REPORT FROM THE COMMISSION EIGHTH ANNUAL REPORT FROM THE COMMISSIONTO THE EUROPEAN PARLIAMENTOVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONSAGAINST THE EUROPEAN UNION(STATISTICS UP TO 31 DECEMBER 2010 BUT COMMENTARY ON CASES AND TEXT IS UPDATED TO MARCH 2011)
Date: 2011-07-04
Institutions: European Commission
Subjects: EU industrial policy, World Trade Organisation, anti-dumping measure, economic recession, export (EU), research, third country

EUROPEAN COMMISSION 

Brussels, 4.7.2011 
COM(2011) 399 final 

REPORT FROM THE COMMISSION 

EIGHTH 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 2010 BUT COMMENTARY ON CASES AND 
TEXT IS UPDATED TO MARCH 2011) 

{SEC(2011) 856 final} 

 
 
 
 
  
 
 
 
 
Executive Summary 

The European Commission's monitoring activity during the year 2010 was quite intense given 
the unprecedented high number of investigations initiated in 2009, in the context of the global 
economic crisis.  

Individual  assistance  was  provided  to  several  EU  industries  confronted  with  these 
investigations,  and  many  interventions  were  necessary  in  order  to  ensure  that  EU  access  to 
foreign markets was not unduly restricted by unwarranted measures. Indeed, in times of crisis, 
EU exporters faced trade defence actions that are indeed sometimes used in order to shield the 
domestic industry in the importing country from foreign competition. 

The  EU's  interventions  were  positive  since  many  investigations  did  not  result  in  measures, 
and at the end of 2010 the number of measures in force against the EU has reached its lowest 
level since years. The Commission's interventions thus often led to positive results and this is 
encouraging.  

Unfortunately,  not  all  the  problems  could  be  solved.  The  number  of  new  investigations  in 
2010 remained relatively high, with a higher degree of complexity. In addition, despite some 
improvements,  some  of  the  weaknesses  identified  in  the  previous  reports  still  exist,  such  as 
low standards of initiation and investigation, lack of transparency and misuse of the safeguard 
instrument.  

The Commission has developed new tools to assist EU industries – a guide for EU exporters 
has  been  published  and  a  new  and  more  user-friendly  website  was  developed  –  and  it  will 
continue to advocate for a prudent and disciplined use of trade defence instruments in order to 
promote free and fair trade worldwide.  

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1. 

INTRODUCTION 

Last years' reports underlined the increased use of trade defence by third countries since the 
beginning  of  the  global  economic  downturn,  which  resulted  in  2009  in  an  unprecedented 
increase  in  the  number  of  new  measures  imposed  and  of  new  investigations,  notably 
safeguards. It was feared that the new investigations would result in even more new measures 
in 2010. This trend has been a matter of concern because it showed that various governments 
very  often  resorted  to  trade  defence  actions  in  order  to  shield  their  domestic  industry  from 
foreign competition.  

The  Commission  had,  therefore,  to  multiply  its  interventions  and  assistance  to  the  EU 
exporters  concerned.  Some  political  interventions  were  also  necessary  in  order  to  avoid 
deviations from the strict application of the relevant rules. As explained further in this report, 
these efforts were not in vain. Indeed, many investigations initiated in 2009 – often on weak 
basis – finally did not result in measures, and at the end of 2010 the number of measures in 
force against the EU has reached its lowest level since years.  

Despite  this  very  positive  development,  the  number  of  new  anti-dumping  investigations 
remained  high  in  2010,  and  the  problems  identified  in  the  past  (lack  of  transparency,  low 
standards  of  initiation  and  inappropriate  use  of  the  instruments)  still  exist.  Even  if  some 
countries  improved  their  standards,  it  is  worrying  that  others  are  moving  in  the  opposite 
direction and departing from them to a noticeable extent.  

This report describes overall trends, the problems identified and the improvements recorded. 
It also gives in the annex a detailed analysis of trends and specific cases of the most important 
users of the instrument.  

2. 

OVERALL TRENDS 

Even  if  the  number  of  new  investigations  decreased  in  2010  as  compared  to  2009,  it 
remained  quite  significant,  and  the  degree  of  complexity  of  the  new  cases  increased.  The 
number of new investigations came down from 45 in 2009 to 39 in 2010, mainly due to an 
noticeable drop in the number of initiations of safeguard investigations (from 31 to 18) which 
was extremely high in 2009. Because of the erga omnes nature of safeguard investigations not 
all  of  them  affect  EU  exports.  By  contrast,  the  number  of  new  anti-dumping  investigations 
increased  from  13  in  2009  to  20  in  2010.  The  switch  from  safeguard  to  anti-dumping 
measures  is  a  positive  development  since  anti-dumping  measures  address  exclusively  unfair 
trade  of  a  specific  origin  while  safeguard  measures  affect  imports  irrespectively  of  their 
conditions  of  trade  and  origin.  The  number  of  new  countervailing  investigations  did  not 
change. 

In 2010, 15 new measures were imposed, as compared to 33 in 2009. Over the 12 countries 
imposing  measures  against  the  EU  in  2010,  China  was  the  one  that  imposed  the  highest 
number  of  measures  (20%  of  the  total).  As  compared  to  last  year,  the  number  of  new 
safeguards and anti-dumping measures respectively decreased from 15 to 7 and from 18 to 8. 
Like in 2008 and 2009, no new countervailing measure was imposed in 2010. 

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At the end of 2010, there were 123 measures in force against the EU (against the EU as a 
whole or against single Member States), which is the lowest level reached since years. There 
were 136 measures in force in 2009 as opposed to the peak of 185 in 2004. This is a positive 
development,  especially  given  the  fact  that,  in  2009,  a  significant  number  of  new 
investigations were initiated (45) and it was expected that many of them would result in more 
measures in the following year. Even if this is an encouraging trend, it should nevertheless be 
mentioned  that  those  new  investigations  were  often  neither  sufficiently  substantiated  nor 
legally justified and they should thus not have been opened. Indeed, even if no measures were 
imposed,  they  had  a  disturbing  effect  on  trade  flows  by  creating  an  uncertain  business 
environment and put unnecessary additional pressure on businesses suffering already from the 
economic crisis. 

Anti-dumping remains the most commonly used instrument (88 measures versus 93 in 2009), 
followed  by  safeguards  (with  30  measures  versus  37  in  2009)  and  anti-subsidy  (4  measures 
versus 6 in 2009). The US remains the country having the higher number of measures in force 
against  the  EU  in  2010  (24  measures  in  force)  despite  the  fact  that  no  new  measures  have 
been  introduced  in  the  last  two  years.  China  (14  measures  in  force),  which  has  been 
particularly active in 2010, moved from the third to the second position, confirming the trend 
registered  in  previous  reports.  India  and  Turkey  share  the  third  position  (13  measures  in 
force). Other important users are Brazil, Argentina and Mexico (9 and 5 measures in force). 

3. 

ONGOING PROBLEMS 

The  Commission's  interventions  have  contributed  to  the  termination  of  some  of  the  weak 
investigations  initiated  under  the  pressure  of  the  global  economic  downturn  in  2009.  The 
Commission's interventions have also resulted in a more positive outcome for EU exporters in 
certain  individual  cases.  However,  the  problems  identified  in  the  past  still  exist,  and  more 
have been identified in 2010, such as the absence of implementation of WTO Panel findings, 
inadequate use of the instruments and excessive use of safeguards.  

3.1. 

Lack of compliance with WTO obligations 

In two WTO cases (DS294 and DS350), the EU has been successful in demonstrating that a 
large number US anti-dumping duties in force against EU exports are either created or unduly 
inflated  due  to  the  use  of  "zeroing".  The  US  has  abolished  zeroing  in  weighted-average 
comparisons  in  new  investigations  but  has  previously  refused  to  change  its  practice  in 
reviews, where most duties are collected. To comply with its WTO obligations the US would 
have  to  modify  its  review  practice  and  recalculate  the  dumping  margins  with  respect  to  a 
number of individual measures, as well as refund excess duties collected after the deadline for 
implementation lapsed. 

Despite  reiterated  condemnations  by  the  relevant  WTO  bodies  and  the  convincing  evidence 
provided, the US has not complied so far with its international obligations. As a positive step 
toward  implementation  of  the  relevant  WTO  rulings,  the  US  published  a  proposal  on  28 
December  2010  proposing  a  new  methodology  to  remove  zeroing  in  reviews.  However,  the 
proposal remains unclear as well as the timeline for the changes. In addition, the US has so far 
refused to refund excess duties collected since the end of the implementation periods in both 
WTO cases. If the US does not comply with its obligations, an award from an arbitrator on a 
potential  amount  of  sanctions  is  due  to  be  issued  on  15  September  2011.  In  another  case 

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(TKAST),  the  US  has  been  unwilling  to  correct  an  arithmetical  error  and  revoke  the  anti-
dumping measure.  

3.2. 

Inadequate use to the instruments 

As already mentioned in last year's annual report, 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.  This  trend  has  continued  in  2010,  also 
now in relation to the choice of the instrument or the criteria used for imposition of measures. 
Indeed,  the  EU  has  been  confronted  with  a  countervailing  investigation  and  imposition  of 
measures based on threat of injury in another investigation shortly after having used the same 
instrument/criteria against the same country. In all these cases, it is very difficult to believe in 
a pure coincidence. 

In addition, the patterns of these cases are always similar: very weak standards of initiation 
(often also lacking transparency by abusing the rules on confidentiality), and no evidence of 
injury.  The  Commission  is  actively  intervening  in  such  instances  and  is  determined  to 
scrutinise even more carefully the compliance of these investigations with WTO rules. 

3.3. 

Abuse of the rules on confidentiality  

In  trade  defence  investigations  the  lack  of  disclosure  of  sufficient  detail  of  the  information 
submitted  in  confidence  is  a  recurrent  problem,  which  is  particularly  regrettable  because  it 
deprives  interested  parties  from  their  legitimate  right  of  defence.  While  rules  on 
confidentiality are necessary to protect the interests of the cooperating parties, these rules can 
be  very  often  used  in  an  abusive  manner  so  that  the  public  versions  of  applications  and/or 
public  notices  of  preliminary  or  final  determinations  often  do  not  allow  a  reasonable 
understanding of the matter. 

According to the relevant rules, confidential data should be subject to a meaningful summary, 
and  it  is  the  role  of  the  investigating  authorities  to  request  interested  parties  providing 
confidential  information  to  furnish  such  non-confidential  summaries.  Unfortunately,  the 
investigating  authorities  of  several  countries  fail  to  comply  with  this  obligation,  thereby 
hampering the rights of defence of the EU exporters concerned.  

3.4. 

Unnecessary recourse to safeguards 

The  use  of  the  safeguard  instrument  virtually  exploded  in  2009  coinciding  with  the  global 
economic downturn. Indeed, during that year more than two thirds of all new investigations 
initiated  and  almost  half  of  all  new  measures  imposed  were  safeguards.  This  trend  slowed 
down in 2010, which is a very positive sign. 

The  problem  of  unnecessary  recourse  to  safeguards,  however,  still  exists.  Some  countries 
became  heavy  users  of  the  instruments  and  had  recourse  to  safeguards  under  circumstances 
that would rather warrant a targeted action against dumped imports from a specific country. 
While  the  WTO  jurisprudence  has  underlined  the  high  requirements  necessary  to  impose 
safeguard measures, these are still too often considered as an easy-to-use instrument. 

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Given  their  erga-omnes  nature  (measures  are  imposed  against  all  countries  of  origin), 
safeguards  produce  several  co-lateral  damages.  Indeed,  exporting  countries  which  do  not 
cause any injury to the domestic industry (e.g. because their prices are much more expensive 
than the domestic ones) are also subject to measures. 

The European Commission intervened in many cases in order to highlight flaws in safeguard 
investigations. As a result in some cases the measures themselves or their negative impact on 
EU exports was avoided.  

4. 

MAIN ACHIEVMENTS 

The Commission's role in relation to third country cases includes monitoring of investigations 
but also providing advice and assistance to European exporters concerned. The Commission 
intervenes directly with third country authorities both on case-specific issues, to support the 
companies concerned, and on systemic issues, in order to generally improve discipline among 
trading partners. The Commission also organises specialised trade defence seminars for third 
countries'  officials  in  order  to  exchange  and  enhance  best  practices  throughout  the  trade 
community.  

Although,  achievements  in  these  areas  are  not  always  easy  to  measure,  the  Commission's 
intervention  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.  From  a  general 
point  of  view,  the  fact  that  many  of  the  numerous  investigations  initiated  in  2009  did  not 
result  in  measures  can,  at  least  partly,  be  attributed  to  the  Commission's  interventions.  In 
particular, the following should also be highlighted:  

Success stories 

Guide for EU exporters, "fact sheets" and new website 

EU exporting companies very often do not know how to react to trade defence investigations 
initiated by third countries. It is however crucial that these companies are aware of their rights 
and obligations in order to decide whether or not to co-operate to the investigations and what 
would  be  the  cost/benefit  of  co-operating.  For  this  purpose,  in  2011,  the  Commission 
published a guide for EU exporters and "fact sheets" summarising the main characteristics of 
trade defence practices of the main users of these instruments against the EU.  

The  guide  for  EU  exporters  explains  the  main  concepts  of  trade  defence  and  the  relevant 
procedural steps. It provides advice on how to react to trade defence investigations initiated 
by EU trade partners, by spelling out the rights and obligations of exporters, the advantages of 
cooperating  with  the  investigating  authorities,  and  what  is  the  role  of  the  various  parties, 
including the Commission. This guide is available on-line and translated in all EU languages.  

The Commission has also prepared 'fact-sheets' on the main users of trade defence measures 
against the EU. These fact sheets briefly report by country  the name and the  address of the 
investigating  authorities,  the  timelines  of  investigations,  remarks  on  on-spot  verifications, 
specific  standards  of  investigation  (such  as  the  lesser  duty  rule  and  the  public  interest  test), 
hearings, legal representation and any other salient issue. These fact-sheets are also available 
on-line. 

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Finally,  it  should  also  be  mentioned  that  the  Commission  has  developed  a  new  and  more 
user-friendly  website  where  basic  info  on  trade  defence  measures,  statistics  on  on-going 
investigations  and  measures  in  force  as  well  as  the  annual  reports  are  easily  accessible  to 
everyone. 

Turkey 

Turkey  used  to  be  a  very  important  user  of  safeguards  and  the  Commission  actively 
intervened  in  order  to  highlight  the  weaknesses  of  these  investigations  and  the  following 
measures. Judging from the  most recent developments it appears that Turkey has somewhat 
reduced its use of safeguards. However, the Commission continues to be vigilant since there 
have  been  some  signs  of  new  safeguard  activity  (notably  review  of  existing  safeguard 
measures) in 2011. 

Gulf countries 

Last  year's  annual  report  mentioned  the  initiation  by  the  Cooperation  Council  for  the  Arab 
States of the Gulf of two safeguard investigations concerning imports of uncoated paper and 
paperboard  in  rolls  and  sheets  and  steel  angles,  channels  and  beams.  The  Commission 
intervened  and  made  a  formal  submission  to  express  concern  as  to  the  lack  of  transparency 
and of objectivity of the injury analysis and the weak causal link analysis performed by the 
investigating authorities in these two cases. Both were terminated without measures in 2010. 

Mexico 

The expiry review concerning the countervailing measures on bovine meet, initiated in June 
2009  was  terminated  in  December  2010.  The  Commission  had  provided  ample  information 
and  evidence,  which  allowed  Mexico  to  conclude  that,  following  the  reform  of  the  EU 
Common Agricultural Policy, the EU became a net importer of beef, and thus that there was 
no likelihood that injury would recur should measures lapse.  

Canada 

The  expiry  review  of  the  countervailing  measures  regarding  refined  sugar  from  the  EU  and 
the parallel expiry review of the anti-dumping measures against imports of the same product 
from  Denmark,  Germany,  the  Netherlands  and  United  Kingdom  were  terminated  in 
November  2010.  This  positive  outcome  was  the  result  of  ample  information  and  evidence 
provided by the European Commission, which allowed Canada to conclude that following the 
reform  of  the  EU  Common  Agricultural  Policy,  production  volumes  had  been  reduced  and 
that therefore there was no likelihood of recurrence of injury.  

Morocco 

Morocco  initiated  one  new  safeguard  investigation  in  July  2010  concerning  imports  of 
machine-made  carpets.  The  EU  industry  concerned  co-operated  with  the  investigating 
authorities and the Commission made a submission emphasising the total lack of a causal link 
between EU imports and any injury suffered by the domestic industry. The investigation was 
terminated in November 2010 without the imposition of measures given the lack of injury.  

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Israel 

In  2010  the  Commission  has  actively  intervened  with  technical  submissions  in  individual 
cases. At the same time, different occasions were used to highlight to the Israeli authorities at 
higher  political  level  the  persisting  shortcomings  pertinent  to  all  the  TDI  investigations 
initiated by Israel. As a result, two anti-dumping investigations on recycled containerboards 
and  white  paper  were  concluded  without  the  imposition  of  measures  and  the  anti-dumping 
investigation against imports of stretch wrap was suspended after an undertaking agreement 
was  reached  with  EU  exporters.  Finally,  following  repeated  requests  from  the  Commission, 
Israel has officially confirmed the termination of the safeguard investigation against imports 
of steel rebars. 

Ukraine  

Recently Ukraine started to be very active in the use of safeguards. The Commission actively 
monitored  its  actions  and  urged  it  to  refrain  from  using  the  safeguard  instrument  when 
injurious imports come from only one or a few specific sources, to extend the period analysed 
from  1  to  3  years  and  to  duly  consider  the  national  interest  before  the  adoption  of  any 
measures.  Ukraine  finally  terminated  two  important  safeguard  cases  without  imposition  of 
any  measures  (Ferro-alloys  and  Fertilisers)  and  in  case  of  Float  glass  it  adopted  definitive 
measures for 10 days only, in addition to provisional measures.  

5. 

CONCLUSION 

The  monitoring  activity  in  2010  was  strongly  affected  by  the  high  number  of  new 
investigations  initiated  in  2009,  when  the  effects  of  the  global  economic  crisis  appeared. 
Many of these investigations were terminated without measures in 2010 and thus the overall 
number  of  measures  in  force  decreased.  This  positive  trend  has  also  been  the  result  of  the 
Commissions' numerous interventions.  

Even if the number of new investigations decreased in 2010, it remained however important. 
While  the  use  of  safeguard  measures  diminished  considerably,  anti-dumping  investigations 
has  nevertheless  increased  in  2010  and  is  likely  to  lead  to  a  higher  number  of  measures  in 
force in 2011.  

Despite favourable trends in the figures, the Commission's monitoring activity in relation to 
third  country  trade  defence  actions  remains  crucial  since  more  problems  in  the  use  of  these 
instruments  by  some  countries  have  been  identified  in  2010.  Therefore,  the  Commission 
intervened in many cases to prevent, to the extent possible, deviations from WTO rules. Often 
these  efforts  have  been  successful  and  investigations  were  terminated  without  measures  or 
measures did not affect EU exports. 

The Commission is satisfied of the good cooperation established with the EU Member States, 
the European associations of producers, and the companies concerned on a case by base basis. 
In this context, the guide for EU exporters developed by the Commission and the new website 
are useful and powerful tools to improve the understanding of this highly technical subject by 
the  EU  businesses.  The  Commission  continues  also  to  strengthen  exchanges  with  other 
investigating authorities in order to increase standards, transparency and predictability in the 
use of trade defence measures. 

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