COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Regulation (EC) No 1225/2009 on protection against dumped imports from countries not members of the European Community and Council Regulation (EC) No 597/2009 on protection against subsidised imports from countries not members of the European Community
Date: 2013-04-10
Institutions: European Commission
Subjects: anti-dumping duty, anti-dumping measure, anti-subsidy proceeding, import (EU), originating product, third country

EUROPEAN 
COMMISSION 

Brussels, 10.4.2013  
SWD(2013) 106 final 

COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Council Regulation (EC) No 1225/2009 on protection against dumped imports 
from countries not members of the European Community and Council Regulation (EC) 
No 597/2009 on protection against subsidised imports from countries not members of the 
European Community 

{COM(2013) 192 final} 
{SWD(2013) 105 final} 

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COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Council Regulation (EC) No 1225/2009 on protection against dumped imports 
from countries not members of the European Community and Council Regulation (EC) 
No 597/2009 on protection against subsidised imports from countries not members of the 
European Community 

1. 

INTRODUCTION  

This impact assessment (IA) lays out how the Commission should tackle different challenges 
to  its  trade  defence  policy,  which  has  not  undergone  any  major  reform  since1995.  The 
principal  goal  of  the  Commission  is  to  find  solutions  to  streamline  the  system,  to  ensure 
utmost  efficiency  and  effectiveness  of  the  instruments  without  altering  the  existing  balance 
among  the  different  interests  of  stakeholders.  On  this  basis  the  IA  examines  three  policy 
options. 

Trade defence (TD) is part of the legal order created by the World Trade Organization (WTO) 
and provided to its members by Article VI of GATT 1994, the WTO Anti-Dumping and Anti-
subsidy  Agreements.  TD  can  be  used  only  if  the  relevant  conditions  are  met  and  an 
investigation concludes that imported goods are dumped or benefit from a subsidy, and cause 
or threaten to cause material injury to the domestic industry. Any measures imposed may not 
exceed the level of the dumping or subsidy found. 

Beyond the WTO minimum requirements, the EU framework contains extra elements, known 
as 'WTO+', i.e. the lesser duty rule (LDR), which allows imposing duties that are lower than 
the  actual  dumping  or  subsidy  margin,  and  the  Union  interest  test.  This  test  involves  an 
examination of the interests of all economic operators in the EU before imposing measures. 

In 2006/2007 a reform exercise was launched in form of a green paper, which failed due to a 
lack of convergence among stakeholders. The main controversial issues were the scope of the 
Union interest test and the definition of Union industry. However, due to the new challenges 
that  have  occurred  in  the  trading  environment  over  the  past  years,  this  new  initiative  was 
launched in October 2011. 

Evidence for the present initiative was drawn from the Commission services' own experience, 
a  study  prepared  by  an  external  consultant,  and  the  public  consultation  of  stakeholders 
through an online questionnaire. 310 replies were received from stakeholders such as business 
associations at European and national level, EU industry, importers, etc. 

2. 

PROBLEM DEFINITION 

Various areas of improvement of the system have been identified in order to better cope with 
the ever-changing trading environment. 

(a) 

Suboptimal transparency and predictability 

Transparency and predictability issues may impact on the quality of the measures taken and 
the  treatment  of  stakeholders.  The  lack  of  disclosure  prior  to  the  Commission's  provisional 

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decision, and the opacity of the work of the anti-dumping and anti-subsidy committees appear 
problematic in some cases. Certain inequalities in the dissemination of information relating to 
these  committees  have  also  been  identified.  Other  concerns  raised  relate  to  more  technical 
issues  such  as  the  choice  of  the  analogue  country,  the  calculation  of  the  injury  margin,  the 
Union interest analysis, the methodology used in expiry reviews, non-confidential versions of 
complaints and submissions, or refund procedures.  

(b) 

Retaliation against users of TDI 

EU producers using or intending to use TDIs face ever growing threats of direct and indirect 
retaliation.  At  present,  EU  producers  fear  increasingly  'tit  for  tat'  strategies  to  which  some 
respond by deciding not to lodge or not to support a complaint, not to cooperate, or even to 
withdraw  from  an  investigation.  Since  the  current  basic  regulations  do  not  provide  for  an 
obligation to cooperate, the Commission may not have sufficient information to continue the 
investigation.  Retaliation  by  third  countries  ranges  from  countermeasures  on  the  same  or 
different products to personal blackmailing. 

(c) 

Circumvention of measures 

Circumvention  increasingly  risks  jeopardising  the  effectiveness  of  AD  and  AS  measures. 
Circumvention practices comprise among others a slight modification of the products or their 
misclassification, in order not to pay the duty. It is very difficult for the EU industry to detect 
these  practices  because  the  relevant  information  is  confidential  and  not  available  in  official 
statistics. 

(d) 

Trade distortive subsidisation and raw material distortions in third countries 

Subsidisation  occurs  when  governments  provide  financial  contributions  to  their  companies, 
which is considered an even more serious form of unfair trading practice than dumping. AS 
cases  are  however  fewer  than  AD  cases  because  of  the  difficulty  of  finding  evidence  of 
subsidization in the third country, and because of the effect of the lesser duty rule in parallel 
AS and AD cases. Consequently, in practice, third countries often subsidize with impunity. 

Concern  has  also  been  raised  with  regard  to  structural  raw  material  distortions.  These 
distortions can take the form of a subsidy (e.g. provision of cheap energy by the government). 
However,  often  they  are  not  countervailable  and  need  to  be  addressed  in  an  anti-dumping 
context,  e.g.  various  forms  of  export  restrictions,  or  trading  of  raw  materials  on  specialised 
exchanges which are under state influence and to which access of companies is restricted.  

(e) 

Quality of data available for the decision-making process 

TD  investigations  rely  on  information  provided  by  interested  parties,  who  must  fill  in  a 
questionnaire  and  who  must  allow  Commission  investigators  to  verify  their  data.  The 
information  gathered  is  often  incomplete  due  to  the  burdensome  and  lengthy  task  of 
completing  questionnaires  within  a  relatively  short  deadline.  SMEs  have  even  greater 
difficulties  in  meeting  these  deadlines  and  fail  to  provide  relevant  information,  which  may 
give Commission services an incomplete picture.  

(f) 

Access to TDIs by SMEs  

TDIs are not easy instruments for SMEs, because gathering the necessary evidence is costly 
and resource intensive.  

(g) 

Shortcomings of the review practice 

Currently,  expiry  reviews  only  allow  either  repeal  of  the  duty,  or  else  maintaining  it  at  the 
same  level.  However,  in  the  case  of  a  second  or  third  expiry  review,  when  measures  have 

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been in force for 10 or more years, market conditions may have changed, and a variation in 
the level of duties may be appropriate. 

Another  issue  to  be  addressed  is  the  reimbursement  of  duties  collected  during  the  review 
period, when the review investigation shows that the duty should be repealed. 

(h) 

Review of certain provisions in the basic regulations 

Since  the  last  substantive  changes  to  the  basic  regulations  in  1995  several  WTO  dispute 
settlement  rulings  and  ECJ  rulings  have  been  handed  down  and  need  to  be  reflected  in  the 
basic  regulations.  Also  certain  issues  that  have  arisen  in  the  practice  of  TDIs  need  to  be 
clarified. 

(i) 

Inadequate consideration of value chains 

It is claimed that TDIs fail to take into account global value chains. Current legislation (in line 
with WTO law) defines as Union industry only companies that physically produce in the EU, 
depriving final stage importers of their label of 'domestic (Union) producer'.  

(j) 

Time taken from the onset of injury to imposition of measures 

The time that lapses between the initiation of a case and the imposition of provisional duties is 
longer in the EU than in some other countries using TD instruments. This, coupled with the 
complexity  of  gathering  the  necessary  information,  greatly  decreases  the  deterrent  effect  of 
TDIs. 

(k) 

Duration of TDI measures 

TDI  measures  normally  remain  in  force  for  5  years.  They  may  be  prolonged  following  an 
expiry  review  for  another  5  year  period.  There  is  no  limitation  on  the  number  of  expiry 
reviews and hence there is no limit to the overall duration of TD measures. EU producers are 
in favour of the current practice. Importers, however, complain about the lack of justification 
for measures remaining in force for 10 years or more. 

3. 

(1) 

OBJECTIVES 

General Objectives: 

(a)  Contribute to free and fair trade in the world 

(b)  Contribute to economic growth, consumer benefits and labour effects 

(c)  Restore fair trading conditions 

(2) 

Specific Objectives: 

(a)  Create a trading environment in which EU industries (and by implication their 
workers)  are  able  to  compete  on  the  basis  of  their  genuine  competitive 
advantages  and  make  sure  that  they  can  make  full  use  of  the  instruments 
legally at their disposal to restore a level playing field  

(b)  Allow  users  and  consumers  to  benefit  from  imports  based  on  the  genuine 

competitive advantages of foreign suppliers 

(c) 

(d) 

Increase  confidence  and  awareness  in  the  EU's  TDI  system  among  all 
stakeholders, including among small and medium enterprises 

Improve  the  level  of  cooperation  of  all  stakeholders  concerned  in  TDI 
proceedings 

(e)  Preserve  the  existing  balance  of  interests  between  producing  and  importing 

interests 

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(3) 

Operational Objectives: 

(a) 

Increase transparency and predictability 

(b)  Prevent retaliation 

(c)  Ensure effectiveness and enforcement 

(d)  Facilitate cooperation 

(e)  Optimise review practice 

(f) 

Increase legal certainty (codification) 

4. 

POLICY OPTIONS 

Policy Option 1: No change: the first option would be to continue with the current state of 
affairs, and leave current legislation and practice unchanged. 
Policy  Option  2:  consists  of  a  specific  proposed  intervention  for  each  individual  problem 
identified (and retained) – with alternative solutions in a limited number of cases.  
Policy  Option  3:  the  third  option  consists  of  a  package  of  precisely  those  specific 
interventions  examined  under  Option  2  where  the  overall  impact  is  expected  to  be  positive, 
and which do not change the balance of interest between producers and importers. 

5. 

IMPACT ANALYSIS 

Option 1 – no change: 

While not changing anything may well be the preferred option of some stakeholders, inaction 
would also leave all the identified problems unaddressed. This would have a limited negative 
economic  impact.  It  would  result  in  an  increased  administrative  burden  and  thus  increased 
workload  for  all  stakeholders  concerned.  The  absence  of  additional  guidance  on  certain 
technical issues of an investigation and the need for clarification regarding certain legal issues 
may  lead  to  an  increasing  number  of  legal  challenges.  Retaliation,  a  newer  phenomenon, 
would not be tackled. In the long term, inaction may also have some limited negative social 
and environmental consequences. 

Option 2 – specific interventions for individual problems identified: 

The impact of each specific intervention proposed in order to address the individual problems 
identified  is  analysed  in  option  2.  In  a  limited  number  of  cases  alternative  solutions  are 
proposed and their impact is analysed on an individual basis as well. While the effect of these 
interventions  may  be  significant  as  regards  the  individual  specific  problems  addressed,  the 
overall impact on trade flows of option 2 is expected to be marginal and no noticeable social 
and environmental effect is expected. 

Option 3 - package option: 

The  package  proposed  in  option  3  contains  amongst  others,  the  so-called  "three  weeks 
shipping  clause",  i.e.  a  grace  period  when  duties  are  not  imposed.  Importers  would  have  3 
weeks  to  adapt  before  the  imposition  of  provisional  duties.  Furthermore,  duties  collected 
during an expiry review investigation would be reimbursed in case of termination of the duty. 
Both proposals would have a limited positive impact on importers. 

The negative impact on Union producers would be limited, since 3 weeks is not sufficient to 
place many additional orders or engage in massive stockpiling. No negative impact on Union 
producers  is  expected  from  the  re-imbursement  of  duties,  since  measures  remain  in  force 
throughout the review period.  

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The  non-application  of  the  LDR  in  cases  of  subsidisation  or  structural  raw  material 
distortions,  would  increase  the  duties  in  such  cases  and  might  therefore  have  an  impact  on 
costs  for  importers  and  final  consumers.  At  the  same  time,  such  higher  duties  would  give 
some  breathing  space  to  Union  producers  who  are  affected  by  unfair  practices,  and  the 
increased duties should discourage third country governments and exporters from engaging in 
trade distorting behaviour.  

Option 3 envisages ex officio initiations and an obligation to cooperate for Union producers 
in cases of retaliation. This would improve the ability of Union producers to seek protection 
while  reducing  their  exposure  to  the  economic  consequences  of  such  retaliatory  behaviour. 
Regarding SMEs, an improved helpdesk would help them to better understand and deal with 
TDI proceedings.  

Overall, the effect on trade flows is expected to be minimal. Any social and environmental 
impacts will also be limited but positive, i.e. option 3 would contribute to limiting job losses 
in the EU. 

6. 

COMPARING THE OPTIONS 

Option 2: 

To  the  extent  it  addresses  the  individual  problems  identified,  policy  option  2  would  meet 
certain  of  the  operational  objectives  and  partially  meet  some  of  the  specific  objectives. 
However, since it lacks coherence, it would not make a significant contribution to achieving 
the  general  objectives.  Such  individual  approach  also  bears  the  risk  of  creating  imbalance 
between producing and importing interests. 

Option 3: 

This  option  contributes  fully  or  partially  to  each  of  the  general  objectives.  Besides 
discouraging operators from engaging in trade distortive practices and retaliatory behaviour, it 
also helps to restore a level playing field. Finally, it maintains the balance of interests among 
stakeholders.  In  a  nutshell,  option  3  responds  to  all  the  specific  objectives  and  makes  a 
significant contribution to achieving all the general objectives. 

7. 

MONITORING AND EVALUATION 

In order to evaluate the impact and effectiveness of the present initiative, indicators have been 
conceived that will allow monitoring the development of the EUs TDI system. It is suggested 
to use 2013 as a benchmark year, and an evaluation period, covering at least three years after 
the entry into force of the proposed amendments. 

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