European Union May Toughen Anti-Dumping Rules Further

Trade & Policy

European Union May Toughen Anti-Dumping Rules Further

On 20 June 2017, EU lawmakers arrived at a decision on the position of the European Parliament for negotiating with all EU governments on the new rules concerning the calculation of anti-dumping duties.

The International Trade Committee of the European Parliament (INTA) approved a report to toughen the EU's body of anti-dumping legislation, which will make it easier to impose higher tariffs on dumped imports from countries that the EU does not regard as free economies, such as mainland China.

Most notably, the European Parliament elaborated on the interpretation of "significant distortions" that would allow the European Commission to disregard a country's domestic costs and prices in favour of international costs and prices in the course of anti-dumping investigations.

INTA opined that an exporting country's compliance with fiscal, social and environmental standards needs to be taken into account, describing significant distortions as "those distortions which occur when reported prices or costs, including the costs of raw materials, energy and other factors of production, are not the result of free market forces as they are affected by government intervention, or in case of lack of compliance with core ILO Conventions, environmental and tax multilateral agreements leading to a distortion of competition."

The definition of "significant" distortions is likely to be one of the most contentious issues in the negotiations between the European Parliament and the EU Member States. Member state officials do not agree with the far reaching position put forth by the European Parliament, indicating that South Africa is the only country apart from the EU which would meet the test.

In addition, the European Parliament reiterated that its position that there should not, in any event, be any additional burden of proof on EU companies in the determination of the existence of significant distortions in a third country, on top of the current procedure to be followed when asking the European Commission to launch an anti-dumping investigation.

Regarding the issue of "pre-disclosure", the European Parliament disagrees with the proposal of the EU Member States to oblige the European Commission to grant a guaranteed notice period of four weeks to interested parties before being able to impose provisional duties.

The European Parliament intends to shorten the notice period, stating that "the parties to the investigation shall be informed shortly after initiation about the relevant sources that the Commission intends to use, including a preliminary determination as the existence of significant distortions and shall be given 10 working days to comment."

The adoption of the European Parliament's negotiating position was broadly welcomed by the EU business community, which believes that it has been provided with stronger reassurances that the new rules will shield them from unfair trading practices.