Overview of third country trade defence actions against the European Union (Statistics up to 31 December 2009 but commentary on cases and text is updated to March 2010) SEC(2010)772
Date: 2010-06-25
Institutions: European Commission
Subjects: anti-dumping legislation, anti-subsidy proceeding, common commercial policy, competitiveness, protective clause, report, third country

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EUROPEAN COMMISSION 

Brussels, 25.6.2010 
COM(2010)334 final 

SEVENTH ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT 

OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE 
EUROPEAN UNION (STATISTICS UP TO 31 DECEMBER 2009 BUT 
COMMENTARY ON CASES AND TEXT IS UPDATED TO MARCH 2010)  

SEC(2010)772 

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SEVENTH ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT 

OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE 
EUROPEAN UNION (STATISTICS UP TO 31 DECEMBER 2009 BUT 
COMMENTARY ON CASES AND TEXT IS UPDATED TO MARCH 2010)  

Executive Summary 

Despite  the  international  commitments  not  to  introduce  protectionist  measures  in  this 
climate  of  global  economic  crisis,  the  number  of  new  investigations  and  trade  defence 
measures  imposed  in  2009  was  very  high.  Regrettably,  the  standards  applied  in  a 
number of measures against EU exporters leave something to be desired. This year this 
was  particularly  notable  in  the  area  of  the  standards  of  initiation  of  investigations. 
Furthermore, the ever increasing use of the safeguard instrument is preoccupying. The 
Commission’s  monitoring  activity  in  this  context  has  been  very  important.  The 
Commission  intervened  frequently  in  order  to  assist  EU  exporters  and  to  ensure  that 
their  access  to  foreign  markets  was  not  unduly  restricted  by  unwarranted  measures. 
This  has  often  led  to  positive  results,  but  unfortunately  not  all  the  problems  could  be 
solved. The Commission will continue to advocate for a prudent and disciplined use of 
trade defence instruments in order to promote free and fair trade world-wide. 

1. 

INTRODUCTION 

Last year's report highlighted the first signs of the global crisis and its impact on trade defence 
activity.  In  2008,  an  impressive  number  of  new  investigations  were  initiated,  in  particular 
during the last two months of that year. Despite the commitment of the G20 to avoid any trade 
restrictive measures, this report will show that the trend started in 2008 has continued in 2009. 
The  number  of  new  investigations  initiated  and  of  measures  imposed  in  2009  has  indeed 
increased significantly.  

As long as trade defence instruments are used in full compliance with WTO rules, they cannot 
be considered as a protective tool. Their purpose is rather to remedy very specific situations in 
accordance  with  strict  rules.  Unfortunately,  the  trends  and  the  problems  identified  in  this 
report seem to indicate that in 2009 these rules were at times applied in a fanciful way. The 
inappropriate use of the instruments and the all-too-often poor standards applied during trade 
defence  investigations,  as  continuously  deplored  by  the  Commission  in  the  past,  have  been 
more prominent than ever. 

The  Commission's  continued  efforts  in  monitoring  third  country  trade  defence  actions  have 
been  further  intensified  in  this  context.  The  Commission  assisted  numerous  industries  in 
individual  investigations  and  also  intervened  frequently  at  broader  levels  in  order  to  avoid 
deviations  from  the  applicable  rules.  Furthermore,  the  Spanish  presidency  has  identified 
market access as a priority, which has given further prominence to the Commission's activities 
in this field. 

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This report describes overall trends, the problems identified and the results achieved. It also 
gives  a  detailed  analysis  of  trends  and  specific  cases  for  the  most  important  users  of  the 
instrument.  

2.  OVERALL TRENDS 

The  2009  TDI  activity  by  third  countries  was  very  intense,  especially  in  terms  of  new 
initiations.  The  increasing  trend  observed  since  the  end  of  2008  has  indeed  continued.  No 
less  than  45  new  investigations  have  been  initiated  in  2009,  which  is  a  steep  increase  as 
compared  to  the  33  new  initiations  in  2008  (of  which  almost  half  took  place  in  the  last 
quarter), and even more so when compared to the 19 new initiations in 2007. 

Safeguard  is  more  than  ever  the  most  frequently  used  instrument  for  new  investigations. 
Indeed, with 31 new safeguard investigations initiated, more than two out of three new cases 
concern this instrument. Even if, given the erga omnes nature of safeguards, the EU does not 
always export the product under investigation, this trend remains a cause of serious concern. 
While  India  has  been  the  most  important  user  with  9  new  initiations  in  2009,  it  should  be 
noted  that  Turkey  has  prolonged  4  safeguard  measures  beyond  their  original  period  of 
imposition of three years.  

The  overall  increase  of  new  investigations  since  the  end  of  2008  has  naturally  resulted  in  a 
higher number of measures imposed in 2009: 33 new measures were imposed, as compared 
to 18 in 2008. India was again the most important player (7 measures imposed) followed by 
China  (4  measures),  Israel  and  Ukraine  (3  measures  each).  Almost  half  of  these  measures 
were  safeguards,  meaning  15  out  of  33  measures  in  2009  (as  compared  to  6  out  of  18 
measures in 2008). 

Despite the above trend, the total number of measures in force increased only slightly. At the 
end of 2009, there were 136 trade defence measures in force, which is only 3 measures more 
than at the end of 2008. This is due to the fact that a non negligible number of measures has 
lapsed or has been terminated during the year 2009.  

Anti-dumping remains the instrument with most measures in force (93 measures versus 91 in 
2008),  followed  by  safeguards  (with  37  measures  versus  32  in  2008)  and  anti-subsidy  (6 
measures versus 10 in 2008).  

The  main  user  of  the  instruments  against  the  European  Union  is  still  the  USA  with  23 
measures  in  force,  even  though  in  2009  there  was  no  activity  in  terms  of  new  measures  or 
initiations.  India  remains  the  second  biggest  user,  with  15  measures  in  force,  and  has  been 
very active in 2009, as explained above. China is now almost catching up with India and is 
together with Turkey in third position with 12 measures in force against the EU in 2009. The 
other  important  users  are  Brazil  with  11,  closely  followed  by  Ukraine  with  9  measures  in 
force.  

3.  ONGOING PROBLEMS 

The Commission's interventions have often resulted in improvements in individual cases, or 
even  their  termination  without  any  measures.  However,  the  problems  described  in  previous 
reports still exist. Due to the pressure created by the difficult economic situation, it seems that 
certain  problems  got  even  worse  in  2009.  This  is  the  case  in  particular  for  the  (weak) 

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standards  of  initiation  and  the  ever  increasing  use  of  the  safeguard  instrument.  The  lack  of 
transparency  also  remained  an  important  issue.  In  the  worst  cases  we  have  even  seen  a 
combination of these three issues.  

3.1.  Poor standards of initiation 

Many industries worldwide have suffered and are still suffering from the difficult economic 
situation  since  the  end  of  last  year.  In  this  context,  operators  may  be  tempted  to  look  for  a 
shield  against  foreign  competition,  e.g.  protective  measures.  Therefore,  national  authorities 
have  to  be  particularly  careful  when  they  receive  applications  to  impose  trade  defence 
measures. Investigations should only be initiated when there is genuine evidence that the legal 
conditions required for initiation are met. 

Even though the pressure to initiate investigations may be very high, only technical grounds 
should serve as a basis for initiation. Unfortunately, in 2009 this was not always the case. This 
led  to  an  increase  of  new  initiations  of  over  80%  when  compared  to  2008,  i.e.  33  new 
investigations were initiated in 2009 as compared to 18 in 2008. For most of these initiations 
e.g. the evidence on injury was based on only a few negative financial indicators covering a 
very  short  period  (often  only  one  quarter).  The  causality  analyses  were  also  flawed  since 
businesses tried to impute the negative impact of the financial crises on dumped, subsidised or 
increased imports, thus conveniently overlooking causes other than the imports that impacted 
negatively on their situation. 

Although  these  investigations  did  not  and  may  not  always  lead  to  measures,  the  initiation 
already has a disturbing effect on trade flows because it creates an uncertainty in the business 
environment. Furthermore, cooperating in an investigation implies a significant investment in 
human  and  financial  resources  for  the  economic  operators  concerned.  Therefore,  initiations 
that do not meet the WTO criteria should be avoided at all times because they are unlawful, 
and, particularly in the present framework, because they put unnecessary additional pressure 
on businesses that are already suffering from the current economic crises. 

In  addition  to  the  issues  identified  above,  a  new  trend  has  emerged  in  2009.  On  various 
occasions, it has been found that, following the imposition of anti-dumping measures by the 
European Commission, investigations concerning similar products have been initiated by the 
country targeted by these measures. While it is too early to conclude that this is an established 
trend, it is difficult to believe in a pure coincidence. The Commission is closely following this 
issue. 

3.2.  Extensive use of safeguards 

In 2009 the use of the safeguard instrument virtually exploded after an already steep increase 
in 2008. 31 new safeguard investigations were initiated and 15 new measures were imposed in 
2009. This represents more than two thirds of all new investigations initiated and almost half 
of all new measures imposed. 

It should be recalled that safeguard measures are the most restrictive trade defence instrument 
because  they  concern  'fairly  traded'  imports  (i.e.  neither  dumped  nor  subsidised)  from  all 
countries of origin, and also imports that do not cause injury to the domestic producers. Thus, 
they remove unilaterally and temporarily the tariff concessions that have been granted in the 
various rounds of GATT/WTO negotiations. Therefore, panels and the Appellate Body have 

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always interpreted WTO rules regarding safeguards in a very strict way. I it is questionable 
whether all these measures imposed in 2009 do actually comply with the strict legal standards 
required. More importantly, even if, due to the very poor standards of initiation, measures are 
ultimately  not  imposed,  trade  flows  will  have  been  disturbed  during  the  investigation. 
Furthermore,  for  the  first  time  in  2009  certain  countries  (i.e.  Turkey  and  Russia)  have 
extended safeguard measures beyond their initial 3 year period of application. This is also a 
cause of concern because in some of these cases imports had almost completely disappeared 
due  to  the  measures,  and  the  domestic  industry  had  recovered.  In  other  cases,  the  domestic 
industry  was  still  in  a  weak  situation,  either  as  a  result  of  the  economic  crisis,  or  because 
measures were ineffective. In all of these situations, measures should have been removed.  

The  European  Commission  has  intervened  in  many  cases  in  order  to  highlight  WTO 
incompatibilities and, as will be explained below, in some cases measures could be avoided 
while  in  others,  at  least  European  exports  could  be  spared.  This  is  however  far  from 
satisfactory, as safeguards became the most frequently used instrument in 2009.  

3.3.  Procedural aspects 

The  lack  of  transparency  in  trade  defence  investigations  is  a  recurrent  problem,  and  it  is 
damaging because it deprives interested parties of their legitimate right of defence.  

The most frequent problems occur in relation to issues of confidentiality. While it is obvious 
that  information  submitted  on  a  confidential  basis  by  parties  should  not  be  disclosed,  every 
interested  party  has  the  right  to  receive  sufficient  information  to  be  able  to  understand  the 
substance of the data submitted in confidence. However, often all figures in public versions of 
applications  lodged  by  the  industry  and/or  public  notices  of  preliminary  or  final 
determinations  are  simply  blanked  out,  without  giving  a  summary  of  this  information.  In 
addition,  data  such  as  aggregated  figures  relating  to  more  than  three  companies  are  often 
unduly  considered  confidential,  since  their  disclosure  would  not  have  any  adverse  effect  on 
the party supplying the information.  

Other procedural shortcomings make trade defence investigations unnecessarily burdensome. 
This mainly concerns excessive requests for information such as are seen in sampling cases, 
where  exporters  are  asked  to  provide  detailed  information  beyond  that  necessary  for  the 
selection  of  a  sample.  In  other  cases,  complete  information  (including  sales,  costs,  third 
country  sales,  etc.)  for  an  overly  long  investigation  period  of  two  years  or  more  has  been 
requested.  Sometimes  exporters  are  asked  to  provide  very  detailed  information  that  is  not 
necessary for the establishment of dumping but is considered a business secret, e.g. specific 
cost  items  in  the  production  process.  These  excessive  requests  may  discourage  companies 
from cooperating, which has inevitably negative consequences usually in the form of higher 
duties.  

The Commission tries to remedy such situations by intervening directly with the investigating 
authorities and by providing assistance to the parties concerned. Although in many cases such 
interventions  were  successful,  this  was  unfortunately  not  always  the  case.  The  Commission 
will thus continue to raise these issues in the framework of bilateral contacts and during the 
appropriate WTO committees in Geneva with the aim of ensuring that WTO legislation and 
high standards are applied by all users of the instruments.  

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4.  MAIN ACHIEVMENTS 

The Commission's role in relation to third country cases goes far beyond merely monitoring 
investigations. In fact, the Commission provides advice and assistance to European exporters 
who are concerned and intervenes directly with third country authorities on case-specific and 
systemic  issues.  These  efforts  aim  at  supporting  the  companies  concerned,  but  also  at 
generally  improving  disciplines  among  trading  partners  when  applying  trade  defence 
instruments.  In  this  context,  the  Commission  also  continues  to  organise  specialised  trade 
defence seminars in order to spread best practices throughout the trade community.  

Although  achievements  in  these  areas  are  not  always  easy  to  measure,  the  Commission's 
perseverance  did  bear  fruit,  and  in  several  cases,  the  outcome  for  the  companies  was  more 
favourable than it would have been without the Commission's intervention, in particular:  

4.1. 

India: termination of 7 safeguard investigations  

India  initiated  9  safeguard  investigations  in  2009.  This  is  about  one  third  of  all  safeguards 
initiated that year, and also an extraordinary high number when compared to the 10 safeguard 
investigations initiated by India over the past 10 years. 7 of these cases concerned products 
exported from the EU for an estimated value of no less than 500 million €/year, and covering 
sectors  such  as  steel,  paper  and  chemicals.  All  these  cases  were  initiated  on  very  weak 
grounds.  The  Commission,  in  cooperation  with  exporters,  strongly  opposed  the  proceedings 
and  intervened  at  different  levels.  These  interventions  had  positive  results  and  despite  the 
recommendation  by  the  Indian  authorities  to  impose  provisional  measures,  all  the 
investigations which directly concerned EU exports were terminated without the imposition of 
any  measures.  However,  it  has  to  be  born  in  mind  that  during  almost  one  year  trade  was 
negatively affected by on-going investigations that should not have been initiated in the first 
place.  

4.2.  New  Zealand:  termination  of  the  expiry  review  concerning  countervailing 

measures on canned peaches 

This case is important because it concerns the new scheme introduced as part of the reform of 
the EU Common Agricultural Policy, which is considered to be in full compliance with WTO 
standards and should thus not be subject to any countervailing measures. In the framework of 
the expiry review initiated in 2008, New Zealand has accepted the arguments put forward by 
the Commission, which demonstrated that the new scheme has no trade distorting effects and 
is  thus  not  countervailable.  As  a  result,  the  duties  in  force  for  more  than  10  years  were 
terminated. 

4.3.  Croatia: termination of the safeguard measure on cheese and cheese supplements  

Croatia  imposed  provisional  measures  on  these  products  in  June  2009,  on  very  weak 
procedural grounds and lack of transparency (no disclosure showing that the legal conditions 
to introduce measures were met). The annual EU exports originally at stake were around 80 
million €. Given the high economic impact and the serious flaws of the case, the Commission 
has  strongly  intervened  at  technical  and  political  level.  As  a  result,  the  product  scope  was 
significantly reduced. The types of cheese excluded represented 80% of the EU exports and 

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the  corresponding  measures  were  revoked  and  reimbursed.  For  the  remaining  products 
measures were imposed for 6 months only and expired in January 2010. 

4.4. 

Israel: no imposition of safeguard measures 

Israel  became  an  important  user  of  trade  defence  instruments  in  2009.  Amongst 
others, a safeguard investigation against imports of steel products was initiated. The 
case was initiated on weak grounds, and provisional measures were imposed despite 
the  fact  that  imports  decreased  in  2009  and  average  import  prices  increased. 
Following various interventions, including from the Commission, the measures were 
suspended  and  duties  reimbursed.  The  Commission  nevertheless  continues  to 
monitor this case since the investigation has unfortunately not been terminated yet. It 
is  however  difficult  to  see  how  Israel  could  still  justify  the  imposition  of  any 
measure. 

4.5.  Russia:  termination  of  the  anti-dumping  investigation  concerning  flat-rolled 
polymer coated steel and temporary non-application of safeguard measures on 
grain-harvesting combines 

The  anti-dumping  investigation  against  imports  of  flat  rolled  polymer  coated  steel  from 
Belgium and Finland was concluded in September 2009. The Commission had intervened in 
order to highlight weaknesses identified in this case, such as lack of injury and transparency. 
Subsequently, in November 2009, the investigating authorities have proposed not to impose 
measures due to a negative injury determination.  

The  Commission  and  the  EU  industry  have  also  been  very  active  in  the  safeguard  case 
concerning  grain  harvesting  combines,  given  its  high  economic  interest  (110  million  €  in 
2007).  The  conditions  to  impose  safeguard  measures  were  indeed  not  met  and  Russia  has 
therefore  decided  not  to  apply  safeguard  measures.  Unfortunately  import  duties  were 
increased instead, which is more difficult to be legally challenged. The possibility of Russia's 
introducing safeguard measures at a later stage cannot be excluded, i.e. if customs duties are 
reviewed downwards, and the Commission thus remains vigilant on this issue. 

4.6.  Morocco: extension of EU quota for safeguard measures on ceramic tiles 

In 2009 Morocco initiated an investigation in order to explore the need to prolong safeguard 
measures imposed in 2006. The Commission, together with the industry, actively intervened 
in this case. Although, the prolongation of measures could not be avoided, the quota allocated 
to EU exporters has been significantly liberalised as compared to the original measures, and 
the conditions to obtain import licences have been improved. As a result EU exporters have 
access to the Moroccan market again.  

4.7.  Termination of investigations or absence of measures in various cases 

In the petrol extraction pumps case initiated by Argentina in May 2008 against imports from 
Romania,  the  continued  interventions  by  the  Commission  and  the  industry  resulted  in  the 
acceptance  of  undertakings  offered  by  the  Romanian  exporter  concerned.  The  Commission 
also  actively  supported  the  EU  industry  in  a  safeguard  investigation  initiated  by  Ukraine 

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concerning liquid chlorine and an anti-dumping investigation initiated by Turkey concerning 
textile products. Both investigations were terminated without measures in 2009.  

4.8.  MES new Member States 

It is recalled that in June 2009, after a long and difficult struggle and numerous interventions 
by the Member States and the Commission, Bulgaria and Romania were finally also granted 
market economy status by Brazil. 

4.9 

US: Zeroing 

The EU challenged the zeroing practice in two WTO dispute settlement cases DS 294 and DS 
350. The Panel decided in favour of the EU in both cases, but the US did not comply with the 
Panels' decisions in a reasonable timeframe. Therefore the EU asked for a compliance Panel 
in  the  first  case  (DS  294)  and  received  confirmation  on  certain  claims  and  appealed  certain 
aspects of the Panel's additional findings. The final ruling found that the US had to stop this 
unfair practice immediately. Since the US still has not complied, the EU imposed sanctions. 
Currently an arbitrator is deciding on the level of these sanctions. 

In  the  second  Zeroing  case  (DS350),  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 periodic reviews. The EU is 
now considering further steps also in this case, in order for the US to comply with the final 
ruling.  

5.  CONCLUSION 

As predicted in last year's report, the TDI activity in third countries has been very intense in 
2009. The increasing trend of the number of new initiations which started at the end of 2008 
has  continued  in  2009,  and  the  number  of  measures  imposed  has  increased  significantly  as 
compared to previous years. The relatively limited increase of measures in force at the end of 
the year does therefore not fully reflect the true situation. In reality, the high number of new 
measures has partly been compensated by the expiry of many measures in 2009. In addition, 
some investigations have either not yet been concluded or have been terminated without the 
imposition of measures. However, as explained above, even if an investigation is terminated 
without  measures,  trade  flows  are  nevertheless  disturbed  while  the  investigation  is  ongoing 
due to its uncertain outcome. Moreover, in many cases, due to the lack of evidence required 
for opening a proceeding, investigations should not have been initiated in the first place. 

The  overall  increase  in  activity  is  preoccupying  as  such,  and  certain  aspects  of  it  are 
especially worrying. In particular, the low standards of initiation and the extensive use of the 
safeguard  instrument  continue  to  be  problematic.  It  seems  that  the  economic  situation  since 
the end of 2008 has resulted in a particularly wide interpretation of WTO rules. Therefore, the 
Commission increased its efforts in order to prevent any deviations from these rules whenever 
possible.  

In this context, the Commission intervened in many cases and contacts with industries have 
been  numerous.  Often  these  efforts  have  been  successful  and  investigations  were  either 
terminated  without  measures  or  measures  did  not  unduly  harm  EU  exports.  This  shows  the 
particular importance of the Commission's monitoring activity in these economically difficult 

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times. Ensuring legitimate market access for EU producers is even more important in times of 
crisis.  

There  is  certainly  a  need  to  maintain  and  even  enhance  the  Commission's  efforts.  The 
Commission  is  continuously  trying  to  improve  its  actions  and  the  most  important  challenge 
for the coming years, besides assisting the EU exporters concerned in on-going investigations, 
is to try to anticipate and avoid the initiation of unwarranted new investigations. Intensifying 
exchanges with other investigating authorities in order to increase standards, transparency and 
predictability could help in achieving this aim. 

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