On October 3, 2017, the EU Parliament, the Council, and the Commission reached an agreement on changes to the EU anti-dumping and anti-subsidy legislation. (See our previous posts on China’s status and the public consultation.) Concurrently, however, the 2013 Commission’s proposal on the Modernization of Trade Defense Instruments (covering inter alia amendments to the “lesser duty rule”) is still undergoing internal negotiations.
The main change to the anti-dumping legislation would be the introduction of a new methodology for calculating dumping margins for imports from WTO members in the case of significant market distortions, or pervasive state’s influence on the economy. Under the new methodology, when it is not appropriate to use domestic prices or costs due to distortions, other benchmarks reflecting undistorted costs of production and sale will be used. The Commission would also be able to take into consideration the corresponding costs of production and sale in an appropriate representative country with a similar level of economic development as the exporting country.
The Commission intends to draft country or sector reports that will identify distortions and summarize any supporting evidence. These reports would be made publicly available and would become part of any anti-dumping investigation into that specific country or sector. Complainants will be able to rely on the Commission’s reports as evidence. Exporting producers, however, will still be able to rebut any findings of distortion included in those reports. According to public sources, the Commission is likely to publish a comprehensive report on China as soon as the new methodology enters into force.
This agreement also includes changes to the way the EU investigates subsidy complaints. In future cases, any new subsidy revealed in the course of an investigation will be further assessed and taken into account in the final calculation of the duties.
It is anticipated that the draft proposal will be formally approved by the EU Parliament’s Trade Committee on October 12. Member states are expected to approve the political compromise at the Trade Ministers Meeting on November 10, 2017. If passed, the new methodology is likely to enter into force at the beginning of 2018 and will be applicable in the first expiry review proceedings.