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EU proposes changes to anti-dumping legislation

The European Commission has proposed a new method of calculating the 'dumping' of cheap products to ensure the EU's trade defence measures are able to deal with overcapacity in world markets.09 Nov 2016

The EU needs to ensure that its trade defence instruments remain effective in dealing with significant market distortions in some countries that can lead to industrial overcapacity, and that encourage exporters to dump their products on the EU market, the Commission said.

"This causes damage to European industries, which ultimately can result in job losses and factory closures, as has been the case recently in the EU steel sector," it said.

Under current rules, in normal market circumstances dumping is calculated by comparing the export price of a product to the EU with the domestic prices or costs of the product in the exporting country.

This approach will now be complemented by a new, country-neutral methodology that will apply in the same way to all World Trade Organisation (WTO) members and will take into account any significant distortions in countries due to state influence in their economy, the Commission said.

WTO members will no longer be part of a list of countries subject to the current "analogue country" methodology. Under the analogue country method, an investigation that is not able to gather credible data from a non-market economy is required to use a country in which the general capacity and type of production closely approximates that of the investigated country. The intention is to allow investigators to model the costs of production in the investigated country as if that country operated on market economy conditions. This approach will now be reserved for non-market economy countries that are not members of the WTO, the Commission said.

The proposal also includes a transition period during which all anti-dumping measures currently in place as well as ongoing investigations would remain subject to the existing legislation. The Commission has proposed a strengthening of EU anti-subsidy legislation so that in future cases any new subsidies revealed in the course of an investigation can also be investigated and included in the final duties imposed.

An impact assessment has demonstrated that "the new methodology will result in a broadly equivalent level of anti-dumping duties as is currently the case", the Commission said.

EU Commission vice-president Jyrki Katainen, responsible for jobs, growth, investment and competitiveness, said: "Trade is Europe's best growth lever. But free trade must be fair, and only fair trade can be free. Today we are presenting a proposal to adapt our trade defence instruments to deal with the new realities of over-capacity and a changing international legal framework. More than 30 million jobs in Europe, including six million jobs in SMEs, depend on free and fair trade which remains at the heart of EU strategy for jobs and growth."

Competition expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com said: "Although not explicitly identified, it is likely that the Commission's new approach will disproportionately affect investigations into Chinese producers".

The European Parliament and the Council will now decide on the proposal.

The Commission imposed new duties on the import of steel products from China and Russia in August in an attempt to reduce the 'dumping' of cheap steel in Europe. The duties are to be imposed on cold rolled steel, which is used in packaging, white goods, and automotive, construction and general industries.

The Commission began an investigation into the imports in May 2015 following a complaint from the European Steel Association.

EU trade commissioner Cecilia Malmström asked China in February to reduce the overcapacity in its steel mills. Shortly afterwards, the Commission imposed a provisional anti-dumping duty on imports on the cold rolled steel products from China and Russia.

The EU currently has over 100 trade defence measures in place, 37 of them targeting unfair imports of steel products, of which 15 are from China. Twelve more investigations concerning steel products are still ongoing, the Commission said.