Modernisation Of The European Union Trade Defence System - Reform De Jure And De Facto

There have been several high profile European Union (EU) trade defence investigations and court decisions in recent years, including those concerning footwear, stainless steel fasteners, wireless modems and solar panels from China. These cases received high political attention and have led to increasing questions about the effectiveness, transparency and fairness of the EU trade defence instruments. In April 2013, the EU Commission proposed a modernisation of the current system, which may or may not be effective in addressing the issues raised.

The EU trade defence system is based on Arts VI and XVI of the World Trade Organization (WTO) General Agreement on Tariffs and Trade (GATT) and the respective implementing agreements, that is, the Anti-Dumping Agreement (ADA) and the Agreement on Subsidies and Countervailing Measures (ASCM). Trade defence instruments fall under Art 207 of the Treaty on the Functioning of the European Union (TFEU), which gives the Union sole competence in questions of common commercial policy. Regulation 1225/2009,1 the Basic Anti-Dumping Regulation, and Regulation 597/ 2009,2 the Basic Anti-Subsidy Regulation (jointly, the Basic EU Regulations), which are directly applicable in all EU Member States, implement the ADA and the ASCM into EU law.

The EU Commission is the investigating authority in anti-dumping and anti-subsidy investigations, which are subject to statutory time limits of 15 and 13 months, respectively. The Commission can impose provisional measures after a maximum of nine months from the initiation of the proceedings; currently, the EU Council decides whether or not to impose definitive measures upon a proposal by the Commission.3 Like the WTO rules, the Basic EU Regulations make the imposition of anti-dumping or countervailing measures conditional upon the investigation establishing that non-EU producers have caused injury to the EU industry through dumped or subsidised imports of the product under investigation. In addition, EU law has two further requirements: first, the imposition of measures must be in the overall EU interest. The Commission and Council weigh the interest of the EU industry to have relief from the injury suffered, against that of EU users, importers or other parties.4 Secondly, under the EU "lesser duty" rule, dumping/countervailing duties will only be imposed to the extent of the lesser of the dumping/subsidy margin and the injury margin. The rationale behind the lesser duty rule is that if the injury suffered by the EU industry is lower than the dumping/subsidisation, it is sufficient to...