The Commission has also published its first country report on such state-induced distortions.
Following its publication in the EU's Official Journal, the revised legislation enters into force just over a year after being proposed by the Commission. It introduces a new way of calculating whether dumping has occurred in imports into the EU from countries where the economy is distorted owing to state interference.
The purpose of this new legislation is to make sure that Europe has trade defence instruments that are able to deal with current realities – notably state-induced distortions which too often lead to overcapacities – in the international trading environment, while fully respecting the EU's international obligations in the legal framework of the World Trade Organisation (WTO).
President Jean-Claude Juncker said: "The EU is and will remain one of the most open markets in the world. We are and will remain in the first line defending open, fair and rules-based trade. This, however, should not be mistaken as naivety. Our unshakable and facts-based conviction that trade brings prosperity will not prevent us from defending our workers and companies with all legitimate tools when others do not play by the rules. With this new legislation and a new set of modernised tools that will be soon in place, Europe will be able to keep pace and deal more effectively with the ever changing realities of the international trading environment."
Commissioner for Trade, Cecilia Malmström, said: "Today we welcome the entry into force of the EU's new anti-dumping and anti-subsidy legislation. This is an important time in our trade defence policy. It signals the EU's commitment to strong and effective trade defence instruments. The EU is open for business. But we must also protect our industry from unfair competition from imports, particularly from countries whose economies are significantly distorted owing to state interference. The publication of country reports will help us to put the new methodology into practice. It will also give the EU industry a basis on which to make its case concerning countries where distortions exist."
The standard way of calculating dumping is to compare export prices with domestic prices or costs in the exporting country. If, due to state intervention in the economy, domestic prices or costs are distorted, the Commission will disregard these when calculating domestic value. Instead, it will use other benchmarks reflecting undistorted costs of production and sale.
The new methodology can apply to any WTO member. Before applying the new methodology, it will be necessary to show that significant distortions exist in the economy of the exporting country as a result of state interference. To do this the Commission will examine all the evidence presented in the course of an investigation, including by the EU industry. The Commission may also prepare reports describing the economies of certain countries or sectors in this context.
In parallel with the publication of changes to the EU's anti-dumping legislation, the Commission has today released the first country report envisaged by the new legislation. The Commission selected China for the first report because the bulk of the EU's anti-dumping activity concerns imports from that country.
The report published today describes factually certain aspects of the Chinese economy, focusing on the country's macro-economy; the main production factors used in all manufacturing processes (e.g. labour, energy); and certain sectors of the economy, including steel and ceramics.
Other reports will be prepared on the basis of the same criteria: their relative importance in the EU's anti-dumping activity, as well as indications that there may be distortions related to government interventions in the economy. The next country report will concern Russia.
The EU industry may rely on the country reports as evidence to request the use of the new methodology in anti-dumping investigations. In the course of each investigation, the Commission will examine if the use of the new methodology should be applied based on all the evidence in the file. All parties concerned by an investigation, including the government of the country concerned as well as exporting producers, will have the opportunity to comment on and disprove any findings made in the reports in the course of the relevant investigations.
Social and environmental standards can play a role under the new methodology. When selecting the appropriate representative third country for the purpose of replacing costs, besides the per capita gross national income or other relevant economic indicators, the Commission would also take into account the level of social and environmental protection in the representative source country.
The new methodology will also strengthen the EU anti-subsidy legislation so that, in future cases, any new subsidies revealed in the course of an investigation can be investigated and included in the final duties imposed.
On 9 November 2016 the European Commission presented a proposal for a new method for calculating dumping on imports from countries where there are significant market distortions. The European Parliament and the Council reached agreement with the Commission's proposal after three-way negotiations on 3 October 2017.
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