REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 39th Annual Report from the Commission to the European Parliament and the Council on the EU’s Anti-Dumping, Anti-Subsidy and Safeguard activities and the Use of Trade Defence Instruments by Third Countries targeting the EU in 2020
Date: 2021-08-30
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: activity report, anti-dumping measure, anti-subsidy proceeding, coronavirus disease, countervailing charge, epidemic, import (EU), import restriction, originating product, surveillance concerning imports, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 30.8.2021  COM(2021) 496 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 39th Annual Report from the Commission to the European Parliament and the Council on the EU’s Anti-Dumping, Anti-Subsidy and Safeguard activities and the Use of Trade Defence Instruments by Third Countries targeting the EU in 2020    {SWD(2021) 234 final}  
 
 
EXECUTIVE SUMMARY 

This  39th  Report  gives  information  on  the  EU’s  anti-dumping,  anti-subsidy  and  safeguard 
activities, as  well as the  trade defence  activity  of third countries  against the EU in  2020, in 
line with the Commission’s reporting obligations. 

The European Union is committed to open rules-based trade, supported by the tools to defend 
European  industry  against  unfair  trade  practices.  The  Commission  ensures  that  where 
industries  are  harmed  because  of  unfair  practices,  such  as  dumped  and  subsidised  imports, 
they can rely on the EU’s trade defence instruments to provide an effective response.   

The COVID-19 pandemic in 2020 tested the Commission’s ability to apply the trade defence 
instruments  because  on-the-spot  verifications  could  no  longer  be  carried  out.  However,  by 
swiftly  adapting  its  work  practices,  the  Commission  completed  investigations  within  legal 
time  limits,  fully  respecting  the  rights  of  interested  parties  and  its  legal  obligations.  The 
number of cases remained in line with previous years’ activity levels with an increase in the 
number of cases lodged towards the end of 2020. 

The  successful  application  of  the  EU’s  trade  defence  instruments  by  the  Commission  was 
confirmed in a report from the European Court of Auditors in July 2020. The Auditors found 
that procedures  were  followed properly leading  to sound and comprehensive decisions. The 
report made a number of recommendations to further strengthen the Commission’s response 
to  the challenges posed  by unfairly traded imports. The Commission started to  implement  a 
number  of  these  recommendations  in  2020  such  as  improving  monitoring  to  ensure  the 
effectiveness of measures.   

Not  least  of  these  challenges  is  the  need  to  tackle  increasingly  complicated  and  opaque 
subsidy programs granted by third countries, which damage European producers. In response 
to  evolving  subsidy  practices,  in  2020  the  Commission  countervailed,  for  the  first  time, 
subsidies  granted  by  one  country  to  manufacturing  plants  based  in  another  country  and 
exporting  to  the  EU.  The  rationale  was  that  the  financial  contribution  provided  by  the  third 
country  could  be attributed to  the exporting country. The imposition of measures shows the 
Commission’s ability and commitment to deal with new and innovative forms of subsidisation 
practices. A separate section of the report addresses the issue of subsidies. 

A  renewed  focus  on  enforcement  and  effectiveness  of  trade  rules  in  2020  meant  improved 
monitoring  of  measures,  especially  of  those  that  presented  an  increased  risk  of  being 
circumvented.  Imposing  anti-circumvention  measures,  monitoring 
imports,  obtaining 
information from industry on market developments as well as alerting customs authorities to 
potentially  risky  imports  underpinned  the  Commission’s  commitment  to  effective  trade 
defence  policy.  A  change  to  the  surveillance  of  steel  and  aluminium  imports  in  2020  also 

1 

 
 
 
provided real import statistics allowing earlier identification of import trends that could harm 
the Union steel and aluminium industry.  

Ensuring fair trade conditions for European producers also means dealing with trade defence 
actions taken by third countries against the EU, which reached their highest level in 2020.  

While  2020  presented  new  and  unique  challenges  in  global  trade,  the  Commission  adapted 
and responded to these challenges and those posed by existing and new unfair trade practices 
and 

enforcement 

the  EU’s 

continued 

instruments.   

defence 

trade 

its 

of 

2 

 
 
1 

1.1 

APPLICATION OF TRADE DEFENCE INSTRUMENTS (TDI) IN 20201 

Investigative activity 

1.1.1  General Overview 

At  the  end  of  2020,  the  EU  had  150  trade  defence  measures  in  force:  99  definitive  anti-
dumping (AD) measures (which were extended in 29 cases), 18 anti-subsidy (AS) measures 
(extended in 1 case) and 3 safeguard (SFG) measures. This is an increase of 10 measures as 
compared to the end of 2019.  

Investigative  work  continued  to  increase,  with  a  higher  workload  than  in  2019,  driven  by  a 
greater  number  of  review  investigations  (54).  At  the  end  of  2020,  47  investigations  were 
ongoing2.  

A  Commission  Staff  Working  Document  (SWD),  providing  more  detailed  information  and 
statistics on the annual activity accompanies this Report. The SWD includes annexes relevant 
for the sections below.  

1.1.2 

Anti-dumping and Anti-subsidy investigations (see Annexes A to I)  

In  2020,  the  Commission  initiated  15  new  investigations  (12  AD  and  3  AS).  It  imposed 
provisional duties in 6 proceedings and concluded 11 cases by imposing definitive duties (8 
AD and 3 AS). Five investigations were concluded without measures. 

The  number  of  reviews  that  were  initiated  increased  compared  to  2019.  In  2020,  the 
Commission  initiated  21  expiry  and  2  interim  reviews  resulting  in  54  active  review 
investigations during the period. 7 expiry reviews were concluded with a confirmation of the 
duty  in  2020.  4  interim  reviews  were  concluded  with  only  1  resulting  in  amendment  of  the 
duties.  

1  

2  

This part of the Report has been prepared pursuant to the updated provisions of Article 23  of the Basic 
Anti-Dumping  Regulation  (OJ  L  176,  30.6.2016,  p.21),  of  Article  34  of  the  Basic  Anti-Subsidy 
Regulation (OJ L 176, 30.6.2016, p.55) and of Article 23 of the Basic Safeguards Regulation (OJ L 83, 
27.3.2015, p.16). 
Complemented by 5 refund investigations, covering 82 individual refund requests by importers. 

3 

 
 
 
                                                 
2020 TDI Activity

35

30

25

20

15

10

5

0

2016

2017

2018

2019

2020

New investigations

Reviews

Definitive measures

1.1.3 

Safeguard investigations 

There were no new safeguard investigations initiated in 2020. 

Regarding the EU’s steel safeguard measure imposed in 2019 as a reaction to the US Section 
232 measures, the Commission carried out a second review, which resulted, on 1 July 2020, in 
an adjustment of certain aspects of the measure. These included, the introduction of quarterly 
administration of all Tariff Rate Quotas (TRQ), the implementation of country-specific TRQ 
in product category 1 (hot-rolled steel) and a new regime for accessing the residual TRQ in 
the last quarter of a period.   

On 30 October 2020, the Commission initiated another review to adapt the volume of quotas 
under  the  safeguard  measure,  as  a  result  of  Brexit.  These  changes  came  into  effect  on  1 
January 2021.  

1.1.4 

Verifications in investigations 

In order to ensure the accuracy of the information provided by interested parties and the basis 
on which any measures are imposed, the Commission carries out on-the-spot visits to verify 
the data submitted during trade defence investigations.  

Travel  restrictions caused by the  COVID-19 pandemic made normal verification procedures 
impossible for almost all of 2020, while safety measures and related constraints affected the 
activities  of  companies.  In  response,  the  Commission  adapted  its  work  practices  in  order  to 
ensure that investigations continued while respecting due process, transparency requirements 
and  meeting  legal  deadlines.  This  involved  companies  submitting  sufficiently  detailed 
information  for  analysis,  setting  up  a  system  of  remote  cross-checking  of  the  data  by 
independent  and  verifiable  sources  as  well  as  granting  interested  parties  some  flexibility  on 
deadlines to submit data3. In total, the Commission carried out 26 on spot verifications and 83 
remote  cross-checks.  While  the  remote  cross-checking  system  has  ensured  the  continued 

3  

Commission notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy 
investigations, OJ C 86 of 16.3.2020 p.6. 

4 

 
 
 
                                                 
implementation  of  the  trade  defence  instruments  in  2020,  it  is  burdensome,  demanding  and 
only presents a temporary solution.     

1.2 

Effective application and enforcement of TDI 

1.2.1 

European Court of Auditors - Audit of the EU’s TDI  

In  July  2020,  the  European  Court  of  Auditors  published  its  audit  report  of  the  EU’s  Trade 
defence  policy  covering  the  period  2016-20194,  in  which  it  concluded  that  the  Commission 
successfully enforces the policy. The report found that investigations led to timely measures 
being imposed, the Commission followed procedures properly, treated all parties equally and 
that the analyses underlying the decisions were sound and comprehensive. 

At the same time, the European Court of Auditors recommended that, by the end of 2021,  the 
European  Commission  should:  (a)  document  its  assessments  of  the  confidentiality  status  of 
the documents from parties (b) seek additional communication channels to raise stakeholders’ 
awareness  (c)  improve  guidance  on  relevant  competition  aspects  (d)  improve  monitoring 
activities and carry out regular evaluations of the effectiveness of trade defence measures (e) 
launch  more  investigations  at  its  own  initiative  and  (f)  use  clear  criteria  to  prioritise  the  
response to measures by third countries.  

The  Commission  accepted  all  the  recommendations,  except  for  (e)  relating  to  ex-officio 
investigations which the Commission accepted only partially as it considers it already uses the 
provisions in the legislation to the fullest extent possible.  

The  Commission  started  implementing  the  recommendations,  in  the  required  timeframe,  by 
improving  monitoring  activities  of  measures  in  place,  defining  criteria  for  prioritising  third 
country  actions  as  well  as  examining  ways  to  increase  awareness  of  TDI  among  EU 
industries.  Implementation  of  all  recommendations  will  continue  with  the  evaluation  of  the 
overall effectiveness of trade defence measures scheduled for 2023. 

1.2.2  Monitoring and Enforcement of measures (see Annexes J, K, M, Q) 

Given the central role of enforcement of trade measures in the von der Leyen Commission’s 
agenda, the monitoring activity saw enhanced emphasis.  

In  2020,  the  Commission  monitored  41  trade  defence  measures  that  presented  an  increased 
risk  of  duty  avoidance.  Where  relevant,  the  Commission  alerted  the  customs  authorities  in 
Member States to pay particular attention to imports of the products in question. In addition, 
where the Commission had information suggesting fraudulent activity surrounding imports, it 
notified  OLAF. The  Commission  maintained  close  contact  with  Union  industry  to  get 
additional information on market developments and to decide on the most efficient follow-up 
action. The  Commission  also  scrutinised  the  price  undertakings  in  force  to  ensure  that  the 
exporting producers were complying in full. 

4  

https://www.eca.europa.eu/en/Pages/DocItem.aspx?did=54349 

5 

 
 
                                                 
In  line  with  its  commitment  to  ensure  effective  application  of  measures,  the  Commission 
initiated 3 anti-circumvention investigations in 2020. The investigations tackle different types 
of  circumvention,  i.e.  circumvention  of  measures  through  assembly  operations  in  a  third 
country  and  modification  of  the  product.  The  Commission  concluded  5  anti-circumvention 
investigations  in  2020.  It  extended  duties  in  4  cases  to  cover  imports  from  other  third 
countries where transhipment was found to have taken place.  

1.2.3 

Surveillance measures  

The Commission can introduce surveillance measures to monitor import trends, where these 
imports  threaten  to  cause  injury  to  Union  producers5.  There  are  two  types:  prior  and 
retrospective surveillance. Prior surveillance makes imports subject to the presentation of an 
import  licence,  thereby  giving  information  on  the  intention  to  import.  With  retrospective 
surveillance, import statistics are available fifteen days after the end of the reporting month, 
compared to Eurostat data available only 6 weeks after the end of the reporting month.   

While  surveillance  is  normally  introduced  by  a  Commission  Regulation,  retrospective 
surveillance can be introduced without a legal act, when there is no need to create additional 
specific customs classification codes (10-digit TARIC goods codes). 

On this basis, the Commission replaced the prior surveillance system on steel and aluminium, 
which expired on 15 May 2020, by retrospective surveillance. In addition, in November 2020, 
the  Commission  introduced6  retrospective  Union  surveillance  on  imports  of  bioethanol  for 
fuel.   

The  Commission  publishes  the  available  surveillance  monthly  on  the  ‘surveillance  / 
monitoring of imports’ public page7 of DG Trade’s website.  

1.2.4 

Protecting European small and medium sized enterprises (SMEs) 

Given that SMEs face resource constraints in dealing with trade defence, the Commission has 
always made efforts to  facilitate SME awareness of and access to TDI.  In 2020, through its 
dedicated  helpdesk,  the  Commission  continued  to  assist  such  companies  affected  by  unfair 
trade  practices,  both  in  the  EU  and  in  third  countries.  During  their  recourse  to  TDI,  SMEs 
benefitted  from  less  burdensome  questionnaires  and,  where  possible,  investigation  periods 
aligned with their financial year.  

While the Commission continued to help SMEs through its SME website, helpdesk and TDI 
guide, the European Court of Auditors recommended that the Commission increase awareness 
of the instruments among industries and SMEs in particular. In 2020, the Commission started 
work on an information package tailored for SMEs explaining the instruments, how to access 
them  and  what  is  involved  in  proceedings.  The  information  will  be  passed  through  existing 
channels such as the Market Access Advisory Committee, SME networks in Member States 

5  
6  
7  

Article 11 of Regulation (EU) 2015/478 of 11 March 2015, OJ L86, 27.3.2015, p.16. 
Regulation (EU) 2020/1628, OJ L 366, 04.11.2020, p.12. 
https://webgate.ec.europa.eu/siglbo/post-surveillance 

6 

 
 
                                                 
as well as through industry associations. In line with the timeframe proposed by the European 
Court of Auditors, this will be implemented in 2021.  

Several  manufacturing  sectors  in  the  EU  characterised  by  SMEs  are  successfully  using  and 
benefitting from the protection under EU trade defence instruments, for instance bicycles, tyre 
retreaders,  trout  and  ceramics.  Regarding  the  latter,  the  AD  measures  on  ceramic  tableware 
and  the  ex-officio  anti-circumvention  investigation  completed  in  2019,  demonstrate  the 
Commission’s commitment to ensuring the efficacy of measures in force. Being aware of the 
potential  for  further  circumvention  of  these  measures,  the  Commission  carefully  examined 
fourteen applications from Chinese exporters for new exporting producers treatment received 
in 2020, to ensure that the applicants are genuine new exporting producers selling their own 
products and not channelling products of other Chinese tableware producers. The cases were 
ongoing at the end of 2020.    

1.3 

Developments in 2020 following the legislative changes in 2017 and 2018  

1.3.1 

 Social and environmental standards 

The  amendments  to  the  trade  defence  legislation  in  December  2017  and  June  2018, 
introduced  a  number  of  areas  where  social  and  environmental  standards  should,  where 
possible, be taken into account in AD and AS investigations.  

When the Commission applies the new methodology of normal value calculation, it chooses 
an appropriate representative country to construct a non-distorted normal value of a product. 
When  there  is  more  than  one  country  with  suitable  available  data,  the  Commission  should 
choose  based  on  the  level  of  social  and  environmental  protection  in  the  countries  under 
consideration. 

In the investigations concluded in 2020, the issue did not arise, as suitable data was available 
for only one representative country in each case.  

When establishing the injury margin in investigations, the EU industry’s costs of production 
should  include  the  cost  of  compliance  with  multilateral  environmental  agreements  and 
International Labour Organisation Conventions during the lifetime of TDI measures. As these 
costs are incurred by Union industry during the period of application of the measure, they can 
be  reflected  in  the  Union  industry’s  target  prices/non-injurious  prices  when  calculating  the 
injury margin.  

In  the  investigations  concerning  Heavyweight  thermal  paper  originating  in  the  Republic  of 
Korea  and  Certain  hot-rolled  stainless  steel  sheets  and  coils  from  Indonesia,  the  People's 
Republic of China and Taiwan, the Commission adjusted the target prices after assessing the 
future costs resulting from Multilateral Environmental Agreements to which the EU is a party. 
This  resulted  in  the  Commission  increasing  the  non-injurious  prices  by  amounts  ranging 
between €6 and €10 per tonne in the thermal paper case and by €1.5 and €6 per tonne in the 

7 

 
 
steel  sheets  and  coils  case.  The  issue  was  not  raised  by  interested  parties  in  other  cases 
concluded in 2020.  

1.3.2 

Report on distortions in the economy of Russia 

When the new dumping methodology was introduced in December 2017, the legislation stated 
that the Commission should produce reports on significant distortions describing the market 
circumstances in a country or a sector. In this context, the Commission published a report on 
significant government-induced market distortions in the Russian economy in October 20208.   

This is the second such report after the publication of one in December 2017 describing the 
distortions  existing  in  China.  Russia  was  selected,  as  the  country  subject  to  the  highest 
incidence of AD activity in the EU, after China.  

The  report  is  a  technical,  fact-based  document,  which  draws  on  a  range  of  sources,  in 
particular  Russian  legislation  and  other  official  public  records  in  Russia.  The  report  is 
descriptive in nature and divided in three parts. The first is a macro-economic description of 
the  Russian  economy,  the  second  discusses  the  main  production  factors  used  in  all 
manufacturing processes (e.g. labour, energy) while the third deals with certain sectors of the 
Russian economy, namely steel, aluminium and chemicals.  

1.3.3 

 Improved transparency – changes to pre-disclosure period 

In  the  context  of  the  modernisation  of  TDI  in  2018,  a  ‘pre-disclosure’  obligation  was 
introduced.  This  obliged  the  Commission  to  give  interested  parties  3  weeks  notice  of  the 
intention to impose, or not, provisional measures. The Commission reviewed the provision in 
2020, as requested by the European Parliament and the Council to examine if pre-disclosure 
had led to stockpiling and additional injury to the EU industry. The analysis showed that this 
was  not  the  case  and,  as  a  result,  the  period  of  pre-disclosure  was  increased  to  4  weeks,  in 
August 2020.  

1.4 

Judicial review by EU Courts (Annex S)  

In  2020,  the  General  Court  (GC)  and  the  Court  of  Justice  (CJ)  rendered  17  judgments  and 
orders  in  the  TDI  area:  the  GC  handed  down  12  rulings  whereas  the  CJ  rendered  4 
preliminary rulings and decided on one appeal.  

The jurisprudence in 2020 provides interesting insights into the possible direct effect of WTO 
law in the area of trade defence. The CJ confirmed  the very limited role for WTO appellate 
body reports, underlining that they are not pertinent where they postdate the adoption of the 
contested regulation. The GC confirmed the Rusal case law, by finding that the Protocol on 
the  Accession  of  China  to  the  WTO  cannot  be  relied  on  to  challenge  the  legality  of  the 
contested  regulation.  The  most  important  judgments  are  described  in  the  Staff  Working 
Document.   

8  

Commission  Staff  Working  Document  on  significant  distortions  in  the  economy  of  the  Russian 
Federation for the purposes of trade defence investigations (europa.eu). SWD(2020) 242 final 

8 

 
 
                                                 
30 new cases were lodged in 2020 in relation to TDI – 23 before the GC and 7 before the CJ, 
out of which 6 appeals and 1 request for a preliminary ruling.   

1.5 

Dealing with trade defence activity against the EU 

The Commission monitors and intervenes in TDI investigations conducted by third countries 
targeting EU exports and helps EU exporters develop their defence strategy.  

The  Commission’s  main  objective  is  to  stop  the  imposition  of  unjustified  trade  defence 
measures  on  EU  exports  and/or  to  reduce  the  negative  economic  impact  of  any  measures 
imposed e.g. through a reduction of the duty rate or, in SFG cases, a tariff rate quota instead 
of an ad valorem duty.   

The  Commission  intervenes  at  a  technical  level  in  the  form  of  written  submissions  to  third 
country  investigating  authorities  and  by  participating  in  hearings,  as  well  as  at  the  political 
level.  In 2020, this involved both the Commissioners for Trade and Agriculture raising cases 
with  their counterparts in  the third country  concerned, either in  meetings or through written 
correspondence. The Commission also raises cases in the relevant World Trade Organisation 
(WTO)  Committees.  All  interventions  are  closely  coordinated  with  EU  industry  and 
concerned  Member  States,  focussing  on  cases  with  a  significant  economic  impact  for 
European industries and systemic implications.   

With its  actions,  the Commission  wants  to  ensure that WTO rules are  correctly applied  and 
procedural errors and legal inconsistencies are addressed to counter the abusive use of TDI by 
third  countries.  Of  major  concern  is  a  general  lack  of  transparency  and,  in  many  cases, 
insufficient  injury  and  causal  link  analysis.  Repeated  interventions  by  the  Commission, 
highlighting  legal  inconsistencies  and  systemic  flaws,  have  been  an  important  contributing 
factor in preventing unjustified measures. Some successful interventions in 2020 were:  

  The  Commission  intervened  in  two  safeguard  investigations  conducted  by  Ukraine 
regarding imports of fertilisers, leading to the termination of the investigations without 
measures. The EU export value before the investigation amounted to €190 million.  

  The  Commission,  together  with  industry  and  Member  States,  also  successfully 
intervened in the AD investigation by the Gulf Cooperation Council regarding imports 
of  ceramic  tiles.  As  a  result,  Spain  with  exports  valued  at  over  €200  million,  was 
excluded from the scope of the investigation. 

 

In  two  safeguard  investigations  by  the  Philippines  and  Malaysia,  targeting  ceramic 
tiles,  the  Commission  intervened  in  both  cases.  Both  countries  terminated  the 
investigations without the imposition of measures. 

The Commission also intervenes in AS investigations targeting EU aid schemes. 

 

In January 2020, the US initiated an AD and AS investigation on imports of fluid end 
blocks  from  Germany  and  Italy.  The  AS  investigation  was  notable  in  that  the  US 
concluded that certain free allowances granted under the European Emission Trading 
System (ETS) to the European companies exporting the product to the US constituted 

9 

 
 
a  countervailable  subsidy.  Despite  our  efforts,  this  intervention  did  not  lead  to  a 
satisfactory outcome. 

  A second noteworthy case, which is currently subject to WTO dispute settlement, was 
the  US  AS  measures  on  Spanish  ripe  olives  imposed  in  August  2018.  That 
investigation  targeted  mainly  EU  support  measures  under  the  Common  Agricultural 
Policy,  which  are  considered  not  specific,  not  trade  distortive  and  thus  not 
countervailable.  In  December  2020,  the  Chair  of  the  panel  informed  the  Dispute 
Settlement  Body  that,  due  to  delays  caused  by  the  global  COVID-19  pandemic,  the 
panel expected to issue its final report to the parties by the end of June 2021.  

At  the  end  of  2020,  there  were  178  trade  defence  measures  in  force  affecting  EU  exports, 
which  is  5  more  than  2019  and  represents  the  highest  number  so  far  in  the  Commission’s 
monitoring  activity.  This  level  is  expected  to  remain  stable,  with  a  high  number  of  new 
investigations initiated in 2020, 43 compared to 37 in 2019. 

The AD instrument remains the most used instrument globally, accounting for 133 of the 178 
measures  in  force.  39  of  the  measures  were  SFG  (compared  to  37  in  2019)  and  6  were  AS 
measures. 

There were 43 new investigations opened, 22 SFG proceedings (compared to 30 in 2019), 20 
were AD and one AS investigation.   

The US  has the highest  number of measures against EU exports, with 38 measures in  force 
(36 in 2019), followed by China with 19, Turkey with 16 and India with 15. 

Of  the  measures  in  force  against  the  EU  in  2020,  steel  products  account  for  the  highest 
number – 70 out of 178, comprised of 54 AD, 3 AS and 13 SFG. This is followed by chemical 
products – 48, comprised of 42 AD and 6 SFG. Other sectors frequently targeted are frozen 
fries, ceramic tiles or paper. 

1.6 

Activities in the framework of the WTO 

Due  to  COVID-19,  the  WTO  cancelled  the  April  meetings  of  the  Subsidies  and 
Countervailing,  Anti-dumping  and  Safeguards  Committees  and  held  virtual  meetings  in 
October  2020.  The  Informal  Group  on  Anti-Circumvention  and  the  Anti-dumping  Working 
Group on Implementation did not meet during 2020.   

In the  AD Committee, the EU raised  a number  of third countries’ investigations of concern 
for  EU  Exporters.  These  included:  a  review  investigation  on  imports  of  frozen  chips  /  fries 
from Belgium and the Netherlands by the South African Customs Union (SACU); a review of 
measures on refined sugar from Denmark, the Netherlands, UK and Belgium by Canada and 
the preliminary AD duties on imports on common alloy aluminium sheet originating in seven 
EU Member States by the US.  

In the context of the Subsidies and Countervailing Measures (SCM) Committee, the EU, USA 
and  Japan  co-sponsored  an  agenda  item  on  the  role  of  subsidies  as  a  contributor  to  excess 
capacity in various sectors of economic activity. This is an ongoing exercise to understand the 

10 

 
 
role  which  subsidies  play  in  contributing  to  overcapacities  in  various  sectors.  In  2020, 
discussion focussed on the OECD Report on “Measuring distortions in international markets: 
The semiconductor value chain” as  well as the ongoing work of the  Global  Forum on Steel 
Excess capacity. On the latter, the EU, along with other WTO Members, reiterated its call on 
China  to  resume  its  participation  in  the  Forum  to  tackle  the  problem  of  overcapacity  in  the 
steel sector.    

During the Safeguard Committee meeting, the EU raised a number of concerns regarding the 
following  investigations:  Indonesia:  Articles  of  apparel  and  clothing  accessories,  Morocco: 
Welded  tubes  and  pipes  of  iron  or  steel,  South  Africa:  Certain  flat-rolled  steel  products, 
Turkey: Toothbrushes and Ukraine: Polymeric materials as well as wires and cables. The EU 
also defended its position concerning the safeguard measures on certain steel products, which 
were subject to criticism from India, China, Russia, Japan, Switzerland and Korea. 

In  cases  where,  despite  the  Commission’s  interventions,  unjustified  TDI  measures  are 
imposed,  the  Commission  may  resort  to  WTO  dispute  settlement,  in  particular  when 
significant  systemic  issues  have  been  identified.  There  are  currently  two  on-going  dispute 
settlement procedures brought by the EU, one concerning the Colombian AD duties on frozen 
fries  from  Belgium,  Germany  and  the  Netherlands  and  the  other  concerning  AD  and  AS 
duties imposed by the US on imports of Spanish ripe olives.  

In  January  2020,  the  EU,  US,  Japan  issued  a  ministerial  statement  outlining  how  the  WTO 
industrial subsidy rules should be strengthened in the future. This initiative is important in the 
context  of  strengthening  the  WTO  Agreement  on  Subsidies  and  Countervailing  measures 
(ASCM)  to  deal  with  evolving  subsidy  practices  among  members.  The  changes  proposed 
relate to transparency, identification of harmful subsidies and definitions on public body for 
example. The EU continues to engage in the process.  

1.7 

Activities of the Hearing Officer 

In  2020,  the  Hearing  Officer  received  24  intervention  requests  and  held  12  hearings.  As 
before,  whenever  parties  submitted  the  request  for  an  intervention  simultaneously  with  a 
request  for  a  hearing  with  the  Commission  services  responsible  for  the  investigation,  the 
Hearing Officer maintained its approach that the interested parties should first  address  their 
concerns to the Commission services. The Hearing Officer would then only intervene when a 
solution  was  not  reached.  This  approach  enabled  the  interested  parties  to  find  a  solution 
directly with the investigation teams in half of the cases 

On two occasions, the Hearing Officer extended the deadline for comments. The issues raised 
at  the  hearings  concerned  requests  for  additional  disclosure,  anonymity  and  confidentiality. 
An EU producer also raised the issue of the impact of COVID-19 related measures on trade 
defence proceedings. In all cases, an agreement was reached with the services to review the 
issues at hand, or provide clarifications or additional disclosures.   

In  2020,  the  caseload  was  similar  to  2019.  The  timing  of  requests  was  irregular  due  to 
COVID-19 but the logistics for holding hearings was simpler with the elimination of travel. 

11 

 
 
2 

2.1 

FOCUS ON USE OF SUBSIDIES  

Subsidisation trends 

The  EU’s  AS  cases  initiated  in  the  last  ten-year  period  have  seen  a  marked  increase  in 
comparison to the previous ten years, going from 24 to 32 initiations. This is coupled with a 
dramatic change in the countries primarily concerned by such actions. In the period 2001 to 
2010, India, Indonesia and the US accounted for most of  the EU’s AS initiations, with India 
traditionally as the front-runner with 10 (over 40%) out of the total 24 initiations. However, in 
the period 2011 – 2020, China accounted for 14 (44%) out of 32 cases initiated, with India, 
Indonesia and Turkey accounting for only around 10% of initiations. This number for China, 
accounting for most AS initiations, is even more telling at WTO level where, in the last 10-
year  period  55%  of  AS  cases  initiated  concerned  China.  This  is  a  reflection  of  the  trade 
distorting impact of China’s widespread and complex system of subsidisation of its industry. 
In  2020,  two  of  the  EU’s  three  AS  investigations  initiated  concerned  China  and  the  three 
definitive  AS  measures  imposed  all  related  to  subsidies  granted  by  China  –  either  in  the 
country  itself  or  in  Egypt.  Therefore,  given  that  most  of  AS  activity  in  2020  related  to 
subsidies  where  China  was  in  fact  the  origin,  the  remainder  of  this  section  focuses  on  that 
country. 

2.2  The context of financial support by the PRC 

China’s  government  subsidises  its  companies  in  a  myriad  of  ways,  and  the  lack  of 
transparency  means  that  understanding  them  is  challenging.  In  2006,  China  introduced  the 
concept  of  “indigenous  innovation”9,  with  the  aim  to  “….raise  the  indigenous  innovation 
capacities and to consider this as a pivotal means to adjust economic structures, transform the 
growth model, and improve China’s competitiveness”. Its combination with China’s ‘Go Out’ 
policy  from  1999,  which  set  out  to  promote Chinese investments  abroad,  gives  the 
background  to  numerous  types  of  China’s  industry  support.  The  ‘Made  in  China  2025’ 
(MIC2025)  strategy10  and  roadmap11  issued  in  2015  are  an  expansion  of  China’s  goal  on 
‘indigenous  innovation’  and  cover  new  and  emerging  industries  as  well  as  traditional 
manufacturing industries. The  Belt and Road  Initiative launched in  2013, builds on the ‘Go 
Out’ policy of China by developing trade routes and investing in infrastructure and industry 
projects around the world.   

These  Government  strategies  are  closely  intertwined  with  a  multitude  of  five-year  plans, 
which  determine  the  direction  of  the  Chinese  economy,  by  setting  priorities  and  goals  for 
central  and  local  governments.  The  13th  Five  Year  plan  covered  the  period  2015  –  2020. 
Financial support to industry is one of the means by which the goals of the five-year plans are 
met.  This  was  confirmed  when  the  People’s  Bank  of  China,  together  with  governmental 

9  

10  
11  

2006-2020 National Mid- and Long-term Plan on Science and Technology Development Plan, Section 
I. http://www.gov.cn/jrzg/2006-02/09/content_183787.htm 
http://www.gov.cn/zhengce/content/2015-05/19/content_9784.htm 
Made in China Priority Sectors Roadmap, October 2015. 

12 

 
 
                                                 
departments, released Several Opinions as to how to ensure a more efficient financial support 
to growth and structural adjustment (2016)12 and the Guiding Opinion on Financial Support to 
Build a Strong Manufacturing Country (2017)13. The support can take the form of free or low-
cost loans; artificially cheap raw materials, components, energy, and land; tax exemptions and 
support  for  R&D  and  technology  acquisitions.  These  subsidies  have  contributed  to  massive 
excess global capacity in sectors including steel and aluminium. This has led to an increase in 
unfairly traded exports from China, driving down prices globally and causing injury to many 
industries in importing countries, including in the EU Member States. The EU’s response in 
2020,  as  in  previous  years,  has  been  to  tackle  the  problem  by  imposing  countervailing 
measures  where  justified,  including  the  adoption  of  a  new  approach  for  new  problems  as 
outlined in the next section.    

2.3  Dealing  with  cross-country  subsidisation  under  the  Anti-subsidy 

instrument 

One  of  the  major  initiatives  under  China’s  Belt  and  Road  Initiative  is  creating  overseas 
Economic and Trade Cooperation Zones. The purpose of these zones includes gaining access 
to raw materials, transferring production (excess) capacities and making use of the benefits of 
trade agreements signed by the host country with third countries. 

Two  AS  investigations,  completed  in  2020,  were  notable  in  that,  for  the  first  time  the 
Commission imposed countervailing duties on such cross-border financial support. In the two 
cases,  the  Commission  countervailed  Chinese  subsidies  given  to  Chinese-owned  companies 
manufacturing glass fibre fabrics and continuous filament glass fibre products based in Egypt 
and  exporting  from  there  to  the  EU.  In  the  glass  fibre  fabrics  case,  the  Commission  also 
countervailed subsidies granted to exporting producers of the product based in China. In line 
with  changes  introduced  in  2018  under  the  modernisation  of  the  trade  defence  instruments, 
the  lesser  duty  rule  was  not  applied  in  these  investigations  resulting  in  measures  that  fully 
offset the subsidies the exporters received. 

The investigations showed that Chinese-owned companies operated from a Special Economic 
Zone  in  the  territory  of  Egypt  and  were  provided  with  subsidies  by  the  governments 
concerned,  benefitting  from  exports  to  the  EU.  These  subsidies  created  additional  capacity 
and opened new channels for export of subsidised products to the EU, causing injury to EU 
companies producing the same products. 

China provided many of the subsidies as part of the Chinese Belt and Road Initiative making 
the subsidies a factor in fostering local production.   

The  investigations  confirmed  the  growing  practice  of  state-owned  Chinese  companies 
receiving subsidies to export production capacity outside of China to special economic zones. 

12  

13  

http://www.gov.cn/xinwen/2016-02/16/content_5041671.htm  (People’s  Bank  of  China,  NDRC,  MIIT, 
MOF, MOFCOM, CBRC, CSRC, CIRC). 
http://www.miit.gov.cn/n1146295/n1652858/n1652930/n3757016/c5552432/content.html 
(People’s Bank of China, MIIT, CBRC, CSRC, CIRC). 

13 

 
 
                                                 
This practice was used in Egypt, where exporters proceeded to supply the Union market with 
dumped  and  subsidised  products  duty  free,  presenting  a  challenge  with  regard  to  the  EU-
Egypt Association Agreement.      

Tackling  such  cross-country  subsidisation  shows  the  Commission’s  commitment  to  counter 
new  types  of  subsidisation  which  are  damaging  the  EU  industry.  This  response  by  the 
Commission  in  2020  to  China’s  evolving  subsidy  practices  builds  on  an  earlier  case  where 
another Belt and Road Initiative was successfully countervailed. The AS investigation on tyre 
imports  from  China,  where  measures  were  imposed  in  2018,  was  the  first  time  the 
Commission countervailed the Silk Road Fund. The investigation found that tyre imports, not 
only benefitted from the usual range of distorting financing by China, but from a package of 
support measures by the Government of China (preferential loans/refund on interest paid on 
loan/equity participation in restructuring exercise/grants). This allowed China National Tire & 
Rubber Co. Ltd (CNRC) to acquire a 65% stake in Pirelli Group at the end of 2015. Those AS 
measures are still in place.   

2.4  Levelling the playing field as regards foreign subsidies 

In June 2020, the Commission issued a “White paper on levelling the playing field as regards 
foreign subsidies”. While EU State aid  controls deal  with  subsidies  granted by EU Member 
States,  and the trade defence instruments  tackle the damaging effects  of subsidised imports, 
there remains a regulatory gap. None of the existing instruments address subsidies provided 
by third  countries  for the acquisition, or  financing, of EU  companies  and thereby providing 
them with an unfair competitive advantage against their European competitors. The aim of the 
Commission’s initiative is to create instruments that would protect against foreign-subsidised 
services  and  investments.  It  would  close  an  enforcement  gap  for  foreign  subsidies  and 
complement  existing  instruments.  In  May  2021,  the  Commission  adopted  a  proposal  for  a 
regulation to tackle foreign subsidies distorting the internal market14. 

3 

 CONCLUSION 

The  robust  and  innovative  ways  of  using  the  trade  defence  instruments  in  2020  showed  the 
EU’s  continued  commitment  to  rules  based  open  trade.  The  Commission  adapted  to  the 
practical  challenges  presented  by  the  COVID-19  pandemic  to  ensure  the  ‘system  for 
protecting EU businesses from dumped and subsidised imports’ continued to ‘function well’, 
as stated by European Court of Auditors in its audit report published in mid-2020. By using 
the  countervailing  duty  instrument  to  tackle  previously  unchallenged  subsidy  practices  by 
third countries, the EU has signalled that it will address new distortive practices harming our 
industries. Building on that experience, as well as the implementation of the European Court 
of Auditors’ recommendations means that, as we return to ‘normal’ working procedures after 
the pandemic, the EU remains strong in its ability to tackle unfair trade.   

14  

COM(2021) 223 final 

14