Explanatory Memorandum to COM(2016)721 - Amendment of Regulation (EU) 2016/1036 and Regulation (EU) 2016/1037 on protection against dumped imports and subsidised imports from non-EU countries - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2016)721 - Amendment of Regulation (EU) 2016/1036 and Regulation (EU) 2016/1037 on protection against dumped imports and subsidised ... |
|---|---|
| source | COM(2016)721  |
| date | 09-11-2016 |
1. CONTEXT OF THE PROPOSAL
The proposal covers targeted amendments to Regulation (EU) 2016/1036 on protection against dumped imports from countries that are not members of the European Union (the Basic Anti-Dumping Regulation) and to Regulation (EU) 2016/1037 on protection against subsidised imports from countries that are not members of the European Union (the Basic Anti-Subsidy Regulation)
1.1.Amendments to the Basic Anti-Dumping Regulation
Contents
Articles 2(1) to 2(7) of the Basic Anti-Dumping Regulation stipulate the basis on which normal value shall be determined. The circumstances prevailing in certain countries that are Members of the WTO and the experience gathered from the case-law make it appropriate to amend the methodology used to determine the normal value and the dumping margin for the countries concerned, in particular those currently subject to the provisions of Article 2(7)(b) and (c).
As a result, the Commission proposes to amend Article 2(7) and to introduce a new provision, namely Article 2(6)a for WTO member countries.
(a) Normal value for WTO Members
For WTO members, the normal value is normally determined on the basis of the domestic prices of the like product or on the basis of a constructed normal value.
There are circumstances however in which the domestic prices and costs would not provide a reasonable basis to determine the normal value. This could be the case, for instance, when prices or costs are not the result of free market forces because they are affected by government intervention. Relevant considerations in this respect include, for instance, the fact that the market in question is to a significant extent served by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country; the state presence in firms allowing the state to interfere with respect to prices or costs; the existence of public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces; and the access to finance granted by institutions implementing public policy objectives.
In such circumstances, it would be inappropriate to use domestic prices and costs to determine the value at which the like product should be normally sold ("the normal value") and a new provision (Article 2(6)a) stipulates that the normal value would instead be constructed on the basis of costs of production and sale reflecting undistorted prices or benchmarks. For this purpose, the sources that may be used would include undistorted international prices, costs, or benchmarks, or corresponding costs of production and sale in an appropriate representative country with a similar level of economic development as the exporting country.
This methodology would allow the Commission to establish and measure the actual magnitude of dumping being practised in normal market conditions absent distortions.
For the sake of transparency and efficiency, the Commission services intend to issue public reports describing the specific situation concerning the market circumstances in any given country or sector. Of importance, the EU industry would be in a position to rely on and refer to the information contained in these reports when alleging in a complaint or a request for review that the domestic prices and costs in the exporting country are unsuitable to determine the normal value. Such reports and the evidence on which it is based would also be placed on the file of any investigation relating to that country or sector so that all interested parties would be in a position to express their views and comments.
(b)Normal value for non-WTO members
For those countries which are, at the date of initiation, not Members of the WTO and listed in Annex I of Regulation (EU) 2015/755 of 29 April 2015 on common rules for imports from certain third countries, the normal value will be determined on the basis of the analogue country methodology as provided by Article 2(7) as amended.
The proposal introduces specific disciplines ensuring that the entry into force of the new system would be made in an orderly and transparent manner and would not create legal uncertainty for ongoing cases or unduly affect existing measures.
Thus, the proposal makes clear that the new system would only apply to cases initiated upon entry into force of the amended provisions. Any given ongoing anti-dumping investigation at the time of entry into force would remain governed by the current disciplines.
As far as existing measures are concerned, the Commission considers that the sheer introduction of the new disciplines does not constitute sufficient reasons to review such measures within the meaning of Article 11(3) of the Basic Anti-Dumping Regulation. Indeed, reviews of existing measures should only be conducted if and when the factual circumstances of the exporters concerned, as opposed to the legal disciplines to which they are subject, have changed to an extent that the current level of measures is shown to no longer be appropriate. Furthermore, if a review is initiated as a result of an objective change in the circumstances of an exporter, the review could still be conducted on the basis of the current methodology if the specific circumstances that led to the application of the current methodology, including the methodology based on Articles 2(7)(a) and 2(7)(b), have not changed. If the factual circumstances justifying the application of a given methodology have not changed, the normal value and dumping margin will be established on the basis of the same methodology as the one that led to the imposition of the measure subject to review. This is clarified in Article 11(9) of the Basic anti-dumping regulation and is necessary to avoid a situation where essentially the same circumstances would lead overtime to the application of two different methodologies.
Furthermore, the proposal provides that, in the case of a transition from a normal value calculated pursuant to Articles 2(7)(a) or 2(7)(b) to a normal value calculated pursuant to paragraphs 1 to 6a of Article 2, the reasonable period of time provided for in the first sub-paragraph of Article 11(3) of the Basic Anti-Dumping Regulation shall be deemed to elapse on the date on which the first expiry review following such transition is initiated.
The same approach should apply with respect to newcomer reviews conducted pursuant to Article 11 i of the Basic Anti-Dumping Regulation.
1.2.Amendment to the Basic Anti-Subsidy Regulation
The Commission considers also it is essential that the Basic anti-subsidy regulation can deploy its full effectiveness. In that respect, experience shows that the actual magnitude of subsidisation is not always evident at the time of initiation. Oftentimes, investigated exporters are found to benefit from subsidies whose existence could not have been reasonably known before carrying out the investigation. Yet, those subsidies clearly provide an unfair benefit the exporters concerned, which allows them to sell at injurious prices to the EU market.
It is therefore essential that such subsidies be adequately captured in the final analysis and level of duty imposed.
For that purpose and for reasons of due process and transparency, the proposal clarifies that, when such subsidies are found in the course of any given investigation or review, the Commission will offer additional consultations to the country of origin and/or export concerned with regard to such subsidies identified in the course of the investigation. In these situations, the Commission will send to the country of origin and/or export a summary of the main elements concerning these other subsidies to ensure meaningful consultations.
2. RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
2.1.Consultation of interested parties
Interested parties concerned by this proposal have had the opportunity to participate in the Public consultation carried out from February to April 2016. A summary of the results of the public consultation was published as part of the Impact Assessment together with this legislative proposal. The Impact Assessment can be found on DG Trade's website.
2.2.Collection and use of expertise
An independent study into the impact of a number of options to address the way normal value is calculated in the case of imports from non-market economy countries was finalised in May 2016 and was published on DG Trade’s website in parallel to the release of the legislative proposal.
2.3.Impact Assessment
Taking into account the results of the public consultation, the independent study and the Commission's extensive practice in the use of the instruments an impact assessment was carried out in Spring 2016. The impact assessment analysed various options. The Impact Assessment Board considered the report in June 2016 and gave a favourable opinion subject to some revisions to the report. The report has since been revised and finalised. The preferred solutions form the basis for this proposal.
3. LEGAL ELEMENTS OF THE PROPOSAL
3.1.Legal basis
The legal basis for this proposal is Article 207(2) of the Treaty on the Functioning of the European Union, in accordance to which the European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.
This proposal amends Regulation (EU) 2016/1036 and Regulation (EU) 2016/1037.
3.2.Subsidiarity Principle
Pursuant to Article 3(1)(e) of the Treaty on the Functioning of the European Union, the proposal falls under exclusive competence of the Union. The subsidiarity principle therefore does not apply.
3.3.Proportionality Principle
The proposal complies with the proportionality principle.
3.4.Choice of instruments
Proposed instrument: Regulation of the European Parliament and of the Council.
Other means would not be adequate for the following reason: a Regulation must be amended by a Regulation.
4. BUDGETARY IMPLICATION
Not applicable.
5. OPTIONAL ELEMENTS
Not applicable.