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EU Court Dismisses Action Filed by Zhejiang Jndia Pipeline Industry Co. Ltd Against Anti-dumping Measures

On 19 September 2019 the General Court of the European Union (“General Court”) issued a judgement dismissing an action for annulment filed by Zhejiang Jndia Pipeline Industry Co. Ltd (“Zhejiang Jndia”) against Commission Implementing Regulation 2017/141 of 26 January 2017 imposing definitive anti-dumping measures on imports of certain stainless steel tube and pipe butt-welding fittings, whether or not finished, originating in mainland China and Taiwan.

Following a complaint lodged on 14 September 2015 by the Defence Committee of the Stainless Steel Butt-welding Fittings Industry of the European Union, on 29 October 2015 the European Commission initiated an anti-dumping proceeding concerning imports of certain stainless steel tube and pipe butt-welding fittings, whether or not finished, originating in mainland China and Taiwan. After completing the relevant phases of an EU anti-dumping proceeding, the Commission issued Regulation 2017/141 by means of which it imposed a definitive anti-dumping measure against Zhejiang Jndia – in the form of an ad valorem duty of 48.9%.

Hong Kong traders might recall that a product is considered to be dumped – i.e. introduced into the commerce of another country at less than its normal value – if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country. Moreover, where there are market distortions present in the exporting country that do not allow for a determination of the normal value in the ordinary course of trade, anti-dumping legislation provides for mechanisms to construct such normal value. In the EU anti-dumping legislation, where market distortions are perceived to be present, the normal value can be based on the value of the product concerned in a third country market (referred to as the analogue or surrogate country). In Regulation 2017/141, the Commission explained that Taiwan was utilised as the analogue country for the purposes of determining the normal value of the products originating in mainland China.

By means of an application lodged at the Registry of the General Court on 19 April 2017, Zhejiang Jndia brought an action for annulment of Regulation 2017/141. Hong Kong traders may know that an action for annulment can be filed before the General Court by a natural or legal person, even if not established in the European Union, subject to one of the following requirements being met: (i) that the challenged act is an act addressed to the applicant or which is of direct and individual concern to it; or (ii) that the challenged act is a regulatory act which is of direct concern to the applicant and which does not entail implementing measures. 

In its application, Zhejiang Jndia claimed that the Commission had, amongst others, made a manifest error of assessment in applying non-market economy treatment to imports originating in mainland China. Zhejiang Jndia argued that in view of the European Union’s international legal commitments, in particular its obligations with regard to the WTO, the Commission was not allowed to determine the normal value on the basis of the analogue country method and that normal value should have been calculated on the basis of Zhejiang Jndia’s domestic costs and prices.

The General Court found that, according to settled case-law, EU institutions enjoy discretion when determining normal value in respect of non-market economy countries and that the interpretation of the European anti-dumping legislation by Zhejiang Jndia would render meaningless the margin of discretion that the legislature intended to grant to the Commission. The General Court further noted that the Commission was fully entitled to apply non-market economy treatment to imports originating in mainland China.  

Zhejiang Jndia also raised other claims relating to the following: a manifest error of assessment of evidence by the Commission; a failure to assess evidence impartially; an imposition of an excessive burden of proof on Zhejiang Jndia by the Commission during the investigation; an infringement of Zhejiang Jndia’s right to be heard; and a failure to provide an adequate statement of reasons.

However, all these claims were dismissed by the General Court. Consequently, the General Court ordered Zhejiang Jndia to pay the costs of the proceedings incurred by the Commission.  

An appeal may be filed before the Court of Justice of the European Union, within two months from the notification of the decision by the General Court to Zhejiang Jndia dismissing its claims.

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