Trade Defence Instruments

PresentationTDI Scheme, Rules and Limits

Dipl. Ing. Vladimir Jarunek

General State Counsellor

Why we need trade defence instruments?

• WTO member state Rules

• Protect Community industry

• Protect Consumers

• Protect Trade

How to protect?

• Anti-dumping proceeding

• Anti-subsidy and Countervailing proceeding

• Safeguards proceeding

• Trade Barriers Regulations

• Injurious pricing instruments

Anti-dumping proceedingDumping is often seen to relate to any cheap or below-cost imports, but the reality is more complicated. The 1996 Anti-Dumping Regulation provides for the imposition of anti-dumping duties, but only when the following conditions are met:• a finding of dumping: the export price at which the product is sold on

the Community market is shown to be lower than the price on the producer's home market;

• a material injury to Community industry: the imports have caused or threaten to cause damage to a substantial part of the industry within the EC, such as loss of market share, reduced prices for producers and resulting pressure on production, sales, profits, productivity etc.;

• the interests of the Community: the costs for the Community of taking measures must not be disproportionate to the benefits.

Anti-dumping Legislation• Basic Regulation - Council Regulation (EC)No 384/96 of 22 December

1995 on protection against dumped imports from countries not members of the European Community

• Secondary Legislation – Council Regulation (EC) No 1972/2002 of 5 November 2002 amending Regulation (EC) No 384/96

• Council Regulation (EC) No 1310/2002 amend.Regulation (EC) No 963/2002

• Council Regulation (EC) No 963/2002 of 3 June 2002

• Commission Decision No 435/2001 ECSC amend.Decision No 2277/96 ECSC

• Council Regulation (EC) No 2238/2000 amending R. No 384/96

• Council Regulation (EC) No 905/98 amending Regulation (EC) No 384/96

• Council Regulation (EC) No 2331/96 amending Regulation (EC) No 384/96

• Commission Decision No 2277/96/ECSC of 28 November 1996

Anti-subsidy proceeding• WTO ASCM• The EC regulation only concerns imports from outside the EC, providing for

imposition of countervailing duties on goods which have been subsidised by the governments of non-EU countries and whose import into the Community causes or threatens injury to EC producers of the same product. Three conditions must be met before countervailing duties can be imposed:

· the subsidy must be specific: i.e. it must be an export subsidy, or a subsidy limited to a company, an industry or a group of companies or industries;

· material injury to Community industry: the import sales have caused or threaten to cause damage to a substantial part of the industry within the EC, such as loss of market share, reduced prices for producers and resulting pressure on production, sales, profits, productivity etc.;

· the interests of the Community: the costs for the Community of taking measures must not be disproportionate to the benefits.

Anti-subsidy Legislation

Basic Regulation: defining the Community's powers in this field and the conditions governing the exercise of those powers is: Council Regulation (EC) No 2026/97 on protection against subsidised imports from countries not members of the European Community (OJ No L 288, 21 October 1997) .

Secondary Legislation:• COUNCIL REGULATION (EC) No 1973/2002 of 5 November 2002

amending Regulation (EC) No 2026/97

• COUNCIL REGULATION (EC) No 1310/2002 of 19 July 2002 amending Regulation (EC) No 963/2002 (OJ L 192, 20.7.2002, p. 9)  

• COUNCIL REGULATION (EC) No 963/2002 (OJ L 149, 7.6.2002, p.3)  

• COMMISSION DECISION No 1889/98/ECSC of 3 September 1998

Safeguards proceeding • Free importation is the general rule of the Community's Common Import

Regime which is established principally in Regulations (EC) 3285/94 (for WTO Members) and 519/94 (for non-WTO Members).

• Nevertheless, there are three basic exceptions to this general rule:

• Safeguard measures, which may be applied to imports that increase in such quantities and are made under such conditions as to cause or threaten to cause serious injury to the Community industry, provided there is a Community interest to do so. At the request of a Member State or at the Commission's own initiative, an investigation may be initiated on the basis of which measures may be applied on a case-by-case basis. Industry may not directly request the introduction of these measures. These measures must respect the WTO Agreement on Safeguards.

Safeguards proceeding • Quotas on imports originating in the People’s Republic of China, which

currently concern footwear, tableware and ceramics. These quotas are in-built in Regulation (EC) 519/94 which applies to certain non-WTO members. However, upon WTO accession the progressive removal of these quantitative restrictions by year 2005 was agreed. Council Regulation (EC) No 427/2003 (OJ L 65, 8.3.2003, p. 1) and Commission Regulation (EC) 428/2003 (OJ L 65, 8.3.2003, p.12) implement this phase-out plan.

• Surveillance, which is not an import restrictive measure, but a system of automatic import licensing. Current surveillance measures under the common import regime concern mainly steel products. Within a WTO framework, surveillance measures are covered by the WTO Agreement on Import Licensing Procedures.

Safeguards Legislation

Basic Legislation: COUNCIL REGULATION (EC) No 3285/94 of 22 December 1994 on the common rules for imports, repealing Regulation (EC) No 518/94

Council Regulation (EC) No 519/94 of 7 March 1994 on common rules for imports from certain countries and repealing Regulations (EEC) No 1765/82, 

· Council Regulation (EC) No 520/94 of 7 March 1994 establishing a Community procedure for administering quantitative quotas (OJ L 66, 10.03.94, p.1, as amended subsequently.)

Council Regulation (EC) No 2603/69 of 20 December 1969 establishing common rules for exports (OJ L 324, 27.12.69, p.25).

Secondary Legislation:

· COUNCIL REGULATION (EC) No 427/2003 of 3 March 2003 on a product-specific safeguard mechanism for imports originating in China

Trade Barriers Regulations

It has become necessary to create trade policy instruments aimed not only at protecting

the EC market but also at opening third country markets.

· TBR is a legal instrument that gives the right to Community enterprises and industries to lodge a complaint, which obliges the Commission to investigate and evaluate whether there is evidence of violation of international trade rules resulting in adverse trade effects. The result is that the procedure will lead to either a mutually agreed solution to the problem or to resort to dispute settlement.

· The TBR is an instrument of commercial offence to open third country markets by eliminating obstacles to trade for the benefit of Community exporters.

· The TBR has a broad scope of application and applies not only to goods but also to some extent to services and intellectual property rights, when the violation of rules concerning these rights has an impact on trade between the EC and a third country.

Wide range of obstacles to trade or trade barriers is covered by the Regulation.

An obstacle to trade is defined in the Regulation as "any trade practice adopted

or maintained by a third country in respect of which international trade rules

establish a right of action". In this context international trade rules are primarily

those established under the auspices of the WTO and laid down in the Annexes

of the WTO Agreement.

However this definition also covers other international agreements and bilateral

agreements between the EC and a third country.

Target of the TBR instrument: obstacles to trade

Community enterprises: One or more individual firms or any association acting

on their behalf can lodge a complaint aimed at opening a third country market.

Community industry: A Community industry, or association acting on its behalf,

can complain about trade barriers having an effect on the market of the

Community.

Member state: Any Member State may lodge a complaint in respect of any

obstacle to trade.

Who can lodge a complaint?

The complainant needs to provide: · definition of the goods or services affected by the trade barrier; · prima facie evidence of the existence of the trade barrier; · prima facie existence of a right of action of the Community under international trade rules; · prima facie evidence that the trade barrier results in adverse trade effects or injury.

Before a complaint is lodged, the complainant is invited to make informal contact with the Commission for advice on the relevance of the issue and on the best way to submit the case. The officials of the Commission can provide guidelines for the submission of acomplaint. Therefore, the procedure does not involve any particular costs for the complainant.

How to file a complaint?

· Lodging of a complaint;

· Commission decision on admissibility;

· Investigation and report to Member States;

· International action

Procedure-course of action

The non EC country takes satisfactory steps to eliminate the adverse trade effects or injury complained of => procedure suspended and implementation monitored by the Commission;

Initiation of international (WTO or other) dispute settlement(WTO dispute settlement website);

In certain cases an international agreement appears to be necessary => the procedure is suspended to allow negotiations in order to conclude an agreement between the non-EC country and the EC

The outcome

· The sole trade policy instrument that can be triggered by the private sector and that is not confined to the defence of the internal market.

· A right given to Community industries to examine the complaint, carry out an investigation and take international action if the necessary conditions are met.

· The complainant is fully associated at each step of the procedure. An instrument which provides industry with indirect access to WTO rules

· A solution oriented instrument permitting flexibility to allow for a negotiated solution at each step of the procedure.

· A procedure that will not engage the complainant in individual costs.

· Confidentiality: any information provided on a confidential basis by a party to the examination procedure shall not be revealed.

What are the advantages of the TBR?

TBR Legislation

· Council Regulation (EC) No 356/95 of 20 February 1995 amending Regulation (EC) No 3286/94 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organization (WTO)

· COUNCIL REGULATION (EC) No 3286/94 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organization

Injurious pricing instruments

• European Community rules include an instrument concerning the sale of newly built ships called the Injurious Pricing Regulation. This is similar to the anti-dumping Regulation and can lead to the imposition of charges on the shipbuilders in question based on the level of injurious pricing found. If these are not paid, the Community may deny those ships loading and unloading facilities in its harbours until payment is made.

• As stated earlier, application of this Regulation has been suspended pending ratification by the USA of the OECD Agreement on shipbuilding and ship repairing.

Injurious pricing Legislation

• COUNCIL REGULATION (EC) No 385/96 of 29 January 1996 on protection against injurious pricing of vessels

List of AD+AS+SFG Cases against Bulgaria

AD Cases: Hot-rolled Coils

Urea

Ammonium Nitrate

SFG Cases: Steel products

Strawberries

Discussion

• New EC legislation in opposite to national Bulgarian legislation

• Preparing administration officials for enlargement concerning increase of trade matters

• Preparing for Advisory Comities• Others E-mail: jarunek@economy.gov.sk

Thank you for your attention.