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Document 62009TJ0512
Judgment of the General Court (Second Chamber, extended composition) of 5 November 2013. # Rusal Armenal ZAO v Council of the European Union. # Dumping - Imports of certain aluminium foil originating in Armenia, Brazil and China - Accession of Armenia to the WTO - Market economy treatment - Article 2(7) of Regulation (EC) No 384/96 - Whether compatible with the Anti-Dumping Agreement - Article 277 TFEU. # Case T-512/09.
Judgment of the General Court (Second Chamber, extended composition) of 5 November 2013.
Rusal Armenal ZAO v Council of the European Union.
Dumping - Imports of certain aluminium foil originating in Armenia, Brazil and China - Accession of Armenia to the WTO - Market economy treatment - Article 2(7) of Regulation (EC) No 384/96 - Whether compatible with the Anti-Dumping Agreement - Article 277 TFEU.
Case T-512/09.
Judgment of the General Court (Second Chamber, extended composition) of 5 November 2013.
Rusal Armenal ZAO v Council of the European Union.
Dumping - Imports of certain aluminium foil originating in Armenia, Brazil and China - Accession of Armenia to the WTO - Market economy treatment - Article 2(7) of Regulation (EC) No 384/96 - Whether compatible with the Anti-Dumping Agreement - Article 277 TFEU.
Case T-512/09.
Court reports – general
ECLI identifier: ECLI:EU:T:2013:571
JUDGMENT OF THE GENERAL COURT (Second Chamber, Extended Composition)
5 November 2013 ( *1 )
‛Dumping — Imports of certain aluminium foil originating in Armenia, Brazil and China — Accession of Armenia to the WTO — Market economy treatment — Article 2(7) of Regulation (EC) No 384/96 — Whether compatible with the Anti-Dumping Agreement — Article 277 TFEU’
In Case T-512/09,
Rusal Armenal ZAO, established in Yerevan (Armenia), represented by B. Evtimov, lawyer,
applicant,
v
Council of the European Union, represented initially by J.P. Hix, acting as Agent, and by G. Berrisch and G. Wolf, lawyers, and subsequently by J.P. Hix and B. Driessen, acting as Agents, and by G. Berrisch, and lastly by J.P. Hix and B. Driessen,
defendant,
supported by
European Commission, represented by M. França and C. Clyne, acting as Agents,
intervener,
APPLICATION for the annulment of Council Regulation (EC) No 925/2009 of 24 September 2009 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain aluminium foil originating in Armenia, Brazil and the People’s Republic of China (OJ 2009 L 262, p. 1),
THE GENERAL COURT (Second Chamber, Extended Composition),
composed of N.J. Forwood (Rapporteur), President, F. Dehousse, I. Wiszniewska-Białecka, M. Prek and J. Schwarcz, Judges,
Registrar: N. Rosner, Administrator,
having regard to the written procedure and further to the hearing on 3 October 2012,
gives the following
Judgment
Background to the dispute
1 |
The applicant, Rusal Armenal ZAO, is a manufacturer and exporter of aluminium products that was established in 2000 in Armenia. On 5 February 2003, the Republic of Armenia acceded to the Agreement establishing the World Trade Organisation (WTO) (OJ 1994 L 336, p. 3). |
2 |
Following a complaint lodged on 28 May 2008, the European Commission initiated an anti-dumping proceeding concerning imports of certain aluminium foil originating in Armenia, Brazil and China. The notice of initiation of that proceeding was published in the Official Journal of the European Union of 12 July 2008 (OJ 2008 C 177, p. 13). |
3 |
By letters of 25 July and 1 September 2008, the applicant disputed, inter alia, whether Article 2(7) of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), as amended (‘the basic regulation’) – replaced by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, corrigendum in OJ 2010 L 7, p. 22) – was applicable in the present case, having regard to (i) the accession of the Republic of Armenia to the WTO since 2003, (ii) the fact that the conditions for the application of the second supplementary provision to paragraph 1 of Article VI of the General Agreement on Tariffs and Trade 1994 (the GATT) were not met and (iii) the fact that the instruments of accession of the Republic of Armenia to the WTO do not provide for the possibility of derogating from the rules of the Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (OJ 1994 L 336, p. 103, ‘the Anti-Dumping Agreement’). In addition, in the context of the analysis relating to price undercutting/underselling, the applicant pointed to deficiencies associated with its products, a matter on which it provided additional information in a letter dated 7 October 2008. |
4 |
Besides, the applicant submitted a claim to be granted market economy treatment or, failing that, individual treatment (‘the MET/IT claim’). In that regard, by letter of 19 December 2008, the Commission sent the applicant the considerations on the basis of which it concluded that the criteria relating to accounting records and production costs referred to in the second and third indents of Article 2(7)(c) of the basic regulation (now the second and third indents of Article 2(7)(c) of the Regulation No 1225/2009) were not met. By letter of 5 January 2009, the applicant repeated its complaints against the application of Article 2(7) of the basic regulation in respect of Armenia and disputed the assessments made by the Commission concerning the criteria which the latter considered not to have been met. By letter of 19 January 2009, the Commission replied to the letter of 5 January 2009, providing, inter alia, additional explanations regarding whether Armenia had market economy status. By letter of 13 March 2009, the applicant submitted to the Commission additional evidence relating to its MET/IT claim. |
Provisional regulation and the contested regulation
5 |
On 7 April 2009, the Commission adopted Regulation (EC) No 287/2009 imposing a provisional anti-dumping duty on imports of certain aluminium foil originating in Armenia, Brazil and the People’s Republic of China (OJ 2009 L 94, p. 17, ‘the provisional regulation’). By letter of 8 April 2009, in accordance with Articles 14(2) and 20(1) of the basic regulation (now Articles 14(2) and 20(1) of Regulation No 1225/2009), the Commission communicated the provisional regulation to the applicant, together with the considerations relating to the calculation of the dumping and injury margins applicable to it. |
6 |
Turkey was designated as an analogue country for the purposes of calculating a normal value for exporting producers to which market economy treatment would not be granted. A Turkish producer of the like product replied to the questionnaire sent out by the Commission (recitals 10, 12 and 52 in the preamble to the provisional regulation). |
7 |
According to recital 13 of the provisional regulation, the investigation of dumping and injury covered the period from 1 July 2007 to 30 June 2008. The examination of the trends relevant for the assessment of injury covered the period from 1 January 2005 to 30 June 2008. |
8 |
According to recital 19 of the provisional regulation, the product concerned is aluminium foil of a thickness of not less than 0.008 mm and not more than 0.018 mm, not backed, not further worked than rolled, in rolls of a width not exceeding 650 mm and of a weight exceeding 10 kg originating in Armenia, Brazil and China falling within CN code ex 7607 11 19. With regard to the like product, recital 20 of the provisional regulation states that aluminium foil produced and sold by the Community industry in the Community, aluminium foil produced and sold on the domestic markets of Armenia, Brazil and China and aluminium foil imported into the Community from those countries, as well as that produced and sold in Turkey, have essentially the same basic physical and technical characteristics and are intended for the same basic end uses. |
9 |
As regards the grant of market economy treatment, the Commission concluded, first of all, that Armenia could not be regarded as a market economy, since it is mentioned in the footnote accompanying Article 2(7)(a) of the basic regulation (now Article 2(7)(a) of Regulation No 1225/2009). Next, the Commission stated that the applicant did not meet the criteria relating to accounting records and production costs referred to in the second and third indents of Article 2(7)(c) of the basic regulation. In that regard, first, the applicant’s accounts for the 2006 financial year contained an adverse opinion from the auditors and the applicant had failed to provide duly audited accounts for the 2007 financial year. Secondly, the price paid to the Armenian State to acquire shares in the undertaking operating on the former production site was around one third of their nominal value and, moreover, the applicant had obtained land for free (recitals 24, 25 and 27 to 31 of the provisional regulation). |
10 |
As far as the calculation of the dumping margin is concerned, the Commission explained, in an annex to its letter of 8 April 2009 (see paragraph 5 above), that the applicant satisfied the conditions to be granted individual treatment. In addition, the comparison of the weighted average normal values of each product type in question exported to the Community and originating from the Turkish manufacturer who replied to the related questionnaire with the corresponding weighted average export prices of the applicant had resulted in a dumping margin of 37%. Those facts are reproduced in recitals 42, 74 and 77 of the provisional regulation. |
11 |
Since the Commission took the view that the criteria relating to injury, causation and Community interest were met, it proceeded to impose a provisional anti-dumping duty tied to the injury elimination level, taking into account a non-injurious price which the Community industry should obtain. Accordingly, the provisional anti-dumping duty was set at 20% in relation to the products manufactured by the applicant (recitals 91 to 94, 119 to 138 and 164 to 170 of the provisional regulation). |
12 |
By letter of 15 July 2009, the Commission sent the applicant, pursuant to Article 20(2) to (4) of the basic regulation (now Article 20(2) to (4) of Regulation No 1225/2009), a final disclosure document setting out the essential facts and considerations on which the proposal to impose definitive anti-dumping duties was based. The Commission invited the applicant to submit its comments to it on the final disclosure document by 30 July 2009. |
13 |
By letter of 22 July 2009, the applicant submitted its observations on the final disclosure document and made an offer of an undertaking within the meaning of Article 8(1) of the basic regulation (now Article 8(1) of the Regulation No 1225/2009). |
14 |
On 24 September 2009, the Council of the European Union adopted Regulation (EC) No 925/2009 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain aluminium foil originating in Armenia, Brazil and the People’s Republic of China (OJ 2009 L 262, p. 1, ‘the contested regulation’). |
15 |
With regard to the applicant’s MET/IT claim, the Council confirmed, in recitals 18 to 26 and 32 of the contested regulation, the assessments made in the provisional regulation regarding Armenia’s status, the criteria considered by the Commission not to have been met by the applicant and the grant of individual treatment to it (paragraphs 9 and 10 above). In those circumstances, the dumping margin applicable to the applicant was set at 33.4% (point 4.4 of the contested regulation). Furthermore, in recitals 55 and 56 of the contested regulation, the Council confirmed the assessments contained in the provisional regulation regarding the cumulative assessment of the effects of the imports concerned. Lastly, the Council also confirmed the assessments contained in the provisional regulation relating to injury and the Community interest and fixed the elimination level for the injury caused by the imports of the applicant’s products at 13.4%. |
16 |
In those circumstances, in accordance with Article 1(2) of the contested regulation, the Council imposed a definitive anti-dumping duty of 13.4% on the imports of the applicant’s products. |
Procedure and forms of order sought by the parties
17 |
The applicant brought the present action by an application lodged at the Court Registry on 21 December 2009. |
18 |
By document lodged at the Court Registry on 25 March 2010, the Commission sought leave to intervene in the present case in support of the form of order sought by the Council. |
19 |
By order of 4 May 2010, the President of the Seventh Chamber of the Court granted the Commission leave to intervene and, on 21 June 2010, the Commission lodged its statement in intervention. The applicant submitted its observations on that statement on 23 August 2010. |
20 |
When the composition of the chambers of the Court was altered, the Judge-Rapporteur was assigned to the Second Chamber, to which this case was, consequently, assigned. By decision of 16 May 2012, the Court referred the case to the Second Chamber (Extended Composition). |
21 |
Upon hearing the Report of the Judge-Rapporteur, the Court decided to open the oral procedure. |
22 |
The applicant claims that the Court should:
|
23 |
The Council contends that the Court should:
|
24 |
The Commission contends that the Court should:
|
Law
25 |
The applicant puts forward five pleas in law, alleging:
|
26 |
In the context of the first plea in law, which must be examined first, the applicant submits that Article 2(7) of the basic regulation must be declared inapplicable to it to the extent that it provided the legal basis for applying the market economy third country methodology in the contested regulation. The application of that methodology pursuant to Article 2(7) of the basic regulation in respect of the applicant in the present case is in breach of Article 2.1 and 2.2 of the Anti-Dumping Agreement and Article 2(1) to (6) of the basic regulation. In those circumstances, Article 2(7) of the basic regulation should be declared, in so far as is relevant to the present case, inapplicable to the applicant under Article 277 TFEU and, consequently, the contested regulation should be annulled. |
27 |
In that regard, the applicant submits that, in accordance with the system established by the Anti-Dumping Agreement as regards normal value, that value is to be calculated pursuant to Article 2.1 and 2.2 of that agreement subject to two exceptions. The first consists in the application, in accordance with Article 2.7 of the Anti-Dumping Agreement, of the second supplementary provision to paragraph 1 of Article VI of the GATT. The second involves the application of accession instruments of certain countries to the WTO Agreement which contain special rules in that regard. |
28 |
Since the applicant, as an undertaking having its seat in Armenia, does not fall within the scope of the second supplementary provision to paragraph 1 of Article VI of the GATT and, unlike in the cases of the People’s Republic of China and the Socialist Republic of Vietnam, the documents relating to the accession of the Republic of Armenia to the Agreement establishing the WTO do not provide for derogations to Article 2.1 and 2.2 of the Anti-Dumping Agreement, Article 2.1 and 2.2 have – since Armenia’s accession – precluded the market economy third country method under Article 2(7) of the basic regulation being applied to the applicant’s exports. That is true whether the footnote accompanying paragraph (a) thereof, as inserted by Council Regulation (EC) No 905/98 of 27 April 1998 amending the [basic] regulation (OJ 1998 L 128, p. 18), is invoked or any other provision of Article 2(7). The abovementioned provisions of the GATT and the Anti-Dumping Agreement give no scope for the creation of ‘intermediate’ categories between State-trading countries and market economy countries; furthermore, the Republic of Armenia has never agreed to such a status. It follows from this that the institutions cannot establish normal value in respect of the applicant by following the market economy third country methodology as was ultimately applied in the present case pursuant to Article 2(7)(a) of the basic regulation. In those circumstances, the institutions went beyond the legal framework established by the Anti-Dumping Agreement, in conjunction with the primary law provisions such as Article 216(2) TFEU and the case-law on the application of the basic regulation in the light of the Anti-Dumping Agreement. Consequently, Article 2(7) of the basic regulation should be declared inapplicable in the present case and the contested regulation should be annulled for breach of Article 2.1 and 2.2 of the Anti-Dumping Agreement and Article 2(1) to (6) of the basic regulation. This would in no way compromise the European Union’s negotiating position in the context of the WTO. |
29 |
The Council states, first of all, that the inclusion of Armenia in the footnote accompanying Article 2(7)(a) of the basic regulation precludes Article 2(1) to (6) being applied to the applicant’s exports. In addition, that position cannot be resolved by an interpretation compatible with the GATT or the Anti-Dumping Agreement. However, it must be recognised, first, that the case-law is limited in the methods of interpretation available and, second, that it was not the purpose of the basic regulation to implement any obligation to apply Article 2.1 and 2.2 of the Anti-Dumping Agreement to imports from Armenia. The Council adds that Article 2(7) of the basic regulation does not allow market economy treatment to be granted to an undertaking which fails to satisfy the criteria contained in subparagraph (c) of that provision. |
30 |
The Council, supported by the Commission, contends that, in any event, neither the GATT nor the Anti-Dumping Agreement requires the institutions of the European Union to treat Armenia as a market economy for the purposes of investigations into dumping. In addition, the transition to a market economy is a gradual process which may take years of reform and adaptation. Furthermore, the Republic of Armenia did not enter into negotiations on this matter at the time of its accession to the WTO, nor has it demanded such treatment in its claims for a change of status in the context of the application of the basic regulation. Lastly, the Council points to the disadvantages for the position of the European Union in the context of the multilateral negotiations which might result if it were possible to challenge the legality of Article 2(7) of the basic regulation in the light of the WTO rules. In that context, the Council states that there are also other members of the WTO which do not treat Armenia as a market economy and that, unlike in the cases of the People’s Republic of China and the Socialist Republic of Vietnam, the Republic of Armenia did not negotiate a deadline beyond which the other WTO members were required to treat it as a market economy. |
Preliminary observations
31 |
As the applicant states on several occasions in its pleadings, the present plea in law raises the question of whether Article 2(7) of the basic regulation could, in the present case, provide a valid basis for applying the market economy third country methodology for the purposes of calculating the normal value of the applicant’s products covered by the anti-dumping investigation in question. |
32 |
In that regard, the applicant submits that, in the light of the rules on calculating normal value in the Anti-Dumping Agreement and the GATT rules to which that agreement refers, Article 2(7) of the basic regulation must be declared inapplicable pursuant to Article 277 TFEU in so far as the institutions relied on it in the present case in order to apply the market economy third country methodology. |
33 |
Before examining the merits of the arguments relied on by the applicant in the context of the present plea, the manner in which the institutions applied Article 2(7) of the basic regulation in the present case must first be considered. |
34 |
In that regard, it is apparent from recitals 22 to 25 of the provisional regulation, recitals 19 and 20 of the contested regulation and the first page of the Commission’s letter of 19 January 2009 (see paragraph 4 above) that the institutions relied on the inclusion of Armenia in the list of countries in the footnote accompanying Article 2(7)(a) of the basic regulation. The institutions then took the view that, since the Republic of Armenia was, moreover, a member of the WTO at the date of the initiation of the investigation, Article 2(7)(b) of the basic regulation was applicable, so that the applicant could rely on Article 2(1) to (6) of the basic regulation only if the Commission granted its claim for market economy treatment. In that regard, it is apparent from recitals 27 to 31 and 43 to 52 of the provisional regulation and recitals 21 to 26 and 35 of the contested regulation that the MET claim was rejected. It is also apparent from those recitals that, in accordance with the last sentence of Article 2(7)(b) of the basic regulation, normal value was finally established by reference to data from Turkey, which was considered an analogous market economy third country pursuant to Article 2(7)(a) of that regulation. |
35 |
In that context, it is for the Court to examine whether, and if so under what conditions, the institutions may find that a WTO member country constitutes a non-market economy country and, consequently, apply a methodology for calculating normal value such as that described in the previous paragraph. In order to carry out that examination, the status of the Anti-Dumping Agreement in the European Union legal order must be considered and that agreement must be interpreted with regard to the extent to which it affords WTO members the possibility to derogate from the rules laid down in Article 2.1 and 2.2 thereof. |
36 |
As regards the status of the Anti-Dumping Agreement in the European Union legal order, the Court notes at the outset that, having regard to their nature and structure, the Agreement establishing the WTO and the agreements and understandings annexed to it are not in principle among the rules in the light of which the Courts of the European Union are to review the legality of measures adopted by the Community institutions, pursuant to the first paragraph of Article 263 TFEU. However, where the Community intended to implement a particular obligation assumed in the context of the WTO, or where the Community measure refers expressly to precise provisions of the agreements and understandings contained in the annexes to the Agreement establishing the WTO, it is for the Courts of the European Union to review the legality of the Community measure in question in the light of the WTO rules. The preamble to the basic regulation, and more specifically the fifth recital therein, shows that the purpose of that regulation is, inter alia, to transpose into Community law the new and detailed rules contained in the Anti-Dumping Agreement, which include, in particular, those relating to the calculation of the dumping margin, so as to ensure a proper and transparent application of those rules. It is therefore established that the Community adopted the basic regulation in order to satisfy its international obligations arising from the Anti-dumping Agreement (see Case C-76/00 P Petrotub and Republica [2003] ECR I-79, paragraphs 53 to 56, and the case-law cited) by way of implementation of Article 18(4) of that agreement (Case T-19/01 Chiquita Brands and Others v Commission [2005] ECR II-315, paragraph 160). In addition, by Article 2 of the basic regulation, entitled ‘Determination of dumping’, the Community intended to implement particular obligations created by Article 2 of that agreement, which also relates to the determination of whether there is dumping. |
37 |
The applicant submits, in essence, that Article 2(7) of the basic regulation must be declared inapplicable, pursuant to Article 277 TFEU, in so far as it was used as the basis in the present case for applying the market economy third country methodology and thereby infringed Article 2.1 and 2.2 of the Anti-Dumping Agreement. Under that methodology normal value is constructed on the basis of data from undertakings situated in a third country, even when the imports are from WTO members, such as the Republic of Armenia, which do not satisfy the criteria laid down by the second supplementary provision to paragraph 1 of Article VI of the GATT. |
System established by the Anti-Dumping Agreement and by the second supplementary provision to paragraph 1 of Article VI of the GATT
38 |
As regards the interpretation of the Anti-Dumping Agreement, it must be found that the arguments put forward by the Council in its defence, first, alleging that neither the GATT nor the Anti-Dumping Agreement give rise to a particular obligation to treat Armenia as a market economy and, second, based on the process of transition towards a market economy – which moreover develops further the Commission’s analysis in the letter of 19 January 2009 (see paragraph 4 above) – reflect a misunderstanding of the provisions of the GATT and the Anti-Dumping Agreement relating to the calculation of normal value. |
39 |
In particular, first of all, paragraph 1 of Article VI of the GATT states, ‘a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another (a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or, (b) in the absence of such domestic price, is less than either (i) the highest comparable price for the like product for export to any third country in the ordinary course of trade, or (ii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit’. |
40 |
It is apparent from that provision that normal value comprises (i) the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, (ii) the highest comparable price for the like product for export to any third country in the ordinary course of trade, or (iii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit. |
41 |
Those rules are implemented, at WTO level, by Article 2.1 and 2.2 of the Anti-Dumping Agreement, laying down more detailed rules, while remaining within the limits of those three possibilities listed exhaustively in Article VI of the GATT. |
42 |
Next, Article 2.7 of the Anti-Dumping Agreement states that the application of Article 2 of that agreement is without prejudice to the second supplementary provision to paragraph 1 of Article VI of the GATT. That supplementary provision states, ‘[i]t is recognised that, in the case of imports from a country which has a complete or substantially complete monopoly of its trade and where all domestic prices are fixed by the State, special difficulties may exist in determining price comparability for the purposes of paragraph 1, and in such cases importing contracting parties may find it necessary to take into account the possibility that a strict comparison with domestic prices in such a country may not always be appropriate’. |
43 |
Contrary to the institutions’ claims, Article 2.1 and 2.2 of the Anti-Dumping Agreement, on the one hand, and Article 2.7 and the second supplementary provision to paragraph 1 of Article VI of the GATT, on the other, are not two extremes (market economy as opposed to State monopoly of trade) between which there is a spectrum of situations where the Anti-Dumping Agreement would allow WTO members the freedom to establish the rules that they regard as appropriate for calculating normal value, such as constructing normal value on the basis of data from undertakings in a third country if the producer concerned fails to show that market economy conditions prevail for the manufacture and sale by it of the like product. |
44 |
The Anti-Dumping Agreement lays down, in Article 2.1 and 2.2 thereof, rules concerning the calculation of normal value but does not specify in any way that those rules are intended to be applied in the case of imports from ‘market economy’ countries. In particular, as the Council accepted at the hearing, no reference is made in the Anti-Dumping Agreement or in Article VI of the GATT to the ‘market economy’ concept as a precondition for applying Article 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI of the GATT. |
45 |
In addition, the parties are agreed that the instruments of accession of Armenia to the WTO do not lay down any exception relieving WTO members of the obligation to apply rules compatible with Article 2.1 and 2.2 of the Anti-Dumping Agreement when calculating the normal value of products originating in that country. |
46 |
The Council’s view that the inclusion of exceptions to Article 2.1 and 2.2 of the Anti-Dumping Agreement and cut-off dates in the instruments of accession of the People’s Republic of China and the Socialist Republic of Vietnam merely evidences an intention to limit in time the WTO members’ right not to apply rules compatible with those articles, when calculating normal value, does not correspond to the facts. |
47 |
In that regard, the Court notes that point 15 of Part I of the Protocol on the accession to the WTO of the People’s Republic of China expressly provides for the possibility that other WTO members may not apply Article 2 of the Anti-Dumping Agreement where the producer(s) concerned fail to show that they operate under market economy conditions as regards the manufacture, production and sale of the like product. The same is true of point 3 of Part I of the Protocol on the Accession to the WTO of the Socialist Republic of Vietnam, which, by reference to paragraphs 527 and 255 of the Working Party Report on the Accession of that country to the WTO, lays down an identical exception. It must be emphasised that, contrary to the Council’s and the Commission’s contentions, the exceptions in question were not requested by those two candidate countries for accession in exchange for setting a cut-off date after which they would be repealed. As is apparent from paragraph 150 of the Report of the Working Party on the Accession to the WTO of the People’s Republic of China and from paragraph 254 of the Report of the Working Party on the Accession of the Socialist Republic of Vietnam, it was the WTO members which raised the issue of price comparability in the candidate countries and obtained the abovementioned commitments from them together with a cut-off date after which the commitments would expire. However, if Article 2.1 and 2.2 of the Anti-Dumping Agreement and the second supplementary provision to paragraph 1 of Article VI of the GATT were to be interpreted in the manner put forward by the institutions, the exceptions created – in the form of ‘commitments’ from the accession country – under the Protocols of accession of the People’s Republic of China and the Socialist Republic of Vietnam would serve no purpose since the existing legal framework would already permit what is provided for by those exceptions. |
48 |
It must therefore be found that the rules laid down in Article 2.1 and 2.2 of the Anti-Dumping Agreement concerning normal value, which implement the provisions of paragraph 1 of Article VI of the GATT (see paragraphs 39 and 40 above) are applicable unless exceptions to those rules are laid down in the Anti-Dumping Agreement itself, in the GATT, such as the second supplementary provision to paragraph 1 of Article VI of the GATT, or in the instruments of accession to the WTO of a member of that organisation. |
49 |
Consequently, a WTO member is, from the perspective of Article VI of the GATT and the Anti-Dumping Agreement, entitled to apply to imports from another WTO member a method for calculating normal value different from the methods laid down in Article 2.1 and 2.2 of the Anti-Dumping Agreement only on the basis of Article 2.7 of that agreement and, consequently, under the second supplementary provision to paragraph 1 of Article VI of the GATT or, as the case may be, under a particular provision to that effect in the instruments of accession of that other WTO member. |
50 |
In those circumstances, the Court cannot uphold the institutions’ view that Article 2(7) of the basic regulation allows them, without infringing the Anti-Dumping Agreement, not to apply rules for calculating normal value compatible with Article 2.1 and 2.2 of that agreement even when the second supplementary provision to paragraph 1 of Article VI of the GATT does not apply and when the instruments of accession to the WTO of the exporting country do not provide for such possibility. It is also apparent from the foregoing analysis that the institutions’ argument that neither the Anti-Dumping Agreement nor the GATT create a particular obligation to treat Armenia as a market economy is irrelevant, since the obligation arising from those agreements consists in applying, in respect of other WTO members such as the Republic of Armenia, rules compatible with Article 2.1 and 2.2 of the Anti-Dumping Agreement, subject to the reservations set out in paragraphs 48 and 49 above. In that regard, the Court notes that Article 2.1 and 2.2 comprise a set of clear, precise and detailed rules laying down the procedure for calculating the normal value of the like product (see paragraph 36 above) and do not attach to those rules conditions making their application subject to the discretion of the WTO members. In addition, the possibility of derogating from those rules on the basis of the second supplementary provision to paragraph 1 of Article VI of the GATT, to which Article 2.7 of the Anti-Dumping Agreement refers, is delimited precisely. In particular, the ‘countr[ies] which ha[ve] a complete or substantially complete monopoly of [their] trade and where all domestic prices are fixed by the State’ fall within the scope of that supplementary provision. Consequently, that legal rule is clear as to the extent of the situations which it covers, so as to allow both the Commission and the Council to assess whether a WTO member meets the relevant description and the Courts of the European Union to review that assessment and, where relevant, draw the necessary conclusions in accordance with the case-law set out in paragraph 36 above. |
51 |
As regards the Council’s assertion, in support of its interpretation of the Anti-Dumping Agreement, that the United States of America and Canada treated Armenia as a non-market economy country even after its accession to the WTO, it is sufficient to note that the Council has not called in question the applicant’s detailed rebuttals supported by references to the relevant national legislation of those two countries, so that, in any event, the Council has not shown that its assertion is accurate. |
Rules laid down by the basic regulation and application to the present case
52 |
In a context such as that of paragraphs 39 to 50 above, when the European Union legislature adopts provisions on ‘non-market economy’ countries which are applicable to a WTO member included on a list of such countries, such as the list in the footnote accompanying Article 2(7)(a) of the basic regulation, its action engages the second supplementary provision to paragraph 1 of Article VI of the GATT, and requires therefore an assessment of whether that WTO member satisfies the conditions laid down by that provision. |
53 |
Furthermore, it must be recalled that the compilation of a list of countries considered non-market economy countries was introduced by Council Regulation (EEC) No 1681/79 of 1 August 1979 amending Regulation (EEC) No 459/68 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Economic Community (OJ 1979 L 196, p. 1). In accordance with the sixth recital of Regulation No 1681/79, the establishment of that list constitutes a codification of the practice developed until then under Article 3(6) of Regulation (EEC) No 459/68 of the Council of 5 April 1968 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Economic Community (OJ English Special Edition 1968(I), p. 80). The latter provision however essentially reproduced the definition of non-market economy countries provided by the second supplementary provision to paragraph 1 of Article VI of the GATT (see, as regards the practice developed in that regard under Regulation No 459/68, the sixth recital of Council Regulation (EEC) No 955/79 of 15 May 1979 imposing a definitive anti-dumping duty on a certain herbicide originating in Romania (OJ 1979 L 121, p. 5)). |
54 |
The legislative practice of establishing a list of countries considered non-market economy countries by reference to the list of countries annexed to the regulations on common rules for imports from State-trading countries has been consistently followed by the Council. This is shown by (i) Article 2(5) of Council Regulation (EEC) No 3017/79 of 20 December 1979 on protection against dumped or subsidised imports from countries not members of the European Economic Community (OJ 1979 L 339 p. 1), (ii) Article 2(5) of Council Regulation (EEC) No 2176/84 of 23 July 1984 on protection against dumped or subsidised imports from countries not members of the European Economic Community (OJ 1984 L 201, p. 1), (iii) Article 2(5) of Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection against dumped or subsidised imports from countries not members of the European Economic Community (OJ 1988 L 209, p. 1), (iv) Article 2(7) of Council Regulation (EC) No 3283/94 of 22 December 1994 on protection against dumped imports from countries not members of the European Community (OJ 1994 L 349, p. 1) and (v) Article 2(7) of the basic regulation, in its initial version. |
55 |
In addition, according to points 4 and 5 of the Communication from the Commission to the Council and the European Parliament of 12 December 1997 (COM(97) 677 final), the same considerations linked to price reliability within command economies led to the Community adopting provisions analogous to Article 2(7) of the basic regulation and to the adoption of the second supplementary provision to paragraph 1 of Article VI of the GATT. |
56 |
Consequently, although establishing a list of countries considered non-market economy countries, in the light of which normal value is to be calculated following methods other than those laid down by Article 2.1 and 2.2 of the Anti-Dumping Agreement, does not infringe, as such, that agreement, maintaining on that list a country which has in the meantime acceded to the WTO must be based on valid considerations showing that this complies with the criteria laid down in the second supplementary provision to paragraph 1 of Article VI of the GATT. |
57 |
However, in the present case neither the contested regulation nor the Council’s line of argument supports the contention that Armenia fulfils the criteria laid down in the second supplementary provision to paragraph 1 of Article VI of the GATT. |
58 |
In particular, as set out in paragraph 34 above, the institutions justified the application of the market economy third country methodology laid down in Article 2(7)(a) of the basic regulation to the applicant solely by the fact that Armenia is referred to in the footnote accompanying that provision. Article 2(7)(a) was ultimately applied pursuant to the last sentence of Article 2(7)(b) of the basic regulation, after the applicant’s claim for market economy treatment had been rejected. It is apparent moreover from the Commission’s letter of 19 January 2009 (see paragraph 4 above) that it took the view that the application of Article 2(7) of the basic regulation was consistent in the present case with the Anti-Dumping Agreement. This was on the ground that Article 2.1 and 2.2 of that agreement, on the one hand, and the second supplementary provision to paragraph 1 of Article VI of the GATT, on the other, represented two extremes between which a variety of potential situations could exist, such as that of a WTO member which does not comply with the conditions of that supplementary provision while still being able to be considered a non-market economy. However, by its nature, the argument that Armenia is an economy in transition between a market economy and the State monopoly described by the second supplementary provision to paragraph 1 of Article VI of the GATT is premissed on the proposition that Armenia does not comply with the conditions for applying that provision. |
59 |
It must therefore be found that, after the Republic of Armenia acceded to the WTO, its inclusion in the list in the footnote accompanying Article 2(7)(a) of the basic regulation was no longer compatible with the system of rules laid down by Article 2.1 and 2.2 of the Anti-Dumping Agreement and the second supplementary provision to paragraph 1 of Article VI of the GATT, to the extent that such inclusion has the effect of making the application of Article 2(1) to (6) of the basic regulation conditional upon a successful claim by the undertaking concerned for market economy treatment and, if that claim is rejected, requires the market economy third country methodology to be applied. |
60 |
Thus, as the applicant argues, in the absence of evidence establishing that Armenia satisfies the criteria laid down by the second supplementary provision to paragraph 1 of Article VI of the GATT, and having regard to the fact that, in accordance with the Commission’s assessments during the administrative procedure, Armenia does not satisfy the conditions of that provision (see paragraph 58 above), the reference to Armenia in the footnote accompanying Article 2(7)(a) of the basic regulation does not constitute a valid basis in the present case for applying the market economy third country methodology pursuant to Article 2(7)(a) and (b) of that regulation, and to that extent must be declared inapplicable pursuant to Article 277 TFEU. Consequently, the institutions were not entitled to make the application of Article 2(1) to (6) of the basic regulation conditional upon a successful claim for market economy treatment – which, in their view, the applicant had to submit in order to obtain such treatment pursuant to Article 2(7)(b) of that regulation – nor to apply the market economy third country methodology after that claim had been rejected. |
61 |
In those circumstances, in relying on the reference to Armenia in the footnote accompanying Article 2(7)(a) of the basic regulation and in applying the market economy third country methodology after the applicant’s MET claim under Article 2(7)(b) of that regulation had been rejected, the contested regulation implemented a method for calculating normal value incompatible with Article 2.1 and 2.2 of the Anti-Dumping Agreement and the second supplementary provision to paragraph 1 of Article VI of the GATT, and also infringed Article 2(1) to (6) of the basic regulation. |
62 |
Consequently, it must be held that the first plea in law is well founded and the contested regulation must be annulled, and it is not necessary to examine the other pleas in law put forward in support of the action. |
Costs
63 |
Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Council has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the applicant. |
64 |
The Commission must bear its own costs, in accordance with Article 87(4) of the Rules of Procedure. |
On those grounds, THE GENERAL COURT (Second Chamber, Extended Composition) hereby: |
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Forwood Dehousse Wiszniewska-Białecka Prek Schwarcz Delivered in open court in Luxembourg on 5 November 2013. [Signatures] |
( *1 ) Language of the case: English.