Proposal for a Council Regulation amending Council Regulation (EC) No 384/96 on protection against dumped imports from countries not members of the European Community
Date: 2005-11-30
Institutions: European Commission
Subjects: Ukraine, anti-dumping duty, anti-dumping legislation, common commercial policy, dumping, import, third country

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.11.2005 
COM(2005) 623 final 

2005/0243 (ACC) 

Proposal for a 

COUNCIL REGULATION 

amending Council Regulation (EC) No 384/96 on protection against dumped imports 
from countries not members of the European Community 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

Ukraine  completed  a  reform  process  aiming  at  functioning  according  to  market 
economy rules and should thus now be granted market economy status (MES) for the 
purpose  of  anti-dumping  investigations.  This  requires  an  amendment  of  Council 
Regulation (EC) No 384/96 on protection against dumped imports from countries not 
members of the European Community (the 'Basic Anti-Dumping Regulation'). 

•  General context 

Ukraine lodged its documented request to the European Union for graduation to MES 
for the purpose of trade defence investigations in May 2002.  

Ukraine's request was examined in the light of the following cumulative criteria, which 
seem  pertinent  in  order  to  assess  whether  a  country  as  a  whole  can  be  treated  as  a 
market economy country for the purpose of anti-dumping investigations: 

1. Low degree of government influence over the allocation of resources and decisions 
of enterprises, whether directly or indirectly (e.g. public bodies), for example through 
the use of State-fixed prices, or discrimination in the tax, trade or currency regimes. 

2.  Absence  of  State-induced  distortions  in  the  operation  of  enterprises  linked  to 
privatisation  (i.e.  "carry  over"  from  the  old  system).  Absence  of  use  of  non-market 
trading or compensation systems (such as barter trade). 

3. Existence and implementation of a transparent and non-discriminatory company law 
which ensures adequate corporate governance (application of international accounting 
standards,  protection  of  shareholders,  public  availability  of  accurate  company 
information). 

4.  Existence  and  implementation  of  a  coherent,  effective  and  transparent  set  of  laws 
which  ensure  the  respect  of  property  rights  and  the  operation  of  a  functioning 
bankruptcy regime. 

5. Existence of a genuine financial sector which operates independently from the State 
and which in law and practice is subject to sufficient guarantee provisions and adequate 
supervision. 

In order to determine whether Ukraine fulfilled these criteria, the Commission services 
examined the information provided by the Ukrainian authorities and compared it also 
with  information  obtained  from  a  number  of  authoritative  external  sources  (OECD, 
IMF,  EBRD,  World  Bank  etc.)  as  well  as  from  its  own  anti-dumping  investigations 
involving Ukrainian exports. 

In  March  2003  the  Commission  issued  its  preliminary  assessment  of  Ukraine's  MES 
request, concluding that, despite progress, the five MES criteria had not been met. The 
Ukrainian  authorities  were  thus  requested  to  implement  certain  actions  and  provide 
additional information in respect of all five criteria. In a new assessment issued in May 
2004,  the  Commission  concluded  that  three  of  the  criteria  could  be  considered  as 

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solved,  and  that  only  two  areas  remained  where  further  progress  and/or  respectively 
further  information  was  needed  in  order  for  Ukraine  to  be  graduated  to  MES: 
bankruptcy  legislation  and  price  interference  by  the  State.  After  Ukraine  has  taken 
further  steps  to  improve  its  bankruptcy  legislation  and  to  solve  the  issue  of  price 
interference  by  the  State,  the  Commission  now  considers  that  Ukraine  fulfils  all  the 
criteria in order to be granted MES for the purpose of trade defence investigations. 

•  Existing provisions in the area of the proposal 

Council  Regulation  (EC)  No  384/96  on  protection  against  dumped  imports  from 
countries not members of the European Community. 

•  Consistency with the other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

Consultation methods, main sectors targeted and general profile of respondents 

The  Commission  informed  the  industry  and  consulted  Member  States  in  the  relevant 
trade committees about the proposed amendments. 

Summary of responses and how they have been taken into account 

The Commission has considered the comments and suggestions received. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

The  MES  graduation  of  Ukraine  will  trigger  a  change  in  the  methodology  used  to 
establish  the  dumping  margin  for  Ukrainian  exporters  subject  to  anti-dumping 
investigations.  This  change  is  automatic  whenever  a  third  country  is  being  granted 
MES. 

3)  LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

It is proposed to remove Ukraine from the list of economies in transition in the Basic 
Anti-Dumping Regulation. 

•  Legal basis 

Treaty establishing the European Community, and in particular Article 133. 

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•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reason(s). 

The  Basic  Anti-Dumping  Regulation  foresees  a  form  of  action  which  does  not  leave 
scope for national decision. The proposed amendment does not change anything in that 
respect. 

An indication of how financial and administrative burden falling upon the Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized  and  proportionate  to  the  objective  of  the  proposal  is  not  applicable  as  the 
proposal does not entail any financial or administrative burdens. 

•  Choice of instruments 

Proposed instruments: regulation. 

Other means would not be adequate for the following reason: the current proposal is an 
amendment of an existing Regulation. 

4)  BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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2005/0243 (ACC) 

Proposal for a 

COUNCIL REGULATION 

amending Council Regulation (EC) No 384/96 on protection against dumped imports 
from countries not members of the European Community 

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 Commission1, 

Whereas: 

(1) 

(2) 

By  Regulation  (EC)  No  384/962  (the  'Basic  Anti-Dumping  Regulation')  the  Council 
adopted  common  rules  for  protection  against  dumped  imports  from  countries  which 
are not members of the European Communities. 

In view of the very significant progress made by Ukraine towards the establishment of 
market  economy  conditions,  as  recognised  by  the  conclusions  of  the  Ukraine-
European Union Summit on 1 December 2005, it is appropriate to allow normal value 
for  Ukrainian  exporters  and  producers  to  be  established  in  accordance  with  the 
provisions of Article 2(1) to (6) of the Basic Anti-dumping Regulation. 

HAS ADOPTED THIS REGULATION: 

In Regulation (EC) No 384/96, as last amended by Regulation (EC) No 461/2004, in the first 
sentence of paragraph (b) of Article 2(7), the term “the Ukraine” is deleted. 

Article 1 

Article 2 

This  Regulation  shall  apply  to  all  investigations  initiated  pursuant  to  Regulation  (EC)  No 
384/96 after the date of entry into force of this Regulation on the basis of an application for 
initiation lodged after such date. 

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OJ C , , p. . 
OJ L 56, 6.3.1996, p. 1. Regulation last amended by Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, 
p. 12). 

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This Regulation shall enter into force on the 7th day following that of its publication in the 
Official Journal of the European Union. 

Article 3 

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

Done at Brussels,  

For the Council 
The President 

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