EUROPEAN COMMISSION

Brussels, 27.3.2019

SWD(2019) 141 final

COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

37th Annual Report from the Commission to the Council and the European Parliament
on the EU's Anti-Dumping, Anti-Subsidy and Safeguard activities and the Use of trade defence instruments by Third Countries targeting the EU in 2018

{COM(2019) 158 final}

COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

37th Annual Report from the Commission to the Council and the European Parliament
on the EU's Anti-Dumping, Anti-Subsidy and Safeguard activities and the Use of trade defence instruments by Third Countries targeting the EU in 2018

Table of Contents

1. Overview of the legislation

1.1.Anti-dumping and anti-subsidy

1.1.1.The international framework

1.1.2.The EU legislation

1.2Safeguards

1.2.1.The international framework

1.2.2.The EU legislation

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

2.1.Measures in place

2.2.New investigations

2.3Review investigations

3. Overview of activities in 2018

3.1.New investigations

3.1.1.Initiations

3.1.2.Provisional measures

3.1.3.Definitive measures

3.1.4.Details on individual cases with application of new provisional or definitive duties

3.1.5.Investigations terminated without measures

3.1.6.Details on some individual cases of termination without measures

3.2.Review investigations

3.2.1.Expiry reviews

3.2.2.Interim reviews

3.2.3.New exporter reviews

3.2.4.Absorption investigations

3.2.5.Anti-circumvention investigations

3.2.6.“Other” reviews (reinvestigations)

3.3.Safeguard investigations

4. Enforcement of anti-dumping/countervailing measures

4.1.Follow-up of measures

4.2.Monitoring of undertakings

4.3.OLAF activity

5. Refunds

6. TDI Modernisation

7. Information and Communication activities / Bilateral contacts

7.1.Small and medium sized enterprises (SMEs)

7.2.Bilateral contacts/information activities – EU economic operators including their key stakeholder associations and third countries

8. Judicial review: decisions given by the Court of Justice (CJ) and the General Court (GC)

8.1.Overview of the judicial reviews in 2018

8.2.Cases pending

8.3.New cases

8.4.Judgments rendered by the General Court (a selection)

8.5.Judgments rendered by the Court of Justice (a selection)

9. Activities by third countries targeting the EU

10. Activities in the framework of the WTO

10.1.Dispute settlement in the field of trade defence

10.2.Other WTO activities62

11. Activity of the hearing officer

LIST OF ANNEXES

ANNEX A

ANNEX B

ANNEX D

ANNEX E

ANNEX F

ANNEX G

ANNEX H

ANNEX I

ANNEX J

ANNEX K

ANNEX L

ANNEX M

ANNEX N

ANNEX O

ANNEX P

ANNEX Q

ANNEX R

ANNEX S

ANNEX T

ANNEX U110

1.Overview of the legislation

1.1.Anti-dumping and anti-subsidy

1.1.1.The international framework

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

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

1.1.2.The EU legislation

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

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

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

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

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

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

The lesser duty rule requires the measures imposed by the EU to be lower than the dumping or subsidy margin, if such lower duty rate is sufficient to remove the injury suffered by the EU industry. Such a “no-injury” rate is usually determined by using the cost of production of the EU industry and a reasonable profit margin (although, as a result of the recent TDI modernisation, the latter rules have been further elaborated, as explained below). In almost half of the cases, the anti-dumping measures for individual exporting companies are set at the level of the injury margin instead of the higher dumping margin. The EU is one of the few investigating authorities on a worldwide level that applies the lesser duty rule in such a coherent and comprehensive way.

1.2.Safeguards

1.2.1.The international framework

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

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

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

1.2.2.The EU legislation 5

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

- Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports (codification), 6  

- Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries (recast), 7

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

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

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

The number of new investigations initiated in 2018 remained similar compared to the previous year, with 10 initiations (compared to 11 in 2017). In addition, the Commission reopened three cases to implement findings following court rulings (see "Other reviews"). The number of measures imposed in 2018 somewhat decreased as compared to 2017: four new definitive measures (as compared to 12) and two provisional measures were imposed. At the same time, 8 investigations were terminated without the imposition of measures, which brought the total number of investigations concluded in 2018 to 12 (only slightly less than in 2017). Moreover, during 2018, as many as 21 review investigations were initiated. Among the latter, there were 17 initiations of expiry reviews. Seven such expiry reviews have been concluded in 2018, all with a confirmation of the duty. In other words, 2018 stood again as a busy year, with significant new casework and reviewing activity. Below are details on new investigations and review investigations.

2.1.Measures in place

At the end of 2018, the EU had in force 93 definitive anti-dumping measures (which were extended 8 in 27 cases) and 12 countervailing measures in force (which were extended in one case). 9  

The anti-dumping measures covered 67 products and 16 countries (see Annex O); the countervailing measures covered 12 products and four countries (see Annex P). The large majority of measures was in the form of duties. In one case, undertakings were in place.

Of all the 120 anti-dumping measures in force at the end of 2018, the countries affected were China (85), Russia (9), USA (4), India and Korea (three each), Belarus, Indonesia, Taiwan, Thailand and Ukraine (two each), Brazil, Iran, Japan, Malaysia, South Africa and Turkey (one each).

Of the 12 anti-subsidy measures and one extension in place, half concerned imports from China (6) whereas India was subject to four measures, USA to two measures and Turkey to one measure.

2.2.New investigations

In the five-year period from 2014 to 2018, 66 new investigations were initiated on imports from 22 countries. The sectors concerned by the investigations were: 'iron and steel' – 32 investigations, 'chemical and allied industries' – 19 investigations, 'other metal products' – five investigations, the 'mechanical engineering' sector and the 'wood and paper' sector – one investigation each, and finally 'other products' – 8 investigations. A breakdown of the product sectors is available in Annex B(A).

The breakdown of the countries concerned by initiations during the period from 2014 to 2018 include China – 24 investigations, Russia – seven, India and Turkey – five, Brazil, Korea – three each, Taiwan, Ukraine and USA – two each, Argentina, Belarus, Bosnia and Herzegovina, Egypt, Georgia, Indonesia, Iran, Japan, North Macedonia, Malaysia, Mexico, Serbia, Trinidad and Tobago – one each. A table showing all the investigations initiated over the last five years broken down by country of export is available at Annex B(B).

Table 1 below provides statistical information on the developments regarding new investigations for the years 2014 – 2018.

TABLE 1

Evolution of new anti-dumping and anti-subsidy investigations

during the period 1 January 2014 - 31 December 2018 10

2.3.Review investigations

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

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

Reviews continue to represent a major part of the work of the Commission's TDI services. In the period from 2014 to 2018, 132 such review investigations were initiated. Reviews represented two-thirds of all TDI investigations initiated.

In 2018, 24 reviews were initiated. These comprised 17 expiry reviews, three interim reviews, one anti-absorption investigation and three re-openings.

An overview of the review investigations in 2018 can be found in Annexes F to K. Table 2 below provides statistical information for the years 2014 – 2018.

TABLE 2

Reviews of anti-dumping and anti-subsidy investigations

during the period 1 January 2014 - 31 December 2018 12

3.Overview of activities in 2018

3.1.New investigations

3.1.1.Initiations

In 2018, eight new anti-dumping and two new anti-subsidy investigations were initiated. The anti-dumping investigations involved four different products from seven different countries. No country stood out in terms of number of these initiations. Details of the investigations are given in Annex A. The anti-subsidy investigations both concerned biodiesel-producing countries. Notably also, in 2018, the EU initiated three safeguard investigations.

The list of cases initiated in 2018 can be found below, together with the names of the complainants. More information can be obtained from the Official Journal publications to which reference is given in Annex A.

3.1.2.Provisional measures

In 2018, provisional duties were imposed in two anti-dumping investigations. It has to be noted that the latter run often in parallel to anti-dumping investigations, where the provisional anti-dumping duty already provides some relief to the Union industry.

The list of cases where provisional measures were imposed during 2018 can be found below, together with the measures imposed. More information can be obtained from the Official Journal publications to which reference is given in Annex C.

3.1.3.Definitive measures

During 2018, definitive duties were imposed in three anti-dumping investigations and in one anti-subsidy investigation. The list of cases where definitive measures were imposed during 2018 can be found below, together with the measure(s) imposed. More information can be obtained from the Official Journal to which reference is given in Annex D.

3.1.4.Details on individual cases with application of new provisional or definitive duties

Electric bicycles from China

On 8 September 2017, the Commission received a complaint lodged by the European Bicycle Manufacturers Association (EBMA) representing more than 25% of total Union production of electric bicycles regarding imports of electric bikes from China. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of an investigation.

On 20 October 2017, the Commission initiated an anti-dumping investigation in the matter and, on 21 December 2017, initiated a separate anti-subsidy investigation 16 (not covered by this description). 17 The complainant also submitted a request for registration of imports. The Commission agreed to make the product subject to registration from 4 May 2018 onwards.

Product definition

During the anti-dumping investigation there were several claims regarding the scope of the product given that it was not clear whether the product under investigation covered all types of cycles or only bicycles. There were also claims on the different use and consumer perception of electric bicycles compared to “speed” electric bicycles.

After examination of the different options and considering all comments, the Commission stated that the product scope of the complaint covered “cycles” including bicycles, tricycles and quadricycles and that the intended use and consumer perception overlap to a significant extent, therefore not warranting a product exclusion.

Dumping

One exporting producer requested Market Economy Treatment. The Commission decided to reject the request as it did not comply fully with the required criteria. 18 In fact, the company failed to demonstrate that there was no significant State interference in the company’s business decisions and that costs of major inputs substantially reflected market values.

Normal value had to be established on the basis of the price or constructed value in a market economy third country. The Commission tried to identify producers in several third countries but, based on the information received, only Switzerland appeared as a viable analogue country.

However, parties contested the choice. They argued that Switzerland’s overall production scale is much smaller than China’s and that Swiss electric bicycles seemed to be significantly different from Chinese ones. Swiss electric bicycles use a different technology - they have a central motor whereas Chinese electric bicycles have predominantly hub motors. Also, Swiss manufacturers produce under their own brands and import their parts from the Union and Japan, whereas Chinese ones are mainly original equipment manufacturers (‘OEM’) for the Union importers and source domestically. Therefore, the Commission decided to construct the normal value on the basis of the prices actually paid or payable in the Union for the like product, due to the inappropriateness of Switzerland. The normal value of each product type was based on the actual sales price adjusted to include the target profit of the Union industry.

Normal value was then compared to the export price for differences affecting prices and price comparability. The Commission adjusted the export prices using the data provided by the sampled exporting producers in their questionnaire replies and during the verification visits on bank charges, handling and loading charges in the exporting country, credit costs, and profits for traders. This resulted in dumping margins ranging from 34,6% to 106,4%.

Injury and causation

Confronted with an accelerating flow of dumped imports from China, the Union Industry was not able to capitalize on the growth of the electric bicycle market. Prices of dumped imports undercut the EU industry prices during the investigation period (1 October 2016 to 30 September 2017). The volume of imports from China more than tripled and the pace of import growth accelerated between 2016 and the investigation period. Moreover, the share of the Union market held by imports had increased from 17% in 2014 to 35% in the investigation period. In fact, between 2014 and the investigation period, Chinese imports grew by 250%, while the consumption in the Union increased at a much slower pace of 74%. All this had negative consequences on the situation of the Union industry. Thus, the Commission concluded that the Union industry had suffered material injury.

Further, the Commission also analysed the effects of other factors such as the imports from countries other than China, investment and expansion of capacity, as well as the export performance of the Union industry. It concluded that the causal link between the Chinese dumped imports and the injury suffered by the Union industry could not be broken.

Union interest and provisional measures

The Commission concluded that the imposition of an anti-dumping duty would not be against the interest of the Union industry and considered provisionally that the imposition of measures would allow all producers to operate under conditions of fair trade on the Union market. In the absence of measures, a further deterioration of the Union industry's economic and financial situation was very likely to take place.

The Collective of European Importers of Electric Bicycles disagreed with the imposition of anti-dumping measures. They argued that the imposition of duties was likely to disrupt, at least temporarily, their supply chains and threaten their financial position if they were not able to pass on the increased costs related to the duty to their customers. However, import statistics showed that Vietnam and Taiwan provided significant volumes of electric bicycles to European importers. It was also likely that other countries, which are well positioned in the manufacturing of conventional bicycles, could supply importers.

The Commission also considered that the imposition of duties on imports of conventional bicycles from China did not have the effect of closing the Union market to imports and, on the contrary, expanded the number of countries supplying conventional bicycles.

Therefore, the Commission found no compelling reason that it was not in the Union interest to impose provisional measures. To determine the level of the measures, the Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry. The Commission established that the injury would be eliminated if the Union industry were able to cover the costs of production and to obtain a profit before tax on sales that could be reasonably achieved under normal conditions of competition if there were no dumped imports. The target profit was provisionally set at 4,3%, which is the highest average profit margin of the Union industry during the period considered. The injury margins established ranged between 21,8% and 83,6%. On this basis, the Commission decided to impose a provisional anti-dumping duty in accordance with the lesser duty rule, ranging between 21,8% and 83,6%.

On 17 January 2019, the Commission adopted a Regulation imposing definitive measures on electric bicycles. The injury margins were modified on the basis of data provided by the interested parties. The adjustment took into account certain costs for R&D and design incurred by the sampled Union producers. Subsequently, the injury margins were established between 18,8% and 79,3%.

On 17 January 2019, the Commission also imposed countervailing duties on the same product in the range of 3,9% - 17,2%, as a result of a parallel anti-subsidy investigation.

The definitive injury elimination level was reduced by the amount of the countervailing duties, in order to avoid double-counting. On this basis, the final anti-dumping duties were ultimately imposed in the range of 10,3% - 70,1%.

Corrosion resistant steels from China

On 7 February 2018, the Commission imposed definitive anti-dumping duties on imports of certain corrosion resistant steels originating in China. 19 This followed an investigation that had been opened in December 2016, further to a complaint from the European Steel Association (EUROFER) on behalf of producers representing more than 53% of total production. Provisional measures were imposed in August 2017. 20

Dumping

The Commission sampled exporting producers based on the largest volume of exports to the EU. The Commission did not receive any comments on the selected sample even though all parties and the authorities of the country concerned had been consulted.

Three groups of exporting producers asked for individual treatment. The companies concerned argued that they were the only Chinese exporting producers supplying the Union. However, the Commission decided that no individual treatment could be granted as the number of entities to be additionally investigated and the number of different locations to be visited for the verification would have prevented the investigation from being completed on time. 21

In addition, two groups of non-sampled cooperating producers submitted Market Economy Treatment (MET) claims 22 with their request for individual treatment. Given that the claims for individual treatment were rejected, the MET requests were not assessed.

Normal value

The normal value was determined on the basis of data obtained from a producer in a market-economy third country. Interested parties contested the Commission’s first choice of Canada because of the alleged price difference of the like product and the relationship between a possible cooperating producer and one of the complainants. The Commission then selected Brazil as the analogue country.

The choice was again contested by an exporting producer and the China Iron and Steel Association (CISA), which argued that the normal value in the analogue country was 21% higher than the target price for the Union industry and that the average sale price of the analogue country producer was higher than the (already high) prices in Brazil. It also raised doubts about the calculation used by the Commission.

The Commission responded that in case exported products could not be directly matched with Brazilian normal values, the normal value was adjusted to take account of all physical differences. As for the quality of data and calculations, the data of the analogue country producer were verified for accuracy and found reliable and all the calculations were factually correct.

Injury and causation

The Union industry was in a vulnerable situation during the period considered. Even though the Union consumption grew by around 27% during the period, the sales volume of the Union industry on the Union market increased by only 5% and the Union industry lost 17% of market share. By contrast, the market share of the imports from China increased during the period by 93%.

Imports from China increased by 146% over the period of analysis. Their prices per ton fell by 22%, exceeding the decrease in raw material prices of 20%. In addition, these imports significantly undercut EU industry prices, by 17% to 28%.

Moreover, the industry suffered losses throughout the period considered (despite a minor improvement over that period).

Consequently, the Commission concluded that the material injury to the Union industry was caused by the dumped imports and that the other factors, such as imports from third countries or export sales performance of EU producers, did not break the causal link between the Union material injury and the dumped imports, even if its effects were to be considered in a combined manner.

Registration

Imports of the products concerned were subject to registration from July to August 2017, when the provisional measures were imposed, with a view to possible collection of duties. However, the Commission found that a retroactive duty recollection was not necessary.

Union interest and definitive measures

It was concluded that the imposition of measures would contribute to the recovery of the Union industry by allowing price increases that would enable the industry to return to a profitable situation. Also, the investigation did not show that the potential impact on other actors would outweigh the benefits to the EU industry. Thus, it was considered that the measures would lead to a level playing field, still allowing for imports from the country concerned, at fair prices. Given the findings, the Commission imposed a definitive anti-dumping duty ranging between 17,2% and 27,9%, depending on the exporting company.

New and retreaded tyres for buses or lorries from China

In August 2017, the Commission initiated an anti-dumping investigation on imports of certain pneumatic tyres, new or retreaded, of rubber, used for buses or lorries imported from China. This followed a complaint lodged by a coalition against unfair tyre imports, on behalf of producers representing more than 45% of the total EU production. On 7 May 2018, the Commission imposed provisional anti-dumping duties on imports of the products concerned. 23 In October 2017, the Commission also initiated a separate anti-subsidy investigation on the product. 24

Product definition

The tyre market is segmented in three tiers. Tier 1 tyres cover premium new tyres with the flagship brand of main manufacturers. Brand recognition is a key factor for tyres in this tier and justifies significantly higher prices for expected high performance as well as particularly strong marketing investments. The quality of tier 1 tyres ensures a high level of retreadability of the tyres, which are designed to be ‘multi-life’ tyres further increasing the significantly higher mileage of the original product.

Tier 2 tyres cover most non-premium tyres, both new and retreaded tyres, with prices ranging between approximately 65% and 80% of the price of tier 1 tyres. Retreaded tyres can be classified under tier 2 or tier 3. While some Chinese tyres are retreadable, there is very little retreading performed in China. Retreading is, however, quite widespread in the Union and in other markets.

Following further product analysis and after consulting all interested parties, the Commission determined that main EU producers focused on the so-called 'tier 1' and 'tier 2' tyres. These products are, however, often hard to distinguish from 'tier 3' tyres - new and retreaded tyres with lower mileage performances and very limited retreadability, which are also cheaper than 'tier 1' and 'tier 2' tyres.

Dumping

Market Economy Treatment (MET) claims were introduced by two exporting producers out of the four that were sampled. However, the Commission found that none of the exporters fulfilled the MET criteria, 25 and so the status could not be granted. More specifically, both failed to demonstrate that they had one set of clear independently audited accounts and that their operations were not subject to significant market distortions. Additionally, one of them failed to demonstrate that its business decisions were made without significant State interference and that costs of major inputs substantially reflect market values.

The normal value of the exports was based on data obtained from a producer in a market-economy third country. The Commission concluded that the most appropriate analogue country in this case was Brazil, given that its volumes were substantially representative, it had similar conditions of access to raw materials and both China and Brazil were comparable in terms of economic development. Normal value was then compared to the export price. All sampled exporting producers claimed that the method for constructing the normal value, which the Commission applied at the provisional stage resulted in extraordinarily high dumping margins and produced results that did not appear to correspond to reality: the normal value was not inferior for tiers 2 and 3, although in reality the former tyres are always cheaper. The exporting producers urged the Commission to adjust the normal value, which the Commission accepted. The Commission finally constructed the normal value for the non-matching product types taking into account the differences identified in the costs of manufacturing between the three tiers.

Injury and causation

The exporting producers sampled were mapped out according to tiers, which resulted in several asking the Commission to move them from the ‘tier 3’ allocation to ‘tier 2’. After analysis, the Commission agreed to two of those requests.

Prices of dumped imports from China significantly undercut EU industry prices during the investigation period and injury indicators showed that the industry had been under increasing pressure. In fact, it experienced a reduction of production capacity, investment and employment, as well as a significant loss of market share (the import volumes from China increased significantly resulting in an increase of the market share of Chinese imports, in a growing market, from 17,1% to 21,3%). This was of particular concern for 'tier 3' tyres, where Chinese imports were mainly focused, forcing many EU producers in that tier, especially SMEs, to exit the market.

Thus, the Commission concluded that the material injury to the Union industry was caused by the dumped imports and that the other factors, such as imports from third countries or the interconnection between the new and retreaded tyres, did not break the causal link between the Union material injury and the dumped imports.

Union interest

It was determined that the imposition of the anti-dumping measures on the EU producers would be positive for the Union industry, especially for SMEs. They would be able to benefit from the growing consumption in a market governed by fair conditions. EU producers would be able to increase their sales and regain a part of the market share lost. This would in turn increase the EU production and the capacity utilisation rate.

In fair market conditions, the EU industry would be able to improve their financial situation. Furthermore, the available capacity in the EU industry and imports from other countries would provide alternative offers of supply.

Given the interconnection between the retreading business and the production of retreadable tyres, the proposed measures would also improve the viability of the retreading segment. This would bring relief in terms of employment, in particular since the retreading segment of the tyre, located throughout the EU, is labour-intensive.

The situation of importers was also analysed. The Chinese imports of the product concerned represented a significant share of their turnover in the investigation period. Their business model is mainly based on contracts with Chinese exporting producers, although they also have alternative sources (either domestically or from other third countries). Therefore, the imposition of measures would have an impact on their activity. In addition, another business model was found to rely on a ‘container-only trading strategy’. In this case, importers have more flexibility to change sources of supply. This method was used by some non-sampled companies, which only represented 2% of the total Chinese imports. However, their low level of cooperation suggested that the imposition of measures would not have any significant impact on their activity.

Moreover, it is a long-standing Union policy to reduce waste and to manage raw materials in a sustainable way. Retreading is crucial for a sustainable circular economy. In fact, several interested parties underlined that premium tyre manufacturers produce new high quality tyres designed to have a long life cycle as they can be retreaded. Without the retreading business, competition in the tyre industry will end up in a race to the bottom, resulting in industrial depletion, loss of value through the supply chain while minimising the quality of the offer in the Union. Accordingly, measures that also protect high quality tyre producers in the Union, as opposed to single-use tyres, would also foster policy coherence with the Union objectives on waste reduction and circular economy, as they would support the continued existence of a viable retreading business in the Union. Moreover, given that mostly SMEs are active in this sector, measures would also be in line with the Commission's objective to support SMEs.

On this basis, the Commission concluded that measures would not be against EU interest.

Registration

Imports of these products were subject to registration from February until May 2018, when the provisional measures were imposed, with a view to possible collection of duties from the imports taking place during those months. However, no significant rise in imports was observed during that time if compared to the flow observed during the investigated period. Therefore, the Commission concluded that duties would not be collected retroactively.

Definitive measures

Given the findings, the Commission imposed definitive anti-dumping duties ranging between 42,73 and 61,76 EUR per item. 26 Subsequently, definitive countervailing duties were imposed on 9 November 2018. 27 In order to avoid any double counting with the imposition of both anti-dumping and anti-subsidy measures, the anti-dumping measures were adjusted by the regulation imposing the anti-subsidy measures, 28 with final anti-dumping duties ranging ultimately from 0,37 to 38,98 EUR per item, depending on the exporting company.

3.1.5.Investigations terminated without measures

In accordance with the provisions of the respective basic Regulations, investigations may be terminated without the imposition of measures if a complaint is withdrawn or if measures are unnecessary (i.e. no dumping/no subsidies, no injury resulting from dumped or subsidised imports, measures not in the interest of the Union). In 2018, eight new proceedings (all were anti-dumping investigations) were terminated without measures, as compared to two in 2017.

The list of cases which were terminated without the imposition of measures during 2018 can be found in the following table. More information can be obtained from the Official Journal publications to which reference is given in Annex E.

3.1.6.Details on some individual cases of termination without measures

Low-carbon ferrochrome from China, Russia and Turkey

On 23 June 2017, the European Commission initiated an anti-dumping investigation with regard to imports of low-carbon ferrochrome originating in China, Russia and Turkey, following a complaint lodged by the Association of European Ferro-alloy Producers (“Euroalliages’’) on behalf of the sole Union producer of low-carbon ferrochrome in the Union, Elektrowerk Weisweiler GmbH.

Dumping

The Commission verified all the information obtained by means of questionnaires and carried out verification visits to the premises of the Union producer, the users and the importer form a third country (Turkey).

Injury and Union interest

The Commission assessed the information provided for a determination of dumping, resulting injury and Union interest.

After all the findings were duly processed and analysed, the Commission decided not to impose provisional measures due to lack of clarity regarding the scope of the product but also to continue the investigation.

Termination

On 22 May 2018, the complainant notified the Commission that it would like to withdraw its request. 29 Since the complainant was the only Union producer, no opposition was raised. The Commission also found that termination would not be against the Union interest. Therefore, the Commission decided to terminate proceedings without the imposition of measures.

3.2.Review investigations

3.2.1.Expiry reviews

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

In 2018, two anti-dumping measures and two anti-subsidy measures expired automatically. Two of these measures concern solar panels (see section 3.2.3).

The references for these measures are available in Annex N.

Since the expiry provision of the basic Regulations came into force in 1985, a total of 512 measures have expired automatically.

3.2.1.1.Initiations

During 2018, 15 expiry reviews of anti-dumping measures and two concerning anti-subsidy measures were initiated. The list of the expiry reviews initiated in 2018 can be found in the following table, together with the name of the complainant. It should be noted that some expiry reviews may be carried out in parallel with interim reviews. Where there are interim reviews and expiry reviews ongoing at the same time, these are indicated by an asterisk in the table below. More information can be obtained from the Official Journal to which reference is available in Annex F.    

3.2.1.2.Expiry reviews concluded with confirmation of duties

During 2018, 7 expiry reviews were concluded with confirmation of the duties for a further period of five years.

The list of the measures, which were renewed during 2018, together with the results of the investigations, can be found below. More information can be obtained from the Official Journal publications to which reference is given in Annex F.

3.2.1.3.Details on some individual cases concluded by confirmation of duty

Steel ropes and cables from China

On 6 November 2016, the Commission received a request for review on the grounds that the expiry measures for steel ropes and cables from China would result in a likely continuation of dumping and recurrence of injury. This request was lodged by the Liaison Committee of EU Wire Rope Industries on behalf of producers representing more than 25% of the total EU production of steel ropes and cables.

The measures at issue in the review request had been extended to imports of steel ropes and cables consigned from Morocco and the Republic of Korea, whether declared as originating in those countries or not following an anti-circumvention investigation.

The Commission decided to initiate an expiry review after establishing that there was enough evidence in the request.

Analogue country selection

In the context of selecting an analogue country, two producers from market economy third countries replied to the questionnaires, one located in Turkey and one in the US.

Even though Turkey had been preliminarily envisaged as an analogue country, the Commission finally decided to select the US as the quality of the information provided by the American producer was more comprehensive to establish a reliable normal value.

Sampling

The Commission received only one reply from an exporting producer out of 21 contacted in China. Dumping was established based on information provided by the sole cooperating exporting producer. This producer accounted for 100% of the total exports to the EU but only 1,3% of the total estimated production of China during the investigating period.

The Commission also sampled six Union producers, which represented 50,5% of the total Union industry’s production during the review investigation period. The Commission analysed the information provided and conducted verification visits to companies premises so as to determine the likelihood of continuation or recurrence of dumping and injury, as well as the Union interest.

Likely continuation of injury and recurrence of dumping

Following the application of the initial anti-dumping duties, the EU industry continued to recover from the effects of dumping. If the measures were allowed to lapse and the Chinese exporting producers maintained their export prices at a similar level, the Commission established that the undercutting margin would amount to 36,3%. Despite the effectiveness of the measures, the Chinese products remained present on the Union market keeping a market share of 1,2% during the review investigation period.

The investigation also found that Chinese exporting producers achieved higher prices in the Union market than in other third countries. Therefore, it was concluded that the exporting producers in China have the potential and incentive to raise the volume of exports to the EU at dumped prices, which would undercut the prices offered by the Union industry in case the measures lapsed.

In addition, if the Union industry were to lower prices to compete with imports from China, the industry’s profits would decline and many companies would have gone out of business, with a significant consequent impact on employment. Indeed, further deterioration of the Union industry's situation might even cause the shutdown of whole producing units. Thus, it was concluded that the already negative situation of the Union industry would be likely to further deteriorate.

Despite its recovery, the Union industry had to face lower demand for bulk commodities and reductions in the oil price, which led to reduced activity in the sectors of mining, oil and gas. Thus, the demand for the products concerned reduced, which resulted in a decrease in production and sales volume. Therefore, almost all the injury indicators deteriorated. On that basis, it was concluded that the Union industry has suffered material injury although it had benefitted from the original measures, as it continued to recover from the effect of past injurious dumping for the first two years of the period considered (2013-2014). However, the recovery process stalled due to the reasons mentioned above.

Union interest and definitive measures

The Commission analysed all the interests at stake, including those of the Union industry, importers and users. The investigation found that should the measures expire, this would likely have a significant negative effect on the Union industry and that its currently fragile financial situation would deteriorate further. As for the interest of importers, no comments were received but a prior investigation had shown that the impact of continuing the measures would not be significant. Users did not manifest much interest and those that made themselves known stated that their use of the concerned product was marginal.

The Commission therefore concluded that it was in the Union interest to maintain the measures, which were extended for five years. The definitive anti-dumping duty imposed in the case of China was also extended to imports of the same products consigned from Morocco and the Republic of Korea, whether declared as originating in those countries or not.

3.2.1.4.Reviews concluded by termination

In 2018, no expiry review was concluded by the termination of measures in force.

3.2.2.Interim reviews

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

During 2018, three interim reviews were initiated (two anti-dumping and one anti-subsidy). Six interim reviews were concluded during the same period - four confirming the duties unchanged and two amending the duties. The details of the cases can be found below. More information can be obtained from the Official Journal publications to which reference is given in Annex G.

3.2.2.1.Details on individual cases

Ammonium nitrate from Russia

The Commission received a request for a partial interim review from eight European farmers associations limited in scope to the examination of injury on anti-dumping measures on ammonium nitrate originating in Russia. The applicants argued that they were suffering from the anti-dumping measures that have been in place on the product concerned for more than 20 years. On 17 August 2018, the Commission announced the initiation of a partial interim review limited in scope to the examination of injury. That same day, the Commission also announced the initiation of another partial interim review of the measures applicable to the product concerned originating in Russia but limited to the examination of dumping of Acron (the applicant of this second review).

Product scope

Originally, the product concerned was defined as ammonium nitrate but was subsequently re-defined to solid fertilizers with specified ammonium nitrate content. This clarification aimed to cover also ammonium nitrate to which phosphorus and/or potassium nutrients (so-called ‘dirty’ or ‘stabilized’ ammonium nitrate) were added. The main raw material used in its production is natural gas, representing over 60% of the total cost of production.

Partial interim review limited to dumping

In that review, the Commission found that domestic gas prices in Russia are regulated by the State via federal laws and do not reflect normal market conditions, where prices are principally set by production costs and profit expectations. Therefore, the Commission considered that the circumstances regarding the gas market in Russia had not changed and, as a result, a modification of the measures was not warranted.

During the review request, Acron also argued, among others, that the last time the dumping margins were set was in 2008 (before Russia’s accession to the World Trade Organisation (WTO)). When Russia joined the WTO in 2012, it committed to ensure that producers/distributors of natural gas would operate within the relevant regulatory framework on the basis of normal commercial considerations, the result of which was a regular gas price increase. In that respect, Acron argued that no WTO dispute settlement cases have been launched putting into question the fulfillment of those commitments.

In response, the Commission stated that it was not taking any position with regard to Russia’s WTO commitments since this was not within the scope of the investigation. The objective was rather to determine whether there was a lasting change of circumstances that would warrant the recalculation of the anti-dumping duty. In this regard, the Commission found that Russian gas prices were still distorted, and that the absence of cases against Russia concerning a breach of its WTO commitments or the fact that Russian gas prices have been gradually increasing on the domestic market cannot automatically lead to conclude there were no price distortions. Therefore, the arguments presented by Acron were not considered as changes of a lasting nature.

The applicant submitted a duly signed voluntary undertaking offer. The Commission analysed the undertaking offer and considered that its acceptance would be impractical. The company had two related companies in two Member States and one of them sold the like product to the Union market. The applicant also sold directly the Russian product to Union customers. If both would sell the product concerned to the same customers, the prices could be set in a way to compensate for the minimum import price subject to the undertaking, which would be very difficult to monitor. Consequently, on 12 November 2018, the Commission terminated the partial interim review without changing the dumping margin for Acron or accepting an undertaking from that company.

Partial interim review limited to injury

In that review, the Commission proceeded again first to assess whether any changes occurred in the circumstances which lead to the application of the current measures, and if so, whether these changes were to last. The Commission notably analysed the evolution of world markets and global changes for the concerned product.

The Commission noted that Russian consumption of ammonium nitrate had more than tripled and the demand of third countries had also increased. Meanwhile, the Union’s agricultural consumption had decreased slightly and was expected to remain stable in the future. Thus, the EU market has become less attractive for Russian producers.

Further, the situation in the US gas market had also changed. US shale gas production has increased steeply since 2000 and it was even expected to increase further in the future. The shale gas boom has led and still leads to the development of capacities of US producers' nitrogen fertilizers.

Changes had also been taking place in the Union industry in the recent years. The level of concentration had increased through mergers and acquisitions and the applicant argued that the Union industry was capable of competing with Russian imports due to greater efficiencies gained from investments and restructuring. The situation was different from that of previous reviews where many small and medium size companies operated independently. However, despite the restructuring, there was still a healthy competition on the Union market with 10 companies competing with each other, and none of them had a market share of more than 20%.

The Commission concluded that these global changes and the Union industry’s restructuring are of a lasting nature and can impact the injury situation, including the likelihood of recurrence of injury.

Further, the Commission also assessed data on the economic situation of the Union industry. It concluded that the economic situation overall was non-injurious, although a number of injury indicators showed that the financial performance and economic state of the industry followed a negative trend, related notably to the decrease in prices.

The Commission also used verified data from the cooperating companies and other Russian exporters in order to assess capacity and spare capacity in Russia. It concluded that significant volumes could still be exported and have a particularly strong effect on some neighbouring regions. Besides, Fertilizers Europe argued that Russian capacity might be extended in view of the Russian plan on fertilizers of March 2018.

In terms of market for the products concerned, the domestic market was the main market for Russian producers. However, the Union market was found to also remain attractive for the latter. Prices in certain third countries were less appealing than Union prices, even though for some countries the opposite situation also applied. The Commission thus concluded that some Russian volumes might be redirected from less attractive third markets to the Union market if measures lapsed, given its size, geographic proximity and prices, with subsequent injurious effects for the EU industry.

The Commission also made a prospective analysis of the evolution of Russian export prices. It found that the product concerned would likely be sold on the Union market at a price below the weighted average sales price of the Union producers charged to unrelated customers on the Union market.

Based on the totality of evidence on the file, the Commission concluded that there was a likelihood that Russian producers could use their available spare capacity to export to the Union should the measures be terminated. It was also likely that some volumes that were at the time exported to third countries would be re-directed to the EU, given the relative attractiveness of the Union market and its proximity to Russia. As the Union industry was in a less prosperous state compared to the last expiry review, such increased volumes could cause injury to recur. The likely future evolution of Russian export prices was also a clear indication that injury could recur quickly. Therefore, the Commission concluded that there was a likelihood of recurrence of injury should the measures be removed.

In response to the disclosure of the findings, COPA-COGECA, representing Union farmers and cooperatives, sent submissions and called for the anti-dumping measures to be terminated. COPA-COGECA claimed that the anti-dumping measures damaged the competitiveness of Union agricultural exports and family farm incomes. COPA-COGECA argued that by organizing themselves in cooperatives they would benefit from increased competition from Russian exporting producers, lowering farmers’ production costs. However, the Commission noted, as in previous expiry reviews, that farmers might not benefit from a potential price decrease following a potential termination of the measures since farmers usually buy from distributors who may not pass on any of the benefits. The Commission also noted that the cost of ammonium nitrate for farmers in the entire Union was not disproportionally high. Therefore, the Commission concluded that the termination of the measures was not justified on this basis.

Amendment of the measures

After an assessment of the evidence and the submissions provided by the parties, the Commission used an 8% profit margin for the injury calculation, which was in line with previous investigations concerning ammonium nitrate. The Union industry submitted a study that substantiated a 36% return on sales (ROS) target profit. Two Union producers reiterated the same claim and submitted that the Union industry had in the past achieved a two-digit profitability, which would justify a higher target. However, the Commission noted that profitability had fluctuated when measures were in place, both above and below the target profit. Thus, it concluded that the 8% target profit was still valid, and has set the new duty levels accordingly, differentiating the latter by product types. The amended anti-dumping measures were fixed between 28.78 and 32.71 EUR per ton. These findings were published on 14 November 2018,

Rainbow trout from Turkey

On 26 February 2015, following an anti-subsidy investigation that related to the year 2013, the European Commission imposed definitive countervailing duties on imports of certain rainbow trout originating in Turkey. 31 In July 2017, the Commission initiated a partial interim review of these measures, 32 following a request from the Aegean Exporters Association (‘the applicant’). The request was supported by evidence that a change in the implementation of the direct production subsidies introduced in 2016 resulted in a substantial decrease of the level of subsidies to trout producers in Turkey. The applicant also argued that the change in the subsidy schemes was of a lasting nature. Therefore, the applicant claimed that the countervailing measures were no longer necessary and that they should be reviewed.

Procedure

In view of the large number of exporting producers, the Commission selected a final sample of six exporting producers/groups of exporting producers in Turkey that accounted for approximately 71% of the volume of imports of the product under review. The Commission considered that it was representative and would enable it to properly analyse the effects of the changes on all companies in that sector. After completion of verification visits, on 21 February 2018 the Commission disclosed the essential facts and considerations of the investigation to all interested parties.

Subsidies countervailed in the original investigation

In the original investigation, the Commission examined a number of measures from which the Turkish exporting producers of trout benefited or might have benefitted during the original investigation period (the year 2013). The main subsidies from which the Turkish producers of trout benefited during the original investigation period were direct subsidies granted to all trout producers on a ‘per kg’ basis.

Under Decree No 2013/4463 on agricultural subsidies 33 (‘the decree’), which provided for the subsidies in the original investigation period, subsidies were granted to all producers of trout possessing a valid production licence relating to a fish farming unit (sea, dam or inland site). A trout producer could have several production licences (fish farming units) in the same site. According to the Commission’s findings, the total amount of subsidies for the original investigation period amounted to 62,992,720 TL.

Results of the review investigation

The Commission found that the decree was changed in 2016. As a consequence, the volume of trout production eligible for direct subsidies decreased and thus resulted in a significant decrease of subsidies received by trout producers.

However, the investigation showed that the actual impact of the legislative change of 2016 in terms of volume and value of the eligible production in comparison with the previous system was difficult to determine, and depended on the production volumes produced under each of the licences.

Moreover, the Commission observed that, in 2017, the actual amount of direct subsidies to trout producers increased and that the decrees of 2016 and 2017 also introduced a number of new subsidies from which trout producers could benefit.

Therefore, while the limitations introduced in 2016 might have led to a decrease in subsidisation via the direct subsidies, Turkey had simultaneously introduced new subsidies and/or amended existing subsidy measures.

Second, the Commission analysed the overall evolution of the amounts of subsidies granted by Turkey since the original investigation. It reached the conclusion that between 2013 and 2016, the subsidies to trout producers decreased by 37%. After 2016, however, the level of subsidies to trout producers increased again, reaching a total amount comprised between 43 and 48,5 million TL in 2017. The Commission thus concluded that the decrease of existing subsidies after the legislative change in 2016 was temporary and that the amount of subsidies after 2016 was approaching the amount before the legislative change.

The Commission observed that the system of implementation of direct subsidies was characterised by constant changes in the legal basis, the eligibility criteria and the actual amounts of subsidisation. As a matter of fact, not only the Commission found the decrease in subsidisation of trout producers in 2016 to be temporary, but also maintained that, since the conditions and amounts of subsidies were reviewed by Turkey on an annual basis, the introduced changes could not be considered as long lasting. Further, the Commission estimated that the total subsidies to trout producers might reach up to 56 million TL in 2018, i.e. around 6 million TL above the amount of 2015 – the year before the legislative change.

Termination of the partial interim review

Having concluded that the decrease observed in 2016 could not be considered as having a lasting nature, the Commission terminated the partial interim review investigation and maintained the measures in force unchanged.

Polyethylene terephthalate (PET) from India

In May 2013, the Council imposed a definitive countervailing duty on imports of certain polyethylene terephthalate (PET) originating in India, 34 which was amended by the Commission in 2015 by Regulation 2015/1350, 35 following two partial interim reviews pursuant to Article 19 of the basic Regulation.

In September 2016, an Indian exporting producer, Dhunseri Petrochem Limited (‘DPL’) requested the Commission to amend the Regulation imposing the measures in force because of a reorganisation. The Commission considered that there was sufficient evidence that the circumstances with regard to subsidisation of DPL and its related companies had changed significantly and were of a lasting nature. Consequently, a partial interim review investigation pursuant to Article 19 of the basic Regulation was initiated, 36 in order to establish the rate of subsidisation for the company's new structure.

Another Indian exporting producer, Reliance Industries Limited (‘Reliance’) lodged a request for a partial interim review pursuant to Article 19 of the basic Regulation. The request was limited to the examination of the subsidisation of Reliance, which provided sufficient evidence that the continued application of the measures at their current level was no longer necessary to offset the countervailable subsidisation. The company alleged in particular that the overall subsidy level was reduced due to the termination of the Focus Product Scheme and the Focus Market Scheme and the reduction of amounts availed by the applicant with regard to other schemes, like the Advanced Authorisation Scheme and the Duty Drawback Scheme.

Having determined that the request contained sufficient evidence, the Commission announced the initiation of a partial interim review limited in scope to the examination of subsidisation for Reliance. The review investigation period covered the period from 1 April 2016 to 31 March 2017.

Results of the investigation

As far as the reorganisation of DPL and its related companies was concerned, the investigation confirmed that DPL transferred its entire PET production facility to a new company, IVDPIL in April 2016 and acquired 50% share of that company, thus ceasing to be an exporting producer of the product under review with effect from that date. The investigation also confirmed that DPL acquired 50% of stake in MPPL, an Indian manufacturer of PET which previously did not export the product under review to the Union.

The purpose of the partial interim review was therefore to establish the rate of subsidisation applicable to the new group of companies resulting from the re-organisation undergone by DPL, IDIPL, and MPPL (the ‘Dhunseri group’).

With regard to subsidisation, the Commission calculated the subsidy rates applicable to both the Dhunseri Group and Reliance. In order to establish the rates of subsidisation, the Commission investigated various subsidy programs and found that the exporting producers availed themselves of five of these programs during the review investigation period, i.e. Duty Drawback Scheme (DDS), Export Promotion Capital Goods Scheme (EPCGS), Merchandise Export from India Scheme (MEIS), Gujarat Electricity Duty Exemption Scheme (GEDES), and Advance Authorisation Scheme (AAS).

As the benefit received by the exporting producers under the GEDES and AAS schemes was found to be negligible, the Commission mainly focused on the DDS, EPCGS and MEIS schemes.

The latter were all found to provide subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. Furthermore, since the payment by the Government of India subsequent to exports made by exporters under these schemes was contingent upon export performance, it was deemed to be specific and countervailable under Article 4(4)(a) of the basic Regulation.

The Commission considered that DDS and EPCGS could both not be considered permissible duty drawback systems within the meaning of Article 3(1)(a)(ii) of the basic Regulation. With particular regard to DDS, the Commission noted that the cash payment to the exporter was not necessarily linked to actual payments of import duties on raw materials, and was not a duty credit to offset import duties on past or future imports of raw materials.

Amount of countervailable subsidies

Significantly, when calculating the DDS subsidy amount, the Commission rejected Reliance’s claim that the benefit calculated on the basis of DDS should be restricted to the excess benefits as DDS should be considered as a duty drawback scheme permissible under Article 3(1)(a)(ii) of the basic Regulation. The claim was rejected since the Commission concluded during the on-the-spot verification that Reliance had benefited from the DDS even if it had not imported any of the two relevant raw materials during the review investigation period and since the total amount granted to Reliance represented the excess.

This conclusion was reached on the basis of the information available, as Reliance failed to provide evidence that one of the two main raw material used to manufacture PET was entirely imported and import duties were paid.

The Commission reached an opposite conclusion with regard to the Dhunseri group, since the company provided sufficient evidence in this respect, and the Commission showed the correctness of the evidence during a verification visit. Hence, the Commission calculated the level of subsidisation on the excess remission with regard to the Dhunseri group.

The Commission recalled that the amount of subsidisation established for DPL and Reliance by Implementing Regulation (EU) 2015/1350 were respectively 3,2% and 6,2%, which translated into countervailing duties of respectively 35,69 EUR/tonne and 69,39 EUR/tonne.

During the current partial interim reviews the Commission found the amount of countervailing subsidies, expressed ad valorem, to be 2,3% for the Dhunseri group and 4% for Reliance. The Commission established the following specific countervailing duties: 18,73 EUR/ton for Dhunseri group and 29,21 EUR/ton for Reliance.

Lasting nature of changed circumstances with regard to subsidisation

The Commission established that, during the review investigation period, the exporting producers concerned continued to benefit from countervailable subsidisation by the government, although at different rates.

As far as Reliance was concerned, the most important subsidies in terms of subsidisation rates during the review investigation period were DDS and MEIS. The subsidisation rate for DDS was reduced several times by the government over the last seven years, reaching 1,5% of the FOB value during the review investigation period. As far as MEIS was concerned the rate of 2% of the FOB value that became applicable to PET in October 2015 remained unchanged since then. No significant change of subsidisation rate for EPCGS was expected after the review investigation period.

As no evidence was adduced that the countervailed schemes would be discontinued or that their subsidisation levels would be either increased or decreased in the future, the Commission concluded that the circumstances that led to Reliance's new subsidisation rate were of a lasting nature.

Hence, the level of the duties for Reliance was established on the basis of a 4% subsidy margin.

With reference to the Dhunseri group, the investigation showed that the structure of the group changed significantly. Most importantly the group owned two PET plants during the review investigation period as compared to a single one during the previous interim review. The re-organisation involved several legal steps over a period of almost two years and reached its completion when it was sanctioned by the High Court of Kolkata in December 2017. The Commission hence considered that the change of structure was of a lasting nature and that the measures in force should be amended to reflect the new situation also in view of the previous conclusions on the current (and lower) level of subsidisation found in these reviews.

3.2.3.New exporter reviews

As far as 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 EU following the investigation period, or that they have entered into an irrevocable contractual obligation to export a significant quantity to the EU.

When a review for a new exporter is initiated, the duties are repealed with regard to that exporter, though its imports are made subject to registration under Article 14(5) of the basic 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 promptly establish an individual countervailing duty. Any exporter whose exports are subject to a definitive countervailing duty but who was not individually investigated during the original investigation for reasons other than a refusal to co-operate with the Commission can request such review.

In 2018, no new exporter review was initiated. Since the Commission carried out the first reviews of this type in 1990, a total of 77 such reviews were initiated so far. Two new exporter reviews were concluded in 2018 by an exemption (see details below).

Bicycles from China (exemption review)

On 29 May 2013, the Council extended the already existing definitive anti-dumping measures on imports of bicycles originating in China to those consigned from Indonesia, Malaysia, Sri Lanka and Tunisia, following an anti-circumvention investigation. 37

On 13 September 2016, the Commission received a request from Look Design System SA, an exporting producer of bicycles based in Tunisia, for an exemption from the measures applicable to Tunisia. As the request contained sufficient evidence, the Commission initiated an investigation on 4 May 2017 to determine whether an exemption was warranted.

Investigation

The Commission notified the Union industry as well as the applicant and the authorities of the exporting country, which were given the opportunity to comment and make their views known. The Commission assessed all the information at its disposal and conducted a verification visit at the premises of the applicant in Tunisia.

The investigation confirmed that the company fulfilled the three conditions necessary to be granted “new exporter” status: 38 it had not exported the product under review during the original reporting period, it demonstrated that it did not have any links, direct or indirect, with any of the Tunisian exporting producers subject to the extended measures with regard to the product under review and the investigation showed that the applicant had started to export the product to the Union only after the original reporting period.

The sources of raw materials and cost of production were also analysed. It was concluded that the parts mainly originated in other countries and that the raw materials originating in China represented less than 60% of the total value of the parts assembled. Moreover, there was no evidence of circumvention taking place through transshipments. The Commission concluded that the applicant was a genuine producer of bicycles and granted the producer an exemption from the measures applicable to Tunisia.

Solar panels from China

The Commission imposed definitive anti-dumping and countervailing measures on imports of solar panels originating in China in 2013. 39 The measures consisted of an ad valorem duty ranging between 27,3% and 64,9%. In February 2016, following an anti-circumvention investigation, the Commission extended those measures to imports of the products consigned from Malaysia and Taiwan, with the exception of imports produced by certain companies specifically exempted from those measures.

Following expiry reviews investigations described in the Annual Report on year 2017, these measures were extended for 18 months (instead of the normal five years period) based on Union interest reasons.

Exemption investigation with regard to a Malaysian company

On 18 July 2018, the Commission initiated an investigation in order to assess whether it should grant an exemption from the duties to a Malaysian exporting company of the concerned product. 40 In the request, there seemed to be enough prima facie evidence that the applicant fulfilled the criteria for an exemption.

The applicant was a wholly owned subsidiary of a Hong Kong-based company, which was also a subsidiary of a Chinese company, the ultimate parent company. The parent company was subject to both countervailing and anti-dumping duties.

However, after carrying out further examinations in order to determine the relationship and possible circumvention of the existing measures, the Commission found that the Malaysian applicant was a genuine producer and had not been involved in circumvention activities. The Commission concluded that the Chinese ownership did not constitute a reason to reject the application and that the applicant should be added to the list of companies that are exempted from the existing countervailing 41 and anti-dumping duties. 42

Expiry of measures

On 13 March 2018, the Commission gave notice that both the anti-dumping and countervailing measures would expire on 3 September of the same year. The EU industry lodged a request for an expiry review in order to extend the existing measures.

The Commission decided on 31 August 2018 to reject the requests. It noted that in a previous expiry review, measures were extended for a limited period of 18 month and the limitation was warranted because of Union interest grounds. The applicant did not provide any information that put into question the Union interest grounds previously established. The Commission also noted that the market situation had not changed sufficiently to justify a further extension of the measures, as the level of the measures had gradually decreased over time to allow the prices of the imports into the EU align progressively with world market prices. In its assessment, the Commission also took into account the new EU’s renewable energy targets.

Therefore, on 3 September 2018, both the anti-dumping and countervailing measures on solar panels expired.

3.2.4.Absorption investigations

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

In 2018, one anti-absorption investigation was initiated and no such investigation was concluded (Annex J).

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

In 2018, No anti-circumvention investigations were initiated. Two anti-circumvention investigations were terminated without the extension of duty. More information can be obtained from the Official Journal publications to which reference is given in Annex K.

Hand pallet trucks and their essential parts from China (via Vietnam)

On 18 July 2005, the Council imposed a definitive anti-dumping duty on imports of hand pallet trucks and their essential parts originating in China. 43 The measures consisted of an ad valorem duty ranging between 7,6% and 46,7%. These measures were prolonged twice as a result of expiry reviews. On 6 June 2017, the Commission received a request to investigate a possible circumvention of the anti-dumping measures by imports coming from Vietnam. The request was lodged on behalf of Union producers representing over 60% of EU production of the products concerned.

The request contained prima facie evidence showing that assembly operations taking place in Vietnam constituted circumvention as Chinese parts seemed to constitute more than 60% of the total value of the assembled product and the value added during the assembly operation was lower than 25% of the manufacturing costs. Complainants argued that this practice was undermining the effectiveness of the anti-dumping measures in place. 44 The Commission decided to initiate an investigation on this basis.

The Commission informed Chinese and Vietnamese authorities and followed the procedure by sending out questionnaires and carrying out verification visits to two companies in Vietnam.

For both companies it was found that the parts from China did not constitute 60% or more of the total value of the parts of the assembled products. Consequently, the assembly operations carried out by the cooperating Vietnamese companies could not be considered as circumvention. In addition, as the two investigated companies represented 100% of the Vietnamese exports to the EU during the reporting period, it could not be established that measures in force with regard to China were being circumvented by such imports from Vietnam. The Commission terminated the investigation on 21 February 2018.

3.2.6.“Other” reviews (reinvestigations)

These investigations fall outside Article 11(3) or Article 19 of the basic Regulations and focus on the implementation of court rulings. In 2018, the Commission initiated three such investigations. Two “other” reviews were concluded with a confirmation or re-imposition of the duty. More details can be found below. Three "other" reviews were terminated with a repeal of the measures. A list of the cases concerned is given in Annex H. More information can be obtained from the Official Journal publications to which reference is given in that Annex.

Bicycles from China (via Sri Lanka)

On 11 April 2017, the Commission published a notice partially reopening the anti-circumvention investigation concerning imports of bicycles consigned from Sri Lanka following a General Court judgment annulling the original anti-circumvention regulation on the concerned products to the extent it applied to Sri Lankan company City Cycle Industries.

On the same day, imports of the product concerned from City Cycle Industries were made subject to registration following a request by the European Bicycle Manufacturers Association and EU producer Maxcom Ltd.

Dumping

The Commission reassessed all the data available and found that the evidence submitted by the Sri Lankan company demonstrated that raw materials from China constituted more than 60% of the total value of the parts of the assembled product.

In addition, because of the low investment required for assembly operations, and the fact that the Sri Lankan company already had the necessary know-how and experience for this type of activity, the applicants submitted that it was likely that City Cycle Industries will go back very quickly to circumventing practices.

It was also found that the value added during the assembly operations was less than 25% of the manufacturing cost and therefore constituted circumvention.

Injury

The Court judgment is limited to the analysis of circumvention practices, which City Cycle Industries may have been engaged in. As a result, the findings that were not challenged, rejected or not examined by the General Court remain valid.

The applicants submitted that a real risk persisted that City Cycle Industries' exports to the Union could resume in significant quantities given the ease of setting up assembly circumvention practices for bicycles on a large scale in Sri Lanka. In addition, it had a major customer in the Union for its products.

Definitive measures

On this basis, on 9 January 2018, the Commission re-extended the original measures to the Sri Lankan exporter, as from the date of registration. 45

Biodiesel from Argentina and Indonesia

On 19 November 2013, the Commission imposed definitive anti-dumping duties on imports of biodiesel originating in Argentina and Indonesia by means of Regulation 1194/2013 (‘the definitive Regulation’). 46  

In September 2016, the General Court of the European Union (‘GC’) annulled Articles 1 and 2 of the definitive Regulation to the extent that they applied to the applicants. 47 The GC ruled that the institutions should not have taken the view that the price of the raw materials was not reasonably reflected in the records of the Argentinian and Indonesian exporting producers and should not have disregarded those records when constructing a normal value for biodiesel produced in these countries. In particular, the GC held that the institutions failed to establish to the requisite legal standard that there was an appreciable distortion of the prices of the main raw materials used for the production of biodiesel in Argentina and Indonesia because of different tax rates on raw materials and on biodiesel.

The anti-dumping measures were also challenged by Argentina and Indonesia before the WTO adjudicating bodies. 48 In both disputes, it was found, among other things, that the legal justification relied upon by the Union to proceed with a cost adjustment was incompatible with WTO law. Moreover, the Indonesia Panel Report found that the Union had failed to establish a profit-cap pursuant to Article 2.2.2 of the WTO Anti-Dumping Agreement when constructing the normal value. In addition, the Indonesia Report also found that there had been some company-specific calculation inconsistencies, as well as additional points on injury-related matters.

In order to comply with its obligations under the GC’s judgments and the Reports adopted by the Dispute Settlement Body (DSB), the Commission decided to resume the anti-dumping proceeding at the very point at which the illegality occurred and thus to re-examine the methodology used for constructing the normal value.

On 28 May 2018, a Notice was published re-opening the original investigations.

Determination of the normal value and calculation of the dumping margins

The Commission reassessed the findings of the original investigations on the issues identified by the GC and the WTO adjudicating bodies, determining anew the duty rates in respect of all Indonesian and Argentinian exporters.

In view of the high negative dumping margins for two of the four sampled Indonesian companies, the Commission verified whether the weighted average countrywide dumping margin taking account of the negative margins was above de minimis as provided for in Article 9(3) of the basic Regulation. In this respect, it noticed that the amount of dumping in the Indonesian sample was 1,6% – that is below the 2% de minimis threshold.

In view of the countrywide de minimis dumping margin, the Commission decided to terminate the investigation without measures as regards imports of biodiesel from Indonesia.

Revised injury findings based on the Reports

As the investigation was terminated with regard to Indonesia, the Commission limited its causation analysis to dumped imports of biodiesel from Argentina, in order to determine the existence of a causal link between the dumped imports and the injury suffered by the Union industry, and assessed imports from Indonesia separately, as another factor that might also have caused injury.

During the investigation period, almost half of all imports into the Union came from Indonesia at a price lower than Union prices as well as Argentinian prices. It was also noted that the exponential increase on imports volumes from Indonesia as well as their market share significantly contributed to the material injury suffered by the Union industry.

The impact of the Indonesian exports added to other factors, among others overcapacity of Union industry and self-inflicted injury: On this basis, the Commission concluded that the effect of imports of biodiesel from Indonesia to the Union taken together with the other factors contributed to the injury suffered by the Union industry to such an extent that it could not be established that a genuine and substantial causal relationship between the dumped imports from Argentina and the material injury suffered by the Union industry actually existed.

Conclusion

On 18 October 2018, the Commission terminated the investigation, given that dumping margins from Indonesia were found to be de minimis and a genuine and substantial causal relationship between the dumped imports from Argentina and the material injury suffered by the Union industry, as required under Article 3(7) of the basic Regulation, could not be established. Anti-dumping measures were hence repealed.

3.3.Safeguard investigations

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

The Commission expects the EU’s commercial partners to follow a similarly strict approach. 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 EU producers, if necessary at WTO level.

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

In April 2018, the Commission put forward a proposal for a horizontal bilateral safeguard regulation that will allow the Commission to use the bilateral safeguard clauses laid down in all future trade agreements. The objective of these safeguard clauses is to temporarily suspend tariff preferences where preferential imports increase to such an extent that they cause or threaten to cause serious injury to a particular EU industry. This horizontal regulation provides standard rules for the implementation of bilateral safeguard clauses, including the conditions and decision-making process. In the past, the EU adopted separate regulations for each individual FTA, which will no longer be necessary. The proposed Regulation has been politically approved by the co-legislators in December 2018.

In terms of casework, in 2018, the EU initiated three safeguard investigations – one erga omnes on steel products and two bilateral ones against Cambodia and Myanmar on Indica rice under the rules of the Generalised Scheme of Preferences (Annex L).

3.3.1.Details on individual safeguard cases

General safeguard measures on certain steel products

The investigation into 26 different steel product categories was initiated ex officio on 26 March 2018, 49 pursuant to Article 5 of Regulation (EU) 2015/478 and Article 3 of Regulation (EU) 2015/755. On 28 June 2018, the Commission extended the product scope of the safeguard investigation to two additional categories. 50  The investigation covered the period from 2013 to 2017 (‘the period considered’). The most recent developments have also been considered (i.e. the period between July 2017 and June 2018). Provisional measures were imposed in July 2018, 51 and on 31 January 2019 have been replaced by definitive measures. 52 While the latter Regulation was not adopted in 2018, this section nevertheless describes the latest measures, due to their importance of the case.

Product scope

The product concerned is certain steel products, encompassing 28 product categories. The Commission decided to exclude two product categories for which imports decreased overall between 2013 and June 2018. Therefore, definitive measures only apply to 26 categories.

Legal requirements

i) Increase in imports

The investigation showed that over the period considered and the most recent period, there had been a sudden, steep and significant increase in imports, in both absolute and relative terms, for the products concerned (+71%). This finding was further confirmed when analysing the level of imports at the level of the three product families (+64% for flat products; +97% for long products and +60% for tubes).

ii) Unforeseen developments

The Commission established that the increase in imports of steel products in the Union was the result of unforeseen developments that finds its source in a number of factors establishing and aggravating imbalances in the international trade of the products concerned.

These factors consisted of an unprecedented steelmaking overcapacity that persists, despite the important number of measures adopted worldwide to reduce it. This was aggravated by distortive subsidies and government support measures, which led to price depression, the increased use of trade restrictive practices, TDIs and the US Section 232 measures adopted in March 2018.

iii) Threat of serious injury

The Commission concluded that the situation of the Union industry deteriorated significantly in the period 2013-2016 and improved only partially in 2017. However, the Commission considered that the Union industry, despite the temporary improvement, was still in a fragile situation and under the threat of serious injury if the increasing trend in imports continued with the ensuing price depression and profitability drop below sustainable levels.    

At provisional stage, a critical element in the determination of a threat of injury was that the significant increase in imports observed since 2013 would not end but would further rise and reach serious injurious levels in the absence of remedial action. This expected trend was already confirmed by the most recent data analysed and is mostly caused by trade diversion resulting from the US Section 232 measures on steel products.

Form of the measures

The definitive safeguard measure took the form of a tariff-rate quota in order to prevent serious injury, but at the same time preserve as much as possible traditional trade flows. This level of tariff-rate quota was set at the average level of imports over the last three representative years. The Commission considered it necessary to modulate the tariff-rate quota level above the average import level for the last three years to take account of the competing interests between users and importers, on the one hand, and the Union industry, on the other hand. On this basis, the Commission considered that the quantitative level of the tariff-rate quota should be based on the average imports in the period 2015-2017 plus 5%. The Commission set an out-of-quota duty of 25% that would apply if the tariff-rate quota in a given product category is exhausted.

In addition, the Commission concluded that a mixed approach to quota allocation (country-specific quota and global quota) would be the most appropriate. First, a country specific tariff-rate quota should be allocated to countries having a significant supplying interest, based on their imports over the last three years. A global tariff-rate quota (‘the residual quota’) based on the average of the remaining imports over the last three years should be allocated to all other supplying countries. This residual tariff-rate quota should be divided quarterly in order to ensure that imports are evenly distributed over the year and prevent that significant imports of standard products are stockpiled at the beginning of the period in order to avoid possible duties. Unused quarterly tariff-rate quota allocations would also be automatically transferred to the next period.

A country specific tariff-rate quota was however not allocated to those countries whose export level – for each product category concerned and overall for hot rolled coils – has substantially diminished in the recent past because of anti-dumping/anti-subsidy measures in place. These countries fall within the residual tariff-rate quota.

Review clause

The Commission considered that, based on the Union interest, it may have to adjust the level or allocation of the tariff-rate quota in case of changes of circumstances during the period of imposition of the measures. The Commission will carry out an assessment of the situation on a regular basis, and consider a review at least at the end of each year of imposition of measures. The Commission shall initiate the first review investigation no later than on 1 July 2019.

Exclusions

Definitive measures apply to imports from all origins, with very few exceptions. First, on account of the close integration of markets with EEA members, the Commission considered that the products under assessment originating in Norway, Iceland, and Liechtenstein should be excluded from the application of the Regulation. Furthermore, in order to comply with bilateral obligations, certain countries with which the Union has signed an Economic Partnership Agreement that is currently in force were excluded from the application of the measures. WTO developing countries accounting for less than 3% of EU imports are also excluded.

Duration

Measures shall be in place for a maximum period of 3 years, i.e. from February 2019 until July 2021.

Indica Rice from Cambodia and Myanmar

In March 2018, upon request of Italy, the Commission initiated a safeguard investigation under the GSP Regulation, regarding imports of Indica rice from Cambodia and Myanmar. The findings of the investigation confirmed that a significant surge of rice imports from these two countries has caused economic damage to the rice sector in the EU. Therefore, the legal conditions to impose measures were met. According to Article 22(1) of the GSP Regulation, the Commission decided on 16 January, after consultation of the Member States, to reinstate the Common Customs Tariff applied duties of 175 EUR/ton, with a progressive liberalisation (175 EUR/ton for the first year, 150 EUR/ton for the second year and 125 EUR/ton for the third year).

3.4.    Verification activities

Based on Articles 16 and 26 of the respective basic AD and AS Regulations, in the course of investigations, the Commission carries out visits to examine the records of companies or associations with the aim to verify the information provided during the proceedings. During 2018, EU TDI services made 167 such visits, which amounted to 1978 man/days of verification work. Circa 60% of the visits carried out aimed at verifying EU companies’ data relating to injury and Union interest, while the rest constituted verifications at companies in 19 third countries.

3.5.    Social and environmental standards in investigations

Since the entry into force of the new methodology of normal value calculation in December 2017, when the Commission chooses an appropriate representative country to construct the normal value of a product under that new methodology, it should base its choice on an assessment of the adequate level of social and environmental protection in the countries at stake when there is more than one such country. The Commission would therefore look, in all such new investigations and expiry reviews initiated after 20 December 2017, in particular whether relevant international conventions have been ratified.

A description of how social and environmental protection standards are considered and taken into account in TDI investigations can only be referenced in future annual reports, after investigations have reached provisional or final conclusions. However, none of the ongoing investigations using the new methodology has reached this stage – results will only be available in the next report.

Moreover, since the entry into force of modernized TDI rules, when the Commission calculates the target price of a product, it also reflects actual or future costs of production of EU companies, which result or would result from the application of multilateral environmental agreements (and their protocols), as well as of certain International Labour Organisation conventions. Since 8 June 2018 onwards, the Commission has therefore started to apply the latter rule in its investigations. In this case, too, none of the on-going investigations where this is an issue has reached the provisional or final stage yet. The next annual report will consequently revert to such cases.

Last but not least, the respect of principles and obligations set out in in multilateral environmental agreements and protocols thereunder, to which the Union is a party, and of certain ILO conventions, can also play a role when it comes to deciding whether an undertaking should be accepted.

4.Enforcement of anti-dumping/countervailing measures

Globalisation of trade led to greater possibilities for circumventing or otherwise reducing the effectiveness of anti-dumping and countervailing measures. To address this problem, throughout 2018 the TDI services continued their follow-up activities aimed at ensuring that measures were effectively enforced. In the framework of an integrated approach measures were considered in all their forms - duties and undertakings – and synergy was sought between the TDI services and enforcement-oriented services (OLAF, DG Taxud and customs authorities in Member States).

4.1.Follow-up of measures

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

4.2.Monitoring of undertakings

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

At the beginning of 2018, there were three undertakings in force. No new undertaking was accepted during the year. Therefore, the number of undertakings in force at the end of 2018 remained at 3. More information is available in Annexes M and Q.

4.3.    OLAF activity

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

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

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

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

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

5.Refunds 

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

During 2018, 120 new refund requests were submitted. At the end of 2018, 6 refund investigations were on-going, covering 99 requests. The Commission adopted in 2018 two Implementing Decisions granting partial refund or rejecting refund requests.

6.TDI Modernisation 

In April 2013, the Commission adopted a proposal and a communication in order to modernise the EU’s trade defence instruments (‘TDI’). The aim of the proposal was to enhance the efficiency and effectiveness of the EU’s TDI for the benefit of all stakeholders, including producers, importers or users. Increasing transparency, finding practical solutions to real problems and making the TDI more accessible, so that these instruments would provide a more adequate response to the proliferating unfair trade practices, was at the heart of the proposal.

After the Council and the European Parliament reached an agreement on the Commission's proposal in December 2017, the modernisation legislation entered into force on 8 June 2018. Together with the new anti-dumping calculation methodology adopted in 2017, this is the first major overhaul of the EUs anti-dumping and anti-subsidy instruments since 1995.

The new legislation strikes a balance between the interests of EU producers, users and importers alike. The EU's trade defence instruments have become more effective, transparent and more adapted to face the challenges of the global economy. At the same time, the modernisation brought these instruments closer to the needs of small and medium sized companies ('SME'). Finally, trade unions that represent workers whose jobs are at stake due to unfair competition can also now fully participate in investigations, including as co-complainants together with the Union industry.

The overhaul covers a broad range of aspects relating to the way the Commission carries out trade defence investigations. The changes deliver concrete solutions to practical problems raised by businesses. They benefit EU industry but also importers and downstream users who depend on imports.

Amongst the most important changes to the modernised EU's anti-dumping and anti-subsidy legislation are:

·More transparency and predictability: the Commission is now to issue an early warning on the imposition of provisional anti-dumping and anti-subsidy measures. This includes a grace period of three weeks during which provisional duties are not be applied. As a result, all companies will know in advance which exporters will be subject to duties and at which rates. During this period the Commission will register imports, where warranted, to avoid stockpiling. This will allow for the retroactive collection of duties for that period, if necessary. Exporting producers and the EU industry concerned will also be provided with their respective dumping, subsidy,/ injury calculations for provisional measures. The Commission will also notify interested parties if provisional measures will not be imposed. Within two years, the Commission will review the three weeks early warning system with the option to go up to 4 weeks or down to 2 weeks of such pre-disclosure.

·More efficient anti-dumping investigations: provisional measures have now to be imposed within 7 to 8 months, instead of 9 months. The investigative process has been streamlined to maintain the high standards, in terms of data verification, respect of procedural rights, deadlines, etc.

·Additional support for EU SMEs: an SME helpdesk, as well as streamlined procedures make it easier for SMEs to participate in trade defence investigations. The Commission has created a dedicated web page for SMEs which provides relevant information to help navigate the system, including a guide to filing complaints as well as standard questionnaires for Union producers, importers and users.

·An improved injury margin calculation method: the new rules concerning the non-injurious price for the EU industry are now better adapted to economic reality. They allow reflecting the profitability needed to cover full costs and investments, research as well as development and innovation. Moreover, the injury margin includes future expenses related to social and environmental standards, for example under the Emissions Trading System, if the Union industry presents sufficient evidence to this effect.

Moreover, the non-injurious price now includes a minimum profit of 6%. However, higher profit margins are always possible on a case-by-case basis. This ensures a better recovery of the industry from unfair trade, if measures are based on injury.

·Inclusion of social and environmental considerations: as mentioned above, the future higher costs of EU industry for complying with EU social and environmental standards are now to be taken into account. Furthermore, the EU needs not accept price undertakings for - among others - reasons of general policy which comprise in particular the principles and obligations set out in multilateral environmental agreements (and their protocols) to which the Union is a party, and of certain ILO Conventions. From now on, social and environmental standards considerations have also a dedicated part in the Commission's annual reports on TDI activity.

·Better response to raw material distortions or subsidisation: the EU's "lesser duty rule" is now adapted so as to take into account the existence of serious distortions regarding raw materials with the imposition of duties reflecting the full amount of dumping in such cases. Distortions must concern one raw material, including energy, which account individually for more than 17% of the cost of production. The price of the distorted raw material needs to be significantly lower as compared to prices in the representative international markets. The new rules provide a list of relevant raw material distortions. These new disciplines are subject to a Union interest test.

Measures against unfair subsidies are also now based on the subsidy margin: anti-subsidy measures will fully offset the subsidies that an exporter has received, unless it is against the overall interest of the EU to do so.

·Better response to threats of retaliation: European industry can sometimes find itself under pressure from foreign governments not to use TDI whenever it is exposed to injurious dumping or subsidisation. Where there might be a risk of such threats, the Commission can launch investigations on its own initiative, i.e. without a complaint lodged by industry.

·Participation of trade unions in investigations: trade unions can now be interested parties in investigations. They will have full access to the non-confidential file as well as the right to comment. They can also jointly prepare, with the Union industry, applications to launch trade defence investigations.

·New rules in the EU continental shelf and exclusive economic zones: trade defence measures can now also be applied to dumped or subsidised products imported and used on the Continental Shelf where the consumption of the product concerned is significant, such as oil rigs or off-shore wind parks. Regulations imposing anti-dumping and/or anti-subsidy measures will specify if these zones are covered. A horizontal regulation setting out the relevant customs modalities is currently being prepared.

·Better rules on price undertakings: the Commission will now only accept undertakings commitments where the price rise eliminates the injurious effect of the dumping or subsidisation. (See also above on social and environmental standards)

·Fair reimbursement of duties: where the Commission decides that a measure should not be renewed, anti-dumping or anti-subsidy duties collected while an expiry review is ongoing will be repaid, through an application of the company to its competent customs authorities.

7.Information and Communication activities / Bilateral contacts

7.1.Small and medium sized enterprises (SME)

During 2018, in the context of the modernisation of the trade defence instruments, the EU launched an initiative to help SMEs affected by trade defence investigations, both within the EU and in third countries. A dedicated webpage was set up which brought together in one place advice for companies and sample questionnaires. Moreover, in June 2018, the Commission published a comprehensive guide for SMEs, which introduces TDI rules and describes how to manage the process of investigations in all their stages. This is complementary to the SME Helpdesk, which continued to help SMEs seeking information regarding the trade defence instruments. Queries to the helpdesk during the year ranged from general information requests regarding the nature of trade defence instruments to more targeted case-related queries.

In order to raise the SMEs awareness on how TDI work, the Commission has also developed standard presentations it can give upon request at regional conferences organized by chambers of commerce or other institutions that play a role in information dissemination amongst economic operators.

7.2.Bilateral contacts/information activities – EU economic operators including their key stakeholder associations and third countries 

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

Similarly to previous years, in 2018, the Commission held bilateral meetings to exchange best practices in the field of TDI with officials from China and Korea, and participated in relevant seminars with other administrations (US, Japan, Australia) notably regarding subsidies.

During 2018, the trade defence services continued to entertain contacts with practically all key stakeholder organisations affected by trade defence. Various informative events were organized with the latter organisations on the important topic of the TDI reform. Special sessions of the Civil Society Dialogue took place in March and June 2018 on the new calculation methodology and TDI modernisation.

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

8.1.Overview of the judicial reviews in 2018

In 2018, the General Court (GC) and the Court of Justice (CJ) rendered 26 judgments in the areas of anti-dumping or anti-subsidy. 10 judgments were handed down by the GC and 12 concerned appeals of GC rulings, which were decided by the CJ. The CJ rendered four preliminary rulings in the TDI field.

8.2.Cases pending

At the end of 2018, 35 anti-dumping/anti-subsidy cases were pending before the GC and 13 before the CJ. A list of the cases is given in Annex S.

8.3.New cases

In 2018, 15 new court cases were lodged in the field of trade defence (compared to 20 in 2017). Nine of these were lodged before the GC (all actions for annulment) and six before the CJ (four appeals and two preliminary rulings).

8.4.Judgments rendered by the General Court (a selection)

T-211/16 – Caviro Distillerie and Others v European Commission

The General Court (‘GC’) dismissed the action brought by Caviro Distillerie Srl, Distillerie Bonollo SpA, Distillerie Mazzari SpA, Industria Chimica Valenzana (ICV) SpA, EU producers of tartaric acid representing more than 25% of the total production of this substance (“the applicants”). The applicants questioned the validity of the Decision by which the Commission terminated the anti-dumping proceeding concerning imports of tartaric acid from China produced by Hangzhou Bioking Biochemical Engineering Co. In essence, the applicants questioned the representativeness of the sample of EU producers selected by the Commission and contested the conclusion that the Union industry had not suffered material injury as a result of the imports from Hangzhou Bioking.

With reference to the representativeness of the sample, the applicants submitted that it did not sufficiently represent the situation of small EU producers as it was skewed in favour of the largest producer (Distillerie Mazzari SpA), with a production volume of around 30% of the total EU production and having sales volumes accounting for 29% of the total EU production.

The GC first noted that under Article 17(2) of the basic AD Regulation the final selection of parties, types of products or transactions made under the sampling provisions ultimately rests with the Commission. Furthermore, the GC stated that the Commission carried out an objective examination of the facts (in particular, the applicants had contested that the non-representativeness of the sample compromised the reliability of several microeconomic indicators used by the Commission in the investigation). Finally, the GC found that even if the Commission had used a larger sample, there was no evidence showing that the conclusions related to profitability and injury would have changed. For all these reasons, the GC held that the applicants had failed to adduce sufficient evidence in order to establish that the Commission’s assessment in selecting the sample of the Union industry was manifestly wrong.

With regard to the Commission's conclusion that the Union industry had not suffered material injury, the applicants claimed that the Commission did not take sufficient account of the factors displaying negative trends (magnitude of the dumping margin, price undercutting margin, dumped volumes, impact of the imports on EU producers' sales volumes and market shares, expansion of Hangzhou Bioking's production volumes). Against the background of the Commission’s broad discretion when assessing economic data, the GC stated that the institution’s assessment was based on all the relevant factors. The GC also considered that the Commission clearly explained the reasons why it considered that the Union industry had not suffered any material injury. As a consequence, the GC stated that the applicants had not put forward sufficient evidence to challenge the Commission's conclusion.

T-462/15 – Asia Leader International (Cambodia) v European Commission

In this judgment, the General Court ('GC') dismissed the action brought by Asia Leader International Co. Ltd, an exporting producer of bicycles from Cambodia (“the applicant”) against the Commission Regulation extending the definitive anti-dumping duty on imports of bicycles originating in China to imports of bicycles consigned from Cambodia, Pakistan and the Philippines. Specifically, the applicant challenged the Commission’s conclusions of that it circumvented the anti-dumping measures via transhipment and assembly operations.

In examining the case, the GC ruled in favour of the Commission on various important points regarding the way it carries out circumvention investigations.

With regard to the findings on circumvention practices and the requests for exemption, the GC recalled that while the EU institutions must assess that anti-dumping measures are being circumvented in respect of the third country as a whole, it is for each individual exporting producer to show that its particular situation justifies an exemption. Coherently, the GC stated that if the applicant for exemption fails to prove that its particular situation justifies the grant of that exemption, the Commission is fully entitled to refuse it. The GC found that the applicant was not capable of demonstrating that it was a genuine producer of bicycles. Consequently, the GC held that the Commission was entitled to find that those bicycles were transhipped from China and to establish that the applicant did not fulfil the conditions laid down in Article 13(4) of the basic Regulation, thus rejecting its request for exemption.

In relation to the evaluation of the circumvention practices listed in Article 13(1) of the basic regulation, the GC underlined the non-exhaustive character of this list and found that it was sufficient to establish the existence of only one circumvention practice to reject the applicant's request for exemption under Article 13(4).

T-675/15 – Shanxi Taigang Stainless Steel v European Commission

The General Court (‘GC’) dismissed the action brought by Shanxi Taigang Stainless Steel Co. Ltd, an exporting producer from China (‘the applicant’) against the Regulation imposing a definitive anti-dumping duty on imports of stainless steel cold-rolled flat products originating in China and Taiwan (‘contested regulation’).

The applicant contested in particular the selection of the analogue country, the absence of adjustment for differences in the production process and access to raw materials, and the analysis carried out by the Commission in order to determine the causal link between the dumped imports and the alleged injury.

The claims related to the selection of the analogue country and the absence of adjustment for differences in the production process and access to raw materials were made with reference to the construction of normal value for the determination of dumping pursuant to Article 2(7)(a) of the basic AD Regulation. Under this provision, in case of imports from non-market-economy countries, normal value must be determined on the basis of the price or constructed value in a market-economy third country, duly adjusted if necessary. 53

With regard to the selection of the analogue country for the construction of normal value in order to determine dumping, the GC confirmed that the Commission's choice was in accordance with Article 2(7)(a) of the basic Regulation, which prescribes the choice of a market-economy third country which is subject to the same investigation as an analogue country, where appropriate. In this case, Taiwan was subject to the same investigation and the applicant claimed that it should have been selected as an appropriate analogue country over the US, which was ultimately chosen by the Commission. The GC confirmed that it is not mandatory to select the market-economy third country subject to the same investigation, as long as the comparative analysis of the potential analogue countries shows that the chosen analogue country is more appropriate.

In relation to the applicant’s claim that the Commission should have made the adjustments for differences in the production process and access to raw materials, the aim of Article 2(7)(a) of the basic Regulation being to prevent that account be taken of prices and costs in non-market-economy countries which are not the normal result of market forces, the GC confirmed that EU institutions cannot be required to make adjustments in light of factors which are not directly or indirectly the result of normal market forces. Since China was not a market-economy at the time of the investigation and the applicant did not claim Market Economy Treatment, there is nothing to indicate that sourcing of nickel and the production process were not influenced by parameters which are not the result of market forces.

Lastly, concerning the assessment of injury and causal link, the GC recalled its established case law that it is not necessary for all relevant economic factors and indices to show a negative trend in order to find injury. Moreover, contrary to the arguments put forward by the applicant, the GC recalled that the EU institutions are under an obligation to consider whether the injury on which they intend to base their conclusions does in fact derive from dumped imports and must disregard any injury deriving from other factors such as imports from third countries, the export performance and the overcapacity of the Union industry. Regarding the Union industry’s overcapacity, in the present case the GC noticed that it was linked to the increased level of dumped imports and that it was not a factor capable of undermining the relevance of the link between those imports and the injury sustained by the Union industry.

Having dismissed all the applicant’s claims, the GC confirmed the validity of the contested regulation. The judgment is under appeal.

T-431/12 – Distillerie Bonollo and Others v Council of the European Union

The General Court (‘GC’) upheld the action brought by Distillerie Bonollo SpA, Industria Chimica Valenzana SpA, Distillerie Mazzari SpA, Caviro Distillerie Srl and Comercial Quimica Sarasa SL, EU producers of tartaric acid (‘the applicants’) against the Council Regulation (‘contested regulation’) imposing a definitive anti-dumping duty on imports of tartaric acid originating in China.

The applicants contested the change in methodology for the calculation of the normal value in order to determine dumping. In particular, the applicants criticised the construction of the normal value for the two Chinese exporting producers on the basis of the costs of production in Argentina rather than on actual domestic sale prices in Argentina as had been done during the initial investigation. According to the Council, the choice of methodology stemmed from the difference between the processes for producing tartaric acid in Argentina and China, respectively the natural process and the synthetic process.

The GC considered that the contested regulation infringed Article 11(9) of the basic AD Regulation. This provision allows the institutions to apply a different method in review investigations from the one used in the initial investigation insofar as circumstances have changed, or the method initially used has been found contrary to Article 2 of the basic Regulation.

First of all, the GC considered that the differences in the production process (natural v synthetic) existed and were already known during the initial investigation stage. Therefore, there was no change in circumstances to justify the Council approach and the adjustment of the normal value taking into account the differences in the production process.

The GC further clarified that the contested regulation did not state that the initial method had been found contrary to Article 2 of the basic Regulation. Moreover, the GC noted that the tartaric acid produced by chemical synthesis has the same characteristics and the same basic uses as that produced from by-products of winemaking. As a consequence, a comparison between the normal value calculated using the data relating to the natural production process and the export prices based on data relating to the synthetic production process was not considered by the GC as contrary to Article 2 of the basic Regulation.

In light of these arguments, the GC annulled the contested regulation and maintained the anti-dumping duty as regards one of the two Chinese exporting producers pending implementation of the judgment.

T-654/16 – Foshan Lihua Ceramic v European Commission

In this judgment, the General Court (‘GC’) dismissed the action brought by Foshan Lihua Ceramic Co. Ltd., an exporting producer of ceramic tiles from China (“the applicant”). The applicant sought the annulment of the Decision by which the Commission refused its request to initiate an interim review limited to dumping aspects.

The decision clarifies the conditions under which an exporting producer who has not cooperated in the investigation leading to the imposition of anti-dumping measures, and who has not been included in the samples usually used by the Commission in a large-scale investigation of this type, can request a partial interim review of those measures under Article 11(3) of the basic AD Regulation. In essence, the GC stated that a non-cooperating and non-sampled exporting producer cannot solely prove that its own circumstances with regard to dumping and injury have changed significantly in order to sustain its request for a partial interim review. Precisely because the applicant is a non-cooperating exporting producer and the setting of the anti-dumping rate is based on sampling, it must prove - as stated by the Commission – either that the factors forming the basis for the setting of the dumping margin used to establish the anti-dumping duties that apply to the sampled companies have changed significantly and for a long period of time, or that such changes have effected all exporting producers of the exporting country.

Importantly, the GC further explained that a non-cooperating and non-sampled exporting producer may not request individual examination to get an individual anti-dumping duty rate via an interim review pursuant to Article 11(3) of the anti-dumping Regulation. In order to support its request, the applicant had relied on Article 17(3) of the Regulation, which provides the possibility of calculating an individual dumping margin for a non-sampled exporting producer in the case of an investigation based on sampling, and Article 11(5), which extends the rules regulating investigations to review procedures. The GC took a different stand, acknowledging that the application of Article 11(5) must take into account the specific characteristics and purposes of the review procedures. The purpose of the partial interim review in question is the assessment of a possible change of circumstances of a more general nature than the ones concerning only the non-cooperating and non-sampled exporting producer. As a consequence, the application of Article 11(5) in order to obtain an individual examination via an interim review would run counter the purpose of the interim review procedure.

T-364/16 – ArcelorMittal Tubular Products Ostrava and Others v European Commission

The General Court (‘GC’) annulled the decision (‘contested decision’) by which the Commission amended the EU-wide TARIC database in a way that obliged national customs authorities to stop collecting anti-dumping duties with respect to goods produced by the Chinese exporting producer of steel pipes and tubes Hubei Xinyegang Steel Co. Ltd (‘Hubei’), 54 following an action brought by ArcelorMittal, a Czech producer.

In 2009, definitive anti-dumping measures were imposed on imports of steel pipes and tubes from China. 55 Hubei successfully challenged those measures in Court, which were thus annulled as far as Hubei was concerned (‘the Hubei judgments’). However, in the meantime, the Commission had re-imposed anti-dumping measures on the same products following an expiry review. The question was whether the annulment of Regulation 926/2009 automatically meant that there was no more legal basis to collect duties on imports from Hubei justifying the adoption of the contested decision to amend the TARIC database in relation to Hubei.

The judgment affirmed two important principles.

First, the GC affirmed that an annulling judgment cannot entail annulment of an act that was not challenged before the EU Courts, even if it suffers from the same illegality of the annulled act.

In this context, Regulation 2015/2272, which replaced Regulation 926/2009, is the legal basis for imposing anti-dumping duties on the goods at issue originating in China, including those produced by Hubei. As a consequence, the GC concluded that the latter regulation, absent any judgment to the contrary, was still to be considered lawful.

Secondly, the GC stated that, although the Commission was obliged to draw the consequences from the Hubei judgments and take the necessary actions to stop collecting anti-dumping duties on imports from Hubei, such actions had to respect the legal principle of equivalence of form. As a consequence, the non-collection of anti-dumping duties laid down by a regulation which had not been annulled or declared invalid must be brought about by means of a regulation.

8.5.Judgments rendered by the Court of Justice (a selection)

C-301/16 P – European Commission v Xinyi PV Products (Anhui) (appeal in T-586/14)

The CJ upheld the appeal by which the Commission sought to set aside the judgment of the GC of 16 March 2016, Xinyi PV Products (Anhui) Holdings Ltd v. European Commission (T-586/14). In this judgment the GC had annulled Article 1 of Regulation (EU) No 470/2014 of 13 May 2014 (“regulation at issue”) by which the Commission had imposed a definitive anti-dumping duty and collected definitively the provisional duty imposed on imports of solar glass originating in China.

Among other grounds of appeal, the Commission submitted that the GC erred in law in interpreting the concept of “former non-market economy system”, as established in Article 2(7)(c) of Regulation No 1225/2009, as referring to an economic system of a state-trading country.

As China’s economic system is normally regarded as being in transition to a market economy but still considered as a non-market economy system, the CJ stated that the expression “former non-market economy system” does not refer specifically to the historic economic system of a state-trading country, but more in general to a non-market economy system which has already experienced some reform.

Finally, the CJ agreed with the Commission that measures aimed at implementing a five-year plan are always presumed as having been carried over from the former non-market economy system. By taking this view, the Court diverged from the GC’s more formalistic reading of the words “carried over from the former non-market economy system” and embraced a conceptual interpretation of the expression. In particular, coherently with the ratio legis of the provisions on Market Economy Treatment, the Court considered the fact that the distortions had stemmed from such as system to be sufficient to assume that they had been carried over from it. Specifically, the CJ rejected the position taken by the GC view that the continued existence of those plans did not necessarily imply that they were carried over from the former non-market economy in China. Instead, the CJ considered that, even assuming that the Chinese five-year plans no longer provide defined production objectives for all sectors of the economy, as was the case when China was still a state-trading country, those plans still play a fundamental role in the organisation of that economy, in so far as they contain, for a great number of sectors, precise objectives which are binding on all levels of government. Hence, the Court stated that the fact that the specific preferential tax schemes at issue implement a five-year plan is deemed sufficient to conclude that these measures constitute significant distortions “carried over from the former non-market economy system”, within the meaning of that provision.

Having upheld the first ground of appeal, the CJ set aside the judgment and referred the case back to the GC.

C-256/16 P – Deichmann SE v Hauptzollamt Duisburg (preliminary ruling)

The CJ ruled on a request for preliminary ruling concerning the validity of Commission Implementing Regulation (EU) No 223/2016 of 17 February 2016 (“regulation at issue”) establishing a procedure for assessing certain Market Economy Treatment and individual treatment claims made by exporting producers from China and Vietnam, and implementing the judgment of the Court in joined cases C659/13 and C34/14. These judgments had declared the invalidity of Regulation (EC) No 1472/2006, imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in China and Vietnam (“the definitive Regulation”) and of Regulation (EU) No 1294/2009, imposing a definitive anti-dumping duty on the same imports, and also to the imports consigned from the Macao SAR (“the prolonging regulation”).

The request was made in proceedings between Deichmann SE and the Hauptzollamt Duisburg, the Principal Customs Office in Duisburg, concerning an application for the repayment of anti-dumping duties paid on imports of footwear with uppers of leather into the European Union. The facts of the dispute in the main proceedings and the regulation at issue took place in a time when the adoption of anti-dumping measures within the EU had successively been governed by two successive anti-dumping regulations, namely Regulation (EC) No 384/96 (“Regulation No 384/96”) and Regulation (EC) No 1225/2009 (“Regulation No 1225/2009”).

The Court of Justice gave blessing to the manner in which the Commission implemented the judgments of the Court in cases C659/13 and C34/14, namely by re-imposing the anti-dumping duties.

The CJ relied on Article 14(1) of Regulation No 1225/2009 as a legal basis to empower the Commission to take preparatory measures for the re-imposition of anti-dumping duties and to adopt directions suspending the repayment of anti-dumping duties by national custom authorities.

First of all, the CJ held that, by providing that anti-dumping duties should be imposed by regulation and collected by Member States according to the criteria laid down in the regulation which establishes them, Article 14(1) does not contain an exhaustive list of criteria relating to the collection of anti-dumping duties that the Commission may set out. Accordingly, as the directions set out in Article 1 of the regulation at issue aim to safeguard the collection of anti-dumping duties imposed by the regulation by obliging national custom authorities to wait until the Commission has determined the rates at which such duties should have been fixed, and these directions relate to the collection of the relevant anti-dumping duties by Member States, Article 14(1) of Regulation 1225/2009 empowers the Commission to adopt them.

In the second place, the CJ recognized the possibility for the Commission to adopt directions suspending the repayment of anti-dumping duties by national custom authorities as not contrary to Article 236 of the Customs Code. As a matter of fact, the Court stated that - according to settled case law - the exact scope of a declaration of invalidity contained in one of its judgments, and of the obligations stemming from it, must be determined taking into account the grounds that constitute its essential basis. In particular, the Court noticed that its assessment in joined cases C659/13 and C34/14 did not reveal factors which affected the validity of the definitive Regulation and the prolonging regulation, but only reflected the fact that the Commission and the Council adopted them without assessing the Market Economy Treatment claimed by certain exporting producers involved in the investigation, and omitted to assess the individual treatment claims from the same exporting producers.

As a consequence, the CJ held that the Commission was entitled to carry out the assessment of the claims submitted by the concerned exporting producers in order to determine whether the anti-dumping duties that applied to them should have been set at rates below those laid down by the two regulations. Accordingly, the only amount that had to be repaid to the concerned parties since it had been wrongly imposed, was the one corresponding to the difference between the rate at which the two regulations had set those anti-dumping duties and the rate at which they should have been set if the illegalities found by the Court in its judgments C659/13 C34/14 had not been committed. Article 236 of the Customs Code not being interpreted as prohibiting the Commission from directing that a ruling be made on the applications for repayment of those anti-dumping duties following a procedure with the specific aim of allowing it to calculate such a difference, the directions set out in Article 1 of the regulation at issue were not deemed contrary to Article 236(1) of the Customs Code. Consequently, the Commission was empowered to adopt them on the basis of the first sentence of Article 14(1) of Regulation No 1225/2009.

The Court confirmed the validity of the regulation at issue.

C-363/17 P – Equipolymers and Others v Council of the European Union (appeal in T-422/13)

The Court of Justice (‘CJ’) dismissed the appeal by which Equipolymers Srl, M&G Polimeri Italia SpA, and Novapet (‘the appellants’), European producers of polyethylene terephthalate (‘PET’), sought to set aside the judgment of the General Court (‘GC’) of 5 April 2017. In this judgment the GC had dismissed their claims for compensation of damages allegedly suffered as a consequence of the illegality of the Council Decision rejecting the proposal for an anti-dumping regulation, in so far as the proposal would have imposed a definitive anti-dumping duty on imports of PET originating in India, Taiwan and Thailand (‘the decision at issue’).

In the proceedings before the GC the appellants had argued that, following the decision at issue, they had been forced to maintain their EU sales prices at loss-making levels, in order to compete with dumped imports from India, Taiwan and Thailand. That loss was due, according to them, to the difference between their earnings before interest, taxes and amortisation (‘EBITA’) during the period between April 2012 and March 2013 and the EBITA estimated for the period from June 2013 to May 2014. On its part, the GC had dismissed the claim for damages on the ground that the information provided by the appellants did not make it possible to establish a direct and sufficient causal link between the adoption of the decision at issue and the alleged losses.

By their single ground of appeal, the appellants disputed the GC’s conclusion.

First of all, they submitted that the GC erred in characterizing the facts when it held that the appellants failed to establish the existence of a direct and sufficient causal link. In particular, while accepting that the factors relied on by the GC in its decision were capable of influencing their EBITA, the appellants alleged that the GC failed to take into account certain adjustments and explanations provided by them, the purpose of which was to make a distinction between the part of the reduction of their EBITA caused by the increase in imports from India, Taiwan and Thailand following the adoption of the decision at issue, and that resulting from other factors. On its side, the CJ found that it was for the appellants to adduce conclusive proof as to the existence of a sufficiently direct causal link. Accordingly, it was not for the GC to attempt to deduce its existence by referring to calculations which, at least expressly, did not take into account all the relevant factors.

Additionally, the appellants submitted that the GC did not set out the reasons for which the evidence provided on their part was insufficient to establish a direct and sufficient causal link. In that regard, the CJ recalled established case-law to affirm that the obligation to state reasons does not require to provide an exhaustive account which follows one by one all the arguments put forward by the parties to the case. As a matter of fact, the CJ noticed that the reasoning may be implicit on condition that it enables the persons concerned to know why the GC has not upheld their arguments and provides the CJ with sufficient material for it to exercise its power of review. In the present case, the GC listed factors which were likely to cause or lead to a reduction in the appellants’ EBITA, and stated that the appellants had not made a distinction, in that reduction, between the part entailed by the unlawful adoption of that decision and that attributable to those factors. Hence, the CJ found that the GC had implicitly but necessarily fulfilled its obligation to state reasons.

Having rejected as unfounded the appellants’ single ground of appeal, the CJ dismissed the appeal in its entirety.

C-100/17 P – Gul Ahmed Textile Mills v Council of the European Union (appeal in T-199/04)

The Court of Justice (‘CJ’) dismissed the appeal by which Gul Ahmed Textile Mills Ltd (‘the appellant’), a Pakistani exporting producer of bed linen, sought to have set aside the judgment of the General Court (‘GC’) of 15 December 2016, by which the GC rejected its action for annulment of the Regulation imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Pakistan, in so far as it concerned it.

By its first ground of appeal, the appellant challenged the findings of the GC that the second and third pleas of the application concerning the calculation of the normal value and the fair comparison between normal value and export price were no longer admissible. The GC had concluded for the inadmissibility of these pleas as it considered that the appellant had not shown the continuing existence of its interest in bringing proceedings with respect to them.

In particular, the appellant alleged the GC’s failure to fulfil its obligation to state reasons in this respect, as well as an error in law.

The CJ confirmed that the interest in having a contested act annulled must continue until the end of the proceeding and that the matter of a continuing interest in the proceeding can be raised at any point in time, either by the GC itself or by a party who relies on sufficiently serious evidence. However, when examining the continuing interest in bringing the proceeding, the GC must respect the rights of defence of the other side, in particular by inviting the applicant to express its views and submit evidence showing this interest.

The CJ concluded that this was appropriately done by the GC when, following the hearing at which the issue of lack of continuing interest was raised by the Commission, the appellant was invited to express its views on that question and was afforded the opportunity of submitting any evidence which might contradict the institutions’ claims. Therefore, the GC had not disregarded its burden of proof nor failed to fulfil its obligation to state reasons. As a consequence, the CJ rejected the first ground of appeal.

In its second plea in law the appellant claimed that the GC committed an error in law and distorted facts when reviewing the assessment of the causal link between the alleged dumping and the alleged material injury of the EU industry. In particular the appellant claimed that the causal link was broken by the EU industry's shifting of production to the high-value segment of the EU bed-linen market and by the increasing EU imports of bed linen from Turkish producers related. The CJ dismissed the appellant’s arguments and confirmed the GC's conclusions with regard to the institution's causation assessment.

For these reasons, the CJ dismissed the appeal.

C-145/17 P – Internacional de Productos Metálicos v European Commission (appeal in T-217/16)

The Court of Justice (‘CJ’) dismissed the appeal by which Internacional de Productos Metálicos SA, a Spanish importer of iron or steel fasteners (‘the appellant’), sought to have set aside the judgment of the General Court (‘GC’) of 25 January 2017 (T‑217/16). By this judgment, the GC had dismissed the action seeking the annulment of Article 2 of the Regulation by which the Commission repealed the definitive anti-dumping duty imposed on imports of certain iron or steel fasteners originating in China (‘the regulation at issue’).

This case essentially concerned the right for importers to challenge antidumping regulations directly before the EU Courts in cases where they are not individually concerned by the regulations and there are implementing measures which have to be challenged at national level. In essence, the appellant requested the annulment of the provision according to which the repeal of the anti-dumping duties took effect from the date of the entry into force of the regulation, and did not serve as a basis for the repayment of the duties collected prior to that date. The CJ rejected the appellant’s request on the basis that the regulation at issue was not of individual concern to the applicant and that it entailed implementing measures.

First of all, the CJ recalled that where a measure affects a group of persons who were identified or identifiable when that measure was adopted by reason of criteria specific to the members of the group, those persons may nevertheless be individually concerned by that measure if they form part of a limited class of economic operators. The CJ held that this takes place particularly when the decision alters rights acquired by the individual prior to its adoption. In the present case, however, the CJ found that the regulation at issue affected the appellant only in its objective capacity as an importer, without taking into account its individual situation. Moreover, the CJ stated that being subject to anti-dumping measures, such as those which were repealed by the regulation at issue, could not validly be regarded as constituting an “acquired right”, since there was no right acquired by the importer at the time the entries took place.

Secondly, the CJ noticed that Article 2 of that regulation, in so far as it provided for the expiry of the duties from the date of its entry into force and excluded any retroactive effect, could be implemented, as regards the appellant, only through measures taken by the national authorities for the purpose of collecting the anti-dumping duties in question before that date. Consequently, the CJ found that the regulation at issue entailed implementing measures although the repeal of the anti-dumping duties did not depend, as such, on the adoption of measures of this type.

For these reasons, the CJ rejected the appeal in its entirety.

9.Activities by third countries targeting the EU

This section describes the main developments and trends in the area of third country actions in 2018 (see also the Annual Report, which this document is accompanying, as well as annex U (A – F) below for detailed figures).

In 2018, the main users of the trade defence instruments against EU exports were the US with 33 measures in force, India with 21, China with 18, Brazil with 16, Turkey with 14, and Australia with 10 measures in force. Besides these main users, other important cases in countries that use the instruments less frequently are also described below.

United States (US)

Overall trends

In 2018, the US initiated three new AD investigations affecting EU exports, 7 less than in 2017. Furthermore, it initiated three AD expiry reviews and one AS expiry review investigation. It also initiated the Article 232 safeguard investigation regarding steel and aluminium. One AD investigation was terminated without measures. In one of the AD investigations provisional measures were imposed, which are still in force.

Definitive measures were imposed in 10 investigations out of which nine (five AD, two AS, two safeguards) had been initiated in 2017 and one AD in 2018.

At the end of 2018, the US had 33 measures in force affecting EU imports.

Main cases

Regarding product types, the investigations initiated in 2018 concerned imports of steel (two investigations) and chemical substances (one investigation), whereas measures were imposed on five steel products, one processed agricultural product (AD and AS measures), one chemical substance and two other consumer and industrial goods.    

Spanish ripe olives AD/AS investigations

The most important investigations were the AD and AS investigations concerning imports of Spanish ripe olives, which were finalised with the imposition of the AD and AS measures in August 2018. The AS investigation was of a particular concern since it targeted, among others, several EU subsidy schemes available under the EU Common Agricultural Policy (CAP), which is considered non-trade distorting, non-product specific and thus non-countervailable under the rules of the WTO. Despite the numerous Commission interventions, the US nevertheless decided to countervail some of these schemes using questionable reasoning relating, for example, to the issue of specificity and so called a pass-through test. On 28 January 2018, the EU requested to hold consultations with the US under the WTO Dispute Settlement Understanding to solve the matter.

India

Overall trends

The total number of 21 measures in force in 2018 has remained the same as in 2017, confirming that India remains amongst the main users of the instruments. However, on a more positive note, it reduced its use of safeguards over the last four years (two in force in 2018) and did not initiate any new safeguard investigation last year.

Overall, India initiated four new AD investigations (Coated paper, Dimethylformamide (DMF), High speed steel, Epoxy resin). It imposed definitive AD duties in two cases (Nylon Filament Yarn, Wooden flooring) and extended AD duties following one expiry review investigation (Methylene Chloride). It imposed definitive ad-valorem safeguard duties on imports of Solar Cells (the investigation was mentioned in the previous Annual Report on third countries’ activity).

In the course of 2018, India streamlined its internal procedures in trade remedies and amended its anti-dumping and anti-subsidy rules, making them stricter and more in line with WTO and EU rules. At the request of the Indian authority, the Commission provided comments on the draft and welcomed the proposed amendments.

Main cases

In addition to the successful interventions in the AD investigation concerning coated paper, which was terminated without measures (see also the Annual Report, which this document is accompanying), India terminated five other investigations (three new ones and two expiry reviews) without imposing or further extending the duties.

Acrylic Fibre

The investigation was initiated in April 2017 (EU economic interest of around 7 million EUR). In April 2018, the Indian authorities concluded that there was no price undercutting and no price suppression caused by imports, therefore the imposition of AD measures was not warranted. The Commission followed the case in close contact with the industry and gave support to the affected EU companies. It made two written interventions and two oral interventions during public hearings.

Melamine – expiry review

In March 2018, the Indian authorities concluded that the domestic industry was in a stable and healthy situation and there was no injury due to imports, resulting in the expiry of the duty without further extension (EU economic interest 4,6 million EUR). The Commission made two written interventions, claiming inter alia that AD duties must not be used as a means to protect the domestic industry’s plan to build additional capacity.

Sodium Nitrite – AD mid-term review

The review was initiated in December 2017, at the request of the domestic industry, who claimed that the duty in force was no longer sufficient to remedy the injury, and asked to raise the duty level. At the end of July 2018, after examination of the facts, the Indian authorities concluded that the increase of the injury margin was not caused by imports, but was due to the capacity expansion of the domestic industry, who otherwise was in a healthy and profitable situation. Thus, there was no need to raise the level of the AD duty in force. The Commission made two written interventions.

China

Overall trends

In 2018, China's Trade defence activity was of lower intensity than in previous years. In 2018, China initiated two new AD cases, two expiry reviews and one interim review. In 2018, China imposed one AD measure, concluded one AD interim review with an increase in duty, extended one existing AD measure, and let expire two AD and one AS measure(s).

The total number of measures in force against the EU at the end of 2018 was 18, as compared to 20 in 2017.

Main cases

Polysilicon – AD/AS measures

On 31 October 2018, MOFCOM issued a notice terminating anti-dumping and anti-subsidy measures in place against EU exports of Polysilicon, a key raw material in the production of Solar Panels. These measures were in place since 2014, covering a volume of exports worth around 650 million EUR, and targeted particularly German Polysilicon producer Wacker. In the context of EU measures on Solar Panels from China, China retaliated by imposing measures on EU exports of Polysilicon and carefully mirrored every single move by the EU in the Solar Panels case. On 31 August 2018, the EU decided not to extend its anti-dumping and anti-subsidy measures on solar panels from China. The termination of these measures by MOFCOM brings to a close a long-running process that has been the subject of much discussion.    

Brazil

Brazil kept a moderate activity in 2018. As in 2017, the country initiated one new AD investigation regarding silicon electrical steel from Germany. As in 2017, Brazil also imposed one new AD measure in 2018 (nitrile rubber from France). However, the total number of measures in force remains high with 16 measures at the end of 2018. At the end of 2018, there were also a number of measures under review: milk powder from the EU, laminated steel from Germany and Finland and ethanolamine from Germany.

Turkey

Overall trends

In 2018, Turkey was very active in terms of trade defence. Turkey initiated two new safeguard investigations and reviewed two safeguard measures in force. In addition, Turkey launched one new AD investigation on synthetic filament tow and initiated a review of measures concerning water heaters. Turkey also initiated three new anti-circumvention investigations concerning imports of hinges, chains and woven fabrics. There were 14 Turkish measures in force against the EU at the end of 2018.

As regards the investigations initiated before 2018, Turkey imposed AD measures on imports of sodium percarbonate from Germany, extended AD measures on imports of pipefittings from Bulgaria and imposed AD measures on imports of kraft liner paper from Finland and Poland. Finally, Turkey also imposed safeguard measures on imports of toothbrushes.

Main cases

Iron and steel products – safeguard investigation

In April 2018, Turkey initiated a safeguard investigation concerning imports of iron and steel products. This is an important case for the EU industry as it exports over €3 billion of steel to Turkey annually. The initiation followed the imposition of measures in the US under Section 232. In October 2018, Turkey adopted provisional safeguard measures in the form of a tariff rate quota (“TRQ”) for 200 days. Both in form (free of duty quota corresponding to the average imports in the last 3 years), as well as in out-of-quota duty (25%), the measures resemble the EU safeguard measures on steel. The scope of the measures is slightly larger than the scope of the EU measures. The Commission has intervened and highlighted that the criteria of an increase of imports in terms of the WTO Safeguards agreement does not appear to be met in this case.

Wallpaper - safeguard investigation

In 2015, Turkey imposed safeguard measures on imports of wallpaper (export value around 13 million EUR (in 2014)). In close coordination with the EU industry, the Commission negotiated a TRQ for wallpaper with a CIF value above 5 USD/kg (which allows for the continuation of imports of the more expensive wallpaper from the EU). After a review concluded in August 2018, the safeguard measure was extended, however that extension did not include the TRQ. After the intervention of the Commission and the EU industry last year, Turkey has now, in early January 2019, also extended the TRQ. The TRQ will apply for three years.

Australia

Australia increased the use of trade defence in 2018 and is becoming an important user of trade defence against the EU. As compared to 1 new case in 2017, Australia initiated three new AD investigations in 2018: A4 copy paper from Austria, Slovakia and Finland, railway wheels from France and ammonium nitrate from Sweden. The number of measures imposed increased from one in 2017 to four in 2018, totalling 10 measures in force at the end of 2018.  

The Commission is closely following and intervening in all the three new investigations and also in the on-going expiry review of the AD measures against “all other” Italian exporters of canned tomatoes imposed in 2014.

Other important cases

Canada – safeguard investigation concerning imports of certain steel products

As a response to the US 232 investigation, Canada initiated a safeguard investigation and imposed provisional measures in October 2018. The scope of the investigation covers seven steel products (EU export value around 150 million €). Provisional measures were imposed for 200 days and are in the form of a tariff-rate quota (based on the average of the last three years) with a 25% out-of-quota duty. The investigation is now approaching its final phase. The Commission already intervened in the context of this investigation with a view to highlight potential flaws mainly relating to the non-disclosure of critical information, which affects the Commission’s right of defence guaranteed by the WTO Safeguard Agreement. The imposition of the final safeguard measures, if any, is scheduled for April 2019.

Colombia – AD investigation concerning imports of frozen fries

On 9 November 2018, Colombia concluded the anti-dumping investigation on imports of frozen fries from Belgium, Germany and the Netherlands with the imposition of measures. Colombia imposed duties for one company in each Member State concerned (from 3,21% to 8,01%) and for all other Dutch exporters (44,52%). The Commission, together with the three Member States, raised the different deficiencies of this investigation with the Colombian authorities from the very beginning. Political interventions also took place at a high level. The main weaknesses of the case concern the calculation of the dumping margin, a non-objective injury and causality analysis, weak standards of initiation and other procedural issues mainly concerning confidentiality. The industry is very concerned because Colombia is the third country imposing measures on frozen fries after South Africa in 2014 and Brazil in 2017 (EU export value 21 million EUR for South Africa, 96 million EUR for Brazil and 23 million EUR for Colombia). The Commission raised its strong concerns during the annual meeting of the EU-Colombia Trade Committee (highest implementation body under the Trade Agreement) and a meeting took place in Bogota at the end of January 2019, where EU and Colombian experts discussed calculations. Bilaterally, the Commission is considering to request an administrative review. In parallel, the Commission continues its analysis in view of a possible action in the WTO. 

South Africa – bilateral safeguard investigation concerning imports of frozen chicken under the EPA (European Partnership Agreement)

In 2016, South Africa initiated a bilateral safeguard investigation concerning imports of poultry from the EU under the Trade and Development Cooperation Agreement and continued the investigation under the EU-SADC EPA, when provisional application of the EPA started in October 2016. At the end of 2017, South Africa announced that the investigation had shown that the relevant conditions were met and imposed definitive safeguard measures in September 2018. The definitive duties apply until March 2021. The initial duties have been set at 35.3% ad valorem and will be liberalised over time to 25% during the last year. The Commission has conveyed the message to the SACU countries that it does not agree with the measures and has held several formal exchanges with the SACU countries to find a mutually acceptable solution. The SACU countries have not accepted any of the proposed solutions. The Commission is considering next steps.

10.Activities in the framework of the WTO

10.1.Dispute settlement in the field of trade defence

The WTO provides for a rigorous procedure for the settlement of disputes between WTO Members concerning the application of the WTO agreements. The procedure is divided into two main stages. The first stage, at the level of the WTO Members concerned, consists of a bilateral consultation. Upon failure of the consultation to settle the dispute, the second stage can be opened by requesting the WTO Dispute Settlement Body to establish a panel. WTO Members, other than the complaining and defending party, with an interest in a given case, can intervene as 'third parties' before the panel. The panel issues a report, which can be appealed before the Appellate Body ('AB') (each appeal being heard by three members of a permanent seven-member body set up by the Dispute Settlement Understanding (DSU)). Both the panel report and the report by the Appellate Body are adopted by the Dispute Settlement Body ('DSB') unless the latter rejects the report by unanimity.

The findings of a panel or Appellate Body report have to be implemented by the WTO Member whose measures have been found to be inconsistent with the relevant WTO Agreements. If the complaining WTO Member is not satisfied with the way the reports are implemented, it can ask for the establishment of a so-called 'implementation panel'. Here too, an appeal against the findings of the panel is possible.

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

In 2018, the EU participated actively in a number of WTO dispute settlement proceedings as a third party.

Regarding the dispute settlement cases against the EU, the main developments in 2018 were the following:

European Union – Anti-Dumping Measures on Biodiesel from Indonesia (DS480)

On 10 June 2014, Indonesia requested consultations with the European Union regarding the application of anti-dumping duties on imports of biodiesel originating, inter alia, in Indonesia. 56 A panel in the case was further composed on 4 November 2015. After a suspension in the Panel’s proceedings in 2016 (at the request of Indonesia), the Panel issued its report on 25 January 2018, which was adopted by the DSB on 28 February 2018. The Panel found, among others, that in line with the findings in EU – Biodiesel from Argentina the EU should have calculated the normal value using the cost of production of biodiesel in Indonesia, based on the records kept by the producers/exporter under investigation. The Panel also stated that the EU failed to determine the profit normally realized by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin. Moreover, with respect to the injury, the Panel established that the EU failed to establish the existence of significant price undercutting. Consequently, on 18 October 2018, the EU implemented the DSB’s recommendations through Implementing Regulation (EU) 2018/1570, which terminated the proceedings concerning imports of biodiesel originating in Argentina and Indonesia and repealed Implementing Regulation (EU) No 1194/2013 (see above).

European Union – Countervailing Measures on imports of PET from Pakistan (DS486)

The Appellate Body (“AB”) report was circulated on 28 May 2018, following the filing of an appeal by the EU on 30 August 2017 and a cross-appeal by Pakistan on 4 September 2017. The AB upheld the Panel’s report which found that the EU had acted inconsistently with certain provisions of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”).

The EU argued that the measure at issue had expired during the Panel proceedings, and requested that the AB reverse the entirety of the Panel Report and declare moot its findings. The AB rejected this argument, stating that the Panels have a margin of discretion in exercising their jurisdiction and the expiry of the measure did not mean that the matter before the Panel had been fully resolved.

Furthermore, the AB sided with the Panel and found that the EU wrongly countervailed the entire amount of duty drawback. The AB considered that, in the context of genuine duty drawback schemes, the financial contribution element of the subsidy is limited only to the excess remission or drawback of import charges on inputs and does not encompass the entire amount of the remission or drawback of import charges..

The AB also rejected the EU’s claim that there was silence as to the legal consequences when the subsidising country lacks a verification procedure in the context of the investigating authority's inquiry on whether the excess remission or drawback occurred. In particular, the AB referred to Article 12.7 of the SCM Agreement as an essential tool in order to fill the gaps of missing information with "facts available" on the records of the investigating authority. As a consequence, the simple fact that the exporting Member does not have a proper verification system or failed to carry out an additional investigation in the case of duty drawback schemes is not, as such, a sufficient reason to countervail the entire amount of import duties payable.

The Commission will take due account of the judgment in cases involving duty drawback schemes.

European Union – Measures related to Price Comparison Methodologies (DS516)

Following the original composition of a panel in July 2017 and a first substantive meeting with the parties in December 2017, a second meeting took place in May 2018. Subsequently the parties submitted responses to the questions posed by the Panel.

As the procedure among the parties is complete, the Panel must now issue the final report. In November 2018, the Panel informed that it would deliver its report during the second quarter of 2019, as the legal matters at issue are particularly complex.

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

On 7 May 2015, the Russian Federation requested consultations with the European Union regarding “cost adjustment” methodologies used by the European Union for the calculation of dumping margins in anti-dumping investigations and reviews.

In its request, Russia challenged several provisions of the basic AD Regulation. Specifically, Russia argued that Article 2(3) thereof is inconsistent with Article 2.2 of the Anti-dumping Agreement (‘ADA’) because it requires that only "representative" prices are applied to the two alternative methods of determination of normal value of the like product (based on cost of production or on export prices to an appropriate third country).

Russia also claimed that Article 2(5) of the basic Regulation is inconsistent with Articles 2.2.1.1 and 2.2 of the ADA insofar as it authorises the investigating authority to use costs other than the cost of production in the country of origin for the construction of normal value, without requiring any adjustments to represent the cost of production in the country of origin. In particular, Russia challenged the “cost adjustment methodology”, which concerns the adjustments to the cost of gas paid by the Russian exporters. Under this methodology, the Commission considers that the records of the Russian exporters do not reasonably reflect the cost of gas as Russia has a dual pricing policy with different regulated prices for domestic and export sales. As a consequence, the cost for gas is adjusted on the basis of the average price of Russian gas when sold for export at the German/Czech border. Russia considered this methodology to be inconsistent with Article 2.2.1.1 of the ADA, since the EU rejected the records of the Russian exporters that are supposed to reasonably reflect their costs. Furthermore, Russia claimed that this methodology infringes Article 2.2 of the ADA because the EU uses costs other than the "cost of production in the country of origin".

The Dispute Settlement Body established a panel to rule on the dispute on 16 December 2016. After some time, upon request by the Russian authorities, the Panel was composed on 17 December 2018.

10.2.    Other WTO activities

The EU remained fully committed and active in pushing a subsidies-related agenda in the WTO. In the course of 2018, intensive negotiations on fisheries subsidies continued in Geneva. While only limited progress was made, an ambitious work programme for 2019 was adopted at the end of the year that should allow WTO Members to conclude the negotiations by the end of 2019, which is a deadline set by the 11th WTO Ministerial conference in Buenos Aires. In October 2018, the EU also organised, along with the US and Japan, an event in the context of the WTO Public Forum on subsidies called "Make the Playing Field Level Again".

In 2018, the EU participated in the work of the WTO Subsidies and Countervailing, Anti-dumping and Safeguards Committees which are held twice yearly in April and October. In the Anti-dumping Committee, the EU responded to many questions on the changes to the EU’s anti-dumping legislation arising from the introduction of the new calculation methodology as well as the modernisation of TDI. In addition, the EU responded to questions posed by other WTO members on its anti-dumping investigations, while also using the opportunity to raise issues of concern in investigations taken by third countries against the EU or Member States.

In the Informal Group on Anti-Circumvention in April and October, India and Canada shared their experiences respectively in tackling circumvention of measures and the EU posed questions on their particular regimes.

The EU also participated in both sessions of the Anti-dumping Working Group on Implementation (WGI). In April 2018, the topics discussed were: the calculation of dumping margins, the treatment of expenses for ‘research and development’, of start-up costs, of ‘selling, general and administrative’ (SG&A) expenses, as well as of the reasonable profit level in the normal value and export price determinations. In October 2018, methodologies to determine the likelihood of continuation or recurrence of dumping and injury in expiry reviews, as well as the institutional structures of the investigating authorities were discussed.

In the Special Committee of the Subsidies and Countervailing Committee, the EU’s 2017 subsidy notification was reviewed. In the regular Subsidies and Countervailing Committee, in addition, discussions continued on the role of subsidies as a contributor to excess capacity in various sectors of economic activity. This important agenda item is co-sponsored by the EU along with several other WTO members including US, Canada and Japan. The EU also repeatedly called for improved transparency by other members urging them to notify their subsidies to the WTO, as required under the Agreement on Subsidies and Countervailing measures. In this context, the EU participated in a seminar hosted by the WTO for Asian countries to explain how the EU prepares its subsidy notification, highlighting the difficulties and proposing solutions.

In the Committee on Safeguards, the EU raised a series of concerns relating to other WTO Members’ safeguard investigations (e.g. Chile – Powdered milk and Gouda cheese, US – Solar panels, or Turkey – Wall paper). In addition, the EU responded to questions asked by other WTO members concerning the initiation of its own safeguard investigation concerning imports of certain steel products and the imposition of provisional safeguard measures in July.

11.    Activities of the hearing officer

In 2018, the Hearing Officer received altogether 27 intervention requests and held eight hearings. In a number of cases, the request for an intervention was submitted simultaneously with a request for a hearing with the services responsible for the investigation. The Hearing Officer took the view that the interested party first shall address their concerns to the services and only when a solution could not be reached, the Hearing Officer would intervene. This approach led to the result whereby the interested parties seeking an intervention were able to find a solution directly with the investigation teams in most of the cases.

This year only few investigations led to intervention requests. These were either requests from several interested parties or a number of intervention requests from the same party. The interested parties mostly challenged the determinations, facts and conclusions of the investigation and in all cases an agreement with the services to provide clarifications or additional disclosures could be reached. In a noteworthy case, the interested party challenged the Commission’s policy of protection of personal data within the framework of the investigation – the case had to be referred further to European Data Protection Office. During all interventions in 2018, the Hearing Officer found that the procedural rights of the interested parties had been respected. The Hearing Officer was not requested to exercise her decision-making powers foreseen in the Terms of Reference 57 .

As a result of the TDI legislative reforms of 2017 and 2018, the Hearing Officer’s role is now firmly embedded in the basic Regulations. In this context, the Hearing Officer also contributed to the procedures to be applied in the modernisation implementation, in order to increase transparency and guarantee the procedural rights of the parties.

LIST OF ANNEXES

ANNEX A

New investigations initiated
during the period 1 January – 31 December 2018

A.    Anti-dumping investigations (chronological by date of publication)

B.    Anti-subsidy investigations (chronological by date of publication)

C.    Reopenings (chronological by date of publication)

ANNEX B

A.    New investigations initiated by product sector during the period 2014 – 2018 (excluding the reopenings)

B.    New investigations initiated by country of export during the period 2014 – 2018 (excluding reinvestigations)

ANNEX C

Imposition of provisional duties in the course of new investigations
during the period 1 January – 31 December 2018

A.    Anti-dumping investigations (chronological by date of publication)

B.    Anti-subsidy investigations (chronological by date of publication)

ANNEX D

New investigations concluded by the imposition of definitive duties
during the period 1 January – 31 December 2018

A.    Anti-dumping investigations (chronological by date of publication)

B.    Anti-subsidy investigations (chronological by date of publication)

ANNEX E

New investigations terminated without the imposition of measures
during the period 1 January - 31 December 2018

A.    Anti-dumping investigations (chronological by date of publication)

B.    Anti-subsidy investigations (chronological by date of publication)

ANNEX F

Expiry reviews initiated or concluded
during the period 1 January - 31 December 2018
(chronological by date of publication)

ANNEX G

Interim reviews initiated or concluded
during the period 1 January - 31 December 2018
(chronological by date of publication)

ANNEX H

Other reviews initiated or concluded
during the period 1 January - 31 December 2018
(chronological by date of publication)

ANNEX I

New exporter reviews initiated or concluded
during the period 1 January - 31 December 2018
(chronological by date of publication)

A.    Anti-dumping investigations

B.    Anti-subsidy investigations ("accelerated" investigations)

ANNEX J

Anti-absorption investigations initiated or concluded
during the period 1 January - 31 December 2018
(chronological by date of publication)

ANNEX K

Anti-circumvention investigations initiated or concluded
during the period 1 January - 31 December 2018
(chronological by date of publication)

ANNEX L

Safeguard investigations initiated and concluded
during the period 1 January - 31 December 2018
(chronological by date of publication)

ANNEX M

Undertakings accepted or repealed
during the period 1 January - 31 December 2018
(chronological by date of publication)

ANNEX N

Measures which expired / lapsed
during the period 1 January - 31 December 2018
(chronological by date of publication)

A.    Anti-dumping investigations (chronological by date of publication)

B.    Anti-subsidy investigations (chronological by date of publication)

ANNEX O

Definitive anti-dumping measures in force on 31 December 2018

a. Ranked by product (alphabetical) 

Definitive anti-dumping measures in force on 31 December 2018

b. Ranked by country (alphabetical)