Twenty-first annual Report from the Commission to the European Parliament on the Community's anti-dumping, anti-subsidy and safeguard activities - Overview of the monitoring of third country anti-dumping, anti-subsidy and safeguard cases (2002) /* COM/2003/0481 final */
TWENTY-FIRST ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT ON THE COMMUNITY'S ANTI-DUMPING, ANTI-SUBSIDY AND SAFEGUARD ACTIVITIES - OVERVIEW OF THE MONITORING OF THIRD COUNTRY ANTI-DUMPING, ANTI-SUBSIDY AND SAFEGUARD CASES - (2002) CONTENTS Executive summary 1. Overview of the legislation 1.1. Anti-dumping and anti-subsidy 1.1.1. The international framework 1.1.2. The Community legislation 1.1.2.1. The legislation covered by the Treaty establishing the European Community 1.1.2.2. The legislation covered by the Treaty establishing the European Coal and Steel Community (ECSC Treaty) 1.1.3. Changes to the Community legislation in 2002 1.1.3.1. Changes to the anti-dumping basic Regulation 1.1.3.2. Changes to the anti-subsidy basic Regulation 1.2. Safeguards 1.2.1. The international framework 1.2.2. The Community legislation 1.2.3. Proposal for a Regulation on safeguards and phasing out of certain quotas for imports originating in the People's Republic of China 1.3. Anti-subsidy and unfair pricing instrument for airline services 2. BASIC CONCEPTS 2.1. Anti-dumping and anti-subsidy 2.1.1. What is dumping and what are countervailable subsidies - the material conditions for the imposition of duties 2.1.1.1. Dumping and subsidies 2.1.1.2. Material injury and causation 2.1.1.3. Community interest 2.1.2. Procedure 2.2. Safeguards 2.2.1. What are safeguard measures 2.2.2. Procedure 3. The Trade Defence Instruments' services 4. Co-operation with the European Parliament 5. General overview of anti-dumping and anti-subsidy investigations and measures 5.1. New investigations 5.2. Review investigations 6. Overview of activities in 2002 6.1. New investigations 6.1.1. Initiations 6.1.2. Provisional measures 6.1.3. Definitive measures 6.1.3.1. Overview 6.1.4. Investigations terminated without measures 6.2. Review investigations 6.2.1. Expiry reviews 6.2.1.1. Initiations 6.2.1.2. Reviews concluded with confirmation of duty(ies) 6.2.1.3. Details on some individual cases (in chronological order) 6.2.1.4. Reviews concluded by termination 6.2.1.5. Details on some individual cases (in chronological order) 6.2.2. Interim reviews 6.2.3. Other" interim" reviews 6.2.4. New exporter reviews 6.2.5. Absorption investigations 6.2.6. Circumvention investigations 6.3. Safeguard investigations 6.3.1. Safeguard on steel products 7. Monitoring of undertakings 8. Refunds 9. Judicial review : decisions by the Court of Justice / Court of First Instance 9.1. Overview of the judicial reviews in 2002 9.2. Cases pending 9.3. New cases 9.4. Judgments rendered by the Court of First Instance 9.4.1. Certain footwear with textile uppers originating, inter alia, in the People's Republic of China 9.4.2. Farmed Atlantic salmon originating in Norway 9.4.3. DRAMs originating in Japan 9.4.4. Certain electrolytic aluminium capacitors originating in Japan, Korea and Taiwan 9.4.5. Stainless steel fasteners originating , inter alia, in India 9.5. Order rendered by the Court of First Instance 9.5.1. Ferro-silicon originating in China, Kazakhstan, Russia and Ukraine 10. Anti-dumping and anti-subsidy investigations of third countries concerning imports from the Community or its Member States 10.1. Anti-dumping cases against the Community or its Member States 10.1.1. Overview 10.1.2. Details on some individual cases 10.1.2.1. USA - Low enriched uranium from France, Germany, the Netherlands and the UK 10.1.2.2. USA - Stainless steel bars from France, Germany, Italy and the UK 10.1.2.3. USA - Cold-rolled steel from Belgium, France, Germany, the Netherlands, Spain and Sweden 10.1.2.4. USA - Structural steel beams from Germany, Italy, Luxembourg and Spain 10.1.2.5. India - Cold rolled flat products of stainless steel from the Community 10.1.2.6. India - Hot-rolled coils, sheets and plates from the Community 10.1.2.7. India - Catalysts from Denmark 10.1.2.8. Turkey - Polyvinyl chloride from Belgium, Finland, Germany, Greece, Italy and the Netherlands 10.1.2.9. China - Catechol from the Community 10.1.2.10. China - Caprolactam from Belgium, Germany and the Netherlands 10.1.2.11. Thailand - Flat cold-rolled steel from the Community 10.1.2.12. South Africa - Self-copy paper from Belgium, Germany and the United Kingdom 10.1.2.13. Andean Community - Sorbitol from France 10.1.2.14. USA - Oil country tubular goods (OCTG) from Austria, France and Germany 10.1.2.15. India - X-ray baggage inspection multi energy systems (XBIS) from the Community 10.2. Anti-subsidy cases against the Community or its Member States 10.2.1. Overview 10.2.2. Details on some individual cases 10.2.2.1. USA - Low enriched uranium from France, Germany, the Netherlands and the United Kingdom (See anti-dumping case) 10.2.2.2. USA - Stainless steel bars from Italy (See anti-dumping case) 10.2.2.3. USA - Carbon and alloy wire rod from Germany 10.2.2.4. Australia - Canned tomatoes from Italy 10.2.2.5. Peru - Olive oil from the Community 10.2.2.6. USA - Cold-rolled carbon steel products from France 10.2.2.7. USA - Oil country tubular goods from Austria 11. Safeguard measures concerning the Community 11.1. Overview 11.2. Details on some individual cases 11.2.1. United States, China, Poland, Hungary, Czech Republic and Canada - Steel 11.2.2. Russia - Ball bearings from the Community 11.2.3. Russia - Wallpaper from the Community 11.2.4. Czech Republic - Steel pipes from the Community 11.2.5. Ukraine - Instant Coffee from the Community 11.2.6. Poland - Water Heaters from the Community 12. Activities in the framework of the World Trade Organization (WTO) 12.1. Dispute settlement in the field of anti-dumping, anti-subsidy and safeguards 12.1.1. Overview of the WTO dispute settlement procedure 12.1.2. Dispute settlement procedures initiated by the Community 12.1.2.1. USA - Privatisation methodology (countervailing duties) (DS212) 12.1.2.2. USA - Countervailing measures on corrosion-resistant carbon steel flat products from Germany (DS213) 12.1.2.3. USA - The Dumping and Subsidisation Offset Act (DS217/234) 12.1.2.4. Argentina - ceramic floor tiles (DS189) 12.1.2.5. USA - steel (201 safeguard) (DS248) 12.1.2.6. Argentina - canned peaches (DS238) 12.1.2.7. USA - Safeguard measures on circular welded carbon quality line pipe (DS 202/214) 12.1.2.8. USA - Cut-to-length plate from Germany and corrosion-resistant carbon steel flat products from Germany and France (DS262) 12.1.3. Dispute settlement procedures initiated by third countries against the Community. 12.1.3.1. India - anti-dumping duties on imports of cotton-type bed linen 12.1.3.2. Brazil - anti-dumping duties on malleable cast iron tube or pipe fittings 12.2. Other WTO activities 13. Conclusion LIST OF ANNEXES ANNEXES : SUMMARY ANNEX A // New investigations initiated during the period 1 January - 31 December 2002 A. Anti-dumping investigations B. Anti-subsidy investigations ANNEX B // New investigations initiated A. by product sector during the period 1998 - 2002 (31 December) B. by country of export during the period 1998 - 2002 (31 December) ANNEX C // New investigations concluded by the imposition of provisional duties during the period 1 January - 31 December 2002 A. Anti-dumping investigations B. Anti-subsidy investigations ANNEX D // New investigations concluded by the imposition of definitive duties during the period 1 January - 31 December 2002 A. Anti-dumping investigations B. Anti-subsidy investigations ANNEX E // New investigations terminated without imposition of measures during the period 1 January - 31 December 2002 A. Anti-dumping investigations B. Anti-subsidy investigations ANNEX F // Expiry reviews initiated or concluded during the period 1 January - 31 December 2002 ANNEX G // Interim reviews initiated or concluded during the period 1 January - 31 December 2002 ANNEX H // Other reviews concluded during the period 1 January - 31 December 2002 ANNEX I // New exporter reviews initiated or concluded during the period 1 January - 31 December 2002 A. Anti-dumping investigations B. Anti-subsidy investigations (accelerated reviews) ANNEX J // Anti-absorption investigations initiated or concluded during the period 1 January - 31 December 2002 ANNEX K // Anti-circumvention investigations initiated or concluded during the period 1 January 31 December 2002 ANNEX L // Safeguard investigations initiated or concluded during the period 1 January - 31 December 2002 ANNEX M // Undertakings accepted or repealed during the period 1 January - 31 December 2002 ANNEX N // Measures which expired during the period 1 January - 31 December 2002 ANNEX O // Definitive anti-dumping measures in force on 31 December 2002 A. Ranked by product B. Ranked by country ANNEX P // Definitive anti-subsidy measures in force on 31 December 2002 A. Ranked by product B. Ranked by country ANNEX Q // Undertakings in force on 31 December 2002 A. Ranked by product B. Ranked by country ANNEX R // Anti-dumping & anti-subsidy investigations pending on 31 December 2002 : A. New investigations (ranked by product) B. Review investigations (ranked by product) C. Ranked by country (new & review investigations) ANNEX S // Refunds during the period 1 January - 31 December 2002 ANNEXT // Court cases A. Court cases pending before the Court of Justice and the Court of First Instance of the European Communities on 31 December 2002 B. Judgments, orders and other decisions rendered by the Court of Justice and the Court of First Instance of the European Communities during 2002 ANNEX U // Anti-dumping and anti-subsidy investigations of third countries concerning imports from the Community or its Member States during 2002 A. Anti-dumping investigations B. Anti-subsidy investigations ANNEX V // Third country safeguard actions during 2002 Executive summary This report is submitted to the European Parliament following its resolution of 16 December 1981 on the Community's anti-dumping activities [1], and the report of the European Parliament's Committee on industry, external trade, research and energy [2]. [1] OJ C 11, 18.1.1982, p.37 [2] PE 141.178/fin of 30.11.1990, reporter Mr Gijs DE VRIES. Moreover, the European Parliament adopted a report prepared by MEP Michel Hansenne in October 2002, based on the Commission's 19th Annual Report. Generally, the Parliament was supportive of the application of the anti-dumping instrument by the Community and brought forward suggestions to improve the present situation in some selected areas. Further details are given under heading 4. This 2002 report also gives an overview of the Community legislation in force with regard to trade defence instruments. This chapter covers, inter alia, the adoption by the Council in 2002 of transitional provisions to be applied to products falling under the application of the ECSC Treaty. As the ECSC Treaty expired on 23 July 2002, it was necessary to specify that now all pending investigations, complaints and applications submitted pursant to the former ECSC legislation and all measures adopted under this legislation would be covered by the basic anti-dumping and anti-subsidy Regulations. Furthermore, the Commission introduced two proposals amending the basic anti-dumping and anti-subsidy Regulations, which were adopted by the Council on 5 November 2002. The amendments consist, inter alia, of the recognition of Russia as a market economy country. The report further summarises the developments in general policy. As last year, the report no longer contains a commentary on each individual case. It gives an overview of all investigations together with the most essential information, such as for instance the duty imposed. In turn, cases which merit some special attention are treated in more detail. Consequently, the report is more factual and condensed and covers the essential facts of the year. The detailed annexes which cover all cases ensure that the factual content of the report remains meaningful and sufficient to understand the activity in 2002. As regards the 2002 activities, a total of 33 new investigations were concluded, of which 28 by the imposition of definitive anti-dumping or countervailing measures and 5 by termination. In a further 17 investigations, provisional measures were imposed. As regards the expiry review investigations, 13 investigations were initiated and 6 terminated. In 12 cases, the investigations were concluded with confirmation of the duty. As for the interim review investigations, 36 were initiated, 10 terminated and 9 concluded with confirmation or amendment of the duty. Of the 36 initiations, however, 15 concerned partial interim reviews of a specific type, namely limited to the form of the existing measures which did not appear sufficient to counteract the dumping which has caused injury and/or which did not cater for situations in which imported goods had been damaged before entry into free circulation. It should be noted that this version of the report has been extended to include the safeguard activities. This subject was only briefly mentioned in previous reports since the Community had not adopted any safeguard measures since the entry into force of the 1994 WTO Agreement. In 2002, however, the Community adopted such measures vis-à-vis steel products. In particular, definitive safeguard measures were imposed on 7 steel products; the investigation concerning 11 other steel products was terminated. Three products were still being investigated at the end of 2002 but the investigations were terminated at the beginning of 2003. As in previous years, this issue continues to provide an overview on the Court cases relating to the trade policy instruments. During 2002, five Judgments and one Order were rendered by the Court of First Instance (CFI). 2002 can be considered a very successful year in terms of defending trade defence actions before the CFI. In 4 out of the 5 Judgments, the Court confirmed the practices of the European Institutions. The report also includes an overview of the activities in relation to anti-dumping, anti-subsidy and safeguard measures adopted by third countries. In particular, at the end of 2002, 118 anti-dumping, 26 anti-subsidy and 39 safeguard measures were in force against the Community or its Member States. It is confirmed that the Community is still second only to China as most affected territory by third country trade defence actions. The chapter on activities in the framework of the World Trade Organisation (WTO) covers both dispute settlement procedures initiated by and against the Community. Furthermore, it deals with other activities, such as the first phase of negotiations on the Anti-dumping and Subsidies Agreements, in which the Commission played an active role by submitting negotiating proposals. The annexes to this report provide easy access to the activities in table form. This report is also available to the general public. The 2001 version was released in more or less 500 copies. (Internet Website http://europa.eu.int/comm/trade/policy/dumping/reports.htm) 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. Since that time, considerable efforts have been made to harmonise the rules relating to trade instruments. During the last GATT round (the « Uruguay Round ») which led to the creation of the 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 protective measures can be adopted. The Community played an active role in the negotiation of these relevant criteria which are reflected in its own legislation. 1.1.2. The Community legislation 1.1.2.1. The legislation covered by the Treaty establishing the European Community The Community'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 Community, entered into force in March 1996 and October 1997. These are in line with the Anti-Dumping and Anti-Subsidy Agreements adopted during the GATT/WTO negotiations. The basic texts are : - Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community [3] [3] OJ L 56, 6.3.1996, p. 1, as last amended by Council Regulation (EC) No 1972/2002 (OJ L 305, 7.11.2002, p. 1) - Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidized imports from countries not members of the European Community [4] [4] OJ L 288, 21.10.1997, p. 1, as last amended by Council Regulation (EC) No 1973/2002 (OJ L 305, 7.11.2002, p. 4) These regulations will overall be referred to as the "basic Regulation(s)". The Community legislation contains a number of provisions aimed at ensuring a balanced application of the Community's Anti-Dumping and Anti-Subsidy rules on all interested parties. These provisions include the "Community interest test" and the "lesser duty rule", which go beyond the WTO obligations. The Community interest test is a public interest clause and states that measures can only be taken if they are not contrary to the overall interest of the Community. This requires an analysis of all the economic interests involved, including those of the domestic industry, users, consumers and intermediaries. The lesser duty rule requires the measures imposed by the Community to be lower than the dumping or subsidy margin, if such lower duty rate is sufficient to remove the injury suffered by the Community industry. 1.1.2.2. The legislation covered by the Treaty establishing the European Coal and Steel Community (ECSC Treaty) During the existence of the ECSC Treaty, specific legal texts [5] existed for products falling under the application of the ECSC Treaty. These texts addressed unfair trade practices and, on the basis of these texts, a number of anti-dumping and anti-subsidy measures were taken. [5] Commission Decision No 2277/96/ECSC of 28 November 1996 on protection against dumped imports from countries not members of the European Coal and Steel Community (OJ L 308, 29.11.1996, p. 11), as last amended by Commission Decision No 435/2001/ECSC (OJ L 63, 3.3.2001, p. 14); and Commission Decision No 1889/98/ECSC of 3 September 1998 on protection against subsidized imports from countries not members of the European Coal and Steel Community (OJ L 245, 4.9.1998, p. 3) As the ECSC Treaty expired on 23 July 2002 after 50 years of existence, it was necessary to specify that now all products would be covered by the basic Regulation(s) and that all existing measures or pending investigations on ECSC products would be governed by these Regulations. Therefore, the Council, by Regulation (EC) No 963/2002 [6], laid down transitional provisions, which provided for all anti-dumping and anti-subsidy measures adopted and for all pending investigations, complaints and applications submitted pursuant to Decisions Nos 2277/96/ECSC and 1889/98/ECSC to be governed by the provisions of the respective basic Regulations, with effect from 24 July 2002. [6] OJ L 149, 7.6.2002, p. 3, as last amended by Council Regulation (EC) No 1310/2002 (OJ L 192, 20.7.2002, p. 9) 1.1.3. Changes to the Community legislation in 2002 1.1.3.1. Changes to the anti-dumping basic Regulation On 5 November 2002, the Council adopted Regulation (EC) No 1972/2002 [7] amending the basic anti-dumping Regulation. [7] OJ L 305, 7.11.2002, p. 1 The amendment consisted, inter alia, of the formal recognition of Russia as a market economy country in the context of trade defence instruments, which is an acknowledgement of the important progress achieved in Russia in respecting market economy principles. In practical terms, this means that the calculation of dumping margins will no longer be based on information from an analogue country, but that, in all cases, the Russian companies' own costs and prices will be taken in consideration. Other amendments consist of the clarification of the terms "related parties", "commissions" and "particular market situation that does not permit a proper comparison". Furthermore, the regulation gives indications as to what has to be done when certain costs on the exporting country market are distorted and clarifies the use of facts available and of certain criteria for granting "individual duty" to certain exporters from non-market economy countries and countries in transition. This change applies to all investigations initiated pursuant to the basic anti-dumping Regulation after the date of entry into force of Regulation (EC) No 1972/2002, i.e. 8 November 2002. 1.1.3.2. Changes to the anti-subsidy basic Regulation On 5 November 2002, the Council adopted Regulation (EC) No 1973/2002 [8] amending the basic anti-subsidy Regulation. [8] OJ L 305, 7.11.2002, p. 4 The amendments had two main aims : first, as a matter of "housekeeping", the expiry of the WTO provisions on non-actionable subsidies had to be implemented by repealing the corresponding provisions in the Community's legislation. Second, the rules on subsidies in the form of provision of cheap goods or services were clarified to also cover situations where there is no market for the goods or services in the country concerned. In such a case, the amendments foresee that adjustments are made or world market prices used. Furthermore, this change applies to all investigations initiated pursuant to the basic anti-subsidy Regulation after the date of entry into force of Regulation (EC) No 1973/2002, i.e. 8 November 2002. 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 short-term temporary defence measure (a "safety valve") that applies to all imports of the product covered by a measure, irrespective of origin [9]. [9] However, 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 (e.g. the People's Republic of China's Protocol) Safeguards should only be adopted after a comprehensive investigation which provides evidence of the existence of a) unforeseen developments leading to b) increased imports c) the existence of a serious injury for domestic producers and d) a causal link between the imports and the injury. 1.2.2. The Community legislation The above-mentioned principles are all reflected in the relevant Community regulations. Additionally, the adoption of measures in the Community 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 Community's interest to do so. The current Community safeguard instruments are covered by the following regulations : - Council Regulation (EC) No 3285/94 [10] on the common rules of imports and repealing Regulation (EC) No 518/94 [10] OJ L 349, 31.12.94, p. 53, as last amended by Regulation (EC) No 2474/2000 (OJ L 286, 11.11.2000, p. 1) - Council Regulation (EC) No 519/94 [11] on common rules for imports from certain third countries and repealing Regulations (EEC) Nos 1765/82, 1766/82 and 3420/83 [11] OJ L 67, 10.3.94, p. 89, as last amended by Regulation (EC) No 1138/98 (OJ L 159, 3.6.1998, p. 1) - Council Regulation (EC) No 517/94 [12] 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 Community import rules. [12] OJ L 67, 10.3.94, p. 1, as last amended by Regulation (EC) No 1309/2002 (OJ L 192, 20.7.2002, p. 1) These regulations will overall be referred to as the "basic safeguard Regulation(s)". 1.2.3. Proposal for a Regulation on safeguards and phasing out of certain quotas for imports originating in the People's Republic of China In June 2002, the Commission submitted to the Council a proposal on a transitional product-specific safeguard mechanism for imports originating in the People's Republic of China and amending Council Regulation (EC) No 519/94 on common rules for imports from certain third countries [13]. The proposal was consequently adopted by the Council and published in March 2003 [14]. [13] OJ C 227 E, 24.9.2002, p. 555 [14] L 65, 8.3.2003, p. 1 The regulation is an exact transposition into Community law of provisions contained in the Accession Protocol of the People's Republic of China to the WTO. It has two main pillars, - the first pillar provides for rules to establish a Transitional Product-Specific Safeguard Mechanism (TPSSM) for imports from the People's Republic of China. Under this mechanism, the Community is allowed to impose specific measures, inter alia, duties, if imports from the People's Republic of China into the Community increase rapidly so as to cause market disruption to the Community industry. Measures can only be imposed if the Community interest calls for intervention. The high procedural standards contained in the Community's existing trade defence instruments are also applicable to this specific instrument. No measures can be imposed beyond 11 December 2013, when the TPSSM will cease to exist according to the provisions of the Accession Protocol. - the second pillar foresees the gradual phasing-out of certain non-textile quotas (footwear, tableware and ceramics) until the total abolition of quotas in 2005. At the same time, the regulation ensures that Council Regulation (EC) No 519/94 is no longer applicable to the People's Republic of China. 1.3. Anti-subsidy and unfair pricing instrument for airline services In March 2002, the Commission adopted its proposal for a trade defence instrument concerning the supply of airline service from non-EC Countries [15]. The proposal foresees the adoption of redressive measures if subsidised or unfairly priced airline services cause material injury to Community carriers on certain routes to and from the Community. [15] Proposal for a Regulation of the European Parliament and of the Council concerning protection against subsidisation from countries not members of the European Community (COM(2002)110 final of 12.3.2002). This is the first new proposal for a trade defence instrument in the services sector since a similar instrument was adopted in 1986 concerning maritime services. It was prompted by the crisis in the airline sector at the end of 2001 which led some third-country governments to subsidise their airlines. This created increasing difficulties for the Community industry which had to compete with third country airlines benefiting from generous subsidies, while they were subject to strict rules on government aid. The proposal draws from existing instruments in the area of trade in goods, in particular the basic anti-subsidy Regulation. It foresees the imposition of measures on two tracks : first, if subsidised airline services supplied by non-Community carriers cause material injury, or, as a second track, if such state-controlled carriers benefit from non-commercial advantages and charge injurious fares below the normal fare rate. The European Parliament has adopted a set of amendments to this proposal [16], which are currently discussed in the Council. Adoption of the proposal is expected for mid 2003. [16] EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION (COM(2002)110 - C5-0133/2002 - 202/0067 (COD)) 2. BASIC CONCEPTS 2.1. Anti-dumping and anti-subsidy 2.1.1. What is dumping and what are countervailable subsidies - the material conditions for the imposition of duties 2.1.1.1. Dumping and subsidies Dumping is traditionally defined as price discrimination between national markets, or as selling below cost of production. The Community's anti-dumping legislation defines anti-dumping as selling a product in the Community at a price below its "normal value". This "normal value" is usually the actual sales price on the domestic market of the exporting country. Therefore, a country is selling at dumped prices if the prices in its home market are higher than its export prices (i.e. price discrimination) . Where sales in the domestic market are not representative, for instance because they have only been made in small quantities, the normal value may then be established on another basis, such as the sales prices of other producers on the domestic market or the cost of production. In the latter case, a company is selling at dumped prices if its export prices are below the cost of production. A certain segregation of the market exists in the majority of the cases where dumping occurs on a more than incidental basis. That segregation may be caused, amongst other reasons, by government regulation or consumer preferences. As a result, exporters are shielded, at least to a certain degree, from international competition on their domestic market. Subsidies can have similar effects to sales at dumped prices. They involve a direct support from a government which has the effect of conferring a benefit to producers or exporters (e.g. grants, tax and duty exemptions, preferential loans at below commercial rates, export promotion schemes, etc.), all aimed at allowing the exporters to sell at low prices in the Community. 2.1.1.2. Material injury and causation For measures to be taken against these unfair trading practices, it is not sufficient that companies are exporting their products to the Community at dumped or subsidised prices. Measures can only be taken if these exports cause material injury to Community producers, who cannot compete on an equal footing with exporters. Typical injury indicators are that the dumped and/or subsidised import volumes increase over a certain period and import prices undercut the sales prices of the Community industry. As a consequence, the latter is forced to decrease production volumes and sales prices thus losing market shares, making losses or having to make employees redundant. In extreme cases, exporters may try to eliminate viable Community producers by using a predatory pricing strategy. In any event, the injury analysis requires that all relevant factors be taken into account before deciding whether the Community industry is in fact suffering "material injury". A further condition for the imposition of measures is the need for "causality": the injury must be caused by the dumping or the subsidy. This condition is fulfilled when the injury to the Community industry coincides with the increase in dumped and subsidised imports. It is important to note that the dumped or subsidised imports do not have to be the only cause of the injury. 2.1.1.3. Community interest Finally, it has to be established that the application of measures would not be contrary to the overall interest of the Community. In this respect, the interests of all relevant economic operators which might be affected by the outcome of the investigation must be taken into account. 2.1.2. Procedure Investigations are carried out in accordance with the procedural rules laid down in the basic Regulations. These rules guarantee a transparent, fair and objective proceeding by granting significant procedural rights to interested parties. In addition, the results of an investigation are published in the Official Journal, and the Community is obliged to justify its decisions in this publication. Finally, it is ensured that each case is decided on its merits and the Commission does not hesitate to terminate a case if the conditions to impose measures are not met. Whereas each investigation is different depending on the products and countries involved, all cases follow the same procedural rules. However certain preferential rules apply to Central and Eastern European Countries and Turkey. The rules relating to a new case are summarised below. Initiation A case normally starts with a sufficiently substantiated complaint from the Community industry manufacturing the same or a similar product to the one referred to in the complaint. After receipt of this complaint, the Commission assesses whether the complaint contains sufficient evidence to allow for the initiation of the case. A case is opened by a notice of initiation published in the Official Journal. In this notice, all interested parties, including users and, where appropriate, consumer organisations, are invited to participate and co-operate in the proceedings. Detailed questionnaires are sent to producers in the exporting countries and in the Community, traders (in particular importers) and other interested parties, such as users. These parties are also informed that they can request a hearing and ask for access to the non-confidential files which will help them defend their case. The investigation up to the provisional measures Following receipt of the replies to the questionnaire, investigations are carried out by Commission officials at the premises of the co-operating parties. The main purpose of these visits is to verify whether the information given in the questionnaires is reliable. The verified information is subsequently used to calculate or determine the dumping margin and the injury factors, in particular the price undercutting margin and injury elimination level. These calculations often involve the processing of thousands of transactions, and require a complex analysis of production costs. The results of the calculations and other findings are summarised in a working document, on the basis of which it is decided - after consultation of the Member States in the Advisory Committee - whether to impose provisional measures or to terminate the proceedings. In either eventuality, at this stage the decision is the Commission's responsibility. The investigation up to the definitive stage Following the publication in the Official Journal of a Commission regulation imposing provisional duties, interested parties which so request receive a full disclosure which allows them to verify the Commission's calculations and to submit comments. Comments can also be made at a hearing. These provisional submissions and comments are taken into account when a second, definitive, working document is prepared by the Commission. After final disclosure and consultation of the Member States on the basis of the second working document, the Commission makes a proposal to the Council whether or not to confirm the provisional measures and impose definitive measures. Another possibility is that the Commission accepts undertakings offered by exporters, which undertake to respect minimum prices. In the latter case, no duties are generally imposed on the companies from which undertakings are accepted. The Council decides on the adoption of the Commission proposal by simple majority vote, i.e. at least eight Member States have to be in favour of the Commission proposal. The regulation imposing definitive duties, and deciding on the collection of the provisional duties, is published in the Official Journal. In view of the findings made, it may also be decided to terminate a case without the imposition of measures. The same procedure (disclosure, comments, hearing, working document) as described above applies. The termination of the case would generally be made by a Commission Decision after consultation of the Member States. Timing The procedure described above is subject to strict statutory time limits. Thus, a decision to impose provisional duties must be taken within nine months of the initiation and the total duration of an investigation is limited to fifteen months (13 months in anti-subsidy cases). This leads to significant time constraints, taking into account, inter alia, internal consultations and the necessity to publish regulations and decisions in all Community languages at the same time. Anti-dumping or countervailing measures will normally remain in force for five years, and may consist of duties or undertakings concluded with exporters. Measures are taken on a countrywide basis, but individual treatment, i.e. the application of a company-specific duty, can be granted to exporters which have co-operated throughout the investigation. During the five-year period, interested parties may, under certain conditions, request a review of measures or the refund of anti-dumping duties paid. Measures may also be suspended for a certain period, subject to given criteria. The basic Regulations provide for administrative reviews and distinguish between interim reviews, newcomer reviews and expiry reviews. Those procedures are initiated normally only on the basis of substantiated evidence and will normally not exceed 12 months in length. The expiry review is intended to determine if the expiry of the measures would lead to continuation or recurrence of dumping and injury. During the five year period, the Commission may perform an interim review. Under the latter procedure, the Commission will consider whether the circumstances with regard to subsidy/dumping and injury have changed significantly or whether existing measures are achieving the intended results in removing the injury. Finally, the basic Regulations provide that a review shall be carried out to determine individual margins for new exporters in the exporting country concerned. Judicial reviews The procedural rights of the parties, including hearings and access to non-confidential files, are respected in the course of the proceeding, and a system of judicial review is in place to ensure their correct implementation. The competence to review anti-dumping and anti-subsidy cases lies with the Court of First Instance and the Court of Justice in Luxembourg. Furthermore, the possibility of recourse to the WTO dispute settlement mechanism exists for WTO members. 2.2. Safeguards 2.2.1. What are safeguard measures Safeguard measures are a "safety valve" which allow temporary protection against the adverse effects of import surges. Under the Community legislation [17] implementing the WTO Safeguards Agreement, they can be applied under the following conditions : safeguard measures may be imposed if, as a result of unforeseen developments, a product is being imported into the Community in such increased quantities and/or on such terms and conditions as to cause, or threaten to cause, serious injury to Community producers of like or directly competitive products. Safeguard measures may only be imposed to the extent and for such time as may be necessary to prevent or remedy the injury. [17] Council Regulation (EC) No 3285/94 on common rules for imports 2.2.2. Procedure Investigations are carried out in accordance with the procedural rules laid down in the basic safeguard Regulations. These rules guarantee a transparent, fair and objective proceeding. In addition, the results of safeguard investigations are published in the Official Journal, and the Community is obliged to justify its decisions in this publication. Initiation The Commission is informed by one or more Member States should trends in imports of a certain product appear to call for safeguard measures. This information must contain evidence available, of the following criteria : a) the volume of imports, b) the price of imports, c) trends in certain economic factors such as production, capacity utilisation, stocks, sales, market share, prices, profits, employment, etc. and d) facts other than trends. Where there is a threat of serious injury, the Commission must also examine whether it is clearly foreseeable that a particular situation is likely to develop into actual injury. This information is immediately passed on by the Commission to all other Member States, at which stage consultations are held within the Advisory Safeguard Committee. If there is sufficient evidence to justify an investigation, the Commission publishes a notice of initiation on the Official Journal within one month of receipt of the information and commences the investigation, acting in co-operation with the Member States. Provisional measures Provisional measures may be imposed at any stage of the investigation. They shall be applied in critical circumstances where delay would cause damage which would be difficult to repair, making immediate action necessary, and where a preliminary determination provides clear evidence that increased imports have caused, or are threatening to cause, serious injury. The duration of the provisional measures can, however, not exceed 200 days (i.e. 6 months). Definitive measures If, at the end of the investigation, the Commission considers that definitive safeguard measures are necessary, it will take the necessary decisions no later than nine months from the initiation of the investigation, at which stage the results of the investigation are being published in the Official Journal. In exceptional circumstances, this time limit may be extended by a further maximum period of two months, provided a notice is published in the Official Journal specifying the duration of the extension and a summary of its reasons. Safeguard measures shall be applied only to the extent to prevent or remedy serious injury, thereby maintaining as far as possible traditional trade flows. As to the form of the measures, the Community will choose the measures most suitable in order to achieve these objectives. These measures could consist of quantitative quotas, tariff quotas, etc. Duration and review of the measures The duration of safeguard measures must be limited to the period of time necessary to prevent or remedy serious injury and to facilitate adjustments on the part of the Community producers, but should not exceed four years, including the duration of the provisional measures, if any. Under certain circumstances, extensions may be necessary but the total period of application of safeguard measures should not exceed eight years. If the duration of the measures exceeds one year, the measures must be progressively liberalised at regular intervals during the period of application. If the duration exceeds three years, the Commission should seek consultations with the Advisory Safeguard Committee in order to examine the effects of the measures, to determine the appropriateness of further liberalisation and to ascertain that the application of the measures is still necessary. Depending on the consultations, the measures may be revoked or amended. 3. THE TRADE DEFENCE INSTRUMENTS' SERVICES A restructuring of the anti-dumping and anti-subsidy services took place in April 2002. This resulted in the creation of one Directorate covering all Trade Defence Instruments (TDI). The directorate now consists of 5 Units. Unit 1 is in charge of policy aspects (including WTO and complaints office) and Unit 2 monitors the activity of third countries on anti-dumping, anti-subsidy and safeguards. The other three units deal exclusively with investigations covering both the injury and dumping/subsidization aspects of the investigation. 4. CO-OPERATION WITH THE EUROPEAN PARLIAMENT In the report prepared by MEP Michel Hansenne (mentioned in the introduction of this report), the European Parliament suggested a number of improvements to current practices, such as shorter deadlines for enforcing provisional measures and the introduction of deadlines in reviews. It called for better access of SMEs to trade defence instruments and more transparency, in particular by granting easier access to information and strenghtening the right to be heard. It took note of the new situation in regard to enlargement and requested the Commission to clarify whether present resources for handling trade defence instruments were sufficient. It underlined the importance of granting the Commission the means which it feels necessary to deal with the possible future improvements. The European Parliament also urged the Commission to submit proposals within the WTO negotiations (Cancun Ministerial Conference) with the aim of harmonising investigations, improving transparency and preventing circumvention. It also insisted on making the lesser duty rule and the public interest test a WTO requirement, aspects which are already implemented at Community level. It further recommended to introduce general measures to reduce costs for companies under investigation. It also proposed a number of issues for improving the WTO Dispute settlement mechanism and asked for the WTO Safeguards Agreement to be added on the negotiation agenda. In its reaction, the Commission welcomed this report and its recommendations. It was very timely as the Doha - WTO negotiations were about to gain momentum, with anti-dumping being high on the agenda. The Commission generally acknowledged its interest to study the proposals put forward by the European Parliament, in particular in areas such as shortening deadlines, cost reductions and simplification of procedures for SMEs. At the same time, it stressed the need to assess the effect on its resources. The Commission underlined that it had already put forward a number of issues, which fully coincide with the European Parliament's suggestions in the framework of the Doha negotiations on trade defence instruments (see heading 12.2). In particular, the Commission will continue to push that equally high standards are applied at world-wide level, thereby ensuring that the Community exporters are not put at a disadvantage. The preparations for a smooth transition after the EU-enlargement are also well on the way. Contacts with the candidate countries have been established and information sessions have already been held and more are planned. In this regard, the Trade Defence Instruments' services (TDI services) developed an "action plan" in order to ensure that the candidate countries are operative as of the first day of their accession. This "action plan" foresees that the TDI services will guide the candidate countries through the preparatory process of accession, inter alia, through a series of seminars and exchanges of views/information. These events are targeted at both candidate countries' administrations and at all economic operators concerned. They will take place both in Brussels and in the capitals of the candidate countries in order to reach as many participants as possible. 5. GENERAL OVERVIEW OF ANTI-DUMPING AND ANTI-SUBSIDY INVESTIGATIONS AND MEASURES 5.1. New investigations At the end of 2002, the Community had 174 anti-dumping measures [18] and 19 countervailing measures in force. The anti-dumping measures covered 65 products and 34 countries (see Annex O); the countervailing measures covered 14 products and 8 countries (see Annex P). Of the measures, the large majority was in the form of duties; however, in a significant number of cases, undertakings were accepted. [18] The measures are counted per product and country concerned. Of the measures in force at the end of 2002, 32 concerned China, 24 India, 15 Taiwan, 12 Thailand, 11 the Republic of Korea, 11 Russia, 9 Indonesia, 6 Japan and 15 measures applied to countries with economies in transition or to non-market-economy countries, including Ukraine with 10 measures and Belarus with 5 measures. Thirty-one measures concerned one or more of the 10 Central and Eastern European Countries (CEEC) [19]. [19] These countries are : Romania, Bulgaria, Slovak Republic, Czech Republic, Slovenia, Hungary, Poland, Latvia, Lithuania and Estonia. For a more realistic view of the impact of anti-dumping measures, however, one has to look at the trade volume of the products concerned, which varies considerably depending on the product sector. The biggest trade volumes are often generated by high technology, such as electronics, which are high-value products. It should be noted that in 2002, only 0,5% [20] of total imports into the Community was affected by anti-dumping or anti-subsidy measures. [20] Source Comext. TABLE 1 Anti-dumping and anti-subsidy new investigations during the period 1 January 1998 - 31 December 2002 [21] [21] The initiation of a case concerning several countries is accounted as separate investigations/proceedings per country involved. >TABLE POSITION> 5.2. Review investigations Anti-dumping measures, including price undertakings, may be subject, under the basic 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 circumvention investigations (Article 13). Also anti-subsidy measures may be subject, under the basic 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 circumvention investigations (Article 23). These reviews continue to represent a major part of the work of the Commission's TDI services. In the period from 1998 to 2002, a total of 198 review investigations were initiated. These review investigations represented almost 50% of all investigations. In 2002, 55 reviews were initiated. Of these, 13 were expiry reviews, 36 interim reviews, 1 newcomer review, 2 accelerated reviews, 1 anti-absorption investigation and 2 circumvention investigations. An overview of the review investigations in 2002 can be found in Annexes F to K. Table 2 provides statistical information for the years 1998 - 2002. TABLE 2 Reviews of anti-dumping and anti-subsidy investigations during the period 1 January 1998 - 31 December 2002 [22] [22] The initiation of a case concerning several countries is accounted as separate investigations/proceedings per country involved. >TABLE POSITION> Details on the conclusions can be found under heading 6.2. 6. OVERVIEW OF ACTIVITIES IN 2002 6.1. New investigations 6.1.1. Initiations In 2002, 23 investigations were initiated. Three of them concerned anti-subsidy investigations. They involved 13 different products from 14 different countries. Details of these investigations are given in Annex A. Most affected countries are China with 4 investigations, Russia and India with 3 investigations each, followed by Indonesia and the Faeroe Islands with 2 investigations each. As to the products, the most affected is the iron and steel sector and the chemical and allied sector. In the five-year period from 1998 to 2002, 202 investigations were initiated on imports from 41 countries. The main sectors concerned by the investigations were iron and steel with 72 investigations, chemical and allied with 55 investigations and textiles and allied with 27 investigations. A breakdown of the product sectors is given in Annex B(A). The main countries concerned during the period from 1998 to 2002 were India with 28 investigations, the People's Republic of China with 24 investigations, Korea with 20 investigations and Taiwan with 13 investigations. The investigations initiated over the last five years are broken down by country of export in Annex B(B). The alphabetical list of cases initiated in 2002 can be found below, together with the name of the complainant. More information can be obtained from the Official Journal to which reference is given in Annex A. >TABLE POSITION> 6.1.2. Provisional measures In 2002, provisional duties were imposed in 17 proceedings, two of which concerned anti-subsidy proceedings. They involved imports from 13 different countries. As shown in Table 1 (see point 5.1), this figure compares to 18 in 2001 and 48 in 2000. The alphabetical list of cases where provisional measures were imposed during 2002 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 C. >TABLE POSITION> 6.1.3. Definitive measures 6.1.3.1. Overview During 2002, definitive duties were imposed in 28 cases, three of which concerned anti-subsidy proceedings. They involved imports from 20 different countries and covered 9 products. India featured with 4 investigations, the People's Republic of China with 3 investigations, Ukraine, Indonesia and the Czech Republic with 2 investigations and all other countries with one investigation each. The alphabetical list of cases where definitive measures were imposed during 2002 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. Annex D also gives some additional information on import and consumption volumes. >TABLE POSITION> Details on some individual cases (in chronological order) 1. Urea originating in Belarus, Bulgaria, Croatia, Estonia, Lithuania, Libya, Romania and the Ukraine Urea is produced from natural gas and may take the form of a liquid or a solid. Urea is mainly used in the agricultural sector as a fertiliser and in the industrial sector as a raw material for certain glues and resins. The investigation was originally initiated against 10 third countries. However, for two countries (Egypt and Poland), the injury margin was found to be de minimis and the proceeding against these two countries was terminated. Definitive measures were imposed against the remaining 8 countries by the Council on 19 January 2002, in the form of specific amounts of between EUR 4,12 to EUR 18,80 per tonne, whilst two offers of price undertakings were accepted from exporting producers in Bulgaria and Lithuania. The economic interest of this case was quite high. Community consumption in the investigation period amounted to around 6,4 million tonnes and the value of the total imports from the countries concerned during the same period to around EUR 172 million. This case was not only of importance in view of the economic interest involved, but also in view of several other aspects, such as the number of accession candidate countries involved, the first use of market economy treatment for Ukrainian companies and the calculation of injury margins at the level of individual Community producers rather than at the whole industry level. Dumping A relatively high number of accession candidate countries were subject to the proceeding. These countries enjoyed a preferential treatment as foreseen in the Europe Agreements [23] and the Declaration of the European Council of Essen of 28 November 1994 (Essen Declaration). This case was the first in which the Ukraine was recognised as an economy in transition and it was determined on an individual basis whether certain exporting producers operated under market economy conditions. As a result, market economy treatment was applied to two companies in the Ukraine. As such, domestic prices and costs for those companies were used as a basis to calculate the dumping margin. The request of a third Ukrainian company was rejected on the grounds that its prices and costs were not made in response to market forces. The State could, however, not interfere in this company's export activities as such. There was therefore no risk that anti-dumping measures could be circumvented and an individual duty was also calculated for this exporter, based on the exporter's own export prices. Normal value was based on domestic prices in an analogue country, in this case the USA. [23] Bulgaria: OJ L 358, 31.12.1994, p.3; Estonia: OJ L 068, 9.3.1998, p.3; Lithuania: OJ L 051, 20.2.1998, p.3; Poland: OJ L 348, 31.12.1993, p.2; Romania: OJ L 357, 31.12.1994, p.2 Injury and causation of injury The investigation showed that competition in the Community took place between individual exporting producers and Community producers. Significant price spreads were found with Community producers, depending upon whether they were based close to their main markets or to their suppliers of raw materials. This had a significant impact on the actual cost incurred by each producer and made price comparaisons at the whole Community level unreliable. As such, it was concluded that any injury to the Community industry should be assessed on the actual market situation and on the basis of specific data verified for each company. Accordingly, the injury margins were calculated by comparing prices of each Community producer to each co-operating exporting producer. On this basis, the injury margins found ranged between 3,89% and 21,04%. Community interest Another important aspect of this case was the interest shown by farmers and their representatives as major users of urea. As a result, the Commission carried out a review of the effect of all anti-dumping measures against fertilisers in order to assess the cumulative effect on farmers. This review was made independent of any particular proceeding. The results showed that, taken either in isolation or in conjunction with the other measures in force, the impact of the anti-dumping duties on urea would have only a minor impact on the costs of farmers. This impact was not sufficient to conclude that definitive measures were against the Community interest. Taking all factors into account, definitive measures were imposed on the basis of the injury margins found, except for Lithuania where for the sole known exporting producer, the dumping margin was found to be lower than its injury margin. In application of the lesser duty rule, its duty was therefore based on the dumping margin found. For this company, the Commission accepted a price undertaking and likewise, the minimum price was calculated on the basis of the dumping margin. 2. Ferro-molybdenum originating in the People's Republic of China For the first time, the European Commission had to withdraw a market economy status from a Chinese exporter because evidence revealed that the Chinese industry planned to abuse this exporter as a free channel for exports from other producers. As usual in cases against China, the proceeding started with the invitation to all exporters to apply for market economy treatment (MET). This status is given to companies in countries with economies in transition, which can prove that they are independent from state influence and can take their business decision freely and based on commercial considerations. In this case, 6 exporters applied for MET, but only one exporter, representing about 4,5% of the total exports to the Community, passed the tests after investigation and verification by the Commission. At the stage of the imposition of provisional measures, the duty for this exporter was significantly lower than for all other exporters. Once provisional measures were in place, the TDI services received an indication from a Community producer that the Chinese ferro-molybdenum industry was planning to circumvent the duties imposed, evidence of which came to light in the subsequent investigation by the Commission. It was established that the China Chamber of Commerce and the association of Chinese Ferro-Molybdenum producers, Minmetals (CCCMC), had set up a grouping of Chinese FeMo producers, accounting for 70% of China's FeMo output, which agreed to apply price and quantitative restrictions on exports of FeMo to the Community. This grouping brought together 25 producers, most of which were state-owned and which consequently chose not to apply for MET or to co-operate with the proceeding. The producers concerned were granted specific export allocations which appeared to have been determined by taking into account the level of their provisional anti-dumping duties. Thus, companies with low duty levels were allocated disproportionately high quotas. The company which had been granted MET and had the lowest duty (3,6%) was allocated an export quota in excess of its production capacity, corresponding to more than one third of the entire quantity which the grouping intended to export to the Community. This, in view of the Commission, was a clear and deliberate attempt to channel exports from one company via another company with a lower anti-dumping duty for the purpose of avoiding to pay the much higher anti-dumping duties. Consequently, the Commission withdrew the MET for the one company at definitive stage because of the evident attempt of abuse. The exporter from whom MET was withdrawn, has filed an application for annulment before the Court of First Instance, where the case is pending. 3. Compact disk recordables originating in Taiwan In June 2002, the Council imposed definitive anti-dumping duties on Taiwanese compact disk recordables (CD-Rs). The complaint was lodged by CECMA (the European Manufacturers' association) in March 2001. Provisional measures were imposed in December 2001. CD-Rs are relatively recent high-tech products which became generally available to the public only around 1997/1998. In that period, the start-up of the first production facilities in the Community took place. The production of CD-Rs forms part of the recording media production sector, which covers a wide range of high-tech products. The Community market for CD-Rs has boomed from 160 million in 1997 to around 2.000 million units in 2000. But the investigation showed that the Taiwanese CD-R production capacity was mushrooming to the extent that they could satisfy the entire estimated world market demand. Investigation of Dumping and Injury The investigation showed that Taiwanese CD-Rs were sold on the Community market below production costs and at between 17,7% to 29,9% below the price sold in Taiwan. On the Community market, Taiwanese import prices decreased by up to 73%. However, between 1997 and 2000 (the period investigated), although Community producers had to follow the downward trend, Taiwanese prices on the Community market were still largely lower. By exercising a downward price pressure on the Community market, the Taiwanese exporters took full advantage of the market growth; whilst their market was around 6% in 1997 rising to 60% in 2000. In the meantime, the Community industry barely increased its market share from 12% to 13%. This situation led to financial difficulties, losses and thus material injury for the Community industry. Moreover, Community producers had problems to raise additional capital and were forced to significantly reduce their investments. This is particularly damaging when a new high-tech product is affected. Injury to the Community industry was especially pronounced between 1999 and the investigation period, when Taiwanese imports into the Community market increased exponentially, whilst undercutting the Community industry's prices by 29% on average. Causation and Community Interest Other factors were addressed during the investigation, in particular the development of consumption, imports from third countries and the export performance of the Community industry, but it was concluded that the Taiwanese imports had been a major cause of the injury suffered. The investigation revealed that not imposing measures would put at jeopardy not only the Community production of CD-Rs, but also the whole recording media production sector, which covers a wide range of products from diskettes to DVDs. No compelling reasons of Community interest were found to exist which would overturn the need to impose measures.It should be noted that the imposition of the anti-dumping measures has been challenged by two Taiwanese exporters. The case is still pending before the Court of First Instance. 4. Sulphanilic acid originating in the People's Republic of China and India (AD) and originating in India (AS) Definitive anti-dumping duties for both countries and a countervailing duty for India were imposed by the Council on 4 July 2002. The duties were imposed at the level of the dumping and subsidy margins which were found to be lower than the injury elimination level. The overall duties imposed for the countries concerned were not very different, i.e. 21% in the case of China and 25,4% in the case of India. It should be noted that the overall duty for India comprises of an anti-dumping duty of 18,3% and a countervailing duty of 7,1%. Regarding India, it is noted that the anti-dumping duty rate was set at the level of the dumping margin (24,6%) minus the rate of the export subsidies (6,3%) established during the investigation. This is standard practise followed by the Institutions in order to avoid unduly onerous protection. The particular aspect of the anti-subsidy case was the fact that, in the course of the investigation, two subsidy schemes which were not initially alleged in the complaint were discovered. The scope of the investigation was thus extended in order to take into account these schemes. Both of these schemes were found to have conferred countervailable benefits to the exporter concerned and contributed to the imposed countervailing duty with 4 percentage points. The anti-dumping part of the case was straightforward with no issues of special interest. However, it should be noted that a request of a Chinese producer for market economy treatment was rejected, because of restrictions in its import and export operations. Finally, it is noted that the sole Indian exporting producer offered a price undertaking which was accepted by the Commission. 6.1.4. 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 therefrom, measures not in the interest of the Community). In 2002, 2 new anti-dumping proceedings and 3 new anti-subsidy proceedings were concluded without measures, compared to 12 in 2001 and 32 in 2000. The alphabetical list of cases which were terminated without the imposition of measures during 2002 can be found below. More information can be obtained from the Official Journal to which reference is given in Annex E. >TABLE POSITION> 6.2. Review investigations 6.2.1. Expiry reviews Article 11(2) and Article 18 of the basic Regulations provide for the expiry of measures after five years, unless an expiry review demonstrates that they should be maintained in their original form. In 2002, 14 measures were allowed to expire automatically. The references for these measures are set out in Annex N. Since the expiry (or "sunset") provision of the basic Regulations came into force in 1985, a total of 327 measures have been allowed to expire automatically. 6.2.1.1. Initiations During 2002, 13 expiry review investigations were initiated. The alphabetical list of these cases can be found below, together with the name of the complainant. It should be noted that some expiry reviews may be carried out in parallel with interim reviews, which allow the amendment of the duty rates. In such case, these reviews are marked with an asterisk. More information can be obtained from the Official Journal to which reference is given in Annex F. >TABLE POSITION> >TABLE POSITION> 6.2.1.2. Reviews concluded with confirmation of duty(ies) During 2002, 12 expiry reviews were concluded with confirmation of duty. It should be noted that some expiry reviews may be carried out in parallel with interim reviews, which allow the amendment of the duty rates. These reviews are marked with an asterisk. The alphabetical list of the cases which were concluded with confirmation of duty during 2002, together with the result of the investigation, can be found below. More information can be obtained from the Official Journal to which reference is given in Annex F. >TABLE POSITION> >TABLE POSITION> 6.2.1.3. Details on some individual cases (in chronological order) 1. Colour television receivers (CTVs) originating in the People's Republic of China, the Republic of Korea, Malaysia and Thailand This was a review of the measures imposed in April 1995 against Malaysia, the People's Republic of China, the Republic of Korea, Singapore and Thailand. Duties were re-imposed on imports from all countries, except for Singapore, as it was found unlikely that producers in this country would practice dumping in the future. This case was challenging, as it raised two main difficulties. The first issue was the complexity of the specific rules of origin applicable to imports of CTVs and the fact that the Commission had to make sure that the duty imposed could be effectively levied by customs authorities. As already reported in the 2001 Annual Report, a significant proportion of the CTVs imported from Turkey turned out to be in reality originating in countries for which anti-dumping duties were in place. Since these CTVs were incorrectly declared on importation as originating in Turkey, a significant amount of duty, conservatively estimated at EUR 35 to 90 million, was not collected. This resulted in the intervention of the European Anti-Fraud Office (OLAF), which opened an investigation in January 2002. This investigation is on-going. Special provisions were now included in the operative part of the Regulation that allow a better determination of the origin of the CTVs and therefore ensure a more effective enforcement by customs authorities. The second particularity was the fact that the Chinese side offered an unusual undertaking and the Commission, before accepting this offer, had to make sure that it was practical and effective. The undertaking was offered jointly by seven companies and the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCME). Therefore, many parties had to be dealt with in parallel. The offer combined price and quantitative elements. The seven producers offered to sell at defined prices until certain quantitative ceilings. The anti-dumping duty in force would only be levied if the relevant ceilings are exceeded. During the negotiations of the undertaking, it turned out that wider European interests were at stake, namely operations of Community producers in the People's Republic of China. The Chinese side stressed that an overall balance had to be found. Usually, the Community industry criticises any proposals for an undertaking. This time, parts of the Community industry reacted positively and even encouraged the Commission to accept the proposed undertaking. 2. Polyester staple fibres (PSF) originating in Belarus Definitive duties were imposed in July 1996 on polyester stable fibres (PSF) from Belarus, and extended in 1997 to cover polyester filament tow (PFT) to prevent circumvention of the original measures. As Belarus is considered not to be a market economy, the dumping margin was calculated on the basis of costs in an analogue country (Taiwan). A review of the measures was opened in 2001 to investigate two opposing claims. On the one hand, the sole exporter in Belarus claimed that domestic prices in Taiwan had experienced lasting changes which resulted in a lower normal value and consequent decreased level of dumping. On the other hand, the Community producers claimed that the expiry of measures would result in a recurrence of injurious dumping. It was found that whilst actual exports of PSF to the Community from the producer in Belarus had decreased between 1997 and 2001, the producer had maintained significant spare production capacity which was available to allow him to resume exports to the Community market. Furthermore, the producer was still found to be dumping, albeit at a lower level (21%), and was also dumping PSF in other third countries. At the same time, the Community producers had been unable to fully benefit from an expanding domestic market and saw their margins eroded as increased costs outstripped any price rises. It thus emerged that the situation of the Community industry remained vulnerable. This vulnerability was contrasted with the ability and willingness of the producer in Belarus to sell large volumes of low-priced dumped imports of PSF. In light of all factors, and in the absence of any foreseeable changes, it was concluded that the lapsing of measures would lead to the recurrence of dumped import from Belarus into the Community market. Accordingly, in October 2002, the Council imposed a definitive anti-dumping duty on (PSF) originating in Belarus, but reduced it from 43% to 21% on the basis of the revised dumping calculation. 6.2.1.4. Reviews concluded by termination During 2002, 6 expiry reviews were concluded by termination. It should be noted that some expiry reviews may be carried out in parallel with interim reviews. These reviews are marked with an asterisk. The alphabetical list of the cases which were concluded by termination during 2002, together with the result of the investigation, can be found below. More information can be obtained from the Official Journal to which reference is given in Annex F. >TABLE POSITION> 6.2.1.5. Details on some individual cases (in chronological order) 1. Magnetic disks (3,5" microdisks) originating in Taiwan An expiry review was initiated in April 1998 concerning measures initially imposed in October 1993 on imports originating in Japan, the People's Republic of China and Taiwan. On 18 February 2002, the Council concluded that the measures should be maintained at their existing levels in respect of imports originating in Japan and the People's Republic of China but that the review should be terminated without the continuation of measures for imports originating in Taiwan. The proceeding with respect to Taiwan was terminated on the grounds that the sole Taiwanese co-operating company, CIS Technology Inc., which has accounted for practically all the exports of the product concerned to the Community during the investigation period, had ceased production of 3,5" microdisks by closing its Storage Media Business Division. It was therefore considered that there was no serious risk of a recurrence of dumping from Taiwan. 6.2.2. 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 elapsed since the imposition of the definitive measure, following a request containing sufficient evidence by an exporter, an importer or by the Community producers. In carrying out the investigations, it is being considered, inter alia, whether the circumstances with regard to dumping and injury have changed significantly. Reviews can be limited to dumping/subsidization or injury aspects. During 2002, a total of 36 interim reviews were initiated. However, 15 of these reviews were partial interim reviews of a specific type, namely limited to the form of the existing measures which did not appear sufficient to counteract the dumping which had caused injury and/or which did not cater for situations in which imported goods had been damaged before entry into free circulation. Nine interim reviews were concluded with confirmation or amendment of duty and 10 investigations were terminated. The alphabetical list of cases which were concluded during 2002, together with the result of the investigation, can be found below. The asterisk refers to parallel interim and expiry reviews. More information can be obtained from the Official Journal to which reference is given in Annex G. >TABLE POSITION> >TABLE POSITION> 6.2.3. Other" interim" reviews A series of other reviews, not falling under Article 11(3) or Article 19 of the basic Regulations or for which no notice of initiation was published in the Official Journal, were concluded during 2002. They more specifically concern : - investigations which were conducted and concluded under the specific provisions of the Regulation imposing the original measures when sampling was used (bicycles, television camera systems); - investigations carried out following an Appellate Body report and a panel report adopted by the Dispute Settlement Body of the World Trade Organisation (bed linen); - Acceptance, voluntary withdrawal or breach of undertakings (quarto plates, flat pallets of wood, urea, seamless pipes and tubes, salmon, binder or baler twine). More information can be obtained from the Official Journal to which reference is given in Annex H. 6.2.4. New exporter reviews As far as the anti-dumping measures are concerned, Article 11(4) of the basic 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 investigation period. 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 Community following the investigation period, or that they have entered into an irrevocable contractual obligation to export a significant quantity to the Community. 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 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 Regulation allows for a review ("accelerated" review) to be carried out in order to establish promptly 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 2002, 1 new exporter review and 2 accelerated reviews were initiated. Since the Commission carried out the first reviews of this type in 1990, a total of 37 investigations have been initiated. As to the investigations concluded with imposition/amendment of the duty, they concern 2 new exporter reviews and 2 accelerated reviews. Furthermore, one new exporter review and 3 accelerated reviews were concluded by termination. More information can be obtained from the Official Journal to which reference is given in Annex I. 6.2.5. Absorption investigations The possibility of "absorption" reviews, which deal with situations where the exporters directly or indirectly bear the cost of the duty and thereby increase the dumping margin without leading to sufficient movement in resale prices, is included in Article 12 and Article 19(3) of basic Regulations. In 2002, one anti-absorption investigation was initiated. More information can be obtained from the Official Journal to which reference is given in Annex J. 6.2.6. Circumvention investigations The possibility of investigations being re-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 Community which 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. In 2002, two investigations were initiated and one was concluded with extension of the duty. More information can be obtained from the Official Journal to which reference is given in Annex K. 6.3. Safeguard investigations The Community has seldom made use of safeguard measures. In 2002, for the first time since the entry into force of the 1994 WTO Agreement, Community measures were introduced on certain steel imports, in response to a similar action taken by the USA (see chapter 11 for more details). As a matter of principle, the Commission considers that safeguard measures should only be used as an exceptional tool in emergency situations. The Commission followed this line rigorously in the recent steel case. At WTO level, this position was shared by the Dispute Settlement Body on several occasions. The Commission expects the Community's commercial partners to follow a similarly strict approach. However, more and more countries are adopting safeguard measures, often in circumstances which do not appear to be entirely in line with Article XIX of the GATT 1994, the WTO Agreement on Safeguards and other WTO rules. Consequently, the activities of the Commission in relation to safeguards is more and more driven towards the defence of the export interests of Community producers, if necessary at WTO level (see heading 12.1.2). As regards conventional trade regimes, the Commission has agreed within the various bilateral agreements to which it is a party (Europe Agreements, Agreements with Mediterranean countries, FTAs with South Africa, Mexico, Chili, etc.) to introduce special safeguard clauses, which apply to cases, which arise between the partners. These clauses normally entail rights and obligations additional to those arising under WTO safeguard rules (in particular special notification and consultation procedures). In this regard, the Commission carefully monitors any cases, which are initiated by partners with which it has a preferential trade agreement. 6.3.1. Safeguard on steel products In March 2002, the Commission received evidence that the increasingly protectionist stance of the US in relation to its steel market had caused a surge in imports of steel to the Community. On the basis of that evidence and preliminary enquiries, the Commission decided to carry out a full investigation. Scope of the investigation The investigation covered 21 steel products : non alloy hot rolled coils, non alloy hot rolled sheets and plates, non alloy hot rolled narrow strip, alloy hot rolled flat products, cold rolled sheets, electrical sheets (other than GOES), metallic coated sheets, organic coated sheets, tin mill products, quarto plates, wide flats, non alloy merchant bars and light sections, alloy merchant bars and light sections, rebars, stainless bars and light shapes, stainless wire rod, stainless steel wire, fittings (<609,6mm), flanges (other than of stainless steel), gas pipes and hollow sections. Provisional measures The circumstances in which provisional measures may be taken are strictly defined. They may only be taken in critical circumstances when increased imports are causing or threatening to cause serious injury to the Community producers, and where delay would cause damage which would be difficult to repair. Preliminary enquiries by the Commission indicated that US protectionism had caused trade diversion resulting in increased Community imports which threatened to cause serious injury to the Community producers, who were in a critical situation. Imports of 15 products [24] had increased significantly - from 12,5 million tonnes in 2000 to 14,2 million tonnes in 2001, an increase of 13%. [24] The products covered by provisional measures were non alloy hot rolled coils, non alloy hot rolled sheets and plates, non alloy hot rolled narrow strip, alloy hot rolled flat products, cold rolled sheets, electrical sheets (other than GOES), tin mill products, quarto plates, wide flats, non alloy merchant bars and light sections, alloy merchant bars and light sections, rebars, stainless wire rod, stainless steel wire, fittings (<609,6mm) and flanges (other than of stainless steel). On 28 March 2002, the Commission adopted provisional safeguard measures in relation to those 15 products. The object of the measures was to prevent a further surge in imports, whilst maintaining access to the Community market. The measures applied for six months and took the form of tariff quotas set at generous levels (equal to average imports in the period 1999 - 2001 plus 10%), beyond which duties of between 14,9% and 26% applied. In accordance with WTO rules, the measures did not apply to imports from developing countries, except those with more than 3% of total Community imports of the product concerned. The results of the investigation In relation to seven steel products, the investigation confirmed that increasing US protectionism, culminating in the imposition of safeguard measures across a wide range of steel products on 6 March 2002, had caused a sudden, sharp and significant increase in imports to the Community. Taken as a whole, imports of these seven products had increased from 5,9 million tonnes in 1999 to 8,8 million tonnes in 2001. In order to determine whether there was serious injury to the Community producers, the Commission evaluated all relevant factors of an objective and quantifiable nature having a bearing on their situation. The development of production capacity, production, capacity utilisation, employment, productivity, cash flow, return on capital employed, captive use, stocks, consumption, sales, market share, price, undercutting and profitability for the years 1997 to 2001 were each examined and evaluated. Overall, there was negative development of the economic indicators and the Commission therefore concluded that the Community producers of the seven products were suffering serious injury. Finally, the Commission examined whether there were any compelling economic reasons not to take measures. Taking account all Community interests (including those of the Community producers, importers, and users), the Commission concluded that no such compelling reasons existed, and it was in the Community interest that measures be taken. Definitive measures Definitive safeguard measures were imposed on five primary steel products [25] and on two more sophisticated finished products [26] which were manufactured by a number of widely disseminated small to medium sized enterprises. More than 70.000 people are employed in the manufacture of these seven products in the Community. [25] These are non alloy hot rolled coils, non alloy hot rolled sheets and plates, non alloy hot rolled narrow strip, alloy hot rolled flat products and cold rolled sheets. [26] These are fittings (<609,6mm) and flanges (other than of stainless steel). In conformity with WTO rules, the measures apply erga omnes. Existing restriction on imports from Russia, Kazakhstan and Ukraine continue to operate. The measures do not apply to imports from developing countries except those with more than 3% of total Community imports of the product concerned. They took the form of tariff quotas establishing unrestricted import volumes at generous levels. Beyond this level, tariffs of between 17,5% and 26% apply. The measures will be progressively liberalised, and will expire on 28 March 2005. For each product, the initial tariff quota was calculated by adding 10% to the average level of relevant Community imports in the last three years (1999 to 2001). The overall effect is to maintain existing levels of access to the Community market. Those countries with a substantial interest in exporting to the Community were allocated a specific part of the quotas. Nevertheless, in order to ensure that all countries continued to have access to the Community market, a significant part remained for use by other countries. However, for one product, hot rolled coils, this approach would have led to excessive fragmentation of the quota, so a single global quota was put in place. Continuation of the investigation, termination and surveillance For the remaining fourteen products, the Commission proposed to terminate the investigation as the conditions for the imposition of definitive safeguard measures were not met. However, as the Commission received new information concerning recent imports and their impact on the Community producers for three of the products concerned (tin mill products, quarto plates, rebars), it terminated in September 2002 the investigation vis-à-vis eleven products and continued its investigation into these three products. However, the continued investigation showed that the conditions for definitive safeguard measures were not met and these investigations were subsequently closed in January 2003. In light of the uncertain situation of the international steel market, the Commission also established a system of retrospective surveillance for all fourteen products. In this way, the Commission has put in place a safety net without resorting to market barriers. More information can be obtained from the Official Journal to which reference is given in Annex L. 7. MONITORING OF UNDERTAKINGS Undertakings are a form of anti-dumping or countervailing measures. They are accepted by the Commission if it is satisfied that they can effectively eliminate the injurious effects of dumping or subsidisation. To achieve this goal, exporters normally pledge to raise their prices. The necessary price increase stems from the findings of the investigation and directly depends on the level of dumping or subsidisation found, or on the injury elimination level, whichever is the lower. In order to allow the Commission to monitor whether or not the undertakings are being respected, the parties concerned have to submit regular sales reports, normally every quarter. They also have to provide the Commission with any other information that is considered necessary, and to allow verification of such data and any other relevant information at their premises, even at short notice. In case of breach or withdrawal of undertakings, a duty is imposed. At the beginning of 2002, there were undertakings in force accepted from 275 companies, covering 21 products originating in 21 different countries. During 2002, the following changes to the portfolio of undertakings took place : Definitive anti-dumping and/or countervailing duties were imposed on 34 companies following withdrawal of acceptance of their undertakings : - 16 companies breached their undertaking (farmed Atlantic salmon originating in Norway - 10 companies; flat pallets of wood originating in Poland - 6 companies). - 2 companies were related to a company that had breached its undertaking. The acceptance of their undertaking had to be withdrawn in order to avoid sales channelling through a related company (farmed Atlantic salmon originating in Norway - 1 company; flat pallets of wood originating in Poland - 1 company). - 16 companies voluntarily withdrew their undertakings (quarto plates originating in Romania - 11 companies; seamless steel tubes originating in the Ukraine - 3 companies; steel wire ropes originating in Turkey - 1 company; binder or baler twine - 1 company in Hungary). Undertakings of 68 companies came to an end for reasons other than withdrawal: - The undertaking of 1 company lapsed since the country concerned was not included in the request for a review lodged at the end of the normal 5-year period (seamless steel tubes originating in Hungary - 1 company). - The undertakings of 67 companies expired due to the expiry of measures (zinc originating in Poland - 2 companies; lighters originating in Mexico and Philippines - 2 companies; flat pallets of wood originating in Poland - 63 companies). In addition, 22 offers for undertakings have been accepted: - In 3 new proceedings undertakings from 10 companies were accepted (colour television receivers originating in China - 7 companies; sulphanilic acid originating in India - 1 company; tube and pipe fittings - 1 company in Slovakia, 1 company in Czech Rep.). - In ongoing proceedings, 12 undertakings from new exporters have been accepted (farmed Atlantic salmon originating in Norway - 8 companies; PET chips originating in India - 1 company; Urea originating in Lithuania - 1 company; certain flat-rolled products of iron or non-alloy steel originating in India - 1 company and, before the expiry of the measures, from 1 company on wooden pallets from Poland). This brings the total number of undertakings in force at the end of 2002 to 195, covering 27 proceedings corresponding to 20 products originating in 21 different countries. Details concerning the above can be found in Annex M and an overview of all undertakings in force can be found in Annex Q. Due to the ever-increasing number of undertakings and to their complexity in nature, the Commission has continued to allocate additional resources to the monitoring of undertakings by way of internal re-allocation. As undertakings have to provide the same remedial effect as the alternative duties would do, the examination, adaptation and drafting of undertaking offers has to be based on a double assessment of risk and effectiveness. This has led to situations in which undertakings were not considered to be acceptable, notably where an exporter did not provide sufficient co-operation and accurate data during an investigation, or where the trading patterns of the company allow too much scope for cross-compensation (i.e. the price increase charged for products subject to the undertaking being compensated through the granting of rebates on products not subject to the undertaking, if sold to the same customer in the Community). Once undertakings are accepted, continued contacts with the Community industry remain essential to ensure that the necessary feedback is received on the effects of the undertakings on the market. In this way, the Commission can focus its monitoring activities more effectively. 8. REFUNDS Article 11(8) of the basic anti-dumping Regulation allows importers to request the reimbursement of anti-dumping duties collected where it is shown that the dumping margin, on the basis of which duties were paid, has been eliminated, or reduced to a level below the duty in force. The Commission continued to deal with a mixture of outstanding refund requests and new applications. Four new refund requests were lodged during the year. As usual, the Commission seeks to structure the various investigations in such a way as to best utilise its resources. During the year 2002, 3 decisions were adopted relating to separate applications. All related to imports of leather handbags from China. A further 2 cases relating to the same product are due to be investigated early 2003. Whilst one case which was suspended at the applicant's request has been re-opened, another different case has been suspended in similar circumstances. The merits of 8 of the current refund cases were under consideration as the year closed. The Commission also proceeded this year to the publication of its updated guidelines for potential applicants [27]. The purpose of the Commission Notice, of which the first version was published in 1986, is to indicate Commission practice in the treatment of applications for refunds of anti-dumping duties. This new Commission Notice is primarily for the benefit of potential applicants and clarifies the refund procedure, thus enhancing transparency. An aide-mémoire is attached to the Notice to assist potential applicants in the preparation of their submission. [27] OJ C 127, 29.5.2002, p. 10 Notably, the following aspects have been modified or clarified: - The new notice clarifies that a refund is calculated on the basis of the dumping margin determined for all the exports of the exporter concerned, and not on the basis of those exports imported by a single applicant. - The deadlines to introduce and substantiate a refund application are explained in detail. - The role of the Member States and the Commission in the reception and analysis of the refund applications is clarified. - The practice of extrapolating findings from one investigation period to adjacent importations is formalised. - The treatment of refund applications in cases where the original investigation used sampling of exporters is explained for the first time. The new Notice, which was published in Official Journal C 127 of 29 May 2002, page 10, can also be found at http://europa.eu.int/comm/trade/index_en.htm. Further details on refunds can be found in Annex S. 9. JUDICIAL REVIEW : DECISIONS BY THE COURT OF JUSTICE / COURT OF FIRST INSTANCE 9.1. Overview of the judicial reviews in 2002 In 2002, five Judgments and one Order relating to anti-dumping or anti-subsidy were rendered by the Court of First Instance (CFI) and none by the Court of Justice. 9.2. Cases pending A list of the anti-dumping/anti-subsidy cases before the CFI and the Court of Justice still pending at the end of 2002 is given in Annex T (9 before the CFI and 4 before the Court of Justice). 9.3. New cases Five new cases were lodged in 2002 (compared to 7 in 2000 and 6 in 2001), three before the CFI and two before the Court of Justice. The three cases brought to the CFI in 2002 are dealing in particular with the following items: - Determination and revocation of Market Economy Status [28]; [28] T-138/02, Nanjing Metalink v. Council, OJ C 169, 13.7.2002, p. 39 - Application of the third method set out in Article 2(11), i.e. under what circumstances are the Institutions entitled to make a comparison of a weighted average normal value with individual export prices; this method implies "zeroing" of non-dumped transactions [29]. [29] T-274/02, Ritek Corp et al v. Council, OJ C 289, 23.11.2002, p. 27 - Lack of retroactivity of the exclusion of certain types of like product from the scope of anti-dumping measures [30]. [30] T-350/02, Ikegami v. Council, [not published yet] 9.4. Judgments rendered by the Court of First Instance The following summaries only mention some of the most important points of the Judgments and do not deal with all questions raised in these Judgments, nor with their specific facts. 9.4.1. Certain footwear with textile uppers originating, inter alia, in the People's Republic of China - Case T-598/97 British Shoe Corporation Footwear Supplies Ltd. and others v. Council : Judgment of 28 February 2002 (ECR 2002 Page II-01155) This case was decided on the issue of Locus standi. In this respect, the CFI first recalled the main principles governing admissibility of application lodged by an unrelated importer. The first one is that provisions of regulations imposing anti-dumping duties can be of individual concern to those importers whose resale prices were taken into account for the construction of export prices. The CFI also mentionned that the Court of Justice has held an action brought by an unrelated importer against such a regulation to be admissible where there were exceptional circumstances, in particular where that regulation seriously affected that importer's business activities (the judgment of the Court of Justice in Case C-358/89 Extramet Industrie v Council [1991] ECR I-2501). In the present case, the CFI considered that the applicants, as unrelated importers, do not belong to any of the two above categories which are recognised in the case-law as having a direct right of action against regulations imposing an anti-dumping duty. On the one hand, the existence of dumping was not established by reference to their resale prices. On the other hand, the measures did not affect the applicants other than in their mere capacity as importers of the products in question, albeit named in the contested Regulation, and the applicants have not proved the existence of other factors capable of distinguishing them from all other traders. Notably, they could not base their right to bring an action against that regulation exclusively on the fact that they actively participated in the administrative procedure leading to its adoption. It follows from all the foregoing considerations that the contested regulation was not of individual concern to the applicants within the meaning of the fourth paragraph of ex-Article 173 of the Treaty and the action was therefore declared inadmissible. 9.4.2. Farmed Atlantic salmon originating in Norway - Case T-340/1999- Arne Mathisen AS v. Council : Judgment of 4 July 2002 In this case, the applicant contested the withdrawal by the Commission of an undertaking and the imposition of duties on the imports of salmon from Norway. Essentially, the Commission had withdrawn the undertaking further to a failure by the applicant to fully provide data in a way as to allow the Commisison to verify the implementation of the undertaking. The CFI considered that the requirement to respect the minimum import price as settled in the undertaking had been breached. Mere failure to provide information permitting verification of pertinent data is to be regarded as a breach. Moreover, the CFI found that the principle of proportionality does not apply when considering the question of the imposition of the duties after a breach of an undertaking. Finally, the Court considered that the breach of undertaking by the applicant broke the relationship of trust on which the acceptance of undertakings by the Commission was based and justified the imposition of definitive duties. 9.4.3. DRAMs originating in Japan - Case T-239/00 - SCI UK Ltd. AS v Commission - Judgment of 4 July 2002 The CFI has held that it is the importer who bears responsibility both for the payment of the import duties (including anti-dumping duty) and for the regularity of the documents presented by him to the customs authorities (including price undertaking document), and that the adverse consequences of wrongful acts of his contractual partners cannot be borne by the Community. This even applies, as in this case, if the importer is the victim of a fraudulent use of the price-undertaking document by the exporter. The possibility that price undertaking documents are subsequently discovered to be invalid is a trade risk inherent in the importation business. Therefore, the presentation of documents subsequently found to be invalid cannot in itself constitute a special situation justifying repayment of import duties even where such documents were presented in good faith. In addition, the CFI observed that the Commission is not provided with information on each importation. Consequently, there is no procedure which would permit the Commission to check regularly that the undertaking documents drawn up by undertakings correspond to actual imports. The CFI stated that, in the context of customs clearance, the Commission is not required to check whether the terms of the import transaction indeed correspond to the price undertaking given by the exporter and accepted by the Commission. According to the CFI, it would be unreasonable to require the Commission to monitor not only compliance with the price undertakings but also the consistency of each price undertaking document with the importation effected thereunder. 9.4.4. Certain electrolytic aluminium capacitors originating in Japan, Korea and Taiwan - Case T-89/00 - Europe Chemi-Con GmbH v Council - Judgment of 12 September 2002 Reviews of measures on imports of the product concerned originating in Japan, Korea and Taiwan were initiated. A new proceeding on imports from the USA and Thailand was also initiated in the meantime. In the proceeding against imports from the USA and Thailand, the Council did not adopt the Commission proposal within the time limit. As a result, definitive measures were not imposed on these imports and the provisional measures, which entered into force on 29 August 1998, lapsed on 28 February 1999. In parallel, although the imposition of measures was in principle proposed, it was decided to terminate the proceedings against the imports from Japan, Korea and Taiwan without imposing measures in order to avoid discrimination with regard to imports from the USA and Thailand. The Institutions stated, in the contested regulation, that the proceedings would be terminated with retroactive effect in order to take into account the date at which the discrimination effectively started, i.e. as of 28 February 1999 when the provisional measures on imports from the USA and Thailand lapsed without being collected. The applicant, a wholly-owned subsidiary of a Japanese exporter challenged, as a main ground, the date from which the Council in the contested regulation concluded that the retroactive effect had to apply, i.e. as of 28 February 1999. For the applicant, the retroactive effect should have applied the date of expiry of the anti-dumping duties imposed in 1992 on imports of the product concerned originating in Japan, i.e. as of 4 December 1997. The CFI stated that the review concerning imports originating in Japan and the initial investigation on imports from the USA and Thailand were governed by different provisions of the basic Regulation (respectively Article 11(2) and Article 5) which had different consequences as regards the collection of the anti-dumping duties. Consequently, the CFI concluded that, as the difference in treatment in respect of the collection of anti-dumping duties was based on different legislative bases, it could therefore not be regarded as constituting a violation of the principle of equal treatment. The CFI dismissed the application and the applicant has appealed this case to the European Court of Justice. 9.4.5. Stainless steel fasteners originating , inter alia, in India - Case T-88/98 - Kundan & Tata v Council - Judgment of 21 November 2002 In the present case, the Institutions had found that the export price could not be calculated on the basis of the prices charged by Kundan, the producer, to Tata, the exporter, as these prices were unreliable in the sense of Article 2(9) of the basic Regulation because of an association or compensatory arrangement. Moreover, the Institutions deducted from the export price an adjustment for a 2% commission payment pursuant to Article 2(10)(i) of the basic Regulation. These two points were the main grounds of the application. The CFI recalled that according to Article 2(9), the Institutions may treat the export price as unreliable in two cases only, namely where there is an association or a compensatory arrangement between the exporter and the importer. In any other case, where a reliable export price exists, the Institutions are required to base their determination of dumping on that price. In the case at hand, the CFI observed that the Commission inferred an association or arrangement essentially from the fact that the prices Kundan charged Tata were higher than the prices charged by Tata in the Community market. Consequently, they could not reflect economic reality. The CFI stated that that finding was not contrary to the provisions of Article 2(9) of the basic Regulation. However, on a second point, the CFI rejected the Institutions' argument that an adjustment could be made also where no commission has been paid but where the producer sells through a trader established in the country of export operating in a similar way to that of an agent acting on a commission basis. To be able to make the adjustment in question, in the view of the CFI, the Institutions would have had to base their decision on factors capable of showing, or of giving rise to the inference, that a commission was in fact paid had a definite effect on the comparison between the export price and the normal value. In the present case, the Institutions based their decision solely on the finding that the functions carried out by Tata in the course of its export activity were similar to those of an agent acting on a commission basis, and did not adduce any evidence from which it could be inferred that Kundan and Tata had effectively agreed a commission. Under these circumstances, the CFI annulled Article 1 of the contested regulation insofar as it imposes on the applicants an anti-dumping duty in excess of that which would apply without the illegal adjustment of the export price made in respect of a commission. 9.5. Order rendered by the Court of First Instance 9.5.1. Ferro-silicon originating in China, Kazakhstan, Russia and Ukraine - Case T-132/01R - Euroalliages et al. v Commission : Order of 1 August 2001 and 27 February 2002, and Case C-404/01P (R) - Appeal against Order of 1 August 2001 : Order of 14 December 2001 See the twentieth annual report from the Commission to the European Parliament COM (2002) 484 final/2, point 6.5.1, page 42. 10. ANTI-DUMPING AND ANTI-SUBSIDY INVESTIGATIONS OF THIRD COUNTRIES CONCERNING IMPORTS FROM THE COMMUNITY OR ITS MEMBER STATES At the beginning of 2002, 18 countries had a total of 102 anti-dumping and 26 anti-subsidy measures in force against imports from the Community or its Member States. During 2002, a further 22 anti-dumping and 2 anti-subsidy measures were imposed. At the end of 2002, an additional 25 new investigations were in progress. The Commission continues to apply a "pro-active" approach in these cases. In selected cases, there is increasing intervention vis-à-vis the investigating authorities of the third countries at various stages of the domestic proceedings, as well as at WTO level. A continuing problem in these cases is that many Community exporters do not co-operate in these investigations with the inevitable result that measures are normally imposed. Any significant non-co-operation, of course, reduces the capacity of the Commission to intervene and therefore one of the aims of the Commission in this area is to encourage Community exporters having an interest in the case to co-operate fully with the investigating authority of the third country. The Commission is ready to assist Member States and companies involved in these investigations. Nevertheless, it is the companies themselves who should take the primary role in defending their own interests by co-operating and, if necessary, appointing legal representation. 10.1. Anti-dumping cases against the Community or its Member States 10.1.1. Overview The table below provides a record of the anti-dumping action taken by third countries against the Community or its Member States in 2002. It gives the position at the beginning of the year, during the year, and at the end of the year, in terms of measures in force and cases initiated. A more detailed picture is provided in Annex U, Section A. TABLE 3 Anti-dumping investigations against the Community or its Member States during 2002 >TABLE POSITION> In 2002, Germany is the Member State most affected by definitive anti-dumping measures (34), followed by France (27) and Italy (25). In addition, the Community, as a whole, is affected by another 24 definitive anti-dumping measures. 10.1.2. Details on some individual cases This chapter identifies some of the anti-dumping actions taken in 2002 by third countries which merit special attention. 10.1.2.1. USA - Low enriched uranium from France, Germany, the Netherlands and the UK In December 2000, the USA opened a highly controversial anti-dumping case against low enriched uranium from France, Germany, Netherlands and the UK. The initiation of this investigation was problematic since the petitioner USEC (the US enrichment company) is essentially a sub-contractor that processes the product for US electricity utilities. Therefore, USEC could be viewed as a service provider rather than a producer of goods. The fact that US electricity utilities, which outsource to USEC the enrichment processing but retain the ownership of the good along the process, were opposed to the investigation, raised the problem of whether there was the required support from the US domestic industry to initiate this case. This "goods vs service" is now before the US Courts and a decision is expected during 2003/2004. On 13 February 2002, the US Department of Commerce (DOC) imposed definitive anti-dumping duties of 19,95% on imports of low enriched uranium from France (Eurodif), but terminated the case against Germany, UK and the Netherlands (Urenco) because of de minimis dumping margins. The Commission followed the US investigation closely and intervened several times during the process. With regard to the French case, the main concerns expressed by the Commission during the investigation do not appear to have been taken into account. The Commission raised concerns in particular as regards the standing of the petitioner to file a complaint and the treatment of the DOC of the price of electricity used in the enrichment of uranium for the purposes of establishing the constructed normal value used in the calculation of the dumping margin. The International Trade Commission's (ITC) definitive findings on injury also involved the cross-cumulation of dumped and subsidised imports, which appears not be permitted by WTO rules. In addition, ITC had not properly analysed the effects of other factors, notably Russian imports, on the domestic industry. However, any further action has been put on hold pending the outcome of the "goods vs services" issue in the US courts. 10.1.2.2. USA - Stainless steel bars from France, Germany, Italy and the UK On 24 January 2001, the USA initiated an anti-dumping investigation against imports of stainless steel bars from France, Germany, Italy and the UK. On 7 March 2002, the USA issued its final determination in the case and imposed anti-dumping duties ranging from 3,9 to 71,83 % for France, from 4,17 to 32,32% for Germany, 2,5 to 33% for Italy, and from 4,48 to 125,77% for the UK. The principal European stainless steel bar producers are subject to relatively modest duties. In fact, the anti-dumping margin for the French company Ugine (Arcelor Group) is only 3,90%, for Corus (UK) 4,48% and for the Italian producer Valbruna 2,5%. The 33% duty for the Italian company Cogne (the largest producer of the subject merchandise in Italy) was due to non-co-operation. Three of the four German producers received a quite high anti-dumping margin. Finally, the USA confirmed the preliminary margin of 125,77% ad valorem to the UK firm, Firth Rixson Specialty Steel. The Commission has raised its concerns about the US application of the zeroing methodology in this case, which appears not to conform with the findings of the WTO Dispute settlement body in the "bed linen" case. In addition, this product is subject to a 15% duty in the context of the Section 201 steel safeguard measures. The Commission requested the US not to deduct this duty when calculating dumping in administrative reviews. 10.1.2.3. USA - Cold-rolled steel from Belgium, France, Germany, the Netherlands, Spain and Sweden On 18 October 2001, the USA initiated the above anti-dumping case against 20 countries including the following Member States : Belgium, France, Germany, the Netherlands, Spain and Sweden. In July 2002, the investigation concerning, inter alia, Sweden, was terminated as the ITC found that the domestic industry was not injured or threatened with injury as a result of these imports. On 24 September 2002, the USA announced its final determinations on dumping. The USA (DOC) calculated the following rates : Sidmar (Belgium) 11,56 %; Arcelor (France) 11,59 %; Corus (the Netherlands) 6,28 %; Thyssen-Krupp (Germany) 12,56 %; Laminacion y Derivados (Spain) 46,20 %. On 16 October 2002, the ITC issued its final determinations on injury on the above case. ITC found that imports from all the countries included in the scope of the investigation did not cause injury to the US domestic industry. This nullified previous DOC's positive findings and the case was terminated. The ITC decision is mostly based on the fact that these products were already subject to 30% additional tariff imposed in the context of the Section 201 safeguard investigation. The ITC concluded that the safeguard additional duties had already offset the injury caused by imports from these countries. Although this case in the end turned out well for the Community companies, the Commission thinks that it should not have been initiated given the existence of the safeguard protection. 10.1.2.4. USA - Structural steel beams from Germany, Italy, Luxembourg and Spain On 24 May 2001, the USA filed a complaint regarding structural steel beams from Germany, Italy, Luxembourg and Spain. On 12 June 2002, USA published its final determinations on dumping. For the Italian company Defordofin, the dumping was found to be de minimis, while rates for the companies in the other Member States were set at : Germany 8,09 to 35,75 %, Spain 5,19 % and Luxembourg 6,14%. However, on 22 June 2002, the ITC found that the imports from the countries under investigation did not injure the US domestic industry and therefore terminated the case without imposing duties. 10.1.2.5. India - Cold rolled flat products of stainless steel from the Community On 19 October 2002, India imposed definitive anti-dumping duties ranging from 50% to 90% on imports of cold rolled flat products of stainless steel from the Community. The Commission has intervened with the Indian authorities on several aspects of this case. It submitted that exporters selling to India face very high ordinary import tariffs that are paid on importation, 40% in this case. Under these circumstances, the EU export price had to be low enough to take account of the fact that a cost of 40% is added upon importation. On the other hand, the high import tariffs which raised the import price of the EU product should normally have made it difficult to establish injury. However, in this case, undercutting was alleged, which inevitably means that the Indian domestic prices must be very high. It is apparent that other factors (possibly inefficiency of domestic producers) might have caused or at least contributed to the alleged injury suffered by the Indian domestic industry. The Commission is still examining this case with a view to deciding whether further action would be warranted. 10.1.2.6. India - Hot-rolled coils, sheets and plates from the Community Another steel case was initiated by India on 25 September 2002 concerning imports of hot rolled coils, sheets and plates originating in the European Community and 7 other countries. This case investigates imports with a combined market share of only 3%. The Commission has questioned how Indian domestic producers can be suffering material injury from such a small percentage of imports, in particular, when they already benefit from ordinary tariff protection at over 40%. In addition, by choosing an investigation period of 18 months, India disregarded the recommendation by the WTO Committee on Anti-dumping Practices regarding the periods of data collection for anti-dumping investigations which explicitly establishes that "the period of data collection for dumping investigations normally should be twelve months [...] ending as close to the date of initiation as is practicable." This case also raises serious concerns regarding the product scope, with very distinctly different products all subject to a single investigation. The Commission will closely monitor this case. 10.1.2.7. India - Catalysts from Denmark On 19 September 2002, India decided not to renew the anti-dumping duties it had imposed on imports of catalysts from Denmark. On 17 January 2002, India had initiated a sunset review of the definitive measures imposed in 1997. This is a case where the Commission has been very active in recent years, as the original Indian decision to impose measures was very controversial, both in relation to the dumping calculation and the injury findings, which were extremely weak. During the current review, the Commission intervened at several stages with the Indian authorities to express its concerns and to invite the Indian authorities to repeal the measures. The decision by India to terminate the case was therefore very much welcomed by the Community. 10.1.2.8. Turkey - Polyvinyl chloride from Belgium, Finland, Germany, Greece, Italy and the Netherlands Turkey initiated on 2 December 2001 an anti-dumping investigation into polyvinyl chloride (PVC) originating in Belgium, Finland, Germany, Greece, Italy and the Netherlands. The Community exports targeted by this proceeding amounted in the reference period to EUR 97 million. The investigation, which was initially due to expire on 1 November 2002 was extended for a further 6 months until 1 March 2003. Turkey did not apply provisional measures in this case. The Commission has been closely following the case from its start. It has been in close contact throughout the investigation with the Community exporters. On 12 September 2002, the Turkish authorities disclosed their definitive findings. Dumping margins ranging from 15% to 30% were found for all Community companies. Dutch, Finnish, and Greek producers were reported not to have co-operated with the investigation. The Commission strongly criticized some aspects of the investigation, concerning both the methodology used for calculating dumping and the one used to assess injury and causality. A bilateral meeting took place in December 2002, in which the Commission insisted that the Turkish authorities review their findings after taking into account the Commission's remarks. Following this meeting, the Turkish authorities revised downwards the dumping margins for one co-operating company. There was no further information whether the Turkish authorities would make any more adjustments on the grounds of the Commission's criticisms. At the end of 2002, there was still no concrete proposal on measures. 10.1.2.9. China - Catechol from the Community On 1 March 2002, China initiated an anti-dumping investigation on imports of catechol originating in the Community, on the basis of a complaint lodged by Lianyungang Sanjili Chemicals Co. Ltd. On 4 November 2002, MOFTEC and SETC (the Chinese investigating authorities) published their preliminary determination on the investigation and imposed anti-dumping duties ranging between 50% and 92% on imports from the Community. This was the first time that China imposed provisional measures based on their new anti-dumping legislation which took effect on 1 January 2002. The Chinese investigating authorities carried out on-spot verification visits at the premises of the co-operating Community exporters in December 2002, after the imposition of provisional measures. The Commission followed developments in this case and worked very closely with the Community industry in this context. The Commission had a number of concerns regarding the Chinese handling of the case particularly relating to the standing of the complainant, procedural deficiencies (recourse to best information available without adequate notification to the exporters concerned), injury findings, the obligation to use Chinese lawyers and the requirement for questionnaire replies to be made in Chinese. The Commission will continue to monitor the developments in this case. 10.1.2.10. China - Caprolactam from Belgium, Germany and the Netherlands China initiated on 7 December 2001 an anti-dumping investigation on imports of caprolactam originating, inter alia, in Belgium, Germany and the Netherlands. Although it was under no WTO obligation in this case, given that the date of initiation was prior to their WTO accession, China indicated that they would follow the WTO anti-dumping rules. On 5 December 2002, MOFTEC announced an extension of six months for the investigation. By the end of 2002, no preliminary determination or on-spot verification visits had taken place in this case. The Commission will continue to monitor developments. 10.1.2.11. Thailand - Flat cold-rolled steel from the Community On 19 February 2002, Thailand initiated an anti-dumping investigation on imports of flat cold-rolled stainless steel originating, inter alia, in the Community. Provisional measures were imposed on 27 August 2002 ranging between 10,02% and 51,12%. On-spot verification visits took place in December after the imposition of provisional measures. The Commission is actively following this case and has provided assistance to the Community exporters who co-operated in the proceeding. Definitive measures, if any, are expected early 2003. 10.1.2.12. South Africa - Self-copy paper from Belgium, Germany and the United Kingdom On 18 January 2002, South Africa imposed provisional anti-dumping duties ranging from 6,3% to 20,9% on imports of self-copy paper from Belgium, Germany and the UK. Definitive anti-dumping duties ranging from 6% to 55,7% were imposed on 1 July 2002 with retroactive effect to 18 January 2002. The measures could be criticised on several grounds. The existence of injury to the South African industry is questionable and it is even harder to establish any causal link with Community imports. There appears to be no overall price undercutting, no overall price depression and no overall price suppression. Although the profitability of the sole domestic producer may have declined slightly, this producer invested in a huge increase in capacity just before the investigation, and any injury appears to be self-inflicted. There are also concerns about the rights of defence for the exporters concerned, since their arguments were not adequately addressed. The Commission intends to pursue this matter and to contact the South African authorities with a view to clarifying the above mentioned issues. 10.1.2.13. Andean Community - Sorbitol from France On 12 August 2002, the Secretary-General of the Andean Community decided to initiate an anti-dumping investigation on imports of sorbitol originating in France. Under Andean Community legislation, a member of the Andean Community or a firm with a legitimate interest may request the imposition of anti-dumping measures to prevent or correct distortions in competition in the sub-regional market when, amongst others, dumping originating in third countries threatens to cause or does cause material injury to its national production. The Commission expressed its doubts about the legality of the proceeding initiated by the Andean Community. The common anti-dumping rules of the Andean Community have never been notified to the WTO. In substance, there are serious doubts that the Andean Community can be considered a Customs Union, since GATT requirements, and in particular GATT Article XXIV.8(a), do not appear to be fulfilled. In addition, for the product in question, there are as yet no common external tariffs. Customs duties applied are 15% in Ecuador and Colombia, 10% in Venezuela and Bolivia and 4% in Peru. The Commission will continue monitoring further developments. 10.1.2.14. USA - Oil country tubular goods (OCTG) from Austria, France and Germany On 18 April 2002, the USA initiated this new anti-dumping investigation against Austria, France and Germany. At the time of the Section 201 safeguard investigation on steel, OCTG was excluded from measures. The OCTG industry in the US was found by the US ITC to be not threatened with serious injury by imports from all sources. The Commission therefore argued that the initiation of such an investigation could not be justified. The ITC, in its preliminary examination, confirmed its previous findings in Section 201 and determined, on 10 May 2002, that there was no reasonable indication of material injury. As a result of these negative determinations, the investigation was terminated. 10.1.2.15. India - X-ray baggage inspection multi energy systems (XBIS) from the Community The Commission is closely following the anti-dumping investigation initiated by India on 15 April 2002 regarding X-ray baggage inspection multi energy systems (XBIS) from the Community. The complaint was lodged by the sole Indian company selling these machines, which already benefits of 30% ordinary tariff protection. The Commission has argued that this company already had low capacity utilisation rates even when imports were practically non-existent, which makes it difficult to argue that injury is being caused by imports. Although no provisional measures have been imposed so far, the Commission is monitoring this case. 10.2. Anti-subsidy cases against the Community or its Member States 10.2.1. Overview The table below provides a record of the anti-subsidy action taken by third countries against the Community or its Member States in 2002. It gives the position at the beginning of the year, during the year, and at the end of the year, in terms of measures in force and cases initiated. A more detailed picture is provided in Annex U, Section B. TABLE 4 Anti-subsidy investigations against the Community or its Member States during 2002 >TABLE POSITION> In 2002, Italy is the Member State most affected by definitive countervailing measures (10), followed by France (7). In addition, the Community, as a whole, is affected by another 9 definitive countervailing measures. 10.2.2. Details on some individual cases This chapter identifies some of the anti-subsidy actions taken in 2002 actions by third countries which merit special attention. 10.2.2.1. USA - Low enriched uranium from France, Germany, the Netherlands and the United Kingdom (See anti-dumping case) The USA opened the countervailing case on low enriched uranium originating in France, Germany, the Netherlands and the UK in December 2000. On 13 February 2002, the DOC imposed definitive countervailing duties on those imports. The countervailing duties were the following : 12,15 % for Eurodif (France) and 2,23% for Urenco (UK, Germany and the Netherlands). The Commission followed the investigation closely and intervened several times during the process. The Commission raised concerns in particular as regards the standing of the petitioner to file a complaint and, for France, as regards the treatment by the DOC of the price of electricity used in the enrichment of uranium for the purposes of the calculation of the amount of the subsidy. The Commission also pointed out during the investigation that Urenco had paid back part of the alleged subsidy and that the repayment should have been taken into account when assessing the benefit conferred to the company. The "international consortium provision" also posed a problem for Urenco. As regards injury determinations, see anti-dumping case - point 10.1.2.1. As in the anti-dumping case, any further action awaits the resolution of the goods vs services issue in the US courts. 10.2.2.2. USA - Stainless steel bars from Italy (See anti-dumping case) On 15 January 2002, the USA (DOC) issued its final determination in the case of stainless steel bars from Italy. With the exception of one ex-Ilva firm privatised in 1994 (Cogne), for which the countervailing duty is 13,7%, the rate of all the companies under investigation was determined to be either zero or de-minimis. The "subsidies" for Cogne are based on the WTO inconsistent "same person" methodology on privatisation (see WTO section) and therefore should not have been countervailed. 10.2.2.3. USA - Carbon and alloy wire rod from Germany On 2 October 2002, the USA (ITC) issued its final determinations on injury on the above case. ITC found that imports from Germany were negligible and therefore they could not have caused injury to the US domestic industry. Consequently, the case was terminated without measures. This nullified the DOC's positive findings of 30 August 2002 when Saarsthal received a subsidy rate of 18,46 % and a dumping rate of 15,1 %. The second company under investigation had a subsidy rate of only 1,12 %. The Commission has argued that the DOC findings of subsidy and dumping were inconsistent, not only with the WTO Agreement on Subsidies and Countervailing Measures (SCM) and the WTO Anti-dumping Agreement, but also with the US own trade law and practice. Not only had the US applied their WTO inconsistent "same person methodology" to the privatisation of two companies involved in the case, but also unduly extended the average useful life of certain non-recurring subsidies. This substantially increased the countervailing rate of Saarstahl, which should have been de minimis. The Commission, during pre-initiation consultations, had demonstrated that import levels were negligible (well below de minimis) and formally requested the US not to open this case against Germany. 10.2.2.4. Australia - Canned tomatoes from Italy Australia initiated this sunset review at the end of 2001. The measures were due to expire on 28 April 2002. Australian countervailing measures with respect to Italian canned tomatoes were first imposed in 1992. They were taken on the grounds of Community aid granted to tomato processors and export restitution. The measure has the form of a minimum price, which was fixed at the lowest non-injurious level for the domestic industry. In the sunset review, the Commission argued that, following a revision of the Community aid scheme in 2000, the production aid is no longer paid to producers of canned tomatoes. It is now paid to tomato growers, who obviously do not produce canned tomatoes. Therefore, Australia is required to positively demonstrate that the aid has benefited the canners, not the tomato growers. Absent a positive demonstration of an upstream benefit to the canners, Australia should conclude that there is no subsidy to the imported product under the new Community aid regime. The export restitution has been reduced in compliance with the WTO Agriculture Agreement. In their conclusions, the Australian investigating authorities maintained that subsidisation of canned tomatoes is continuing in the Community, on the grounds that aid is granted to the producers of fresh tomatoes only upon presentation of contracts passed with the processing industry. They also established continuation of the export restitution. Australia therefore decided on 28 April 2002 to continue the measures for 5 more years. However, following a legal challenge in Australia by the Italian exporters, a Federal Court order of 25 September 2002 set aside the decision to continue the countervailing duties, with effect from 28 April 2002. On 1 October 2002, Australia initiated on its own initiative a new investigation. It appeared, however, that the conditions of Article 11(6) of the SCM Agreement governing self-initiation of new investigations, are not met. In order to initiate a new investigation under this provision, two conditions have to be fulfilled. Firstly, "special circumstances" have to be identified, and secondly, the investigating authorities must have in their possession the same standard of evidence had there been an official complaint lodged. For instance, there has to be evidence that the alleged injury to a domestic industry is caused by subsidised imports through the effects of subsidies pursuant to Article 11(2)(iv) of the SCM Agreement. The Commission considers that, following the court decision, there was no prima facie evidence of the alleged subsidisation, and that there was no prima facie evidence of material injury or threat of injury. In fact, it was concluded in the sunset review that the Australian canned tomatoes industry is not currently suffering material injury. The Commission has made several submissions to the Australian investigating authority, and intends to pursue the matter further. 10.2.2.5. Peru - Olive oil from the Community In August 2002, Peru opened a countervailing case on olive oil from the European Community. Despite numerous interventions by the Commission, Peru adopted a provisional countervailing duty of US$ 1,09 per kilo on olive oil originating in the Community. The Commission has criticised the provisional measures on several grounds. First of all, there is no demonstration that the subsidies, which are in fact granted to growers, do eventually benefit to olive oil producers. Furthermore, the Commission and the Member States were not given adequate opportunity to submit information and make comments, since the provisional duties were imposed even before the Commission's response to the questionnaire. In this context, the decision to impose provisional measures was based on the incomplete and unsubstantiated information presented by the domestic industry. The Commission is closely monitoring this case in co-operation with the authorities of the Member States concerned. Further steps are currently being considered. 10.2.2.6. USA - Cold-rolled carbon steel products from France On 18 October 2001, the USA decided to open the above case against France, in addition to the anti-dumping case against 20 countries (see point 10.1.2.3). On 24 September 2002, the DOC announced its final determinations in the above-noted countervailing investigation on imports of cold rolled steel. DOC calculated a final countervailing rate of 1,27 %, just above de minimis, and exclusively based on pre-privatisation subsidies. The "subsidies" for Usinor/Arcelor are based on the WTO inconsistent "same person" methodology and therefore should not have been countervailed. However, as explained in the section on the parallel anti-dumping case, ITC subsequently closed the case with a "no injury" finding. 10.2.2.7. USA - Oil country tubular goods from Austria On 18 April 2002, the USA (DOC) initiated a new investigation against Austria, in addition to the anti-dumping case against Austria, France and Germany (see point 10.1.2.14). DOC decided to initiate the investigation despite the fact that during consultations held on 12 April 2002, the Commission maintained that all the alleged subsidies, either did not exist, or had already expired. However, DOC decided not to follow these arguments. As explained in the section on the parallel anti-dumping case, the ITC closed the case with a "no injury" finding. 11. SAFEGUARD MEASURES CONCERNING THE COMMUNITY 11.1. Overview The year 2002 has seen an exceptional increase in the world-wide activity in the safeguard area, notably due to the measures on steel imports applied by the USA and, in response, by several other countries, including the Community. The amount of trade affected by these steel measures is huge and is unprecedented in the history of this instrument. In particular, in 2002, 14 countries initiated a total of 41 safeguard investigations affecting imports from the Community and its Member States. The Commission increased its interventions vis-à-vis third-country investigating bodies as well as within the WTO framework. The Commission has voiced its concerns on several safeguard cases at the regular meetings of the WTO Committee on Safeguards in Geneva and in various occasions, it has requested consultations with countries adopting safeguard measures pursuant to Article 12 of the Agreement on Safeguards. The table below gives the number of investigations initiated by third countries, as well as the number of measures, which were imposed on Community exports during the same year. TABLE 5 Safeguard investigations by third countries during 2002 >TABLE POSITION> Annex V provides a more detailed breakdown and picture of these cases. 11.2. Details on some individual cases This section sets out some cases, which merit special mention. 11.2.1. United States, China, Poland, Hungary, Czech Republic and Canada - Steel On 5 March 2002, by Presidential Proclamation No 7529, the USA decided to impose safeguard measures which became effective as from 20 March 2002. Steel products covered by US measures are as follows: slabs, plate, hot rolled, cold rolled, coated, tin mill, hot bar, cold bar, rebar, welded pipe, carbon flanges, stainless steel bar, stainless steel rod and stainless steel wire. For almost 70% of the Community exports to the USA, these measures take the form of a tariff increase of 30% and consequently imply a substantial closing of the US steel market. The Community has initiated WTO dispute settlement proceedings against the US measures (case WT/DS248). A panel was established on 3 June 2002. The panel's final decision is expected by March 2003. A more detailed explanation on this case can be found in the section dealing with dispute settlement cases. In response to the US action, several other countries took similar actions. In its first safeguard case, China imposed definitive safeguard measures on five steel products with effect from 20 November 2002. The products were non-alloy hot-rolled sheets and coils, non-alloy cold rolled sheets and coils, organic coated sheets, non-grain oriented electrical sheets and stainless non-alloy cold rolled sheets and coils. For three of the five products, there were specific quota allocations for the main exporting countries; for the remaining two products, the quotas were allocated on a first come/first served basis. The quotas will be increased in the second and third year by percentages ranging between 3% and 15%. Duties ranging between 10,3% and 23,2% (weighted average 18,26%) will be applied to imports above the quota depending on the product and these duties are set to reduce in the second and third year. The inclusion of stainless steel products in the Chinese measures is of particular concern, not only because of the substantial trade interest involved, but also because neither the US, nor the Community, imposed safeguard measures. As a result, the Commission concentrated its efforts on having these stainless steel products excluded from the Chinese measures. This yielded some positive results between the provisional measures (imposed in May 2002) and the definitive measures when certain hot-rolled stainless steel products were excluded representing an important share of Community exports to China. The Commission continued to try persuading China to reduce the negative impact of the measures for Community exporters. After the imposition of definitive measures, negotiations were held in Beijing in November 2002. As a result of the considerable pressure exerted by the Community, China indicated that it would seriously address the Community concerns and, in this context, a further round of negotiations were arranged for January 2003. Poland initiated a safeguard investigation into pig iron, hot and cold-rolled flat products, hot-rolled bars and sections, electrical sheets, and seamless and welded tubes on 8 June 2002. Shortly after, Poland submitted a proposal for provisional measures in the form of tariff quotas, which would seriously affect Community steel exports to Poland. The Commission reacted promptly and, after a very intensive negotiating process, provisional measures were applied at substantially less restrictive levels. Poland was further urged to consider product exclusions. This process was launched in August 2002 and has been monitored since by the Commission in very close co-operation with the Community industry. At the end of 2002, good progress was made in this area and product exclusions were scheduled to be applied by Poland from February 2003. The Commission services will pursue next the question of definitive measures, on which Poland is expected to present a proposal in the course of February 2003. On 22 March 2002, Hungary initiated a safeguard investigation into hot and cold-rolled flat products, hot and cold-rolled bars and rods, angles/shapes/sections, welded tubes/pipes and wires, ropes and cables. It applied provisional measures in the form of tariff quotas applicable as from 3 June 2002. When the provisional measures expired on 18 December 2002, the investigation had not yet been concluded. Hungary introduced surveillance for the imports under investigation as from 23 December 2002 and pursued the investigation with the aim of finalising it in the beginning of 2003. The Commission has been monitoring this case and has had regular contacts with the Hungarian authorities. The Czech Republic initiated a safeguard investigation into hot and cold-rolled flat products, hot-rolled bars and rods, angles/shapes/sections, seamless tubes/pipes and certain welded tubes and pipes on 28 August 2002, without applying provisional measures. The investigation was still on-going at the end of 2002. The Commission services are closely monitoring this case in close co-operation with the exporters affected. Several contacts took place with the investigating authorities and concerns have been expressed as to various aspects of the injury findings. On 22 March 2002, the Canadian Government requested the Canadian International Trade Tribunal (CITT) to conduct a safeguard investigation on certain steel products. On 20 August 2002, the CITT announced its final determinations on remedy (determinations on injury were published on 4 July 2002) in the above safeguard case and submitted its final report to the Canadian Government. In its report, the Tribunal recommended the imposition of safeguard measures for five steel products (out of nine originally investigated) : discrete plate, cold-rolled sheet and coil, angles, shapes and sections, reinforcing bar and standard pipe. For 4 out of the 5 products, CITT recommended the imposition of tariff quotas (discrete plate, cold-rolled sheet, hot-rolled shapes and structurals and standard pipe), while for reinforcing bars a straight 15% tariff was recommended. CITT also recommended to exclude from the scope of the measure imports from developing countries and from some FTA partners but to include imports from the US. Finally, CITT recommended to grant 215 out of the 280 product exclusion requested by the interested parties (exporters and final consumers) during the inquiry, since these products are not available from Canadian producers. The Canadian Government is still evaluating the CITT recommendations although it is also possible that no measures will be taken. The Canadian steel industry is performing quite well and, if any measures are imposed, the Commission will have to consider further action. 11.2.2. Russia - Ball bearings from the Community The investigation into imports of ball and tapered roller bearings was initiated by Russia on 13 March 2002. The exports from the Community to Russia amounted to EUR 10,6 million in 2001, and originated mainly in Germany and Sweden. The industries of the Member States concerned have since the beginning of the investigation been actively involved and have attended the public hearing organised by the Russian investigating authority in Moscow in October 2002. A decision on the imposition of possible measures was due on 13 December 2002, but there has so far been no communication by the Russian authorities as to the outcome of the investigation. The Commission has argued that any imposition of measures against Community exports would be unjustified. The volume of Community exports is very low compared to domestic consumption and the sales price of these exports is significantly higher than that of domestically produced bearings. In fact, in 2001, the volume of Russian exports of ball bearings to the Community exceeded by 10 times the Community exports to Russia. In addition, the Russian export price to the Community is approximately 9 times lower than the Community export price to Russia, which would indicate that Community exports are not directly competing with Russian bearings. Therefore, the Commission considers that in the case of measures, Community exports should be excluded. This view was also supported by the user industries in Russia which are dependent on Community produced bearings. 11.2.3. Russia - Wallpaper from the Community Russia initiated this investigation on 6 September 2002. The Community interest in the Russian market is very significant with exports of wallpaper and wall coverings amounting to EUR 112 million in 2002. The largest exporter of wallpaper is by far Germany, followed by the United Kingdom, Italy and France. For some Community companies, the Russian market represents an important and fast growing export market on a world-wide basis, and the investigation is thus causing serious concern for the companies potentially affected. The Commission expressed its doubts as to whether any injury potentially suffered by the domestic industry can be caused by increased imports from the Community. The exports of wallpaper from the Community to Russia have remained well below the level reached before the Russian currency crisis of 1998. In addition, the wallpaper produced and exported by Community companies is of a technical standard not yet used in the Russian wallpaper manufacturing process. This would support the view that Community exports are not directly competing with the domestic production. Rather, the Commission argued that the threat to the domestic industry is due to a recent increase in imports from Ukraine. In view of the detrimental effect that restrictive measures could have on the Community companies concerned, the Commission is monitoring this investigation very closely. A Note Verbale was sent to the Russian authorities in December 2002 requesting additional information, but there has so far been no reaction from Russia. The Commission is planning to hold talks on an informal level with the Russian authorities in the beginning of 2003 if no further information is made available. 11.2.4. Czech Republic - Steel pipes from the Community The Czech Republic initiated a safeguard investigation into steel pipes and tubes on 6 March 2002. The Commission followed actively this case in close contact with the industry concerned. The findings of this investigation and a proposal for applying measures were presented to the Commission in December 2002. Discussions took place with the Czech authorities with a view to review their findings and discuss the proposed measures. A definitive decision is expected early 2003. 11.2.5. Ukraine - Instant Coffee from the Community The investigation concerning imports of instant coffee originating, inter alia, in France, Germany, the United Kingdom and France was initiated on 7 October 2002. The Community interest in this market is relatively significant with a total of EUR 9,6 million of exports in 2001. The Community industries concerned have been registered as interested parties in the investigation and are due to deliver their respective statements to the Ukrainian investigating authorities in the first week of January 2003. A public hearing with the interested parties should then take place in Kiev in the early part of 2003. The Commission expressed its growing concern at the recent increase in safeguard investigations launched by the Ukrainian authorities. In the last 4 months of 2002, Ukraine has initiated a total of 4 new investigations on the basis of what the Commission has argued to be very weak complaints by the domestic industry. This development creates a situation of uncertainty for exporters and importers alike. This concern has been voiced by the Commission on several occasions, notably during the meeting between Vice Prime Minister Rohovyi and Commissioner Lamy in Brussels in October 2002. 11.2.6. Poland - Water Heaters from the Community Poland initiated a safeguard investigation into water heaters on 28 May 2002. The Commission has been monitoring the case from its start in close contact with the Community industry involved. A first exchange of views with the Polish authorities took place in November 2002. By the end of 2002, Poland had not yet finalised the investigation. A decision is expected early in 2003. 12. ACTIVITIES IN THE FRAMEWORK OF THE WORLD TRADE ORGANIZATION (WTO) 12.1. Dispute settlement in the field of anti-dumping, anti-subsidy and safeguards 12.1.1. Overview of the WTO dispute settlement procedure In line with the conclusions of the Uruguay Round, the WTO provides for a strengthened procedure for the settlement of disputes between WTO Members on the application of the WTO agreements. This was a major development for international trade law. The procedure is divided into two stages. The first stage, at the level of the WTO Members concerned, consists of a bilateral consultation. Upon failure of the consultation, 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 Appellate Body (AB) (each appeal being heard by three members of a permanent seven-member body set up by the Dispute Settlement Understanding). Both the panel report and the report by the Appellate Body are adopted by the Dispute Settlement Body (DSB) unless the latter rejects the report by unanimity. Anti-dumping, anti-subsidy and safeguards measures are among the most popular subject matters in WTO dispute settlement. Out of the 64 panel reports adopted between 1 January 1995 and 31 December 2002, 23 cases referred to the aforementioned areas. 12.1.2. Dispute settlement procedures initiated by the Community 12.1.2.1. USA - Privatisation methodology (countervailing duties) (DS212) This case is the follow-up of a previous WTO case "Lead Bar from UK" also known as "British Steel" (DS 138). In the British steel case, the AB found, in May 2000, that the US change in ownership methodology known as "gamma" was WTO inconsistent because the investigating authority did not evaluate the nature of the privatisation. The AB also found that a privatisation at arm's length and for fair market value eliminates the benefit to the privatised firm of all the subsidies previously bestowed. The US did not revise the previous cases where the gamma methodology was used and, in January 2001, developed a new methodology, the so-called "same person" approach, to be applied to all the new investigations (or reviews). The Commission argued that this new methodology was clearly WTO-inconsistent, and after a long series of meetings and discussions with the US which failed to lead to any change in their approach, the Commission had no choice but to request a new Panel. The complaint brought by the Commission in this case concerned the methodologies, the US law governing changes in ownership (Section 1677(5)(F)) and the decision of the US authorities to impose or maintain countervailing duties in 12 cases involving the following firms: Usinor and GTS (France), Dillinger (Germany), Corus (United Kingdom), AST, Ilva and Cogne Acciai Speciali (Italy), SSAB (Sweden) and Aceralia (Spain) The panel was established on 10 September 2001. The Panel ruled (31 July 2002) against the US on all main counts. It confirmed the "British Steel" WTO ruling that a privatisation at arm's length and for fair market value, eliminates the benefit of prior subsidies. In these circumstances, any countervailing duty against the privatised firm is illegal. It then found that both DOC methodologies (the old "Gamma" and the current "Same person") are WTO incompatible, because they both preclude an examination of the nature of the privatisation. Furthermore, the US legislation was found to be WTO-incompatible. The AB (9 December 2002) substantially confirmed the Panel ruling. It found that the US acted inconsistently with the SCM agreement, by imposing and maintaining 12 countervailing measures against privatised European steel companies without determining whether a benefit continues to exist. The AB confirmed the panel's findings against the two methodologies, although at the same time it found that a transaction at arm's length and for fair market value did not necessarily prevent a subsidy pass-through and consequently reversed the Panel's ruling on the US legislation. Regarding implementation, the Commission will request the US to replace without delay its change-in-ownership methodology with a new and fully WTO compatible approach. Furthermore, the Commission will request that all the 12 countervailing measures which were included in the current case (or at least those which do not require any further investigation) be terminated. 12.1.2.2. USA - Countervailing measures on corrosion-resistant carbon steel flat products from Germany (DS213) The complaint brought by the Commission in this case concerned the decision of the US authorities to continue the countervailing duties for corrosion-resistant steel products from Germany. This decision was based on the DOC's final determinations of 2 August 2000 that subsidisation would be likely to continue at a rate of 0,54%. The original definitive measure dated back to 1993, prior to the entry into force of the WTO. The original countervailing rate was 0,60%, which would have been de minimis under the SCM Agreement. The Panel held that the 1% de minimis threshold provided for in Article 11(9) of the SCM Agreement for new investigations equally applies to sunset reviews and that, therefore, the US law, which provides for a de minimis threshold of 0,5% in sunset reviews, was in breach of the SCM Agreement. The Appellate Body, however, reversed this finding. The Panel and the Appellate Body furthermore found that Investigating Authorities are entitled to self-initiate a sunset review without any evidence. Nonetheless, the Panel held that the likelihood determinations in the case at hand did not rest on an adequate factual basis. This finding was not appealed by the US. The Panel and Appellate Body reports were adopted on 19 December 2002. In the light of the Panel's findings, the Commission has taken the view that the only way for the US to implement the recommendations is to remove the duties. 12.1.2.3. USA - The Dumping and Subsidisation Offset Act (DS217/234) On 28 October 2000, the US Congress enacted the Dumping and Offset Act (CDSOA - also known as the Byrd Amendment). According to this legislation, proceeds of anti-dumping and countervailing orders are redistributed to the domestic petitioners. The Community, with a large number of other WTO members, considered that this legislation was incompatible with Article 18(1) of the Anti-dumping Agreement and with Article 32(1) of the Agreement on Subsidies and Countervailing measures, since it constitutes a specific action against dumping or subsidisation which is not permitted by the WTO agreements. Along with a number of other countries, the Community initiated WTO dispute settlement proceedings against the USA (case WT/DS217/5 and WT/DS234/14). A panel was established on 23 August 2001. On 16 September 2002, the final panel report was published. The Panel upheld the Commission's arguments that the CDSOA was a non-permitted action against dumping and subsidisation, and that it violated Articles 5(4) of the ADA and 11(4) of the SCM Agreements on standing, by providing an incentive to domestic producers to support complaints. Consequently, the USA was asked to bring the CDSOA into conformity by repealing the CDSOA. The USA appealed with the panel's findings on 18 October 2002. On 17 January 2003, the AB upheld the panel's ruling that the CDSOA was a non-permitted response to dumping and subsidisation. 12.1.2.4. Argentina - ceramic floor tiles (DS189) On 12 November 1999, Argentina imposed a minimum price duty against imports of ceramic floor tiles from the Community. A cursory examination of this case made it apparent that Argentina had acted inconsistently with WTO rules and the Community referred the matter to a panel. This panel upheld all the claims submitted by the Community and the Dispute Settlement Body report was adopted on 5 November 2001, as Argentina did not appeal. On 26 April 2002, upon expiration of the period agreed for compliance with the panel ruling, Argentina published a regulation which terminated all anti-dumping duties on the Italian exports. This was an important success for the Community, not only for having forced Argentina to repeal unwarranted measures, but also because it clarified a number of issues relating to the standards of an investigation (rejection of information submitted by exporters, errors in the calculation of the dumping rates, lack of disclosure). In particular, the findings will have an impact on new users of commercial defence instruments whose standards do not always meet those required by the WTO Agreements. 12.1.2.5. USA - steel (201 safeguard) (DS248) On 5 March 2002, by Presidential Proclamation No 7529, the USA decided to impose safeguard measures on many steel products which became effective as from 20 March 2002. For almost 70% of the Community exports to the USA, these measures took the form of a tariff increase of 30% and consequently implied a substantial closing of the US steel market. The Community, in conjunction with a number of WTO Members (Korea, Japan, China, Switzerland, Norway, New Zealand and Brazil) initiated WTO dispute settlement proceedings against the US measures on 7 March 2002. A panel was established on 3 June 2002. The Panel Report will be made public in late July 2003. Taking into account a likely appeal, the final WTO verdict is not expected before October 2003. In parallel, the Community exercised its WTO right to request authorisation to suspend "substantially equivalent concessions" to re-balance the adverse trade effect of the US measures. Accordingly, on 14 May 2002, the Community notified to the WTO a list of products imported from the USA and worth more than EUR 2 billion on which additional duties will apply automatically once the US steel safeguards have been condemned in WTO. On 13 June 2002, the Council unanimously adopted a Regulation to that effect. In addition, WTO rules provide for immediate re-balancing action against the US measures, to the extent that they have not been based on an absolute increase in imports. In this context, the Community notification and Regulation also comprised a shortlist of products worth EUR 379 million for which additional duties could be imposed, even before WTO rulings, upon a decision by the Council on the basis of a proposal from the Commission. However, the USA excluded certain steel products from the scope of its safeguard measures. Product exclusions in favour of Community exporters amounted to nearly $ 650 million, i.e. around 30% of the $ 2,3 billion of Community steel exports hit by the US measures. Compared to the $ 4 billion of total Community steel exported to the USA in 2001, almost 60% of the total Community steel exports now escape from the US measures. In this context, following the recommendation from the Commission, the Council decided, on 30 September 2002, not to apply immediate re-balancing measures at this stage. The US exclusion process started again in November 2002, for decisions to be taken in March 2003. The Community will of course carefully monitor this process to attempt to ensure that legitimate requests from Community exporters are satisfied. 12.1.2.6. Argentina - canned peaches (DS238) In August 2001, Argentina imposed a definitive safeguard measure on imports of canned peaches, in spite of the apparent shortcomings with respect to the required WTO standards as pointed out by the Community. In December 2001, Chile requested the establishment of a panel concerning the definitive safeguard measures imposed. Chile challenged the measure on a number of points, most of which were in line with the views of the Community. For example, the lack of a finding of an emergency arising from "unforeseen developments", the lack of an increase in imports, as well as deficiencies in the investigation with regard to injury and causality. Furthermore, Chile contested the level of the measure on the grounds that it would exceed the level necessary to prevent or remedy the alleged serious injury. In order to defend its legitimate interests in this case, the Community participated in the proceeding as a third party. The panel circulated its report to the WTO Members on 14 February 2003, which is largely in line with the Community position. 12.1.2.7. USA - Safeguard measures on circular welded carbon quality line pipe (DS 202/214) On 10 September 2001, a WTO panel was established at the Community's request in respect of two safeguard measures applied by the USA against imports of line pipe and wire rod. They have in fact been in force since March 2000 but dispute settlement action was delayed for some time while a number of discussions took place with the USA to try and find an amicable solution. By the summer of 2001, little progress had been made and a panel was requested in August 2001. The wire rod case was successfully concluded by an agreement in November 2001. A separate panel on the US measure on line pipe had been established on 23 October 2000 at the initiative of Korea. The Community participated in that proceeding as third party. The Community challenged both US measures on a number of grounds, relating, inter alia, to the exclusion of Canada and Mexico from being subject to remedy, the lack of a finding of "unforeseen developments", the lack of increased imports, the absence of injury caused by imports and the disproportionate level of the measures imposed. The panel reviewing the Korean complaint - before which the Community appeared as third party - concluded that the US measure was in breach with the WTO Agreement on Safeguards and with Article XIX of GATT 1994 on several grounds, largely corresponding to the grounds on which the Community had based its own panel request. Both the US and Korea appealed the panel ruling. On 15 February 2002, the Appellate Body confirmed most of the panel findings and the incompatibility of the US measure with WTO safeguard rules. Talks resumed between the USA and Korea, as well as between the USA and the Community, in order to settle the case. The Community decided to suspend its own panel proceeding pending the result of these consultations. Following an agreement between the USA and Korea, the USA decided on 28 August 2002 to modify their measure by raising the quota for Korean imports. The quota for Community exporters was not modified but, given the changed market circumstances, this was considered to be acceptable on condition that the USA respect their commitment to let the measure expire on its original deadline, i.e. 1 March 2003. 12.1.2.8. USA - Cut-to-length plate from Germany and corrosion-resistant carbon steel flat products from Germany and France (DS262) In 1993, the USA imposed definitive anti-dumping and countervailing duties on imports of cut-to-length plate from Germany and on import of corrosion-resistant carbon steel flat products from Germany and France. Following a sunset review, the USA found that revocation of the anti-dumping and countervailing duty orders would be likely to lead to continuation or recurrence of dumping, countervailing subsidies and injury. Therefore, it was decided to maintain for a further 5 years the original duty orders issued in 1993. The Commission argued that the US findings were in practice based on an in-built presumption that dumping, subsidy and injury would continue or recur, rather than on a positive determination. With regard to injury, the case turned on ITC's refusal to consider significant changes of circumstances since the original investigation, notably the increased integration of the Community market, leading to a large fall in export potential. Thus, the likely impact of German and French exports on the US industry was assessed cumulatively with imports from all countries subject to the same initial order. The Commission argued that, had conditions for cumulation been addressed and German and French imports been analysed on their own, it would have been highly unlikely that German and French imports were found to lead to the continuation or reoccurrence of dumping, subsidy or injury, and the case would probably have been terminated. The US recourse to cumulative assessment of the likely impact of exports on the domestic industry has become a recurring problem, which often prevents Community exporters to escape from duties in spite of the fact that they have changed their behaviour. In view of the important issues arising in this case, dispute settlement consultations were requested with the USA and a first round of consultations was held in September 2002. 12.1.3. Dispute settlement procedures initiated by third countries against the Community. 12.1.3.1. India - anti-dumping duties on imports of cotton-type bed linen By Council Regulation (EC) No 2398/97 [31], the Community imposed anti-dumping measures on cotton-type bed linen originating, inter alia, from India. Subsequent developments, including the findings of a WTO panel established upon request by India and of the WTO Appellate Body and the implementation of the WTO Dispute Settlement Body recommendations by the Community, were summarised in the 2000 and 2001 Reports to the European Parliament. [31] OJ L 332, 4.12.1997, p. 1. Regulation as last amended by Regulation (EC) No 554/2000 (OJ L 68, 16.3.2000, p. 1) After the adoption of the reports by the WTO Dispute Settlement Body, the Commission implemented the reports by suspending the application of the anti-dumping measures against India by Council Regulation (EC) No 1644/2001 [32]. Following a request by the Community industry, a partial interim review, limited to the examination of the dumping aspects, was initiated on 13 February 2002. This review was not yet been concluded at the end of 2002. The anti-dumping measures on imports from India remained suspended during the review. [32] OJ L 219, 14.08.2001, p.1 Despite the suspension of the application of the measures, India claimed that the Commission had not implemented correctly the previous panel and Appellate Body findings. India therefore requested consultations with the Commission. These consultations were held in March 2002 but failed to settle the dispute. The implementation panel, established thereafter upon request by India, issued its report on 29 November 2002. It rejected all the eight claims brought forward by India and fully confirmed the consistency of the Commission's implementation with the previous panel and Appellate Body recommendations. On 8 January 2003, India lodged an appeal against the findings of the implementation panel. 12.1.3.2. Brazil - anti-dumping duties on malleable cast iron tube or pipe fittings By Council Regulation (EC) No 1748/2000 [33], the Community imposed definitive anti-dumping duties on imports of certain malleable cast iron tube or pipe fittings originating, inter alia, in Brazil. After consultations, a panel was established on 26 July 2001 following a request by Brazil. No panel report had been issued by the end of 2002. [33] OJ L 208, 18.08.2000, p.8 12.2. Other WTO activities The year 2002 was dominated by the first phase of the negotiations on the WTO Anti-dumping and Subsidies Agreements, as agreed at the 4th Ministerial Conference in Doha. Even though the negotiations had a slow start, they gained momentum in the course of the year, in particular on anti-dumping. The Commission has played an active role in the Negotiating Group on Rules - the forum of the negotiations - by submitting negotiating proposals both on anti-dumping and subsidies [34]. [34] EC submission on anti-dumping: WTO document TN/RL/W/13 of 8 July 2002; EC submission on subsidies: WTO document TN/RL/W/30 of 21 November 2002 Concerning anti-dumping, the situation can be described as follows : after four meetings of the Rules Group in 2002, a critical mass of proposals by most major players is on the table. Positions expressed so far range from objection to any changes in substance to a wholesale re-negotiation of the Anti-dumping Agreement. In its negotiating submission, the Commission expressed its openness to a broad negotiation covering topics such as introduction of lesser-duty rules, public interest test and rules on circumvention, swift initiation panels and proposals for reducing costs of initiations. With regard to subsidies, the discussions focussed on the issue of subsidies to fisheries, which is specifically mentioned in the negotiating mandate on Rules. The "Friends of Fish", a group of countries led by Australia, New Zealand, Iceland and the USA, presented their ideas of a "special" status for fisheries subsidies, an approach rejected by Japan and Korea. The Commission has maintained its neutral position in this area, pending the internal reform of the Common Fisheries Policy which was finalised in December 2002. The Commission was the only participant who submitted a comprehensive negotiating submission on general subsidies disciplines aiming at strengthened and more operational disciplines on subsidies. Other issues raised by WTO Members were export financing and special and differential treatment for developing countries. In addition to the negotiating process, the so-called "implementation" process continued throughout 2002. Under this track, the Anti-dumping and Subsidies Committees dealt - in dozens of special meetings and informal sessions - with issues transferred to them by the Doha Ministerial Decision on implementation issues. These included recommendations relating to the determination of negligible import volume in anti-dumping investigations and the granting of extension for export subsidies given by developing countries. In parallel to these activities, the regular work of the Anti-dumping, Subsidies and Countervailing Committees was on-going. The Committees met twice in regular sessions (in spring and autumn) to review notifications and to raise issues of special interest. 13. CONCLUSION As regards the Community's anti-dumping and anti-subsidy activities, the year 2002 can be described as normal in terms of number of investigations initiated and measures imposed. As regards measures imposed by third countries, the increasing trend of investigations targeting the Community as a whole rather than individual Member States has again been confirmed in 2002. Of the total measures in force targeting the Community or its Member States (both anti-dumping and countervailing), almost 28% were imposed by the USA. The Community is still second only to China as most affected territory by third country anti-dumping and anti-subsidy actions. The Doha Development Agenda had its first phase of negotiations on the WTO Anti-dumping and Subsidies Agreements. The Commission calls for negotiations aimed at strengthening the provisions of the relevant Agreements, a cause of action which the Community shares and is fully committed to. ANNEX Summary On 31 December 2002, there were 174 anti-dumping and 19 countervailing measures in force. This compares to 175 anti-dumping and 16 countervailing measures in force at the end of 2001. The following gives a breakdown of all initiations, measures imposed and terminations for both new investigations and review investigations. 1. Initiations A total of 79 investigations were initiated, split up as follows : - 23 new investigations, of which 3 anti-subsidy (see Annex A) - 13 expiry reviews (when a measure is about to expire, a review can be initiated on the request by the Community producers. The measure remains in force pending the outcome of such a review.) (see Annex F) - 36 interim reviews (the need for the continued imposition of measures may be reviewed on the initiative of the Commission, at the request of a Member State or upon request by any exporter or importer or Community producer, when circumstances have substantially changed) (see Annex G) - 1 new exporter review (see Annex I) - 1 anti-absorption investigation (see Annex J) - 2 anti-circumvention investigation (see Annex K) - 2 accelerated reviews (see Annex L) - 1 safeguard investigation concerning imports of 21 types of steel products 2. Measures - 17 provisional measures were imposed (of which 2 anti-subsidy measures), involving imports from 13 different countries and covering 5 products (see Annex C) - 28 definitive measures were imposed (of which 3 countervailing measures), involving imports from 20 different countries and covering 9 different products (see Annex D) - the Commission accepted undertakings offered by exporters in 12 cases; in 5 cases, undertakings were repealed with imposition of definitive measures (see Annex M) - of the expiry reviews, 12 reviews were concluded with confirmation of duty (see Annex F) - of the interim reviews, 9 reviews were concluded with confirmation/ amendment of duty (see Annex G) - of the other reviews, 11 investigations were concluded confirming/ amending the measures (see Annex H) - of the new exporter reviews, 2 were terminated with imposition/ amendment of duty (see Annex I) - of the anti-circumvention investigations, one was concluded with extension of duty (see Annex K) - of the accelerated reviews, 2 were concluded with imposition/ amendment of duty (see Annex L) - provisional safeguard measures against imports of 15 steel products - definitive safeguard measures against imports of 7 steel products 3. Terminations - 5 new investigations (of which 3 anti-subsidy) were terminated without the imposition of measures (see Annex E) - of the expiry reviews, 6 were concluded by termination (see Annex F) - of the interim reviews, 10 investigations were concluded by termination (see Annex G) - of the other reviews, one was terminated and in one case measures were suspended (see Annex H) - of the new exporter reviews, one was concluded by termination (see Annex I) - of the accelerated reviews, 3 were concluded by termination (see Annex L) - 14 measures expired automatically after their 5-year period of imposition - safeguard measures against imports of 11 types of steel products. Further information can be found on the Court cases (up till 31.12.2002) (Annex T), on all definitive anti-dumping measures in force on 31.12.2002 (Annex O), on all definitive anti-subsidy measures in force on 31.12.2002 (Annex P), on undertakings in force on 31.12.2002 (Annex Q) and on investigations pending on 31.12.2002 (Annex R). Please note that those statistics are also available on the following Internet Website : http://europa.eu.int/comm/trade/policy/dumping/reports.htm. ANNEX A New investigations initiated during the period 1 January - 31 December 2002 A. Anti-dumping investigations (chronological by date of publication) >TABLE POSITION> B. Anti-subsidy investigations (chronological by date of publication) >TABLE POSITION> ANNEX B A) New investigations initiated by product sector during the period 1998 - 2002 (31 December) >TABLE POSITION> B) New investigations initiated by country of export during the period 1998 - 2002 (31 December) >TABLE POSITION> ANNEX C New investigations concluded by the imposition of provisional duties during the period 1 January - 31 December 2002 A. Anti-dumping investigations (chronological by date of publication) >TABLE POSITION> B. Anti-subsidy investigations (chronological by date of publication) >TABLE POSITION> ANNEX D New investigations concluded by the imposition of definitive duties during the period 1 January - 31 December 2002 A. Anti-dumping investigations (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> B. Anti-subsidy investigations (chronological by date of publication) >TABLE POSITION> ANNEX E New investigations terminated without the imposition of measures during the period 1 January - 31 December 2002 A. Anti-dumping investigations (chronological by date of publication) >TABLE POSITION> B. Anti-subsidy investigations (chronological by date of publication) >TABLE POSITION> ANNEX F Expiry reviews initiated or concluded during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX G Interim reviews initiated or concluded during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX H Other reviews concluded during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX I New exporter reviews initiated or concluded during the period 1 January - 31 December 2002 (chronological by date of publication) A. Anti-dumping investigations >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> B. Anti-subsidy investigations ("accelerated investigations") >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX J Anti-absorption investigations initiated or concluded during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX K Anti-circumvention investigations initiated or concluded during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX L Safeguard investigations initiated or concluded during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX M Undertakings accepted or repealed during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX N Measures which expired during the period 1 January - 31 December 2002 (chronological by date of publication) >TABLE POSITION> ANNEX O Definitive anti-dumping measures in force on 31 December 2002 A. Ranked by product (alphabetical) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> B. Ranked by country (alphabetical) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX P Definitive anti-subsidy measures in force on 31 December 2002 A. Ranked by product (alphabetical) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> B. Ranked by country (alphabetical) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX Q Undertakings in force on 31 December 2002 A. Ranked by product (alphabetical) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> B. Ranked by country (alphabetical) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX R Anti-dumping & anti-subsidy investigations pending on 31 December 2002 A. New investigations (ranked by product - in alphabetical order) >TABLE POSITION> >TABLE POSITION> B. Review investigations (ranked by product - in alphabetical order) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> C. Ranked by country (new and review investigations) (alphabetical) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX S Refunds during the period 1 January - 31 December 2002 >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX T Court cases A. Court cases pending before the Court of Justice and the Court of First Instance of the European Communities on 31 December 2002 Court of Justice Case C-76/00P // Petrotub and Republic & Council (Appeal T-33 & 34/98) Case C-472/00P // Fresh Marine v. Commission (Appeal T-178/98) Case C-76/01P // Eurocoton & Council (Appeal T-213/97) Case C-422/02 // Europe Chemi-Con GmbH v. Council Court of First Instance Case T-192/98 // EUROCOTON v. Council Case T-195/98 // Ettlin Spinnerei AG v. Council Case T-177/00 // Philips v. Council Case T-35/01 // Shanghai Teraoka v. Council Case T-132/01 // Euroalliages v. Commission Case T-255/01 // Changzhou Hailong Electronics & Yankon v. Council Case T-138/02 // Nanjing Metalink v. Council Case T-274/02 // Ritek Corp. & Prodisc Tech Inc. v. Council Case T-350/02 // Ikegami v. Council B. Judgments, orders and other decisions rendered by the Court of Justice and the Court of First Instance of the European Communities during 2002 Court of Justice // Court of First Instance Case T-132/01 R // Euroalliages v. Commission Case T-598/97 // British Shoe v. Council Case T-340/99 // Arne Mathisen AS v. Council Case T-239/00 // SCI UK Ltd. v. Commission Case T-89/00 // Europe ChemiCon GmbH v. Council Case T-88/98 // Kundan Industries Ltd. and Tata International Ltd. v. Council ANNEX U Anti-dumping and anti-subsidy investigations of third countries concerning imports from the Community or its Member States during 2002 A. Anti-dumping investigations (sorted by date of imposition) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> B. Anti-subsidy investigations (sorted by date of imposition) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> ANNEX V Third country safeguard actions during 2002 (sorted by date of imposition) >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION> >TABLE POSITION>