EUROPEAN COMMISSION

Brussels, 30.4.2020

SWD(2020) 71 final

COMMISSION STAFF WORKING DOCUMENT

[…]

Accompanying the document

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

38th 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 2019

{COM(2020) 164 final}

COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

38th 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 2019

Table of Contents

1. Overview of the legislation    

1.1.    Anti-dumping and anti-subsidy    

   1.1.1. The international framework    

   1.1.2. The EU legislation    

1.2    Safeguards    

   1.2.1. The international framework    

   1.2.2. The EU legislation    5

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

2.1.    Measures in place    7

2.2.    New investigations    

2.3    Review investigations    

3. Overview of activities in 2019    

3.1.    New investigations    

   3.1.1. Initiations    

   3.1.2. Provisional measures    10

   3.1.3. Definitive measures    

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

   3.1.5. New investigations terminated without measures    26

3.2.    Review investigations    27

   3.2.1. Expiry reviews    27

   3.2.2. Interim reviews    35

   3.2.3. New exporter reviews    35

   3.2.4. Anti-absorption investigations    36

   3.2.5. Anti-circumvention investigations    36

   3.2.6. “Other” reviews (reinvestigations)    38

3.3.    Safeguard investigations    38

   3.3.1. Details on individual safeguard cases    39

3.4.    Verification activities    41

4. Enforcement of anti-dumping/countervailing measures    41

4.1.    Follow-up of measures    42

4.2.    Monitoring of undertakings    42

4.3.    OLAF activity    42

5. Refunds    43

6. Information and Communication activities / Bilateral contacts    

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

7.1.    Overview of the judicial reviews in 2019    

7.2.    Cases pending    

7.3.    New cases    

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

7.5.    Judgments rendered by the Court of Justice (a selection)    51

8. Activities by third countries targeting the EU    

9. Activities in the framework of the WTO    58

9.1.    Dispute settlement in the field of trade defence    58

9.2.    Other WTO activities (in more detail)    59

LIST OF ANNEXES    61

ANNEX A    62

ANNEX B    63

ANNEX C    65

ANNEX D    66

ANNEX E    67

ANNEX F    68

ANNEX G    70

ANNEX H    71

ANNEX I    72

ANNEX J    74

ANNEX K    75

ANNEX L    77

ANNEX M    78

ANNEX N    79

ANNEX O    80

ANNEX P    98

ANNEX Q    100

ANNEX R    101

ANNEX S    105

ANNEX T    109

ANNEX U    110

1.    Overview of the legislation

1.1.    Anti-dumping and anti-subsidy

1.1.1.    The international framework

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

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

1.1.2.    The EU legislation

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

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

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

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

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

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

The lesser duty rule requires the measures imposed by the EU to be lower than the dumping or subsidy margin, if such lower duty rate is sufficient to remove the injury suffered by the EU industry. Such a “no-injury” rate is usually determined by 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 the Protocol of Accession of the People’s Republic of China (China), 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

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), 5  

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

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

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

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

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

The number of new investigations initiated in 2019 was substantially higher compared to the previous year, at 16 initiations (compared to 10 in 2018). In addition, the Commission reopened 7 cases to implement findings following court rulings (see "Other reviews"). The number of measures imposed in 2019 also increased as compared to 2018: 7 new definitive measures and 5 provisional measures were imposed, a total of 12, versus 6 in 2018. 9 At the same time, 5 investigations were also terminated without the imposition of measures, which brought the total number of new investigations concluded in 2019 to 17. Moreover, during 2019, the Commission initiated 16 review investigations (excluding re-openings). Among the latter, there were 8 initiations of expiry reviews (two of which regarding anti-subsidy measures). As many as 18 expiry reviews were concluded in 2019 - 16 with a confirmation of the duty and 2 by termination and repeal of measures. In other words, 2019 stood as a particularly busy year, with even more significant new casework and reviewing activity than 2018. Below are details on new investigations and review investigations.

2.1.    Measures in place

At the end of 2019, the EU had in force 94 definitive anti-dumping measures (which were extended 10 in 27 cases) and 15 countervailing measures in force (extended in one case). 11

The anti-dumping measures product coverage remained at 67 products, concerning 15 countries (see Annex O); the countervailing measures covered 13 products and 6 countries – two more than in 2018 (see Annex P). The large majority of measures was in the form of duties. In one case, undertakings have been put in place.

Of all the 121 anti-dumping measures in force at the end of 2019, the countries affected were China (86), Russia (10), US (4), India and Korea (3 each), Belarus, Indonesia, Taiwan, Thailand and Ukraine (2 each), Brazil, Iran, Japan, Malaysia, and Trinidad and Tobago (1 each).

Of the 16 anti-subsidy measures in place, 7 concerned imports from China, whereas India remained subject to 4 measures, the US to 2 measures and Argentina, Indonesia and Turkey to 1 measure each.

2.2.    New investigations – recent evolution

In the 5-year period from 2015 to 2019, 66 new investigations were initiated on imports from 22 countries. The sectors concerned by the investigations were mainly: 'iron and steel' – 30 investigations, and 'chemical and allied industries' – 18 investigations, A breakdown of the product sectors is available in Annex B(A).

The countries concerned by the highest number of initiations in the period from 2015 to 2019 include China – 25 investigations; Egypt and Russia – 5 each; Brazil, India, Indonesia, Korea and Turkey – 3 each. A table showing all the investigations initiated over the last 5 years broken down by country of export is available at Annex B(B).

Table 1 below provides statistical information on the developments regarding new investigations for the years 2015 – 2019.

TABLE 1

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

during the period 1 January 2015 - 31 December 2019 12

2.3.    Review investigations – recent evolution

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

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

Reviews continue to represent a major part of the work of the Commission's TDI services. In the period from 2015 to 2019, 133 such review investigations were initiated by the Commission. Reviews represented 2/3 of all TDI investigations initiated.

In 2019, specifically, the Commission initiated 23 reviews of a broad range of types. These comprised 8 expiry reviews, 2 interim reviews, 4 anti-circumvention investigations, 1 anti-absorption investigation, 1 ‘new exporter’ review and 7 re-openings. At the same time, 22 reviews were concluded by the Commission.

An overview of the review investigations in 2019 can be found in Annexes F to K. Table 2 below provides statistical information for the years 2015 – 2019.

TABLE 2

Reviews of anti-dumping and anti-subsidy investigations

during the period 1 January 2015 - 31 December 2019 15

3.    Overview of activities in 2019

3.1.    New investigations

3.1.1.    Initiations

In 2019, the Commission initiated 11 new anti-dumping and 5 new anti-subsidy investigations. Iron and steel as well as glass fibre products stood out in terms of product coverage. The investigations concerned 6 different countries, with the highest number of initiations occurring against China (7) and Egypt (4). Details of the investigations are given in Annexes A and B.

The list of cases initiated in 2019 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 2019, provisional duties were imposed in four 4-dumping investigations, and 1 anti-subsidy investigation. 18  

The list of cases where provisional measures were imposed during 2019 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 2019, definitive duties were imposed in 4 anti-dumping investigations and in 3 anti-subsidy investigations. The list of cases where definitive measures were imposed during 2019 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 (Definitive CVD)

On 21 December 2017, the Commission initiated an anti-subsidy investigation with regard to imports into the Union of electric bicycles originating in China. The initiation was based on a complaint lodged on 8 November 2017 by the European Bicycle Manufacturers Association (EBMA) on behalf of Union producers representing more than 25% of the total Union production of electric bicycles. The complaint contained evidence of subsidisation and of a resulting injury that was sufficient to justify the initiation.

Sampling

The final sample of Union producers consisted of four Union producers, which accounted for 60% of total production volume and 58% of total sales of the Union industry. The Commission selected a sample of five unrelated importers on the basis of the largest volume of imports into the Union. It has also selected a sample of five groups of exporting producers on the basis of the volume of the product concerned and considered as the largest representative volume of exports to the Union which could reasonably be investigated within the time available. The sampled exporting producers represented 43% of the total imports of the product concerned to the Union.

Product concerned

The product concerned was defined as: cycles, with pedal assistance, with an auxiliary electric motor, originating in the PRC The Commission concluded that speed electric bicycles, L1e-A category electric bicycles and electric tricycles shared the same basic physical characteristics and properties as well as end-uses with other types of electric cycles, and therefore could not be excluded from the product scope of the investigation.

Subsidisation

The following subsidies were investigated: (1) provision of preferential loans and directed credits by State policy banks and State-owned commercial banks; (2) preferential Export credit insurance; (3) grants; (4) Government revenue that is otherwise due or forgone or not collected; (5) revenue foregone through Indirect Tax and Import Tariff Programmes; (6) Government provision of goods and services for less than adequate remuneration. Given the partial non-cooperation from the Government of China (GOC) and the sampled exporting producers, the Commission had to use the best facts available in relation to the preferential lending, export credit insurance, and provision of inputs for less than adequate remuneration.

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

(1) Provision of preferential loans and directed credits by State policy banks and State-owned commercial banks: financial institutions had provided loans, credit lines or bank acceptances to exporting producers. Those of the banks that were State-owned qualified in a straightforward manner as public bodies. With regard to other banks, which were not directly owned by the State, the Commission found that they were nevertheless entrusted and directed by the GOC to carry out functions normally vested in the Government. Chinese bicycle producers benefited from advantageous credit lines (without the need to pay additional fees to compensate the bank’s costs and risks) and from bank acceptances with extended repayment deadlines, which were granted at conditions, which the market does not normally offer. This preferential lending was only available to a limited number of companies/industries compliant with the GOC’s policies.

(2) Preferential Export credit insurance: These insurance agreements were provided by a State-owned enterprise (“SOE”) to electric bicycles producers at rates that were not market-oriented nor based on risk assessment. Premiums were also insufficient to cover the claims’ cost and the overhead expenses of the SOE. Furthermore, some exporting producers benefited from a partial or total refund of the export credit insurance premiums. These agreements could not be obtained without exporting (hence were export contingent).

(3) Grant Programmes: some sampled companies were found to benefit from one-off or recurring grants from different levels of government authorities. These subsidies constituted a transfer of funds from the GOC in the form of grants to the producers of the product. They were specific as they were limited to certain companies or specific projects in concrete regions and/or specifically the electric bicycle industry. In addition, some of the grants were contingent upon export performance.

(4) Government revenue that is otherwise due or forgone or not collected: the direct tax exemption within the Enterprise Income Tax (EIT) regime allowed some high and new technology enterprises determined by the State to benefit from a reduced income tax rate of 15% (instead of 25 %). This tax reduction was found to be a specific subsidy as it conferred a benefit to only some companies. Furthermore, the EIT offset for research and development (R&D) expenses entitled companies to preferential tax treatment for their R&D activities in certain high technology priority areas determined by the State, when certain thresholds for R&D spending were met. A tax exemption on dividend income between qualified resident enterprises was also regarded as a subsidy as it conferred a benefit to specific companies the development of which was encouraged by the State.

(5) Revenue foregone through Indirect Tax and Import Tariff Programmes: Chinese producers benefited from an exemption from VAT and import tariffs for imports of capital equipment used in their production processes. To that end, the equipment must not fall in a list of non-eligible equipment and the claiming enterprise had to obtain a Certificate of State-Encouraged project issued by the Chinese authorities or by the NDRC, thereby making the subsidy specific.

(6) Government provision of goods/inputs for less than adequate remuneration: the Commission concluded that the GOC was entrusting or directing Chinese producers of engines and suppliers of batteries to supply these inputs for less than adequate remuneration to the domestic producers of electric bicycles. These subsidies were not generally available. No evidence was submitted suggesting that those subsidies were based on objective criteria or conditions. In addition, the electric bicycles sector benefited, as a key industry, from the granting of Land Use Rights at preferential rates, which were also considered countervailable subsidies.

Injury and causation

During the IP, where the Union sales and production developed negatively despite a growing Union consumption, the Union industry suffered from a decreasing productivity per employee. Such a decreasing productivity and the consequent negative impact on the profitability of the Union industry was directly linked to the increasing quantities of subsidized imports of Chinese electric bicycles during the period considered. Confronted with an accelerating flow of subsidized imports from China, the Union Industry was not able to capitalise on the growth of the electric bicycle market and has lost market share to Chinese imports. The pressure on prices and the inability to seize economies of scale in a nascent market kept the profitability of the Union industry at depressed levels throughout the period considered. This low level of profit and the variation of stocks led to low operating cash flows which were below the level of investment incurred during the period considered and created an additional element of vulnerability for this cash-intensive business, strongly dependent on the liquidity provided by banks. Four producers went into bankruptcy during the IP, thus confirming a situation of injury within the Union industry.

Regarding the causality analysis, the Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the subsidized imports. In particular, imports from Taiwan and Vietnam had also average lower prices than the Union industry. However, notably, Vietnamese imports ceased to win market share after 2015, and imports from Taiwan were accompanied by a significant increase in prices (while average prices of Chinese products kept on decreasing). This led the Commission to conclude that overall those imports did not attenuate the causal link. Furthermore, with regard to investment in capacity by the Union industry, the Commission concluded that the growth in production capacity between 2015 and 2016 was in line with consumption levels in that period and the EU production capacity was reduced as from 2016 only due to unfair pressure by subsidised Chinese imports. Lastly, the Commission found that the introduction of incentives for electrical bicycles’ sales did not contribute to a shift to Chinese bicycles to the detriment of those produced in the Union. The latter was only caused by the price undercutting resulting from subsidisation.

Union interest and definitive measures

The Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious subsidisation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users. The Commission concluded that the imposition of a countervailing duty would be in the interest of the suppliers of the Union Industry and the Union industry itself. Even if the imposition of duties could have an adverse effect on small importers, this could be mitigated by the possibility to source bicycles from the Union Industry, in other third countries, and in the PRC at fair, non-injurious prices. In any case, any potential adverse effect on importers would not outweigh the positive effect of measures on the Union industry. What is more, the European Cyclists Federation argued that price is not the determining factor in whether people cycle more or less and provided evidence that countries where people cycle more are the countries where bicycles and electric bicycles cost more. The Commission therefore concluded that the measures would not unduly affect the situation of consumers and would contribute to the sustainable development of electric bicycles in the Union as well as its wider benefits to society in terms of protection of the environment and improved mobility.

A definitive countervailing duty was imposed at a level sufficient to eliminate the injury caused by the subsidised imports without exceeding the amount of subsidisation found. The definitive countervailing duty rates ranged between 3.9% and 17.2%.

Biodiesel from Argentina (Definitive CVD)

On 31 January 2018, the Commission initiated an anti-subsidy investigation with regard to imports into the Union of biodiesel originating in Argentina. The initiation was based on a complaint lodged on 18 November 2017 by the European Biodiesel Board (EBB) on behalf of Union producers representing more than 70% of the total Union production of biodiesel. The complaint contained evidence of subsidisation and of a resulting threat of injury that was sufficient to justify the initiation. The investigation covered the period from 1 January 2017 to 31 December 2017.

Sampling

The final sample of Union producers consisted of three Union producers, accounting for 23% of total production. Sampling of importers was not carried out due to the low number of unrelated importers that provided information. The Commission selected eight exporting producers which exported biodiesel to the Union during the investigation period (IP). This last sample represented 84% of the total exports of the product concerned to the Union.

The product concerned

The product concerned was ‘biodiesel’, in pure form or as included in a blend, originating in Argentina. The investigation showed that biodiesel produced in Argentina was exclusively soybean methyl ester derived from soybean oil, whereas biodiesel produced in the Union is mainly rapeseed methyl ester but made also from other feedstock, including waste oils as well as virgin oils. However, both the product concerned and the biodiesel produced and sold in the EU were found to have the same basic physical, chemical, and technical characteristics as well as the same basic uses.

Subsidisation

The following subsidies were investigated: (1) the Government's support to the biodiesel industry including through the provision of soybeans for less than adequate remuneration; (2) the Government's mandated purchase of biodiesel for more than adequate remuneration (‘Biodiesel Supply Agreement’); (3) the Provision of loans and export financing on preferential terms and preferential lending by the National Bank of Argentina (Banco de la Nación Argentina, ‘BNA’); (4) the Government's revenue forgone or not collected, such as the accelerated depreciation for biodiesel producers under the Biofuels Law of 2006, the exemption and deferral of the minimum presumed income tax for biodiesel producers under the Biofuels Law of 2006; as well as (5) Provincial and municipal tax exemptions. Given the partial non-cooperation from the Government of Argentina (‘GOA’) and the sampled exporting producers, the Commission had to use the best facts available in relation to the provision of soybeans for less than adequate remuneration.

(1) Government's support to the biodiesel industry including through the provision of soybeans for less than adequate remuneration (‘LTAR’):

The GOA supported the biodiesel industry through various measures, notably by implementing a policy of imposing high export taxes and other regulations relating to soybeans and soybean oil. As soybean oil is the key raw material used for the production of biodiesel in Argentina, these measures allowed domestic prices of this raw material to remain significantly lower than global prices. The investigation found that the GOA resorted to the following measures with regard to soybeans: export taxes on soybeans, subsidies to soybean producers to continue producing and selling domestically to biodiesel producers, countermeasures on producing other grains such as by imposing export quotas, and public statements to encourage soybean producers not to stop their production, but to continue selling domestically. The GOA explicitly pursued the support and development of the biodiesel industry as a policy objective. The Commission also established that the GOA entrusted/directed the input producers to carry out its policy, which created a compartmentalised domestic market by providing goods to the domestic users of soybeans (the biodiesel producers) for LTAR. The Commission considered that the provision of soybeans located on Argentinian soil to the Argentinian biodiesel industry was a function which was normally vested in the government. Alternatively, the Commission also analysed whether the measures followed by the GOA could be considered as ‘income or price support’. The investigation showed that several legislative acts clearly and explicitly pointed to the GOA’s support the domestic biodiesel industry. Thus, the Government directly or indirectly provided income/price support to the biodiesel industry resulting in an increase of exports of biodiesel.

The Commission then analysed whether the GOA's support to the biodiesel industry conferred a benefit. As the prices paid by the domestic biodiesel producers differed from a benchmark based on the prevailing market conditions in Argentina for soybeans, this difference represented the ‘savings’ obtained by the Argentinian producers of biodiesel which purchase soybeans in the Argentinian distorted market, compared to the price which they would have paid in the absence of subsidies. Ultimately, this total amount ‘saved’ represented the benefit conferred. Lastly, the GOA's set of measures was directed to benefit certain industries, including the domestic biodiesel industry. Indeed, even though the distortions on soybeans also benefited downstream products other than biodiesel, the benefit was available only to certain industries in Argentina, being those in the soya value chain. Thus, the Commission concluded that these measures were specific and they therefore qualified as a countervailable subsidy. The subsidy amount was calculated as reflecting a rate in the range of 25.05% – 33.15%, depending on the beneficiary.

(2) Government's mandated purchase of biodiesel for more than adequate remuneration (‘Biodiesel Supply Agreement’)

These agreements were designed to provide biodiesel to the domestic market given the blending mandate in force since 2010. This mandate required blending companies to purchase biodiesel and blend it with mineral diesel before sale. Furthermore, the GOA established individual and collective quotas for biodiesel to supply the domestic market. Given that none of the sampled exporting producers received a quota during the IP, none of these companies sold biodiesel on the domestic market through the quota system in force during that period. In addition, no Biodiesel Supply Agreement was in force during the IP with respect to the exporting producers. Therefore, the Commission concluded that there was no inherent benefit from any quota system received by the sampled exporting producers.

(3) Provision of loans and export financing on preferential terms and preferential lending

The complainant argued that the Banco de la Nación Argentina, a State-owned bank, was lending money to micro, small and medium enterprises for investment and working capital at preferential rates. The investigation showed that the loans granted to the sampled companies were not at preferential rates when compared to similar loans provided by privately owned banks.

(4) Government's revenue forgone or not collected under the Biofuels Law of 2006

The complainant also alleged that provisions of the Biofuels Law would allow biofuel producers to reduce the tax base on which the minimum presumed income tax is calculated as well as an accelerated depreciation for capital goods. The investigation showed however that none of the sampled exporting producers benefited from these promotional benefits and thus the Commission concluded that there was no countervailable subsidy involved.

(5) Provincial and municipal tax exemptions

Despite several schemes providing either tax exemptions to the biodiesel industry (Province of Cordoba), exemptions from the payment of taxes (Province of Buenos Aires) or tax advantages (Province of Santiago del Estero), the investigation showed that none of the sampled exporting producers benefited from these measures. Finally, it was found that the Province of Santa Fe had been granting during 15 years an exemption from income tax, stamp duty, real estate tax and vehicle duties to biodiesel companies located in that province. This fiscal exemption was considered a subsidy due to the revenue being foregone by the GOA and to specificity to only certain industries which could avail from it. The subsidy rate was calculated in the range of 0.06% - 2.15%.

Threat of injury and causation

Due to the effect of anti-dumping duties on imports of biodiesel from Argentina 21 that were in place between 2014 and August 2017, there were no or negligible imports from Argentina to the Union. However, in September 2017, the latter anti-dumping duties were reduced 22 and, as a result, imports from Argentina started to increase rapidly and significantly, reaching a 2.8% market share in the IP. Despite a 5% growth between 2014 and 2016, the Union production of biodiesel did not increase at the same rate as the Union consumption due to the Argentinian subsidised imports which started entering the Union market at the end of the IP. The Commission found that the IP was already negatively influenced by imports from Argentina and the period following the IP indicated a further deterioration of the situation of the Union industry. In spite of an increase of sales and production, caused by increasing consumption during the IP, the Union industry did not show indications of improving its economic situation. In fact, during the IP, the Union industry showed almost no profits, in view of the pressure exercised by the low prices of the subject imports. The low profits during the IP turned into losses in the first six months of 2018. The trends showed that the Union industry appeared not to have fully recovered from the effects of past dumping. The Commission also examined whether the subsidised imports caused a threat of material injury to the Union industry. Taking into account the nature of the subsidies, which decreased the costs of inputs, the reduction of the anti-dumping duties, the spare capacity of the Argentinian biodiesel producers, and the lower price of biodiesel imports, the Commission concluded that the fragile economic condition of the Union industry was likely to be aggravated by the imminent and continuing massive quantities of subsidised imports of biodiesel from Argentina. There was therefore a threat of a clearly foreseeable and imminent injury to the Union industry at the end of the IP. 

Regarding the causality analysis, the Commission established that there was a causal link between the threat of injury suffered by the Union industry and the subsidised imports of biodiesel from Argentina. In particular, the sharp increase in subsidised imports at prices undercutting the Union industry's prices coincided in time with the drop of the Union industry's performance. At the same time the Union industry was unable to reap the benefits of increased Union consumption and had to limit its increase in production, lost market share and was unable to achieve profits. The Union industry was forced to follow the price level set by the subsidised imports in order to avoid a further shrinking of its market share. Exports from third countries, sales performance of the Union industry and a reduction of capacity of the Union industry were found not to attenuate the causal link between subsidised imports and the threat of injury.

Union interest and definitive measures

The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users. With regard to importers, they were found usually not only to import but also to trade biodiesel purchased from Union producers. Importers might have faced additional difficulties to fully replace the level of imports affected by measures with supplies from Union producers, which normally used their own distribution channels. However, the Commission concluded that this possible negative effect could be balanced by the increased volume of trade of biodiesel purchased from the Union industry. Regarding the final consumers, they could be affected by the price increase following the imposition of measures. The Commission found that the imposition of duties would have the negative effect of increasing consumer prices. However, because of the limited content of biodiesel in the final product purchased by consumers (typically less than 10 %), this negative effect on the price of diesel fuel would only be a small proportion compared to the direct change in the price of biodiesel on the Union market.

A definitive countervailing duty was therefore imposed in the range of 25% - 33,4%, at a level sufficient to eliminate the threat of injury caused by the subsidised imports but without exceeding the amount of subsidisation found,

Undertakings

Further to the disclosure by the Commission of the case facts, cooperating exporting producers offered price undertakings in accordance with Article 13(1) of the basic AS Regulation. The offer consisted in selling biodiesel in the Union market at one minimum import price, linked to the average monthly soybean oil price quoted the GOA, which comprised the soybean export tax. Moreover exporters were to ensure that the volume of imports would be set at an annual level corresponding to their overall market performance (around 10% of the average annual Union consumption between 2014 and the IP).

The Commission carefully analysed, inter alia, the current export prices of biodiesel, the level of countervailing duty as well as other relevant investigation findings and found that the injurious subsidisation could be removed by the price undertakings offered at the proposed annual level of imports, while an ad valorem duty levied on imports exceeding that annual level would provide for a safety net against circumventing the measure. The Commission therefore concluded that the undertakings offered could be accepted in that latter form.

Biodiesel from Indonesia (Definitive CVD)

On 6 December 2018, the Commission initiated an anti-subsidy investigation with regard to imports into the Union of biodiesel originating in Indonesia. The initiation was based on a complaint lodged on 22 November 2018 by the European Biodiesel Board (EBB) on behalf of Union producers representing 32% of the total Union production of biodiesel. Producers representing 63% of the total Union production of biodiesel supported the complaint. The investigation of subsidisation and injury covered the period from 1 October 2017 to 30 September 2018.

Sampling

The final sample of Union producers consisted of three Union producers. A sample of importers was not selected due to the low number of unrelated importers that provided information. Four Indonesian exporting producers accounting for 100% of exports to the Union provided information. The Commission decided not to carry out sampling but rather to investigate all these Indonesian exporting producers.

The product concerned

The product concerned was commonly known as ‘biodiesel’, in pure form or as included in a blend, originating in Indonesia. Biodiesel produced in Indonesia is primarily palm oil methyl ester, which is derived from palm oil. Biodiesel produced in the Union is instead mainly rapeseed methyl ester but made also from other feedstock, including waste oils as well as virgin oils. However, both the product concerned and the biodiesel produced and sold in the EU were found to have the same basic physical, chemical, and technical characteristics as well as the same basic uses.

Subsidisation

The following subsidies were investigated: (1) direct transfer of funds, such as direct subsidies granted through the Oil Palm Plantation Fund; (2) government support to the biodiesel industry including through the provision of crude palm oil (CPO) for less than adequate remuneration (LTAR); and (3) government support via revenue forgone via the Bonded Zone scheme. Given the partial non-cooperation from the Government of Indonesia (‘GOI’) and the sampled exporting producers, the Commission had to partially rely on facts available in relation to the existence and the extent of the alleged support granted to the biodiesel industry including through the provision of CPO for LTAR and for the government support via revenue forgone.

(1) Government support to the biodiesel industry through direct transfer of funds via the Oil Palm Plantation Fund:

According to the complaint, the GOI supported the biodiesel industry by providing grants to the Indonesian biodiesel producers covering the difference between the GOI's reference price for biodiesel and the price at which oil companies purchase biodiesel, namely the reference price for diesel oil. The GOI established an Oil Palm Plantation Fund (‘OPPF’) to support purchases of biodiesel by entities appointed by governmental bodies. A Biodiesel Subsidy Fund was part of the OPPF and served the procurement and utilization of biodiesel on the domestic market. Additionally, the GOI created a management agency to collect export levies on the exportation of palm oil commodities and to manage the OPPF. These compulsory export duties were then used to fund the OPPF. The Directorate General of New Renewable Energy and Energy Conservation (EBKTE) selected the domestic biodiesel producers which participated in the procurement of biodiesel, and the allocation of the volume of biodiesel for each producer. The selected producers were then constrained to sell the monthly amount of biodiesel to the Petrofuel Entities. The OPPF envisaged a specific payment mechanism, whereby the buyers paid biodiesel producers the diesel reference price (lower than the actual biodiesel price). The Ministry of Energy and Mineral Resources determined the reference price. The difference between such diesel reference price and the biodiesel reference price was paid to the biodiesel producers out of the OPPF by the Management Agency.

The Commission analysed whether this set of measures adopted by the GOI to support the Indonesian biodiesel industry would amount to a countervailable subsidy. First, regarding the possible existence of a financial contribution, the investigation showed that all the exporting producers chose to participate in the procurement of biodiesel and thus were under the obligation to sell biodiesel to Pertamina and AKR. Furthermore, the reference price for biodiesel was higher than the reference price for mineral diesel and, thus, all the exporting producers received payments from the OPPF. The OPPF was created by an act of the GOI and the Management Agency was explicitly entrusted by the GOI with the duty to make payments to biodiesel producers. The Management Agency was granted the exercise of governmental functions with respect to the biodiesel sector, thus acting as a public body. The legal acts implementing the OPPF expressly confirmed that its funds (from the export levies and taxes) were used for the benefit of the biodiesel producers. The compensation of differences between reference prices made by the Management Agency to the biodiesel producers qualified as financial contributions in the form of a direct transfer of funds from the government. This situation allowed exporting producers to be in a better situation than they would be absent the scheme, thus entailing a benefit. As the OPPF was only available to some industries (those industries in the CPO value chain), the Commission concluded that the subsidy was specific. The subsidy amount was calculated as reflecting a rate in the range of 7.91% - 12.76%, depending on the beneficiary.

(2) Government support to the biodiesel industry including through the provision of CPO for LTAR

CPO was the main raw material used for the production of biodiesel in Indonesia. It was contended that CPO prices were distorted in Indonesia due to GOI’s intervention, namely through the imposition of high export taxes on CPO. This ensured that the CPO’s price remained significantly lower than global prices, thus benefiting Indonesian biodiesel producers. Additionally, the GOI introduced an export levy of 50 USD per tonne on CPO and a lower levy on downstream processed palm oil products. Overall, this policy of high export taxes and levies on CPO imposed by the GOI allowed for a depressing effect on the domestic palm oil price in Indonesia. It encouraged private CPO producers to sell their products internally and leading to the conclusion that the GOI entrusted or directed Indonesian palm oil producers to provide CPO to biodiesel producers for LTAR. Further to this export restraint system, the GOI also intervened in the market in order to de facto control CPO prices through the company PTPN - a CPO producer wholly owned by the State, which ensured that CPO was sold at an artificially low level. The investigation showed that in the CPO’s daily auctions organized by this company, the price of CPO was set by the GOI and did not reflect undistorted market conditions. Also, all the independent CPO suppliers aligned their prices with the daily PTPN prices. The Commission concluded that PTPN was a public body and exercised governmental functions when selling CPO on the market. The GOI directed the CPO suppliers to provide CPO at less than adequate remuneration to, inter alia, biodiesel producers by de facto setting a maximum price on the Indonesian domestic CPO market. The Commission concluded that the set of measures adopted by the GOI lead to a financial contribution in the form of government's provision of CPO for LTAR to the Indonesian biodiesel exporting producers.

Alternatively, the Commission further concluded that the GOI provided income or price support to the biodiesel producers through its intervention in the CPO market, as the categories of ‘financial contribution’/‘income or price support’ are not mutually exclusive. The investigation showed that the GOI’s intention to support the creation and development of the Indonesian biodiesel industry was manifest. Through the measures mentioned above (export taxes and levies, control of PTNP and direct subsidies to CPO producers), the GOI intervened in the market, allowing biodiesel producers to benefit from artificially low prices for CPO. These measures qualified as ‘a form of income/price support” to the biodiesel industry. Either through the financial contribution or the income/price support, this set of measures allowed the Indonesian biodiesel producers to benefit from ‘savings’ when purchasing CPO in the Indonesian distorted domestic market.

The GOI and most of the exporting producers argued that the Commission erred in qualifying the export restraints as a countervailable subsidy as those measures are WTO-consistent. However, the Commission observed that it did not consider export restraints per se as countervailable subsidies but rather the imposition of export restraints (such as export taxes and levies) was one of the tools used by the GOI to provide CPO for LTAR which amounted to a countervailable subsidy. The latter was calculated to be in the range of 0.13% - 5.15%.

(3) Government Support via revenue forgone: the Bonded Zone scheme

The Bonded Zones scheme allowed import duties and VAT on imported goods to be suspended or exempted for certain companies. The Commission considered that, particularly, the import duty exemption on machineries granted by the Bonded Zones scheme constituted a financial contribution by the GOI to the exporting producers in the form of revenue forgone. The investigation showed that the exporting producers essentially never paid the import duty and the VAT on the machinery they imported. The GOI conferred a benefit to the exporting producers which allowed them to be placed in a better financial position that they would be absent the scheme. The scheme was specific as it was available only to certain companies depending on their export performance and location in specific geographic areas. The subsidy rate was calculated in the range of 0.03% - 0.16%.

The Commission also identified certain other support schemes of relevance, which however were found not to be used by the exporting producers or not to provide a benefit, hence these schemes were not analysed further.

The definitive total subsidies rates reflecting subsidies amounts in the companies’ turnover were in the range of 8 to 18%, depending on the beneficiary.

Injury, threat of injury and causation

With regard to the analysis of imports price, the Commission calculated the level of undercutting according to various methodologies, depending on the type of biodiesel product. It was established that the prices of Indonesian imports significantly undercut the prices of the Union industry, by at least 6%, and as much as 17.5%, depending on the methodology chosen.

Due to the previous anti-dumping duties on biodiesel from Indonesia, which were in place, until March 2018, imports from Indonesia were negligible. However, as a result of the repeal of the latter duties, imports of the product concerned increased significantly. While the Union consumption increased during the IP by 33%, this positive development could not be reflected in the production and sales volumes of the Union industry which have only increased by 11% and 13% respectively. This allowed Indonesian imports to increase their market share. During the period considered, the injury indicators showed a mixed picture. Union production and sales followed the market demand. Investments fluctuated throughout the period considered and the number of employees in the Union industry remained stable. However, the profitability of the Union industry remained poor, thus leading to the conclusion that the Union industry did not manage to reach the level of normal profitable operations.

The Commission could not conclude on the existence of material injury and thus examined whether the subsidised imports from Indonesia could constitute a threat of material injury to the Union industry. As imports of the product concerned benefited from governmental support, the significant undercutting and price depression found during the IP lead to the conclusion that the delicate economic situation of the Union industry could develop even more negatively in the future. This could happen notably due to the fact that the Union market was very attractive for Indonesian exports (it constituted 40% of the global demand), that production inputs could be obtained at low cost in Indonesia, that the production capacity of the Indonesian biodiesel producers exceeded the domestic demand and that provisional anti-dumping and countervailing duties on biodiesel from Indonesia were imposed by the US. Moreover, the analysis of post-IP indicators indicated that the economic situation of the Union industry further deteriorated. The Commission concluded therefore that subsidized imports from Indonesia constituted a threat of material injury to the Union industry.

The Commission also established that there was a causal link between the threat of injury and the subsidised imports of biodiesel from Indonesia, notably as the undercutting of the Union industry prices by at least 6.0% to 11.6 % due to the significant and sudden increase of imports during the IP contributed to the loss of market share by EU producers. Exports from third countries, sales performance of the Union industry, and a reduction of capacity of the Union industry did not attenuate the causal link between subsidised imports and the threat of injury found. Notably, with regard to export from third countries, Argentinian imports, which featured generally lower prices than Indonesian ones in the IP, were now subject to countervailing duties, with a price undertaking since February 2019. Therefore, the latter could no longer be the main cause for a threat of injury to the Union industry. With regard to imports from Malaysia, the Commission found that, while they featured a similar market share than those from Argentina in the IP, the prices of Malaysian biodiesel were higher than Indonesian prices (and the Union sales prices). The same applied to imports from China, which also held a much smaller market share. Therefore, the former and latter could not be considered as a price-setting factor on the market, and they did not weaken the causal link.

Union interest and definitive measures

The Commission analysed finally whether it was not in the Union interest to adopt countervailing measures despite the determination of injurious subsidisation. The Commission based the determination of the Union interest on an analysis of all the various interests involved, including those of the Union industry, importers and consumers. Regarding the interest of the Union industry, the Commission found that the situation of the Union industry was fragile since it did not recover from the dumping previously suffered. Furthermore, the investigation showed that the Union industry used feedstock produced by the Union agriculture and the upstream agricultural oil sector also largely depended on the biodiesel industry. Thus, the Commission concluded that the imports of biodiesel from Indonesia would affect both the Union biodiesel industry and the agricultural sector. With regard to importers, they were found usually not only to import but also to trade biodiesel purchased from Union producers, and they might have faced additional difficulties to fully replace the level of imports affected by measures with supplies from Union producers, which normally used their own distribution channels. However, the Commission concluded that this possible negative effect could be balanced by the increased volume of trade of biodiesel purchased from the Union industry. Regarding the final consumers, the Commission found that the imposition of duties would have the negative effect of increasing consumer prices. However, because of the limited content of biodiesel in the final product purchased by consumers (typically less than 10%), this negative effect on the price of diesel fuel would only be a small proportion compared to the direct change in the price of biodiesel on the Union market.

The Commission concluded that a definitive countervailing duty should be imposed, corresponding to the total amount of countervailable subsidies established. The countervailing duty rates ranged between 8.0 % and 18.0%.

In relation to the measures, one of the exporting producers made an offer of price undertaking. However, the latter was judged by the Commission as unworkable, notably due to the level of minimum price proposed (considered as insufficient to offset the subsidies amounts), to the unsatisfactory level of annual imports, and to the applicant’s complex structure and sales channels, which increased the likelihood of circumvention and cross-compensation, putting at risk the proper enforcement of such undertaking.

Urea and ammonium nitrate from Russia, Trinidad and Tobago and the United States (US) (Definitive AD)

On 13 August 2018, the Commission initiated an anti-dumping investigation with regard to imports into the Union of mixtures of urea and ammonium nitrate originating in Russia, Trinidad and Tobago and the. The initiation was based on a complaint lodged on 29 June 2018 by the Fertilizers Europe on behalf of Union producers representing more than 50% of the total Union production of mixtures of urea and ammonium nitrate (UAN). The complaint contained evidence of dumping and of a resulting material injury that was sufficient to justify the initiation of the investigation.

Registration of imports and provisional measures

The Commission made imports of the product concerned subject to registration. 23 A provisional anti-dumping duty was imposed on 12 April 2019 on imports into the Union of UAN originating in all three countries. 24  

Sampling

The Commission selected the provisional sample on the basis of the reported production and Union sales volume by the Union producers. The sample consisted of three Union producers that accounted for around 70% of Union production and sales.

Product concerned 

The product concerned (UAN) was a liquid nitrogen fertilizer: mixtures of urea and ammonium nitrate in aqueous or ammoniacal solution. The most significant feature of this product was the nitrogen content which can vary depending on the water added to the solution. However, whatever their nitrogen content, all solutions of UAN are considered to have the same basic physical and chemical characteristics and therefore constitute a single product. UAN produced and sold in Russia, Trinidad and Tobago and the US, as well as UAN produced in the Union by the Union industry, were regarded as like products.

Dumping

Two Russian companies produced UAN and exported to the Union during the investigation (Acron and Eurochem). For Acron, the domestic sales were found not to be representative as the like product was sold in low quantities on the domestic market. Thus, the Commission constructed the normal value. For Eurochem, it was found that the like product was sold in representative quantities on the domestic market.

The investigation found that wholesale prices of natural gas produced by State-owned company Gazprom in Russia were regulated by the State via federal laws and based on policy objectives. At the same time, Gazprom was the biggest gas provider in the country with a market share of above 50% and acted as a price-setter. The investigation confirmed this price-setting behaviour, as all other providers sold gas at low price levels, similar to Gazprom’s. In addition, it was established that Gazprom was the owner of the pipelines through which all gas, including the one supplied by the independent producers. Therefore, Gazprom held a de facto monopoly for the export of Russian piped gas, which was transported at tariffs that were also regulated by the State, as the investigation found. Therefore natural gas prices in Russia did not reflect normal market conditions. Under normal market conditions, prices would mostly be set based on production costs and profit expectations of each producer. The Commission therefore concluded that the price of Russian natural gas needed to be adjusted. The Commission selected the price at the Waidhaus hub - the price of exported Russian gas at the German/Czech border - as the proper benchmark for gas adjustments.

With regard to Trinidad and Tobago, the only cooperating exporting producer did not have sales of the like product on the domestic market and, therefore the Commission constructed the normal value.

Only one US producer exported the product concerned to the Union during the IP. The total volume of domestic sales of this producer was regarded as representative. The normal value was calculated as a weighted average of the profitable sales only.

On the basis of a comparison between normal value and export prices, the following dumping margins were calculated: a) Russia: between 20% and 31.9 %; b) Trinidad and Tobago: 55.8% and c) US: 37.3 %

Injury, causation and level of measures

During the period considered, the Union consumption fluctuated with an overall fall of 5%. Imports from the countries concerned increased by 64% over the period considered, which led to an increase in market share (increase by 72%, from 21.9 % in 2015 to 37.7% in the IP). The steep increase in market share by the countries concerned was clearly to the detriment of other market participants. Regarding price undercutting, the investigation showed that imports from the countries concerned undercut the prices of the Union industry by 6,8% on average. Besides price undercutting, the investigation showed that the effect of the dumped imports caused also price suppression on the Union market and thus sales prices could not be raised to cover substantial increases in costs.

In terms of macroeconomic indicators, due to increased imports from the countries concerned, the Union production of UAN fell by 8% over the period of 2015 - 2017. Production capacity increased whereas capacity utilization fell by 12% over the same period. Overall, the Union industry was not able to grow over the period considered. The impact of the magnitude of dumping margins on the Union industry was substantial, given the volume and prices of imports from the countries concerned. Regarding microeconomic indicators, sales prices and unit cost of production in the Union fell over the period considered. Labour costs per employee increased, especially in 2017, when production and productivity increased. On the basis of the above, the Commission therefore concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic AD Regulation.

Regarding the causation analysis, over the period considered and against a backdrop of decreasing consumption in the Union, import volumes from the countries concerned and their market shares increased significantly whereas prices from the countries concerned fell on average by 33%. The increase in the market share of the imports coincided with a similar decrease of market share for the Union industry. Bearing in mind that UAN is a price-sensitive commodity, that the market share of imports from the countries concerned was 37.7 % in the IP, and that those imports were made at prices that undercut Union industry prices, such imports produced substantial harmful effects. The price pressure from imports from the countries concerned on Union producers was particularly damaging in 2017 and the IP when costs were increasing. The Commission’s analysis found that no other factor had a significant impact on the Union industry's injurious situation. On the basis of the above, the Commission concluded that the material injury to the Union industry was caused by the dumped imports from the countries concerned.

Furthermore, the Commission needed to determine the amount of duty necessary to eliminate the injury suffered by the Union industry. It therefore proceeded to calculate a target price which would allow it to cover for all costs of production (including the additional costs resulting from complying with Multilateral Environmental Agreements, to which the EU is party to and relevant ILO Conventions) and to still obtain a reasonable profit. With respect to additional costs, non-injurious price was increased by 3.7% to cover for the EU producers’ future compliance with the EU Emission Trading System, based on the cost of average estimated additional EU ETS allowances which will have to be purchased during the life of the measures.

The injury elimination level was determined on the basis of a comparison of the weighted average import price of the cooperating exporting producers in and the US as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the Union market during the IP. The underselling margins for Trinidad and Tobago was eventually at 16.2%, for the US at 23.9% and for Russia ranged from 13.7 % to 16.3%.

To determine the level of the measures with regard to Russia, the Commission found the existence of raw material distortions under Article 7(2a) of the basic AD Regulation. Notably, the investigation showed that natural gas was subject to an export tax of 30%, which affected the sales of natural gas in Russia. Furthermore, an exclusive right for gas export in gaseous state was granted to the Unified Gas Supply System (UGSS), the latter entity being controlled by the Russian State. As Gazprom enjoyed a unique licence to export natural gas through the UGSS, the Commission argued that this measure could also qualify as either a “licensing requirement” or a “qualified exporter list” measure. Lastly, a dual pricing of natural gas for domestic and export sales was found in the investigation, in the form of the domestic price being significantly lower (more than twice) as compared to the Waidhaus price.

Consequently, pursuant to Article 7(2a) of the basic AD Regulation, the Commission decided to set the provisional level of duties for Russia at the dumping margin.

It was also argued that raw material distortions were existent in the natural gas markets of Trinidad and Tobago and the US. The Commission concluded that such distortions did not exist.

Union interest

The determination of the Union interest was based on an appreciation of all pertinent information to the investigation, including the spare capacities in the exporting country, competition for raw materials and the effect on supply chains for Union companies. In particular, the Commission first established that there were distortions on raw materials with regard to the product concerned in Russia. Second, the Commission found that Russia had spare capacity which can be used to increase exports into the Union. In addition, the Commission found that Russian producers had an unfair advantage vis-à-vis Union producers with regard to natural gas due to the regulation in the Russian market. The Commission concluded that measures would not negatively affect the supply chain in Europe. More specifically, the Commission found that, although a limited number of farmers in the Union could potentially be affected by measures, any impact would be limited and not disproportionate overall. Finally, the Commission considered that imports of UAN would continue and, therefore, supply would not be disrupted by measures. Imports from the countries concerned, with a market share above 37% in the IP, were expected to continue in light of the growth foreseen in UAN demand. In addition, Union producers, with spare capacities, could produce significant volumes of UAN.

Additionally, regarding the Union industry, the Commission concluded that the measures would allow the Union industry to exploit its potential on a Union market on a level-playing field basis, recover lost market share, and improve profitability to levels considered sustainable. Importers would also benefit from the imposition of the measures. From the side of the users, even though it has been argued that ultimate users (farmers) could be affected by price increases steaming from the measures, the Commission found that UAN represented less than around 1% of overall farming costs in the Union. A price increase derived from measures, if any, should thus not have a significant impact on the farming sector as a whole in the Union. Even in specialised firms where UAN is used as a sole source of nitrogen fertiliser and it represents a high percentage of the costs (ex: common wheat), the increase in the cost of production would not be higher than 3%.

Definitive anti-dumping measures

The Commission concluded that definitive anti-dumping measures should be imposed on imports of UAN originating in Russia, Trinidad and Tobago, and the US in order to prevent further injury being caused to the Union industry. In the determination of the form of the measures, with regard to arguments from importers to apply a minimum import price or the opposition of complainants to a specific duty, the Commission considered that minimum import prices were not justified and could not protect the Union industry and that ad valorem duties could be insufficient to eliminate injury when prices would be low or could unduly hurt the user industry when prices would peaking. Consequently, it concluded that a specific duty reflecting previously calculated ad-valorem duties would be more appropriate for the present situation. Therefore, the anti-dumping duty was determined as a fixed amount per tonne applicable to imports of the product originating in: Russia - at 27.77 EUR/t (Azot and Nevinnomyssky Azot), 42.47 EUR/t (Acron and other companies); in Trinidad and Tobago - at 22.24 EUR/t and in the US - at 29.48 EUR/t.

3.1.5.    New investigations terminated without measures

In accordance with the provisions of the respective basic Regulations, investigations may be terminated without the imposition of measures if a complaint is withdrawn or if measures are unnecessary (i.e. no dumping/no subsidies, no injury resulting from dumped or subsidised imports, measures not in the interest of the Union). In 2019, 5 new proceedings (all were anti-dumping investigations) were terminated without measures, as compared to 8 in 2018.

The list of cases which were terminated without the imposition of measures during 2019 can be found in the following table. More information can be obtained from the Official Journal publications to which reference is given in Annex E.

3.2.    Review investigations

3.2.1.    Expiry reviews

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

In 2019, 1 anti-dumping measure expired automatically. The references for this measure are available in Annex N.

Since the expiry provision of the basic Regulations came into force in 1985, a total of 513 measures have expired automatically.

3.2.1.1.    Initiations

During 2019, the Commission initiated 6 expiry reviews of anti-dumping measures and 2 concerning anti-subsidy measures. The list of the expiry reviews initiated in 2019 can be found in the following table, together with the name of the complainant. It should be noted that some expiry reviews may be carried out in parallel with interim reviews. Where there are interim reviews and expiry reviews ongoing at the same time, these are indicated by an asterisk in the table below. More information can be obtained from the Official Journal to which reference is available in Annex F.    

3.2.1.2.    Expiry reviews concluded with confirmation of duties

In 2019, the Commission concluded 16 expiry reviews with a confirmation of the duties for a further period of 5 years.

The list of the measures, which were renewed during 2019, 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

Ceramic tableware and kitchenware from China (AD)

On 15 May 2018, the Commission decided to initiate an expiry review of the measures on imports of ceramic tableware and kitchenware originating in China. The initiation was based on a request filed by the European Federation for Table- and Ornamentalware (FEFP) that represented more than 28% of the total Union production of ceramic tableware and kitchenware.

Sampling

The Commission decided to limit its investigation to a reasonable number of exporting producers by using a sample of three groups based on the largest sales volume to the Union during the RIP. The three sampled groups covered 8.8% of the total Chinese exports to the Union in the RIP. On 25 July 2018, one of the sampled groups withdrew from cooperation forcing the Commission to select a new sample by adding one more group, the fourth largest in terms of Union sales during the RIP. The Commission also sampled five Union producers, out of which two SMEs, covering all major product types and located in five Member States. That sample represented over 10% of the estimated total production of the Union industry in 2017.

Existence of significant distortions and Normal value

The Commission examined whether it was appropriate or not to use domestic prices and costs in China in view of the possible existence of significant distortions in the Chinese market. The analysis mainly covered the substantial government interventions in the Chinese economy in general and in the specific market conditions of the sector that includes the product under review. The Commission found that all the available evidence pertaining to China’s economy in general as well as to the Chinese ceramic sector specifically pointed to the fact that prices or costs, including the costs of raw materials, energy and labour, were not determined by free market forces, because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic AD Regulation. Among others, the Commission found that tableware and kitchenware producers in China were subject to control or policy supervision or guidance by the Chinese government. While the sector included a significant number of private companies, the high level of government control and intervention in the sector and the economy as a whole prevented even privately owned producers from operating under market conditions. It was also established that the Government interfered with respect to prices and costs through its presence in ceramic tableware and kitchenware firms, as well as in the financial sector and other input sectors, Moreover, the Commission found extensive evidence of policy directives whereby the State steered the development of the ceramic tableware and kitchenware sector with regard to: market composition and restructuring, raw materials, investment, capacity management, product range, geographical location, or upgrading. All this evidence pointed to the fact that public policies or measures influenced free market forces in the Chinese ceramics sector.

On the basis above, and in the absence of any cooperation from the Chinese government, the Commission concluded that it was not appropriate to use domestic prices and costs to establish normal value in this case. In that context, the Commission needed to determine the normal value based on undistorted prices or benchmarks pertaining to a representative country. The Commission identified three such potential countries: Brazil, Thailand and Turkey. All three countries met the essential criteria to be eligible for a representative country: first, they have a level of economic development similar to the PRC, they all produce the product concerned and thirdly there are relevant public data available. Thus, the Commission analysed the data on all factors of production in the three potential representative countries. It was concluded that Turkey was the most appropriate representative country to establish a reliable normal value. Notably, as compared to the other countries, Turkey featured relatively high import quantities of inputs concerned, had information on labour costs publicly available, and the lead Turkish producer had published recent audited financial reports.

Likely continuation of dumping and recurrence of injury

After having constructed the normal value, the Commission compared it with the average Chinese export prices and concluded that the dumping margin in the RIP stood at of 35% for the only cooperating exporting producer, and at circa 70% for all other exporting producers. Further to the finding of the existence of dumping during the RIP, the Commission investigated the likelihood of continuation of dumping, should the measures be repealed. To that end, the Commission analysed the production capacity and spare capacity in the PRC, the pricing behaviour of Chinese exporting producers in other markets and the attractiveness of the Union market. The Commission found that Chinese imports of the product concerned continued to enter the Union market at dumped prices during the RIP. In addition, China was the biggest exporter of ceramic tableware in the world characterized by significant spare capacities, which could have turned in a continuation of dumped exports. Furthermore, the pricing behaviour of the Chinese exporting producers in third markets supported the likelihood of continuation of dumping into the Union. Finally, the Commission established that the Union market remained an attractive market for Chinese exporting producers of ceramic tableware even after the impositions of measures (Chinese exports of ceramic tableware represented almost 60% of the Union consumption). Considering all these factors, the Commission concluded that there was a strong likelihood that the repeal of the measures would result in increased exports of ceramic tableware from China into the Union at dumped prices.

Concerning injury, the Commission’s analysis showed that the situation of the Union producers improved in the period considered (increased production, Union sales volumes and market share). It was inferred that the Union industry did not suffer anymore material injury in the RIP and started recovering. However, the Commission also found that this recovery was slow and the industry’s general economic situation still fragile. What is more, given the high spare capacities in China, the attractiveness of the Union market and the pricing behaviour of Chinese exporting producers, there was a high likelihood of significant volumes of low-priced Chinese ceramic tableware and kitchenware available for sale/redirection to the Union already in the short term, in case the measures were allowed to lapse. The Commission simulated the potential increase of low-priced imports, and found that it could amount to additional imports of 67,800 tonnes and a decrease in EU production by 12,000 tonnes, which was considered sufficient to cause material injury to the Union industry, as it would lead to a lower capacity utilisation, an increase in the average cost of production, and thereby lower profitability (which was already below the target profit). As per all these facts, the repeal of the measures on the imports from China would likely result in a recurrence of material injury.

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 by further deteriorating its current low profitability.

With regard to 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 in the EU did not manifest any significant 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.

Accordingly, an anti-dumping duty on ceramic tableware and kitchenware products originating in China, was extended for five years: at the individual rates in the range of 13.1% - 23.4%; at the individual rate of 17.9% for all other cooperating companies; at the residual rate of 36.1% for all other companies. The definitive duty imposed was also extended to imports consigned from Morocco and the Republic of Korea, whether declared as originating in those countries or not.

Organic coated steel products from China (AD)

On 14 March 2018, the Commission initiated an expiry review of the measures imposed on imports of certain organic coated steel (OCS) products originating in China, further to a request lodged by The European Steel Association (EUROFER) on behalf of producers representing more than 70% of the total Union production.

Sampling

The Commission selected a sample of three operators which were found to be representative of the Union industry in terms of volume of production and sales of the like product in the Union. The sample accounted for 28% of the estimated total production of the Union industry and for 27% of total Union sales volume of the Union industry to unrelated customers in the Union during the review investigation period (RIP). No Chinese exporting producers cooperated in the case.

Dumping and continuation of dumping

The Commission’s analysis showed that due to China’s intervention in the economy and, in particular, in the steel sector, prices or costs, including the costs of raw materials, energy and labour, are not the result of free market forces as they are affected by substantial government intervention. No exporting producer cooperated with the investigation and no claim was presented that some domestic costs would be undistorted under the third indent of Article 2(6a)(a) of the basic AD Regulation. Therefore, Chinese domestic prices and costs could not be used and the normal value for China was constructed based on corresponding costs of production and sale in an appropriate representative country. Malaysia and Mexico met all the criteria to be considered as appropriate as potential representative countries: they had a substantial production of the product under review and a complete set of data available for all factors of production, manufacturing overheads, SG&A expenses and profit. In that situation, the Commission additionally assessed both countries’ level of social and environmental protection. Mexico had ratified almost all fundamental International Labour Organisation (ILO) conventions (except for one) and all major environmental conventions, whereas Malaysia had not ratified three out of the eight core ILO conventions, nor one of the major environmental agreements. The Commission therefore decided to choose Mexico as appropriate representative country, in accordance with Article 2(6a)(a) of the basic AD Regulation.

The Commission compared the constructed normal value price with the export price to countries other than the Union on an ex-works basis and concluded that dumping continued during the RIP. The Commission found the average dumping margin, expressed as a percentage of the CIF Union frontier price, to be 134%. The expiry review investigation showed that despite the low level of imports, Chinese imports of OCS products continued to enter the Union market at dumped prices.

The Commission further analysed whether there was a likelihood of continuation of dumping should the measures lapse. Given the significant spare capacities found in China, the fact that other countries have imposed trade defence measures against China and the attractiveness of the Union market compared to some of the third markets and the domestic market, it was considered likely that Chinese exporting producers would (re)enter the Union market with significant quantities at dumped prices in case the measures would be allowed to lapse. Thus, the expiry of the anti-dumping measures would be likely to lead to a continuation and, in any case, recurrence of dumping.

Injury and likelihood of recurrence of injury

The Union industry economic situation improved significantly during the review period. The imposition of the definitive anti-dumping measures in March 2013 allowed the Union industry to slowly but steadily recover from the injurious effects of the dumping. The fact that the Union industry has significantly benefited from the measures is illustrated, inter alia, by an increase in production and Union sales volumes, positive cash flow and return on investments, selling prices in general higher than the unit cost of production, minimum increase in labour costs and improved profitability. However, even if the Union industry had largely recovered from the past injury and seemed to be on the right track to further improve its condition in the long-run, it was still in a fragile situation due to its limited profitability, which was still below the target profit. Moreover, China's overcapacity in steel production was well enshrined and 80% of the production was exported. At the same time, the Union was the largest OCS market (after Asia and North/Central America) and trade defence measures by third countries were in place against Chinese steel products. All these facts led the Commission to conclude that the repeal of measures on the imports from China would likely result in a recurrence of injury to the Union industry.

Union interest and definitive measures

With regard to the interest of importers, the investigation showed that the measures in force had no substantial negative effect on the financial situation of importers. Similarly, key users experienced improvements in profitability during the period under review and the measures in place did not have a sizeable impact on users and consumers as OCS represented a negligible part of the cost of downstream products. The investigation showed that the measures allowed the Union industry to further exploiting its potential on a Union market that was now a level-playing field and thus its expiration would likely have a significant negative effect on the Union industry. As a consequence, the Commission concluded that there were no compelling reasons that maintaining the definitive anti-dumping measures would go against the Union interest.

Therefore, the anti-dumping measures applicable to certain OCS products originating in China were maintained in the range of 5.9% - 26.1%.

Organic coated steel products from China (AS)

On 13 December 2017, the Commission initiated an expiry review of the countervailing measures imposed on imports of certain OCS products originating in China. The request was also lodged by EUROFER on behalf of producers representing more than 70% of the total Union production. The request was based on the grounds that the expiry of the countervailing measures would be likely to result in the continuation or recurrence of subsidisation and injury to the Union industry.

Sampling

The Commission selected the same three operators as in the case of the parallel anti-dumping investigation (see above).

Likelihood of continuation of subsidisation

The original investigation determined that the following measures constituted countervailing subsidies:

1) the provision of goods and services for less than adequate remuneration (LTAR): both SOE and private bodies entrusted by the GOC provided hot-rolled and cold rolled steel at LTAR; the GOC proved land-use rights bellow the normal market rate and electricity was provided at lower rates and limited to certain enterprises and regions;

2) direct transfer of funds through privately owned banks entrusted by the GOC to provide financial contributions to steel producers at more favourable terms than those obtained on the market (in the form of preferential lending and below the market interest rates) or through public bodies entrusted by the GOC to provide financial contributions in the form of equity infusion and/or loans or in the form of revenue forgone resulting from debt cancelled or not repaid (debt for equity swaps) or grants to exporting steel producers, either under national, regional and municipal programmes or through export subsidy programmes at rates that were not market-oriented nor based on risk assessment criteria;

3) government revenue forgone or not collected that was due in the form of preferential treatment in income, direct and indirect tax regimes or import tariff programmes which were only available to certain enterprises such as the OCS producers;

In the absence of cooperation from Chinese exporters, the Commission resorted to facts available. The overall conclusion was that the OSC producers in China continued to benefit from countervailable subsidies during the RIP. In order to evaluate the likelihood of continuation of subsidisation, the following elements were taken into account: the production and spare capacity in China, the availability of other markets, and the attractiveness of the Union market. Chinese exporting producers had significant spare capacity as only 20% of capacity utilisation was reached. Thus, in case of removal of countervailing measures, OCS producers would have spare capacity to export to the Union market. Furthermore, trade defence measures against Chinese OCS exports had already been imposed in other important markets (India, Malaysia, Pakistan, Turkey and Vietnam). The removal of measures would have allowed Chinese exporting producers to redirect exports towards the Union. Lastly, the Union industry’s price was higher than the Chinese export price thus in case of removal of the measures, Chinese exporting producers could easily redirect the exports of substantial volumes of OCS into the Union market. The Commission concluded that there was sufficient evidence that subsidisation of the OCS industry could continue in the future.

Injury and likelihood of recurrence of injury

The Union industry improved significantly during the review period. The imposition of the definitive countervailing measures in March 2013 allowed the Union industry to slowly but steadily recover from the injurious effects of the subsidisation and allowed the Union consumption to increase by 18%. Due to the measures, imports from China to the Union remained low. However, the analysis of Chinese export prices to other third markets showed that China was selling in some of its main export markets at prices similar to or sometimes even lower than those to the Union, thus reinforcing the conclusion that the current level of Chinese prices would undercut the sales prices of the Union industry in the Union market. The analysis of the imports from third countries (India, Korea, Turkey and Taiwan) to the Union showed that, in general, the import price was higher than the average price of Chinese imports. However, even if the Union industry had largely recovered from the past injury and seemed to be on the right track to further improve its condition in the long-run, it was still in a fragile situation due to its limited profitability, which was still below the target profit. The precarious situation of the Union industry could be undermined in case of repeal of measures. As the parallel AD investigation had also established, China's overcapacity in steel production was significant and 80% of the production was exported. The Commission therefore concluded that the repeal of countervailing measures on the imports from China would likely result in a recurrence of injury to the Union industry.

Union interest and countervailing measures

The Commission analysed whether the maintenance of the existing countervailing measures would not be against the interest of the Union as a whole. With regard to the interest of the Union industry, the repeal would result in a significant negative effect as sales and profitability would decrease. The investigation also showed that the countervailing measures had no substantial negative effect on the financial situation of importers and users and that the continuation of the measures would not unduly affect the latter.

Therefore, the Commission concluded that there were no compelling reasons that maintaining the countervailing measures would go against the Union interest. Consequently, the measures imposed by Implementing Regulation (EU) No 215/2013 were applied anew in the range of 13.7% to 44.7%.

3.2.1.4.    Reviews concluded by termination

In 2019, 2 expiry reviews were concluded by the termination of measures in force. One selected example is described in more detail below.

Tube and pipe fittings from Turkey (termination of expiry review)

On 25 October 2017, the Commission received a request for an expiry review regarding measures on imports of certain tube and pipe fittings (TPF) originating in Korea, Malaysia, Russia, and Turkey. The request was lodged by the Defence Committee of the Steel Butt-Welding Fittings Industry, on behalf of Union producers representing approximately 51% of the total Union production of TPF, on the grounds that the expiry of the measures would likely result in continuation and/or recurrence of dumping and/or the recurrence of injury to the Union industry. The Commission initiated the expiry review on 27 January 2018.

Dumping

The Commission analysed first whether imports of TPF from the countries concerned were dumped during the RIP. While dumping was found to occur in the case of imports from Russia (with a margin of 41.8%), Korea (with a margin of 7.2% - 9.1%), in the case of Turkey no dumping was established during the RIP, while imports from Malaysia were negligible thus not allowing a dumping analysis.

Further to that, the Commission analysed whether there was a likelihood of recurrence of dumping in case the measures on imports of TPF from the countries concerned would lapse. The following elements were analysed: exports to other destinations, the production capacity and spare capacities, and the attractiveness of the Union market.

The Commission found that TPF producers from Malaysia, Korea and Russia would be likely to export significant quantities of TPF at dumped prices to the Union should the measures be allowed to lapse: Malaysia had a spare capacity close to the Union consumption and US AD measures were in place on imports of Malaysian TPF; the Korean spare capacity equalled two times the Union consumption and AD duties blocked access to Korean TPF in Japan, while their exports to the US were already significant; finally, Russia's spare capacity was close to the Union consumption too and the EU had been traditionally a key export market for Russian TPF.

Regarding Turkey however, the Commission found that the Turkish domestic market remained the main focus of Turkish TPF producers, and exports to third countries (besides the Union) were negligible. On the other hand, Turkish spare capacity represented close to half of the Union consumption of TPF during the review period. However, the investigation established that the spare capacity would be unlikely to be re-directed to the Union market in large quantities should the measures lapse: indeed, despite having benefited from low anti-dumping duties, which gave a comparative advantage in relation to other exporting producers, Turkish producers did not increase their market share in the Union. What is more, as no dumping was found concerning exports during the RIP, future exports to the Union were unlikely to be dumped.

Consequently, the Commission concluded that dumping of TPF from Turkey was not likely to recur, and thus the measures on Turkish imports should be repealed. (With regard to the other countries concerned, the investigation has shown that measures should be extended for five years more.)

3.2.2.    Interim reviews

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

During 2019, the Commission initiated 2 interim reviews (both with regard to countervailing measures). Three interim reviews were concluded during the same period - one was terminated confirming the duties unchanged and two amended 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.

3.2.3.    New exporter reviews

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

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

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

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

In 2019, the Commission initiated 1 ‘new exporter’ review. Since the Commission carried out the first reviews of this type in 1990, a total of 78 such reviews were initiated so far. (Annex I)

3.2.4.    Anti-absorption investigations

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

In 2019, 1 anti-absorption investigation was initiated and 1 such investigation was terminated without increase of duty (Annex J).

3.2.5.    Anti-circumvention investigations

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

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

In 2019, The Commission initiated 4 anti-circumvention investigations. More information can be obtained from the Official Journal publications to which reference is given in Annex K.

Ceramic tableware and kitchenware from China (anti-circumvention)

Ex-officio investigation

In 2019, the Commission analysed available evidence on the patterns and channels of sales of ceramic tableware and kitchenware products from China since the imposition of the original measures. The comparison of export figures between 2014 and 2018 revealed a sharp rise or fall in the exports of certain exporting producers. Moreover, in some cases, the actual exports from certain exporting producers exceeded the declared production. These indicators suggested that certain exporting producers currently subject to the (higher) residual or individual duty were selling their ceramic tableware and kitchenware via other exporting producers subject to a lower duty (mainly 17.9%) – a practice called channelling, aimed at circumventing anti-dumping measures. Consequently, on 21 March 2019, the Commission opened an anti-circumvention investigation which was not based on a complaint or request.

The Commission proceeded to sending questionnaires to 50 Chinese exporting producers listed in the Annex to the initiating Regulation asking for all the relevant information, including with respect to any related company located in China. Of the 50 exporting producers, 48 belonged to the group of non-sampled cooperating exporting producers subject to a duty of 17.9 %; and two had individual rates of duty of 22.9 % and 23.4 %.

Circumvention

19 exporting producers submitted complete questionnaires replies, out of which 17 were found not to be engaged in the circumvention practices after verification visits. The remaining exporting producers either did not submit (13) or submitted an incomplete questionnaire (18). The companies that did not reply were already subject to a duty of 17.9% and their exports sharply increased during the period 2014-2018, without a valid economic justification the Commission concluded based on the facts available on the file that these producers were engaged in channelling practices.

Out of the 18 that submitted highly deficient questionnaires, 15 were also subject to the rate of duty of 17.9% and experienced a sharp increase in the exports in the period under analysis. Two other exporting producers had decreased their exports yet they were also subject to duties of 22.9% and 23.4% - that is lower than the residual duty but also higher than 17.9% duty. Therefore with regard to the latter 17 (15+2) companies the lack of adequate replies to Commission questionnaire and of economic justification other than possible circumvention practice led the Commission to establish, based on the facts available on the file that channelling was practiced by the said companies.

Change in the pattern of trade

During the expiry review, the Commission analysed the development of the import volumes from China into the Union with reference to Eurostat data, which provided countrywide figures. In the anti-circumvention investigation, an assessment of company-specific data was necessary. Through its internal database, established based on Article 14(6) of the basic AD Regulation, the Commission identified the change in the pattern of trade by comparing exporting producers with higher and lower duties for the purpose this investigation. The exporting producers subject to this investigation accounted for 26% of the total Chinese export volumes of the product under investigation to the Union.

The Commission noted a clear change in the pattern of trade within the period 2015 – 2018. The 30 exporting producers engaged in circumvention increased their sale volumes to the Union by more than 20% in 2018, in clear contrast with the increase of all Chinese imports into the Union by about 11%. In addition, when differentiating between these 30 companies based on their applicable duty rate, the Commission found that 28 exporting producers subject to the non-sampled cooperating rate of duty (17.9%) increased their sales volume to the Union by about 12,600 tonnes on an aggregate level, whereas the remaining 370 exporting producers subject to the non-sampled cooperating rate of duty increased their sales volume to the Union by only about 20,000 tonnes during the same period.

The Commission considered that these changes in trade flows to the Union constituted a change in the pattern of trade which stemmed from a practice, process or work for which the investigation did not establish any due cause or economic justification other than the avoidance of the residual or the higher duty in force on tableware and kitchenware originating in China.

Dumping and measures

The Commission compared the average normal value as established in the recent expiry review Regulation with the weighted average export prices during the review period of the 30 producers found to be circumventing the measures. The conclusion was that the exports of Chinese ceramic tableware and kitchenware continued to be dumped in relation to the normal value previously established through the channelling practice.

The Commission also concluded that the latter practice was undermining the remedial effects of the existing measures in terms of both quantities (as the circumvented imports represented a significant 10% of the Union market) and prices (as the average CIF price of the 30 exporting producers was found to be below the average cost of production in the Union).

There was neither due cause nor economic justification for the channelling other than the avoidance, by the 30 Chinse exporting producers, of the higher duty in force.

The Commission therefore concluded that it was appropriate that the residual duty of 36.1% should be applied to the circumventing 30 exporting producers that initially had a lower duty. The additional duties were to be retroactively collected on the registered imports from the 30 companies.

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

These investigations fall outside Article 11(3) or Article 19 of the basic Regulations and focus on the implementation of court rulings. In 2019, the Commission initiated 7 such investigations. A list of the cases concerned is given in Annex H. More information can be obtained from the Official Journal publications to which reference is given in that Annex.

3.3.    Safeguard investigations

Safeguard measures have always been and remain an instrument 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).

On 14 March 2019, an EU Horizontal Safeguard Regulation entered in force, 26 with the aim to streamline the implementation of the EU’s bilateral safeguard measures. The objective of these safeguard clauses is to temporarily suspend tariff preferences where preferential imports increase to such an extent that they cause or threaten to cause serious injury to a particular EU industry. This horizontal regulation provides standard rules for the implementation of bilateral safeguard clauses, including the conditions and decision-making process. In the past, the EU adopted separate regulations for each individual FTA, which will no longer be necessary.

In terms of casework, in 2019, the EU concluded three safeguard cases with definitive measures (Annex L):

- on 16 January 2019, further to two bilateral safeguard investigations, the Commission imposed definitive duties on Indica rice originating in Cambodia and Myanmar under the rules of the GSP, by re-establishing the applicable Common Customs Tariff rate of 175 EUR/tonne, with a progressive liberalisation to 125 EUR/tonne over three years; 27

- on 2 February 2019, the EU imposed an erga omnes definitive safeguard duty on certain steel products. 28 The steel safeguard measure was described in the 37th Annual Report on Trade Defence Activities in year 2018 29 (due to the fact that provisional measures were imposed in 2018 and to the political importance of the case). These measures were reviewed on 1 October 2019, as per the description below.

3.3.1.    Details on individual safeguard cases

General safeguard measures on certain steel products – Review

On 17 May 2019, the Commission initiated the first review 30 of the steel safeguard measures. These measures had been in place since 2 February 2019. 31 When imposing definitive safeguard measures, the Commission had committed to review them regularly 32 and to adjust the level or allocation of the tariff-rate quotas (‘TRQs’) in case of changes of circumstances during the period of imposition.

After analysing over 200 submissions from interested parties, the Commission concluded its investigation and the resulting adjustments were published in the amending Regulation 33 , which entered in force on 1 October 2019. The Commission’s findings and adjustments to the definitive safeguard measures are summarised below:

a)Potential adjustment to the level and allocation of tariff-rate quotas

For product category 1 (hot-rolled flats), the Commission imposed a 30% cap on the imports of any individual country – per quarter – with a view to preserving the traditional trade flows in terms of origins. In addition, regarding product category 25 (large welded tubes) the Commission observed that if the allocation of TRQs per country set out in the definitive measures were maintained, the participation of suppliers of other potential countries of origins in procurement processes for other ongoing or future projects could unduly be distorted. The same problem could also arise if the Commission were to set a cap per supplying country, as it decided to do for product category 1. The Commission thus considered that maintaining the original situation would not be in the Union interest and that the change in the allocation of TRQs for this category – by removing the country-specific TRQs and transforming this category into a single global TRQ – was justified.

Moreover, the Commission considered it in the Union interest to adjust the functioning of the TRQ for category 4, in such a way that the use of category 4B is restricted to only imports that could demonstrate an end-use in the automotive sector.

To this end, imports under category 4B continued to be subject to the safeguard measures but, as regards formal requirements, were placed under the end-use procedure referred to in Article 254 of Regulation (EU) No 952/2013 34 . This requirement was however subsequently removed 35 , with retroactive application, since the system did not function as originally expected and imports under product category 4B were disrupted.

b)‘Crowding out’ of traditional flows

The Commission identified negative crowding out 36 effects in two product categories (13 – rebars, and 16 – wire rod). Accordingly, the Commission decided to impose, in the last quarter of a given period, a cap of 30% of the imports of those countries that had previously exhausted their country-specific quota. In this way, the Commission sought to ensure that traditional import volumes from other origins – usually smaller exporting countries – were preserved.

c)Potential detrimental effects in achieving the integration objectives pursued with preferential trading partners

The Commission concluded that the definitive measures did not markedly limit the ability for the Western Balkan countries to export steel to the Union. This fact, coupled with the quota increase resulting from the liberalisation of the measures as of 1 July 2019, led the Commission to conclude that the current TRQ was not producing detrimental effects to their integration objectives.

d)Update of the list of developing WTO member countries excluded from the scope of the measures based on their most recent level of imports

Under the applicable legislation, safeguard measures should not apply to any product originating in a developing country member of the WTO as long as two conditions are met. First, that its share of imports of that product into the Union does not exceed 3%; Second, that developing country members of the WTO with less than a 3% import share account collectively for not more than 9% of total Union imports of the product concerned.

In the context of the review, the Commission reassessed the list of exclusions based on the most recent and consolidated data available at the time of the investigation – i.e. import data of 2018. As a result, imports of some product categories of certain developing countries became subject to the measures and vice versa.

e)Other changes in circumstances that may require an adjustment to the level of allocation of the TRQs

Following an in depth assessment of the functioning and effects of the existing safeguard measures, the Commission also considered it appropriate to lower the liberalisation level of the measures from an initially foreseen 5% per year, to a 3% pace for the second and third period of measures. The Commission considered that this lowered liberalisation pace is in line with the most-recently published general economy and industrial outlooks, which foresee a growth reduction for the Union and the world economy.

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 2019, EU TDI services made 137 such visits, which amounted to 1948 man-days of verification work. Circa 30% of this activity aimed at verifying EU companies’ data relating to injury and Union interest, while the rest constituted verifications at companies in 12 third countries.

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 2019, the TDI services continued their follow-up activities aimed at ensuring that measures were effectively enforced. In the framework of an integrated approach measures were considered in all their forms - duties and undertakings – and synergy was sought between the TDI services and enforcement-oriented services (OLAF, DG Taxud and customs authorities in Member States).

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

4.1.    Follow-up of measures

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

4.2.    Monitoring of undertakings 

Monitoring of undertakings forms part of the enforcement activities, given that undertakings are a form of AD or AS measures. 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 2019, there were 3 undertakings in force. Eight new undertakings were accepted during the year. Therefore, the number of undertakings in force at the end of 2019 was 11. More information is available in Annexes M and Q.

4.3.    OLAF activity

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

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

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

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

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

5.    Refunds 

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

During 2019, 26 new refund requests were submitted. At the end of 2019, 2 refund investigations were on-going, covering 66 requests. The Commission adopted in 2019 22 Implementing Decisions granting partial refund or rejecting refund requests. More details on these decisions and on the status of refund investigations can be found at: http://trade.ec.europa.eu/tdi/refunds.cfm?sta=1&en=20&page=1&c_order=number&c_order_dir=Down .

6.    Information and Communication activities / Bilateral contacts

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

During 2019, besides the activities described in this Annual Report and SWD in other sections (notably with regard to SMEs), the Commission’s trade defence services continued to entertain contacts with practically all key stakeholder organisations affected by trade defence. Two sessions of the Civil Society Dialogue, in April and December, were dedicated to trade defence matters. In April, the EU’s Annual Report on Trade Defence activities in 2018 was presented, while in December, an update was provided of the practical implementation of the legislative reforms of TDI carried out in 2017 and 2018.

Similarly to previous years, in 2019, 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 (e.g. Japan). These meetings allow continuing a constructive dialogue despite potential differences as regards the applied TDI methodology.

In addition, the Commission came back in 2019 to the idea of organising a seminar for officials from third countries. The aim of this training seminar, which took place in December 2019, was to allow the participants to gain a deeper understanding of how the European Commission applies trade defence rules and exchange experiences on how to manage trade defence investigations. 15 participants from five different foreign administrations (Indonesia, Taiwan, Tunisia, Ukraine and the Gulf Cooperation Council (GCC)) attended the seminar. The participants also presented the TDI administration and investigation practice of their respective countries.

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

7.1.    Overview of the judicial reviews in 2019

In 2019, the General Court (GC) and the Court of Justice (CJ) rendered 31 judgments and orders in the areas of application of anti-dumping or anti-subsidy measures: 14 rulings were handed down by the GC, whereas the CJ issued 8 judgments in appeals of GC rulings, 5 orders in relation to taxation of costs and 4 preliminary rulings.

7.2.    Cases pending

At the end of 2019, 48 cases were pending before the GC and 13 before the CJ. A list of the cases is given in Annex S.

7.3.    New cases

In 2019, 24 new court cases were lodged in the field of trade defence. Twelve of these were lodged before the GC (all actions for annulment) and 12 before the CJ (5 appeals and 7 preliminary rulings).

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

T-607/15 – Yieh United Steel Corp. (Yusco) v European Commission

The General Court dismissed the action brought by Yusco (the applicant), an exporting producer of stainless steel cold-rolled flat products (the product concerned). The applicant sought the partial annulment of the regulation by which the Commission imposed anti-dumping duties on the product concerned from China and Taiwan.

The GC supported the Commission’s rejection of the applicant’s claim for a deduction of scrap value from its cost of production. The objective of that claim was to reduce the applicant’s cost of production and consequently decrease the duty rate. The Commission’s decision was based on the finding that the applicant’s cost allocation method was peculiar, was not clearly explained until very late in the investigation and there was a risk of double deduction. The GC recalled that Article 2(5) of the basic AD Regulation does not require the Commission to accept unconditionally and without carrying out the necessary checks the information, contained in the applicant’s accounting records. Under this provision costs shall normally be calculated on the basis of records, kept by the party under investigation, if certain conditions set therein are met. This conclusion is confirmed by Article 6(8) of the basic AD Regulation, according to which the information provided by interested parties shall be examined for accuracy as far as possible. The objective of the verification visits is precisely this one.

Importantly, the GC further explained that it was for the applicant to provide to the Commission, from the beginning of the procedure and to the best of its ability, all the information necessary for a proper understanding of its accounting methods and with a view to allowing the Commission to carry out the necessary checks. As the applicant has grouped together the cost of production of different products (including the product concerned), the GC concluded that the Commission did not commit manifest error when considering that it was impossible to verify that all costs were accurately reflected in the cost of production declared. The GC recalled that Article 6(2) of the basic AD Regulation does not allow the interested parties not to mention all necessary information immediately in their replies to anti-dumping questionnaires and to reveal it only in the light of the progress of the investigation. Although it is for the Commission, as investigating authority, to determine whether there is dumping, injury and causal link, the Commission depends on the voluntary cooperation of the parties. The GC concluded that the Commission was entitled, without committing a manifest error of assessment or erring in its interpretation of article 2(5) of the basic AD Regulation, to reject the claim to deduct recycled scrap from the cost of production, having been unable to verify the accounting record.

This judgment also clarifies the relevant criterion to qualify sales as “domestic”. The applicant complained about the exclusion from the determination of the normal value of one important part of its sales it considered as domestic. For the applicant, the relevant criterion is the “intention” or the “subjective knowledge” of the destination of the sale and the Commission did not demonstrate the existence of this intention. The GC, after having examined different linguistic versions of the basic AD Regulation and also the relevant provisions of the WTO AD Agreement and jurisprudence, took a different stand and considered that the “destination” of the product should be considered and not the “intention”. For the General Court, making the exclusion of sales subject to proof of the intention of the vendor would allow to take into account export prices in the determination of the normal value, which will compromise its correct determination. The GC concluded that the Commission based its decision to exclude the sales in question on the existence of objective evidence of export 37 . Subjective elements (intention or knowledge) did not play any role in its assessment. On this basis, the Court rejected also this part of the complaint.

After rejecting all pleas, the GC dismissed the action in its entirety.

T-300/16 and T-301/16 – Jindal Saw Ltd and Jindal Saw Italia v European Commission, supported by Saint-Gobain Pam

The General Court annulled both Regulations imposing respectively countervailing (CVD) and anti-dumping (AD) duties on ductile pipes from India as far as Jindal Saw Ltd is concerned (‘Jindal’).

T-300/16 (anti-subsidy)

The GC upheld the findings that the export restraints in effect in India (export tax plus dual freight policy consisting in charging higher rail transport fees to iron ore destined for export in comparison with the one destined for domestic consumption) amounted to a “financial contribution ”within the meaning of Article 3(1)(a)(iii) of the basic AS Regulation

Indeed, the GC found that “the Commission established that, through the export restrictions in question, the Indian government had sought to obtain from Indian mining companies the provision of iron ore on the Indian market. Indeed, instead of buying iron ore and supplying it themselves on that market, the Indian government introduced a system which rendered the export of iron ore commercially unattractive through export restraints and, hence, obtained from Indian producers of iron ore that they rather sell on the domestic market”. The GC found evidence of the design, introduction and operation of the export restraints to produce the desired effects and stressed that the export tax was not merely a measure to collect public revenue. The GC further noted that the Indian government performed more than mere acts of encouragement. The GC confirmed that the Commission did not base its analysis on side-effects but on acts attributable to the Government of India. The GC also upheld the Commission’s assessment that the iron ore producers’ behaviour to favour the domestic market was irrational, given the higher prices of iron ore on the world market.

The GC upheld the findings that the measure was specific to the steel industry, regardless of spillovers on other downstream industries. The GC noted that if access to the subsidy is limited by virtue of the fact that only certain enterprises could use the subsidised product, the subsidy is specific.

The GC confirmed the need to determine the existence of a benefit for the recipient “for the whole period investigated”, and thus agreed that the Commission could focus on the transactions showing a benefit when compared to the benchmark price (no need to offset with negative amounts).

According to the GC, “as far as possible, the method used by the Commission to calculate the advantage must make it possible to reflect the benefit actually conferred on the recipient”. In this case, the Commission did not take the actual transport costs from the mine incurred by Jindal but the average of those costs of the two cooperating exporting producers when establishing the net benefit amount resulting from the purchase of iron ore. As a consequence, the GC found that the Commission made an error and violated Article 6(d) of the basic AS Regulation.

Regarding price undercutting calculations, the GC found an error when the Commission compared Union industry’s prices to the first independent buyer and Jindal’s constructed CIF prices on the basis of Article 2(9) of the basic AD Regulation due to the fact that Jindal sold to the EU mostly via a related importer.

T-301/16 (anti-dumping)

The GC annulled the regulation on the basis of the wrong undercutting analysis mirroring the reasoning made in the anti-subsidy ruling described above. However, the GC upheld how the Commission constructed the export price in this case for the purpose of the dumping calculations. In line with Article 2(9) of the basic AD Regulation, the Commission considered the final export prices of Jindal’s selling entities unreliable because of the existence of an association between the exporting producer and its related importer. The GC referred to the history of Articles 2(8) and 2(9) of the basic AD Regulation, including in the GATT and WTO context, to conclude that there is no additional requirement for the Commission to show that the prices between the exporting producer and its related importer were not reliable. Likewise, the GC confirmed that the Commission did not make a manifest error of assessment when constructing the export price.

T-741/16 – Changmao Biochemical Engineering v European Commission

The General Court dismissed the action brought by Changmao Biochemical Engineering (the applicant) against the Regulation imposing a definitive anti-dumping duty on imports of aspartame originating in the People's Republic of China (contested regulation). The applicant contested in particular the rejection of its Market Economy Treatment (MET) claim, the rejection of its claims for adjustments, the process on the selection of the analogue country and the use of some EU Industry data to construct normal value.

On the examination of MET claims, the GC confirmed the Commission’s requirement that the applicant’s accounting records – and not just the audit of such records, as the applicant claimed - be in line with international accounting standards, as this allows the Commission to ascertain whether a company operates under market economy conditions and its accounting records reflect the actual costs.

The GC examination of this claim is interesting for various reasons. First, the GC stresses the importance of mission reports to disprove an argument by the applicant, underlining the usefulness of having complete mission reports. Second, the GC reaffirms the discretion of the Commission to disregard documents provided at so late a stage of the verification visit that they cannot be verified, if the required documents were requested early on during the visit and the company is informed throughout the visit of what remains missing. Third, the GC found that no legitimate expectations can arise from MET findings in previous investigations and that the Commission’s review of MET claims can be “strict and thorough”.

Regarding the adjustments to ensure price comparability when calculating dumping, the GC recalled that it falls on the applicant to make a claim under Article 2(10) of the basic AD Regulation to request an adjustment and provide evidence. In this case, the applicant requested an adjustment because customers pay different prices on the domestic market because of differences in the cost of production. However, the applicant did not provide any evidence supporting the claim. On that basis, the Commission did not do any adjustment. The GC upheld the Commission’s approach.

On the choice of analogue country, the GC ruled that given the rarity of aspartame producers in similar countries and the difficulty of finding a producer willing to cooperate in the investigation, the Commission took all due care in the search for an appropriate analogue country. The GC recalled the voluntary nature of cooperation by third parties and the lack of tools on the Commission’s side to force cooperation; consequently, non-cooperation cannot be viewed as a breach of the Commission’s duty of care. On that basis, the GC upheld the Commission’s choice to use some EU industry data for establishing normal value, as that choice was made in a reasonable manner, taking into account all the reliable information available at the time of that choice, and with all due care.

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

T-749/16 – Stemcor London Ltd, Samac Steel Supplies Ltd v Commission

The General Court dismissed the action brought by two importers based in the United Kingdom, Stemcor and Samac (the applicants) against Commission Implementing Regulation imposing a definitive retroactive anti-dumping duty on the imports of certain cold-rolled flat steel products from China and Russia (the contested regulation). By the contested regulation, the Commission ordered for the first time retroactive collection of registered duties. The judgement gives important clarifications as to the interpretation of Article 10(4)(c) and (d) of the basic AD Regulation which lay down the conditions for retroactive collection of duties.

The first plea concerns the requirement laid down in Article 10(4)(c) of the basic AD Regulation that the duty on registered imports may only be levied retroactively if the importer was aware or should have been aware of the dumping as regards the extent of dumping and the injury alleged or found. The GC first explained that the purpose of the retroactive collection is to prevent the remedial effects of the definitive measures from being undermined. Therefore, the requirement of awareness of dumping cannot be interpreted as awareness of actual level of dumping because, in general, the importers’ awareness of actual dumping can only be established as from the adoption of the definitive measures. Consequently, such restrictive interpretation would deprive Article 10(4) of all practical effect.

The GC also clarified that the awareness of dumping is not a non-rebuttable presumption. The Commission must establish objective evidence that the importer was aware or should have been aware of the extent of the dumping and the injury alleged or found. In order to determine whether the Commission has established the existence of such objective evidence in the case at hand, GC examined the notice of initiation and the non-confidential version of the complaint. GC found that the notice of initiation and the non-confidential version of the complaint contained a number of statements and items of evidence supporting and stating the extent of the dumping and injury alleged. Consequently, the Commission was entitled to infer that applicants, who are experienced professionals, were aware of, or should have been aware of the extent of the dumping and injury alleged. On that basis, the General Court rejected the first plea.

The second plea takes issue with the assessment of the condition laid down in Article 10(4)(d) of the basic AD Regulation relating to a further substantial rise in imports. The applicants had argued that the further substantial rise in imports must take place after the beginning of registration. The GC confirmed that the Commission was entitled to compare the imports made during the IP with those which took place between the first full month following publication of the notice of initiation of investigation and the last full month preceding the imposition of provisional measures.

The Third plea concerns the interpretation of the condition that the further rise in imports must be likely to ‘seriously undermine the remedial effect’ of the definitive anti-dumping duty to be applied, within the meaning of Article 10(4)(d) of the basic AD Regulation.

The GC clarified that it is not required to carry out an individual analysis of the conduct of each importer given that injury caused to an established Union industry by dumped imports must also be assessed as a whole. The further rise in imports must therefore be assessed as a whole, without considering the individual and subjective position of the importers in question. The GC also clarified that retroactive imposition is not punitive, but serves to preserve a level playing field.

Next, the GC examined whether the Commission had rightly established the serious undermining of the remedial effect. While recognizing a broad margin of discretion, the GC examined in detail all arguments that have been included in the contested regulation one after the other. The GC clarified that the ‘substantial’ nature of the rise is to be determined on a case-by-case basis. While a comparison between the two monthly averages is an important element, it is not necessarily the decisive element in determining whether the further rise in imports is ‘substantial’. Other relevant considerations must also be taken into account such as in particular: the development of the overall consumption of the products concerned in the Union, the evolution of stocks and the evolution of market shares. Accordingly, the Commission was fully entitled to conclude, that the further substantial rise in imports, in the light of its volume, timing and other circumstances, namely the substantial decrease in prices and increase in stocks, had a further negative bearing on the prices and Union market share of the Union industry and was therefore likely to seriously undermine the remedial effect of the definitive anti-dumping duty.

After rejecting all pleas, the GC dismissed the action in its entirety.

T‑228/17 – Zhejiang Jndia Pipeline Industry Co. Ltd v European Commission

The General Court confirmed the legality of a regulation imposing anti-dumping duties on imports of certain stainless steel tube and pipe butt-welding fittings, whether or not finished, originating in China. The contested regulation was adopted as the result of an investigation initiated prior to the expiry of certain provisions of Section 15 of the Protocol on the Accession of the Peoples Republic of China to the WTO on 11 December 2016, but concluded only after that date.

Regarding the adjustment of the normal value, the applicant claimed that the Commission committed a manifest error of assessment when it refused to adjust the normal value based on the price lists for welded and seamless pipes used by Chinese producers and submitted for that purpose by CCCMC 38 . Instead, the Commission adjusted the normal value for difference in raw material used and difference in grade of steel based on verified Union Industry cost data. The GC confirmed that, when the use of non-market methodology is warranted like in the present case, the Commission is not required to take into consideration data from the non-market economy country and is authorised to use data from Union Industry. Furthermore, in the case at hand, the fact that the price list originated in the non-market economy country was not the only reason why those data were rejected: sales prices could not be considered suitable for calculating the production costs. In addition, the applicant never submitted the claim for market economy treatment in order to prove that it operates under market economy conditions.

GC also rejected the plea regarding an alleged breach of the applicant’s rights of defence. In particular, the GC clarified that the applicant cannot rely on the CCCMC’s failure to receive certain data before the Court because it had not proved that the CCCMC acted on its behalf. Furthermore, the applicant would have to establish that the outcome of the procedure would have been different had it been aware of those data before the final disclosure.

Lastly, the applicant argued that the Commission should not have applied non-market economy methodology to the case at hand, because Section 15(a) of the Protocol on the Accession of China to the WTO had allegedly expired. The Court clarified that it cannot review the legality of the contested regulation in the light of the Protocol on the Accession of the China of the WTO. Moreover, the Commission was not required to interpret Article 2(7) of the basic AD Regulation in the light of Section 15 of the Protocol on the Accession of China to the WTO. Article 2(7) lays down rules concerning the calculation of normal value for non-market economy countries and has no equivalents in the WTO agreements. Article 2(7) of the basic AD Regulation cannot be considered a measure intended to ensure implementation in the EU legal order of a particular obligation assumed in the context of the WTO. Hence, the GC rejected the applicant’s complaints in that regard as ineffective.

After rejecting all pleas, the GC dismissed the action in its entirety.

T-500/17 – Hubei Xinyegang Special Tube Co Ltd v European Commission

The General Court upheld the action brought by Hubei Xinyegang Special Tube Co Ltd (the applicant), a Chinese exporting producer of certain seamless pipes and tubes of iron or steel, against the Commission Regulation (contested regulation) imposing a definitive anti-dumping duty on imports of tubes and pipes originating in China.

The applicant contested the Commission regulation based on two claims concerning the injury assessment and causation. First, it challenged the Commission’s undercutting calculation methodology, arguing that the Commission (i) only considered in its price comparison one of the four years taken into account for the injury assessment, and (ii) failed to properly compare the prices of the dumped imports with the Union industry’s. In this regard, the applicant argued that the Commission disregarded product types sold by the Union industry but not exported by the sampled exporting producers and that it failed to consider separately the impact of imports on the three market segments identified during the investigation. In the second plea, the applicant claimed that the Commission based its causation analysis on an erroneous finding of undercutting.

In relation to the first plea, the GC rejected the applicant’s argument that the Commission should have calculated the undercutting for the four years considered for the injury assessment. The Court confirmed that calculating the undercutting only for the IP - that is, the same period used to calculate the dumping margin – was within the Commission’s discretion. On the other hand, the GC agreed with the applicant that the Commission should have considered the three market segments on its assessment. In the Court’s view, the Commission failed to take into account all the data available in its analysis of price undercutting and the effect of the dumped imports on prices in the Union market for the like product, thereby breaching Articles 3(2) and (3) of the basic AD Regulation. As a result, the GC also upheld the second plea. The Court held that, since the Commission failed to consider all information before it in its injury assessment, the conclusion of a causal link between dumped imports and injury was also based on an incomplete set of data.

The Commission appealed the judgement.

T-650/17 – Jinan Meide Casting Co. Ltd v Commission

The General Court annulled the regulation re-imposing a definitive anti-dumping duty on imports of threaded tube or pipe cast fittings, of malleable cast iron, originating in the People's Republic of China, manufactured by Jinan Meide Castings Co., Ltd (the applicant).

GC examined all four pleas in law raised by the applicant and rejected three of them as unfounded.

The third plea was upheld. According to the Court, the Commission adopted an unreasonable methodology to reflect the differences in physical characteristics between product types produced in the analogue country and those exported from China. In the absence of data relating to domestic production in the analogue country, the Commission used the difference in prices observed for the export sales of the various product types from China. According to the Court, the Commission could not assume that prices likely to be affected by dumping can form the basis for a reasonable estimate of the market value of differences in physical characteristics as such prices may not be the result of normal market forces.

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

C-612/16 – C&J Clark International Ltd v Commissioners for Her Majesty’s Revenue & Customs

The Court of Justice upheld the validity of the regulations re-imposing anti-dumping duties on imports of shoes from China and clarified that the re-imposition is not time barred in the case of an appeal.

In particular, the CJ confirmed that the Commission has the right to re-impose anti-dumping duties following the delivery of a judgment annulling an act or declaring it to be invalid. The CJ confirmed that the basic AD Regulation is the legal basis (in particular, Article 9(4), applied in conjunction with Article 14(1) thereof) empowering the Commission to do so after having resumed the proceedings that gave rise to the annulled regulations and had remedied the illegalities identified.

In addition, the Court stipulated that re-imposition of duties, based on the substantive rules applicable at the time of the original investigation, does not constitute a retroactive application of duties.

The Court further clarified that the content of the regulation re-imposing duties can be limited only to dealing with the illegalities identified in the judgment annulling it. For example, the Commission was not obliged to deal with other issues such as the assessment of the Union interest, since this was not an issue where the illegalities were identified by the Court.

C-144/18 P – River Kwai International Food Industry Co. Ltd v Association europeenne des transformateurs de mais doux (AETMD)

The Court of Justice dismissed the appeal by a Thai exporting producer River Kwai International Food Industry Co. Ltd, against the judgment of the General Court of 14 December 2017 in case T-460/14 (judgement under appeal). The judgement under appeal annulled Council Implementing Regulation (regulation at issue), which reduced River Kwai’s anti-dumping duty on imports of certain prepared or preserved sweetcorn in kernels from 12.8% to 3.6% following an interim review pursuant of Article 11(3) of the basic AD Regulation. The action for annulment of the regulation at issue before the GC was brought by AETMD, an association representing the interests of the sweetcorn processing industry in the European Union. During the investigation, AETDM was questioning the allocation of costs between River Kwai and AgriFresh, which constituted one of the possible causes of the lowering of the production costs alleged by River Kwai in support of its request for an interim review. However, since River Kwai and AgriFresh are legally separated entities and only River Kwai claimed to produce the product under investigation, this issue was not investigated and was not addressed in the final disclosure. Consequently, the GC found In the judgement under appeal that AETDM’s procedural guarantees provided for in Article 19(2) and Article 20(2) of the basic AD Regulation were breached.

In support of its appeal, the appellant, River Kwai, raised three grounds.

Second, the appellant alleged that the GC was wrong to find that the issue of allocation of costs related to the calculation of the dumping margin and not to ‘lasting change of circumstances’ which is one of the conditions required for the modification of duty in a partial interim review pursuant to Article 11(3) of the basic AD Regulation. The CJ rejected this ground of appeal as ineffective. It concluded that the impact of the restructuring of River Kwai could have affected the assessment of both the lasting nature of the changed of circumstances and of the calculation of the dumping margin; therefore, even if well founded, this ground could not enable River Kwai to set aside the contested judgement.

Finally, River Kwai claimed that by annulling the regulation at issue, the GC retroactively increased the anti-dumping duty applicable to it. The CJ first recognised that the consequence of the annulment is that the regulation at issue is removed retroactively from the legal order and is deemed never to have existed. In addition, the ECJ clarified that the in the judgement under appeal the GC did not rule the duties applicable to imports of River Kwai. That question would be addressed in the implementing measures required by the judgement under appeal. Therefore, it does not fall within the jurisdiction of the Court in the context of the appeal. Consequently, this ground of the appeal was rejected and the appeal was dismissed in its entirety.

C-251/18 – Trace Sport SAS v Inspecteur van de Belastingdienst/Douane, kantoor Eindhoven (preliminary ruling)

The Court of Justice ruled on a request for preliminary ruling concerning the validity of Commission Regulation which extended the anti-dumping duty to imports of bicycles consigned from Indonesia, Malaysia, Sri Lanka and Tunisia (regulation at issue).

This preliminary ruling was requested by the Rechtbank Noord-Holland (tribunal of the province of North Holland) in the context of domestic litigation brought by a French importer of bicycles, Trace Sport. Trace Sport challenged the validity of two payment notices imposing an anti-circumvention duty on its imports of bicycles from Sri Lanka. In the framework of this litigation the Dutch tribunal requested the CJ to judge on the validity of the regulation at issue to the extent that it applies to Kelani Cycles and Creative Cycles - the Sri-Lankan producers-exporters concerned by the payment notices issued by the Dutch authorities.

The decision to impose anti-circumvention measures relied on the findings that there was a change in the pattern of trade between the Union and Sri Lanka and on the lack of cooperation from some of the exporting producers in that country.

The CJ recalled that the burden of proof for the existence of circumvention is with the Union’s institutions. The four conditions of the basic AD Regulation to establish the existence of circumvention are: 1) change in the pattern of trade between third countries and the Union; 2) insufficient due cause or economic justification for this change other than the imposition of the duty; 3) evidence of injury or undermining of the remedial effects of the duty; 4) evidence of dumping. The CJ explained that according to the provisions of the basic AD Regulation and the jurisprudence, in case of non-cooperation (or insufficient cooperation) by the exporting producers, the Union institutions are allowed to base their assessment on a certain number of consistent indications to conclude to the existence of circumvention. These indications shall point to the fulfilment of the four conditions above.

The CJ noted that the regulation at issue did not contain any individual analysis of circumvention practices in which Kelani Cycles and Creative Cycles may have been engaged. The Court found that the conclusion as to the existence of transhipment operations in Sri Lanka could not legally be based only on the two findings expressly made by the Council, that is, first, that there had been a change in the pattern of trade between the Union and Sri Lanka and, second, that some of the producers-exporters had failed to cooperate. The CJ insisted that there is no legal presumption allowing the Union institutions to conclude to the existence of circumvention on the sole basis of the non-cooperation. On this basis the CJ decided that regulation at issue was invalid in so far as it concerns imports of bicycles shipped from Sri Lanka (as a whole), whether or not declared as originating in that country.

C-436/18P – Shanxi Taigang Stainless Steel Co. Ltd v Commission

The Court of Justice dismissed the appeal brought by a Chinese exporting producer Shanxi Taigang, against the judgement in case T-675/15 concerning the Regulation imposing definitive anti-dumping duties on imports of stainless steel cold-rolled flat products originating in the People’s Republic of China and Taiwan. The appellant, Shanxi Taigang, contested in particular General Court’s findings with regard to the selection of the analogue country and the absence of adjustment for differences in the production process and access to the raw materials. The CJ dismissed the appeal in its entirety and confirmed the General Court’s judgement.

With regard to the selection of the analogue country, the CJ confirmed that in accordance with the second sentence of the second subparagraph of Article 2(7)(a) of the basic AD Regulation it is not mandatory to select the market economy third country subject to the same investigation. In this case, Taiwan was subject to the same investigation and the appellant claimed that it should have been selected as an appropriate analogue country over the US, which was ultimately chosen by the Commission. The CJ recalled that the Commission enjoys a broad discretion to select the most appropriate country, which must be selected in a non-unreasonable manner. Whereas preference may be given to a country that is subject to the same investigation, there is no obligation to select that country. To the contrary, the Commission has the obligation to try to find, whilst taking account of the possible alternatives, a market economy third country in which the prices for a like product are formed in circumstances, which are as similar as possible to those in the country of export.

Regarding the second ground of the appeal, the CJ confirmed the General Court’s finding that the EU institutions cannot be required to make adjustments on accounts of differences in the production process and regarding the access to the raw materials in the light of factors which are not directly or indirectly the result of normal market forces. In this particular case, it was not demonstrated that differences in the production process and regarding the access to the raw materials were result of normal market forces. To recall, in the contested judgement the General Court found that since China was not a market economy and the appellant did not claim MET, there is nothing to indicate that the sourcing of nickel and the production process are not influenced by parameters which are not the result of market forces. Consequently, the second ground of appeal was rejected and the appeal was dismissed in its entirety.

8.    Activities by third countries targeting the EU

This section describes the main developments and trends in the area of third country actions in 2019 (see also the Annual Report, as well as annex U (A – F) below for detailed figures).

In 2019, the main users of the trade defence instruments against EU exports were the US with 36 measures in force, China with 20, India with 18, Turkey and Brazil with 15. Besides these main users, other important cases in countries that use the instruments less frequently are also described below.

United States

Overall trends

In 2019, the US initiated 1 new AD investigation affecting EU exports, 2 less than in 2018. At the end of 2019, the US had 36 measures in force affecting EU imports, i.e. 3 more than in 2018.

Main cases

Spanish ripe olives (AD/CVD)

These investigations were significant trade irritants since their initiation. The AD and countervailing duties (CVD) on imports of Spanish ripe olives are in force since August 2018 despite numerous Commission interventions. The CVD investigation is of a particular concern since it targets, among others, several EU subsidy schemes available under the EU Common Agricultural Policy (CAP), which are considered non-trade distorting, non-product specific and thus non-countervailable under the rules of the WTO. Therefore, the Commission decided to request the launch of a WTO dispute settlement proceeding. As the consultations with the US in the framework of this proceeding did not lead to any positive results, the EU has challenged, in particular, the issue of specificity and the lack of pass-through test.

India

Overall trends

The total number of trade defence measures in force in 2019 has decreased as compared to 2018 (18 against 21), even though India remains the second main user of the instruments against the EU, after the US. In particular, India seemed to have resumed the use of safeguard measures last year and initiated 3 new investigations of this kind (none in 2018, one in 2017 and one in 2016).

These 3 safeguard investigations significantly contributed to the 7 new investigations initiated by India in 2019, which is the highest number of new initiations amongst all third countries; the 4 anti-dumping investigations concern: INA & 2-PH, Tin mill, Flat rolled products of stainless steel, and Acrylic fibre.

With regard to actions taken, India imposed definitive AD duties in one case (High-speed steel from Germany) and extended AD duties following two expiry reviews (Methylene Chloride, Acetone).

As regards the Indian trade defence legislation, in addition to the amendment of its internal AD and AS rules that took place in 2018, on which the Commission had provided comments, India introduced specific provisions to address the issue of circumvention, and proposed some amendments also to safeguard rules (namely by introducing tariff rate quota as form of measures).

Main cases

Flat rolled products of stainless steel (AD)

This AD investigation was initiated in July 2019 and it targets imports from 15 different countries, among which the EU (EU economic interest of around € 98 million). The product definition includes both hot and cold rolled products, and it excludes products on which measures are already in force. The Commission has already intervened orally and in writing, and will continue following this case closely.

Acrylic fibre (AD)

This investigation was initiated in September 2019. An investigation on the same product had already been launched in 2017, which was then terminated without measures due to lack of injury (as mentioned in the 37th Annual Report) also as a result of several Commission interventions. The Commission has filed written comments upon initiation and is ready to intervene further if necessary.

China

Overall trends

In 2019, China's trade defence activity continued to be relatively low compared to previous years. The total number of measures in force against the EU at the end of 2019 was 20, as compared to 18 in 2018. China initiated only 1 new investigation in the chemical sector and imposed 1 anti-dumping measure on steel in 2019.

Main cases

Potato starch (AD/CVD)

As of 6 February 2019, China concluded its AD expiry review investigation by extending anti-dumping duties on imports of potato starch originating in the EU. The period of measures is 5 years, i.e. until February 2024. Countervailing duties on the same product also in place until September 2022. The EU exports amounted to € 10 million before the imposition of measures.

Turkey

Following an anti-circumvention investigation initiated the year before, in 2019 Turkey imposed duties on woven fabrics from Greece. Moreover, Turkey concluded a review on water heaters, extending the anti-dumping measures until 2024, and terminated another investigation on synthetic filament tow. Turkey also initiated an anti-dumping review on laminated flooring, in which the Commission intervened.

A safeguard investigation on products of iron and steel, initiated in April 2018 and in which provisional measures had been imposed, was terminated in May 2019 without imposition of measures. The Commission also intervened in a safeguard case on yarns of nylon and polyamide, where measures were finally imposed in 2019.

Brazil

Brazil initiated no new investigation against the EU in 2019, continuing with the moderate activity of recent years. It imposed one new anti-dumping measure against silicon electrical steel from Germany. The total number of measures in force, however, continued to be high, with 15 measures at the end of 2019. Two of these measures were under review at the end of 2019 (Laminated steel from Finland and Germany, and Phenol from the EU).

Morocco

Morocco showed intense TDI activity in 2019 (total of 8 measures in force against EU exports).

During 2019, Morocco initiated 2 new safeguard investigations (Hot-rolled steel sheets and Tubes & pipes), imposed 1 new safeguard measure (Wooden panels) and reviewed 3 safeguard measures in force (Cold-rolled steel sheets, Bars and wire rods, and Paper reels). In addition, Morocco initiated an expiry review on one AD measure (Insulin from Denmark), which is currently being negotiated bilaterally in order to reach, once again, an agreement (price undertaking) with the enterprise concerned.

Regarding the two on-going safeguard investigations on steel products, there has been a lot of interest from the industry and Member States (mainly Spain). Consequently, the Commission has been closely following and intervening in all steps of these investigations, submitting written comments and participating in the public hearing. These proceedings will continue to be closely monitored.

Other important cases

Colombia - Frozen fries from Belgium, the Netherlands and Germany (AD)

In November 2018, Colombia imposed definitive anti-dumping measures for 2 years on imports of frozen fries from Belgium, the Netherlands and Germany. Duties on imports from cooperating producers range from ~3% to ~8% and affect 75% of EU exports. Duties on “other exporters” of 44% affect around 9% of EU exports. The Commission has been very active in this investigation and intervened with the Colombian authorities at both technical and political level more than 30 times. Despite the significant efforts, anti-dumping measures could not be avoided. Member States and the industry strongly advocated for WTO action to avoid replication by other countries (Colombia is already the third country imposing measures on frozen fries, after South Africa and Brazil). Following the imposition of measures, the Commission requested the revocation of the measures through an administrative procedure in Colombia (‘revocatoria directa’) in an attempt to reach a quick settlement in the case. However, Colombia rejected the revocation on 13 May 2018. The EU formally requested WTO consultations with Colombia on 15 November 2019.

South Africa – Frozen potato chips from Belgium and the Netherlands - expiry review (AD)

In October 2016, South Africa imposed AD measures on imports of frozen potato chips from Belgium and the Netherlands (measures are in the range of 6.19% - 30.77%). The EU economic interest is € 21 million. South Africa initiated the sunset review in July 2019. The Commission has submitted written comments in support of the EU industry and will continue to closely monitor the proceedings, particularly in view of the systemic implications of this case.

South Africa – Frozen chicken – bilateral safeguard under the European Partnership Agreement (EPA)

In 2016, South Africa initiated a bilateral safeguard investigation concerning imports of poultry from the EU under its EPA with the EU. The duties, which apply until March 2021, have been set at 35.3% and will be liberalised over time to reach 25% in the last year. The Commission has informed the Southern African Customs Union member countries that it does not agree with the measures and is considering to pursue the bilateral dispute settlement procedure.

Ukraine – Certain nitrogen fertilisers and complex fertilisers – safeguards

Ukraine initiated two safeguard investigations on imports of certain nitrogen fertilisers and on imports of complex fertilisers in September 2019. There is active participation by the Member States (in particular Bulgaria, Lithuania and Poland) and EU industry in the two parallel investigations, especially as the economic interests are considerable (circa € 190 million in relation to both kinds of fertilizers). The Commission provided comments in support of the EU industry and will continue to be active, especially in view of the important economic interest of these cases.

Commission’s successful interventions 

The Annual Report outlines the most notable examples of the Commission’s successful interventions in 2019, which aimed at avoiding unwarranted trade defence measures by third countries. More examples of successful Commission interventions are listed below.

The Commission argued in a Chilean safeguard investigation that the increase of imports of milk powder and Gouda cheese was not due to "unforeseen developments" and that the injury to the domestic industry was not caused by imports. These are both conditions sine qua non for the imposition of safeguards. Following this submission, Chile terminated its safeguard investigation without imposition of measures. The main exporters from the EU were the Netherlands and Germany and the value of exports was € 61 million in 2017.

The Commission’s action was also fruitful in the AD investigation concerning imports of emulsion-styrene butadiene rubber (E-SBR) from Poland initiated by Mexico. The Commission supported the EU industry with written comments and at a hearing. Following these interventions, Mexico terminated the investigation in January 2019 with no imposition of duties.

The Commission also managed to avoid measures in the investigation initiated by India on imports of epoxy resin (the EU economic interest amounts to € 26 million). The Commission made written and oral interventions during public hearings. Following the withdrawal of the complaint by the domestic industry, the investigation was terminated without the imposition of measures in January 2019.

Moreover, the Commission intervened in three safeguard investigations targeting the ceramic tiles producers, initiated recently (2018 and 2019) by Ecuador, the GCC and the Philippines. In the latter case, the Commission intervened in close cooperation with the EU industry arguing inter alia that there was no increase of imports during the IP, which is one of the condition for the imposition of a safeguard measure. A few months later, the Philippine authorities decided not to impose measures.

Finally, the Commission, in close coordination with the industry and the Member States concerned successfully intervened in the Moroccan safeguard investigation on coated wood board initiated in July 2018 (EU economic interest amounting to € 19 million in 2017). When the Moroccan authorities issued their final findings in July 2019 – recommending applying safeguard measures on all imports for three years – the Commission requested bilateral consultations in the framework of the EU - Morocco Association Agreement and obtained a much less penalizing outcome, allowing EU exports to continue along their historical trend without being subject to additional duties.

Free trade agreements

During 2019, the Commission continued negotiations of free trade agreements, which provided an opportunity to agree with our partners on common disciplines in trade defence proceedings. The latter included increased transparency when conducting investigations and ensuring a balanced approach in the application of duties. This was achieved, for example, by promoting the application of the lesser duty rule (where justified), by underlining the need for consultations prior to impositions of measures and by taking into account the interests of importers and downstream users. Such provisions are now part of the EU agreements with Korea, Japan as well as Singapore, and are under negotiation with other partners.

9.    Activities in the framework of the WTO

9.1.    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.

The EU also participates actively in WTO dispute settlement proceedings as a third party in relation to TDI.

Regarding the dispute settlement cases against the EU, the main developments in 2019 occurred in the following cases:

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

After substantive meetings with the parties in December 2017 and May 2018, the Panel issued, in March 2019, a confidential interim report for the knowledge of the parties only and for their comments. On 7 May 2019, China requested the panel to suspend the proceedings, to which the panel responded positively, informing the DSB on 14 June 2019 of the suspension of its work. The authority of the panel over the case is to last for 12 months thereafter.

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 AD 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. 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. Further to that, parties made their submissions, and two substantive meetings took place. Parties replied to the Panel’s questions in relation to the case. It is now for the Panel to issue a report in the coming months.

9.2.    Other WTO activities (in more detail)

The EU remained fully committed and active in pushing a subsidies-related agenda in the WTO. In the course of 2019, intensive negotiations on fisheries subsidies continued in Geneva. The EU kept on positioning itself as a leading proponent in these negotiations by submitting concrete textual proposals in both main areas of negotiation, namely regarding a prohibition of subsidies to IUU fishing and of subsidies contributing to overcapacity and overfishing. While no outcome was achieved in 2019, the EU and other WTO Members strive for an ambitious and comprehensive result to be reached at the 12th WTO Ministerial Conference in Nur-Sultan in June 2020.

In April and November 2019, the EU participated in the work of the WTO Subsidies and Countervailing, Anti-dumping and Safeguards Committees. The EU also participated in meetings of the Informal Group on Anti-Circumvention as well as the Anti-dumping Working Group on Implementation (WGI). These Committees/Groups always meet twice yearly, in spring and autumn.

In the Anti-dumping Committee, the EU continued to engage in a discussion on the changes to the EU’s anti-dumping legislation of December 2017 and June 2018, which introduced the new calculation methodology as well as the modernisation of TDI, respectively. In particular, the practical application of the legislative amendments was discussed. The EU also took the opportunity to raise certain cases by third countries which impact on EU exporters such as the anti-dumping investigation by Colombia on frozen fries from a number of EU Member States. The EU also responded to questions and provided clarifications regarding some of its anti-dumping investigations.

In the Informal Group on Anti-Circumvention in April, Australia gave a presentation on its anti-circumvention legislation and practice. Australia explained that, so far, they have had very few cases, with their main experience of circumvention concerning slight modification of goods. In the November meeting of the Anti-circumvention Group, the US gave an update on its duty evasion investigations highlighting the fact that, since the legislation entered into force in 2016, the number of submissions had tripled.

The EU also participated in both sessions of the Anti-dumping Working Group on Implementation (WGI). In April 2019, the topics discussed were: (i) gathering and examination of evidence for the determination of a causal relationship between the dumped imports and the injury to the domestic industry; and (ii) assessment of domestic industry's economic indicators in threat of injury analysis. In the November 2019 meeting of the WGI the following topics were discussed: (i) verification procedures; (ii) treatment of financial expenses and financial income in dumping margin calculations/sales below cost test; and (iii) determination of the base price for the below-cost test.

In the regular meetings of the Subsidies and Countervailing Measures (SCM) Committee, discussions continued on the role of subsidies as a contributor to excess capacity in various sectors of economic activity. In this context, in April, the US and EU co-hosted a presentation of the OECD Report on “Measuring distortions in international markets: the aluminium value chain”, given by the report’s authors. At the November meeting of the SCM Committee, the issue of overcapacity was further discussed alongside a presentation on the work of the Global Forum on Steel Excess capacity. Discussions also took place on ways to improve transparency on subsidies by WTO members with the EU reiterating the importance of meeting the subsidy notification obligations of the Agreement on Subsidies and Countervailing measures.

Reviews of the 2017 Subsidy notification continued in April at the special meeting of the SCM Committee. At the start of July 2019, the EU submitted its new and complete subsidy notification to the WTO covering subsidies granted in 2017 and 2018. This exercise is done every second year and covers the subsidies granted at both EU level and by the individual Member States. Reviews of the 2019 subsidy notifications commenced at the November special meeting of the SCM Committee and will continue into 2020.

In the WTO Committee on Safeguards, the EU raised a number of concerns relating to other Members’ safeguard investigations (e.g. Philippines – ceramic floor and wall tiles, Turkey – yarn of nylon and other polyamides, Ukraine – nitrogen fertilizers, polyurethane foams). The EU also responded to questions by other WTO members concerning the safeguard measures on certain steel products, notably the results of the most recent review of these measures.

LIST OF ANNEXES

ANNEX A

ANNEX B

ANNEX C

ANNEX D

ANNEX E

ANNEX F

ANNEX G

ANNEX H

ANNEX I

ANNEX J

ANNEX K

ANNEX L

ANNEX M

ANNEX N

ANNEX O