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Court of Justice Ruling Could Lead to Greater Pressure on the Commission and on Traders Facing Anti-dumping Duties

On 2 May 2019, it was reported that, pursuant to a Court of Justice judgment in the “Canadian solar” anti-dumping proceeding, EU tariffs could, according to some analysts, be generally lower in future proceedings. However, it may also become more difficult for traders burdened by anti-dumping tariffs to appeal definitive measures before the European courts.

The Court of Justice has ruled on an appeal brought by Canadian Solar, a company that manufactures solar panels in mainland China. The appeal had been lodged by the company against the anti-dumping duties that were imposed by the EU on imports of solar panels. The Court of Appeal dismissed the appeal, but the Court’s judgment sets out a novel obligation on the Commission, when the latter calculates the material injury that has been caused to the EU’s domestic industry.

When calculating the level of injury (which must be material in order for the duties to be imposed) being caused by imports into the EU, the Court explained that the tariff amount “should not take into account injurious effects caused by factors other than those imports”. The implication is that the duty imposed should not “exceed that which is necessary to counter the injurious effects of the dumped imports”.

In that context, the Court of Justice noted, where the facts as finally established show that there is dumping and injury caused thereby, and the EU interest calls for intervention, a definitive anti-dumping duty is to be imposed by the Council, and the amount of the anti-dumping duty is not to exceed the margin of dumping established. Indeed, it should even be less than the margin if such lesser duty would be adequate to remove the injury to the EU industry.

In order to ensure that the amount of the anti-dumping duty imposed does not exceed that which is necessary to counter the injurious effects of the dumped imports, that amount should not take into account injurious effects caused by factors other than those imports. In other words, the Council and the Commission are to take into account, for the purposes of determining that amount, the conclusions reached by those institutions following the examination of the determination of injury.

The same finding is further supported by provisions in the basic anti-dumping Regulation, from which it follows that anti-dumping duties must be set at an amount appropriate to each case and imposed, on a non-discriminatory basis, on imports of a product from all sources found to be dumped and causing injury.

It is expected that the Commission would have to compute other factors that detrimentally affect the EU’s domestic industry. Once done, this amount would need to be deducted from the overall calculation of injury, thus leading to a lower injury amount. This, in turn, could mean that the duty imposed is lower than would have otherwise been the case. Due to this envisaged scenario, it may be possible – or even necessary – for traders who face anti-dumping duties to demonstrate that there are factors other than injury-related ones that are damaging the domestic industry. It may also be incumbent on them to calculate a figure for such damage, and then convince the Commission to recognise their findings.

Unfortunately, the Canadian Solar case may have also made it more difficult for entities to bring an action challenging definitive measures before the EU courts, by requiring proof that every error made by the Commission during its investigation actually affected the entities bringing the action.

Once definitive anti-dumping duties are imposed by means of an EU Regulation, companies can bring an action before the EU General Court, located in Luxembourg. Any company bringing an action must, first of all, be able to prove that they are entitled to validly bring such a case, by being directly and individually concerned by the legal provisions set out in the Regulation.

Now, due to the Canadian Solar judgment, it seems that companies wishing to bring an action would have to demonstrate a direct interest in each plea that they lay out in their appeal against the Regulation before the General Court. This implies that companies may no longer, in the future, bring a case on an error made by the Commission that generally affected the case. Such error would have to directly affect the applicant bringing the case.

Until now, it has been possible for the Court to justifiably rule on certain practices conducted by the Commission, which are felt to be incorrect and which should be terminated so as to preclude such conduct in the future. However, the Court has now stated that “the possible persistence of such an interest, in order to prevent the institutions from repeating errors based on an incorrect interpretation of a provision of EU law, cannot be accepted in a situation where the applicant never had an interest in bringing proceedings.”

The Court in the case at hand ruled that Canadian Solar did not demonstrate their interest in raising certain pleas when they lodged their application for annulment of the duties on solar panels from mainland China. Since that interest must be evaluated at the date on which the action is brought and may not concern a future and hypothetical situation, the company cannot justify such an interest by invoking the need to prevent the institutions from repeating errors based on an incorrect interpretation of a provision of EU law.

The wording employed by the Court seems to suggest that companies may find it harder to appeal duties imposed on their imports into the EU in the future.

Content provided by Picture: HKTDC Research
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