2005-06-14
Treatment of the “Community Interest” in
EU antidumping investigations
According to EU antidumping law antidumping measures may not
be imposed if they are contrary to the ”Community interest”. The
Community interest should be assessed on the basis of the interests
of all parties concerned. Earlier studies have shown that the requirement to assess the Community interest has had a limited effect
on EU antidumping practice.
The Board of Trade has reviewed the last twenty antidumping cases
where an assessment of the Community interest has been done. The
conclusion of this review is that the Community Interest is dealt with
in a routine manner in the antidumping investigations conducted by
the Commission. No calculation of the cost of the measures has been
done. Instead a set of standard arguments is used in close to all cases.
These include:
1. it is in the interest of the Community Industry to impose measures.
2. imports to non-dumped prices, and imports from third countries,
may continue
3. importers/users/consumers have not made themselves known and
can thus be assumed not to be affected.
4. the cost to each user/consumer is marginal
The National Board of Trade suggests the following changes to the
assessment of the Community Interest:
1. that a simple estimation of the total cost of the measure is made,
2. that the number of people employed in the Community Industry is
taken into account,
3. that the risk of an anticompetitive situation arising from the nonimposition of measures is assessed.
4. that the effects on users and consumers are taken into account
even if these parties have not made themselves known,
5. that the time given to contact the Commission is extended, and
6. that the possibilities to communicate ones concerns to the Commission is improved, for example by using electronic means of communication.
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2005-06-14
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The Community Interest in the Basic Regulation
The requirement to take the Community interest into account before any
antidumping measures are taken has existed for some time in the antidumping regulation of the community. A compulsory procedure to take
the Community interest into account was introduced in 1996. Before
1996 Community interest was often taken to be same as the interest of
the Community industry.1
According to article 7 p 1 and article 9 p 4 in the basic regulation antidumping measure may only be taken if the Community interest . Antidumping measures may not be taken if they should contravene the interest of the Community. The Community interest should also guide the
possibility to temporarily suspend an antidumping measure (Article 14 p
4). According to article 9 p 1 an antidumping procedure may not be terminated if this should contravene the interest of the Community. The
Community interest should thus be examined at every step in an antidumping procedure. 2
Article 21 of the basic regulation gives some guidance as to how the
Community interest should be examined. According to this article a determination of whether the Community interest calls for intervention
shall be based on an appreciation of all the various interests taken as a
whole, including the interests of the domestic industry, users and consumers, after all parties have been given the opportunity to make their
views known. Special consideration shall be given to the need to eliminate the trade distorting effects of injurious dumping and to restore effective competition.
As can be seen in Article 21 “trade distortion” (the effects of dumping) is
considered as something negative, something which there is a need to
“eliminate”. There is no room to consider “trade distortion” (increased
imports as an effect of lower prices) as something that is in the interest of
the Community. Thus there is a presumption that measures to counter
dumping (eliminate “distortions”) are in the interest of the Community,
unless the opposite has been proven. This presumption is a basic problem
in the assessment of Community Interest.
Users and consumers have been given the status of “interested party” in
article 21 and article 6 p 7. This status was previously only given to the
applicants, importers, exporters and representatives of the exporting
country. Being an interested party gives you the right to:
1
Van Bael & Bellis (1996) Antidumping and Other Trade Protection Laws of the EC,
third edition p. 203
2
In the case T-132/01 Euralliages and Others v. Commission the Court of First Instance stated that the Community interest should also be considered during sunset reviews.
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•
•
•
•
•
•
•
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make oneself known,
provide information to the Commission,
receive information provided by other parties,
request a hearing,
comment on provisional measures, and to respond to comments
made by others,
have disclosed the facts and considerations on which final decisions are likely to be taken, and
have submissions communicated to the member states.
Apart from being entitled certain procedural rights there are no guarantees for an interested party that his or her views are actually taken into
account. An interested party however has under certain circumstances the
right to appeal a Commission- or Council decision to introduce an antidumping measure, to the Court of First Instance.
Examination of the Community Interest in
Twenty Recent Antidumping Investigations
In order to examine the Commission3 practice when addressing the
Community interest we have examined 20 recent cases when antidumping measures have been introduced or extended. In all of the 20 cases the
Commission thus found that it was in the Community interest to introduce measures.4 Studies of the Commission practice over a longer period
show that the introduction of a Community interest test has had a limited
effect on EU’s antidumping practice.5
To begin with it can be noted that the Commissions investigations do not
contain any calculation of the total costs for the Community of imposed
measures. There are no figures for total costs of imposing or not imposing measures. No consideration is given to the total value of the trade
with the concerned product from the country concerned, neither to the
size of the Community industry or of the user industry. The Commission
makes no ex officio investigation of the interest of the interested parties
who have not made themselves known but who could be assumed to be
affected by a measure. Instead the argumentation follows the remarks
made by those interested parties who have made themselves known during the investigation.
The examination of the twenty cases showed the following standard arguments were being used:
3
The term ”Commission practice” is here used to mean EU practice, as the Commission
is the investigating authority. The Council is however the deciding institution when it
comes to definitive measures.
4
During the period examined no investigation was terminated with reference to a finding that it would not be in the Community interest to continue the investigation.
5
Van Bael & Bellis (2004) Antidumping and Other Trade Protection Laws of the EC
Fourth Edition, p. 295
5
Cases where extensive cooperation from users has been noted include Salmon from
Norway and PSF from China, Saudi Arabia and Korea.
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Arguments that measures are in the Community Interest
Number of cases
(out of 20)
Measures are in the interest of the Community Industry
16
The possibility to import from third countries remains
10
The possibility to import to non-dumped or non-injurious prices remains
9
The Community Industry has spare capacity
8
Measures are in the interest of suppliers
8
The product represents a small part of users total costs
6
The users have not contacted the Commission, and therefore measures
would not contravene their interests
4
Consumers have not contacted the Commission, and therefore measures would not contravene their interests
3
The costs for importers can be transferred to the users
3
The costs for users can be transferred to the consumers
3
The product represents a small cost for consumers
2
Measures were found to be in the Community interest in the previous
investigation
2
Some of the arguments listed above come in different forms. For example the argument that the Community Industry could increase their capacity is often built on assumptions, such as that the Community Industry
has the technical know-how and machinery to increase production6,
“several of the Community producers have announced plans to further
increase capacity”7 or “there is no technical reason why the production of
these products in the Community could not be increased”8. In addition to
these standard arguments there are a number of more unusual arguments
such as:
6
•
importation is not a labour intensive activity and therefore no significant consideration can be given to the interests of the importers
•
the importers and users are profitable and can thus shoulder the
extra costs that the antidumping measures would involve
•
the importers and users business with the product concerned is
not profitable and therefore unimportant to importers and users
•
consumers and users benefit from “stable prices”
PSF OJ L 71/2005 p 29 para 273
PET OJ L 52/2005 p31 para 208
8
Bed Linen OJ L 66/2005 p 13 para 128
7
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•
measures would result in higher prices for the end product, which
would benefit the user industry
•
the Community Industry need to sell a lot of the product concerned to finance the more specialised/refined forms of the product (staple fibres)
•
consumers have health insurance and can therefore handle increased costs (for antibiotics)
•
the environment will benefit from there being a market for recycled PET, and the Community therefore needs a polyester staple
fibre industry
•
Importers have managed to handle antidumping measures to date
and can therefore handle them also in the future
That importers, traders, users and consumers make their views known to
the Commission does not affect the assessment of the Community interest significantly. However, more views being put forward does lead to
more of the standard arguments listed above being used.9
As concerns views from interested parties it can be noted that a number
of replies are not being taken into consideration as they are not considered to contain sufficient factual evidence of what is being claimed. This
problem mostly affects those interested parties that oppose measures. For
those who can be assumed to support measures, such as suppliers to the
Community Industry, the Commission way of arguing is the opposite. As
long as there is no evidence against what is being claimed is presented,
what is being claimed is considered true.10 In some cases the Commission goes further and claims that even though no upstream suppliers have
made themselves known “it is clear that if no measures are imposed, several suppliers would be seriously affected”11. The fact that some interested parties have not made themselves known hence does not exclude
the possibility of their interest being taken into account, as long as the
parties can be assumed to be in favour of measures.
9
Cases where there has been significant cooperation from interested parties include
Salmon from Norway, PSF from China, Saudi Arabia and Korea, Barium carbonate
from China, Graphite electrode systems from India, PET from Australia and China and
Rainbow trout from Norway and Faroe Islands
10
In the case of Antibiotics from India the up-stream suppliers stated taht the Community Industry was not one of its main customers but that the Community Industry still
was contributing to the suppliers profitability. The conclusion was therefore drawn that
“in the absence of any information to the contrary, it is concluded that the continuation
of measures would comply with interests of up-stream suppliers” (Council Regulation
713/2005 para 252).
11
Hand Pallet Trucks from China (Commission Regulation 128/2005 para 110). The
same line of reasoning was being followed in Salmon from Norway (Commission
Regulation 628/2005)
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What is Missing in the Assessment of the
Community Interest?
As the analysis above show the Community interest is often being discussed in a routine manner when antidumping measures are being imposed. Below we discuss some aspects of what is missing from the assessment of Community Interest.
The Values of the Trade Affected by Measures
In every antidumping investigation both the volume and the price of imports are investigated. The accumulated value of the trade that might be
affected is however not discussed. As is shown in table 1 below the value
of trade affected by an antidumping measure varies a lot from case to
case. The value of salmon trade with Norway for example was about 957
million euros, while the value of barium carbonate trade with China was
less than one million euro. The cost of an antidumping measure on a
trade which is larger in terms of value is obviously higher than if an antidumping measure is introduced on imports of lesser value.
Since the costs to users and consumers foremost depends on to which
extent one uses the product concerned, the value of the imports affected
is an important aspect to discuss. The Commission however seems to
normally focus on how many users there are. The more users the less cost
to each and every user. In some investigation one also reaches the conclusion that if a product is used in many steps in the production of an end
product, the antidumping measure has a very small impact on each of
those steps. For no step in the process will the cost of an antidumping
measure then be large enough to motivate that measures are not taken.
The value of the trade can also be an indication of the importance of the
user industry itself. Since the cooperation from users is often low there
is often no discussion of the value of the user industry to the Community.
Often the discussion about the user industry ends with a statement that
the cost of the product concerned is marginal in relationship to the total
costs of the user.
The Importance of the Community Industry that is to be
Protected
The size and importance of the Community Industry seeking protection is
not discussed in the context of Community Interest. The number of employees in the Community Industry is being discussed in the context of
the injury assessment, but not in the assessment of Community Industry,
even though the issue has been investigated and the information collected
verified.
The effect of the fact that the size of the Community Industry is not being
discussed is that the value of protecting very small industries can be used
to motivate an increased cost to a very large user industry.
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2005-06-14
The cost of antidumping measures, which depends on the value of trade
and the level of the measures, should be put in relation to the industry
that seeks protection. Such a coarse estimation of the direct costs of an
antidumping measure can be made by calculating the direct costs to importers/users/consumers, in the form of payable antidumping duties, that
would be collected if one were to continue to import the same amount of
the product concerned after the imposition of measures as one did during
the investigation period. Such a coarse calculation has been done in the
table below. The calculation is only an estimation, as it is unlikely that
imports should continue unchanged after the imposition of measures. It is
more likely that importers start buying from third markets not affected by
measures. This however would also imply a cost since products from
third countries are in most cases more expensive than those from the
country affected by the antidumping measure.
In table 1 below the cost of paying the antidumping duty is also related to
the number of employment opportunities that are supposedly protected
by the measures, for those cases where this information was available
Table 1 Costs of antidumping duties payable if imports were to continue unchanged12
Antidumping measure
13
Antibiotics from India
Barium carbonate from China
Bicycles from China and Vietnam
Furfulaldehyd from China
Hand pallet trucks from China
Graphite electrode systems
from India16
Salmon from Norway
Magnesium oxide from China
Steel fasteners from China,
12
Number
of employed in
Community Industry14
3
0
158
11500
Value
of
trade
(m€)
Cost of
duty if
imports
continue
(m€)15
Cost of
duty
per
employee
('
000 €)
1
25-77
2-7
3
24
-
434
1800
2
7-12
-
16-27
-
957
15
66
1003
369
467
157
4-4
5-18
156
11
11-39
All figures refer to the investigation period (IP) normally one year. “-“ denotes that
there was no information available in the regulation imposing the measure.
13
Lacking any better information the value of trade has been calculated by multiplying
the import volume with the average import price.
14
The number of employees is based on the figures given in the injury assessment. For
those cases where these figures only represent a part of Community producers a recalculation has been made to take into account other producers in the non-cooperating part
of the Community Industry, using production figures.
15
Value of imports times the imposed antidumping duty (highest and lowest duties
imposed)
16
Countervailing measure
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Indonesia, Malaysia, Philippines, Thailand and
Sodium cyklamate from China
and Indonesia
Okouméplywood from China
PET from Australia and China
Polyesterfilment yarn from
China
PSF from China, Saudi Arabia
and South Korea
Rainbow trout from Norway
and Faroe Islands
Ringbinding mechanism from
China
Synthetic fibre ropes from India
Bed linen from Pakistan
Seamles pipes from Croatia and
Ukraine
TCCA from China and the
USA
Magnesia bricks from China
-
-
-
-
33
127
311
1462
1710
1795
112
2578
0-56
0-22
17
692
3-9
5-13
1
-
1
-
0
292
29
992
3531
0
38
11-19
0
3-5
24
-
2-8
-
32
800
4-21
4-26
2-22
1-15
11-37
6-22
62-265 35-148
Even if table 1 does not give a measure of the cost to the Community of
imposing an antidumping measure, it does show that there are large differences in the effects of different antidumping measures. In addition to
these costs there are dynamic costs in the form of less competition and
less choice.
The table also shows that in many cases, seven out of twenty, there is no
information on the number of employees in the industry that is supposed
to be protected. This is a serious flaw in the analysis of the Community
Interest.
The Competition Aspect
In theory antidumping measures is a way to ensure competition. The idea
is that if an exporter is dumping in such a way as to put the Community
Industry out of business, this exporter can eventually raise its prices and
make extraordinary profits, harming users and consumers. For this riskscenario to be realistic exporters from the country being subject to an
antidumping investigation should be cooperating, not competing, with
each other and there should not be any competition from firms in other
countries.
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In a number of the cases examined here the number of exporters is large,
and in two cases so large that sampling had to be used. In addition, in ten
out of the twenty cases the Commission stresses that there is the possibility to import from other countries. The risk that an exporter could obtain
such a dominant position on the Community market as to be able to increase prices is thus small. This aspect is never being discussed in the
assessment of the Community Interest. Instead it is simply stated that the
Community Industry might disappear if antidumping measures would not
be imposed. Whether this would be of harm to anyone but the Community Industry itself is not discussed.
The possibility to import from other countries is often used as an argument that antidumping measures are not contrary to the Community Interest. There are two principal objections to this line of reasoning. Firstly,
the possibility to import from third countries means that the measures
would not necessarily benefit the Community Industry at all. Instead
there is a risk that the measures lead to trade diversion that would benefit
exporters in third countries. The measures would then imply a cost to
users and consumers in the Community, and a benefit to exporters in
third countries. Secondly, as has been mentioned above, the possibility to
import from third countries means that the risk that the investigated exporters would obtain a dominant position is minimised. The supposed
risks of not doing anything about injurious dumping are minimised when
the competition on the world market is good. The fact that there is a possibility to import from third countries could thus be used as an argument
against antidumping measures.
Consideration of the Interests that have not been put forward during the Antidumping Investigation
As has been concluded above views put forward by interested parties are
often left without consideration because either they have not been put
forward within the time limit, or the interested party has not given complete replies the Commission questionnaires, or the interested parties
have not put forward sufficient evidence for their claims. Consideration
has however been given to views that have not been communicated to the
Commission according to normal procedure, if these views have been in
support of measures.
There is an obvious risk that users and consumers to whom the cost of an
antidumping measure is marginal, would consider it not worth while to
contact the Commission. There is also an obvious risk that one does not
have time to make oneself known within the fifteens days which the basic regulation grants interested parties. Most interested parties do not get
the information about the antidumping proceeding until provisional antidumping duties are a fact, and then it is often too late to put ones views
forward.
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For a better assessment of the Community Interest the Commission
should on its own investigate effect to users and consumers. Certain conclusions about the consumer interest should be possible to make, such as
the fact that higher prices are not in the consumer interests, even if no
consumer organisation has put its view forward. The Commission could
also, by analysing demand on the Community market, get an idea of the
users interests, even though the user industry has not made itself known.
The Commission should be able to require the applicant industry to provide lists of its customers, in order for the Commission to be able to contact users of the product concerned. The evidential requirements should
also be relaxed for users. It is difficult to see exactly how the user industry can prove that employment will disappear if measures are imposed.
At the same time it is often considered that employment in the Community Industry would disappear if measures are not taken, even if there is
no evidentiary proof of this.
Even though it is unlikely that it is worth while for users and consumers
to contact the Commission, the ways in which to contact the Commission
should be improved. Such improvement could consist of extending the
fifteen days available to make oneself known and providing an easy way
to put ones views forward on the Commission web page in all official
languages. One single e-mail address for each antidumping measure
would make it easier for interested parties to communicate with the
Commission case handlers.
Suggestions for a better assessment of the
Community Interest
With the above background the National Board of Trade suggests the
following in order to improve the assessment of the Community Interest:
Estimating static costs of antidumping duties:
An antidumping investigation should contain data on the value of trade
with the product concerned, and the value of antidumping duties that
would be collected if the same volume that was imported during the investigation period was to be imported following the imposition of measures.
Estimating the size and importance of the total Community Industry:
An antidumping investigation should contain data on the total number
employed with the production of the product concerned in the Community.
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Assessing the risks associated with dumping:
An antidumping investigation should assess the real risks associated with
continued dumping. This can be done by looking at the number of independent producers in the exporting country concerned, and at the level of
competition from the rest of the world. If there are many exporters in the
country concerned and a high level of competition from the rest of the
world, it is unlikely that persistent dumping would result in exporters
establishing a dominant position on the Community market. In these
cases antidumping measures should not be found to be in the Community
interest.
Assessing the interest of the concerned parties which have not contacted
the Commission:
An antidumping investigation should assess the interests also of the parties who have not contacted the Commission or who have returned incomplete questionnaires. The fact that an interested party has not completed a questionnaire should not be ground for disregarding the interests
of such a party.
Improving access to the Commission Services for interested parties:
The time to contact the Commission Services should be extended beyond
the existing fifteen days. The possibilities to communicate electronically
with the Commission Services should be improved. It should be possible
to download questionnaires and make comments on the DG Trade homepage.