EUROPEAN COMMISSION

Brussels, 30.8.2021

SWD(2021) 234 final

COMMISSION STAFF WORKING DOCUMENT

[…]

Accompanying the document

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

{COM(2021) 496 final}

Table of Contents

1.    Overview of the legislation    

1.1.    Anti-dumping and anti-subsidy    

1.1.1.    The international framework    

1.1.2.    The EU legislation    

1.2.    Safeguards    

1.2.1.    The international framework    

1.2.2.    The EU legislation    

2.    General overview of anti-dumping and anti-subsidy investigations and measures    

2.1.    Measures in place    

2.2.    New investigations – recent evolution    

2.3.    Review investigations – recent evolution    

3.    Overview of activities in 2020    

3.1.    New investigations    

3.1.1.    Initiations    

3.1.2.    Provisional measures    

3.1.3.    Definitive measures    

3.1.5.    New investigations terminated without measures    

3.2.    Review investigations    

3.2.1.    Expiry reviews    

3.2.2.    Interim reviews    

3.2.3.    New exporter reviews    

3.2.4.    Anti-absorption investigations    

3.2.5.    Anti-circumvention investigations    

3.2.6.    “Other” reviews (reinvestigations, or re-openings)    

3.3.    Safeguard investigations    

4.    Enforcement of anti-dumping/countervailing measures    

4.1.    Follow-up of measures    

4.2.    Monitoring of undertakings    

5.    Refunds    

6.    Information and Communication activities / Bilateral contacts    

7.    Judicial review: decisions given by the Court of Justice and the General Court    

8.    Activities by third countries targeting the EU    

9.    Activities in the framework of the WTO    

10.    Audit of the European Court of Auditors    

11.    Export authorisation scheme for personal protective equipment    

LIST OF ANNEXES    

1.    Overview of the legislation

1.1.    Anti-dumping and anti-subsidy

1.1.1.    The international framework

On an international level, unfair trading practices such as dumping and the granting of subsidies were identified as a threat to open markets as early as 1947, when the first GATT agreement was signed. The agreement contained specific provisions allowing GATT members to take action against these practices if they caused material injury to the domestic industry of a GATT member. Today's globalised trade environment is characterized by quicker and cheaper communication and transportation, as well as the coexistence of different models of economic governance. In such a world, trade defence instruments are more relevant than ever. Indeed, trade distortions that underlie the application of these instruments are widespread.

Since the beginning of the GATT in 1947, considerable efforts have been made to harmonise the rules relating to trade defence instruments. During the last GATT round (the « Uruguay Round »), which led to the creation of the World Trade Organisation (WTO) and the detailed Anti-Dumping and Anti-Subsidy Agreements, much of the attention was focused on the procedural and material conditions to be fulfilled before measures can be adopted. The EU played an active role in the negotiation of these agreements, which are reflected in its own legislation. The EU applies its anti-dumping (AD) and anti-subsidy (AS) legislation with rigour and consistency. Unfortunately, many WTO Members lack this type of restraint, thereby affecting negatively also EU operators. The role that the EU plays as a prudent user has therefore also an exemplary function at WTO level. Against this backdrop, the EU also continues to play a leading active role in any efforts to update the WTO rulebook.

1.1.2.    The EU legislation

The EU’s anti-dumping and anti-subsidy legislation was first enacted in 1968 and has since been modified several times. The current basic texts, which form the legal basis of anti-dumping and anti-subsidy investigations in the EU, entered into force in March 1996 and October 1997 respectively. These are in line with the Anti-Dumping and Anti-Subsidy Agreements adopted during the GATT/WTO negotiations. These texts were codified in 2016 to reflect changes previously made. The basic texts are:

–Regulation (EU) 2016/1036 of the European Parliament and of the Council on protection against dumped imports from countries not members of the European Union – Codified Version 1 ,

–Regulation (EU) 2016/1037 of the European Parliament and of the Council on protection against subsidised imports from countries not members of the European Union – Codified Version 2 .

These regulations will overall be referred to as the "basic anti-dumping (AD) Regulation" and the “basic anti-subsidy (AS) Regulation”. Both regulations were recently modified by Regulation (EU) 2017/2321 of 12 December 2017 3 and Regulation (EU) 2018/825 of 30 May 2018 4 .

The EU's legislation contains a number of provisions aimed at ensuring a balanced application of the EU’s anti-dumping and anti-subsidy rules on all interested parties. These provisions include the “EU interest test” and the “lesser duty rule”, which go beyond the Union's WTO obligations.

The EU interest test is a public interest clause and provides that measures cannot be applied if it is established that they are contrary to the overall economic interest of the EU. This requires an analysis of all the economic interests involved, including those of the EU industry and its suppliers, downstream users, consumers and traders of the product concerned.

The lesser duty rule requires the measures imposed by the EU to be lower than the dumping or subsidy margin, if such lower duty rate is sufficient to remove the injury suffered by the EU industry. Such a “no-injury” rate is usually determined by comparing import prices with the cost of production of the EU industry and a reasonable profit margin (although, as a result of the recent TDI modernisation, the latter rules have been further elaborated, as explained below). The EU is one of the few investigating authorities on a worldwide level that applies the lesser duty rule in such a coherent and comprehensive way.

Since the 2018 ‘TDI modernisation’ amendments to the basic Regulations, the lesser duty rule does in principle not apply in anti-subsidy investigations, which means anti-subsidy measures will fully offset the subsidies that an exporter has received. The Commission can only depart from this approach further to a duly substantiated request, and after finding it would be against the Union interest not to apply the lesser duty rule. This new practice reflects the increased attention of the EU to tackle unfair and injurious subsidisation by third countries.

1.2.    Safeguards

1.2.1.    The international framework

The principle of liberalisation of imports was set under the GATT 1947 and strengthened under the 1994 WTO Agreements. As safeguard measures consist of the unilateral withdrawal or suspension of a tariff concession or of other trade liberalisation obligations formerly agreed, they have to be considered as an exception to this principle. Article XIX GATT 1994 and the WTO Agreement on Safeguards do not only impose strict conditions for the application of this "escape clause", but also put in place a multilateral control mechanism under the WTO Committee on Safeguards.

Under WTO rules, safeguard action has to be viewed as a temporary defence measure that applies to all imports of the product covered by a measure, irrespective of origin. As regards non-WTO members, safeguard measures may be selective and apply to products originating in a specific country. WTO Accession Protocols may also provide for such selective safeguard mechanisms, as was the case in the Protocol of Accession of the People’s Republic of China (PRC), although the provision has now expired.

Definitive WTO safeguards should only be adopted after a comprehensive investigation that provides evidence of the existence of a) unforeseen developments leading to b) increased imports, c) the existence of a serious injury or a threat of injury for EU producers and d) a causal link between the imports and the injury.

Moreover, FTAs concluded by the Union with third countries often include a ‘bilateral safeguard clause’, i.e. a provision that allows for the temporary suspension of tariff concessions made under the FTA.

1.2.2.    The EU legislation

The above-mentioned WTO principles are all reflected in the relevant EU regulations, except for the “unforeseen development requirement” (which is not found explicitly in the EU legislation nor in the WTO Agreement on Safeguards but has been confirmed as a self-standing condition by WTO jurisprudence, as per Article XIX of GATT 1994). Additionally, the adoption of measures in the EU requires an analysis of all interests concerned, i.e. the impact of the measures on producers, users and consumers. In other words, safeguard action can only be taken when it is in the EU’s interest to do so. The current EU safeguard instruments are covered by the following regulations:

- Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports (codification), 5  

- Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries (recast), 6

- Regulation (EU) 2019/287 of the European Parliament and of the Council of 13 February 2019 implementing bilateral safeguard clauses and other mechanisms allowing for the temporary withdrawal of preferences in certain trade agreements concluded between the European Union and third countries, 7

- Regulation (EU) 2015/936 of the European Parliament and of the Council of 9 June 2015 on common rules for imports of textile products from certain third countries not covered by bilateral agreements, protocols or other arrangements, or by other specific EU import rules (recast). 8

The first two regulations are referred to as the "basic safeguard Regulation(s)".

2.    General overview of anti-dumping and anti-subsidy investigations and measures

The number of new investigations initiated in 2020 was similar to the previous year, with 15 initiations (compared to 16 in 2019). The number of measures imposed in 2020 significantly increased as compared to 2019: 11 new definitive measures and 6 provisional measures were imposed, a total of 17, versus 12 in 2019. 9 At the same time, 5 new investigations were also terminated without the imposition of measures, which brought the total number of new investigations concluded in 2020 to 22. Moreover, during 2020, the Commission initiated as many as 28 review investigations. Among the latter, there were 21 initiations of expiry reviews (two of which regarding anti-subsidy measures). 7 expiry reviews were concluded in 2020 – all with a confirmation of the duty. In other words, 2020 stood as another particularly busy year, with a further increase of new casework and reviewing activity as compared to the trend observed in 2019. Below are details on new investigations and review investigations.

2.1.    Measures in place

At the end of 2020, the EU had in force 99 definitive anti-dumping measures (which were extended 10 in 29 cases) and 18 countervailing measures in force (extended in one case) 11 .

The anti-dumping measures product coverage increased to 72 products, concerning 16 countries (see Annex O); the countervailing measures covered 15 products (2 more than in 2019) and 7 countries – 1 more than in 2019 (see Annex P).

Of all the 128 anti-dumping measures in force at the end of 2020, the countries affected were the PRC (91 measures – i.e. 5 more than in 2019), Russia (9 measures), Korea and the US (4), India and Taiwan (3 each), Belarus, Indonesia, Thailand and Ukraine (2 each), Brazil, Egypt, Iran, Japan, Malaysia, and Trinidad and Tobago (1 each).

Of the 19 anti-subsidy measures in place, 8 concerned imports from the PRC, whereas India remained subject to 4 measures; Egypt and the US are subject to 2 measures; and Argentina, Indonesia and Turkey to 1 measure each.

2.2.    New investigations – recent evolution

In the 5-year period from 2016 to 2020, 67 new investigations were initiated on imports from 21 countries.

The sector concerned by the investigations was mainly 'iron and steel' – 30 investigations. A breakdown of the product sectors is available in Annex B(A).

The countries concerned by the highest number of initiations in the period from 2016 to 2020 include the PRC – 27 investigations; Egypt and Russia – 5 each; Indonesia and Turkey – 4 each; Korea – 3; Brazil, India, Ukraine, the US – 2 each. A table showing all the investigations initiated over the last 5 years broken down by country of export is available at Annex B(B).

Table 1 below provides statistical information on the developments regarding new investigations for the years 2016 – 2020.

TABLE 1

Evolution of new anti-dumping, anti-subsidy and safeguard investigations

during the period 1 January 2016 - 31 December 2020 12

2.3.    Review investigations – recent evolution

Anti-dumping measures, including price undertakings, may be subject, under the basic AD Regulation, to five different types of reviews: expiry reviews (Article 11(2)), interim reviews (Article 11(3)), newcomer investigations (Article 11(4)), absorption investigations (Article 12) and anti-circumvention investigations (Article 13). The Commission also carries out “other” reviews consisting in re-opening of investigations to implement court rulings.

Also anti-subsidy measures may be subject, under the basic AS Regulation, to five different types of reviews: expiry reviews (Article 18), interim reviews (Article 19), absorption investigations (Article 19(3)), accelerated reviews (Article 20) and anti-circumvention investigations (Article 23). In addition, here also, the Commission can re-open investigations to implement court rulings.

Reviews continue to represent a major part of the work of the Commission's TDI services. In the period from 2016 to 2020, 141 such review investigations were initiated by the Commission. Reviews represented over 60% of all TDI investigations initiated.

In 2020, specifically, the Commission initiated 26 reviews of a broad range of types. These comprised 21 expiry reviews (compared to 8 in 2019), 2 interim reviews (of which 1 anti-subsidy), 3 anti-circumvention investigations, 2 ‘new exporter’ reviews. At the same time, 26 reviews were concluded by the Commission – in that 7 were expiry reviews (of which 1 concerning anti-subsidy measures).

An overview of the review investigations in 2020 can be found in Annexes F to K. Table 2 below provides statistical information for the years 2016 – 2020.

TABLE 2

Reviews of anti-dumping and anti-subsidy investigations

during the period 1 January 2016 - 31 December 2020 16

3.    Overview of activities in 2020

3.1.    New investigations

3.1.1.    Initiations

In 2020, the Commission initiated 12 new anti-dumping and 3 new anti-subsidy investigations. The categories of ‘Iron and steel’, as well as ‘other metals’, stood out in terms of product coverage. The investigations concerned 7 different countries, with by far the highest number of initiations occurring against the PRC (8 cases). Details of the investigations are given in Annexes A and B.

The list of cases initiated in 2020 can be found below, together with the names of the complainants. More information can be obtained from the Official Journal publications to which reference is given in Annex A.

3.1.2.    Provisional measures

In 2020, provisional duties were imposed in 5 new anti-dumping investigations, and 1 new anti-subsidy investigation. 19  

The list of cases where provisional measures were imposed during 2020 can be found below, together with the measures imposed. More information can be obtained from the Official Journal publications to which reference is given in Annex C.

3.1.3.    Definitive measures

During 2020, definitive duties were imposed in 8 anti-dumping investigations (4 in 2019) and in 3 anti-subsidy investigations (as in 2019). The list of cases where definitive measures were imposed can be found below, together with the measure(s) imposed. More information can be obtained from the Official Journal to which reference is given in Annex D.

3.1.4 Details of individual cases with application of new measures

Steel road wheels from China (Definitive AD)

On 15 February 2019, the Commission initiated an anti-dumping investigation with regard to imports into the Union of mixtures of steel road wheels originating in China. The initiation was based on a complaint lodged on 3 January 2019 by the Association of European Wheel Manufacturers (EUWA). The complaint contained evidence of dumping and of a resulting material injury that was sufficient to justify the initiation of the investigation.

The investigation of dumping and injury covered the period from 1 January 2018 to 31 December 2018 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2015 to the end of the investigation period (‘the period considered’)

Sampling

The Commission selected the provisional sample on the basis of the reported production and Union sales volume by the Union producers. The sample consisted of three Union producers that accounted for over 35% of Union production and sales.

Product under investigation 

The product under investigation was road wheels of steel, whether or not with their accessories and whether or not fitted with tyres, designed for: (i) road tractors; (ii) motor vehicles for the transport of persons and/or the transport of goods; (iii) special purpose motor vehicles (for example, fire fighting vehicles, spraying lorries); and (iv) trailers, semi-trailers, caravans, and similar vehicles, not mechanically propelled.

The market for steel wheels covers a variety of product types depending mainly on the type of vehicles on which they are fitted. These product types mainly vary in size, with smaller sizes destined for passenger cars and larger diameter sizes destined for heavy trucks and special purpose motor vehicles. These product types are commonly classified by the industry in two categories: passenger car wheels (for vehicles with not more than 8 seats) and commercial wheels (all others).

Dumping – significant distortions

After examining all the available evidence collected during the investigation, the Commission concluded that it was not appropriate to rely on domestic prices or costs because of the existence of significant distortions. In order to arrive at this conclusion, the Commission looked at PRC’s intervention in the economy in general as well as in the steel sector and the automotive industry. This examination showed that prices and costs of the steel road wheels from China and its inputs were not the result of free market forces because they were affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation.

Consequently, the Commission constructed the normal value based exclusively on costs of production and sale reflecting undistorted prices or benchmarks. In this case, Brazil was used as an appropriate representative country.

The government of China did not cooperate in this investigation and, therefore, did not provide any comments on the Commission’s findings.

Out of the twenty exporting producers that came forward, the Commission selected a sample of three companies on which the findings of dumping were to be based.

One of the sampled companies refused to cooperate and was replaced by the next largest exporting producer. Following the verification visit, the Commission decided to disregard the information provided by another exporting producer due to significant shortcomings in its questionnaire replies. In addition, following the exclusion of certain types of products from the scope of the investigation, one of the cooperating sampled exporting producers was no longer concerned by this investigation. As a result, the sample was reduced to only one group of companies (Xingmin Group).

Taking into account the degree of non-cooperation in the sample and the insufficient time to select a new sample, the Commission decided to apply best facts available with regard to the sample, pursuant to Article 17(4) and Article 18 of the basic Regulation.

On this basis, for the non-sampled cooperating exporting producers, the Commission exceptionally decided to set the dumping margin at the same level as the only remaining sampled exporting producer. This is because it considered that the failure of the sample was also caused by the exclusion of certain product types. The Commission also took into account that the remaining company in the sample accounted for around 20% of imports of the product under investigation from China and exported a wide range of product types to the Union.

Finally, for non-cooperating other exporting producers, the Commission based the dumping margin on the level corresponding to the weighted average dumping margin for the eight product types with the highest individual dumping margins of the sampled company. The volume of exports of these product types represented around 29% of the total volume exported to the Union by the company in question, which was considered representative.

As a result, the following dumping margins were established: a) Xingmin Group: 69,4%; b) Other cooperating companies: 69,4% and c) All other companies: 81,1%.

Injury

The investigation established that both China and the Union producers were active in the passenger car wheels and the commercial wheels. Based on the information provided by the complainant, around 45% of the Chinese imports during the IP were passenger car wheels, and 55% commercial wheels. In the Union, around 65% of the sales were for passenger car wheels and 35% commercial wheels.

Over the period considered (2015-2018), the Union consumption increased by 2%. The imports from China and its market share doubled during this period. Imports increased from around 1 million to 2 million pieces, corresponding to an increase of market share from 2,6% to 5,3% in 2018. While Chinese imports increased both for passenger car and for commercial wheels, this increase was much more marked for passenger car wheels.

The Commission found significant undercutting across the different product types for the cooperating exporter during the investigation period, on average 26,2%.

During the period considered, sales prices increased by 21%, which however was not sufficient to cover the 28% increase in the costs of production during the investigation period. The Union industry’s profit level of 2,3% in 2015 turned into losses (-1,1%) in the investigation period. This trend resulted in similar falls in cash flow (-22%) and return on investment (-134%). Furthermore, the Union industry level of production fell by 4%, sales volume fell also by 4%, and market share went from 84,9% to 79,8%. Very few of the indicators examined showed a positive development over the period considered. Investments increased by 87%, but concerned mainly replacements and upgrades of machinery. Stocks fell throughout the period considered, but most of the product is made upon demand and thus this indicator was not considered very relevant.

Thus, the Commission concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

Causation

The analysis of the injury indicators showed that the economic situation of the Union industry had worsened and that this coincided with an increase of dumped imports from China, at prices that undercut the Union industry’s prices. The Union industry lost market shares to dumped Chinese imports. The Commission also found that carmakers used Chinese offers to pressure Union producers to bring their prices down. This situation ultimately resulted in the suppression of the prices of the Union industry. Particularly in 2017 and 2018, when the unit cost of production increased due to higher steel prices, the Union industry could not fully pass on cost increases, a situation which was reflected in the Union industry’s performance indicators.

Injury elimination level

The Commission determined the amount of duty necessary to eliminate the injury suffered by the Union industry. It calculated a target price that would allow to cover for all costs of production and to obtain a reasonable profit. A target profit of 6% was used, in accordance with Article 7(2c) of the basic Regulation.

The injury elimination level was determined on the basis of a comparison of the weighted average import price of the cooperating exporting producer with the weighted average non-injurious price of the like product sold by the sampled Union producers in the Union market during the investigation period. The injury margin for the cooperating parties was established at 50,3% on the basis of the sampled exporting producer. For all other companies, the injury margin was set at 66,4%.

Union interest

The Commission concluded that the Union industry would benefit from measures, as those would likely prevent a further surge of imports from China at dumped prices; not imposing measures would allow imports to continue and even increase, which would cause further injury to the EU industry.

On the other hand, the Commission found that the impact of measures on steel road wheels was limited for car producers. That was because a full set of steel road wheels was estimated to represent about 0,6% of the cost of producing a small passenger car and 0,7% of the cost of producing a truck. 22 Because there was no cooperation from users, the Commission did not have any other information on file and no party challenged that estimation.

Finally, the Commission received comments from two importers claiming that measures would have unreasonable negative effects on importers, consumers and the environment. Neither party provided evidence to substantiate its claim.

Thus, the Commission concluded that measures were not against the interest of the Union.

Definitive anti-dumping measures

The Commission imposed definitive anti-dumping measures on imports of steel road wheels from China. As the injury margin was lower than the dumping margin, in accordance with the lesser duty rules, measures were imposed at the level of the injury margin for all parties: a) Xingmin Group: 50,3%; b) Other cooperating companies: 50,3% and c) All other companies: 66,4%

Certain hot rolled stainless steel sheets and coils from Indonesia, the People's Republic of China and Taiwan (Definitive AD)

On 12 August 2019, the Commission initiated an anti-dumping investigation on imports into the Union of certain hot rolled stainless steel sheets and coils (SSHR) originating in Indonesia, the People's Republic of China and Taiwan. The initiation followed a complaint lodged on 28 June 2019 by Eurofer on behalf of four Union producers representing the entirety of Union production of SSHR.

The investigation of dumping and injury covered the period from 1 July 2018 to 30 June 2019 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2016 to the end of the investigation period (‘the period considered’).

Registration of imports and provisional measures

The Commission made imports of SSHR subject to registration 23 . A provisional anti-dumping duty was imposed on 9 April 2020 on imports into the Union of SSHR originating in all three countries 24 .

Sampling

The final sample of Union producers consisted of three Union producers in three different Member States, accounting for over 78% of production and 88% of sales in the Union of the like product.

A sample of unrelated importers was not selected because only two provided information. One of them turned out to be operating from outside the Union. The second was not a genuine importer but a service centre for various operations. Therefore, there was no cooperation from genuine importers.

There were only two exporting producers in Indonesia known to the Commission at the initiation of the investigation. No further exporting producers came forward. Consequently, the Commission carried out the investigation on the two exporting producers in Indonesia. For the PRC, the Commission selected a sample of three exporting producers; given the shortcomings of the information provided by one of them, the sample was reduced to two companies, still covering around 92% of Chinese exports to the Union in the investigation period. Only two Taiwanese producers, accounting for around 56% of the total volume of exports from Taiwan to the Union, provided information, so the Commission decided not to carry out sampling and investigated both.

Product under investigation

The product concerned, SSHR, was defined as “certain flat-rolled products of stainless steel, whether or not in coils (including products cut-to-length and narrow strip), not further worked than hot-rolled. SSHR are the primary material for the production of various value-added downstream steel products, starting with stainless steel cold-rolled flat products and stainless steel tubes. Typical applications include stainless tubes, structural components and fastening elements in the building industry.

Dumping

Two Indonesian companies were investigated. For one of them, domestic sales were found not to be representative and the Commission constructed the normal value. For the second, and depending on the product type, normal value was based on the price paid or payable in the domestic market calculated where domestic sales were found to be representative or otherwise it was constructed.

For the PRC, the Commission examined whether it was appropriate or not to use domestic prices and costs in in view of the possible existence of significant distortions in the Chinese market. The analysis covered all the available evidence relating to the PRC’s intervention in its economy in general as well as in the steel sector. The Commission found that the prices or costs of the product concerned, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value for the PRC.

The Commission then determined the normal value based on undistorted prices or benchmarks in a representative country. The Commission first identified four potential countries: Brazil, Malaysia, South Africa, and Turkey. Neither Malaysia nor Turkey were suitable as they did not produce SSHR. The Commission finally concluded that Brazil was the most appropriate representative country to establish a reliable normal value given the quality and detail of the available financial data and the representativeness of the factors of production of the domestic producer, that were better than in South Africa.

Two Taiwanese companies were investigated. The normal value was based on the price payed or payable in the domestic market calculated where domestic sales were found to be representative, or otherwise it was constructed.

On the basis of a comparison between normal values and export prices, duly adjusted where necessary, the following dumping margins were calculated: 17,7% for Indonesia (as both exporters were related and part of the same group), from 57,1% to 106,5% for the PRC, and from 6% to 7,5% for Taiwan.

Injury and causation

During the period considered, Union consumption remained stable. Imports from the countries concerned increased by 66%; their market share increased from 18,3% in 2016 to 30,4% in the IP. Indonesia was the main driver of such increase. This increase was in the detriment of the Union Industry, whose sales went down by 13% and whose market share decreased from 71,2% to 61,9%. Union production of SSHR fell by 3% while production capacity increased slightly so capacity utilization fell by 4%; employment increased by 4%. Regarding microeconomic indicators, the sales prices of the Union Industry increased by 17% over the period considered but the cost of production increased by over 20%; profitability fell from 7,2% in 2016 to 3,5% in the IP. The Commission therefore concluded that the Union industry suffered material injury.

Regarding the causation analysis, over the period considered and against a backdrop of stable consumption in the Union, import volumes from the countries concerned and their market shares increased significantly, in parallel with a similar decrease of market share for the Union industry. Import prices from the PRC and Taiwan increased by 21% and 25% respectively, while import prices from Indonesia fell by 25%. Despite an overall average increase of 18%, import prices from the three countries concerned remained lower than Union industry prices over the period considered. With a market share of 30,4% in the IP and being made at prices that undercut Union industry prices, such imports produced substantial harmful effects. The Commission found that no other factor had a significant impact on the Union industry's injurious situation and concluded that material injury to the Union industry was caused by the dumped imports from the countries concerned.

Injury margin and level of measures

The duty necessary to eliminate the injury suffered by the Union industry should be at a level that would allow the EU industry to sell at a target price. This target price is the price at which the EU Industry is able to cover its costs of production, including future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia of the basic Regulation, and to obtain a reasonable profit (‘target profit’). The Commission set a basic target profit of 8,7% based on the average profit achieved over the years 2016 and 2017 where normal conditions of competition prevailed, then increased the target profit for projects that did not take place due to the dumped imports. This target profit was applied to the verified cost of production of the EU Industry in the IP. The resulting price was increased to cover for the EU producers’ future compliance with Multilateral Environmental Agreements to get to the target price

The injury elimination level was determined comparing the weighted average import price of the cooperating exporting producers with the weighted average target price of the Union industry during the IP. The resulting underselling margins were 17,3% for Indonesia, from 9,2% to 19% for the PRC, and from 18,4% to 24,2% for Taiwan.

To determine the level of the measures for Indonesia and the PRC, the Commission investigated the existence of raw material distortions. In Indonesia in the IP an export ban on nickel ore with a nickel content of 1,7% and more, an export tax of 10%, a licensing requirement and a de facto export quota on nickel ore with a nickel content of less than 1,7%, and a de facto licensing requirement on ferronickel and nickel pig iron. In the PRC in the IP, the investigation found export taxes on stainless steel scrap, ferrosilicon, nickel pig iron and ferrochromium and a licensing requirement on ferrosilicon, vanadium, ferronickel and ferrochromium.

The investigation further established that, in both countries, the raw materials subject to those measures represented more than 17% of the total costs of production of the product under investigation and that the prices paid in China and Indonesia for these raw materials were significantly lower than the price in representative international markets.

Following the positive findings of raw material distortions, the Commission analysed whether it could clearly conclude that it is in the Union’s interest to determine the amount of the duties at the level of the dumping margin for Indonesia and the PRC. The investigation established that, given the size of the EU market, spare capacities in both countries were of an enormous magnitude. With regard to competition for raw materials, the investigation established that the export restrictions in both countries as well as the distortions in the raw materials market in the PRC create a comparative disadvantage for the Union industry compared to the exporting producers in both countries. Regarding the effect on supply chains on Union companies, the analysis of the Commission showed that imposing duties at the level of the dumping margin on imports from the PRC and Indonesia would have a very negative impact on the overall profit of users. Taking all this into consideration, the Commission concluded that it was not in the interest of the Union to set the measures at the level of the dumping margins due to the disproportionally negative effect this was likely to have on supply chains for Union companies.

Union interest and definitive measures

The Commission also analysed whether it was not in the Union interest to adopt anti-dumping measures set at the level of the injury margins despite the determination of injurious dumping. The Commission based the determination of the Union interest on an analysis of all the various interests involved, including those of the Union industry, importers and users.

Regarding the interest of the Union industry, the Commission found that the imposition of anti-dumping duties would restore fair trading conditions on the Union market, end the price depression and enable the Union industry to recover from the consequences of injurious dumping. This would result in an improvement of the Union industry’s profitability towards levels considered necessary for this capital-intensive industry. As no unrelated importer cooperated in the investigation, the Commission found no indication that measures would be against the interest of importers. The investigation established that users were likely to be affected negatively by the imposition of duties, but that the impact of the duty at the level of the injury margin for the PRC and Indonesia was not disproportionate and the cooperating users were expected to remain profitable.

The Commission concluded that definitive anti-dumping measures should be imposed on imports of SSHR originating in Indonesia, the People's Republic of China and Taiwan in order to address the injury being caused to the Union industry. The definitive anti-dumping measures, based on the injury margins for Indonesia and the PRC and on the dumping margins for Taiwan, are ad valorem duties of 17,3% for Indonesia, 9,2% to 19% for the PRC, and 4,1% to 7,5% for Taiwan.

Certain heavyweight thermal paper originating in the Republic of Korea (Definitive AD)

On 10 October 2019, the Commission initiated an anti-dumping investigation on imports into the Union of certain heavyweight thermal paper (HWTP) originating in the Republic of Korea. The initiation was based on a complaint was lodged on 26 August 2019 by the European Thermal Paper Association on behalf of producers representing more than 25% of the total Union production of HWTP. The complaint contained evidence of dumping and of a resulting material injury that was sufficient to justify the initiation of the investigation.

The investigation of dumping and injury was from 1 July 2018 to 30 June 2019 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered from 1 January 2016 to the end of the investigation period (‘the period considered’).

Provisional measures

A provisional anti-dumping duty was imposed on 27 May 2020 on imports into the Union of HWTP originating in the Republic of Korea 25 . Imports of HWTP from Korea decreased by 81% in the four months following initiation as compared to the same period during the investigation period. The Commission therefore did not make imports subject to registration as there was no further substantial rise in imports.

Sampling

The final sample of Union producers consisted of three Union producers in two different Member States that accounted for 58,2% of estimated total Union production and 57,5% of total Union sales. Sampling was not envisaged for exporting producers in Korea; indeed, the sole cooperating exporting producer, Hansol Paper, accounted for all exports to the Union during the investigation period. However, in the remainder of the text of the Regulation, some figures had to be given in ranges in order to respect confidentiality. A sample of unrelated importers was not selected due to the low number of replies, so the Commission investigated the two unrelated importers that provided the sampling information, one of which was later found to be a user.

Product under investigation

The product concerned, HWTP, was defined as “thermal paper which weighs more than 65 g/m2; which is sold on rolls of a width of 20 cm or more, weighing 50 kg or more (including paper) and with a diameter of 40 cm or more (jumbo rolls); with or without base coat on one or both sides; coated with a thermo- sensitive substance (i.e. a mixture of dye and a developer that reacts and forms an image when heat is applied) on one or both sides; and with or without top coat”. HWTP is a specialty paper with a thermal active coating, which reacts to form an image when heat is applied by printers with thermal printheads. HWTP is mainly used for self-adhesive labels for e-commerce packaging, tickets and tags.

Dumping

Hansol Paper was the sole known exporting producer of HWTP in Korea during the IP. The normal value was based on the price payed or payable in the domestic market where domestic sales were found to be representative and constructed where domestic sales were not representative.

Hansol Paper exported to the Union directly to independent customers and also through Hansol Europe, a related importer in the Union. For the direct exports, the export price was the price actually paid or payable for the product concerned when sold for export to the Union. For the exports through a related importer, the export price was based on the price at which HWTP was first resold to independent customers in the Union, adjusted backwards to an ex-works price by deducting the SG&A of the related importer, a reasonable amount of profit based on the findings of a previous investigation in the absence of any other appropriate evidence on file, and transport costs.

A comparison between normal values and export prices, duly adjusted where necessary, resulted in a dumping margin of 15,8% for Hansol Paper.

Injury and causation

During the period considered, Union consumption slightly increased by 1%. Korean imports increased by 83% in the same period, and their market share increased by 80%, from 5,5% - 6,5% in 2016 to 10% - 11% in the IP. In the same period, the sales volume of the Union industry decreased by 2%, and its market share decreased by 3%, from 85% - 90% in 2016 to 80% - 85% in the IP.

Union production of HWPT fell by 2%, production capacity increased by 6% so consequently capacity utilization fell by 8%; employment increased by 2%. The sales prices of the Union Industry increased by 14% over the period considered but the cost of production increased by 23% over; profitability thus fell 71%, from 8% - 11% in 2016 to 2% - 5% in the IP. The Commission therefore concluded that the Union industry suffered material injury.

Regarding causation, the investigation established a clear correlation between the rise of imports from Korea and the deteriorating situation of the Union industry. The imports from Korea increased by 83% during the period considered, at the detriment of the Union industry, whose market share went down by 3% during the whole period considered and by 10% since 2017. Moreover, Korean import prices, despite an increase of 34% over the period considered, were consistently and significantly below Union prices and undercut the Union industry’s prices during the IP. Against the price pressure exerted by the dumped imports, the Union industry was unable to account for the increase in cost of production in its Union sales prices. This caused the Union industry’s profitability to go down to very low levels during the IP. The Commission’s analysis found that no other factor attenuated the causal link between the Korean imports and the Union industry's injurious situation. Thus, the Commission concluded that material injury to the Union industry was caused by the dumped imports from Korea.

Injury margin and level of measures

The duty necessary to eliminate the injury suffered by the Union industry should be at a level that would allow the EU industry to sell at a target price. This target price is the price at which the EU Industry is able to cover its costs of production, including future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia of the basic Regulation, and to obtain a reasonable profit (‘target profit’). The investigation established a basic target profit, based on the profitability of the Union industry in year 2016, that is, before the surge of Korean imports. This basic target profit was then increased to take into consideration investments that did not take place during the period considered due to the dumped imports, thus obtaining the final target profit. This target profit was applied to the verified cost of production of the EU Industry in the IP. The resulting price was finally increased to cover for the EU producers’ future compliance with Multilateral Environmental Agreements to get to the target price.

The injury elimination level was determined comparing the weighted average import price of the cooperating exporting producers with the weighted average target price of the Union industry during the IP. The resulting injury margin was 16,9%.

Given that imports were not registered, the Commission analysed import volumes to establish if there had been a further substantial rise during the period of pre-disclosure and, if so, reflect the additional injury resulting from such increase in the determination of the injury margin.

Imports from Korea during the three weeks period of pre-disclosure were 71% higher than the average three-weeks imports in the investigation period. On that basis, the Commission concluded that there had been a substantial rise in imports during the period of pre-disclosure. To reflect the additional injury caused by such increase, the Commission calculated a multiplying factor established by dividing the sum of the volume of imports during the three weeks of the pre-disclosure period of tonnes and the 52 weeks of the IP by the import volume in the IP extrapolated to 55 weeks. The resulting figure reflects the additional injury caused by the further increase of imports. This resulted in a final injury margin of 17,6%.

Union interest and definitive measures

The Commission analysed whether it was not in the Union interest to adopt anti-dumping measures despite the determination of injurious dumping. The Commission based the determination of the Union interest on an analysis of all the various interests involved, including those of the Union industry, importers and users.

Regarding the Union industry, the investigation established that the imposition of anti-dumping duties would restore a level playing field and a fair price level on the Union market, and improve the Union industry’s profitability to levels considered normal for this capital-intensive industry. Only one unrelated importer cooperated, and it did not express any view on whether or not it would agree with the imposition of measures. The investigation established that, given its robust profit margin and its relatively modest share of purchases from Korea, duties should not have a disproportionate effect on the situation of this importer. On that basis, the Commission concluded that measures would not be against the interest of importers. Five users made themselves known to the Commission. Only two of them provided detailed information. However, no user provided sufficient verifiable information that would allow the Commission to quantify the possible effects of any anti- dumping duties on their performance. The investigation also established that the Union Industry had enough capacity to ensure stable supply if measures were imposed. On that basis, the Commission concluded that the effects of a potential imposition of duties on users do not appear to outweigh the positive effects of measures on the Union industry.

The Commission concluded that definitive anti-dumping measures should be imposed on imports of HWTP originating in the Republic of Korea. Hansol Paper’s exports constituted 100% of the total Korean exports from to the Union during the investigation period so the Commission set the country-wide duty at the same level. The definitive anti-dumping measures, based on the dumping margin by application of the lesser duty rule, are ad valorem duties of 15,8%.

Glass fibre fabrics China/Egypt (definitive CVD)

On 16 May 2019, the Commission initiated an anti-subsidy investigation on imports into the Union of certain woven and/or stitched glass fibre fabrics (GFF) originating in the PRC and Egypt. The initiation was based on a complaint lodged on 1 April 2019 by Tech-Fab Europe on behalf of producers representing more than 25% of the total Union production of GFF.

The investigation of subsidisation and injury covered the period from 1 January 2018 to 31 December 2018 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2015 to the end of the investigation period (‘the period considered’).

A separate anti-dumping investigation of the same product originating in the PRC and Egypt was initiated on 21 February 2019 and on 7 April 2020, the Commission imposed definitive anti-dumping duties on imports of the product concerned originating in the PRC and Egypt.

Product under investigation

The product under investigation is fabrics of woven and/or stitched continuous filament glass fibre rovings and/or yarns with or without other elements, excluding products which are impregnated or pre-impregnated (pre-preg), and excluding open mesh fabrics with cells with a size of more than 1,8 mm in both length and width and weighing more than 35 g/m 2 (GFF), originating in the PRC and Egypt.

Sampling

The final sample of Union producers consisted of four Union producers, accounting for 40% of production in the Union of the like product.

A sample of unrelated importers was not selected because only one importer provided information.

Regarding the PRC, eight exporting producers or groups of exporting producers in the PRC provided the requested information in the sampling form and agreed to be included in the sample. The Commission selected a sample of two groups of exporting producers based on the largest representative volume of exports to the Union. The sampled groups of exporting producers represented more than 79% of the reported exports of GFF from the PRC to the Union during the investigation period.

Regarding Egypt, two related exporting producers, representing 100% of the exports to the Union and 100% of the production of GFF in Egypt, came forward. Therefore, no sampling was necessary.

Subsidisation - PRC

The following subsidies and subsidy programmes were investigated: (i) Preferential financing and preferential export credit insurance (iii) Government provision of goods and services for less than adequate remuneration (iv) Revenue foregone through provision of power at reduced rates and Tax Exemption and Reduction programmes (v) Grant Programmes.

Given the partial non-cooperation from the Government of China and the sampled exporting producers, the Commission had to use facts available in relation to Government preferential financing and export credit insurance as well as the financing received by China National Building Materials (CNBM), the parent company of one of the sampled companies CNBM Group.

The investigation showed that the following subsidies and subsidy programmes were countervailable subsidies:

1) Preferential financing: preferential lending, export credit insurance, credit lines, bank acceptance drafts, equity programmes (debt-to-equity swap and other forms of equity injections), bonds: all sampled exporting producers benefited from several forms of preferential financing during the investigation period.

2) Land provision and acquisition in China: the situation is non-transparent and the prices are arbitrarily set by the authorities. There is no functioning market for land and the use of an external benchmark demonstrates that the amount paid for land-use rights by the sampled exporting producers was well below the normal market rate; with regard to electricity the Commission concluded that the legislation provides for a selective application of direct transactions on the electricity market in favour of, among others, building materials and high-tech industries.

3) Enterprise Income Tax (EIT) privileges: allows companies to deduct the income earned from manufacturing from its taxable income.

4) EIT offset for research and development expenses: entitles companies to preferential tax treatment for their R&D activities in certain high technology priority areas determined by the State and when certain thresholds for R&D spending are met.

6) Dividends exemption between qualified resident enterprises: the exemption from tax of income from equity investment is available for encouraged industries, including GFF.

5) Land use tax: one of the sampled companies benefited from rebates or exemptions, even though they did not fall under any of the exempted categories.

6) Grant programmes: some of the sampled companies were found to benefit from technological upgrading, renovation or transformation, environmental protection grants as well as some ad-hoc grants.

Subsidisation: Egypt

The following subsidies and subsidy programmes were investigated: (i) Preferential policy loans, credit lines, other financing, insurance and guarantees; (ii) Revenue foregone through Direct Tax Exemption and Reduction programmes; (iii) Revenue foregone through Indirect Tax and Import Tariff Programmes; (iv) Government provision of goods and services for less than adequate remuneration (LTAR).

Both exporting producers were situated in the China-Egypt Suez Economic and Trade Cooperation Zone (SETC-Zone) which was set up together between the Government of Egypt (GOE) and the Government of China (GOC).

Given the partial non-cooperation by the two governments, the Commission had to base its findings on facts available in relation to the legislative framework and its implementation in the context of the degree of cooperation between the two governments in the SETC Zone.

The investigation showed that the following subsidies and subsidy programmes were countervailable subsidies:

1) Preferential financing: both exporting producers which were related benefited from several forms of preferential financing during the investigation period, both directly and via their parent company in the PRC; this took the form of loans, support for capital investment channelled by the ultimate shareholding company CNBM based in the PRC, as well as export credit insurance. Based on the evidence available, the Commission established that the subsidies provided by the GOC to the companies established in the SETZ Zone can be attributed to the GOE.

2) Land provision and acquisition in Egypt: the two exporting producers either acquired their land or rented it from public bodies or entrusted or directed entities at below normal market rate.

3) Enterprise Income Tax privileges: allows companies to deduct foreign exchange differences due to the devaluation of the EGP from their taxable income more extensively and benefits a limited number of companies in Egypt, i.e. companies that are export oriented and operate their business almost entirely in foreign currencies such as USD or EUR.

4) VAT exemptions and import tariff rebates for equipment imported in order to develop domestic or foreign investment projects are de facto exempted from payment of the VAT and/or import duty for companies located in the SETC- Zone. The two companies were found to benefit from these exemptions;

5) VAT exemptions and import tariff rebates for imported materials: such materials are de facto exempted from payment of VAT, regardless of whether the inputs are later on incorporated into finished products exported or sold domestically. Both companies were found to benefit from these exemptions.

Injury and causation

During the period considered, Union consumption increased by 10%.

During the period considered, the imports from both countries increased by 53% and their market share by 39%. In the same period, the sales volumes of the Union industry decreased by 5% and its market share decreased from 73,7% in 2015 to 63,4% in the IP.

During the period considered, Union production of GFF fell by 8%, production capacity decreased by 2%, while the capacity utilization fell by 7%, employment slightly increased by 1%. The sales prices of the Union industry decreased by 7%, while the cost of production increased by 3% during the period considered. Profitability thus fell by 39%, from 2,5% in 2015 to -3,4% in the IP. The Commission therefore concluded that Union industry suffered material injury.

Regarding causation, the investigation established a clear correlation between the rise of imports from PRC and Egypt and the deteriorating situation of the Union industry.

The prices of imports from the PRC and Egypt fell on average by nearly 14% during the period considered, and undercut Union industry prices, during the investigation period, by between 15,4% and 55,8%.

Prices of the Union industry decreased by nearly 7% during the period considered and resulted in significant losses suffered by the Union industry.

The Commission’s analysis found that no other factor attenuated the causal link between the imports from the PRC and Egypt and the Union industry's injurious situation. Thus, the Commission concluded that material injury to the Union industry was caused by the subsidised imports from the PRC and Egypt.

Union interest and definitive duties

The Commission analysed whether it was not in the Union interest to adopt countervailing measures despite the determination of injurious subsidisation. The Commission based the determination of the Union interest on an analysis of all the various interests involved, including those of the Union industry, importers and users.

Regarding the Union industry, the investigation established that the imposition of countervailing duties would restore a level playing field and a fair price level on the Union market.

Only one independent importer cooperated who imported only negligible quantities from the PRC. Since most high volume users require specific GFF made to order, it is not a product that is regularly imported in high volumes by independent traders. Consequently, the Commission concluded that there are no compelling reasons from unrelated importers not to impose measures as they only import negligible volumes of GFF.

Various ski equipment producers and various kitting companies came forward in support of the potential measures.

Five wind turbine producers provided a questionnaire reply. One wind turbine producer declared to source GFF exclusively from various Union producers.

The Commission established that to prevent supply difficulties, the wind turbine producers usually have a multi-sourcing strategy, regularly purchasing the same kind of GFF from a Union producer and a Chinese or Egyptian producer.

Also, the fact that the multi-sourcing of a specific GFF includes regularly Union producers, both vertically integrated and non-integrated, demonstrates that non-integrated producers can equally provide the required GFF for the wind turbine production. Also, the Commission found that the Union industry does not face capacity issues for supplying users. Indeed, spare capacity is spread between 16 Union producers, rendering the Union a competitive market with varied internal sources of supply. Furthermore, additional capacity can be easily built, as only low investments would be required.

Regarding future competitiveness of the wind energy industry, the Commission established that given the only minor part of GFF in the cost of a wind park (0,1% to 2%), the impact of the definitive duties on the GFF in the total cost of a wind park is considered to be negligible, especially since a large part of the GFF is sourced in the Union.

Furthermore, the cooperating wind turbine producers are in healthy financial condition with profit margins where the small impact of the duties would be easily absorbed, especially given the fact that they also provide a lucrative maintenance services.

The Commission also found that there is no risk of relocation of the blade industry and the measures would not impact negatively renewable energy policy. As for ski producers and other users, they expressed strong support for rendering the Union industry viable again as it is their almost exclusive tailor-made supplier of GFF. The Commission also found that the measures are in the interest of Union GFR producers as suppliers for the GFF producers as well as for Union kitting and cutting service providers.

The definitive countervailing duty was fixed at 10,9% for Egypt, while for the PRC it ranged between 17% and 30,7%. As the anti-subsidy investigation was carried out in parallel with a separate anti-dumping investigation, the Commission amended the definitive antidumping duty in order to avoid double counting.

Regarding the PRC, the Commission first imposed the definitive countervailing duty at the level of the established definitive amount of subsidisation and then imposed the remaining definitive anti-dumping duty, which corresponds to the relevant dumping margin reduced by the amount of the countervailing duty and up to the relevant injury elimination level established in the separate anti-dumping investigation.

In the case of Egypt, since the Commission did not countervail any export contingent subsidy schemes, it imposed the definitive countervailing duty at the level of the established definitive amount of subsidisation in addition to the anti-dumping duty established by Regulation (EU) 2020/492 26 .

Glass fibre reinforcements from Egypt (definitive CVD)

On 7 June 2019, the Commission initiated an anti-subsidy investigation on imports into the Union of continuous filament glass fibre products (GFR) originating in Egypt. The initiation was based on a complaint on 24 April 2019 by the European Glass Fibre Producers Association (APFE) on behalf of producers representing 71% of total Union production.

The investigation of subsidisation and injury covered the period from 1 April 2018 to 31 March 2019 (the ‘investigation period’ or the ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2016 to the end of the investigation period (the ‘period considered’). Where appropriate, the Commission also examined post-IP data.

Amendment of the Notice of initiation and provisional measures

On 12 February 2020, the Commission published a Notice amending the Notice of Initiation. The amendment included subsidies, which were identified in the course of the investigation within the scope of the investigation. In particular, the Commission identified preferential policy loans by Chinese State-owned or State-controlled entities, granted directly to Jushi Egypt and indirectly via the parent company of Jushi Egypt in the People’s Republic of China and which could potentially be attributed to the GOE.

A separate anti-dumping investigation of the same product originating in Egypt and Bahrain was initiated on 3 May 2019. On 2 June 2020, the investigation was terminated following a withdrawal of the complaint by the complainant 27 .

Registration of imports and retroactive collection

The Commission made imports of GFR subject to registration 28 during the three weeks period of pre-disclosure. It subsequently found that it was justified to collect retroactively for the three weeks period countervailing duties because during that period imports can be considered as massive as they were significantly higher than those during the IP. Thus, they caused injury, which was difficult to repair.

Sampling

The final sample of Union producers consisted of three Union producers. Given that only two unrelated importers provided completed sampling forms, sampling was not applied. Regarding the exporting producers, the Commission did not resort to sampling as the Jushi Group is the only exporting producer of GFR in Egypt.

Subsidisation

The following subsidies and subsidy programmes were investigated: (i) Preferential policy loans, credit lines, other financing, insurance and guarantees; (ii) Revenue foregone through Direct Tax Exemption and Reduction programmes; (iii) Revenue foregone through Indirect Tax and Import Tariff Programmes; (iv) Government provision of goods and services for less than adequate remuneration (LTAR).

The exporting producer was situated in the China-Egypt Suez Economic and Trade Cooperation Zone (SETC-Zone) which was set up together between the Government of Egypt (GOE) and the Government of China (GOC).

Given the partial non-cooperation by the two governments, the Commission had to base its findings on facts available in relation to the legislative framework and its implementation in the context of the degree of cooperation between the two governments in the SETC Zone.

Based on the evidentiary elements available, the Commission established that the subsidies provided by the GOC to the company established in the SETZ Zone can be attributed to the GOE.

The investigation showed that the following subsidies and subsidy programmes were countervailable subsidies:

1) Preferential financing: the exporting producer benefited from several forms of preferential financing during the investigation period, both directly and via its parent company in the PRC; this took the form of loans, support for capital investment channelled by ultimate shareholding company CNBM based in the PRC, as well as export credit insurance.

2) Land provision and acquisition in Egypt: the exporting producer acquired its land from public bodies or entrusted or directed entities at below normal market rate.

3) Enterprise Income Tax privileges: allows companies to deduct foreign exchange differences due to the devaluation of the EGP from their taxable income more extensively and benefits a limited number of companies in Egypt, i.e. companies that are export oriented and operate their business almost entirely in foreign currencies such as USD or EUR.

4) VAT exemptions and import tariff rebates for equipment imported in order to develop domestic or foreign investment projects are de facto exempted from payment of the VAT and/or import duty for companies located in the SETC- Zone. The company was found to benefit from these exemptions.

5) VAT exemptions and import tariff rebates for imported materials: such materials are de facto exempted from payment of VAT, regardless of whether the inputs are later on incorporated into finished products exported or sold domestically. The company was found to benefit from these exemptions.

Injury and causation

During the period considered, Union consumption increased by 5%. During the period considered, the imports from Egypt increased by 185% and their market share increased from 5% to 14%.

During the period considered, Union production of GFR fell by 1%, production capacity decreased by 1%, while the capacity utilization fell by 7%, employment slightly increased by 2%. During the period considered, the sales prices of the Union industry decreased by 3%, while the cost of production increased by 7%. Profitability thus dropped from 12,6% in 2016 to 5,2% in the IP. The Commission therefore concluded that the Union industry suffered material injury.

Regarding causation, the investigation established a clear correlation between the rise of imports from Egypt and the deteriorating situation of the Union industry.

The prices of imports from Egypt fell on average by nearly 7% during the period considered, and undercut Union industry prices, during the investigation period, by 16%. The Union industry suffered clear price depression, in view of the fact that Egyptian imports were made at low prices, which dramatically increased in quantity.

The Commission’s analysis found that no other factor attenuated the causal link between the imports from Egypt and the Union industry's injurious situation. Thus, the Commission concluded that material injury to the Union industry was caused by the subsidised imports from Egypt.

Union interest and definitive duties

The Commission analysed whether it was not in the Union interest to adopt countervailing measures despite the determination of injurious subsidisation. The Commission based the determination of the Union interest on an analysis of all the various interests involved, including those of the Union industry, importers and users.

Regarding the Union industry, the investigation established that the imposition of countervailing duties would restore a level playing field and a fair price level on the Union market. Two independent importers cooperated with the investigation and both of them had diversified sources of imports of GFR. For one of the imports of GFR constituted an insignificant part of its activities. For the other importer GFR constituted a more important part of its activities while it had low profit margins. However, it also imported from the PRC and it has already experienced the imposition of much higher duties on the PRC imports. The overall conclusion on importers was that the measures would not be against their interests.

Regarding users, given that GFR is the main raw material in their finished products, measures would not be in their interest, as the measures would increase the costs of the users. However, measures would be in the interest of integrated groups using their own produced GFR.

On balance, given the alternative sources of available supply not subject to measures, given that one integrated user was in favour of measures and since there is no evidence clearly showing that the additional costs from measures imposed on imports from Egypt could not be absorbed by the users, the Commission concluded the negative effects on the users did not clearly show that it was not in the Union’s interest to apply the measures.

The rate of the definitive countervailing duty imposed was 13,1% for Jushi Group and all other companies. The level of retroactively collected duties for the time of registration amounted to 8,7%. In addition, the amounts secured by way of the provisional countervailing duty were definitively collected.

3.1.5.    New investigations terminated without measures

In accordance with the provisions of the respective basic Regulations, investigations may be terminated without the imposition of measures if a complaint is withdrawn or if measures are unnecessary (i.e. no dumping/no subsidies, no injury resulting from dumped or subsidised imports, measures not in the interest of the Union). In 2020, 5 new proceedings (3 anti-dumping and 2 anti-subsidy) were terminated without measures, as in 2019.

The list of cases which were terminated without the imposition of measures during 2020 can be found in the following table. More information can be obtained from the Official Journal publications to which reference is given in Annex E.

3.2.    Review investigations

3.2.1.    Expiry reviews

Article 11(2) and Article 18 respectively of the basic Regulations provide for the expiry of measures after 5 years, unless an expiry review demonstrates that they should be maintained in their original form.

In 2020, 2 anti-dumping measures expired automatically. The references for these measures are available in Annex N.

Since the expiry provision of the basic Regulations came into force in 1985, a total of 515 measures have expired automatically.

3.2.1.1.    Initiations

In 2020, the Commission initiated a significant number of 19 expiry reviews of anti-dumping measures and 2 expiry reviews of anti-subsidy measures. The list of the expiry reviews initiated in 2020 can be found in the following table, together with the name of the complainant. It should be noted that some expiry reviews may be carried out in parallel with interim reviews. Where there are interim reviews and expiry reviews ongoing at the same time, these are indicated by an asterisk in the table below. More information can be obtained from the Official Journal to which reference is available in Annex F.

3.2.1.2.    Expiry reviews concluded with confirmation of duties

In 2020, the Commission concluded 7 expiry reviews with a confirmation of the duties for a further period of 5 years.

The list of the measures, which were renewed during 2020, together with the results of the investigations, can be found below. More information can be obtained from the Official Journal publications to which reference is given in Annex F.

3.2.1.3 Details of some individual cases concluded by confirmation of duty

Solar glass from the People’s Republic of China (AD/AS)

On 14 May 2019, the Commission initiated an expiry review of the anti-dumping and anti-subsidy measures imposed on imports of solar glass originating in China, following a request lodged by EU ProSun Glass on behalf of producers representing more than 25% of the total Union production of solar glass.

The review investigation period (RIP) ran from 1 January 2018 to 31 December 2018. The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2015 to the end of the RIP (‘the period considered’).

Sampling

The Commission selected a sample of two Union producers that accounted for more than 80% of the Union production of solar glass. No Chinese exporting producers or unrelated importers in the Union cooperated in the investigation.

Likelihood of continuation or recurrence of dumping

The Commission’s analysis showed that, due to China’s intervention in its economy in general as well as in the solar glass sector specifically, prices or costs, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention. On that basis, the Commission concluded that it was not appropriate to use domestic prices and costs to establish normal value in this case.

Therefore, normal value for China was constructed based on the corresponding costs of production and sale in an appropriate representative country. Only Turkey met all the criteria to be considered an appropriate representative country: a level of economic development similar to the PRC, production of the product under review and a complete set of data available for all factors of production, manufacturing overheads, SG&A expenses and profit.

As a consequence of non-cooperation, the Commission used the available statistical data on Chinese imports to the Union to determine the export price.

The Commission compared the constructed normal value with the export price to the Union on an ex-works basis. The resulting dumping margin was 33%, showing that dumping continued during the review investigation period.

The Commission also concluded that, given the significant production capacity in the PRC and the attractiveness of the Union market for Chinese exporting producers, there was a strong likelihood that the expiry of the anti-dumping measures would result in an increase of dumped imports of solar glass into the Union.

In view of its findings on the continuation of dumping during the RIP and on the likely development of imports should the measures lapse, the Commission concluded that there was a strong likelihood that the expiry of the anti-dumping measures would result in the continuation of dumping.

Likelihood of continuation or recurrence of subsidisation

In the absence of cooperation from Chinese exporters or the Government of China, the Commission analysed the likelihood of continuation or recurrence of subsidisation on the basis of facts available. In particular, the analysis was based on information from the request for an expiry review, the findings of the original investigation, the findings of the most recent anti-subsidy investigations concerning the PRC and the Commission Staff Working Document on significant distortions in the PRC. The countervailable subsidies found to continue in the RIP were preferential lending, grants and ad hoc subsidies, preferential tax policies for High and New Technology Enterprises, R&D tax expenses offset, and provision of land use rights.

On this basis, the Commission concluded that solar glass producers in China continued to benefit from countervailable subsidies during the RIP. The Commission also concluded that, given the significant production capacity in the PRC and the attractiveness of the Union market for Chinese exporting producers, there was a strong likelihood that the expiry of the countervailing measures would result in an increase of imports of subsidised solar glass to the Union.

In view of its findings on the continuation of subsidisation during the RIP and on the likely development of imports should the measures lapse, the Commission concluded that there was a strong likelihood that the expiry of the measures would result in the continuation of subsidisation.

Likelihood of continuation or recurrence of injury

Union consumption of solar glass decreased by 35% between 2015 and the RIP. The market share of the Union industry went from 73% in 2015 to 79% in the RIP. The market share of the Chinese imports remained relatively important in the RIP (at 9%). The macroeconomic indicators reflected a fragility of the Union industry. Production, sales volume and the number of employees declined steadily during the period considered, although less than Union consumption. The microeconomic indicators, on the contrary, showed an improving situation for the Union industry. In the period considered, the unit cost of production was stable while prices on the Union market increased, with the corresponding increase in the profitability of the Union Industry, that evolved from losses in 2015 to 5% - 15% in the RIP. The Commission thus considered that the Union industry largely recovered from the material injury caused by dumped imports from PRC yet, in view of the drop in Union consumption and the relatively big market share of the Chinese imports, its situation remained fragile.

Since the Union industry did not suffer material injury anymore, the Commission examined whether there was a likelihood of recurrence of injury should the measures expire. Given the fragile situation of the Union industry, the high spare capacities in China, the attractiveness of the Union market and its prices – Chinese import prices during the RIP undercut Union prices – the Commission concluded that it was likely that injury would recur should the measures lapse.

Union interest and definitive measures

The continuation of the measures would benefit the Union industry, enabling it to maintain its sales volumes, market share, profitability and to further improve its economic situation. The group active in the distribution of the solar glass for greenhouses construction expressed its support for the measures. No unrelated importers cooperated.

Regarding the interest of users, and also taking into consideration their future expansion projects due to expected growth, the investigation established that the impact of the measures on their costs, estimated at 2 -3%, was not out of proportion and that their security of supply was not threatened because of the spare capacities available in the Union and of alternative sources of non-dumped imports.

The Commission also concluded that maintaining the measures does not harm the Union’s environmental policies; on the contrary, if the measures lapse, the viability of the Union solar glass industry would be threatened and the users would become dependent on imports, most likely from China. The lapse of the measures would also have as consequence that the solar glass industry could not invest in innovation and research and development. Therefore, from the environmental perspective, the Commission considered it crucial to maintain the solar glass industry viable.

Consequently, the Commission concluded that there were no compelling reasons that maintaining the definitive anti-dumping and countervailing measures would go against the Union interest. Therefore, the anti-dumping duties and the countervailing duties on solar glass originating in the PRC, were extended for five years on 24 July 2020.

3.2.1.4.    Expiry reviews concluded by termination

In 2020, no expiry review was concluded by the termination of measures in force.

3.2.2.    Interim reviews

Article 11(3) and Article 19 of the basic Regulations provide for the review of measures during their period of validity on the initiative of the Commission, at the request of a Member State or, provided that at least one year has lapsed since the imposition of the definitive measure, following a request containing sufficient evidence by an exporter, an importer or by the EU producers. In carrying out the investigations, it will be examined, inter alia, whether the circumstances with regard to dumping/subsidisation and injury have changed significantly and whether these changes are of a lasting nature. Reviews can be limited to dumping/subsidisation or injury aspects.

During 2020, the Commission initiated 2 interim reviews (1 with regard to anti-dumping measures and 1 concerning countervailing measures). As many as 8 interim reviews were concluded during the same period - 3 were terminated by confirming the duties unchanged and 5 by amendment of the measures. The details of the cases can be found below. More information can be obtained from the Official Journal publications to which reference is given in Annex G.

3.2.3.    New exporter reviews

As far as anti-dumping measures are concerned, Article 11(4) of the basic AD Regulation allows for a review ("newcomer" review) to be carried out in order to determine individual margins of dumping for new exporters located in the exporting country in question, which did not export the product during the IP.

Such parties have to show that they are genuine new exporters, i.e. that they are not related to any of the exporters or producers in the exporting country, which are subject to the anti-dumping measures, and that they have actually started to export to the EU following the IP, or that they have entered into an irrevocable contractual obligation to export a significant quantity to the EU.

When a review for a new exporter is initiated, the duties are repealed with regard to that exporter, though its imports are made subject to registration under Article 14(5) of the basic AD Regulation in order to ensure that, should the review result in a determination of dumping in respect of such an exporter, anti-dumping duties may be levied retroactively to the date of the initiation of the review.

As far as anti-subsidy measures are concerned, Article 20 of the basic AS Regulation allows for a review (accelerated review) to be carried out in order to promptly establish an individual countervailing duty. Any exporter whose exports are subject to a definitive countervailing duty but who was not individually investigated during the original investigation for reasons other than a refusal to co-operate with the Commission can request such review.

In 2020, the Commission initiated 2 ‘new exporter’ reviews. Since the Commission carried out the first reviews of this type in 1990, a total of 80 such reviews were initiated so far. (Annex I)

3.2.4.    Anti-absorption investigations

Where there is sufficient information showing that, after the original IP and prior to or following the imposition of measures, export prices have decreased or that there has been no or insufficient movement in the resale prices or subsequent selling prices of the imported product in the EU, an absorption review may be opened to examine whether the measure has had effects on the above-mentioned prices. The duty may be increased to take account of such lower export prices. The possibility of absorption reviews is included in Articles 12 and 19(3) of the basic Regulations.

In 2020, 1 anti-absorption investigation was terminated without increase of duty (Annex J).

3.2.5.    Anti-circumvention investigations

The possibility of investigations being opened in circumstances where evidence is brought to show that measures are being circumvented was introduced by Article 13 and Article 23 of the basic Regulations.

Circumvention is defined as a change in the pattern of trade between third countries and the EU that stems from a practice, process or work for which there is insufficient due cause or economic justification other than the imposition of the duty. The duties may be extended to imports from third countries of like products, or parts thereof, if circumvention is taking place. Duties may also be extended to imports of a slightly modified like product from the country subject to current measures.

In 2020, The Commission initiated 3 anti-circumvention investigations (one ex-officio case is described below). Four such reviews were concluded with an extension of duty to other exporting countries. One anti-circumvention investigation was concluded without extending the measures. More information can be obtained from the Official Journal publications to which reference is given in Annex K.

Certain corrosion resistant steels originating in the People’s Republic of China

Ex-officio investigation

In February 2018, the Commission imposed anti-dumping measures ranging from 17,2% to 27,9% against imports of certain corrosion resistant steels (CRS) originating in China.

During the safeguard investigation against imports of certain steel products, the Commission found a change in the pattern of trade, based on statistics at TARIC level, between CRS subject to anti-dumping measures and CRS not subject to those measures. According to the evidence at the disposal of the Commission, this change seemed to stem from the importation of slightly modified CRS, for example by applying a thin oil-coating, by slightly increasing the content of carbon, aluminium, niobium, titanium, or vanadium, or by changing the coating from simple zinc or aluminium coatings e. g. to zinc-magnesium-aluminium coating. The evidence suggested that there was no due cause or economic justification for such practices other than avoiding the anti-dumping duty, the imposition of the duty for such practice, process or work. Finally, the Commission had sufficient evidence that the remedial effects of the existing anti-dumping measures on CRS were being undermined both in terms of quantity and price and that that the prices of the slightly modified CRS were dumped in relation to the normal value previously established.

On this basis, the Commission initiated, on its own initiative, an anti-circumvention investigation on 25 November 2019.

The investigation period ran from 1 January 2013 to 30 September 2019 (the ‘IP’).

Change in the pattern of trade

The total volume of imports of CRS from China fell from 1 857 000 tonnes during the IP of the original anti-dumping investigation (October 2015 to September 2016) to 204 tonnes during period from 1 October 2018 to 30 September 2019 (‘the reporting period’ or ‘RP’). By contrast, imports of slightly modified CRS only started in 2017, i.e. after provisional measures were imposed on CRS, to reach 758 000 tonnes in the RP. The Commission thus concluded that the sharp decrease of imports of CRS since the imposition of anti-dumping measures combined with a parallel increase of imports of the slightly modified product constituted a significant change in the pattern of trade.

Practice to avoid the duties

Only two groups of Chinese exporting producers, representing less than 1% of export of the slightly modified CRS to the EU in the RP, came forward and requested exemptions. One group did not provide the necessary information in its exemption request and the Commission therefore disregarded the information submitted by this company. The other group could prove that it had already been selling the slightly modified CRS before the imposition of the original measures. The Commission concluded that an exemption to this group was warranted as it had not engaged in circumvention.

Given the low level of cooperation, the Commission therefore had to resort to facts available to obtain positive evidence on the existence of circumvention. The Union industry provided evidence of practices used by Chinese exporters to slightly modify the product concerned to make it fall under customs codes which were not subject to the measures.

Based on this evidence the Commission established the existence of the circumvention practice, namely the slight modification of the product concerned to make it fall under customs codes, which are normally not subject to the measures.

Undermining the remedial effect of the measures and dumping

The investigation established that imports of slightly modified CRS reached a market share of 13% in the EU in the reporting period.

Given the low level of cooperation, the Commission used the Chinese average import price from Eurostat, adjusted using the sole cooperating exporter’s data, to establish the export price. On that basis, Chinese prices undercut the Union industry’s prices by around 4%. The Union industry also submitted data showing that it was still in a loss-making situation. Given the significant volume of imports of slightly modified CRS circumventing the measures and their low prices, the Commission concluded that the remedial effects of the duty were being undermined both in terms of quantities and prices.

Finally, the aforementioned export price was compared to the weighted average normal value established in the original investigation. This comparison resulted in a dumping margin of around 14% during the reporting period.

Extension of the measures

Given the findings of circumvention, the definitive anti-dumping duty on CRS was extended to imports of slightly modified CRS originating in the People’s Republic of China. Two Chinese exporting producers belonging to the sole cooperating group were found not to be circumventing and were thus exempted from the extended duty.

3.2.6.    “Other” reviews (reinvestigations, or re-openings)

These investigations fall outside Article 11(3) or Article 19 of the basic Regulations and focus on the implementation of court rulings. In 2020, the Commission concluded 4 such investigations by amending the measures as appropriate. A list of the cases concerned is given in Annex H. More information can be obtained from the Official Journal publications to which reference is given in that Annex.

3.3.    Safeguard investigations

Safeguard measures have always been and remain an instrument that the Commission would only apply in truly exceptional circumstances. Indeed, they are only used where it is clear that, applying the highest standards, such measures are necessary and justified because, due to unforeseen circumstances, there has been a surge in imports and this has caused or threatens to cause serious damage to the EU industry.

The Commission expects the EU’s commercial partners to follow a similarly strict approach.

Not all safeguard measures adopted by the EU constitute safeguards within the meaning of the WTO Agreement on Safeguards. Some of these measures are called ‘safeguards’ under particular regimes, such as bilateral safeguards or the safeguard investigations under the Generalised Scheme of Preferences (GSP).

On 14 March 2019, an EU Horizontal Bilateral Safeguard Regulation entered in force, 30 with the aim to streamline the implementation of the EU’s bilateral safeguard measures. The objective of these safeguard clauses is to temporarily suspend tariff preferences where preferential imports increase to such an extent that they cause or threaten to cause serious injury to a particular EU industry. This horizontal regulation provides standard rules for the implementation of bilateral safeguard clauses, including the conditions and decision-making process. In the past, the EU adopted separate regulations for each individual FTA, which will no longer be necessary.

In terms of casework, in 2020, the EU concluded two review investigations of its safeguard measure on certain steel products (Annex L).

On 2 February 2019, the EU imposed an erga omnes definitive safeguard duty on certain steel products 31 . These measures were reviewed for the second time in July 2020 32 . Moreover, at the end of 2020, the Tariff Rate Quota (TRQ) volumes were adapted to the exit of the United Kingdom from the EU Customs Union 33 , as per the description below.

3.3.1.     Details on individual safeguard cases

Safeguard measures on certain steel products – Second Review

On 14 February 2020, the Commission initiated the second review of the steel safeguard measures 34 . Definitive safeguard measures had been in place since 2 February 2019. When imposing definitive safeguard measures, the Commission had committed to review them regularly 35 and to adjust the level or allocation of the TRQs in case of changes of circumstances during the period of imposition. After analysing a large amount of submissions from interested parties, the Commission concluded its investigation and the resulting adjustments entered in force on 1 July 2020. The Commission’s findings and adjustments to the definitive safeguard measures following the second review investigation are summarised below: 

A.    Level and allocation of the TRQ for a number of product categories

Effects of the COVID-19 pandemic on the Union steel market and the functioning of the current safeguard measures

The Commission found that the economic shock produced by the COVID-19 pandemic represented a fundamental and exceptional change in circumstances drastically affecting the functioning of the steel market within the Union and worldwide. For this reason, the Commission considered it necessary to carefully take into consideration the economic effects of the COVID-19 pandemic when shaping the adjustments under the second Review of the safeguard measures.

The Commission considered that, whereas the economic shock of the pandemic had been relatively symmetric, in that the pandemic has affected all countries in the world with sudden and very significant output and demand falls, the strength of the rebound in 2021 was likely to be asymmetric. This would depend not only on the evolution of the pandemic in every country, but also on the structure of the national economies and their capacity to respond with recovery policies.

In particular, the Commission expected that some exporters, notably in geographical areas resuming activities comparatively earlier than others, would frontload sales in the Union market more forcefully than in the past to first exhaust country-specific quotas as early as possible, and be ready to tap immediately into the residual quotas when these became available. This opportunistic behaviour of exporters from certain origins risked more than ever displacing other market participants and unduly occupy market shares that in normal circumstances would correspond to other traditional trade flow areas or to domestic production. This was a real risk, as exporters would desperately try to gain larger shares of a smaller market to make up for absolute sales losses due to depressed demand. Apart from endangering the preservation of traditional trade flows in terms of origins, the above-mentioned opportunistic behaviour, unduly displacing traditional trade flows and domestic production, would also be liable to causing very serious imbalances in the Union steel market, which could ultimately compromise the remedial effects of the original safeguard measures in terms of protection against a new sudden surge of imports.

In order to guarantee an orderly return to the market of all suppliers, both domestic industry and exporters, and to minimise undue opportunistic conducts, the Commission considered it necessary to introduce a number of adjustments to the TRQ administration.

Adjustments to the TRQ administration in specific product categories

Category 1 (Hot-rolled flat products) 

The TRQ use in this category had experienced a consistent sharp decline throughout the period. This substantial reduction in TRQ use took place in a period that was not yet affected by the shock of the COVID-19 pandemic. This strongly suggested that it would be very unlikely that any future recovery of EU demand in the course of the third year of measures would be of such a magnitude to reach, eventually, a full or very high TRQ use in this product category.

The Commission established that the risk of potential shortage of supply it tried to prevent with the globalization of the TRQ under the definitive measures did no longer exist. Accordingly, the Commission decided to discontinue the exceptional global administration of the TRQ in this product category and apply the default system of combined country-specific and residual quota. A cap of 30% share nevertheless continues applying to the use of the residual quota in the fourth quarter to prevent crowding-out effects.

Category 8 (Stainless steel hot-rolled sheets and strips)

The Commission observed several important changes affecting this category since the first review investigation. In the first place, on 8 April 2020 the Commission had imposed provisional anti-dumping measures on imports of this product category originating in the People’s Republic of China, Indonesia and Taiwan. 36 Second, the Commission confirmed a consistent very low use of the country-specific TRQ by the US 37 .

Based on these changed circumstances, which risked producing an offer shortfall on the EU market for this product category, the Commission found it was in the Union interest to transfer the volumes of the country-specific quotas of all countries subjected to different types of trade defence measures into the residual TRQ. This adjustment would ensure that EU users have enough flexibility for switching supplying origins, should that be necessary. Therefore, the Commission decided to transform the product category 8 TRQ into a global TRQ administered on a quarterly basis as from 1 July 2020.

Category 25 (Large welded tubes)

Under the second Review, the Commission observed (based on a set of data not available at the time of the first Review investigation) a rather abnormal pattern of import flows under this single category, which differed significantly from the traditional trade flows in terms of volumes and origins and which risked producing imbalances on the market. In fact, the design of the TRQ management had created an undue crowding-out situation.

Accordingly, to reflect more accurately the historical import flows corresponding to the two sub-categories of tubes and to ensure a fairer functioning of the quota, the Commission found it necessary to split this category into two subcategories. The split would guarantee the availability of the necessary volumes for any large-scale engineering project in the EU during the remaining duration of the measures, which otherwise would have continued to be crowded out by other product types.

B.    ‘Crowding out’ of traditional trade flows

The Commission was able to assess the typical residual quota use per quarter by the countries that are the incumbent beneficiaries of this section of the TRQ, based on trade flows over a much longer time period. The Commission calculated the average residual quota use (overall and per origin) in each of the four quarters where the countries benefitting from a country-specific quota could not access the residual section yet. On the other hand, the Commission checked this typical use against the actual use (overall and per origin) in the fourth quarter when indeed the bigger exporting countries could tap into the residual section of the TRQ.

Based on the above-mentioned comparison, the Commission decided that the access to the residual quota in the last quarter of a period should be based on the actual typical use by the incumbent beneficiaries of the residual quota. This would take place under three different access regimes to the residual quota. These three regimes depend on the degree of crowding out effects observed.

a)    Regime 1: No further access

In a number of categories, smaller countries benefiting from country-specific quotas consistently showed across the quarters assessed that they could fill fully or to a large degree the volumes available under the residual quota. In this case, with a view to preserving traditional trade flows in terms of origins in an effective manner, the Commission considered it necessary to no longer allow such countries to access the residual quota in the fourth quarter during the third year of measures. The prohibition of access applies to categories: 5, 16, 20, and 27. The past track of average use per quarter of the residual quota clearly indicated in these categories that the risk that a proportion of it remains unused was very low.

b)    Regime 2: Limited access

In a series of other categories, the average quota use showed that, while the incumbent supplying countries under the residual quota make reasonable use of it, they alone were not able to make full or high use of the available volumes. Therefore, the access in the fourth quarter by larger exporting countries continued to be justified.

However, with a view to ensuring that the necessary entry in these cases did not produce undue displacement of the traditional trade flows from the incumbent smaller supplying countries, the Commission considered it appropriate to limit the access to the residual quotas by countries benefiting from exhausted country-specific quotas. This access was limited to only those volumes exceeding the average quota used by the smaller supplying countries during the four quarters. This adjustment applies to product categories: 10, 12, 13, 14, 15, 21, 22, and 28.

c)    Regime 3: Status quo

For the remaining categories, the Commission concluded that it was in the Union interest to continue the status quo, that is to say, allowing the access in the fourth quota without limitation for the beneficiaries of exhausted country-specific quotas. The reason for this conclusion was that the trends did not show any undue displacement of origins. This unlimited access would apply to Categories: 2, 3A, 3B, 4A, 6, 7, 9, 17, 18, 19, 24, 25B, and 26.

d)    Special cases: Product Categories 1,4B, 8 and 25A

For categories 1 and 4B, a 30% cap to those countries having exhausted their country-specific TRQ applies. Since categories 8 and 25A would consist as of 1 July 2020 of a global TRQ only, this system does not apply to them.

C.    Potential detrimental effects in achieving the integration objectives pursued with preferential trading partners

The Commission considered that, following the review investigation, there were no grounds to propose any adjustment in this regard.

D.    Update of the list of developing WTO member countries excluded from the scope of the measures based on updated import statistics

Following the adoption of the definitive safeguard measures, the Commission committed to reviewing, on a regular basis, the list of developing countries potentially excluded from the scope of the measures based on updated import statistics.

For updating the list of exclusions from the measures under the second Review, the Commission used the more updated and representative set of consolidated statistics, i.e. the full year 2019.

Steel safeguard measures – adaptations to the TRQs following the exit of the United Kingdom from the EU Customs Union

Pursuant to the Withdrawal Agreement between the Union and the United Kingdom (‘UK’), as of 1 January 2021, the UK was no longer going to be part of the Union customs territory. Therefore, as of that date the territorial scope of the safeguard measures would change. Since the level of the safeguard measures was based on the average imports into the Union of 28 Member States, i.e. including imports into the UK, during the reference period 2015-2017, the Commission found it appropriate to adapt the volume of Tariff Rate Quotas (‘TRQs’) accordingly, as well as the list of developing countries subject to the current safeguard measures.

The Commission considered that the most appropriate methodology to adapt TRQ volumes was the following: a) Establish import volumes of countries subject to measures in EU27 during the period 2015-2017; b) Add to the level of UK imports into EU27 in the period 2015-2017; c) Add, per product category, a 5% increase to reflect the top-up of February 2019 and the liberalisation increases (two increases of 3% each, in July 2019 and 2020 respectively).

By means of an implementing Regulation, the Commission adapted the TRQ volumes for the period of 1 January 2021 to 30 June 2021.

3.4.    Verification activities

Based on Articles 16 and 26 of the respective basic AD and AS Regulations, in the course of investigations, the Commission carries out visits to examine the records of companies or associations with the aim to verify the information provided during the proceedings. During 2020, EU TDI services made 26 such visits, which amounted to 247 person-days of verification work. As a result of the COVID-19 outbreak, the European Commission decided to suspend all non-essential travel and to postpone all face-to-face meetings with visitors. In this regard, the EC has published a  Notice 38 on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations. All the verification visits have been replaced by a Remote Cross-Checking (RCC) process by videoconference, in order to gain assurances with regard to the information submitted in the questionnaire responses. In 2020, EU TDI services carried out 83 verifications with remote cross checking, which amounted to 545 person-days of verification work. The verification work covered European producers, users of the subject product, foreign exporters (in six countries) and importers alike.

4.    Enforcement of anti-dumping/countervailing measures

Globalisation of trade led to greater possibilities for circumventing or otherwise reducing the effectiveness of anti-dumping and countervailing measures. To address this problem, throughout 2020, the TDI services continued their follow-up activities aimed at ensuring that measures were effectively enforced. In the framework of an integrated approach measures were considered in all their forms – duties and undertakings – and synergy was sought between the TDI services and enforcement-oriented services (OLAF, DG Taxud and customs authorities in Member States).

More information on the Commission’s enforcement focus can be found in the main body of the Report (hereafter the Annual Report) to which this Staff Working Document (SWD) is attached.

4.1.    Follow-up of measures

The follow-up activities concerning measures in force are centred on four main areas: (1) to pre-empt fraud, by defining risk-related areas, alerting customs authorities and assessing the feedback from customs and economic operators; (2) to monitor trade flows and market developments; (3) to improve the effectiveness with the appropriate instruments (new investigation, interim review, newcomer review, contact with national administrations) and (4) to react to irregular practices by enhancing the co-operation with enforcement-related services (OLAF and national customs) and by initiating anti-absorption or anti-circumvention investigations.

4.2.    Monitoring of undertakings

Monitoring of undertakings forms part of the enforcement activities, given that undertakings are a form of AD or AS measures. The Commission accepts such undertakings if it is satisfied that they can effectively eliminate the injurious effects of dumping or subsidisation.

During 2020, there were 11 undertakings in force. No new undertakings were accepted during the year. More information is available in Annexes M and Q.

4.3.    OLAF activity

The Commission has developed a range of activities addressing prevention and detection of fraud, and this includes a close cooperation with the European Anti-Fraud Office (OLAF), through annual meetings, day-to-day contacts, or exchange of case information, via a special OLAF liaison officer within the Directorate–General for Trade.

In relation to that, by mutual agreement between the Commission and OLAF, the Commission provides OLAF with any information and evidence relating to possible cases of fraud, or any other illegal activity related to TDI. Circumvention of TDI measures can occur in the form of: false declaration of product origin; misclassification under product codes outside measures; assembly operations; channelling via companies with no or low duty rates or undervaluation of imported products.

The Commission and OLAF have been reacting whenever they had indications pointing to the possibility of the above situations, such as: 1/ when subsequent to the imposition of measures, a significant decrease in imports from the country concerned into the EU could be noted, which was entirely or partially offset by an increase in imports of: products from another third country, or products classified under a product code outside measures, or parts of the product which are not subject to measures; 2/ when subsequent to the imposition of measures, imports from the country concerned into the EU were coming from a company with a low or a zero duty at the expense of imports from a company with a higher duty; or 3/ when a low amount of duties was collected by Member States’ customs authorities.

Moreover, when the Commission received complaints from Union industry regarding the circumvention of measures, it has each time informed OLAF thereof. The Commission stayed also in regular contact on these matters with Member States’ customs authorities.

Investigations by OLAF into the practices above are confidential. For that reason, it is not possible to give further information or statistics on the latter. Every year OLAF publishes a report presenting its activities of the previous year, as well as statistics of its investigative performance and examples of cases.

5.    Refunds

Articles 11(8) and 21(1) of the basic Regulations allow importers to request the reimbursement of the relevant collected duties where it is shown that the dumping/subsidy margin, on the basis of which duties were paid, has been eliminated or reduced to a level below that of the duty in force.

During 2020, 28 new refund requests were submitted. At the end of 2020, 5 refund investigations were on-going, covering 82 requests. The Commission adopted in 2020 13 Implementing Decisions rejecting refund requests. More details on these decisions and on the status of refund investigations can be found at:

http://trade.ec.europa.eu/tdi/refunds.cfm?sta=1&en=20&page=1&c_order=number&c_order_dir=Down  

6.    Information and Communication activities / Bilateral contacts

Explaining the legislation and practice of the EU's trade defence activity and exchanging views on third country practices continues to be an important part of the work of the TDI services.

Similarly to previous years, in 2020, the Commission held a bilateral meeting (online) to exchange best practices in the field of TDI with officials from Korea. Parties exchanged statistics concerning respective trade defence investigations (TDIs) and informed each other on their trade remedy laws, policies and practices, with a particular focus on transparency of Korean trade defence investigations.

7.    Judicial review: decisions given by the Court of Justice and the General Court

7.1.        Overview of the judicial reviews in 2020

In 2020, the General Court (GC) and the Court of Justice (CJ) rendered 17 judgments and orders in the areas of application of anti-dumping or anti-subsidy measures: 12 rulings were handed down by the GC, out of which seven orders in relation to taxation of costs, whereas the CJ issued one judgment in appeal of a GC ruling and four preliminary rulings.

7.2.        Cases pending

At the end of 2020, 60 cases were pending before the GC and 14 before the CJ. A list of the cases is given in Annex S.

7.3.        New cases

In 2020, 30 new court cases were lodged in the field of trade defence. 23 of these were lodged before the GC (all actions for annulment) and seven before the CJ (six appeals and one request for a preliminary ruling).

7.4 Judgements rendered by the General Court (a selection)

T-307/18 Zhejiang Jiuli

On 15 October, the GC dismissed the action introduced by Zhejiang Jiuli 39 for the annulment of Regulation 2018/330 imposing definitive anti-dumping duties on imports of certain seamless pipes and tubes of stainless steel from China as a result of an expiry review pursuant to Article 11(2) of the basic Regulation.

Jiuli claimed an infringement of its rights of defence, notably a lack of disclosure of essential information concerning the calculation of the dumping margins. Jiuli took issue mainly with the manner in which the Commission calculated the dumping for those exported product types without corresponding domestic sales in the analogue country 40 .

The Court rejected this claim because it found that Jiuli was placed in a position to understand the methodology used by the Commission to calculate the dumping and obtained the information necessary for the defence of its rights.

The applicant also claimed that the Commission committed a manifest error of assessment with regard to the determination of its dumping margin because the Commission did not sufficiently identify comparable products. Only a small proportion of the applicant’s total exports could be directly compared to the product types of the analogue country producer. The applicant considered that in these circumstances it was not possible to establish the existence of dumping on its imports. The Court recalled that the basic Regulation cannot be interpreted as allowing the exclusion of some export transactions to the European Union from the calculation of the dumping margin. On the contrary, the EU institutions are required to take into account all those transactions for the purposes of that calculation. For this reason when there were types of the product under consideration for which there were no ‘comparable prices’, the Commission used the price of a closely related product type as a basis for the calculation of dumping. The Court found the used method to be reasonable. There was only one product “Casing and tubing, of a kind used in drilling for oil and gas”, not produced by the Indian exporting producer, for which the Commission used data from the Union producers to determine the normal value.

The Court confirmed that this method is in line with the provisions of the basic Regulation, according to which where normal value cannot be determined on the basis of the price or constructed value in the analogue country, the Commission may use any other reasonable basis, including the price actually paid or payable in the European Union for the like product.

Jiuli has also claimed that the Commission has committed a manifest error of assessment resulting from the application of the analogue country methodology instead of taking into account the Chinese production costs and domestic prices to calculate dumping. This claim was based on Section 15 of the Protocol on the Accession of China to the WTO. The Court recalled that, according to settled case-law, having regard to their nature and structure, the WTO agreements are not in principle among the rules in the light of which the legality of measures adopted by the EU institutions may be reviewed.

The applicant also alleged the Commission’s failure to verify the Indian exporting producer’s data. The Court considered that the applicant was aware of the producer’s lack of cooperation and recalled that in any event, in the basic Regulation there is nothing to suggest that, on that basis, the Commission was required to disregard the data provided by the analogue country producer.

The applicant submitted that the Commission committed a manifest error of assessment in the finding of the existence of injury and failed to verify the existence of a causal link, between the Chinese imports and the injury suffered by the Union producers. The applicant considered that given their small market share, the Chinese imports have not caused injury to the EU industry and were replaced by imports from India, at substantially lower prices. According to the applicant, the Commission was required to initiate anti-dumping investigations against all countries whose imports were dumped and which caused injury to the EU industry, pursuant to the principle of non-discrimination set out in Article 9(5) of the basic Regulation.

The Court recalled that in the current context of expiry review, the Commission might either maintain measures that are in force or allow them to expire. The Commission could not extend the application of these measures to imports from India. The Court confirmed that the Commission rightly applied Article 3(6) of the basic Regulation, by taking into account the low volume of Chinese imports and concluding that the material injury caused to the EU industry resulted from their low prices. The Court did not accept the applicant’s claim of infringement of the principle of non-discrimination. The Court recalled that the basic Regulation prohibits discriminatory treatment between all imports on which anti-dumping duties were imposed and not between imports on which anti-dumping duties were imposed and imports which were not the subject of any investigation. In other words, the facts of the present case did not come within the scope of Article 9(5) of the basic regulation.

T-835/17 The European Steel Association (Eurofer)

On 12 March 2020, the GC dismissed the action brought by Eurofer against Regulation (EU) 2017/1795 imposing anti-dumping duties on certain hot-rolled flat steel products from Brazil, Iran, Russia and Ukraine and terminating the investigation for the same products from Serbia.

Eurofer, the complainant in the underlying investigation, challenged the termination vis-à-vis Serbia. The company took issue with the Commission having found Serbian imports to be negligible under Article 3(4)(a) of the basic Regulation and therefore unnecessary under Article 9(2), even though they represented 1,04% of EU market share, that is, above de minimis threshold of Article 5(7).

The Court clarified that Article 5(7) of the basic Regulation, which precludes the initiation of a case if imports from a country have a market share of 1% for the initiation, may serve as guidance concerning negligible import volumes. However, this does not mean that, in the context of deciding whether to cumulate imports from various countries in accordance with Article 3(4) of the basic Regulation, imports from the country at issue representing a market share exceeding 1% cannot be regarded as negligible. In other words, de minimis threshold set in Article 5(7) of the basic Regulation is not binding for the interpretation of the conditions for cumulation set in Article 3(4) of the basic Regulation.

The applicant further argued that in order to comply with Article 9(2) the Commission should have examined whether the dumped Serbian imports on their own contributed to material injury to the EU industry. Article 9(2) of the basic Regulation provides that investigations are to be terminated where protective measures are unnecessary without specifying circumstances in which such measures are to be regarded as unnecessary.

The General Court observed that, to satisfy Article 9(2) of the basic Regulation, given the broad wording of that provision, the Commission has a certain margin of discretion and can rely on the same factors forming the basis of our decision as under Article 3(4) of the basic Regulation.

The Court clarified that it was true that, generally, the decision on whether or not an anti-dumping duty should be imposed in a particular case should be based on a detailed analysis of, inter alia, whether dumping has taken place (Article 2 of the basic Regulation) and whether injury has been caused (Article 3 of the basic Regulation). However, it follows from the text of the basic Regulation that such detailed analysis is not always necessary and that it might be appropriate to terminate an investigation or proceedings, inter alia, on the sole basis of the margin of dumping or volumes of imports.

Lastly, Eurofer claimed that the Commission should have disclosed the undercutting calculation for Serbia and not only the average prices. The General Court observed that the Commission had informed the applicant of the ‘essential facts and considerations’ by means of the Information document. The General Court recalled that the Commission does not undermine the effectiveness of someone’s rights of defence when it terminates an investigation as long as parties have had a chance to comment on that decision.

7.5 Judgements rendered by the Court of Justice (a selection)

C-104/19 Donex (preliminary ruling)

On 9 July 2020, the CJ issued a preliminary ruling related to the validity of regulation 91/2009 of 26 January 2009 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in China (Fasteners regulation).

In 2011, Donex (EU importer) lodged declarations for the release into free circulation of fasteners. Donex mentioned Thailand as the country of origin. Following an investigation carried out by OLAF, it was found that those goods were originating in China and therefore, subject to the anti-dumping duty imposed by the regulation at issue.

Consequently, invitations to pay anti-dumping duties were sent to Donex. The importer challenged those invitations. In this context, the Supreme Court of the Netherlands referred two questions related to the validity of the regulation 91/2009 to the Court of Justice.

The first question was about the validity of the regulation in respect of an EU importer due to the infringement of Article 2(11) of the basic Regulation in so far as the Union institutions, in determining the dumping margin for non-cooperating Chinese exporting producers, excluded from the comparison the export transactions of certain types of the product for which there was no corresponding product type produced and sold by the analogue country 41 producer.

The Court recalled that Article 2(11) of the basic Regulation provides for two methods of comparing the normal value and the export price for the purpose of calculating the dumping margin. According to the case law of the Court, whatever the method of comparison chosen, the EU institutions are required to take into account all the export transactions to the EU. The Court found that in the present case, it is not apparent from the contested regulation or any element in the file before the Court that, the EU institutions excluded export transactions relating to certain types of the product concerned.

The second question was about a possible infringement of Article 2(10) of the basic Regulation in so far as the Union institutions refused to take into account, when comparing the normal value of the products of an Indian producer with the export prices of similar Chinese products, adjustments relating to import duties on raw materials and indirect taxes and to differences in production costs. Donex also claimed that the institutions did not provide cooperating Chinese exporting producers (in a timely manner) with all the data of the Indian producer with regard to the determination of the normal value.

The Court found that the EU institutions made certain adjustments in order to make a fair comparison. On the other hand, it does not appear that the EU institutions received claims for adjustments relating to import duties and indirect taxes and to differences in production costs. In these circumstances, the Court of Justice decided that in the absence of any request for adjustments, and evidence to establish that such adjustments are well founded, the EU institutions cannot be criticised for failing to make such adjustments.

With regard to Donex’ claim regarding the belated transmission of the dumping determinations data, the Court recalled that a company, which did not participate in an investigation and is not related to any exporting producer cannot itself claim the benefit of rights of defence.

In the present case, it is apparent from the file before the Court, first, that neither Donex nor its suppliers participated in the investigation procedure and, second, that Donex does not appear to be related to any Chinese exporting producers that participated in it. In other words, rights of defence are personal and cannot be relied upon by others.

C-543/19 Jebsen and Jessen (preliminary ruling)

On 15 October, the CJ issued a preliminary ruling related to the conditions to submit an undertaking invoice and to the consequence of the failure to respect these conditions.

The request has been made in proceedings between Jebsen & Jessen (GmbH & Co.) KG and Hauptzollamt Hamburg (Principal Customs Office, Hamburg, Germany). By Implementing Decision 2015/87, the Commission accepted undertakings offered by different Chinese exporting producers (among them Weifang) in connection with the anti-dumping proceeding concerning imports of citric acid from China.

When clearing imports from Weifang, Jebsen & Jessen presented the invoices, which did not refer to Implementing Decision 2015/87. As a result, the customs office refused to grant Jebsen & Jessen the benefit of the undertaking and instead imposed the general anti-dumping duty of 42,7% on the imports. Jensen & Jessen challenged that decision before the Finance Court of Hamburg that referred two questions to the Court of Justice.

By its first question, the referring Court asked whether Implementing Regulation 2015/82 must be interpreted as meaning that imports of goods can be exempted from the anti-dumping duty imposed by Article 1 of that regulation when the undertaking invoice necessary for obtaining such exemption does not refer not to the relevant decision accepting the undertaking.

In its reply, the Court of Justice recalled that exemptions from anti-dumping and countervailing duties may be made only under certain conditions, in cases specifically provided for, and thus constitute exceptions to the normal regime for anti-dumping and countervailing duties. Therefore, such exemptions must be interpreted strictly. The Court highlighted that the reference to the Implementing Decision by which the Commission accepted an undertaking is of particular importance in the context of an implementing regulation permitting an exemption from the anti-dumping duty on account of such undertaking, as it permits the customs authorities to verify, that all the requirements regarding the exemption from anti-dumping and countervailing duties at issue have been satisfied.

The Court recalled that the exemption regime laid down in Article 2(1) of Implementing Regulation 2015/82 and the conditions it sets out are intended to: 1) eliminate the injurious effects of dumping by exempting from the anti-dumping duty certain exporting companies where they have undertaken to sell the product at a minimum price within the European Union, and 2) limit the risk of circumvention of that implementing regulation by imposing a number of obligations on those companies, so that both the importer of that product and the customs authorities of the Member States are able to determine that a given import is indeed related to an undertaking of one of those companies. Therefore, the purpose of the exemption regime and its conditions is not to protect the interests of a given importer, but to ensure that the interests of EU businesses are protected against the injurious effects of dumped imports.

The second question of the referring Court related to the reimbursement of the duties once the proper invoices are presented. The Court clarified that the commercial undertaking invoice were to be presented when the goods were declared to the customs authorities and not afterwards.

8.    Activities by third countries targeting the EU

This section describes the main developments and trends in the area of third country actions in 2020 (see also the Annual Report, as well as annex U (A - F) below for detailed figures).

In 2020, the main users of the trade defence instruments against EU exports were the US with 38 measures in force, China with 19, Turkey with 16, India with 15 and Brazil with 13. Besides these main users, other important cases in countries that use the instruments less frequently are also described below.                                        

United States

Overall trends

In 2020, the US were the country that launched the highest number (8) of trade defence investigations affecting EU exports. They launched 6 new AD investigations, four more than in 2019, and 2 countervailing duty investigations.

At the end of 2020, the US had 38 measures in force affecting EU imports, i.e. 3 more than in 2019.

Main case

Common alloy aluminum sheet AD

On 6 October 2020, the US DoC announced affirmative preliminary determinations concerning 18 countries, including seven EU Member States (DE, EL, ES, HR, IT, RO, SI). The EU export value concerned is almost EUR 600 million. Dumping margins range from 3% to 350%.  The highest margins are due to the application of adverse facts available. The Commission intervened as appropriate both in the framework of the investigation as well as at high political level.

China

Overall trends

In 2020, China's Trade defence activity continued to be rather limited. The total number of measures in force against the EU at the end of 2020 was 19, as compared to 17 in 2019. China did not initiate any new investigations in 2020.

Turkey

Overall trends

At the end of 2020, Turkey had 16 measures in force that affected the EU, 12 AD and 4 safeguards (SFG) - 2 of which were renewed in 2020 (see below main cases). There were 4 new investigations initiated (2 AD – cereals and oven fabrics and 2 SFG – PET and PVC), which is a considerable increase in comparison to 2019, when no new investigation was initiated.

There was 1 new safeguard measure imposed by Turkey in 2020 (PET) for a duration of 5 years (1 SFG measure imposed in 2019).

Main cases

Wallpaper SFG:

Review of the original SFG measure from 2015. This measure was already extended for 3 years in August 2018, including a TRQ that the EU successfully negotiated during consultations. Economic interest around € 13 million. The Commission will continue to intervene in order avoid a second extension of the measures.

India

Overall trends

The total number of trade defence measures in force in 2020 has decreased as compared to 2019 (15 against 18), even though India remains the third main user of the instruments against the EU, after the US and China.

India has not initiated any safeguard (SFG) investigations last year (3 new investigations in 2019). India has launched 4 new AD investigations in 2020 (7 in 2019) against the EU and remains a country, which has one of the highest number of new initiations amongst all third countries. The 4 new cases concern imports of caprolactam, acrylonitrile butadiene rubber (NBR), newsprint and toluene di-isocyanate.

With regard to actions taken, India imposed provisional AD duties in 1 case (toluene di-isocyanate) and temporarily suspended definitive AD duties imposed in 2019 (high-speed steel from Germany).

Main cases

Newsprint

The AD investigation was initiated in January 2020, targeting imports originating in or exported from 7 countries, among which the EU (EU economic interest of around €60 million). The product concerned is newsprint, in rolls or sheets, excluding glazed newsprint. The Commission intervened as appropriate. The Indian authorities recommended the imposition of an AD duty for five years; however, at the time of writing this report, definitive measures have not yet been introduced.

Acrylonitrile butadiene rubber (NBR)

This AD investigation was initiated in May 2020.  The product concerned is acrylonitrile butadiene rubber (NBR), excluding latex NBR, powder NBR and carboxylated NBR. The Commission has filed written comments and is following the case closely in order to intervene further if necessary (economic interest € 2,3 million).

Ukraine

Overall trends

At the end of 2020, Ukraine had 4 measures in force (1 AD – rubber plugs and 3 SFG – polymeric materials, polyurethane foam and sulphuric acid).

There was a considerable increase in the number of ongoing investigations by Ukraine, especially two new safeguard investigations in 2020 (fresh cut roses and cables). Furthermore, the SFG investigations on syringes and caustic soda were terminated without measures. The Commission intervened in all these investigations. Moreover, the Commission intervened on several occasions at political level with the Ukrainian authorities in order to make them reconsider their extensive use of the SFG instrument.

There was 1 new safeguard measure imposed in Ukraine in 2020 (polymeric materials) for a duration of 3 years and 2 safeguard investigations were terminated (certain nitrogen fertilisers and complex fertilisers).

Main cases

Certain nitrogen fertilizers and Complex fertilizers SFG:

Ukraine terminated the safeguard investigations on imports of certain nitrogen fertilizers and complex fertilizers on 30 June 2020. It concerned two parallel investigations into nitrogen fertilizers and mineral fertilizers containing N, P and K. (Please see also under ‘successful interventions’ below).

Fresh cut roses SFG:

Initiated in July 2020, 95% of EU exports come from the Netherlands. The Commission made a written submission and held several rounds of consultations in order to avoid the very high duty of 139,7% or at least to reduce it. At the time of writing this report, the Ukrainian authorities have decided to continue the investigation. Economic interest € 3 million.

Eurasian Economic Union (EAEU)

Overall trends

The EAEU did not initiate any new investigations against the EU nor did it impose any new measures. Moreover, one measure in force lapsed in 2020 (certain hot rolled steel products, SFG). There currently is one EAEU measure in force (herbicides, AD).

Canada

Overall trends

In 2020, Canada has increased the number of measures imposed against the EU. At the end of 2020, Canada had 10 measures in force against the EU, 2 more than 2019. In terms of new investigations, Canada initiated 3 AD investigations (hot-rolled carbon steel heavy plate from Germany, concrete reinforcing bar from Italy and wheat gluten from Germany, France, Belgium, Austria and Lithuania). In two cases, Canada imposed provisional measures. Canada also initiated a combined AD/AS review investigation

Main cases

AD (DE, NL, UK, BE) and AS (all EU) review investigation on refined sugar

On 2 October 2020, Canada initiated a combined AD and AS review investigation to determine whether to extend or terminate the existing AS and AD measures on imports of refined sugar from the EU. Measures are in place since 1995. EU exports since the imposition of measures were very low and in 2019 amounted to € 3 million.

The Commission has cooperated in the investigations. Regarding the AS investigation, the Commission has submitted evidence showing that there have been significant changes in the EU sugar market in the recent past, in particular, the sugar regime ended in 2017.

AD investigation regarding imports of wheat gluten from FR, BE, DE, LT, AT

The investigation was initiated in August 2020, with a value of exports: € 11,5 million.

The Canadian industry links the increase of imports to the provisional entry into force of the CETA agreement on 21 September 2017, which is an element not linked to dumping. Canada is also looking whether there is a particular market situation in the EU market of wheat gluten. The Commission made a submission at initiation of the investigation and provided additional information to Canada in a questionnaire. On 23 December, Canada imposed provisional AD duties and had not found a particular market situation so far.

Morocco

Morocco showed a more cautious activity in 2020 if compared with the intense TDI activity in 2019, nevertheless a total of 7 measures are still in force against EU exports.

During 2020, Morocco initiated 2 new SFG investigations (hot-rolled steel sheets and tubes & pipes), imposed 1 new SFG measure (wooden panels), reviewed 3 SFG measures in force (cold-rolled steel sheets, bars and wire rods, and paper reels) and  initiated an expiry review on one AD measure (insulin from Denmark),

The SFG investigation on steel tubes and pipes, initiated in October 2019 was finalised in September 2020  with the imposition of definitive measures of 25% for 3 years (with a 1% reduction each year).

The insulin AD review targeting imports from Denmark, initiated also in October 2019, resulted in the application, starting from October 2020, of an AD duty of 26,09% for 5 years. Nevertheless, an agreement was reached between the Ministry and the company to restore the level of the duty at the previous price undertaking.

The SFG measure on paper reels and reams expired at the end of December 2020.

South Africa (SA)

Overall trends

There are currently 8 measures in force - 3 AD (frozen chicken, potato chips and ropes and cables) and 5 SFG (bolts, certain flat rolled iron, frozen chicken BSG, screws and threaded fasteners).

2 new SFG investigations were initiated in 2020 (structural steel and bolts), as opposed to 1 investigation initiated in 2019. Moreover, South Africa imposed 2 new SFG measures (on the aforementioned bolts, and on threaded fasteners), as opposed to 1 SFG measure imposed in 2019.

Main cases

Structural Steel SFG:

The investigation was initiated in June 2020 and the Commission intervened through submissions and comments. The investigative authority recommended terminating this investigation in January 2021. This recommendation is still subject to comments by the interested parties. Economic interest € 9 million.

Frozen Chicken (AD & SFG):

The expiry review, initiated in March 2020, was requested by the South African Poultry Association (SAPA) representing the Southern African Customs Union (SACU) industry. Member States concerned are the Netherlands and Germany. In April 2020 the Commission submitted comments on initiation, heavily contesting the circumstances of the review, but also of the original investigation.

In parallel, the bilateral dispute settlement proceeding on frozen chicken is still ongoing. Bilateral safeguard measures were originally imposed in 2018 for duration of 3,5 years, with a decreasing ad valorem duty (from 35% to 15%). Following several attempts to find an amicable solution, dispute settlement was requested by the EU, which has been advancing very slowly due to unresponsiveness of the SA side. The EU economic interest is valued at € 100 million.

Other important cases

AD cases on EU exports of frozen fries    

In 2020, there were 4 on-going investigations against exports of frozen fries from different EU countries. These investigations are conducted by Colombia, New Zealand, South Africa and Brazil. The combined value of EU exports to these countries was close to € 150 million. Colombia and South Africa conducted expiry reviews of their measures imposed in 2018 and 2016 respectively. New Zealand initiated a new AD investigation and Brazil reviewed the product scope of the measures imposed in 2017. The Commission intervened strongly in all the above cases in close cooperation with the EU industry and Member States affected. The scope review by Brazil was terminated without the extension of measures to other frozen fried potato products, which is to the benefit of EU exporters who can continue to export. Finally, the dispute settlement proceeding brought by the EU to the WTO against Colombia is still ongoing. The EU requested the establishment of a panel in 2020 and will soon make the first written submission in the case proceedings.

Commission’s successful interventions

Examples of successful Commission interventions are listed below.

The Gulf Cooperation Council (GCC) initiated an AD investigation on ceramic tiles against Spain as well as China and India in November 2018. The Commission, in close cooperation with the Spanish authorities and the Spanish Ceramic Tile Manufacturers’ Association (ASCER) submitted comments in the framework of this investigation in December 2018, March 2019, July 2019 and October 2019, when a public hearing took place. In October 2019, the GCC Technical Secretariat issued the Essential facts’ report concluding that the domestic industry was not suffering any injury caused by Spanish imports. Consequently, Spanish imports were excluded from the scope of the investigation (economic interest € 200 million).

Moreover, the Commission successfully intervened in 2 SFG investigations also targeting the ceramic tiles producers. These investigations were conducted by the Philippines and Malaysia. Both countries terminated their SFG investigations without the imposition of measures. The Commission intervened in both cases in close cooperation with the EU industry and Member States concerned, arguing inter alia that there was no increase of imports during the IP, which is one of the conditions for the imposition of a SFG measure, or that the imported product concerned was not comparable to the locally produced one.

The Commission persuasively intervened in the 2 parallel SFG investigations conducted by Ukraine on imports of complex fertilisers and certain nitrogen fertilisers. These actions led to the termination of both investigations by the Ukrainian authorities without imposition of any SFG measure allowing for a market of €190 million total export value not to be closed.

The Commission, together with the industry and Member States, also successfully intervened to obtain a lower level of SFG duty on exports of polymeric materials to Ukraine (from initially 18% to 12,5%) after consultations held with the Ukrainian authorities. Economic interest is €66 million.

The Commission successfully intervened in the two safeguard investigations conducted by Ukraine on imports of caustic soda and syringes. The Commission has repeatedly insisted that measures would not be compatible with WTO rules. In both investigations, Ukrainian authorities decided to terminate the investigations without imposing any measures.

9.    Activities in the framework of the WTO

Dispute settlement in the field of trade defence

The WTO provides for a rigorous procedure for the settlement of disputes between WTO Members concerning the application of the WTO agreements. The procedure is divided into two main stages.

The first stage, at the level of the WTO Members concerned, consists of a bilateral consultation. Upon failure of the consultation to settle the dispute, the second stage can be opened by requesting the WTO Dispute Settlement Body to establish a panel.

WTO Members, other than the complaining and defending party, with an interest in a given case, can intervene as 'third parties' before the panel.

The panel issues a report, which can be appealed before the WTO Appellate Body (AB) (each appeal being heard by three members of a permanent seven-member body set up by the Dispute Settlement Understanding (DSU)).

Both the panel report and the report by the AB are adopted by the Dispute Settlement Body (DSB) unless the latter rejects the report by unanimity. The findings of a panel or Appellate Body report have to be implemented by the WTO Member whose measures have been found to be inconsistent with the relevant WTO Agreements.

If the complaining WTO Member is not satisfied with the way the reports are implemented, it can ask for the establishment of a so-called 'implementation panel'. Here too, an appeal against the findings of the panel is possible.

It should be noted that the anti-dumping, anti-subsidy and safeguards measures are among the most common subject matters in WTO dispute settlement.

The EU has been participating actively in WTO dispute settlement proceedings as a third party in relation to TDI.

It has to be noted, with regard to the above process that, since 11 December 2019, due to the blockage of new appointments to the AB, the WTO is no longer able to deliver binding resolutions of trade disputes and guarantee the right to appellate review.

The EU has been engaged in efforts to resolve this situation. Pending such a resolution, the EU, together with other WTO Members, has prepared a contingency measure to apply as long as the appointments remain blocked – known as the Multiparty Interim Appeals Arbitration (MPIA). The MPIA allows its participants to bring appeals and solve disputes despite the current paralysis of the AB. It provides a functioning and independent two-tier dispute settlement system in disputes between them. It mirrors the usual WTO appeal rules and can be used between any members of the WTO willing to join, as long as the AB is not fully functional.

The MPIA shows that participating WTO members are willing to take concrete action to preserve an independent dispute settlement system with an appeal function. It will apply until the AB is once again able to function. The EU’s priority remains resolving the current AB impasse. The world needs a properly functioning, multilateral, rules-based global trading system, with a functioning dispute settlement system at its core.

Regarding the current dispute settlement cases against the EU, the main developments in 2020 occurred in the following cases:

DS494: European Union – Cost Adjustment Methodologies and Certain Anti-Dumping Measures on Imports from Russia

On 24 July 2020, the panel circulated to all WTO Members its final report in DS494 European Union – Cost Adjustment Methodologies and Certain Anti-Dumping Measures on Imports from Russia.

The panel rejected Russia’s claim that the specific provisions of the basic AD Regulation are inconsistent with WTO law.

Specifically, the Panel disagreed with Russia's reading that Article 2(3) requires only “representative” prices be used in the construction of normal value of the like product.

The Panel also disagreed with Russia that the second subparagraph of Article 2(3) of the Basic AD Regulation introduces an additional circumstance, not provided for by Article 2.2 of the Anti-Dumping Agreement, allowing authorities to use alternative methods in the determination of the normal value (namely that “a particular market situation for the product concerned” exists “when prices are artificially low”).

Finally, the Panel considered that although the second subparagraph of Article 2(5) does not require adapting out country information to arrive at the cost of production in the country of origin, this was not sufficient to render the challenged provision inconsistent “as such” with Article 2.2.

However, the panel upheld Russia’s claim that the EU would have a Cost Adjustment Methodology, which is inconsistent with Article 2.2 of the Anti‑Dumping Agreement.

The panel disagreed with the EU practice of cost adjustment in general and with its application in particular in the third expiry review of the welded tubes and pipes anti-dumping measures.

The panel also disagreed with a few procedural aspects of the third expiry review on the ammonium nitrate anti-dumping measures, in particular the initiation of the review, the access to the initiation request by the Union industry, and instances of access to file and confidential treatment. The panel upheld the EU defence in the majority of the other claims as regards the ammonium nitrate measures, notably product scope matters, the likelihood of recurrence of injury and dumping determinations confidential treatment, use of facts available, definitive disclosure, statement of reasons and others.

Both parties appealed the report.

DS521: European Union — Anti-Dumping Measures on Certain Cold-Rolled Flat Steel Products from Russia

On 27 January 2017, the Russian Federation requested consultations with the European Union concerning anti-dumping measures imposed by the European Union on imports of certain cold-rolled flat steel products from the Russian Federation. In its request, Russia challenges several aspects of the investigation such as the injury determination, recourse to facts available dumping findings, retroactive collection of the duties and various procedural aspects. Consultations with Russia took place on 8 June 2017. Almost two years later, on 13 March 2019, the Russian Federation requested the establishment of a panel. The panel was established on 16 March 2020. Written procedure took place during the summer 2020 whereas the first substantive meeting planned for the autumn was postponed due to COVID-19 related travel restrictions.

10.    Audit of the European Court of Auditors

In July 2020, the European Court of Auditors (ECA) published its report of an audit of the EU’s Trade defence policy. The report concluded that the Commission successfully enforces the EU’s trade defence policy. The audit, which started in 2018, examined whether the Commission successfully enforced the EU’s trade defence policy.

The ECA examination included an examination of whether the Commission followed procedures properly, whether the analyses performed justified the decisions taken, the monitoring of measures in place as well as the Commission’s involvement in the World Trade Organization forum and in third countries’ trade defence investigations. 

The audit covered the Commission’s actions between 2016 and 2019, and the evidence came from a documentary review (including a sample of 10 investigations), as well as interviews with relevant Commission staff, Member State authorities, and stakeholders.

In July 2020, the ECA published its final report where it concluded that the Commission successfully enforces the EU’s trade defence policy.

In summary, the ECA found that trade defence investigations led to timely measures being imposed to protect a number of European industries from unfair trade behaviour by third countries. The ECA also found that the Commission followed procedures properly during its trade defence investigations and treated all parties equally. It also found that the analyses underlying the Commission’s decisions were sound and comprehensive.

The ECA proposed six recommendation on certain aspects of the trade defence investigation.

(I)better document how review of confidentiality issues was carried-out;

(II) to seek additional communication channels with stakeholders to raise awareness of trade defence instruments;

(III)to provide further guidance to in questionnaires to interested parties, as well as to investigators on how to analyse relevant competition issues raised by parties;

(IV) to stipulate criteria for identifying trade defence measures with the highest risk of circumvention, as well as to carry regular evaluations to estimate the overall effectiveness of trade defence measures;

(V)to use its powers of initiating ex-officio investigations more fully, including by specifying the criteria to initiate an investigation for new products ex-officio and by acting swiftly where conditions are met for an ex-officio initiation and

(VI)to prioritise its response to third-country measures more effectively, in particularly by defining specific criteria for its response.

The Commission accepted all the recommendations, except for recommendation (v) relating to ex-officio investigations which the Commission accepts only partially. This is because the Commission considers its current practice with respect to ex-officio investigation to be fully in line with the applicable legislation. The Commission therefore intends to continue its current practice.

The Commission is already taking steps to implement the recommendations within the timeframe proposed by the ECA, i.e. end of 2021 for all recommendations expect that concerning regular evaluation of the effectiveness of trade defence instruments, for which the implementation period was set to end 2023.

11.    Export authorisation scheme for personal protective equipment

Due to the outbreak of the COVID-19 pandemic, the demand for personal protective equipment (PPE) increased significantly in the first months of 2020.

To ensure an adequate supply of PPE within the EU, a temporary export authorisation scheme for PPE was introduced by an urgency procedure on 15 March 2020, pursuant to Article 5 of Regulation (EU) 2015/479 42 .

Under this scheme, export authorisations had to be requested for exports to third countries of protective spectacles and visors, face shields, mouth-nose-protection equipment, protective garments, and gloves during a period of six weeks.

Supplies to the EFTA states were excluded as well as the EU’s overseas countries and territories, and some small states in Europe with a particular dependency on the metropolitan supply chains of the Member States to which they are attached or on the supply chains of neighbouring Member States. Under specific conditions, supplies for humanitarian aid could be authorised.

Public health needs of PPE on the Union market remained high. With Regulation (EU) 2020/568, a revised scheme entered into force on 26 April 2020. This Regulation was valid until 25 May 2020.

The revised scheme reduced the list of products that required export authorisation to masks, spectacles and protective garments, further extended the geographical exception to partners with closely integrated supply chains with the EU and required Member States to swiftly grant authorisations for exports for humanitarian purposes.

It also required Member States to report to the European Commission on the authorisations granted and rejected, to make sure the exports can reach places where they are most needed and to increase the level of transparency of the measures.

In the period of 26 April to 25 May 2020, export authorisations were granted to over 15 million pieces of PPE and were rejected on 4,35 million pieces.

LIST OF ANNEXES

ANNEX A

ANNEX B

ANNEX C

ANNEX D

ANNEX E

ANNEX F

ANNEX G

ANNEX H

ANNEX I

ANNEX J

ANNEX K

ANNEX L

ANNEX M

ANNEX N

ANNEX O

A. Ranked by product (alphabetical)