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EU Introduces New Anti-Dumping Methodology

by Ulrika Lomas,, Brussels

21 December 2017

New EU trade defence legislation entered into force on December 20, changing the way the EU deals with dumped and subsidized imports.

The legislation introduces a new methodology for calculating dumping, applicable to any World Trade Organization (WTO) member. The methodology will be used if significant distortions are found in the exporting country that impact upon prices and costs for goods being sold in the EU.

At present, the standard means of calculating a dumping margin in the case of WTO members is comparison of the domestic prices in the exporting country and export prices for the product under investigation. This will not change under the new legislation.

However, the legislation will enable the Commission to disregard domestic prices and costs if they are found to have been distorted owing to state interference in the economy. They will not be regarded as providing a proper basis on which to determine the comparison with the export price.

Significant distortions are deemed to occur when reported prices or costs (including the costs of raw materials and energy) are not the result of free market forces, but are affected by substantial government intervention.

In such cases, other benchmarks reflecting undistorted costs of production and sale will be used.

Prior to applying the new methodology, the Commission will be required to demonstrate that significant distortions exist in the economy of the exporting country as a result of state interference. The Commission may prepare reports describing the economies of certain countries or sectors in this context.

The aim is for EU industry to be able to rely upon the country reports as evidence to request the use of the new methodology in anti-dumping investigations. In the course of each investigation, the Commission will consider whether the new methodology should be applied, based upon all the evidence available.

All parties concerned by an investigation – including the government of the country concerned, as well as exporting producers – will be given the opportunity to comment on and disprove any findings made.

On December 20, the Commission published its first country report, which focuses on China. The Commission decided upon China as the subject of this report because it said that the bulk of the EU's anti-dumping activity concerns imports from that country. The next report will concern Russia.

The new methodology is also intended to strengthen the EU's anti-subsidy legislation, so that, in future cases, any new subsidies revealed during the course of an investigation can be fully considered and included in any final duties imposed.

European Commission President Jean-Claude Juncker said: "The EU is and will remain one of the most open markets in the world. We are and will remain in the first line defending open, fair, and rules-based trade. This, however, should not be mistaken as naivety."

"Our unshakable and facts-based conviction that trade brings prosperity will not prevent us from defending our workers and companies with all legitimate tools when others do not play by the rules. With this new legislation and a new set of modernized tools that will be soon in place, Europe will be able to keep pace and deal more effectively with the ever-changing realities of the international trading environment."

Trade Commissioner Cecilia Malmstrom added: "The EU is open for business. But we must also protect our industry from unfair competition from imports, particularly from countries whose economies are significantly distorted owing to state interference."

"The publication of country reports will help us to put the new methodology into practice. It will also give the EU industry a basis on which to make its case concerning countries where distortions exist."

TAGS: Russia | business | European Commission | tariffs | anti-dumping | World Trade Organisation (WTO) | China | legislation | trade disputes | import duty | trade | European Union (EU) | Europe

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