After five years of negotiations, modernizing trade defense instruments Regulation comes into force on June 8, 2018

June 11th, by Dimana Todorova 

Since a 2013 proposal from the European Commission, the EU intended to update its trade defense legislation but the talks have been stalled for more than three years in the Council.

On December 5, 2017, an informal agreement was finally reached by Parliament’s negotiating team and the European ministers in Brussels. This agreement was officially endorsed by the Parliament on May 30th. Consequently, Regulation No 2018/825 amending the basic anti-dumping (Regulation No 2016/1036) and anti-subsidy (Regulation No 2016/1037) Regulations was published in the Official Journal on June 7, 2018. The provisions of this Regulation enter into force the day following its publication, June 8, 2018, and will apply to all investigations whose notice of initiation was published in the OJ after the date of entry into force of the Regulation.

The Regulation improves a number of important points such as: increased transparency and predictability of procedures, better access to information for SMEs, adoption of effective measures to counter retaliation by third States, etc. In addition, certain practices that have been applied in recent years by the European Commission in anti-dumping and anti-subsidy investigations have been included in the new regulation.

The main measures of modernization are:

Interested parties

Complaints may be lodged by the Union industry without any further reference to the thresholds for the initiation of a procedure referred to in the Régulations.

In addition, unions will also be able to file complaints jointly with industry or support complaints from industry.

Finally, in the event of the initiation of an investigation without a complaint being lodged (on the Commission’s initiative), the Union producers manufacturing the like product are now required to cooperate with the Commission.

Duration of investigations

The period provided for the imposition of provisional measures will, in principle, be 7 months and in any event not exceed 8 months instead of 9 months in the old provisions.

The definitive duties must be introduced within 14 months instead of 15. However, the amendments to the basic anti-subsidy Regulation provide for a maximum of 13 months for the adoption of definitive measures.

Prior notification

A period of prior notification of 3 weeks before the imposition of provisional measures has been put in place.

In fact, interested parties may request, in writing within the time limit set in the notice of initiation, information on the provisional imposition of provisional rights. The information shall be communicated to those parties 3 weeks before the imposition of provisional measures and shall include: a summary of the proposed duties for information purposes only, and details of the calculation of the dumping margin and the margin adequate to remove the injury to the Union industry. This information will now be public and published on the website of the European Commission.

Parties have 3 business days to comment on the accuracy of the calculations. Thus, this short period allows exporters or producers to verify the calculation of their individual dumping margin or the amount of the countervailable subsidy and the margin sufficient to eliminate the injury to the Union industry prior to the provision of provisional measures.

In cases where it is intended not to impose provisional duties but to continue the investigation, interested parties shall be informed of the non-imposition of duties 3 weeks before the expiry of the deadline.

Margin of elimination of injury

The provisions relating to the proposal not to apply the lesser duty rule in the event of distortions in the commodity market were one of the most controversial issues. The compromise reached makes it possible not to apply the rule of lesser duty in well-defined situations in the regulation:

  • distorted raw materials accounting for more than 17 % of the cost of production, taken individually,
  • raw material distortions as defined in the OECD list but with the possibility to update this list via a delegated act to bring it in line with future OECD considerations,
  • in cases of dumping, the Commission will have to clearly conclude that the disapplication of the LDR is in the Union’s interest (‘positive Union interest test’).

As regards the anti-subsidy regulation, the lesser duty rule may no longer apply.

Regarding the minimum target profit (which is the level of profitability needed to cover all costs and investments, R&D and innovation), the regulation provides for a minimum level of 6%.

Social and environmental standards will be taken into account when establishing the injury elimination margin. In addition, there will be a possibility to take into account future costs stemming from implementing these standards if such costs are clearly foreseeable and objectively quantifiable.

Registration

All products imported into the EU following the initiation of an investigation will be strictly controlled and registered, as far as possible, to avoid storage.

Exemption / anti-circumvention investigations

The Regulation removes the condition that in order to be granted an exemption from registration or extended duties in anti-circumvention investigations outside the Union, producers of the product concerned should not be related to any producer that is subject to the original measures. In addition, where the circumvention practice takes place in the Union, the fact that importers are related to producers that are subject to the measures should not be decisive in determining whether the importer may be granted an exemption.

SME assistance

The regulation introduces a dedicated SME Helpdesk, for example by awareness raising, by providing general information and explanations on procedures and on how to submit a complaint, by releasing standard questionnaires in all official languages of the Union and by replying to general, non-case-specific queries.

Reimbursement of duties

In the event of repeal of anti-dumping or countervailing measures, the duties collected in excess during the expiry review investigations will be reimbursed to importers.

Continental Shelf and Exclusive Economic Zone

Continental shelves and exclusive economic zones (maritime areas, mainly used for energy production) will now also be covered by European regulations.

 

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DS Customs & Trade team is at your disposal to provide you with additional information.

 

CONTACT US:

dscustomsdouane@dsavocats.com

 

 

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