Anti-subsidy measures

SUMMARY OF:

Regulation (EU) 2016/1037 on protection against subsidised imports from non-EU countries

WHAT IS THE AIM OF THE REGULATION?

Regulation (EU) 2016/1037 sets out EU rules on the protection against subsidised imports from non-EU countries and the conditions for the application of countervailing measures.

It has been amended three times: by Regulation (EU) 2017/2321, by Regulation (EU) 2018/825 and by Delegated Regulation (EU) 2020/1173.

KEY POINTS

Regulation (EU) 2016/1037

A countervailing duty is applied to counteract the injurious effects of the subsidised imports of a product on the EU producers of the same product market and to restore fair competition. The duty is paid by the importer and collected by the customs authorities of the EU country concerned.

Four conditions must be met before anti-subsidy measures can be imposed on imports of a product:

the imports benefit from a specific subsidy;
there must be material injury* to the EU industry producing the like product*;
there must be a causal link between the subsidised imports and the material injury; and
the anti-subsidy measure must not be against EU interest — the measures should not cause more harm to its overall economy than the relief brought to the industry suffering from the imports.

Initiating a complaint

An anti-subsidy complaint is filed with the European Commission by or on behalf of the EU producers of the product concerned either directly or via the authorities of an EU country. Other parties, such as trade unions, may also submit complaints jointly with the EU industry and become interested parties in the proceedings. In special circumstances, the Commission may also open an investigation into subsidies on its own initiative.
Any complaint must include evidence of subsidy, injury and a causal link between the allegedly subsidised imports and the alleged injury.
To protect confidential business data, two versions of a complaint need to be lodged: a confidential version and a non-confidential version. The first will be available only to Commission staff directly working on the case. The non-confidential version will be accessible by all interested parties once the investigation is opened, upon request.
The Commission must examine the accuracy and adequacy of the evidence provided in the complaint to determine whether there is a sufficient basis to justify initiating an investigation. This must be done within 45 days of the complaint being lodged.
Prior to initiating an anti-subsidy investigation, the Commission is required to offer consultations to the government of the exporting country.

Anti-subsidy investigation

Once the Commission decides to launch an investigation, it must publish a notice in the Official Journal of the European Union. It contacts all known manufacturers and all other interested parties requesting them to complete questionnaires by a strict deadline.
Where there are many potentially interested parties, the Commission may decide to carry out its investigation on the basis of a sample of operators (exporting producers, EU manufacturers, importers, users).
Where, based on its investigation, the Commission considers that subsidisation causing injury has occurred, anti-subsidy measures may be imposed on imports into the EU of the product concerned. These measures generally take the form of:
- an ad valorem duty — a percentage of the import value of the product concerned;
- specific duties — a fixed value for a certain amount of goods, e.g. €100 per tonne of a product; or
- a price undertaking — a commitment by an exporter to respect minimum import prices.
The authorities of the exporting country can also undertake to eliminate the subsidy or take measures concerning the effects of the subsidy.
Provisional measures, if any, must be imposed no later than 9 months after the investigation has begun and must remain in place for a maximum of 4 months. This may be followed by the imposition of definitive measures, which remain in force for 5 years.
Duties are paid by the importer in the EU and are collected by the national customs authorities of the EU countries concerned.
Measures in force may be reviewed (interim review) under certain conditions. The scope of this review is usually limited to one or various elements of the initial measures, e.g. the level of subsidisation and/or injury, the product scope, or the form of the measures.
After 5 years, the measures lapse unless an expiry review concludes that, if the measures were to expire, subsidisation and material injury would likely continue or recur.
Importers may request a full or partial refund of duties paid if they can show that the subsidy margin, on the basis of which the duties were paid, has been eliminated or reduced.
The EU’s anti-subsidy rules are based on the global standards set by the World Trade Organization (WTO).

Amending Regulation (EU) 2017/2321

As experience showed that some subsidies are only discovered during the relevant investigation, amending Regulation (EU) 2017/2321 added a subparagraph requiring the Commission, in those situations, to offer additional consultations regarding these subsidies to the country of origin and/or of export concerned with regard to such subsidies identified in the course of the investigation.

Amending Regulation (EU) 2018/825

Among other things, the regulation does the following.

It streamlines the investigation process and makes it easier for smaller businesses to participate in trade defence investigations (including the creation of a small and medium-sized enterprise (SME) trade defence helpdesk).
It amends how the rule known as the ‘lesser duty rule’ is applied in anti-subsidy cases. The EU had previously imposed measures at a level lower than the full extent of the subsidisation, where a lower level (the ‘injury margin’) was sufficient to remove the injury suffered by the EU industry. Under the new rules, anti-subsidy measures can fully offset the subsidies that an exporter has received, provided this is in the interest of the EU as a whole to do so.
It introduces new rules on calculating the ‘non-injurious price’ (the price that the industry is expected to have charged under normal circumstances). The calculation may now take into account the cost of necessary investments, for example in infrastructure or research and development, but also future expenses related to social and environmental standards, for example under the EU’s emission trading system. The non-injurious price now assumes a minimum profit of 6% that will be included in the calculation, with a higher profit margin possible on a case-by-case basis.
It introduced a pre-disclosure period, during which interested parties received information on the imposition, or not, of provisional measures 3 weeks in advance. In the review carried out in line with amending Regulation (EU) 2018/825, the Commission concluded that, overall, no additional injury to the EU industry had been caused by the imports during the pre-disclosure period. It therefore adopted a delegated act amending the duration of the period of pre-disclosure to 4 weeks (Delegated Regulation (EU) 2020/1173).

FROM WHEN DOES THE REGULATION APPLY?

Regulation (EU) 2016/1037 has applied since 20 July 2016. It codified and replaced Regulation (EC) No 597/2009 and its subsequent amendments.
Amending Regulation (EU) 2017/2321 has applied since 20 December 2017.
Amending Regulation (EU) 2018/825 has applied since 8 June 2018.
Delegated Regulation (EU) 2020/1173 has applied since 11 August 2020.

BACKGROUND

A subsidy is a financial contribution, such as a grant or a loan, usually paid by the government of a non-EU country. It confers benefit to a business or industry exporting its products into the EU, thus distorting competition in the EU market. To counteract this distortion and restore fair competition, the EU may impose countervailing duties on such imports.
The EU’s anti-subsidy rules are based on the global standards set by the WTO.
For more information, see:
- Anti-subsidy (European Commission)
- Notice: On the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations.

KEY TERMS

Material injury: substantial injury to EU industry, e.g. loss of market share, reduced price levels and/or reduced profitability.

Like product: a product which is identical to or closely resembles the imported product under consideration.

MAIN DOCUMENT

Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (codification) (OJ L 176, 30.6.2016, pp. 55-91)

Successive amendments to Regulation (EU) 2016/1037 have been incorporated into the original text. This consolidated version is of documentary value only.

last update 16.10.2020