52007SC1057

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Commission staff working document - Annex to the Annual Report from the Commission to the European Parliament on third country anti-dumping, anti-subsidy and safeguard action against the Community (2006) COM(2007) 461

/* SEC/2007/1057 final */

Date of document:: 01/08/2007
Date of dispatch:: 01/08/2007; Posredovano Svetu
Date of end of validity:: No end date

Author:: Evropska komisija
Form:: Delovni dokument služb

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Pogodba o ustanovitvi Evropske skupnosti

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11.60.40.00 Zunanji odnosi / Trgovinska politika / Trgovinska zaščita

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52007SC1057

[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 1.8.2007

SEC(2007) 1057

COMMISSION STAFF WORKING DOCUMENT

ANNEX TO THE ANNUAL REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT ON THIRD COUNTRY ANTI-DUMPING, ANTI-SUBSIDY AND SAFEGUARD ACTION AGAINST THE COMMUNITY (2006)

COM(2007) 461

1. UNITES STATES

A) Zeroing

Essentially, zeroing consists of disregarding non-dumped transactions in the calculation of the margins of dumping, which, in certain instances, leads to an inflation or even an artificial finding of the dumping margins, and therefore overstating antidumping duties. The EC challenged the US approach in the WTO in two various proceedings (DS 294 and DS 350). In addition, Japan also challenged the US practice in WTO (DS 322).

In the first dispute (DS 294) the EC successfully challenged a total of 31 measures, comprised of 15 initial investigations and 16 administrative reviews (DS 294). The report of the Appellate Body of April 2006, adopted by the Dispute Settlement Body (DSB) in May 2006, found the US practice of "zeroing" incompatible with the WTO Anti-Dumping Agreement. With regard to the initial investigations, the practice of zeroing was condemned both in respect of the actual cases involved and also regarding the practice per se. On the other hand, as regards the administrative reviews, only the zeroing applied in the actual reviews involved was condemned. It should however be noted that the practice itself in administrative reviews per se was condemned later in a DSB case brought by Japan (DS 322).

In April 2007 the United States have finally implemented part of the WTO ruling with the result that many European exporters have seen the contested anti-dumping duties either entirely revoked or substantially reduced. However, this only concerns the initial investigations, and the US administration has completely ignored its obligation to revise the administrative reviews. The EC therefore will have to consider the options available for encouraging prompt implementation by the US also in the administrative reviews, especially taking into account the ruling in the separate zeroing case brought by Japan against the US.

In addition to the above, the EC also initiated a second dispute settlement proceeding (DS 350) given that DG Trade identified 40 other cases in which the zeroing methodology was still applied by the US, but which were not covered by the first dispute. The first consultations were held in November 2006 and a second round in February 2007. Given the failure to reach an agreement with the US authorities during the consultations, the EC will request the establishment of a WTO Panel to analyse the identified cases.

b) Steel cases - sunset reviews

During 2006, the US conducted a number of 'sunset' reviews concerning steel products . In total, 25 trade defence measures (concerning four different products) were concerned, 15 of which affected EU Member States.

All of these sunset reviews led to the revocation of the anti-dumping and/or countervailing duties, with the exception of one concerning corrosion resistant carbon steel flat products (CORE) from Germany. Apparently, the main difference in CORE from Germany was that, unlike exporters from the other countries, the German exporter concerned did not own any production facilities in the US, and it could therefore not be demonstrated that significant exports to the US were not likely to resume. Among the measures covered by these sunset reviews were three measures which had previously been subject to a WTO panel on privatisation, and subsequent implementation panel, which the EC had launched against the US. The removal of the three measures in the context of reviews means that finally the findings of the WTO Panel and AB on privatisation have been implemented by the US.

As a result of all these terminations, most of the US measures imposed in 1993 on steel products exported from the EU have now been repealed.

The EC will continue to assist the EU producers in other the upcoming sunset reviews on steel products, and will also closely follow the developments on the case CORE from Germany . As mentioned above, the EC is also separately challenging the practice of zeroing in a number of cases, including a majority concerning the steel sector.

c) Revocation of CVD measures on Low-enriched uranium

In 2006, the US revoked the countervailing duties imposed on low-enriched uranium from Germany, Netherlands, and the UK . The decision by DOC was based on the fact that the subsidy rate was equal to zero and that all the benefits previously found to be countervailable were deemed to be fully amortized. As for the anti-dumping measure on low-enriched uranium from France , the French exporter successfully challenged it before a US Federal Court, which ruled that enrichment of uranium is a service rather than a good and therefore is not subject to trade defence instruments. Consequently, DOC proposed to revoke the AD duty, but this proposal was challenged by the US petitioner before the US Court for International Trade. Therefore, for the time being the measure will remain in place until the final decision by the CIT.

d) Firth Rixson case

After putting on hold the WTO action in Steel Bar from the UK, which led to the imposition of an AD duty of 125.77% on the exporter Firth Rixson, there has been little progress in our effort to find a satisfactory solution with the US authorities. The preliminary results of the administrative review at the end of March have yielded a dumping margin of 33% The company continues to cooperate with DOC on the administrative review. The EC will continue to monitor closely this case and, depending on the final outcome of the administrative review, may consider resuming the WTO proceeding.

2. CHINA

a) Wear resistant overlay: imposition of definitive measures

China had initiated, in June 2005, an anti-dumping investigation concerning imports of wear resistant overlay from the EU. The Commission followed the case closely with the industry and in particular one German exporter, Papierfabrik Schoeller & Hoesch Gmbh & Co KG, who co-operated in the investigation. The Chinese authorities imposed provisional measures in June 2006 (25% for the co-operating company and a residual of 42%). This was followed by a verification visit to the German company where a Commission official assisted the proceedings. The practice of carrying out verification visits after the imposition of provisional measures is an aspect of Chinese practice that, while not against WTO rules, is not ideal as it leads to inflated margins at preliminary stage. Definitive anti-dumping duties were imposed in December 2006 which fortunately resulted in a drop in the dumping margin to 10% for Papierfabrik Schoeller. The residual duty remained at 42.8%.

Our main concern in this case related to the lack of disclosure. The European Commission itself received no disclosure to speak of, while the company received a limited disclosure with nothing at all on injury. Strong representations were made to the Chinese authorities on this issue and it was further pursued in a later case.

b) Potato Starch: Initiation of investigation and imposition of measures.

China initiated an anti-dumping investigation on imports of potato starch from the EU in February 2006. This is the first agricultural product from the EU on which China has opened such an investigation. The investigation was opened on the basis of a complaint from the Chinese potato starch industry but which did not include the largest Chinese manufacturer.A number of European exporters co-operated, as did the European Starch Association.The Commission worked closely with the exporters and the Association while also registering itself as an interested party to the investigation.

Provisional measures were imposed in August 2006 ranging from 35% to 57%.Once again verification visits took place after provisional measures. The various adjustments and corrections meant that the definitive measures, which were imposed in February 2006, ranged between 17% – 35%, a reduction that was welcomed by industry. Unfortunately once again there were problems regarding disclosure, with the Chinese authorities again failing to provide any meaningful disclosure to the European Commission on the case. This, along with problems regarding the product definition, were addressed by the Commission in the course of the investigation through submissions to Mofcom.

c) Butanol and Octanol: Termination of investigations

Two investigations, which had been ongoing since 2005 against imports of Octanol and Butanol from the EU, were terminated without the imposition of measures in January and March 2007 respectively. In both cases the Chinese authorities found no link between dumping and injury caused to their domestic industry.

3. LATIN AMERICA

a) Argentina: Termination of CVD measures

After long and difficult negotiations, in the context of DSU proceedings, Argentina finally agreed to end the CVD measures concerning three products. The measures on olive oil were revoked as of 28 July 2006 and wheat gluten as of 10 November 2006. The measures concerning canned peaches expired on 16 December 2006.However the bound tariff rate was increased at the same time in order to compensate for the lapse of the CVD duty.

b) Mexico: Initiation of AD investigation on organic pesticides

Mexico initiated an anti-dumping investigation concerning organic pesticides originating in Denmark in May 2006. Provisional duties of 92.95% were imposed in September. The EU industry concerned offered an undertaking, which is currently still being negotiated with the Mexican authorities. In the meantime the proceeding is continuing as the EU exporter, supported by the Commission, is seeking to demonstrate that the Mexican authorities have erred in the calculation of the normal value by using as a reference a non-representative third country and thus no dumping has taken place. In the event of failure to reach an agreement on the undertaking, the final decision by the Mexican authorities is expected in April 2007.

c) Mexico: Initiation of AD investigation on welded tubes and pipes

An AD investigation concerning welded tubes and pipes in carbon-steel originating in Germany was initiated by Mexico in May 2006 with a provisional duty of 30.62% being imposed in September.The EU exporter concerned, with the full support of the Commission, has been challenging this decision on the basis of an erroneous calculation of the margin of dumping as well as the lack of evidence proving the threat of material injury asserted by the Mexican authorities. As a matter of fact almost all indicators clearly showed that the sole domestic producer was in a very healthy situation. Any decision on the imposition of definitive measures is expected by April 2007.

d) Mexico: EU Request for WTO panel on CVD measures – Olive oil

In December 2006, the Commission challenged the definitive countervailing measures which Mexico had imposed on imports of olive oil from the EC back in August 2005.The European Communities requested the establishment of a dispute settlement panel in the WTO in December 2006.The request was based on the fact that the European Communities consider that the initiation and conduct of the investigation, as well as the imposition of the definitive countervailing duty measures were inconsistent with Mexico's obligations under, inter alia, Article VI of the GATT 1994.

The panel was established on 23 January 2007 and composed on 21 February 2007. The first written submission by the European Communities was submitted at the end of March 2007. The rebuttal submission from the Mexicans is due mid-May and the first substantive meeting in the panel proceeding is scheduled for the end of June 2007.

4. RUSSIA AND UKRAINE

a) Russia: Anti-dumping investigation into stainless steel

This anti-dumping investigation had been initiated by Russia back in 2004, and involves 26 product groups for which EC exports to Russia amount to approximately €75m per year.

The case had been very controversial throughout with the Commission contesting, from the start, the factual basis upon which the dumping claim was made. This related mainly to the price at which EC goods were allegedly exported to Russia. The investigation itself had been completed in November 2005. While the Russian investigating authority had proposed the imposition of measures, for a long time the Russian Government did not adopt any formal decision to actually impose them.At the time of writing last years annual report, it was stated that indications were that the Russians were not, in fact, going to impose measures.

It was therefore very surprising when in February 2007, the Russian Government published a decision to introduce the anti-dumping measures.Since then there has been intense efforts to minimise the effects of these measures for EU exporters.

b) Ukraine: Safeguard investigation on incandescent lamps

This safeguard investigation was initiated in September 2006. The European Commission made representations to the Ukrainian authorities outlining the main weaknesses in the petition.These related mainly to the failure on the part of the petitioner to demonstrate that imports were, in fact, the cause of injury. The petition seemed to clearly indicate that any injury being suffered by the domestic producer existed prior to the increase in imports and that in reality the producer has had serious financial problems for some years.

The investigation is ongoing and in this context the Commission has urged the Ukrainian authorities to refrain for attributing injury to increased imports when clearly other factors are to blame.

c) Ukraine: Safeguard measures on Cotton fabrics and Knitted Fabrics

These two cases were initiated by Ukraine in 2006 and potentially could have significantly affected EU member states given the volume of exports involved. However, given that a large quantity of knitted and cotton fabrics are exported by the EU to the Ukraine for outward processing that impact was minimal because such exports are subject to any measures. Measures were imposed in 2007 and took the form of a minimum import price. Given that EU exports are made at a substantially higher price that this minimum price, the EU exports will not, in the main, be affected.

5. TURKEY

a) Safeguard measures on vacuum cleaners

This investigation was initiated in January 2006. The Commission worked closely with European industry on this case. Given that exports from the EU of the product were made at prices far higher than those from other sources or indeed those of the domestic industry it was clear that the EU product was not the cause of injury. This was pointed out to the authorities and, as a result, they agreed to impose a measure based on a minimum import price which did not have any impact on the product coming from the EU. The definitive measure was imposed in August 2006.

b) Safeguard measures on Electric irons

This investigation was initiated in January 2006. The Commission, in cooperation with the European industry was very active on this case.Like the vacuum cleaners case, it was pointed out to the Turkish authorities that exports from the EU of the product were made at prices far higher than those from other sources or indeed those of the domestic industry. As a result European exports could not be seen as the cause of injury. On this basis we focussed our efforts on having the Turkish authority devise a measure basis on minimum price so as not to penalise imports that did not in fact contribute to the injury suffered by the Turkish industry.Given Turkey had adopted this approach in the safeguard case concerning vacuum cleaners (above), we were confident that they would follow suit. Unfortunately, in August 2006, the Turkish authorities imposed a measure in the form of a fixed price duty which hit all imports alike Regretfully the fixed duty had been calculated on the basis of low priced imports which we contested both bilaterally and in WTO Safeguards Committee The Turkish authorities did not change their approach.

c) Safeguard measures on motorcycles

In this case which was initiated in August 2006, provisional measures were immediately imposed upon initiation, under the form of a specific duty per piece. Again, it appeared in this case that EU exports were on average much higher priced than both imports and domestic products, and could thus not be the cause of the problems encountered by the Turkish industry. The European Commission was very active in this case, met with the Turkish administration and made strong representations. This appeared to be successful given that, contrary to provisional measures which applied regardless of the import price level, the definitive measures introduced in 2007 are only applied to imports below a specific import price. Given that EU exports are on average above that threshold, they are generally not affected by the measures.

Measures in force at the end of 2004, 2005 and 2006 |

Country | AD | CVD | SG | TOTAL |

Measures imposed in 2006 |

ALL MEASURES IN FORCE ON 31 DECEMBER 2006 (DEFINITIVE AND PROVISIONAL) |

Egypt | Tyres for motor cars | AD | Definitive | 1999-Oct-04 | Belgium, Czech Republic, Denmark, Germany, Estonia, Greece, Spain, Ireland, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, Netherlands, Austria, Poland, Portugal, Slovenia, Slovakia, Finland, Sweden, United Kingdom |

India | Caustic soda | AD | Definitive | 2003-Oct-01 | Belgium, Czech Republic, Denmark, Germany, Estonia, Greece, Spain, Ireland, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, Netherlands, Austria, Poland, Portugal, Slovenia, Slovakia, Finland, Sweden, United Kingdom |

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