23rd Annual Report from the Commission to the European Parliament on the Community’s anti-dumping, anti-subsidy and safeguard activities (2004) {SEC(2005) 1038}
Date: 2005-08-03
Institutions: European Commission
Subjects: activity report, administrative procedure, anti-dumping legislation, common commercial policy, common tariff policy, trade dispute

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 3.8.2005 
COM(2005) 360 final 

23rd ANNUAL REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

ON THE COMMUNITY’S ANTI-DUMPING, ANTI-SUBSIDY AND SAFEGUARD 
ACTIVITIES (2004) 

{SEC(2005) 1038} 

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INTRODUCTION 

This 2004 report is submitted to the European Parliament (EP) following its resolution of 16 
December  1981  on  the  Community’s  anti-dumping  activities,  and  the  report  of  the  EP’s 
Committee on industry, external trade, research and energy.  

For  administrative  reasons,  this  report  is  limited  to  10  pages  and  concentrates  mainly  on 
activities  during  the  year  2004.  More  detailed  information  can  however  be  found  in  the 
working document (WD) attached to this report, which is available in English only. The WD 
also  contains  Annexes  to  which  reference  is  made  throughout  the  report.  The  report  also 
follows  the  same  general  structure  of  the  WD  and  all  its  headings  can  also  be  found  in  the 
WD so that easy reference for more comprehensive information is possible. 

The present report and the full WD are also available to the public at 
http://europa.eu.int/comm/trade/issues/respectrules/anti_dumping/legis/index_en.htm 

1. 

OVERVIEW OF THE LEGISLATION 

Anti-dumping  (AD),  anti-subsidy  (AS)  and  safeguard  (SFG)  investigations  are 
conducted  on  the  basis  of  basic  Council  Regulations.  An  overview  of  the  existing 
legislation is given in the WD. The basic AD and AS texts will hereafter be referred 
to as the "basic Regulation(s) (BR)".  

1.1. 

Changes to the Community legislation in 2004 

Experience in 2003, during which two proposals of the Commission (COM) for the 
imposition  of  definitive  AD  measures  did  not  find  the  necessary  majority  in  the 
Council, has highlighted a number of shortcomings in the decision-making process in 
the area of trade defence instruments (TDI). 

In order to address this problem, the Council adopted on 8 March 2004 a Regulation 
amending  the  above-mentioned  BRs.  Along  with  changes  in  the  decision-making 
process, this change introduces greater transparency, efficiency and predictability in 
the  use  of  the  TDI.  Indeed,  under  the  new  rules,  measures  are  considered  adopted 
unless  a  simple  majority  of  Member  States  opposes.  Furthermore,  it  introduces 
mandatory deadlines for the completion of review investigations and clearer rules on 
enforcement of trade defence measures. 

By introducing mandatory deadlines for the completion of review investigations and 
by making the TDI in general more transparent, account has been taken of a number 
of requests voiced by the EP in its Resolution PE 316.244.  

1.2. 

Anti-subsidy and unfair pricing instrument for airline services 

The  EP  and  the  Council  adopted  in  April  2004  a  Regulation  which  deals  with  the 
effect  of  subsidisation  and  unfair  pricing  for  air  services  from  third  countries.  The 
Regulation, which entered into force on 20 May, foresees the adoption of redressive 
measures  if  subsidised  or  unfairly  priced  airline  services  cause  material  injury  to 
Community carriers on certain routes to and from the Community. 

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The  EP  actively  participated  in  the  drafting  of  the  Regulation  and  most  of  its 
amendments clarifying the text and its implementation on several aspects were taken 
on board.  

2. 

ENLARGEMENT 

As for the Union in general, also in the area of TDI, enlargement triggered numerous 
activities.  These  activities  concentrated  on  accompanying  the  administrations 
concerned in order to allow their smooth integration into the working of the EU, and 
on ensuring that economic operators could fully take up their new role. 

This  was  the  more  so  important,  because,  as  from  1  May  2004,  all  on-going 
investigations  and  measures  taken  by  the  acceding  countries  before  their  accession 
lapsed and the Community’s measures were automatically applied to the EU-25. 

Furthermore,  in  March  2004,  at  the  initiative  of  the  COM,  partial  interim  reviews 
were launched in order to examine whether the extension of trade defence measures 
on EU10 users and consumers would result in economic hardship/shock. As a result 
of  the  investigation  carried  out  by  the  TDI  “Enlargement  Task  Force”,  special 
transitional measures were introduced in May 2004 for four products subject to AD 
measures.  The  transitional  measures  took  the  form  of  price  and/or  quantitative 
undertakings limited to the traditional export flows to the new Member States for a 
limited period. 

Moreover, on the basis of the positive experience with the former enlargement action 
plan,  the  TDI  services  will  start  a  similar  plan  aimed  at  working  towards  a  further 
enlargement of the Community in 2007. 

3. 

COUNTRY-WIDE MARKET ECONOMY STATUS (MES) 

The work on the MES requests has continued in 2004 and is now encompassing ever 
more  countries.  During  2004  and  early  2005,  further  requests  were  received  from 
Kazakhstan, Vietnam, Mongolia and Armenia. Additional information was requested 
in order to be able to assess these requests. 

Conceptually,  the  country-wide  criteria  for  determining  whether  a  country  can  be 
considered a full market economy for the purpose of AD investigations are inspired 
from those applicable to individual companies located in economies in transition to a 
market economy, which are set out in Article 2(7) of the BR.  

Significant work has been done in this respect during 2004. In particular, the request 
received in 2002 from Ukraine was assessed and the COM sent its definitive findings 
to the Ukrainian authorities in May. The conclusion reached was not to grant MES at 
that stage as certain criteria were not met.  

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The People’s Republic of PRC’s (PRC) request was received in September 2003. An 
extensive  analysis  was  carried  out  by  the  COM,  leading  to  a  preliminary  and 
substantive  assessment  delivered  to  the  Chinese  authorities  in  June  2004.  In  this 
assessment,  certain  shortcomings  were  identified  in  four  areas,  namely  state 
influence,  corporate  governance,  property  and  bankruptcy  law  and  the  financial 
sector. The issue of MES will be discussed further with China in more detail in the 
months to come. 

4. 

INFORMATION AND COMMUNICATION ACTIVITIES / BILATERAL CONTACTS 

In the framework of assisting small and medium sized entreprises, a Trade Defence 
Helpdesk for  SMEs  was  set  up.  Furthermore, COM organised  or  participated in  11 
information  seminars  for  economic  operators  or  third  country  administrations. 
Finally, a number of ad hoc meetings on TDI matters were organised with specific 
third country TDI services. 

5. 

OVERVIEW OF AD, AS AND SFG INVESTIGATIONS AND MEASURES 

5.1. 

General 

At the end of 2004, the Community had 137 AD measures (see Annex O) and 19 AS 
measures (see Annex P) in force. 

In 2004, only 0,3% of total imports into the Community was affected by AD or AS 
measures. 

Please note that details on the issues hereafter are given in the WD attached to this 
report. The references to the Annexes of the WD can be found beside the titles.  

5.2. 

New investigations (see Annexes A through E and Annex N) 

Table 1 in the WD provides statistical information on the new investigations for the 
years 2000 – 2004 carried out under the provisions of Articles 5 and 10 of the BRs.  

In  2004,  29  investigations  were  initiated.  Provisional  duties  were  imposed  in  6 
proceedings, one of which concerned an AS proceeding.  

Eleven cases were concluded with the imposition of definitive duties. In one of the 
cases (bed linen from Pakistan), the COM received an anonymous letter containing 
life  threats  addressed  personally  to  the  officials  carrying  out  the  verifications.  The 
verification visits had therefore to be interrupted and a determination had to be made 
on  the  basis  of  the  facts  available.  In  this  respect,  resort  was  made  to  all  verified 
information submitted by all interested parties.  

Two  proceedings  were  concluded  without  measures.  They  concern  PET  from 
Pakistan and stainless steel cold-rolled flat products from USA. 

Another  14  measures  were  allowed  to  expire  automatically  following  their  5-year 
duration. Furthermore, 16 measures which were in force against imports originating 

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in one or more of the 10 acceding countries lapsed automatically on the day of the 
enlargement.  

5.3. 

Review investigations 

Review  investigations  continue  to  represent  a  major  part  of  the  work  of  the  TDI 
services. They represented more than 60% of all investigations initiated. Table 2 in 
the WD provides statistical information for the years 2000-2004. 

5.3.1.  Expiry reviews (see Annex F) 

Articles 11(2) and 18 of the BRs provide for the expiry of measures after five years, 
unless an expiry review demonstrates that they should be maintained in their original 
form.  

During  2004,  6  expiry  review  investigations  were  initiated  and  7  were  concluded 
with  confirmation  of  duty.  It  should  be  noted  that  investigations  initiated  after  20 
March  2004  are  now  under  deadline,  i.e.  conclusions  should  be  reached  within  12 
months but not later than 15 months from the date of initiation. Four reviews were 
terminated and the measures repealed. 

5.3.2. 

Interim reviews (see Annex G) 

Articles  11(3)  and  19  of  the  BRs  provide  for  the  review  of  measures  during  their 
period  of  validity.  Reviews  can  be  limited  to  dumping/subsidization  or  injury 
aspects. 

During 2004, a total of 26 interim reviews were initiated, 10 of which were the so-
called “enlargement reviews” (see point 3). Sixteen interim reviews were concluded 
with confirmation or amendment of duty and 2 investigations were terminated.  

5.3.3.  “Other” interim reviews (see Annex H) 

A  series  of  other  reviews,  not  falling  under  Articles  11(3)  or  19  of  the  BRs  or  for 
which no notice of initiation was published in the OJ, were concluded during 2004.  

They more specifically concern, inter alia, the re-imposition of the duty following a 
judgment  of  the  Court  of  First  Instance,  amendment  of  the  duty  rate  following 
reports  adopted  by  the  WTO  Dispute  Settlement  Body,  acceptance,  voluntary 
withdrawal or breach of undertakings, new exporters requests, etc.  

5.3.4.  New exporter reviews (see Annex I) 

Articles  11(4)  and  20  of  the  BRs  respectively  provide  for  a  “newcomer”  and 
“accelerated”  review  in  order  to  establish  an  individual  dumping  margin  or  an 
individual countervailing duty.  

In  2004,  2  new  exporter  review  (no  accelerated  reviews)  were  initiated.  Five 
investigations, of which 3 accelerated reviews, were concluded. Two investigations 
were terminated thereby maintaining the original level of duty. 

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5.3.5.  Absorption investigations (see Annex J) 

The  possibility  of  "absorption"  reviews,  which  deal  with  situations  where  the 
exporters  directly  or  indirectly  bear  the  cost  of  the  duty  and  thereby  increase  the 
dumping margin without leading to sufficient movement in resale prices, is included 
in Articles 12 and 19(3) of BRs. 

In  2004,  one  anti-absorption  investigation  concerning  imports  of  sulphanilic  acid 
originating in the PRC was concluded with an increase of the duty. The investigation 
concerning  imports  of  lamps  originating  in  the  PRC  was  terminated  without  an 
increase of the duty. 

5.3.6.  Circumvention investigations (see Annex K) 

The possibility of investigations being re-opened in circumstances where evidence is 
brought to show that measures are being circumvented was introduced by Articles 13 
and 23 of the BRs. 

In 2004, 8 investigations were initiated and 8 were concluded with extension of the 
duty. A further 3 investigations were concluded without the extension of duty.  

5.4. 

Safeguard investigations (see Annex L) 

In  2004,  there  were  only  two  SFG  measures  in  place  -  one  on  satsumas  (canned 
mandarins) and one on salmon (provisional measures).  

The steel SFG cases which were previously in force to avoid that the EU market was 
flooded  with  steel  products  after  the  US  protected  their  steel  industry  were 
terminated literally the day after the US terminated their measures. 

6. 

ENFORCEMENT OF AD/AS MEASURES 

6.1. 

Enforcement-related changes to the Community AD and AS legislation in 2004 

As mentioned in point 1.1, the BRs were amended to provide a sounder legal basis 
for  enforcement-related  activities.  Details  on  these  provisions  can  be  found  in  the 
WD attached to this report. 

6.2. 

Follow-up of measures 

The  follow-up  activities  concerning  measures  in  force  were  centred  on  four  main 
areas: (1) to pre-empt fraud; (2) to monitor trade flows and market developments; (3) 
to  improve  the  effectiveness  with  the  appropriate  instruments  and  (4)  to  react  to 
irregular  practices.  These  activities  enabled the  TDI  services  to  be  more  pro-active 
rather than simply reactive in the enforcement field. 

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6.3.  Monitoring of undertakings (see Annexes M and Q) 

Monitoring  of  undertakings  forms  part  of  the  enforcement  activities,  since 
undertakings are a form of AD or AS measures. They are accepted by the COM if it 
is  satisfied  that  they  can  effectively  eliminate  the  injurious  effects  of  dumping  or 
subsidisation. 

In 2004, special regard has been given to the “Enlargement Undertakings” since not 
only the companies offering undertakings, but also their traditional customers in the 
EU have been subject to rigorous on-spot verifications, which ensured compliance. 

At  the  beginning  of  2004,  there  were  undertakings  in  force  accepted  from  76 
companies. During 2004 the following changes to the portfolio of undertakings took 
place: definitive AD  duties  were  imposed on  7  companies  following  withdrawal  of 
acceptance of their undertakings; undertakings of 30 companies came to an end for 
reasons other than withdrawal; undertakings of 7 companies were suspended pending 
the outcome of an ongoing review. In addition, 15 offers for undertakings have been 
accepted. This brings the total number of undertakings in force at the end of 2004 to 
47. 

7. 

REFUNDS (SEE ANNEX T) 

Pursuant to articles 11(8) and 21(1) of the BRs, 10 new refund requests were lodged 
during  the  year.  Three  decisions  were  adopted  rejecting  refund  requests  whilst  6 
other  requests  were  withdrawn.  One  importer  obtained  a  refund  of  all  duties  paid, 
whilst two others obtained partial refunds.  

8. 

JUDICIAL  REVIEW :  DECISIONS  GIVEN  BY  THE  COURT  OF  JUSTICE  (COJ)  /  COURT 
OF FIRST INSTANCE (CFI) 

In 2004, one judgment relating to AD or AS was rendered by the CFI. It concerned 
the  case  on  electronic  weighing  scales  originating  in  the  PRC.  The  judgment  was 
particularly noteworthy as it confirmed, inter alia, that the burden of proof lies with 
an exporting producer wishing to avail itself of market economy status, and, in order 
for a regulation to be annulled, any error committed by the institutions in its injury 
assessment  must  also  have  had  an  impact  on  the  determination  of  whether  there  is 
injury and thus on the content of the regulation itself. A summary of the judgment is 
given in the WD. 

Nine new cases were lodged in 2004, all before the CFI.  

A list of the AD/AS cases before the CFI and the CoJ still pending at the end of 2004 
is given in Annex S of the WD. 

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9. 

ACTIVITIES IN THE FRAMEWORK OF THE WORLD TRADE ORGANIZATION (WTO) 

9.1. 

Dispute settlement in the field of AD, AS and SFGs 

The WTO provides for a rigorous procedure for the settlement of disputes between 
WTO Members concerning the application of the WTO agreements. 

One dispute settlement procedure was concluded during 2004 and largely confirmed 
the Community’s approach. It concerned the case on malleable fittings from Brazil.  

Furthermore,  a  panel  was  established  on  23  January  2004  following  a  request  by 
Korea in the DRAMs case. 

Details are given in the WD attached to this report. 

9.2. 

Other WTO activities 

The year 2004 saw a noticeable change in the way the Doha Development Agenda 
negotiations  on  the  WTO  Anti-dumping  and  Subsidies  Agreements  proceeded.  The 
COM has continued to play an active role in the Negotiating Group on Rules. 

Concerning  AD,  the  situation  can  be  described  as  follows  :  a  large  number  of 
proposals have been tabled in the so-called “issue-identification” phase before the 5th 
Ministerial  Conference  in  Cancun,  many  of  them  aiming  at  a  wholesale  re-
negotiation  of  the  agreements.  Following  the  resumption  of  the  Rules  Group 
negotiations in March 2004, discussions have now shifted to a more substantive and 
technical  stage  which  in  turn  will  prepare  the  “solution-seeking”  phase  to  follow 
thereafter. 

With  regard  to  subsidies,  also  in  2004,  the  discussions  continued  to  focus  on  the 
issue  of  subsidies  to  fisheries.  While  most  of  2004  was  taken  up  by  discussions 
amongst WTO Members about the way negotiations should proceed in the future, a 
consensus  started  to  emerge  around  the  “middle  ground”  proposals  tabled  by  the 
Community. 

In  parallel  to  these  activities,  the  regular  work  of  the  Anti-dumping,  Subsidies  and 
Countervailing Committees was on-going. 

10. 

CONCLUSION 

The year 2004 can be described as an average year in terms of workload as measured 
by the number of initiations of proceedings and imposition of measures. It has been 
“eventful”  in  a  number  of  other  aspects,  such  as  the  enlargement  of  the  EU,  the 
safeguards  on  citrus  fruits  and  salmon  and  the  adoption  of  the  COM  proposal  on 
changing the decision-making process and the introduction of deadlines in reviews.  

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As in previous years also this year’s report shows that the EC is a cautious user of 
TDI.  When  applied,  TDI  are  subject  to  the  highest  level  of  discipline  and  restraint 
while providing effective guarantees against unfair trade practices. Transparency in 
the  use  of  TDI  is  regarded  as  essential,  and  this  high  standard  has  been  further 
increased  through  changes  to  the  legislative  framework  in  2004.  The  COM  is 
determined to continue to pursue this line of policy in the future.  

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