Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union’ (COM(2016) 721 final)
Date: 2017-03-29
Institutions: European Economic and Social Committee
Subjects: World Trade Organisation, anti-dumping legislation, anti-subsidy proceeding, countervailing charge, dumping, import (EU), originating product, third country








C_2017209EN.01006601.xml










30.6.2017   


EN


Official Journal of the European Union


C 209/66





Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation amending Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union’
(COM(2016) 721 final)
(2017/C 209/12)






Rapporteur:



Christian BÄUMLER





Co-rapporteur:



Andrés BARCELÓ DELGADO











Consultation


Commission, 24.11.2016




Legal basis


Article 304 of the Treaty on the Functioning of the European Union




 


 




Section responsible


REX




Adopted in section


6.3.2017




Adopted at plenary


29.3.2017




Plenary session No


524




Outcome of vote
(for/against/abstentions)


194/0/1




1.   Conclusions and recommendations









1.1.


The European Economic and Social Committee (EESC) is committed to open and fair trade and recognises its value as a driver of growth and jobs.












1.2.


The EESC calls for a level playing field between European and third country exporting producers, and for effective trade defence instruments.












1.3.


The EESC takes the view that, overall, the Commission’s proposal provides a balanced approach between the issue of China’s market economy status, on the one hand, and the goal of having an effective dumping calculation method, on the other.












1.4.


The EESC supports the Commission’s proposal that the dumping margin should be calculated not using the standard methodology, but on the basis of benchmarks that take account of significantly distorted production and sale costs. The EESC points out that in its 2016 opinion on preserving sustainable jobs and growth in the steel industry, it already called for the standard methodology not to be used in anti-dumping and anti-subsidy investigations into Chinese imports as long as the country failed to meet the EU’s five criteria for market economy status.












1.5.


The EESC welcomes the Commission’s intention of using specific criteria to determine whether there are significant distortions in the market situation. The Committee notes that the respect of ILO standards and of Multilateral Environment Agreements should also be considered.












1.6.


The EESC calls on the Parliament and the Council to clearly state that the Commission will issue specific country reports for every country with significant market distortions. The target will include all countries that, taken together, account for 70 % of the anti-dumping investigations initiated in the previous five-year period.












1.7.


The EESC notes, however, that there is still room for improvement in the Commission’s proposal to amend the basic anti-dumping regulation in terms of the effectiveness and practicability of the anti-dumping investigation process (legal status, feasibility and pertinence of the proposed reports), and particularly with regard to the burden of proof, which should not be shifted onto the European industry.












1.8.


The EESC stresses that the anti-dumping and anti-subsidy complaints procedure must also be accessible to small and medium-sized enterprises.












1.9.


The EESC supports the Commission’s proposed transitional and consultation arrangements.












1.10.


The EESC urges the Commission to ensure to the best possible extent the compatibility of the EU’s new anti-dumping policy with the WTO Anti-dumping agreement in order to strengthen legal certainty.












1.11.


The EESC recommends that trade defence policy towards countries with significant market distortions should take an internationally coordinated approach that goes beyond the EU. Close coordination with major trade partners is needed.












1.12.


The EESC welcomes the Commission proposal regarding the changes proposed in the anti-subsidy regulation.












1.13.


The EESC notes that the efficiency of trade defence instrument (TDI) procedures is also linked to the 2013 proposal to modernise TDI, including the lesser duty rule. The EESC insists that it is crucially important for the TDI modernisation package to also be finalised and adopted in the coming months in order to produce a robust and effective trade defence system and to secure jobs and growth in the EU.




2.   Context and gist of the Commission document









2.1.


The Commission proposal (1) amends Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union. The changes are related to anti-dumping calculations, as well as to the anti-subsidies procedure.












2.2.


The new Commission proposal introduces changes to the basic anti-dumping regulation by abolishing the distinction between countries with market economy status and NME countries which are members of the WTO. ‘Analogue country’ methodology can continue to apply to non-WTO countries, which are NME. The standard methodology will apply to all WTO members, except in the event of substantial market distortions. In this case, the new article 2(6a) allows the normal value to be constructed on the basis of the production and sale costs reflecting undistorted prices or benchmarks.












2.3.


Even if the new proposed regulation is ‘country neutral’, it is closely linked to the expiry of subparagraph 15 (a) (ii) of China’s protocol of accession to the World Trade Organisation (WTO) on 11 December 2016. The consequences of this expiry are subject to different interpretations (2).












2.4.


Under the standard methodology it is required that dumping be calculated by comparing the export prices to the EU with domestic prices or costs of the products in the exporting country. However, for NME countries the EU currently uses the so-called ‘analogue country methodology’, in which domestic prices are replaced by prices and costs from another ‘analogue country’ as a basis for calculation.












2.5.


Regulation (EU) 2016/1036 on protection against dumped imports names WTO countries that are considered Non-Market Economies (3), for which non-standard anti-dumping methodology should be followed.












2.6.


However, the fact that the expiry of subparagraph 15 (a) (ii) of China’s accession protocol might be interpreted as obliging the EU to grant China market economy status (MES) made it necessary for the European Commission to envisage different scenarios for how to maintain strong trade defence instruments (TDI) while protecting European industry from unfair trade practices and complying with the WTO obligations.












2.7.


Intensive debate between the EU institutions and stakeholders took place in 2016. The EESC took part in this debate and in its opinion on ‘The impact on key industrial sectors (and on jobs and growth) of the possible granting of market economy treatment to China (for the purpose of trade defence instruments)’ (4), it insisted that the EU should not lose the tools to ensure free and fair trade with China because an unacceptable number of jobs (amounting to hundreds of thousands) would be lost. The EESC insisted that losses would be concentrated in particular sectors and regions which would be heavily affected, such as aluminium, bicycles, ceramics, electrodes, ferroalloys, glass, paper, solar panels, steel and tyres. The Committee called on the European Commission, the EP and the Council to promote international fair competition, as a way to actively defend these jobs and European society values and to boost income and wealth in the European Union (5). On 12 May 2016, the European Parliament had approved a resolution on China’s market economy status.












2.8.


The Commission proposals include a non-exhaustive list of criteria which point to significant market distortions, which are mainly related to state intervention in the sector. Commission services may issue public reports describing the specific situation concerning the market circumstances in any given country or sector. Such reports and the evidence on which they are based would also be placed on the file of any investigation relating to that country or sector so that all interested parties would be in a position to express their views and comments.












2.9.


In addition to the new methodology for calculating dumping, the Commission’s proposal sets out transitional arrangements for existing trade defence measures and ongoing investigations. The Commission proposal indicates that the new system will apply only to cases initiated upon entry into force of the new provisions. The introduction of new methodology does not constitute sufficient grounds for reviewing existing anti-dumping measures. Requests to review methodology can only be introduced when an expiry review of a given measure is initiated.












2.10.


The Commission proposal also includes changes to the way the EU investigates subsidies granted by governments in third countries and it clarifies in an amendment to the basic anti-subsidy regulation that additional subsidies found during the anti-subsidy investigation or its review can be reflected in the calculation of the anti-subsidy measures.




3.   General comments









3.1.


The EESC supports the EU’s open and fair trade policy. The EU (acting on behalf of the EU Member States, as the common commercial policy is an exclusive EU competence) promotes open trade and recognises the value of trade as a driver of growth and jobs.












3.2.


The EESC is in favour of effective trade defence instruments. In its trade policy, the EU requires domestic and foreign producers to compete on a level playing field. It therefore opposes unfair trading practices and applies its own legislation via trade defence instruments (TDIs), including anti-dumping and countervailing measures.












3.3.


The EESC would point out that most of the anti-dumping measures in force for Chinese imports are concentrated in certain sectors, with the steel industry being one of the most targeted. This sector serves both downstream and upstream industries in equal measure; with more than 350 000 direct jobs and several million more in related industries, it plays an essential role in Europe’s manufacturing industry and the European economy in general.












3.4.


The EESC takes the view that, overall, the Commission’s proposal provides a balanced approach between the issue of China’s market economy status, on the one hand, and the goal of having an effective, country-neutral dumping calculation method, on the other.












3.5.


The EESC welcomes the amendment of the basic anti-subsidy regulation, which clarifies the procedure for anti-subsidy investigation.












3.6.


The EESC proposes that the recitals to the regulations should make it clear that the amendment of the basic anti-dumping regulation and does not grant China market economy status.












3.7.


The EESC has, however, noted that on 13 December 2016 China requested WTO consultations with the US and the EU in connection with the fact that they are not complying with the WTO anti-dumping agreement and that for the EU those consultations cover both the existing basic anti-dumping regulation and its proposed amendment, which is the subject of this opinion. The Committee notes earlier legal disputes, which illustrate the complexity of the problems. Therefore, the EESC is concerned about the legal certainty of the proposed amendment to the anti-dumping regulation and calls on the Commission to build a solid justification for the compatibility of the new system with the WTO anti-dumping rules.












3.8.


The EESC points out that none of the EU’s major trading partners have changed their anti-dumping methodologies, even in view of the expiry of subparagraph 15 (a) (ii) of China’s protocol of accession to the WTO. This strategy is related to pending WTO proceedings initiated by China, the outcome of which should be awaited.












3.9.


The EESC recommends that there should be an internationally coordinated approach on this file that goes beyond the EU.












3.10.


The EESC therefore urges the Commission, the Parliament and the Council to monitor new developments in the trade defence policies of major trading partners closely, and to analyse their impact on the balance of trade flows.












3.11.


The EESC notes that the Committee of the Regions called for the lesser duty rule (6) to be abolished. The Parliament recommended in April 2014 to restrict the lesser duty rule in case of labour and environmental dumping. In its 2016 opinion, the EESC also called for the lesser duty rule to be abolished for steel imports.












3.12.


In this respect, the EESC points out that the efficiency of trade defence instrument (TDI) procedures is also linked to the 2013 proposal to modernise TDI. The EESC notes that the TDI modernisation package and the new dumping margin calculation method cover different, technically and legally unrelated aspects of the EU anti-dumping policy and its implementation, even if they are closely related. The EESC points out that making full use of the dumping margin would further the goal of achieving market economy conditions in all WTO member countries and notes that it is crucially important for the TDI modernisation package to also be finalised and adopted in the coming months in order to produce a robust and effective trade defence instrument system and to secure jobs and growth in the EU.




4.   Specific comments









4.1.


The EESC supports the Commission’s proposal (Article 2(6a)) to change the calculation methodology so that, when significant distortions exist in some countries, a non-standard methodology can be used, and considers that this methodology would allow the Commission to establish and measure the actual magnitude of dumping.












4.2.


In its 2016 opinion (7) on preserving sustainable jobs and growth in the steel industry, the EESC already called for the standard methodology not to be used in anti-dumping and anti-subsidy investigations into Chinese imports as long as the country failed to meet the EU’s five criteria for market economy status. This is in line with the European Parliament resolution of May 2016.












4.3.


The EESC agrees with the Commission’s assessment that prices and costs in some countries are artificially low due to state influence, which means that they do not realistically reflect market forces. Domestic prices and costs are significantly distorted by state intervention. In such cases, domestic prices should therefore not be used for the comparison with export prices.












4.4.


The EESC notes that the trigger for the new calculation is now significant market distortion, for which a list of non-exhaustive examples are given in the regulation. However, the Committee also notes that the violation of minimum labour and environmental standards can also contribute to distorting competition with EU companies and should be taken into account, in particular if it is a part of the State regulatory framework. In addition, the compatibility of the new method with the WTO rules should be carefully assessed.












4.5.


The EESC notes that China has requested a formal panel in the WTO over the so-called ‘analogue country’ approach used by the EU, and points out that the EU is currently working on the introduction of a new methodology which should be in line with all international agreements. The EESC is of the opinion that, if the WTO ruling comes to the conclusion that the expiry of article 15(a)(ii) does not automatically grant market economy status to China and that China has to respect the other commitments it made in its Accession Protocol, the use of the ‘analogue country’ methodology should be maintained.












4.6.


The EESC notes that according to the proposed legislation, the Commission may prepare and issue reports describing the specific circumstances of the market in any given country or sector. These reports and the evidence on which they are based would become part of any anti-dumping investigation into that country or sector, and would be publicly available. EU industry could also use information from these reports when lodging a complaint or a request for review. However, the EESC is worried that no provisions for enlarging the actual number of staff dealing with trade defence instruments are included in the European Commission proposal. It also notes that the legal status of those reports is not defined and it is not clear how the reports can be used in case of a legal challenge to the reports by the country concerned. There is also no mention of how often the reports will be updated and how they will be adapted to sector-specific challenges.












4.7.


The EESC is also worried that these reports are not obligatory (the proposal refers to ‘Commission services may issue a report’) and it also calls for the burden of proof to be more clearly defined in the proposed legislation.












4.8.


The EESC notes that the anti-dumping complaints procedure must be effective, realistic and feasible. However, the EESC cannot accept the reversal of the burden of proof. The burden of proof should not be placed on the EU enterprises concerned and on the Commission in terms of demonstrating the existence of dumping. The associated data collection requirements should remain sustainable.












4.9.


The EESC stresses that the anti-dumping complaints procedure must also be accessible to small and medium-sized enterprises, and that particular attention must be paid to ensuring that these enterprises can bear the costs involved in the investigation and associated data collection requirements.












4.10.


The EESC takes the view that the transitional arrangements proposed by the Commission are in the interests of legal clarity, and supports these arrangements.





Brussels, 29 March 2017.


The President of the European Economic and Social Committee

Georges DASSIS




(1)  COM(2016) 721 final.

(2)  According to the European Commission estimations, in the period from 2012-2016, 73 new anti-dumping and anti-subsidy investigations were opened, 42 % of which went to China, 10 % to India, 5 % to Russia, 5 % to Indonesia and 5 % to Turkey. In 2016 the majority of provisional measures were imposed first of all on China and some on Russia, Belarus and Korea.

(3)  Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (codification) (OJ L 176, 30.6 2016, p. 21).

(4)  OJ C 389, 21.10.2016, p. 13.

(5)  OJ C 389, 21.10.2016, p. 13.

(6)  OJ C 17, 18.1.2017, p. 13.

(7)  OJ C 389, 21.10.2016, p. 50.