Report from the Commission to the European Parliament - Overview of third country trade defence actions against the Community - (Statistics up to 31 December 2006 but commentary on cases and text is updated to April 2007) {SEC(2007) 1057}
Date: 2007-08-01
Institutions: European Commission
Subjects: anti-dumping legislation, anti-subsidy proceeding, common commercial policy, competitiveness, protective clause, report, third country

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 1.8.2007 
COM(2007) 461 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT 

OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE 
COMMUNITY 
(STATISTICS UP TO 31 DECEMBER 2006 BUT COMMENTARY ON CASES AND 
TEXT IS UPDATED TO April 2007) 

{SEC(2007) 1057} 

EN 

   EN 

 
 
 
 
 
1. 

INTRODUCTION 

Last  years  report,  on  monitoring  third  country  trade  defence  actions  against  the  EU, 
highlighted  the  importance  of  this  task  in  the  context  of  the  EU's  overall  trade  policy.  In 
particular,  the  need  to  ensure  that  third  countries  do  not  use  trade  defence  instruments 
incorrectly  was  identified  as  one  of  the  priorities  of  DG  Trade  in  the  context  of  improving 
market access.  

As  part  of  its  strategy  for  European  competitiveness,  the  Commission  has  also  launched  a 
reflection process (the Green Paper) on its own application of the trade defence instruments. 
The  Commission  Green  Paper  does  not  question  the  fundamental  value  of  trade  defence 
instruments,  but  invites  a  public  reflection  on  how  the  EU  can  best  use  them  in  a  changing 
global economic context. 

In  this  context,  while  recognizing  that  third  countries  have  the  right  to  make  use  of  trade 
defence instruments, they should certainly be encouraged to also question their practice and 
improve, where necessary, their use of the instruments. Indeed, many third countries continue 
to  use  these  instruments  in  a  manner  which  results,  all  too  often,  in  the  imposition  of 
measures, the legitimacy of which is questionable.  

Even if there were some improvements in certain areas, we continue to see inappropriate use 
of the instruments, particularly safeguards as well as poor standards applied across all three 
instruments  (anti  dumping,  countervailing  and  safeguard).  These  include  poor  initiation 
standards, disregard for the rights of interested parties as well as poor analysis in respect of 
injury  and  causation.  The  Commission  continues  to  address  these  problems  with  the  aim  of 
minimising  the  negative  impact  of  any  trade  defence  measures,  as  far  as  possible  for  our 
exporters. 

As  always,  our  monitoring  of  third  country  actions  is  done  against  the  backdrop  of  the 
relevant  WTO  Agreements.  Even  where  the  countries  concerned  are  not  WTO  Members, 
these  international  rules  are  the  benchmark  used  to  determine  whether  investigating 
authorities  create  and  maintain  a fair  and  equitable  trading  environment.  It  is  also  our  strict 
observance  of  these  rules  which  makes  us  acknowledge,  and  accept,  that  countries  have  a 
legitimate right to take trade defence action in certain circumstances. 

The Commission administers these instruments to a very high standard and will continue to 
'export'  its  best  practices  in  the  area  of  TDI  through  intervention  on  individual  cases, 
provision of technical assistance and in dialogue with our trading partners at all levels. 

This  report  sets  out  the  activities  of  the  European  Commission  during  2006  in  monitoring 
trade defence cases taken by third countries against the EU or its Member States. It should be 
noted  that,  for  cases  which  were  ongoing  before  2006,  this  report  should  be  read  in 
conjunction  with  last  year's  report  to  the  European  Parliament,  which  included  commentary 
on  certain  cases  up  to  the  end  of  September  2006.  For  those  cases  this  report  provides  an 
update regarding any developments since then. 

EN 

2 

   EN 

 
2. 

OVERALL TRENDS 

At  the  end  of  2006  there  were  a  total  of  143  measures  in  place  against  the  European 
Community  or  its  Member  States,  compared  to  151  at  the  end  of  2005.  It  is  the  third  year 
where  the  number  of  measures  in  place  against  the  Community  has  dropped.  This  year's 
decrease is explained by the imposition of 27 new measures (provisional and definitive) while 
at the same time 34 measures lapsed or have been revoked.  

Of those 34 measures which lapsed, 10 concern the termination or expiry of measures on steel 
products by the US following a number of sunset reviews. In addition the number of measures 
in place by India (-6) and Argentina (-5) also dropped, thus contributing to the overall decline. 
In the case of these two countries, the European Commission services played an active role 
given that some of the measures were terminated following WTO consultations requested by 
the Commission services.  

The  number  of  new  measures  imposed  in  2006  increased  slightly  over  2005,  27  as 
compared  to  25.  The  main  difference  noted  between  these  years  was  an  escalation  in  the 
number of safeguard measures, increasing from 10 in 2005 to 15 in 2006, i.e. over 50%. This 
is mainly due to an increase in the measures imposed by Turkey. 

Concerning the breakdown of the various trade defence instruments, the trend is the same 
as  for  previous  years  with  around  two  thirds  of  the  measures  consisting  of  anti-dumping 
measures. While the number of countervailing measures has been decreasing in the last years, 
there  has  been  an  increase  in  the  number  of  safeguard  measures,  from  24  in  2005  to  32  in 
2006,  an  increase  of  25%.  This  increase  in  the  use  of  safeguards  across  all  three  categories 
(cases  initiated,  measures  imposed  and  measures  in  place)  confirms  an  alarming  trend, 
identified last year, in the use of this instrument. Of course, this should be seen in the light of 
the  fact  that  safeguard  measures  are  imposed  on  an  erga-omnes  basis,  unlike  the  two  other 
instruments  which  are  country  specific.  Therefore,  any  increase  of  safeguard  measures 
worldwide  will  inevitably  also  concern  the  EC,  even  when  the  product  in  question  is  not 
exported  by  the  EU  in  significant  quantities.  For  this  reason  the  Commission  continues  to 
apply  pressure  to  the  users  of  this  instrument  to  be  more  circumspect  in  its  use  while  also 
making every effort to minimise the negative impact of any safeguard measures imposed. In 
this  respect,  the  European  Commission  services  have  been  relatively  successful,  as  detailed 
below. 

In terms of countries, the USA remains the main user of trade defense instrument against the 
EC or its Member States, with 29 measures in force, i.e. 20% of the total. This is in spite of 
the  fact  that  a  significant  number  of  their  measures  were  terminated  or  expired.  The  other 
main countries are India (18 measures), China (10 measures), Brazil (9 measures) and Turkey 
(8  measures).  With  the  exception  of  the  latter,  all  those  countries  have  in  recent  years  been 
important  users.  Turkey  ranks  among  the  main  users  against  the  EC  l  as  a  result  of  its 
extensive use of safeguards. Indeed, with 5 new safeguard measures in 2006, it ranks first for 
this instrument.  

Finally,  it  should  be  noted  that  unfortunately  the  number  of  third  country  cases  initiated 
affecting the European Community increased from 20 in 2005 to 28 in 2006. Within this total, 
the number of anti-dumping cases opened remained the same as the previous year at 9.There 
was  one  anti-subsidy  case  opened  compared  to  none  in  2005.  The  increase  was  mainly 
accounted for by the number of safeguard cases opened, 18 in comparison to 11 in 2005.  

EN 

3 

   EN 

 
3. 

TRENDS BY COUNTRIES 

This section outlines the major trends of trade defence measures third countries. A description 
of the main cases for each third country is given in annex. 

3.1. 

United States 

At the end of 2006, the US had 29 trade defence measures in place against imports from EU 
countries.  The  overwhelming  majority  are  anti-dumping  measures  (24),  with  only  5 
countervailing measures. These figures compare to a total of 39 measures against the EU at 
the end of 2005, of which 27 were anti-dumping and 12 countervailing measures. 

Continuing the trend of the previous two years, there were no new initiations of investigations 
against  EU  exporters  in  2006.  On  the  other  hand,  the  US  initiated  various  sunset  reviews, 
mainly concerning the steel sector, and many of those reviews were concluded in 2006 with 
the revocation of a number of AD and/or CVD measures, including cut-to-length steel plate, 
corrosion-resistant steel, and oil country tubular goods. 

Once  again,  the  focus  on  the  trade  defence  activity  by  the  US  concerned  WTO  dispute 
settlement  proceedings,  namely  those  related  to  the  US  practice  of  'zeroing'  and  the 
implementation of the 'privatisation' case. 

3.2. 

India & Pakistan 

India remains the country with the second highest number of measures against the EC, i.e. 18 
in  total.  In  2006,  6  measures  lapsed  or  were  terminated,  while  two  new  measures  were 
imposed. India only initiated 1 anti-dumping case involving three EU Member States in 2006, 
as compared to 2 in 2005. This is the third successive year where the number of initiations by 
India against the Community has declined.  

This is a welcome development, as traditionally India is an active user of this instrument. One 
of our main concerns vis-à-vis India in 2006 was the fact that they opened a sunset review on 
a case (Flexible Slabstock Polyol) which had been subject to WTO consultations back in 2004 
and on which it was expected the measures would simply expire. This review is ongoing and 
we are monitoring developments.  

Pakistan did not initiate any new investigation against the EC in 2006, which is in contrast to 
2005 where 3 AD cases were initiated. Through 2006, work did however continue on two of 
the  cases  initiated  the  previous  year  resulting  in  the  imposition  of  measures  on  formic  acid 
and the termination of the investigation on tinplate. Details regarding these cases were given 
in last year's report.  

3.3. 

China 

At the end of 2006 China had 10 measures imposed against the EU, as compared to 9 in the 
previous year. Two new measures were imposed while one expired. 

China opened only 1 anti-dumping case against the EU concerning potato starch. This was a 
drop  from  3  cases  opened  by  them  in  2005.  In  overall  terms  their  AD  activity  was 
significantly lower than in 2005 during which, for the latter six months of the year, they had 
become the number one initiator at WTO level. 

EN 

4 

   EN 

 
In 2006 it became very evident that China's poor track record regarding lack of transparency 
and  poor  disclosure  is  in  fact  a  systemic  problem.  The  Commission  has  raised  this  issue 
constantly with the Chinese, both in the context of individual cases and in bilateral contacts. 
We  continue  to  apply  pressure  on  the  Chinese  authorities  and  particularly  the  Bureau  of 
Industry Injury to improve and standardise their practice on disclosure to ensure full respect 
of the rights of defence of interested parties.  

3.4. 

Latin America 

The number of measures in place by Latin American countries decreased in 2006 as compared 
to  the  previous  year.  This  is the  result  of  a  significant  decrease  of  the  measures  in  place  in 
Argentina (-5 measures) and a limited number of new measures. 

However, after relatively low activity by Latin American countries in 2005, 2006 saw 8 TDI 
cases initiated by these countries. Following three years where Argentina did not use the TDI 
instruments  vis-à-vis  the  EC,  3  anti-dumping  cases  were  initiated  in  2006  and  1  safeguard 
case. The cases, which are ongoing, are of low economic interest to the EC. Mexico initiated 
2 AD cases against certain Member States, a drop compared to previous years' activity. Chile 
and Panama both initiated 1 safeguard case each with practically no impact for EU exporters. 

3.5. 

Russia and Ukraine 

The number of measures imposed by these two countries increased, as both imposed 2 new 
measures each in 2006. 

During 2006, Russia and Ukraine initiated a total of 5 safeguard measures between them as 
was the case the previous year. However in 2006 it was Ukraine which initiated the bulk of 
these cases as compared to Russia in 2005. Ukraine imposed two safeguard measures in 2006 
on  ball  bearings  and  carboxy  methylcellulose.  However,  due  to  the  nature  of  the  measures, 
they  do  not  impact  in  any  way  on  EU  exports.  The  measures  imposed  by  Russia  were  on 
lamps and steel pipes. 

3.6. 

Turkey 

After  2005,  when  Turkey  did  not  initiate  any  TDI  actions  against  the  Community,  in  2006 
they became, once again very active in the area of safeguards, initiating 5 cases in total. All 5 
cases have resulted in the imposition of measures in 2006. Owing to the variety of products 
involved and the nature of the measures involved in some cases the impact was greater than 
others.  

3.7. 

Australia 

Australia  initiated  one  CVD  case  against  the  EU  in  2006  compared  to  none  in  2005.  Last 
years  report  mentioned  the  fact  that  Australia  had  terminated  CVD  measures  against  bulk 
brandy  from  France  following  a  sunset  review.  No  causal  link  had  been  found  between 
subsidization and injury to the domestic industry. It was therefore somewhat surprising when 
the Australian authorities initiated a new CVD investigation against bottled and bulk brandy 
from France in July 2006. This investigation resulted in the imposition of definitive measures 
in March 2007. 

EN 

5 

   EN 

 
Despite  the  fact  that  there  was  no  co-operation  form  the  EU  industry,  the  Commission 
followed  the  case  and  identified  some  procedural  shortcomings,  particularly  the  lack  of 
disclosure. Representations were made to the Australian authorities on this matter. 

3.8. 

Tunisia 

On  16  June  2006,  Tunisia,  for  the  first  time,  initiated 2 safeguard investigations concerning 
iron  articles  (hardware)  and  glassware.  In  both  cases  the  non-confidential  versions  of  the 
complaints lodged by the Tunisian industry asking for protective measures were very sketchy 
and  did  not  provide  a  proper  justification  for  initiating  an  investigation.  Also  the  range  of 
products covered in each of the two cases was far too broad to be treated as one like product: 
for  glassware,  ranging  from  all  sorts  of  glass  containers  to  glass  tableware,  while  the 
investigation into hardware covers products as broad ranging as locks, taps and iron fittings 
for furniture. 

The  Commission  raised  these  issues  at  a  hearing  that  took  place  in  Tunis  and  asked  the 
Tunisian authorities to investigate separately the different types of products. The Commission 
continues to monitor these investigations and has asked for a full and meaningful disclosure 
of findings at the end of the investigation. 

4. 

ONGOING PROBLEMS 

In  recent  years  we  have  identified  problems  which  remain  prevalent  in  third  country  trade 
defence actions. While we may see improvements occurring in some individual cases, from an 
overall perspective the issues remain the same i.e. poor standards of initiation, poor injury and 
causality analysis and disregard for the rights of defence of interested parties. The wealth of 
jurisprudence which exists on any of these subjects shows that these are recurring problems 
worldwide.  In  addition  to  those  persistent  problems,  the  abusive  use  of  safeguard  measures 
should also be added to the list given that, in view of the tendency already outlined above, this 
has now become a systemic issue. 

4.1. 

Poor standards of initiation 

The  initiation  stage  of  any  proceeding  is  of  course  critical.  It  begins  a  process  which, 
regardless of whether or not it ends with the imposition of measures, has many implications 
for  those  involved.  The  opening  of  any  proceeding,  by  its  very  nature,  creates  an  uncertain 
trading  environment  and  hence  affects  normal  trade  flows.  In  addition,  economic  operators 
co-operating  in  the  proceeding  incur  considerable  investment  of  resources,  including 
personnel,  time  and,  of  course,  financial.  Therefore  it  is  imperative  that  users  of  the  trade 
defence  instruments  do  not  initiate  without  first  ensuring  that  there  is,  in  fact,  evidence  to 
suggest  that  the  opening  of  any  case  is  warranted.  The  Commission  services  continue  to 
examine this stage of third country proceedings very carefully and make representations to the 
investigating authorities where necessary.  

4.2. 

Poor injury and causality analysis 

In  an  increasingly  liberalised  global  economy,  economic  operators  face  worldwide 
competition and need to adapt to remain competitive. This failure to adapt can often lead to 
demands  for  protection  where  this  is  not  necessarily  justified.  In  order  to  impose  legitimate 
trade defence measures it must first be shown that injury to the domestic industry is the result 
of  injurious  dumping  or  subsidisation  or,  for  safeguard  action,  from  a  sudden,  massive, 

EN 

6 

   EN 

 
unforeseen increase in imports. But, all too often, there is a failure by investigating authorities 
to investigate whether in fact the problems faced by their industries has more to do with other 
factors  rather  than  imports.  This  is  perhaps  one  of  the  major  weaknesses  in  trade  defence 
investigations carried out by third countries. 

4.3. 

Rights of defence of interested parties 

As  with  any  legal  proceeding,  respect  for  the  rights  of  interested  parties  is  essential  to 
ensuring a fair process. This especially applies in the area of TDI. However many countries 
repeatedly  ignore  this  vital  element  in  their  administration  of  the  trade  defence  instruments. 
The  poor  quality  of  the  information  provided  in  the  disclosure,  as  well  as  the  very  poor 
standards of information provided in non-confidential files, repeatedly undermine the rights of 
defence of interested parties. This is another major problem that has been identified in these 
third country trade defence cases and one where considerable energy is spent in an effort to 
have it improved. It is also an issue raised in the Green Paper where four aspects of the EU's 
own practice have been highlighted for consideration including the role of a hearing officer, 
public  hearings  for  market  economy  status  decision,  level  playing  field  for  information  as 
well as access to non-confidential files. 

4.4. 

Extensive use of safeguards 

The  last  years  have  seen  a  worrying  increasing  trend  of  new  safeguard  measures.  This  is 
probably due to the fact that some countries see the instrument as an easy and rapid way to 
take actions against imports because, unlike in anti-dumping or anti-subsidy there is no need 
to  demonstrate  any  unfair  element  of  trade  flows,  but  "only"  a  surge  of  imports  causing  or 
threatening to cause injury. In this respect, safeguards are often used by certain countries to 
tackle problems which should normally be addressed by other trade defence instrument such 
as anti-dumping or anti-subsidy. This is because the nature of the problem in fact often relates 
to  low  priced  imports  from  specific  countries  rather  than  an  overall  and  sudden  increase  of 
imports. 

This is problematic for two reasons. Firstly given that WTO injury standards for safeguards 
are much stricter than those required for the other instruments, safeguard measures imposed 
often  do  not  comply  with  WTO  rules.  For  example,  the  standard  of  injury  in  safeguards 
(serious injury) is higher than for the other trade defence instruments (material injury) and it 
must  be  demonstrated  that  (increased  imports)  are  as  a  result  of  unforeseen  developments. 
The Commission services repeatedly address this lack of WTO compliance. 

Secondly, in view of the multilateral nature of the instrument, even when EU exports are not 
the cause of the problem, they are nevertheless also affected by safeguard measures which are 
applied on an erga-omnes basis. Where safeguard investigations are initiated, the Commission 
services' role is therefore often to try  and minimise,  as much as possible, the impact of any 
such measures on EU exports. 

5. 

MAIN ACHIEVEMENTS 

As  already  outlined  in  the  previous  year's  report,  the  Commission's  activity  in  monitoring 
third country cases certainly had some impact on the number of initiations and measures in 
place against the EC or Member States, which has been decreasing over the years. 

EN 

7 

   EN 

 
Without  repeating  the  details,  which  are  in  last  year's  report,  it  is  useful  to  recall  such 
successful  cases  as  terminations  of  safeguard  cases  on  chemicals  by  Russia,  termination  of 
anti-dumping  investigation  on  tinplate  by  Pakistan  and  the  Moroccan  safeguard  case  on 
ceramic tiles which resulted in negotiation of high quotas for EC exporters.  

In addition, further successes in 2006 were: 

a) Zeroing – revocation of measures 

Following the WTO dispute settlement requested by the European Commission, in April 2007 
the  US  have  implemented,  although  only  partially,  the  WTO  ruling  concerning  the  zeroing 
methodology. The intensive work of the European Commission services in co-operation with 
the  exporters  and  Member  States  concerned  is  finally  rewarded.  Indeed,  many  European 
exporters have seen the contested anti-dumping duties either entirely revoked or substantially 
reduced:  while  for  two  (and  probably  even  three)  cases  the  orders  have  been  completely 
revoked,  in  other  cases  six  individual  exporters  have  seen  their  duty  revoked  and  the  anti-
dumping duties for ten other exporters have been reduced. 

Unfortunately  not  all  the  problems  have  been  solved  by  this  implementation  and  the 
Commission  will  have  to  consider  all  the  options  available  for  encouraging  prompt 
implementation  by  the  US,  and  also  pursue  the  other  on-going  disputes,  including  a  new 
request for the establishment of a WTO Panel should that be deemed necessary. 

b) Termination of measures by India 

During  the  course  of  2005,  upon  request  of  the  EC  exporters,  India  initiated  reviews  of  a 
number  of  measures  subject  to  WTO  consultations.  While  several  of  these  reviews  led  to  a 
termination  of  the  measures,  the  Indian  domestic  industry  appealed  a  number  of  the 
terminations. In some cases the measures were even reinstated while waiting for the appeals 
to be decided by the Indian appellate tribunal. The EC strongly opposed these developments 
and  was  pleased  to  note  that  during  the  year  2006,  most  of  the  appeals  have  been  either 
withdrawn by the domestic industry or dismissed by the Indian courts.  

c) Termination of measures by Argentina 

Following  long  and  difficult  negotiations  in  the  context  of  DSU  proceedings  and  after 
Argentina agreed to end the CVD measures concerning three products (olive oil, wheat gluten 
and canned peaches), those measures were finally revoked during the year 2006. Concerning 
the measures on canned peaches, the bound tariff rate was however increased at the same time 
in order to compensate for the lapse of the CVD duty. 

d) Impact of safeguard measures 

As outlined above, the number of safeguard measures in force has increased in the last years, 
which is causing concerns because EU exporters are also affected even when they are not the 
cause of the problems. However, when those measures could not be avoided, the Commission 
has  been  quite  successful  in  defending  the  EU  exporters'  interest  by  promoting  types  of 
measures  which  would  have  minimum  effect.  This  was  for  example  the  case  for  Turkish 
(vacuum  cleaners  and  motorcycles)  and  Ukrainian  measures  (cotton  fabrics  and  knitted 
fabrics).  

EN 

8 

   EN 

 
Even if this can be seen as a positive outcome, the Commission is however still calling for a 
more prudent use of the instrument, insisting that it should be used only in truly exceptional 
circumstances, which should result in far less safeguard measures being imposed. 

6. 

CONCLUSION 

In 2006, for the third consecutive year, the number of measures in force against the EC has 
decreased.  This  is  of  course  a  positive  development  for  EU  exporters,  even  if  the  increased 
number  of  new  investigations  as  compared  to  the  previous  year  is  an  indication  that  trade 
defence activity may increase in the short term. 

Even if certain improvements in third country trade defence practice have been noticed, the 
problems identified in the past are still present and others have appeared.  

In this context, at a time when the Commission is reflecting on its own use of the instrument, 
many third countries still continue to use these instruments in a questionable way, sometimes 
resulting in measures which are not legally warranted. Consequently, there is certainly a need 
for the Commission to continue to monitor third country actions in order to ensure that third 
countries 
interests  of  EU 
industries/Member  States  targeted  and  aim  to  reduce  the  economic  impact  of  third  country 
measures on exporters. 

respect  WTO  and  bilateral 

rules,  assist  and  defend 

These  issues  are  addressed  through  direct  intervention  on  specific  cases,  raising  general 
systemic problems in the framework of both formal and informal bilateral contacts with the 
countries concerned, discussions in the relevant Committees in the WTO  context as well as 
the continuation of training for third countries regarding our own views and practice in TDI 
matters. 

Positive results have been achieved in this respect, and various EU exporters have relied on 
the  support  and  advice  of  the  Commission.  The  EC  will  therefore  pursue  its  active  role  in 
addressing  abusive  use  of  trade  defence  measures  because  they  are  considered  barriers  to 
trade and an impediment to competitiveness and market access for European exporters. 

EN 

9 

   EN