Sixth annual report from the Commission to the European Parliament - Overview of third country trade defence actions against the community (statistics up to 31 december 2008 but commentary on cases and text is updated to march 2009) {SEC(2009) 958}
Date: 2009-07-10
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, 10.7.2009 
COM(2009) 356 final 

SIXTH ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT  

OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE 
COMMUNITY (STATISTICS UP TO 31 DECEMBER 2008 BUT COMMENTARY 
ON CASES AND TEXT IS UPDATED TO MARCH 2009)  

{SEC(2009) 958} 

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SIXTH ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT  

OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE 
COMMUNITY (STATISTICS UP TO 31 DECEMBER 2008 BUT COMMENTARY 
ON CASES AND TEXT IS UPDATED TO MARCH 2009)  

Executive summary 
The  number  of  trade  defence  measures  in  force  against  the  EU  at  the  end  of  2008 
decreased slightly compared to the previous year. This is due to the fact that there had 
been  a  high  number  of  initiations  in  2001  and  consequently  measures  in  2002/2003, 
many  of  which  expired  in  2008.  This  number  is  expected  to  increase  given  the 
acceleration of initiations of new investigations in the last months of 2008 and the first 
months of 2009. 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. However, the current financial and economic crisis will 
constitute an increasing temptation for many third countries to apply the instruments in 
a WTO inconsistent way which is not conducive to the promotion of open trade. Against 
this backdrop, the Commission's activity to monitor third country actions, to encourage 
international  cooperation  and  coordination  and  to  promote  increased  disciplines  when 
using trade defence instruments is of crucial importance. 

1. 

INTRODUCTION 

In last year's reports the Commission welcomed the decreasing trend of the number of trade 
defence  measures  against  the  EU  or  its  Member  States,  but  also  concluded  that  a  close 
monitoring of those actions was still necessary given the persisting weaknesses identified in 
third country actions.  

The  unfolding  global  economic  crisis  was  certainly  the  striking  event  of  2008,  and  this 
naturally  negatively  affected  the  situation  of  many  economic  operators  worldwide.  In  this 
context,  in  its  recent  declaration,  the  G20  underscored  the  critical  importance  of  rejecting 
protectionism and committed to refrain from raising new barriers to trade in goods, imposing 
new export restrictions or implementing WTO inconsistent measures. 

Interestingly the number of initiations of trade defence investigations increased significantly 
in the last months of the year, and this trend also continued during the first months of 2009: at 
the end of February 2009 there were 49 on-going TDI investigations potentially affecting EU 
exports1, which is an extremely high number as compared to previous years, and almost half 
of those new cases were initiated in the last four months of the year 2008.  

Anti-dumping and countervailing measures cannot be considered as "protectionist" measures 
as  such  given  that  their  purpose  is  rather  to  correct  distortions  in  international  trade  and  to 
restore  fair  trade  flows.  This  however  is  no  longer  the  case  when  initiations  of  new 
investigations, and any possible resulting measures, are not complying with WTO standards. 

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Those cases consist of 29 AD investigations (of which 9 expiry reviews), 19 safeguard investigations 
(of which 8 concern EU exports) and 1 CVD (expiry review).  

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In  the  current  situation,  ensuring  a  legitimate  market  access  to  EU  industries  is  more 
important  than  ever  and  thus  the  need  to  enforce  (and  even  to  reinforce)  the  standards  of 
application  of  the  instruments  and  to  carefully  monitor  that  the  actions  taken  are  legally 
justified remains of crucial importance.  

In this context, the report below gives a detailed analysis of the overall trends, the on-going 
problems as well as the achievements obtained by the Commission in its monitoring activity 
of third country actions. 

2. 

OVERALL TRENDS 

At  the  end  of  2008  there  was  a  total  of  133  trade  defence  measures  in  force  against  the 
European Community or its Member States, which represents a decrease in comparison with 
last  year  (147  measures).  This  decrease  is  mainly  the  result  of  the  expiry  of  a  number  of 
measures after their 'normal' 5 years of imposition and should be seen in the light of the peak 
of measures in force in 2004, which almost reached 200. 

The  majority  of  these  measures  are  still  anti-dumping  measures;  they  stand  for  around  two 
thirds of the total. The decreasing trend in the number of countervailing measures continued 
in 2008. Similarly, the number of safeguard measures also decreased, from 36 in 2007 to 32 in 
2008 but still represents a quarter of the overall measures in force. 

As explained above, the decrease in measure in force is however in contrast with the level of 
new  initiations.  Indeed,  the  total  number  of  initiations  increased  from  19  in  2007  to  33  in 
2008, which is a worrying trend, especially considering that almost half of the new cases were 
initiated in the last two months of the year and that this trend continued in the first months of 
2009. It should however be noted that half of those initiations concern safeguards, which are 
applied  on  an  erga-omnes  basis  but  do  not  always  concern  products  exported  by  EU 
industries. In any event, if all those investigations materialise in measures, it is expected that 
the number of measures in force will increase in the future. 

Those  new  cases  mostly  concern  the  steel  industry  (fasteners,  hot/cold  rolled  coils,  steel 
pipes) but also products such as chemicals, ceramic tiles, and harvesting machines. The main 
users were India, Russia, China and Brazil, but also countries which had never or hardly ever 
used these instruments, e.g. Kazakhstan in 2008, Israel at the beginning of 2009).  

In  total  there  were  18  new  measures  imposed  in  2008  (2  provisional  and  16  definitive 
measures).  Brazil  (4  anti-dumping  measures)  and  Turkey  (4  safeguard  measures)  were  the 
most active, together with India and the USA with two anti-dumping measures each.  

3. 

TRENDS BY COUNTRIES 

The  major  user  of  the  instruments  against  the  European  Community  or  its  Member  States 
remains  the  USA  with  25  measures  in  force,  i.e.  almost  20%  of  the  total.  The  other  main 
countries are India (16 measures), Brazil and Turkey (11 measures each), China (9 measures), 
Ukraine and Mexico (8 measures each). 

The measures in place in India continued to decrease (from 19 in 2007 to 16 in 2008) while 
the numbers for the other countries only started to decrease (Brazil and China) or remained 
stable (USA) as compared to 2007. The five biggest users still account for more than half of 
the total measures in force. 

Only  three  countries  (Turkey,  Japan  and  Republic  of  Moldova  )  increased  the  number  of 
measures in 2008, and as far as Turkey is concerned it should be underlined that the increase 
of measures exclusively relates to new safeguard measures introduced in 2008.  

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

4. 

ONGOING PROBLEMS  

The Commission still faced the same problems it has identified in the past, i.e. poor standards 
of  initiation,  poor  injury  and  causality  analysis,  disregard  for  the  rights  of  defence  of 
interested parties and increasing use of safeguard measures.  

The acceleration of the number of initiations in the last months of 2008 (and first months of 
2009), which is certainly a direct result of the economic crisis, has certainly exacerbated some 
of the problems identified and especially those related to the standards of initiation, rights of 
defence of the parties and the intensive use of the safeguard instruments. 

4.1. 

Poor standards of initiation 

As in previous years, investigations are too often initiated despite the fact that the criteria for 
initiation are not met, i.e. in many cases the evidence on injury is inconclusive and there is no 
convincing evidence of causal link. This has been especially observed in the last months of 
2008. It is obvious that the financial and economic  crisis had negative consequences on the 
situation of many industries, and those industries are trying to obtain relief wherever possible. 
Some industries therefore lodged complaints with a view to obtain protection under the form 
of  trade  defence  measures.  While  recognizing  the  right  of  third  countries  to  use  the  trade 
defence  instruments,  various  investigations  have  however  been  initiated  on  the  basis  of 
unduly  substantiated  complaints,  lacking  prima  facie  evidence.  Indeed,  firstly,  the  negative 
effects  of  the  crisis  materialised  only  at  the  end  of  2008,  which  is  not  a  sufficiently 
representative  period  to  show  evidence  of  dumping,  injury  etc.  Secondly,  imports  are  very 
often unduly accused of causing any alleged injury because the real source of the problems is 
rather  the  overall  economic  downturn.  Finally  the  objective  of  trade  defence  instruments  is 
not to offer protectionist measures to industries, but to remove the injurious effect of unfairly 
traded imports or surges of imports.  

In  the  current  context  it  is  therefore  essential  that  investigating  authorities  ensure  that  the 
complaint they receive from the local industries comply with the WTO standards and includes 
objective,  adequate  and  sufficient  evidence.  Investigating  authorities  should  indeed  refrain 
from  unduly  initiate  investigations  because  they  disrupt  trade,  are  usually  very  burdensome 
for the companies concerned and very often also lead to unjustified measures. 

According  to  WTO  rules,  no  initiation  can  be  justified  on  a  complaint  based  on  pure 
assertions, unsubstantiated by relevant evidence, as however unfortunately seems to be often 
the case. 

4.2. 

Extensive use of safeguards 

Safeguard  continues  to  be  extensively  used:  More  than  half  of  the  new  initiations  in  2008 
concerned a safeguard investigation and they still represent a quarter of the overall measures 
in place against the European Communities. Even if not all those investigations or measures 
affect EU industries (sometimes the product under consideration is not even exported from the 
EU),  this  trend  is  nevertheless  worrying  because  safeguards  should  really  be  reserved  to 
exceptional  circumstances.  Furthermore,  safeguard  measures  can  result  in  direct  or  indirect 
(trade deflection) negative effects for EU firms.  

In  many  occasions  the  rather  strict  WTO  standards  are  not  respected  by  the  investigating 
authorities  when  they  impose  such  measures  and  they  should  thus  be  considered  a 
protectionist measure unduly affecting fairly traded products.  

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When looking at the details of the new initiations and measures imposed in 2008, it appears 
that  some  countries  clearly  favour  this  choice  of  instrument,  whereas  it  is  considered  that 
many occasions' country-specific instruments targeting unfair trade, i.e. anti-dumping, should 
rather be used. 

The Commission therefore continues to express its concerns with regard to the use and impact 
of safeguard instruments, urging third countries to refrain from using this instrument. Where 
safeguard investigations can not be avoided, the Commission services' role is therefore often 
to try and minimise, as much as possible, the impact of any such measures on EU exports. 

4.3. 

Procedural aspects, in particular the respect of rights of defence of parties 

Despite  the  Commission's  efforts  to  solve  these  issues,  it  unfortunately  appears  that  some 
third countries are still neglecting the rights of defence of the parties and impose burdensome 
and unnecessary procedural aspects in the conduct of their investigations. 

In particular the rules on confidentiality are still too often interpreted in an inappropriate way 
and actual data is sometimes not disclosed and/or not even indexed or summarised when there 
is  in  fact  no  risk  of  divulging  confidential  information.  This  is  for  example  the  case  when 
aggregated actual injury indicators are not disclosed although they relate to more than three 
economic operators. 

It also appeared that various countries request from exporters the submission of very specific 
and detailed information, when it is obvious that such information is either not relevant to the 
dumping  and  injury  determinations,  extremely  burdensome  and  unnecessary  or  even 
sometimes concern extremely sensitive business proprietary information. 

This of course negatively affects the right of defence of the exporting industries and the other 
parties concerned. The Commission will therefore continue to raise these issues with relevant 
authorities not only in the context of individual cases, but also more generally during bilateral 
contacts or working groups organised with the various third countries. 

5. 

MAIN ACHIEVEMENTS 

The  Commission  basically  has  three  different  roles  to  play  in  the  context  of  third  country 
trade  defence  actions.  The  first  role  consists  of  informing  and  advising  industries  directly 
concerned  by  investigations.  The  second  is  a  more  general  role  by  which  the  Commission 
closely monitors investigations carried out by third countries in order to ensure that standards 
are properly applied, which also includes the organisation of seminars and working groups in 
order  to  promote  best  practices.  Finally  the  last  role  consists  of  directly  intervening  in  on-
going investigations in order to address weaknesses identified and ensure the best outcome for 
the EU industries concerned. 

As far as the two first roles are concerned it is difficult to measure the achievements that were 
reached, but the Commission obtained very good feedback from the industries concerned as 
well as from the Member States, which is certainly an encouragement to continue this activity 
and to improve it where possible. As a matter of fact, due to the recent financial crisis and the 
resulting increase of third country actions, the Commission's role in providing assistance and 
guidance to EU industries is even more important than in the previous years. 

The main achievements in 2008 were the following: 

5.1. 

Zeroing – favourable WTO findings  

In  the  first  zeroing  case,  the  WTO  Appellate  Body  (AB)  ruled  against  the  United  States  in 
May 2006 and the US was given until April 2007 to comply with the findings. However, the 

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US refused to comply fully, and the EU had to request a so-called compliance panel, which 
issued its report in December 2008. The EU got the Panel’s confirmation that the US cannot 
escape  its  WTO  obligations  by  conducting  annual  reviews  of  a  duty  and  then  arguing  that 
such reviews have "superseded" the challenged measure and can only be subject to challenge 
in a new dispute. Nonetheless, the EU decided to appeal this report as it disagrees with certain 
aspects of the Panel’s additional findings. If the final ruling in this dispute finds that the US is 
still  not  in  compliance  with  its  WTO  obligations  and  if  it  does  not  fulfil  them,  then  the  EC 
will be in position to request retaliation. 

In  the  second  Zeroing  case,  the  AB  confirmed  the  main  EU  claims  on  appeal,  rejected  all 
grounds of appeal put forward by the US and upheld the Panel's findings that the US was in 
breach  of  its  WTO  obligations  by  applying  zeroing  in  annual  reviews.  Therefore,  the  US  is 
required  to  implement  the  recommendations  and  rulings  in  this  dispute  and  may  request  a 
'reasonable  period  of  time'  to  do  so.  Implementation  in  this  case  involves  recalculating  the 
dumping margins in the 46 individual measures identified by the EC, without using zeroing.  

5.2. 

Olive Oil – Mexico – Measures terminated 

The  WTO  Panel  requested  by  the  EU  found  that  the  countervailing  measures  imposed  by 
Mexico against imports of olive oil from the EU were in breach of certain WTO provisions. 
Those  measures  were  terminated  following  the  decision  of  a  Mexican  national  court  that 
endorsed  the  Commission's  arguments  that  were  put  forward  in  the  course  of  the  WTO 
proceeding.  

5.3. 

PVC profiles - Ukraine – Safeguard investigation terminated  

The Commission closely followed this investigation given the high economic interest of the 
EU industry – a yearly export value of around 100 m EUR, mainly from Germany and Poland 
– and the weaknesses that were identified. The Commission coordinated its interventions with 
the  EU  industry  and  outlined  the  main  weaknesses  related  to  the  lack  of  serious  injury  and 
missing  causal  relationship  between  the  imports  and  any  alleged  problems  of  the  domestic 
industry.  These  interventions  proved  to  be  successful  as  the  case  was  terminated  without 
measures on grounds of lack of determination of a serious injury. 

5.4. 

Safeguard measures – Turkey 

In the last years Turkey became one of the biggest users of safeguard measures, also affection 
EU products which, in some cases, were considered not to be the ones causing injury to the 
Turkish  producers.  The  objective  of  the  Commission  was  to  simply  avoid  that  measures  be 
imposed and, although  this  could  not  be achieved, at least the negative economic impact of 
the measures could be minimised to a certain degree. Indeed, in the case concerning certain 
electrical appliances, almost half of the product types were excluded from any measures and 
in  the  cotton  yarn  case  maximum  thresholds  were  established  and  thereby  the  effective  ad-
valorem  duty  for  the  EU  exports  is  decreased.  Turkey  did  not  initiate  any  new  safeguard 
investigation  in  the  second  half  of  2008  and  the  Commission  remains  extremely  vigilant  to 
this issue. 

5.5. 

Glass blocks – Thailand – Duty rates reduced 

This  investigation  was  initiated  in  2007  and  concluded  in  January  2009.  Thailand  imposed 
antidumping  duties  against  imports  of  glass  blocks  originating  in  the  Check  Republic,  but 
following  the  interventions  of  the  Commission  requesting  the  application  of  the  lesser  duty 
rule, the final duty applicable to the EU exporters has been substantially reduced. 

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5.6. 

Cold-rolled steel products – Thailand – Duties revoked 

The  AD  duties  imposed  in  2002  in  this  case  ranged  between  10.02%  and  25.57%  for  EU 
exporters. In March 2008 the Thai investigating authorities initiated an expiry review of the 
measures  against  the  EU,  Japan,  Taiwan  and  Korea.  In  its  preliminary  findings,  Thailand 
considered prolonging the measures for all countries concerned. The Commission intervened 
in this case, arguing that a negative dumping margin of 41% resulting from the investigation 
for  EU  exports  clearly  proved  that  there  was  no  likelihood  of  continuation  or  recurrence  of 
dumping for EU exporters. The Commission closely liaised with a part of the EU exporting 
producers that cooperated with the investigation, which also highlighted the limited exports of 
the  product  concerned  and  the  higher  quality  of  the  EU  exports  as  compared  to  domestic 
production, thus resulting in a lack of injury for the Thai industry. 

5.7. 

Dextrose monohydrate – Indonesia 

Based on the provisional disclosure, the Commission intervened, in close cooperation with the 
industry, and obtained the exclusion of most of the product types that were exported from the 
EU,  on  the  grounds  that  they  were  not  injurious  to  the  Indonesian  domestic  industry.  This 
result remains however subject to confirmation by the final findings.  

5.8. 

Steel wire ropes (South Africa) and viscose fibre (Brazil) – positive preliminary 
findings  

In  those  two  cases  the  provisional  disclosures  seems  to  indicate  that  our  interventions  may 
lead to a more favourable outcome for the EU exporters concerned, i.e. a lower duty in Brazil 
or a not duty at all in South Africa. The later is however subject to confirmation by the final 
findings.  

5.9. 

Brazil: Expiry review against Greece concerning canned peaches 

This case is an other good example of the positive influence that the continuous efforts of the 
industry  and  the  Commission  can  have  on  an  outcome  of  an  investigation.  The  above 
mentioned  review  was  concluded  in  April  2008  without  the  continuation  of  the  measures. 
Unfortunately  shortly  thereafter  Brazil  decided  to  increase  its  customs  duties  on  the  same 
product within the limits of the bound rate. 

5.10.  MES new Member States 

It  is  recalled  that  during  2007  it  emerged  that  Brazil  and  Argentina  continued  to  treat  the 
newer EU Members States as countries that have not reached full and unconditional market 
economy  status  (MES)  in  the  framework  of  anti-dumping  investigations.  After  numerous 
interventions  at  various  levels  this  issue  was  almost  completely  solved  in  2008.  It  is 
regrettable that the solution to this problem came after such a long time, especially because of 
its inconceivable nature, and even more disappointing that the issue is still not totally solved 
in  the  case  of  Romania  and  Bulgaria  in  Brazil.  The  Commission  nevertheless  continue  its 
efforts and hopes for a definitive solution in 2009.  

6. 

CONCLUSION 

Even if the number of trade defence measures in force against the EU or its Member States 
decreased  in  2008,  it  is  expected  that  this  number  will  increase  in  the  next  year.  Indeed,  in 
contrast with the above reduction the trade defence activity was extremely high in 2008, and 
especially at the end of the year. 33 new investigations were initiated, and about half of those 
were  opened  in  the  last  four  months  of  the  year.  This  trend  continued  in  the  beginning  of 
2009. 

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This trend is worrying especially because the Commission noted that in a number of cases the 
initiations were not legally justified, mostly because they did not show sufficient prima-facie 
evidence  of  injury  or  only  during  a  very  limited  period  of  time.  In  addition,  the  rights  of 
defence of the parties were often not fully respected. 

The  global  economic  downturn  undoubtedly  had  negative  consequences  on  the  economic 
situation of many companies worldwide and it is natural that many companies try and obtain 
any kind of relief in those circumstances. This in it self is however not sufficient to justify the 
initiation of trade defence investigations, the objective of which is to correct distortions in the 
market and to restore fair trade flows rather than to protect industries from fair competition. 
Therefore,  when  they  receive  complaints,  administrations  of  third  countries  should  be 
extremely  careful  and  live  up  to  their  international  obligations,  i.e.  not  to  initiate  such 
investigations and/or imposing trade defence measures when they are not legally justified. 

In  this  context,  the  Commission  closely  monitored  the  trade  defence  activity  of  third 
countries,  intervened  very  actively  in  the  framework  of  on-going  investigations  and 
extensively  assisted  companies  targeted  by  those  actions.  The  achievements  of  this  year 
underline the relevance of the actions undertaken by the Commission and also the importance 
of  the  cooperation  with  the  industries  and  Member  States  as  well  as  the  need  to  foster  bi-
lateral  contacts  with  Third  Country  authorities.  Unfortunately  those  efforts  did  not  always 
result  in  positive  outcome  and  in  many  cases  it  is still considered that investigations lacked 
objectivity and that the right of defence of the parties was not adequately respected. 

In a difficult economic situation, ensuring legitimate market access to EU industries is even 
more important and the Commission will therefore continue its efforts to assist exporters and 
promote high standards in trade defence investigations in order to avoid an abusive use of the 
instruments.  

In  addition  to  direct  interventions  in  the  framework  of  on-going  investigations  the 
Commission will also continue discussions on a bilateral level, e.g. in the various TDI ad hoc 
expert groups with a number of trade partners such as India, China, Ukraine and Korea), and 
organise  various  trainings  for  officials  of  third  countries  which  offer  another  opportunity  to 
promote high standards in trade defence matters.  

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