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Europaudvalget 2006-07
KOM (2006) 0763 Bilag 4
Offentligt

GLOBAL EUROPE

Europe's Trade Defence Instruments in a changing global economy

A Green Paper for public consultation

Questionnaire

Name of organisation/individual Government of Denmark

Ministry of Economic and Business Affairs

National Agency for Enterprise and Construction

Address of organisation/individual Dahlerups Pakhus

Langelinie Allé 17

DK-2100 Copenhagen

Country Denmark

Telephone +45 35 46 60 00

Fax +45 35 46 60 01

e-mail

[email protected]

Date of submission 30 March 2007

Organisation/individual belonging to X public administration

the following category

If organisation, please provide

some economic key figures, e.g.

turnover and employment and any

other figure that you consider

relevant.

Replies to the questionnaire should reach the Commission by

31 March 2007

at:

Trade-tdi-

[email protected].

Comments received will be made available on-line unless a

specific request for confidentiality is made, in which case only an indication of the contributor

will be given.

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Question 1:

What is the role of trade defence instruments in the modern global

economy? Do trade defence instruments remain essential in order to ensure respect

for international trade rules and to protect European interests? Should the EU

consider how they might be improved?

Reply:

The Danish Government acknowledges that the use of trade defence instruments is part of the

EU Trade Policy. Furthermore it is legally justified on the basis of the WTO agreements

The Danish Government is concerned, however, about the general use of trade defence

instruments in the EU and in third countries and especially very much concerned about the

increasing politicization of the anti-dumping instrument. If TDI’s are being purposed to

protect and defend industrial interest from fair and normal competition, the credibility in the

TDI-system will definitely fail. Furthermore, it means creating hindrancies for the existance

of a natural development in free trade.

Therefore, there is an obvious need for re-drafting certain provisions in the Regulations of the

trade defence instruments.They should be designed to remain modern and to ensure that they

are not used to stop or postpone natural structural changes in the economy, nor to become an

obstacle to the answers to the challenges arising from globalisation. Furthermore trade

defence instruments measures should be applied as transparent and predictable as possible.

The globalization in trade flows between countries has changed some of the features of an

increasingly global business environment. A series of new methodologies and approaches

applying for the trade defence instruments need to be adopted to meet the business reality of

today.

Outsourcing of production to low cost countries is a fact of life in modern business. Take the

footwear case as an example. By outsourcing production to countries with a competitive cost

of production our shoe producers have been able to maintain and expand their business on an

economically sound basis and thereby created thousands of new jobs in the Community in the

value-added area of design, innovation, logistic, sales and marketing. Future jobs in the EU in

the high value-added production are at stake if the need for outsourcing is being ignored.

According to the Lisbon agenda there is a need for changes in the business structures, strategy

and behaviour alongside the global economic development. From a long term economic

welfare perspective an optimal allocation of resources globally is a condition for mutual

growth and prosperity to the benefit of all parties.

Trade defence instruments play an important role but can become an obstacle to free trade and

efficient use of resources if the instruments are used in an inappropriate and unjustified way.

Question 2:

Should the EU make greater use of Anti-Subsidy and Safeguard

instruments alongside its Anti-Dumping actions? Should the Commission, in

particular circumstances, be ready to initiate more trade defence investigations on its

own initiative provided it is in possession of the required evidence?

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Reply:

The Danish Government is of the opinion that Anti-Subsidy instrument should be used only

when there is clear evidence of state involvement that is not in compliance with WTO rules

on Anti-subsidy. Accordingly, it should be considered to formulate a guideline that allows

third country subsidies which are recognized within the Community or national State aid

Regulations not necessarily covered by WTO obligation on general subsidies. This area needs

to be explored in depth.

The Commission should be ready to initiate Anti-Subsidy investigations on its own initiative

– also applying in cases targeting non market economies - provided that the third country

concerned has been properly consulted in beforehand and that the Commission hearing officer

is participating in the dialogue.

The Danish Government opposes a more frequent use of the safeguard instrument in the EU.

Safeguard measures are by nature imposed on an

erga omnes

basis affecting imports of the

product concerned from all third countries into the Community. The Safeguard instrument

seems not sufficiently justified as long as the criteria for imposing restrictions are very low

and the fact that the instrument is not designed to cope with the real source of injury but target

all external suppliers of the product concerned.

Question 3:

Are there alternatives to the use of trade defence instruments in the

absence of internationally agreed competition rules?

Reply:

The Danish Government recognizes that the absence of internationally agreed competition

rules in WTO leaves no alternatives for the moment at the WTO level to deal differently with

unfair trade practice.

Nevertheless, it is the firm position of the Danish Government that in the long run the present

use in the EU of TDI’s is not an appropriate answer to or a solution to deal with the needed

structural, economic and business environmental changes that the globalization causes.

Consequently, at a later stage we see no reason for not replacing at least the anti-dumping and

safeguard instruments in the EU and WTO with part of the EU competition rules limiting the

restriction on imports to unfair trade behaviour caused by predatory pricing of individual

exporters rather than punishing an entire industry with numerous exporters in the third

country concerned. In this context we are on a general basis far from being convinced that an

allegation of a country-wide dumping is always justified as such allegations of country wide

dumping often are based on statistical average price information or limited samples that do

not reflect the whole range of varieties in prices from one exporter to another.

Question 4:

Should the EU review the current balance of interests between various

economic operators in the Community interest test in trade defence investigations?

Alongside the interests of producers and their employees in Europe, how should we

take into account the interests of companies which have retained significant

operations and employment in Europe, even though they have moved some part of

their production out of the EU? How should we take into account the interests of

importers or producers who process affected imports?

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Reply:

Bearing in mind the objectives set out in the Lisbon Agenda focusing on EU becoming the

most competitive region in the world it is also of vital interest and necessity for the business

environment in the Community to strike a proper balance between the various interests in the

use of trade defence instruments to avoid inappropriate and unjustified use of trade defence

instruments.

It is important to clarify that EU companies taking the benefit of off shoring or sourcing out

production or part of it to more cost effective countries inside the EU or in third countries

often retain or generate in the long run more jobs in EU than companies that maintain

production in EU. Focusing on comparative advantages and costs enable EU industries to

become more competitive and thereby increase production and the number of staff

domestically as well. If companies do not face the reality of the globalisation including the

potential benefit from off shoring or outsourcing they will run the risk of being squeezed out

of the market due to lack of competitiveness causing job losses of both high and low skilled

personnel in the EU.

For this reason there is indeed a need to re-balance the interests between parties eventually

affected by trade defence instruments. One of the important issues to address is the

recognition of an improved standard for the definition of “Community industry” to cover

producers of the like product which should also include those with outsourced production and

related Community producers.

Procedurally, as a general rule under the current practice EU producers of the like product are

being excluded from the proceeding if they are owned by legal entities in the third countries

exporting the product concerned or if they to a certain extent import the product concerned

from the third countries. Also those companies not co-operating in the proceeding are

excluded from the definition of “Community industry”.

This interpretation penalises those globalized companies which both trade and produce, and

even more so those companies which have chosen to outsource production but have kept other

activities in the EU such as research and development, design, logistic and sales and

marketing.

Therefore it would make sense if the burden of proof in the Community interest test was

reversed making it mandatory for the Commission to demonstrate that any proposal for

measures or termination tabled by the Commission is in the interest of the Community.

Question 5:

Do we need to review the way that consumer interests are taken into

account in trade defence investigations? Should the Commission be more proactive

in soliciting input from consumer associations? How could such input be weighted?

How could the impact of trade defence measures on consumers be assessed and

monitored?

Reply:

It is relevant to look at consumer interests especially when direct consumer goods are being

targeted. It might be difficult for consumer organisations to provide information in the form

of exact figures of the impact of measures that the Commission itself is not able to establish.

Therefore a specific consumer interest test could be developed in order to quantify the

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expected effect of measures on consumer prices and the demand/supply situation. These

estimates should be based on well defined price elasticises (single/multi cross products) and

express the EU welfare effect on an aggregate level rather than demonstrating the effect of

measures per unit.

In the shoe case the Commission estimated an increase in consumer prices of around 1-2 euro

per pair of average shoe covered by the measures. The Danish Anti-dumping model based its

partial sector analysis on Eurostat import/export data and demand, supply and price

substitution elasticises and estimated the net impact of measures for the consumers, importers

and retailers to around 340 million euros per year.

The Commission could after e.g. 2 years from the imposition of measures carry out a review

in cases involving consumer products where not only import prices are monitored but also

how the extra cost from measures has been distributed between the various interested parties

and any potential affect it might have had on their business performance or purchasing power

of the households.

Question 6:

Should the EU include wider considerations in the Community interest

assessments in trade defence investigations, such as coherence with other EU

policies? With regard to development policy, should the EU make a formal distinction

between least developed countries and developing countries in the application of

trade defence measures?

Reply:

Even though certain developing countries do not at this time face the same high standards as

the EU in relation to environmental requirements for their industries, pollution policy, human

rights and labour rights - the nature of the TDI is not to correct for differences in policy areas

not directly related to restore claimed unfair trade practice and the legal basis in the WTO

Regulations does not seem to allow for such kind of adjustments. In our opinion the EU

should use the normal proper forum to deal with these issues either on a bilateral or an

international basis.

According to EU practice least developed countries (LDC) are not target in trade defence

cases and it is of utmost importance that this practice is continued due to the need for further

economic development in these countries and the often insignificant impact of the trade with

these countries. In this context the coherence with the national aid programmes to especially

the LDC’s but also to other developing countries needs to be addressed in order to avoid any

discrepancy between the eg. the objectives of the EU and national humanitarian/aid

programmes and the direct effects of the use of TDI’s.

Question 7:

What kinds of economic analysis might help in making these

assessments?

Reply:

Needless to say that more effort should be put into the Community interest test in trade

defence investigations in order to properly reflect the interest of the user, importer,

distributors and the consumers in proportion to the interest of the Community industry. The

Community interest test is an important part of the evaluation but could be further developed

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and strengthened. As an example Denmark has developed a partial equilibrium model – “The

Copenhagen Anti-dumping model” - to calculate the economic impact for the interested

parties (costs and benefits) of imposing/terminating trade defence measures. We believe this

work and approach constitutes a proper starting point in the forthcoming discussion

strengthen the Community interest test in order to improve the efficiency of the trade defence

instruments. The macro economic approach as suggested could work as an additional

contribution for further clarification of the Community interest test conducted under the

heading of the informal clarification paper on Community interest test - without prejudging

the final Commission conclusion and proposal.

Under the current practice the Commission reaches conclusions that lead to proposals to

impose/terminate measures or proceedings e.g. seeking to demonstrate if measures are

disproportionate or not and thereby comply with the Community interest criteria.

How the Commission balances the various interests against each other calls for more

transparency. The various interests in the Community are often expressed in a descriptive way

where the effects for the various interests or the positions of interested parties are indicated as

a ”yes” or a ”no” to measures/termination. A well-known argument is further that the level of

cooperation in the proceeding is low and on this background it is concluded that imposition of

measures will only have limited impact and are therefore not being disproportionate. If such a

non-countable denomination of the various interests is caused by a significant lack of

cooperation among the interested parties the present test is too limited in scope and therefore

does not fully comply with art. 21 paragraph in AD Basic Regulation.

If co-operation among importers and processors etc is sufficiently high in a proceeding the

findings from verification visits can demonstrate the impact of measures for the operators.

The effect is then normally denominated in non-comparable unit cost increases (e.g. 0.5 %

increase in total cost of production or 0.01 eurocent cost increase per unit) isolated to the

individual investigated party whereas effects are not calculated on an aggregated level for the

sector computing total cost effects.

In order to improve transparency it is also suggested that a checklist is added in future

Commission working documents clarifying all the factors that have been taken into account in

the Community interest test and an explanation of how these factors have been weighted and

balanced against each other. In order to ensure higher level of co-operation and to estimate

real economic impact of measures/termination the Commission should act more proactive

towards interested parties aiming at receiving relevant input.

The form and content of the checklist should be agreed upon in the anti-dumping

Committee/Commercial Question Group and the Commission clarification paper on

Community interest test should accordingly be re-drafted and made public available.

Question 8:

Should it be explicitly foreseen that the level of proposed measures

might be adjusted downwards following the results of the Community interest test in

trade defence investigations? Should the EU explicitly allow for exclusion of certain

product types under Community interest considerations? If so, what criteria should be

applied?

Reply:

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In terms of economic effect on interested parties it could often be justified to differentiate the

impact of measures depending on an assessment of the cost and benefit for the interested

parties concerned. In that context, two types of products are frequently more vulnerable

towards imposition of measures. Measures on imports of consumer commodities and

commodities for the processing industry are often burdensome as they create huge welfare

losses for the Community as a whole. There is an obvious risk that the competitiveness of the

EU processing industry is weakened against exporters in third countries if production of the

final product is dependent e.g. on imported raw materials from third countries being subject to

trade defence measures.

If the value of the imported product constitutes a significant share of the total value of the

production cost of the final product it could be considered not to impose measures based on

the Community interest. Likewise it could be considered to exclude certain products from

trade defence proceedings if they become input in a final production of high added value

products where the Community producers have a competitive advantage.

Further, it is recommended not to initiate investigations regarding products in the agriculture

and food sectors where production is extremely sensitive and vulnerable towards changed

weather conditions and sickness in crops etc. since such factors have significant and

determing impact on supply and prices from one year to another. The salmon and strawberry

cases are god examples of proceedings that should not be seen in the context of anti-dumping

proceedings.

The purpose of these proposals is twofold: firstly, to avoid significant price increases for the

consumers or losses for the importers/retailers and secondly, to secure that the Community

user industries are competitive on the domestic and export markets and do not suffer from

higher costs from import duties.

Question 9:

Should the EU seek to have WTO rules changed to allow Community

interest tests to be used at the complaints stage in Anti-Dumping and Anti-Subsidy

investigations? Are there other situations where the community interest test would be

appropriate – for example before the initiation of expiry reviews

Reply:

The Danish Government can fully support the introduction of a public interest test in the

WTO rules on anti-dumping and anti-subsidy as well as an amendment of the existing rules

that allows the test to be used up front at the complaints stage and in requests for expiry

reviews.

To make use of a public test/Community interest test at the complainant stage and in requests

for expiry reviews is a natural course of action to increase the level of transparency in the

proceedings as recommended by all interested parties and seeks as well to balance the various

interests at an earlier stage.

Question 10:

Are viability assessments relevant in reaching decisions on using trade

defence instruments? If so, what criteria should be used in assessing the viability of

EU industries in trade defence investigations, e.g. level of production, employment,

market share?

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Reply:

As well reply to question 18

Some cases have been opened though the market share and employment of complainant(s) is

very low. The complainants do in fact have the right to have its case judged and investigated

if evidence of dumping and injury can be provided but in relation to the cost and immediately

effect on the market lounging a complaint it could be considered to define a set of

de minimis

rules in order to decide at a very early stage in the proceeding weather to continue or

terminate the case. It could be considered to introduce

de minimis

rules e.g. in relation to

market share of complainants and value of production as a pre-condition for opening a

proceeding.

Especially EU-producers requesting an expiry review should demonstrate that they have taken

proper action to adapt to the new competitive environment during the at least five years with

measures in force. If measures have been effective the complainants have what so ever no

reason to base their request for measures on the risk of recurrence of dumping since the

complainants have an obligation to demonstrate the willingness to rationalize and restructure

if needed in order to face competition. If measures are considered needed after expiry of the

initial measures a full expiry review including new calculations for dumping margins should

be conditional. In isolation the present standard in expiry reviews is very low.

Question 11:

Should the EU consider consultations with exporting third countries

after receiving complaints and prior to launching Anti-Dumping investigations?

Reply:

The Danish Government can support consultations at the various stages not only with the

exporting third countries but also with other interested parties in the Community in order to

clearly identify the various interest before taking any further step.

Question 12:

Should the EU more specifically foresee the use of the Anti-Subsidy

instrument in cases involving companies in transition economies that receive market

economy treatment?

Reply:

See reply to question 2.

Question 13:

Should the EU review the ‘standing requirements’ for the definition of

Community industry in Anti-Dumping and Anti-Subsidy cases? Is the level of support

needed to endorse a complaint and thus launch an investigation appropriate? Should

we review the possibility of excluding companies which themselves import or are

related to exporters from standing assessments?

Reply:

Regarding the standing requirement that at least 25 % of the EU production has to be the

active complainant is found to be a small proportion in support of an investigation. This has to

be seen in light of the fact that in a number of cases it is minor parts of the EU industry

(complainants) that find themselves under pressure from increasing competition from third

countries whereas a larger proportion of the industry is not necessary facing the any financial

pressure. The exclusion of related EU producers in the definition of the Community industry

does in fact reduce the standing requirement. In the salmon case actual standing was around 5

% of total EU production since the vast majority of the EU production was excluded from the

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definition of the Community industry due to close financial relationship with the exporters in

the exporting country.

Further, rules should be changed so that only EU producers who actively support a complaint

can be counted as part of the second requirement – the 50 % standing test. Under current

practice EU production is only counted in opposition to a complaint if it is actively opposing

the opening of a proceeding.

New rules on standing requirements could take into account the level of fragmentation of the

industry concerned so for instance less strict requirements apply for an industry with many

SMEs than for an industry with a higher market concentration and fewer producers.

EU producers/EU production should be defined as all production on EU territory irrespective

of any financial link (foreign capital) or relation to producers in third countries from which

EU producers import as well. To leave out certain EU producers from the definition of the EU

industry because of foreign related ownership is contrary to significant increase in global

foreign direct investments and seeks merely to protect national investments.

In expiry reviews the standing requirements should be replaced by one common standing

requirement that takes at least 50 % active support for initiation of an expiry investigation. It

must be assumed that the EU producers injured from imports from third countries after 5

years with anti-dumping/anti-subsidy measures in place have achieved financial gains and

have had time to prepare for a new competitive situation. Further it is unlikely that the EU

industry after a potential lapse of measures will face the same level of competition – at least

from imports from third countries – as before the imposition of measures. This could speak in

favour of stricter rules for expiry reviews to be initiated.

Question 14:

Should the EU change the de-minimis thresholds (in percentage and

absolute terms) that currently apply to dumping and injury in trade defence

investigations?

Reply:

The Danish Government seeks an amendment of the EU rules focusing especially on less

restrictive provisions for developing countries. The proposals could be addressed as follows:



A higher

de minimis

dumping margin and a higher

de minimis

import share. Identical

principles and levels should apply in anti-dumping and anti-subsidy Regulation with the

anti-subsidy Regulation being the starting point. Higher levels should be introduced

though differentiated between developing country exports and developed country exports.

Basicly, it gives in principle no meaning to speak about a country

de minimis

imports

since investigation of dumping is related to the individual company – at least those

represented in the sample. Therefore, it could be considered to introduce a

de minimis

the individuel company level for those in the sample and a

de minimis

level for other

imports from the specific country.

A change in the cumulation provisions. The use of cumulation in multi-country

investigations means that small countries (in terms of export volume) exporting the same

products as larger countries run a risk of being targets of antidumping measures even



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

though their export is

de minimis

and without being the cause of material injury. The

cumulation provision should be deleted or the cumulation level significantly increased. It

is very unlikely that insignificant imports below

de minimis

have a generel impact on the

relevant floor price of the product concerned even though the price of imports is lower

than the EU price. The only reason for having such a provision seems to be of protective

nature to have the possibility to respond to low priced imports from many sources.

The

de minimis

rules in its new form should apply as well in reviews since there is a direct

link between the fact that small imports not being injurious and the real cause for material

injury for the EU industry. If dumping margins in reviews can not be established because

of no or low imports measures should not be prolonged based on an assessment of risk of

recurrence of dumping or injury.

Question 15:

Should the Commission refine the approach on "start-up costs" for

dumping calculations in Anti-Dumping investigations in order to give a longer "grace

period" to exporters in start-up situations?

Reply:

As well reply to question 17

New exporters and exporters in start-up situations face several problems that need to be

addressed. First, new exporters and exporters in start-up situations have high start-up costs

which they are punished for in antidumping investigations reflected in an unfair comparison

between normal value and export prices. It has nothing to do with unfair trade behaviour but

simply an indication of costs not being allocated over a start-up period of several years which

is normal practice and in accordance with standard accounting practice. The antidumping

Regulation needs to be adjusted hereto. Secondly, the new comer (exporter) provision in the

antidumping Regulation needs further to be amended allowing new comer review to be

initiated even though the proceeding for definitive measures is based on sampling.

New exporters and exporters in start-up situations cooperating in the investigation although

not having any production in the IP should automatically be given the average duty of the

sample instead of the residual duty – at least until final conclusions from the Commissions ex-

officio reviews are reached.

Question 16:

Are there other changes to the dumping margin calculation

methodology in Anti-Dumping investigations – for example existing rules on the

"ordinary course of trade-test" – that need to be considered?

Reply:

The dumping concept was established in 1947 where the level of foreign trade was low, the

world economies were relatively closed and trade protected by high tariff duties. Global trade

and the consequences of openness of economies call for a re-definition of the dumping

calculation.

Dumping is – per definition - therefore no longer expressing unfair competition and trade

practise in third countries as it is not demonstrating evidence of predatory pricing with the

aim to take over the market by selling at low prices.

A product can be said to be dumped by an exporter if it is being introduced into the commerce

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of another country at less than its normal value, or more particularly, 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 definition is regarded as an old fashion approach to the reality of global trade in 2007

where production and investment has become worldwide and seeks destinations where the

largest rate of return on capital can be expected calling for more efficiency in allocation of

resources.

According to modern business environment, strategy and practice the definition of dumping

and thereby the methodology to calculate dumping margin needs to be revised.

The dumping definition does not foresee the market situation in the third countries, the level

of competition among the local producers and suppliers, the business strategy of the exporting

producers and their profit margins respectively in the domestic and export market. Neither

does the dumping provision cover the fact that companies’ strategy is to expand and grow in

size, turnover and global markets with overall aim to satisfy the shareholders with the highest

possible rate of return. To enter new markets it often takes to overcome certain barriers in the

market and sell at prices that it lower and not directly comparable with prices at home (normal

value). From a business perspective it is not dumping if export prices are just covering the

cost of production or even the variable cost of production in certain transactions and markets

for a given period.

Redefining the concept of dumping should therefore imply a comparison of export prices in

third countries with cost of production figures for the product(s) concerned leaving out at least

profits.

Question 17:

Should the EU refine the provisions on the treatment of new exporters

in Anti-Dumping and Anti-Subsidy investigations? Should the EU introduce the

possibility of dealing with newcomers that start to operate during the investigation of

the main case more expeditiously?

Reply:

See reply to question 15.

Question 18:

Is evidence of restructuring by an EU industry in any way relevant in

Anti-Dumping and Anti-Subsidy investigations? If yes, in what way, and at what

stage?

Reply:

See reply to question 10.

Question 19:

What are the particular obstacles for SMEs to participate in trade

defence investigations and how could they be addressed?

Reply:

For SMEs participation in trade investigations is very time consuming and financially

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burdensome taken into account the relative shortage in resources. Further, SMEs are often not

timely informed about the cases.

A partly solution is to establish a Commission helpdesk (already established for SME

producers but not an offer for SME importers). Further, it should be considered to reduce the

very comprehensive questionnaire to the minimum of information needed. For SMEs it could

be considered only to provide qualitative information of key figures in the account on a

sufficient detailed level.

Since many SMEs – especially the importers – are often badly organised or informed about

proceedings being initiated the Commission needs to be more proactive in finding relevant

companies or establishing contact with relevant national organisations in order to inform

about the possibilities of cooperation and potential consequences of non-cooperation. The

national organisations should be further encouraged to participate in collecting overall

business data to cover the Community interest aspect.

Question 20:

Bearing in mind that any shortening of deadlines could impose

limitations on the conduct and transparency of investigations, should the EU consider

shortening the deadlines in Anti-Dumping and Anti-Subsidy investigations within

which it must decide whether or not to impose provisional measures? Should these

deadlines be made more flexible?

Reply:

The system is already flexible in the sense that provisional measures can be

proposed/introduced before the 9 month expiry from the initiation of the investigation.

The Danish Government would like to put more weight into the investigation at the

provisional stage including more involvement of all interested parties in the Community

interest test. This recommendation certainly contradicts a proposal shortening of deadlines for

decision whether or not to impose provisional measures. A reduction in time to conclude at

the provisional stage will therefore imply less transparency, less comprehensive assessments

which will create more uncertainty in the market and make it much more difficult for the

companies to plan their business strategy. Further e.g. a provisional decision to impose

measures after 6 months without having taken all necessary considerations into account could

mislead the result and create a premature expectation among the complainants that definitive

measures will be imposed all though all relevant facts at the provisional stage have not

necessary been looked at in depth.

See also reply to question 31.

Question 21:

Should the EU make greater use of more flexible measures in Anti-

Dumping and Anti-Subsidy investigations?

Reply:

It is proposed more frequently to use the suspension provision when the market situation

allows it. Suspension could apply for a shorter period of e.g. 2-3 months if for instance market

prices as a tradition in a certain period of the year rise above the injury level or at a level

where dumping is not taking place.

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The purpose of the proposal is to avoid measures in place that are not needed or

overprotection of the Community industry above the injury elimination level.

Question 22:

Do EU measures in Anti-Dumping and Anti-Subsidy investigations

need to be adapted so as to take better account of products with a long order or

shipment time? If yes, how?

Reply:

Certain sectors e.g. textiles, wearing apparel, leather, arrange the coming collection for the

new season up to 18 months before public disclosure. With a pending trade investigation

initiated after a business strategy to go ahead with the development of a new product concept

the company is unable to foresee the economic consequences if measures are imposed and

who is going to bear any financial risk. Often contracts have been closed before initiation of

the investigation or before any decision at the provisional stage leaving the full uncertainty

and financial burden on the producer/importer. Furthermore, importers and producers (with

outsourced production to third countries) have established a close relationship/partnership or

financial relationship with the exporter which makes it difficult or very cost full to redirect the

production to other producers in the country concerned or in other third countries not affected

by measures.

It is therefore proposed that imports should be exempted from measures if the importer can

provide evidence that the import contract was signed before the imposition of provisional

measures or development of a new concept to be produced in the third country concerned was

kicked off before the initiation of the investigation. The date for measures to enter into force

should under certain circumstances therefore take into account products produced under

especially long production cycles and/or products under a long shipment time.

Question 23:

Should it be made explicitly possible for the duration of definitive

measures in Anti-Dumping and Anti-Subsidy investigations to be shorter than 5

years? If yes, in what type of situations would a shorter duration of measures be

justified?

Reply:

The 5 years duration of anti-dumping and anti-subsidy measures is arbitrary fixed without any

specific justification or logical approach. The shoe case and ammonium nitrate case (2 years

duration) proved the need for a more pragmatic and flexible approach in order to balance the

various interests.

The duration of measures ought to be seen in context with the industry concerned and the

specific product scope under investigation. The duration of measures could be differentiated

depending on various parameters and criteria such as; life time in the production cycle,

depreciation of investments in machinery and technology, life time of consumer product, the

content of technology input in the production etc.

The duration of measures could range from 3 to 5 years including any potential decision taken

by the Council to continue with measures following an expiry review.

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The overall aim to differentiate the duration of measures from case to case is mainly to ensure

that measures are not kept in place one day longer than necessary. A requirement that is fully

justified and takes that the individual case is assessed on its own merits calling for individual

duration of measures.

Question 24:

Should duties collected beyond the 5-year duration of the measures in

Anti-Dumping and Anti-Subsidy investigations be reimbursed if the expiry review

concludes that measures are not to be continue

Reply:

Duties collected under the expiry review/interim review investigation beyond the 5-year

duration of the measures should be reimbursed if they are collected on unjustified grounds.

See reply to question 25

Question 25:

Should expiry reviews in Anti-Dumping and Anti-Subsidy investigations

be timed to end on the fifth anniversary of measures rather than to start on that date?

Reply:

The 5-year duration of measures should be limited to the named period unless there is clear

evidence of the need to continue with the measures. This means that expiry reviews should be

concluded before the expiry of the original measures in order not to penalize exporters or

others if measures are no longer warranted.

A second best proposal is to deduct the second period with measures corresponding to the

investigation period should such measures be warranted. Otherwise any collected duties

should be reimbursed, see reply to question 24.

Question 26:

Should the EU increase thresholds for expiry reviews in Anti-Dumping

and Anti-Subsidy investigations? For example should the EU consider introducing the

"threat of injury"- standard instead of the "likelihood of recurrence"?

Reply:

The Danish Government believes that the present expiry review provisions provide a sort of

build-in automatically expectation among users of the instrument that measures are prolonged

for another 5 years. In principle evidence of “likelihood of recurrence of dumping” is

sufficient to continue with measures which in fact are not based on actually facts but mostly

assumptions, indications and speculations e.g. about future direction of exports from countries

concerned.

On this ground and in order to strengthen the validity of the findings in expiry reviews it is

welcomed to change the wording of the provisions and include requirements to re-assess

subsidy/dumping, injury and causation and Community interest in all expiry investigations. In

other words expiry reviews should be full reviews in compliance with article 5 in the anti-

dumping Basic Regulation and article 10 in the anti-subsidy Basic Regulation.

Question 27:

The Commission is going to create the position of a hearing officer for

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trade defence investigations - what precise functions should such a person carry out?

Reply:

The hearing officer should act independently from the investigating authority and take the

role as an ombudsman defending the interest of all parties including the national authorities to

be heard in the proceedings and ensure that the procedures are followed according to the

regulations.

It is important not to establish an administrative and bureaucratic layer between the interested

parties and the investigating authority that could negatively affect the efficiency of the

proceeding. The role of the hearing officer is not to replace the present dialogue between the

interested parties and the investigators but primarily to handle any potential

conflict/disagreement in relation to procedural matters.

Question 28:

Should the Commission conduct public hearings in Anti-Dumping

investigations for decisions to award country-wide Market Economy Status to a

country?

Reply:

Questions of granting MES (country-wide) is based on a set of technical criteria and are often

concluded by the Commission after comprehensive judgement of the fulfilment of the

relevant criteria. It is not an easy task for Member States or other interested parties to get a

general overview of the fulfilment of the criteria. Therefore the Danish Government

welcomes public hearings based on full transparency and access to comments and information

provide by all interested parties.

Question 29:

Should there be greater openness regarding the working of the Anti-

Dumping Committee, e.g. publication of its agenda and/or the minutes of its

meetings?

Reply:

The Danish Government supports full openness regarding publication of the agenda of the

anti-dumping Committee meetings. Disclosure of the minutes of the meetings can be

supported under the condition that Member States in beforehand have had the possibility to

approve the Commission minutes. Disclosure of Member States position can as well be

supported.

Question 30:

Would it be desirable for the non-confidential files in trade defence

investigations to be accessible via the internet? Would intermediary solutions be

more appropriate – for example the publication of a file index?

Reply:

The Danish Government believes that full transparency in trade defence investigations

demands public access to the non-confidential complainant as well as disclosure of

Commission proposals at the provisional stage to interested parties. Publication of a file index

could be supported.

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Further, access to the informal Clarification papers on the Commission practice in anti-

dumping proceedings should be made public as well e.g. in a file index.

Question 31:

Should current institutional arrangements for adopting Anti-Dumping,

Anti-Subsidy and Safeguard measures be maintained? Are there ways to improve

the way those decisions are taken?

Reply:

In anti-dumping and anti-subsidy cases it is proposed to replace the current two stage system

concluding on Commissions findings at the provisional and definitive stage with a simple one

stage system making it mandatory for the Council to decide by a simple majority on a

proposal from the Commission of the definitive findings before the 12 month expiry date

from the publication of the initiation of an investigation. The Commission could for instance

after 8 months disclose definitive findings for the interested parties and set a one month

deadline for comments to be made before the Commission proposal is finally presented for

the anti-dumping and anti-subsidy Committee.

The aim of such a proposal is to avoid unnecessary transaction of information, rumours and

lobbyism based on a speculative nature mainly caused by non-disclosure of Commission

documents (provisional findings). It is further preferred to focus on only one set of findings –

definitive findings – where comments from interested parties have been taken into account. In

our opinion transparency is also about early dialogue with interested parties. The quality and

credibility of the findings will certainly improve if all interested parties have been consulted

in good time.

At the same time introducing only one proceeding (definitive findings) instead of two

proceedings (provisional + definitive findings) will not only save time, resources and number

of meetings for all interested parties but also significantly contributes to reduce the cost for

the Commission and the Member States. A more efficient case handling and meeting structure

could be carried out without getting in conflict with the need for more transparency in the

proceedings and findings in the individual case.

Question 32:

Is there any other aspect of the EU’s trade defence instruments that

you would like to see addressed?

Reply:

It is proposed to make greater use of assessment of the competitive situation on the

Community market and identify any link and impact of (unfair) competition between

Community producers on the Community market. In the injury assessment the injurious

behaviour of other Community producers on the EU market caused by price depression

(coming from dumping or high efficiency) is not specifically isolated. The complainants and

supporting producers are mostly regarded as a homogenous group of operators and not direct

competitors which affect the prices on the market and any potential injury to the complaining

Community producer.

In this context, if injurious dumping is actually taking place the question of definition of

material

injury is of most interest and should be further clarified.

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In the investigations it is proposed to take into account the development in the market e.g.

prices after the investigation period. Findings are by nature and according to the regulation

based on the latest 6-12 months period (before the initiation of the investigation) information

of prices, costs and injury indicators. The final decision for definitive measures taken by

Member States (Council) is then based on historical data collected 1�½-2 years back in time

and does not necessary reflect the current market situation. The findings are not necessary

supported by the recent development in market structure and market prices. The inclusion of

ex post investigation period price behaviour in the over all assessment is as such not foreseen

in the Regulation but should be implemented as normal practice in the injury and Community

interest test in future cases.

Finally, the impact of long term cross currency changes should be taken into account as this

effect for certain third country exporters’ plays a significant role when dumping margins are

established. Permanent currency changes should be deducted from the dumping margin when

local prices, costs and export prices are converted and denominated in euros.