REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT ELEVENTH REPORT OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE EUROPEAN UNION FOR THE YEAR 2013
Date: 2014-05-27
Institutions: European Commission
Subjects: World Trade Organisation, anti-dumping measure, economic consequence, export (EU), protectionism, restriction on competition, third country, trade dispute













EUR-Lex - 52014DC0294 - EN











|



52014DC0294

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT ELEVENTH REPORT OVERVIEW OF THIRD COUNTRY TRADE DEFENCE ACTIONS AGAINST THE EUROPEAN UNION FOR THE YEAR 2013 /* COM/2014/0294 final - 2014/ () */










1.         
Introduction

Trade defence instruments (TDI) – anti-dumping, countervailing and
safeguards – are important tools allowed under the WTO rules to remove economic
damages caused by unfair trade practices or, in case of safeguards, provide a
temporary relief from unforeseen and significant increase of imports. However,
if not applied strictly in accordance with the WTO rules, they can become tools
of protectionist policies that hamper world trade and economic development.
Accordingly, while recognizing the right of third countries to make
use of TDI, the Commission has defined the promotion of adequate standards
and action against abusive use by third countries of these instruments
against EU exporters as trade policy objectives helping to improve market
access for EU exporters. In cases of serious breaches of WTO rules and lack of
other means to solve the problems, bringing a case to WTO dispute settlement
remains a possibility, but the Commission's preferred approach is to achieve
the above-mentioned objectives through a comprehensive monitoring of the TDI
activity of third countries and interventions within the framework of on-going
investigations where WTO rules are not respected.
The promotion of adequate standards include not only monitoring TDI
activities of third countries, but also a constant scrutiny and improvement of
the way the Commission itself conducts trade defence investigations and applies
the measures. The EU is already a very prudent user of TDI, which is
illustrated by the fact that such measures affect only a very small share of EU
imports. In addition, because the EU legislation sets standards that are even
more demanding than WTO rules, i.e., so-called ‘WTO pluses’, its investigations
do not necessarily result in the application of measures and, in cases where
measures are applied, their level is usually lower than measures imposed by
other countries in similar cases. In recent years the Commission has also
embarked on the process of modernization of its trade defence instruments with
legislative changes and related documents scheduled for adoption in 2014. The
Commission encourages third countries to also constantly analyse their TDI
legislation and practice with the aim of improving them and ensuring their full
compliance with the WTO rules.
In 2013 the significant increase in the number of investigations
opened and measures imposed against EU exports by third countries has required
the Commission to reinforce its activities in this area. The additional
pressure on its resources in this area has come from the increasing complexity
of the cases, the appearance of new countries that have started to make use of
trade defence instruments affecting EU exports and, in particular, the required
active participation in third countries’ countervailing duty investigations
concerning alleged EU subsidy schemes, e.g., China’s investigation on wine
involving around 5000 EU wine exporters.
This report describes the overall trends in 2013 in the use of TDI
by third countries against EU exports and the activities that the Commission
has carried out to address problems that it has identified. The annex provides
a much more detailed country-by-country analysis shedding light on the trends
of trade defence activity of the most important users of the instrument, systemic
problems and developments concerning specific cases.

2.         
Overall trends

At the end of
2013 there was a total of 152 measures in force against the EU or EU
Member States, which is an increase of 14 measures compared to the end of 2012
when the number of measures was 138. The following graph shows that the
decrease in the number of measures in force in 2012 was an exception and that
the overall trend since 2010 is a significant increase in trade defence
activity:
Following the beginning of the global financial and economic crisis
at the end of 2008, many countries started new trade defence investigations.
For example, on average, 40 new investigations were initiated each year in the
period 2008-2010, as compared to just 19 such investigations in 2007. In most
cases the investigation was concluded by the imposition of measures and so the
total number of measures in force since 2010 significantly increased. It should
be noted that while in 2010-2011 the increase in the total number of measures
in force was mostly due to new safeguard measures (16 out of 23 new measures),
in 2013 the increase is mainly because of new anti-dumping measures (10 out of
14 new measures). In this context, it should be reminded that safeguards apply
to all countries of origins and would appear in the statistics even when the EU
is not directly targeted.  This is in contrast with anti-dumping measures which
are country specific and thus directly affect EU exports. Accordingly, the
recent increase in the total number of measures in force appears to have a
direct effect on EU exports.
The breakdown of these measures by type reveals a situation
similar to previous years: the vast majority of these measures are anti-dumping
actions (104 measures), while safeguards still represent about a third of the
total. Concerning the latter, however, it should be recalled that all
safeguards have been included in the statistics as they apply to imports of all
origin, but some of them might have little economic impact on the EU because
the EU has little or no exports of the particular product.
The overall increase of the number of measures in force in 2013
resulted from the expiry or the termination of 13 measures and the imposition
of 27 new measures. This latter number is in line with the average number
of new measures imposed annually in recent years and the breakdown by type –
two thirds anti-dumping and one third safeguards – also corresponds to average
trends. In terms of countries, China has imposed more new measures than any
other country. Other third countries that have imposed at least 2 new measures
include Brazil, Colombia, Eurasian Customs Union (comprised of Russia, Belarus, and  Kazakhstan), India, South Africa and Turkey. Due to the high volume of trade
flows, the measures imposed by China and the Eurasian Customs Union could have
the most negative impact on EU exports.
In terms of measures in force, with 21
measures in force, India remains the most prolific user of TDI against the EU
or EU Member States, but it is closely followed by China with 19 measures. The
steady and fast growth of the number of measures that China has imposed against the EU or EU Member States is truly remarkable, as the number of
such measures was just 9 as recently as 2008. The USA which historically was a
leader in this ranking of third countries has dropped to the third place with
17 measures in force. Turkey’s and Indonesia’s very extensive use of safeguards
have placed these countries among the top five in this list. 
43 new investigations have been
initiated in 2013, as compared to 37 in 2012, i.e. a significant increase. India was by far the most active country followed by China, Colombia, Australia, Brazil, Canada, and South Africa. Compared to the previous year, the raise in activity by India (4 new anti-dumping and 3 new safeguard investigations) and Colombia (4 new safeguard
investigations) is particularly noticeable. As mentioned above, while in the
recent past the vast majority of these new investigations were safeguards, in
2013 anti-dumping instrument had become more popular.

3.         
On-going Problems

There are a number of persistent problems in the use of TDI by third
countries that the Commission has identified and outlined already in its
previous reports. While the Commission's interventions have helped in solving problems
in a number of individual cases, from the overall perspective many of the
issues remain the same.
The main problems that have been recently identified are the
following: 

3.1.           
Inappropriate use of the instruments

The inappropriate use of trade defence instruments remains the most
important problem. This year again there have been strong indications that
investigations against the EU have been initiated in reaction to trade defence
actions taken by the EU itself. In 2012 China initiated a combined anti-dumping
and anti-subsidy investigation against imports of polysilicon from the EU after
the EU had initiated an investigation against imports of Chinese solar panels.
There were rumours that in reaction to the EU’s investigation concerning solar
panels, China would also initiate a case against imports of EU wine. These
rumours materialized when in 2013 China indeed initiated an anti-dumping and an
anti-subsidy investigation against imports of EU wine.
The Commission recognizes the rights of third countries to initiate
investigations based on genuine complaints lodged by a domestic industry, but
it strongly condemns the cases that are initiated for any other reasons. 
The Commission treats this issue as a priority because of its
systemic nature and significant negative economic impact. In the past the
Commission has already successfully challenged a similar case at the WTO (see
below) and will continue to defend the interests of the European Union. 

3.2.           
Use of safeguards

While the number of new safeguard measures imposed this year is
still much lower than in 2011, the number of new initiations of safeguard
investigations still remains too high. 
In 2013, 10 new safeguard measures were imposed, which is
considerably less than the number of on-going investigations in recent years
(on average around 20). On the positive side, this means that safeguard
measures have been avoided in some investigations where the Commission and the
EU Member States had actively intervened. On a more negative side, it again
illustrates the unfortunate practice by several third countries to initiate
safeguard investigations on a weak basis. Even if measures are not imposed in
the end, the simple fact of initiation creates uncertainties to importers
during the time of the investigations and thus negatively affects trade flows.
The Commission also remains concerned that some countries continue
to initiate parallel anti-dumping and safeguard investigations on the same
product. Furthermore, one country in particular continues to almost automatically
extend the application of its safeguard measures to the maximum period allowed
under the WTO Safeguards Agreement.
The Commission continues to pay a very close attention to this issue
and continues to advocate for higher standards in the initiation of safeguard
investigations and application of measures.

3.3.           
Trade defence activity in emerging economies
When applying
trade defence measures, countries often use them primarily against the trading
partners with the most substantial and/or most rapidly increasing bilateral
trade flows. So it is not unusual that EU exporters increasingly face trade
defence measures in emerging economies with whom EU’s trade relations are
developing fast. However, it is very important that investigations are
initiated and measures are imposed only where truly warranted, which is not
always the case.

The Commission
is concerned that several trade defence investigations are initiated in
situations where imports account for a very minor share of the domestic market.
For example, in 2013 South Africa initiated 3 trade defence investigations concerning
the same product, including a safeguard and an anti-dumping investigation. In
these cases the domestic industry mostly complained about the loss of their
market share which a couple of years ago had been 98% (sic). Similarly, Morocco is contemplating the imposition of safeguard measures in a case where the market
share of the imports of the product concerned has increased from 2.5% to just
5%.
The Commission
is also concerned about a number of measures taken by the newly established
Eurasian Customs Union which due to the size of the market, geographical
proximity and historical trade flows have a significant negative impact on the
EU. According to our analysis, the justification of these measures remains
insufficient. 

4.         
Main achievements

In past years the EU had solved
some important cases by resorting to WTO dispute settlement mechanism, e.g. the
dispute with China concerning the unacceptable practice of retaliation (see
below). Sometimes there is no alternative, but to use the WTO dispute
settlement. However, it remains an action of last resort, as WTO dispute
settlement procedures take a long time and meanwhile the unwarranted measures
remain in force.
For these reasons, the Commission
as much as possible intervenes already during the investigation in order to
convince third countries' investigating authorities to either improve their
analysis or not impose the measures. In a number of individual cases the
Commission’s interventions have been successful or at least partially
successful in either preventing the imposition of measures or limiting the
negative impact of such measures.
In 2013 the Commission also
assisted many EU exporters that were willing to co-operate in third countries’
investigations. EU industries and Member States have positively appraised such
guidance and assistance even where this had not prevented the imposition of
measures.
Finally, it should be noted that
there are several very important investigations that have demanded much work
and attention on the part of the Commission already in 2013, but which cannot
be listed under achievements, as they are still on-going in the beginning of
2014 and their outcomes are not yet known.
Below is a list of some of the
individual positive results achieved in 2013.

4.1.           
China - Implementation
of the WTO panel report on X-ray scanners.

On 23 January 2011, China decided to impose anti-dumping duties on imports of X-ray security inspection equipment
originating from the EU (measures ranging from of 33.5% to 71.8%). The
Commission decided to challenge these duties as it was considered that these
measures were not in conformity with WTO rules and that they had been imposed
in retaliation against the EU's own case concerning cargo scanners from China.
On 24 April 2013, the WTO published
the panel report confirming that China acted inconsistently with several
provisions of the WTO anti-dumping agreement. As a result, China announced the termination of the measure on 19 February 2014.

4.2.           
Russia-Belarus-Kazakhstan – termination without
measures.

The safeguard investigation on
woven fabrics was initiated by the Eurasian Economic Commission (EAEC) on 1
October 2012. The case was economically important since annual EU exports amounted
to € 65 million. During the course of the investigation, the Commission
identified several WTO inconsistencies, in particular with respect to the
definition of the product scope, the injury and causality aspects. The
Commission made interventions in this regard and the investigation was
ultimately terminated on 2 October 2013 without the imposition of measures.
After some years of active use of
the TDI and safeguards in particular, in 2013 the EAEC did not initiate any new
investigation and reviewed two existing measures (caramel and stainless steel
pipes) with the final outcome being some degree liberalization or reduction of
the product scope of the application of the measure. As mentioned above, the
Commission is nevertheless concerned by the application of trade defence
actions by the Eurasian Economic Commission. 

4.3.           
Ukraine- limited use of
the trade defence instruments.

From 2009 to 2011 Ukraine initiated a very high number of safeguard investigations. During those years, the
Commission intervened in each of those safeguard cases as well as criticized Ukraine for the excessive use of the safeguard instrument in general. Compared to 2012,
when no case was initiated, in 2013 Ukraine only initiated one safeguard
investigation on porcelain tableware and kitchenware. However, optimism about
the observed restraint on the use of safeguards can be only limited because despite
the Commission’s concerns and numerous interventions, on 14 April 2013 Ukraine
imposed safeguard measures against imports of cars, which touch very important
EU economic interests. The Commission has been very active in this proceeding
and has joined, as a third party, the WTO consultations requested by Japan.

4.4.           
Peru – repeal of
measures.

Since the initiation by the
Peruvian authorities of an anti-subsidy proceeding and imposition of measures
in December 2010 concerning imports of olive oil from Spain and Italy, the Commission as well as EU Member States had actively defended the interests of
the EU in this case. The incompatibilities of the proceedings and measures with
the WTO were brought to light in numerous submissions,
hearings and interventions at both technical and political level as well as
through the launch of an administrative appeal procedure. Finally, in March 2013, these interventions brought the results in
the form of the repeal of these measures.

4.5.           
Morocco – decrease of
the negative impact of measures.

The Commission strongly intervened
in the Moroccan safeguard investigation concerning imports of steel products.
The Commission intervened in writing as well as during the public hearing and
various ad-hoc meetings were organised in order to ensure the best outcome for
EU exporters. These interventions have led to a more flexible measure as the
quota proposed for one product has been doubled following the Commission's
interventions. Even though this is a positive achievement, it is still
regrettable that measures were taken on this product given the obvious
weaknesses. The Moroccan investigations continue to be closely monitored since
so far systemic weaknesses have been identified.

4.6.           
South Africa –
suspension of safeguard measures.

South Africa imposed a prohibitive provisional safeguard measure of 60% against
imports of frozen fries, based on very weak grounds, and the Commission has
also made considerable interventions in this case. Several ad-hoc meetings were
organised at various level in order to convince the South African authorities
not to impose definitive measures. As a result of this, the decision to impose
these measures has so far been postponed, allowing the provisional measures to
lapse. EU exports could no longer access the South African market with a duty
of 60%. It should however be noted that South Africa had initiated an
anti-dumping case (against Belgium and The Netherlands) and imposed provisional
measures on the same product despite a weak injury analysis. The investigation
is still on-going and provisional duties range from 0% to around 30% for
non-cooperating exporters.

4.7.           
            Turkey – decrease of the negative
impact of measures

Turkey concluded
two on-going anti-dumping investigations in 2013 (float glass and electric
water heaters). In both cases Turkey decided to impose measures. However,
thanks to the active joint interventions of the Commission and the EU industry,
the definitive duty rates were significantly lower than the ones proposed at
earlier stages of the investigations. In the float glass case the provisional
duty was 41%, while the definitive duty for the co-operating company was
decreased to 16%. In the electric water heaters case the Turkish authorities
agreed to change the calculation method in order to better reflect the actual
situation for one exporter. With the new method, the duty decreased from the
originally proposed 19.82% to 9%.

4.8.           
Egypt – termination
without measures

Further to the Commission’s
vigorous efforts that included interventions concerning the shortcomings of the
case at the WTO Committee on Safeguards and bilateral WTO consultations, Egypt did not impose definitive measures and committed itself to refund the previously paid
provisional duties in the raw and white sugar case. In November 2013 Egypt also terminated the investigation on steel bars without the imposition of any
definitive measures.

4.9.           
Australia – termination
of safeguard investigations without measures

In December 2013 Australia decided to terminate two safeguard investigations – against imports of processed
tomato products and against imports of processed fruit products – without the
imposition of any measures. This followed a number of interventions including
written submissions and participation in oral hearings by the Commission, EU
Member States and EU industry.

5.         
Conclusion

The trade defence activity against
the EU or its Member States has again increased in 2013. It is not only the
total number of the measures in force that has significantly increased in 2013
compared to 2012, but also the importance and complexity of the issues at
stake.
Significant efforts and resources
have been deployed in order to ensure a correct application of the rules and the
best possible outcome for EU exporters. As a result, there have been a number
of achievements, some of which have been listed above.
Unfortunately, many problems still
persist and, in order to address them, the Commission will continue to closely
monitor third countries’ trade defence activities and to actively intervene
where required.
The Commission will also continue
bilateral contacts with third countries’ investigating authorities and continue
to give them advice/training with the aim of preventing the initiation of
unnecessary cases or incorrect application of the rules.
The EU applies the rules governing
the use of trade defence instruments in very strict and transparent way and it
expects other countries to do the same. In this respect, one of the major
objectives of the Commission in the field of trade is to ensure full and fair
market access in third countries. Fighting unwarranted trade defence measures
is clearly part of this objective.