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Fastener Imports Face Likelihood of New Anti-dumping Probe Despite Favourable WTO Rulings

Imports into the EU of iron or steel fasteners from mainland China may be confronted with a new anti-dumping investigation, despite favourable WTO rulings. According to very recent press reports, European producers of fasteners are contemplating lodging a new anti-dumping complaint, now that tariffs have been removed.

Traders will recall that definitive anti-dumping duties of up to 85% were originally imposed by Regulation 91/2009, published in the EU’s Official Journal of 31 January 2009. This Regulation was challenged by mainland China before the WTO Dispute Settlement Body where it was claimed that anti-dumping duties imposed by the EU were inconsistent with the rules laid down in the WTO Anti-Dumping Agreement. The Chinese mainland also challenged a provision of the EU Basic Anti-Dumping Regulation dealing with the so-called individual treatment test for exporters from non-market economy (NME) countries wishing to obtain an individual duty rate.

In 2012, the Appellate Body confirmed that the EU measures imposed on fasteners were inconsistent with a number of provisions of the Anti-Dumping Agreement. In particular, the Appellate Body faulted the EU for having failed to disclose, to the Chinese producers, information regarding products from an analogue country used for determining their normal value. The Appellate Body also found that the EU’s definition of domestic industry was inconsistent with the standard set out in the Anti-Dumping Agreement. Finally, the Appellate Body held that the challenged provision of the EU Basic Anti-Dumping Regulation was inconsistent as such with the Anti-Dumping Agreement.

The EU had been given until 12 October 2012 to put its measures into compliance. In consequence, the EU amended its Basic Anti-Dumping Regulation and modified the anti-dumping duties on fasteners following a review investigation, lowering duties to 74.1% for ‘all other companies’ by Regulation 924/2012. However, mainland China considered that the measures taken by the EU were insufficient to bring the EU into conformity with its obligations under the Anti-Dumping Agreement. As a consequence, in October 2013, mainland China initiated so-called compliance proceedings, claiming that the revised EU anti-dumping measures have failed to implement the Appellate Body’s ruling.
In August 2015, the compliance panel sided with mainland China and held that the EU failed to comply with the original ruling. In its report of 18 January 2016, the Appellate Body upheld all of the compliance panel’s findings of violation and confirmed that the revised EU measures are inconsistent with a number of provisions of the Anti-Dumping Agreement.

As a consequence of the Appellate Body’s ruling of January 2016, the EU was required to withdraw the anti-dumping measures on fasteners in order to avoid the imposition of retaliatory measures by the Chinese authorities on EU exports.

Following the Appellate Body’s ruling, Commission Implementing Regulation 2016/278 repealing the definitive anti-dumping duty imposed on imports of certain iron or steel fasteners originating in the Chinese mainland, as extended to imports of certain iron or steel fasteners consigned from Malaysia, was published in the EU’s Official Journal on 27 February 2016. Regulation 2016/278 entered into force on the day following that of its publication.

Disappointed with the Commission’s decision to withdraw the measures immediately further to the Appellate Body’s ruling, rather than wait for the mainland Chinese government to lodge a request for sanctions, EU companies have claimed that the repeal of the measures on fasteners could affect up to 55,000 jobs on the EU market.

To counter any negative effects following the withdrawal of the measures, European producers are reportedly considering lodging a new complaint against mainland Chinese imports of fasteners. If accepted, this would mean that a new investigation will be initiated against the products. If dumping and injury can again be established, this will lead to a new imposition of measures for five years. Tariffs may, however, be lower, as the Commission will be required to take due account of the WTO rulings when calculating any dumping margins.

To substantiate a complaint, however, producers will be required to demonstrate that imports of fasteners are causing injury, typically supported by evidence of a significant increase in imports in recent years. For fasteners, however, imports have decreased considerably as a result of the imposition of measures, from 734.8 million euros worth of imports in 2008 to a mere 67.9 million in 2014.

While supporting data showing current injury may prove difficult, the Commission reportedly already confirmed that it would be favourable to opening a new investigation on the basis of a mere “threat of injury”. EU producers would then only need to show the threat of potential injury in the future, rather than any current injury. 

Traders should note that this would be an exceptional situation, as it would mean that an investigation is initiated against imports that are not causing any injury at the time of initiation of the investigation. EU Advocate General Paolo Mengozzi already warned against basing tariffs solely on a threat of injury as it “entails the risk that economic operators will be exposed to arbitrary measures of a purely protectionist nature”.

It is expected that a new investigation would not be initiated before autumn 2016 at the very earliest, given that a complaint will need to be sufficiently supported by import data supporting claims of a threat of a significant increase of imports after withdrawal of the measures.

Content provided by Picture: HKTDC Research
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