19 March 2019
Trade Remedy Issues to Note for Businesses Ahead of Brexit
On 6 March 2019, the Trade Remedies Investigations Directorate of the UK (“TRID”) announced that it will investigate if new anti-dumping, safeguard and anti-subsidy measures are needed in order to counteract unfair trading practices once Brexit occurs. Currently, the EU has over 100 trade remedy measures in place which seek to protect EU businesses from unforeseen surges in imports or unfair trade practices such as dumped and subsidised imports. The TRID pointed out that in order to provide certainty and continuity to UK businesses, the UK government will continue with the existent EU trade remedy measures that “matter” to the UK. Therefore, UK businesses were asked to provide evidence with regard to which measures should be kept and which should be terminated in the UK after Brexit.
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.
The concept of subsidy encompasses a contribution – of a financial nature – by a foreign government or a public body that confers a benefit and which is specific to an enterprise, industry or a group of enterprises or industries. If the aforementioned requirements are met and if the imports of the subsidized product are having a negative effect on the UK’s domestic industry as well as if it is in the UK’s economic interest to impose a measure, the UK could apply anti-subsidy measures (commonly known as countervailing measures).
A safeguard measure is an additional duty that can be applied in the event that the UK’s domestic industry is negatively affected by an unforeseen, sharp and sudden increase in imports.
Once the UK has left the EU, UK businesses will no longer be able to request the European Commission to initiate a trade remedy investigation. The TRID explained that if UK businesses consider that the domestic industry is being harmed due to subsidized or dumped imports or due to an unforeseen surge in imports of a certain product, they can request the initiation of a trade remedy investigation. The TRID also clarified that an emerging UK industry selling its products on the UK market can also ask for the initiation of an investigation, if it cannot grow or establish itself due to an unforeseen surge in imports of certain products or because of the importation of a subsidized product or dumped product.
The duties resulting from trade remedy measures will be collected by HM Revenue and Customs a (non-ministerial department of the UK government responsible for the collection of taxes).
The TRID explained that UK businesses can contact the TRID if they: (i) suspect that products are being dumped and causing injury to the domestic industry; (ii) or think that there are imports of subsidized products that are harming the local UK industry; and (iii) or want a temporary tariff to be applied due to an unforeseen surge in imports. The TRID, for its part, will review if: (i) dumping or subsidization is taking place; (ii) or that there has been an unforeseen surge in imports; (iii) UK domestic producers are being, or may be, injured by the dumping, subsidization or surge in imports; and (iv) putting the trade remedy measures in place is in the UK’s economic interest.
The TRID clarified that it will carry out a transitional review on each of the measures kept by the UK that were put into place by the EU. The TRID will make sure that the measures implemented following the transitional review meet the needs of the UK economy and the requirements of the World Trade Organization. The transitional review will check if: (i) dumping or subsidization would continue to happen if the measures are terminated; (ii) harm to the UK industry would continue to occur if the measures are terminated; (iii) the level and form of the measure is appropriate; and (iv) the measure is in the economic interests of the UK.
As possible outcomes of the review, the TRID can recommend to the Secretary of State of International Trade that a transitional measure – which meets the criteria listed above – is kept for up to 5 years. The TRID can also make a recommendation as to whether the level of the measure needs to be increased or decreased. The TRID can recommend the termination of a measure if: (i) the measure is not necessary to offset the dumping or the import of subsidised goods; (ii) there would be no injury to the UK industry if it is no longer applied; or (iii) maintaining the measure is not in the UK’s economic interest.
Finally, the Secretary of State of International Trade will decide whether to keep or terminate the measure, based on the recommendations of the TRID and the public interest. In the event that the Secretary of State of International Trade disagrees with the TRID’s recommendations, it is obliged to make a statement before the UK Parliament explaining its reasons.