Fifth annual report from the Commission to the European Parliament - Overview of third country trade defence actions against the Community (statistics up to 31 December 2007 but commentary on cases and text is updated to March 2008) [SEC(2008) 2149]
Date: 2008-07-04
Institutions: European Commission
Subjects: anti-dumping legislation, anti-subsidy proceeding, common commercial policy, competitiveness, protective clause, report, third country

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 4.7.2008 
COM(2008) 406 final 

FIFTH ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT  

overview of third country trade defence actions against the Community (statistics up to 
31 December 2007 but commentary on cases and text is updated to March 2008) 

[SEC(2008) 2149] 

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FIFTH ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT  

OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE COMMUNITY 
(STATISTICS UP TO 31 DECEMBER 2007 BUT COMMENTARY ON CASES AND TEXT IS UPDATED 
TO MARCH 2008) 

Executive summary 
The  number  of  trade  defence  measures  in  force  against  the  EU  at  the  end  of  2007 
increased  slightly  compared  to  the  previous  year.  Those  measures  are  mainly  anti-
dumping,  but  the  use  of  the  safeguard  instrument  is  constantly  increasing.  The 
Commission  continued  to  closely  monitor  this  activity,  to  provide  assistance  to  the  EU 
industry concerned and to intervene where appropriate. Positive results were achieved 
this  year  but  the  problems  identified  in  the  past  still  exist  and  often  unduly  restrict 
market access for EU exporters. The Commission will therefore continue this important 
activity  and  intensify  bi-lateral  contacts  with  third  countries  in  order  to  promote 
increased disciplines when using trade defence instruments.  

1. 

INTRODUCTION 

While  the  number  of  measures  in  force  against  the  EU  or  its  Member  Sates  has  fluctuated 
over the last years, not only have the concerns related to their appropriate use remained the 
same  but  new  problems  have  emerged  more  recently.  The  EU  is  a  user  of  trade  defence 
instruments  and  recognizes  the  right  of  third  countries  to  use  them  as  well.  However, 
experience has shown that, in many instances, the standards applied by third countries when 
using  the  instruments  are  not  always  adequate  and  the  resulting  measures  do  not  always 
conform to WTO legal requirements. 

The need to reinforce EU competitiveness on world markets is one of the main objectives of 
Commission's  Trade  policy.  Unwarranted  trade  defence  measures  constitute  an  obstacle  to 
legitimate market access for our exporters and the Commission's aim therefore is to avoid that 
such measures are introduced by third countries or, at least, to minimise their negative impact, 
as much as possible. 

The  Commission  therefore  continues  to  intervene  as  much  as  possible  in  individual  cases 
while also maintaining dialogue and bi-lateral contacts with third countries administrations in 
order to promote the highest standards in the use of the instruments, similar to those applied 
by the Commission in its own practice. 

The  previous  reports  have  underlined  the  need  to  continue  to  monitor  third  country  actions 
and  maintain  technical  assistance  to  the  industries  concerned.  This  year's  trends  and 
developments certainly confirm this, in particular when considering the recent positive results 
that have been achieved. Member States and industries have also made it very clear that they 
rely on the Commission's work and support in this field. 

2. 

OVERALL TRENDS 

At  the  end  of  2007  there  was  a  total  of  147  trade  defence  measures  in  place  against  the 
European Community or its Member States. This compares to 143 at the end of 2006.  

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While  the  number  of  measures  in  place  followed  a  decreasing  trend  in  the  last  three  years 
until  2006,  for  the  first  time  in  2007  they  increased  as  compared  to  the  previous  year.  This 
should  however  been  seen  in  the  light  of  the  enlargement  of  the  Union  that  took  place  in 
January  2007.  In  this  context,  the  measures  which  third  countries  were  already  in  place 
against Romania and Bulgaria before the enlargement, 9 in total, have now been included in 
the  statistics.  In  total  there  were  23  new  measures  in  2007  (14  provisional  or  definitive 
measures and 9 resulting from the enlargement) while at the same time 19 measures lapsed or 
have been revoked.  

Concerning the use of the various trade defence instruments, anti-dumping still constitute 
the  bulk  of  the  measures,  i.e.  around  two  thirds  of  the  measures  in  place.  Similar  to  the 
previous  years  the  number  of  countervailing  measures  has  been  decreasing,  but  the 
breakdown  of  the  measures  in  place  shows  again  an  increase  in  the  number  of  safeguard 
measures, from 32 in 2006 to 36 in 2007. Those measures now represent 25% of the overall 
measures in place. 

Since safeguards are imposed on  an erga-omnes basis, they affect EC exporters, even when 
their exports do not cause any problems to the domestic industry of the country imposing the 
measures. The Commission therefore continues to apply pressure to the users of safeguards to 
be  more  circumspect  in  their  use  while  also  making  every  effort  to  minimise  the  negative 
impact of any safeguard measures imposed. While such interventions have been successful in 
some instances, unfortunately this was not always the case, in particular concerning measures 
imposed by Turkey. 

In terms of countries, the USA remains the main user of trade defense instruments against 
the  EC,  with  25  measures  in  force,  i.e.  almost  20%  of  the  total.  For  many  of  the  products 
concerned  (e.g.  low-enriched  uranium,  hot-rolled  steel)  trade  volumes  are  substantial.  The 
other  main  countries  are  India  (19  measures),  Brazil  (12  measures),  China  (10  measures), 
Ukraine (10 measures), Mexico and Turkey (9 measures each).  

The number of new measures imposed (provisional and definitive) decreased significantly, 
from  27  in  2006  to  18  in  2007  (including  14  new  measures  and  4  provisional  measures 
already  imposed  in  2006  but  definitively  confirmed  in  2007).  This  drop  is  explained  by  the 
fact that China and Turkey imposed in total 9 measures in 2006 but only 2 in 2007. However, 
while China indeed decreased its overall trade defence activity, Turkey remains an important 
user, as detailed below. Similar to the previous year, half of the new measures are safeguards. 

Finally, after a peak in 2006, the number of new initiations in 2007 fell back to a relatively 
moderate level, from 28 to 20 new cases. This is due to the fact that only 9 safeguard cases 
were  initiated  in  2007  as  compared  to  18  the  previous  year.  This  is  a  positive  development 
and hopefully this trend will continue. 

3. 

TRENDS BY COUNTRIES 

While the USA and India decreased their number of measures in the last years, countries such 
as Brazil, Ukraine, Mexico, Turkey and Russia significantly  increased their measures in the 
last three years. While these five countries together accounted for 26 measures in 2005, that 
figure had increased to 45 measures in 2007. 

In the case of the USA, the reduction mainly results from the revocation of various measures, 
while  the  trend  for  India  still  reflects  the  termination  of  measures  following  WTO 
consultations concerning a substantial number of measures. Concerning Russia, Ukraine and 
Turkey,  it  should  be  underlined  that  the  increase  of  measures  almost  exclusively  relates  to 

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new safeguard measures introduced in 2007. Finally the rise for Brazil and Mexico reveals an 
increasing TDI activity in Latin America.  

A detailed description of the trends and main cases for each third country is given in annex. 

4. 

ONGOING PROBLEMS  

Even if there has been some progress overall, the Commission still faced the same problems it 
has identified in the past. Those concerns mainly relate  to  poor standards of initiation, poor 
injury  and  causality  analysis  and  disregard  for  the  rights  of  defence  of  interested  parties. 
Those  were  explained  in  detailed  in  the  previous  reports  and  therefore  not  repeated  in  this 
one.  

The increasing  use of  safeguard  measures was also added to the list of issues last year, and 
unfortunately  it  remains  a  problem  in  2007.  In  addition,  another  important  problem  which 
came  to  the  fore  was  that  the  majority  of  the  most  recent  EU  Member  States  are  still  not 
automatically granted market economy status in anti-dumping investigations in Argentina and 
Brazil. 

The two most recent issues are detailed below. 

4.1. 

Extensive use of safeguards 

The last years have seen a worrying increasing trend of new safeguard measures, and this has 
been confirmed in 2007. Indeed, between 2006 and 2007, the number of safeguard measures 
in place increased from 32 to 36. One in four trade defence measures at the end of 2007 were 
safeguards. While there were less new safeguard cases initiated in 2007 (9 as compared to 18 
in 2006), these cases still accounted for half of the new initiations. 

Various  countries  still  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.  The  legal  conditions  for  the  imposition  of  safeguard  measures  are  however 
intentionally  very  strict,  and  in  fact  much  stricter  than  those  required  for  the  other  trade 
defence instruments, because these measures address free trade rather than unfair trade. Those 
conditions are unfortunately frequently not met.  

In addition, and more importantly, given the multilateral nature of the instrument, safeguard 
measures are imposed against all imports regardless of origin, irrespective of whether they are 
the  cause  of  the  problems  or  not.  As  a  consequence,  in  various  instances,  EU  exports  have 
been unduly affected by safeguard measures despite them clearly not causing any injury to the 
domestic  industry  requesting  protection.  Those  exporters  are  therefore  sometimes  unduly 
penalised and their market access obstructed without any valid justification. 

When  problems  are  related  to  low  priced  imports,  it  is  often  more  appropriate  that  they  are 
addressed  by  the  anti-dumping  instrument.  Even  if  some  countries  introduce  forms  of 
measures  that  specifically  address  the  nature  and  origin  of  the  problems,  i.e.  low  priced 
imports, other countries do not systematically follow this approach. The Commission's role is 
therefore also to try and minimise, as much as possible, the impact of any such measures on 
EU  exports.  However,  this  is  not  an  easy  task  since  certain  countries  are  less  willing  than 
others to implement measures that would only target the genuine origin of the problems.  

4.2.  Market economy status of new EU Members States 

During 2007 it emerged that Brazil and Argentina continue to treat the newer EU Members 
States as countries that have not reached full and unconditional market economy status (MES) 

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in  the  framework  of  anti-dumping  investigations.  In  practical  terms  it  means  that  an 
investigating authority uses a surrogate normal value for dumping calculations. Even though 
there  is  only  one  on-going  investigation  in  those  two  countries  specifically  targeting  new 
Member States, the Commission takes this very seriously because it is inconceivable that EU 
Member  States  are  not  considered  fully  fledged  market  economies.  In  addition  it  is  not 
acceptable  that  certain  EU  Member  States  are  treated  differently  than  others  while  all  have 
adopted the Community acquis.  

The Commission has therefore vigorously intervened in order to obtain a swift solution to this 
issue.  Substantial  information  in  response  to  Brazil's  and  Argentina's  questions  concerning 
MES  of  the  'new'  Member  States  has  been  provided.  On  this  basis,  the  Argentinean  and 
Brazilian  authorities  should  no  longer  be  in  a  position  to  invoke  'technical  grounds'  as  an 
excuse  for  not  granting  MES  to  Bulgaria,  Czech  Republic,  Estonia  Hungary,  Latvia, 
Lithuania, Poland, Romania, Slovak Republic and Slovenia.  

As  a  matter  of  principle,  all  EU  Member  States  should  be  treated  as  market  economies 
irrespective  of  the  date  of  their  accession.  Not  only  is  it  a  pre-condition  (as  part  of  the 
accession  criteria)  that  candidate  countries  must  be  full  market  economies  before  they  can 
accede  to  the  EU,  but  they  also  must  adopt  and  implement  the  full  acquis  communautaire 
which has regulated economic activity in the former Member States. Therefore, there can be 
no legal or economic reason to treat any of the EU Member States as economies in transition 
or even non-market economies. The Commission is actively pursuing this issue in its bilateral 
relations with Brazil and Argentina in order to obtain a swift positive outcome.  

5. 

MAIN ACHIEVEMENTS 

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

In  addition  to  the  concrete  achievements  detailed  below,  it  should  be  noted  that  the 
Commission  has  multiplied  its  contacts  with  the  industries  concerned  by  any  trade  defence 
investigation  in  order  to  provide  assistance,  guidance  and  explanations  concerning  Third 
Country  actions.  These  contacts  have  in  certain  instances  led  to  co-operation  of  the  EU 
industry  while  in  other  instances  industry  may  have  decided  not  to  participate  in  the 
investigation. In those cases, even if there was no concrete positive outcome (co-operation is 
indeed an important pre-requisite), at least the Commission made sure that the industry was 
aware  of  the  on-going  investigations  and  the  possible  negative  consequences  of  non  co-
operation. Participating in trade defence investigations indeed remains an economic decision 
which has to be made by the companies concerned based on more general considerations.  

The main successes in 2007 were the following: 

(1) 

Zeroing – revocation of measures 

Although already highlighted in the previous report, it should be recalled that, as a result of 
the intensive work of the Commission in co-operation with the exporters and Member States 
concerned, the US in April 2007 have implemented, although only partially, the rulings of the 
WTO  panel  requested  by  the  European  Commission  (DS294)  concerning  the  zeroing 
methodology.  Many  European  exporters  have  seen  the  contested  anti-dumping  duties  either 
entirely revoked or substantially reduced. 

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Unfortunately not all the problems have been solved and the Commission had to request a so-
called  implementing  panel  because  it  is  considered  that  the  US  did  not  adequately 
implemented  the  rulings  of  the  WTO  panel.  The  second  EC  zeroing  panel  against  the  US 
(DS350) is ongoing. 

(2) 

Absence of prolongation of US measures in expiry reviews on steel products 

As  explained  above,  the  biggest  EU  exporters  of  stainless  steel  bars  already  saw  their 
measures revoked following the implementation by the USA of the WTO ruling on zeroing. 
The  Commission,  together  with  the  industry  concerned,  subsequently  claimed  within  the 
framework  of  expiry  reviews  that,  as  a  result  of  these  revocations,  the  market  shares  of  the 
remaining  exporters  still  subject  to  the  duties  were  much  lower  than  in  the  overall  initial 
volumes, and therefore no material injury was likely to occur for the domestic industry. This 
argument  was  accepted  and 
the  anti-dumping  measures  and/or 
countervailing orders on stainless steel bar from France, Germany, the UK and Italy due to the 
absence  of  likelihood  of  recurring  material  injury  for  the  US  industry.  The  outcome  of  this 
case  shows  once  more  the  value  of  close  cooperation  between  the  Commission,  Member 
States, and the EC industry. 

the  USA  revoked 

The revocation of those duties, in addition to the revocations in 2006/2007 of anti-dumping 
measures on other steel products (e.g. cut-to length plate, corrosion-resistant flat products, oil 
country tubular goods), is a very welcome development.  

(3) 

Decreasing number of measures by India 

The number of measures in place by India has been decreasing over the last years as a result 
of  successful  reviews  following  the  WTO  consultations  requested  by  the  EU.  For  the  few 
cases for which no review was requested, it was expected that the measures would be allowed 
to lapse after their normal period of imposition of five years. Unfortunately India initiated two 
expiry reviews (one in 2006 and one in 2007) concerning those measures. The Commission 
strongly  opposed  these  new  investigations  on  the  grounds  that  it  would  be  totally 
unacceptable  that  such  measures,  which  were  originally  considered  not  legally  warranted, 
may be prolonged for another five years.  

Our intervention was successful at least in one case. Indeed, despite no co-operation from the 
EU industry, India concluded in 2007 that the measure should be maintained for all countries 
concerned by the investigation with the exception of those concerning the EU. 

(4) 

Improving rights of defence in Chinese investigations 

In last years report it was mentioned that China continued to have problems regarding lack of 
transparency  and  poor  disclosure  in  their  cases.  Transparency  is  a  vital  factor  of  in  the 
administration  of  trade  defence  instruments  as  it  is  an  essential  element  to  ensure  right  of 
defence of interested parties. While this issue was raised constantly with Chinese authorities 
in  the  context  of  individual  cases,  unfortunately  no  major  improvements  were  noted. 
Therefore this issue was raised again in the context of a bilateral 'Best Practices Group' during 
which  the  Chinese  administration  was  given  detailed  examples  of  how  the  EC  handles  this 
aspect  of  investigations.  The  Chinese  have  welcomed  our  advice  on  this  matter  and 
indications are that they will improve this aspect of their cases in the future. While there are 
no  ongoing  cases  by  China  we  will  continue  to  monitor  this  aspect  closely  in  future 
proceedings  and  remain  hopeful  that  our  bilateral  contacts  will  bear  fruit.  It  is  however  an 

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encouragement to pursue bi-lateral contacts with third countries in order to promote the EC's 
high standards and encourage third countries to also apply them. 

(5) 

Elimination and minimising impact of measures taken by Mexico 

Positive results were achieved in the framework of two investigations concluded by Mexico in 
2007.  The  first  one  concerns  an  anti-dumping  investigation  against  imports  of  certain 
pesticides  from  Denmark.  The  Commission  actively  supported  and  assisted  the  Danish 
producer  in  this  case.  The  prohibitive  provisional  measures  of  more  than  90%  were 
challenged  on  the  grounds  of  erroneous  calculation  of  the  margin  of  dumping  and,  after 
various  interventions,  Mexico  finally  accepted  the  price  undertaking  offered  by  the  Danish 
exporter. Even if a termination of the investigation without any kind of measures would have 
been a preferable outcome in this case, at least the negative economic impact was minimised 
and market access ensured. The Commission continues to closely monitor this case as there 
are indications that the only producer in Mexico may go  bankrupt in the near future, which 
would make any measure unnecessary. 

The second case concerns an anti-dumping investigation against imports of welded pipes from 
Germany.  Although  a  provisional  measure  was  also  imposed  in  this  case,  the  Commission 
intensely  intervened  at  various  levels,  mainly  on  grounds  of  a  lack  of  evidence  that  the 
domestic  industry  suffered  of  any  threat  of  material  injury,  as  alleged  by  the  Mexican 
authorities at provisional stage. These efforts were successful and finally Mexico decided to 
terminate the case without imposition of any measure. 

For  the  sake  of  completeness  it  should  also  be  mentioned  that  the  WTO  dispute  settlement 
case  concerning  the  countervailing  duties  imposed  against  imports  of  olive  oil  is  still  on-
going.  The  interim  report  which  was  supposed  to  be  released  by  mid-May  2008  is  still 
pending.  

(6) 

Impact of safeguard measures 

For reasons outlined earlier the Commission emphasises that the safeguard instrument should 
only be used in exceptional circumstances, it  is used against fair trade, unlike anti-dumping 
and  countervailing  duties,  and  also  because  any  resulting  measures  have  a  negative  impact 
also for those exporters that do not cause any injury. Where measures cannot be avoided, the 
Commission  promotes  types  of  measures  which  have  a  minimum  negative  effect  on  EU 
exporters. 

In this respect, the Commission was successful in the case for the three safeguard measures 
imposed  by  Ukraine  in  2007.  These  measures  only  apply  to  imports  below  a  certain  price, 
which effectively does not concern EU exports that are above that price level. 

The same success can be reported in the case of measures imposed by Turkey against imports 
of certain motorcycles. Although provisional measures under the form of a specific duty per 
piece was imposed simultaneously with the initiation of this case, after various interventions, 
the definitive measures introduced in 2007 were also only applied to imports below a specific 
import price. As a result EU exports were not affected as their prices are, on average,e above 
the threshold. 

Unfortunately  the  Commission  was  not  successful  in  all  cases.  Indeed,  despite  various 
interventions  and  discussions  with  the  Turkish  authorities,  no  positive  outcome  could  be 
reached in two safeguard cases for which duties were imposed early in 2008. Those measures 
took the form of a specific duty per piece, which also affects EU exports. Those cases were 
however  clearly  targeting  low  price  imports  from  specific  countries,  other  than  the  EU. 

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Turkey continues to be one of the major users of safeguards and the Commission will pursue 
its efforts to convince them to use country specific instruments when problems are caused by 
well identified countries only.  

(7) 

Australia pig meat 

At the end of 2007, Australia initiated a safeguard investigation into imports of meat of swine. 
Australian  pig  farmers  had  requested  the  initiation  of  a  safeguard  investigation  against 
imports  of  frozen  cuts  of  meat  of  swine  in  October  2007  since  they  were  experimenting 
difficulties,  notwithstanding  the  fact  that  they  compete  with  imports  only  on  part  of  the  pig 
meat  market.  Today  only  USA,  Canada  and  Denmark  meet  the  sanitary  and  phytosanitary 
requirements  to  export  to  Australia.  On  14  December  2007  and  again  on  4  April  2008,  the 
Australian investigating authority proposed not to impose measures, since no causal link was 
found between imports and the difficult situation of the Australian pig farmers, the principal 
cause of injury being the higher domestic feed prices (pig producers worldwide, including in 
the  EU,  face  a  similar  situation).  This  case  is  an  example  of  good  coordination  among  EU, 
Member  State  and  EU  industry  to  avoid  the  imposition  of  measures  which  are  not  legally 
warranted.  

6. 

CONCLUSION 

After a decrease in the last years, the number of measures against the EC remained relatively 
stable  in  2007.  Given  the  current  global  economic  situation  it  is  not  unreasonable  to  expect 
that the number of measures may increase again in the near future. Indeed, when faced with 
difficult economic conditions, industries may be more inclined to ask for protective measures. 

The 'old' and familiar problems are still present, and new concerns have emerged. Therefore 
the  need  to  closely  monitor  third  country  cases  is  necessary  more  than  ever.  Unwarranted 
measures deprive Community exporters of their business opportunities abroad and constitute 
an  impediment  on  Europe's  competitiveness.  Therefore,  these  obstacles  to  market  access 
should  systematically  be  addressed.  On  this  basis,  the  Commission  follows  third  country 
activity  closely,  continues  to  assist  the  EU  industry  concerned  and  intervenes  where 
necessary. 

This  year  again  has  showed  that  joint  efforts  between  the  Commission,  industries  and  the 
Member  States  concerned  strongly  increase  the  chance  of  successful  intervention  in  third 
country  cases.  Noticeable  achievements  were  obtained  this  year:  measures  were  avoided  in 
some cases or their negative economic impact on Community operators was reduced in other 
instances.  The  Commission  will  continue  to  intensify  its  contacts  with  the  industry  and 
intervene as much as possible and in the most appropriate form. 

The  Commission  also  continues  to  foster  bi-lateral  contacts  with  third  countries  in  order  to 
improve disciplines and promote the high standards applied in its own investigations. 

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