Proposal for a COUNCIL REGULATION protecting against the effects of the application of the United States Anti-Dumping Act of 1916, and actions based thereon or resulting therefrom

(presented by the Commission)

EXPLANATORY MEMORANDUM

In the US, the Anti-Dumping Act of 1916 provides for civil and criminal proceedings and penalties against dumping when conducted with an intent to destroy, injure or prevent the establishment of an American industry, or to restrain or monopolise any part of trade and commerce of such articles in the U.S.

The Anti-Dumping Act of 1916 was found incompatible with US obligations under the World Trade Organisation agreements, notably by providing remedies to dumping like the imposition of treble damages, fines, and imprisonment, none of which are permitted by the GATT 1994 and the Anti-dumping Agreement.

The US did not comply with the WTO rulings within the deadline of 20 December 2001. The Community then requested authorisation to apply retaliatory measures in the form of a Regulation applicable to US imports and equivalent to the Anti-Dumping Act of 1916. In February 2002, the Community accepted to suspend the arbitration on this request on the express consideration that a bill was pending in Congress to repeal the Anti-Dumping Act of 1916 and terminate the on-going cases before US courts.

To date, the Anti-Dumping Act of 1916 is yet to be repealed. On the litigation side, three judicial proceedings are on-going against EC companies and two have been initiated after the initial deadline by which the Anti-Dumping Act of 1916 should have been repealed. The EC companies are facing substantial litigation costs and may ultimately be condemned to treble damages.

The Common Commercial policy comprises the harmonious development of world trade and the progressive abolition of restrictions on international trade, notably by ensuring the effective benefit of the rights arising from the WTO agreements. The maintenance and application of the Anti-Dumping Act of 1916 despite its clear condemnation impedes the attainment of those objectives.

Any EC exporter to the US may be affected and all should be able to compete on the US market on equal terms. Recognition and enforcement of Court or administrative decisions based on the Anti-Dumping Act of 1916 may also be sought in any Member States where the persons condemned have assets. Action at the Community level is therefore appropriate.

The proposed regulation provides relief to the EC companies facing claims based on the Anti-Dumping Act of 1916. The protective measures are limited to those strictly needed to neutralise the effects of the Anti-Dumping Act of 1916:

(1) prohibit the recognition and enforcement in the EC of Court or administrative decisions based on the Anti-Dumping Act of 1916,

(2) allow EC companies or individuals to counter-sue to recover any outlays, costs, damages and expenses caused by the application of the Anti-Dumping Act of 1916.

Proposal for a COUNCIL REGULATION protecting against the effects of the application of the United States Anti-Dumping Act of 1916, and actions based thereon or resulting therefrom

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,

Having regard to the proposal from the Commission ( [1]),

[1] OJ C , , p. .

Whereas:

(1) The objectives of the Community include contributing to the harmonious development of world trade and to the progressive abolition of restrictions on international trade.

(2) In the United States of America ('US'), the Anti-Dumping Act of 1916 ( [2]) provides for civil and criminal proceedings and penalties against dumping when conducted with an intent to destroy or injure an industry in the US, or to prevent the establishment of an industry in the US, or to restrain or monopolise any part of trade and commerce in such articles in the US.

[2] Enacted under the heading of "unfair competition" in Title VIII of the Revenue Act of 1916; Title VIII of that Act is codified at United States Code 71-74, cited as 15 U.S.C 72.

(3) On 26 September 2000, the Dispute Settlement Body of the World Trade Organisation (WTO), adopting the Appellate Body report ( [3]) and the Panel report ( [4]), as upheld by the Appellate Body report, found the Anti-Dumping Act of 1916 to be incompatible with the US obligations under the WTO agreements, notably by providing remedies against dumping, such as the imposition of treble damages, fines, and imprisonment, none of which are permitted by the General Agreement on Tariffs and Trade 1994 ('GATT 1994') or by the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ('AD Agreement').

[3] AB-2000-5 and AB-2000-6, 28 August 2000

[4] United States - Anti-Dumping Act of 1916, Panel report (WT/DS/136/R, 31 March 2000).

(4) The US failed to comply with the Panel and Appellate Body recommendations and rulings within the time-limit of 20 December 2001. As a result, the Community requested the authorisation to suspend the application to the US of its obligations under GATT 1994 and the AD Agreement.

(5) In February 2002, the Community agreed to suspend the arbitration on its request, on the express understanding that a bill was pending in the US Congress to repeal the Anti-Dumping Act of 1916 and to terminate the on-going cases before US Courts.

(6) The Anti-Dumping Act of 1916 has yet to be repealed and claims brought under this Act are pending before US Courts against persons under the jurisdiction of the Member States of the Community.

(7) These judicial proceedings are causing substantial litigation costs and may ultimately result in a judgement awarding treble damages.

(8) By its maintenance and application, the Anti-Dumping Act of 1916 impedes the attainment of the aforementioned objectives, affects the established legal order and has adverse effects on the interests of the Community and the interests of natural and legal persons exercising rights under the Treaty establishing the European Community.

(9) Under these exceptional circumstances, it is necessary to take action at Community level to protect the interests of the natural and legal persons under the jurisdiction of the Member States, in particular by removing, neutralising, blocking or otherwise counteracting the effects of the Anti-Dumping Act of 1916,

HAS ADOPTED THIS REGULATION:

Article 1

No judgement of a court or tribunal and no decision of an administrative authority located in the United States of America giving effect, directly or indirectly, to the Anti-Dumping Act of 1916 or to actions based thereon or resulting therefrom, shall be recognised or be enforceable in any manner.

Article 2

1. Any person referred to in Article 3 shall be entitled to recover any outlays, costs, damages and miscellaneous expenses incurred by him as a result of the application of the Anti-Dumping Act of 1916 or by actions based thereon or resulting therefrom.

2. Recovery may be obtained as soon as an action under the Anti-Dumping Act of 1916 is commenced.

3. Recovery may be obtained from the natural or legal person or any other entity that brought a claim under the Anti-Dumping Act of 1916 or from any person or entity related to that person or entity. Persons or entities shall be deemed to be related if:

(a) they are officers or directors of one another's businesses;

(b) they are legally recognised partners in business;

(c) one of them controls directly or indirectly the other;

(d) both of them are directly or indirectly controlled by a third person

4. Without prejudice to other means available and in accordance with applicable law, the recovery may take the form of seizure and sale of assets held by the defendant, including shares held in a legal person incorporated within the Community.

Article 3

The persons referred to in Article 2 shall be:

(a) any natural person being a resident in the Community,

(b) any legal person incorporated within the Community,

(c) any natural or legal person referred to in Article 1 (2) of Regulation (EEC) No 4055/86 ( [5]),

[5] OJ L 378, 31.12.1986, p. 1. Regulation as last amended by Regulation (EEC) No 3573/90 (OJ L 353, 17.12.1990, p. 16).

(d) any other natural person within the Community, including its territorial waters and air space and in any aircraft or on any vessel under the jurisdiction or control of a Member State, acting in a professional capacity.

For the purposes of point (a), 'being a resident in the Community` shall be understood to mean being legally established in the Community for a period of at least six months within the 12-month period immediately prior to the date on which, under this Regulation, an obligation arises or a right is exercised.

Article 4

This Regulation shall enter into force on the 20th day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President