GENERAL GOALS:
The European Union’s Trade Defence legislation aims to remove the distortions caused by dumped or subsidized imports from third countries, or imports that circumvent existing tariff barriers, and to restore actual competition on the European market.
Depending on whether these are instruments implemented by the EU vis-à-vis third countries or measures implemented by the latter vis-vis the EU (or some EU Member States), we speak of active trade defence and passive trade defence. In this regard, the Ministry of Foreign Affairs and International Cooperation carries out support, guidance and consultancy activities for all Italian companies that wish to activate trade defence measures, serving as the entity lodging the relevant complaints to the competent European institutions, or – on the other side – for the Italian companies that are involved in trade defence proceedings initiated by third countries.
CONTACTS:
Minister of Foreign Affairs and International Cooperation – DGUE – Office X
E-mail: dgue-10@esteri.it
Certified e-mail: dgue.10@cert.esteri.it
In compliance with the WTO Agreements, States can provide for three types of Trade Defence instruments:
- anti-dumping measures against imports made on the local market by companies from third countries that sell their products at lower prices than the selling price charged on the market of origin of the goods (dumped imports);
- anti-subsidy measures against imports that benefit from State aid and subsidies granted by the government of the country of origin to its exporting companies;
- safeguard measures,which can be activated in the event of severe harm to local companies resulting from market distortions, such as anomalous import flows.
Nature of the proceedings
Pursuant to EU law, in cases where the European Commission ascertains that imports into the EU market are made through dumping practices, it provides for the application of import duties to exporting companies. These duties are aimed at raising the final price of the imported goods up to the price level in force in the market of origin of the goods.
Aim of the proceedings
The anti-dumping measures are used to protect the EU market of a given product from harm caused to the production system, as a result of imports of goods offered at lower prices than the prices of the same goods sold on the market of origin.
How and to whom duties are imposed
Anti-dumping duties are imposed if, during the proceedings, the existence of the four following conditions are ascertained:
- existence of dumping practices, i.e. when the selling price of goods exported to the European market is lower than the price of the same goods charged on the market of origin of the goods;
- existence of significant harm caused to European producers as a result of dumping practices;
- existence of a causal link between the harm caused and the dumping practices (i.e. the harm to the European industry must be caused by dumped imports);
- EU interest: the benefits resulting from the imposition of the duty shall outweigh the costs that would arise therefrom (for example for downstream industries or for consumers).
The duty is imposed on all exporting companies in the country from which the dumped goods originate. The level of the anti-dumping duty shall be equal to the difference between the price charged in the country of origin of the goods and the selling price on the European market (the duty is calculated as a percentage of the export price). If a lower duty can eliminate any harm to the European industry, the value of the duty shall be equal to the level at which the harm caused to the industry is eliminated (this is called “lesser duty” rule). Following the publication of Regulation 2018/825, this “lesser duty” rule is partially not imposed (for example, in the case of significant distortions in the market of origin of the goods under consideration).
Subjects involved in the proceedings
- The company or companies concerned, which are required to lodge a complaint containing evidence relating to the conditions necessary for imposing an anti-dumping duty, as well as evidence relating to the company or companies concerned and the reference market. During the proceedings, companies may intervene to submit their own considerations. The Commission has drafted a Guide for drafting an anti-dumping complaint in view of lodging complaints.
- The industry association, which may lodge the complaint on behalf of its members and which, in any case, may carry out an important data collection activity.
- The Ministry of Foreign Affairs and International Cooperation, which may act as an intermediary between the companies concerned and the Commission, assisting both of them in the preparation of the dossier. Furthermore, based on the feedback received from the parties concerned and a comprehensive assessment of all the interests involved, the Ministry of Foreign Affairs and International Cooperation drafts the national position on the measures proposed by the Commission and transmits it to the European Commission.
- The European Commission, which manages the whole procedure and proposes to the Council the possible adoption of countervailing duties.
- The manufacturing companies in third countries, which are urged to actively participate in the proceedings, providing the Commission with the necessary data to assess the possible existence of dumping practices.
- The Council of Ministers of the European Union, which decides on the adoption of definitive measures.
Hearing Officer
The rights of the parties involved in the proceedings are guaranteed by the Hearing Officer, who has been envisaged since 2012, but made formally operational starting from 2018, within the process for modernizing the EU trade defence instruments.
It is available to companies (including SMEs), industry associations, law firms, etc.
For more information, consult the Commission website:
https://ec.europa.eu/trade/trade-policy-and-you/contacts/hearing-officer/
Duration of the proceedings
The proceedings normally end within one year of their initiation. In any case, the time limit is 15 months.
After 60 days from the initiation of the proceedings, provisional duties may be imposed. Definitive duties are adopted by the Commission, after consultation with the Member States. The Commission’s proposal is deemed adopted in the absence of a qualified majority of Member States expressing their rejection (in the event of a simple majority against the proposal, a further step in the Appeal Committee is foreseen).
The Regulation on the imposition of duties remains in force for five years, unless the parties concerned, or the Commission request the initiation of a review procedure ex officio (so-called interim review and/or sunset review).
Reference legislation:
EU Regulation No. 2016/1036 (so called anti-dumping “Basic Regulation”)
EU Regulation No.2017/2321
EU Regulation No. 2018/825
EU Regulation No. 2019/1382
Delegated Regulation No. 2020/1173
Nature of the proceedings
Pursuant to EU law, in cases where the European Commission ascertains the existence of imports into the EU by companies that benefit, in the countries of origin of the goods, from State aid/subsidies prohibited by international law, import countervailing duties shall be imposed, i.e. duties that are aimed at increasing the final price of the imported goods, offsetting the downward effect caused by the subsidies.
Aim of the proceedings
The anti-subsidy measures serve to protect the European market of a given product from harm caused to the production system, as a result of imports of goods produced by companies from third countries that benefit or benefitted from State aid.
When and to whom duties are imposed
Countervailing duties are imposed if, during the proceedings, the existence of the following four conditions is ascertained:
- existence of specific State aid, i.e. for a single production sector or for a single company or category of companies;
- existence of significant harm caused to European producers as a result of subsidized imports;
- existence of a causal link between the harm caused and the subsidy (i.e. the harm to the European industry shall be caused by imports of subsidized products);
- EU interest: the benefits resulting from the introduction of the duty shall be greater than the costs that would result therefrom (for example, for consumers).
The countervailing duty is imposed on the exporting companies that benefitted from the subsidies and on the country providing the subsidies. The level of the anti-subsidy duty shall be equal to the amount of the subsidy from which the companies benefitted (calculated as a percentage of the export price). If a lower duty can eliminate all the harm caused to the EU industry, the value of the duty shall be equal to the level at which the harm caused to the industry is eliminated (this is called the “lesser duty” rule).
Subjects involved in the proceedings
- The company or companies concerned, which are required to lodge a complaint containing evidence relating to the conditions necessary for imposing an anti-dumping duty, as well as evidence relating to the company or companies concerned and the reference market. During the proceedings, companies may intervene to submit their own considerations.
- The industry association, which may lodge the complaint on behalf of its members and which, in any case, may carry out an important data collection activity.
- The Ministry of Foreign Affairs and International Cooperation, which may act as an intermediary between the companies concerned and the Commission, assisting both of them in the preparation of the dossier. Based on the feedback received from the parties concerned and a comprehensive assessment of all the interests involved, the Ministry of Foreign Affairs and International Cooperation drafts the national position on the measures proposed by the Commission and transmits it to the European Commission.
- The European Commission, which manages the whole procedure and proposes to the Council the possible adoption of countervailing duties.
- The manufacturing companies in third countries, which are urged to actively participate in the proceedings, providing the Commission with the necessary data to assess the possible existence of State aid/subsidies.
- The Council of Ministers of the European Union, which decides on the adoption of definitive measures.
Hearing Officer
The rights of the parties involved in the proceedings are guaranteed by the Hearing Officer, who has been envisaged since 2012, but made formally operational starting from 2018, within the process for modernizing the EU trade defence instruments.
It is available to companies (including SMEs), industry associations, law firms, etc.
For more information, consult the Commission website:
https://ec.europa.eu/trade/trade-policy-and-you/contacts/hearing-officer/
The procedure for lodging complaints and the subjects involved, at various levels, in the proceedings are the same as those already indicated for anti-dumping investigations.
Reference legislation:
EU Regulation No. 2016/1037 (so called anti-subsidy “Basic Regulation”)
EU Regulation No.2017/2321
EU Regulation No. 2018/825
EU Regulation No. 2019/1382
Delegated Regulation No. 2020/1173
Nature of the proceedings
Although having some aspects in common with the anti-subsidy and anti-dumping measures, the proceedings relating to the implementation of safeguard measures differ from the latter by virtue of their emergency nature. If the existence of a severe crisis or a risk of severe crisis caused by sudden changes in trade flows is ascertained, the imposition – even immediately – of duties and/or quotas on imports for a given product is permitted in order to protect European production on an exceptional and temporary basis. The import quotas shall not be lower than the average of imports recorded in the last three reference years for which statistics and data are available.
To this end, it should be noted that, where the conditions exist, the import of a product may be subject to European checks (so-called surveillance) by decision of the Council or the Commission. Surveillance, which is normally activated by a decision of the Commission, may consist of post-clearance checks on imports (statistical surveillance) or of preventive surveillance. In the latter case, the products subject to preventive surveillance may be released for free circulation in the EU subject to the provision of an import document.
Aim of the proceedings
The safeguard measures serve to protect the European market of a given product from harm caused to the production system as a result of significant changes in trade flows (for example sudden and significant import flows that do not enable EU producers to reorganise production to counteract the impact).
Details of measures:
- “provisional measures” may be imposed – for a maximum period of 200 days – in critical circumstances and where it has been preliminarily ascertained that there is sufficient evidence to demonstrate that the increase in imports of a certain product (or a certain type of products) has caused or threatens to cause severe damage;
- “definitive measures” may be imposed for a period not exceeding four years (including the period of implementation of any provisional measures), subject to extensions for a maximum of eight years.
When and to whom safeguard measures are imposed (duty and/or quota)?
Safeguard measures are applicable if, during the proceedings, the 3 following conditions are ascertained:
- sudden, evident and significant increase in imports of the product under consideration;
- existence of a severe current crisis or threat of potential crisis in a European production sector, as a result of a sudden and substantial increase in imports;
- EU interest: the benefits resulting from the introduction of the duty shall be greater than the costs that would result therefrom (for example, for consumers).
“Safeguard measures” apply erga omnes, i.e. to imports of the product under consideration coming from non-EU countries.
Duration of the proceedings
The duration of the proceedings is set at nine months from the date of their initiation, extendable – where necessary – for a further two months. After 60 days from the initiation of the proceedings, provisional measures may be imposed for a maximum duration of 200 days. The measures are adopted by the Commission, after consultation with the Member States, for a period that cannot exceed four years (including the duration of any provisional measures).
Hearing Officer
The rights of the parties involved in proceedings are guaranteed by the Hearing Officer, who has been envisaged since 2012, but made formally operational starting from 2018, within the process for modernizing the EU trade defence instruments.
It is available to companies (including SMEs), industry associations, law firms, etc.
For more information, consult the Commission website:
https://ec.europa.eu/trade/trade-policy-and-you/contacts/hearing-officer/
Reference legislation:
EU Regulation No. 2015/478
EU Regulation No. 2015/755 (General Safeguard Measures)
EU Regolation No. 2019/1382
ANTI-CIRCUMVENTION MEASURES
Anti-circumvention measures result from the provisions on anti-dumping and anti-subsidy measures. These measures serve to prevent anti-dumping and anti-subsidy duties from being circumvented through operations that artificially alter trade flows – for example, minimal processing or transit through third countries – without any real economic justification, carried out after the introduction of the trade defence measure.
Nature of measures:
This involves the extension of anti-dumping or anti-subsidy duties to imports from third countries where minimal processing or transit occurs without any economic justification other than the imposition of trade defence measures. Circumvention of anti-dumping measures, however, is excluded if the added value resulting from processing exceeds 25% of the production cost. The investigation to ascertain circumvention is conducted within nine months.
Reference legislation:
EU Regulation 2016/1036, Art. 13 (so-called Anti-dumping “Basic Regulation”)
EU Regulation 2016/1037, Art. 23 (so-called Anti-subsidy “Basic Regulation”)
When the Ministry of Foreign Affairs and International Cooperation receives notification of a trade defence investigation initiated by a third country against Italy or Italian companies – usually through the competent Directorate of the European Commission or our Embassies abroad – it informs the national industry of the sectors concerned, usually through its trade associations, providing details regarding the proceedings.
If this has an impact on national interests, the Foreign Ministry may actively participate in the investigation as an interested party, by transmitting its considerations and, where necessary, replying to the questionnaires provided by the competent foreign authorities. This occurs particularly in anti-subsidy investigations, which see the direct participation of the Foreign Ministry, also through the local Embassies, in all phases of the proceedings, in close collaboration with the European Commission.
If a company is involved in an investigation or has specific questions, it may contact its national and/or European industry association and/or the Foreign Ministry for appropriate guidance and an assessment of the proceedings.
Reference legislation:
GATT 94
Agreement on the Implementation of Article VI of GATT 94
Agreement on subsidies and countervailing measures
Agreement on safeguard measures