9 April 2019
EU Domestic Industry Strengthened Through Trade Remedy Measures
On 27 March 2019, the European Commission presented a Report revealing the strengthening of the EU’s trade defence instruments (TDIs) through major reforms. Since 2014, the EU has applied 95 trade defence measures to ensure that EU companies and workers can compete on fair terms. Two-thirds of all the measures currently in place are said to concern imports from mainland China.
Hong Kong traders might recall that in 2018 the EU completed the most significant overhaul of its anti-dumping and anti-subsidy legislation since 1994. The 2018 reform strengthened the EU's trade defence mechanisms against dumped and subsidised imports. The EU, further, continued its trade protection activity and finalised a high number of investigations resulting in the implementation of new trade remedy measures, in particular in the steel sector. The year 2018 was also notable in that the EU imposed three safeguard measures.
It is reported that since Jean-Claude Juncker took office as President of the European Commission on 1 November 2014, the EU has imposed 95 trade defence measures. At the end of 2018:
- The EU had 93 definitive anti-dumping measures and 12 definitive anti-subsidy measures in place.
- Almost 44% of them were measures applying to imports of steel products.
- Of all the measures in force, over two-thirds (68%) concern imports originating in mainland China.
- Last year, the European Commission applied definitive safeguard measures on imports of certain steel products in the form of a 25% tariff once a tariff-rate quota is exhausted.
EU trade remedy measures are felt to provide commercial relief to EU domestic companies. In some cases, the definitive duties applied have resulted in a decrease of unfairly priced imports. At the same time, the duties are set at a level that is intended to be sufficient enough to restore competitive conditions on the EU market, without affecting or overburdening EU consumers and industries that rely on imports.
According to the Commission’s report, EU trade defence measures have a strong remedial effect: in most cases, already during the investigation, but certainly after imposition of measures, dumped or subsidised imports decrease considerably. The report provides several examples, especially regarding imports from mainland China, where the remedial effects are seen to have restored EU competitiveness, e.g., in the case of bicycles, aluminium road wheels, ceramic tiles and coated fine paper, among several others.
The main highlights of 2018 in the EU’s trade defence framework are as follows:
- Major overhaul of trade defence investigations legislation: The EU reformed its anti-dumping and anti-subsidy legislation in 2018 to react more effectively to unfair trade practices that harm EU domestic producers. The changes are said to have resulted in faster and more transparent investigations, with an additional focus on helping smaller companies. The new rules, which started applying for new investigations in 2018, include the possibility to impose higher duty levels in cases where there are serious market distortions.
- Continued high EU trade defence activity: In 2018, the EU initiated 10 new investigations, of which four concerned imported steel products. There were 14 decisions taken regarding new measures. The EU also initiated 17 investigations to review existing measures, with 7 decisions taken to keep measures in place. Furthermore, the Commission initiated three safeguard investigations, one in the steel sector and two bilateral ones on rice with Cambodia and Myanmar.
- Resolute action to safeguard EU steel producers: Following the imposition of tariff measures by the United States on steel and aluminium (known as Section 232 measures) the EU took action to address the disruptive effects of the measures on the EU steel sector. This was deemed as necessary to avoid global trade diversion towards the EU that threatened to cause injury to domestic EU steel producers.
- Defence of EU exporters targeted in foreign investigations: the European Commission intervened in around 70 foreign trade defence investigations targeting EU exporters in cases of allegedly unwarranted or abusive use of trade defence instruments. The number of trade defence measures targeting EU exporters stood at 174 in 2018, as compared to 162 in 2017. This trend is expected to continue over the coming years. The report also states that India is among the biggest users of trade defence instruments against the EU, with 21 measures in force (21 in 2017), followed by mainland China, with 18 measures in force in 2018 (20 in 2017).
Hong Kong traders with interests in mainland China, selling to the EU market, should expect the EU to continue its quest to protect the domestic industry through the application of its trade defence measures including anti-dumping and anti-subsidy duties.