The European Commission will next week (10 April) unveil what it hopes will become the first overhaul of the European Union’s system of trade

defences since 1995.

Karel De Gucht, the European commissioner for trade, will be looking to change how the EU protects European producers against dumping by foreign competitors and unfair subsidies to them. His predecessor-but-one, Peter Mandelson, who was trade commissioner in 2004-08, made a similar bid in 2007, but it was deemed by the member states to be too ambitious.

Ralph Kamphöner of the retailers’ and importers’ association EuroCommerce says that the basis for the pending proposals – a consultative paper published last April by the European Commission – was, as a result, “rather moderate in ambition”. He says that European businesses – producers on one side, and retailers and importers on the other – have also chosen to moderate their demands, in the hope of updating the trade-defence system before the term of the current Commission ends late next year.

The Commission’s consultative paper did contain some proposals that, if they appear in the final paper – as all but a few are expected

to do – would be sensitive politically, and hotly contested by European businesses. In addition, a new element has been introduced since Mandelson’s proposals, because the European Parliament was given greater powers over trade policy by the Lisbon treaty in 2009.

Some proposed changes to anti-dumping measures appear to reflect the Commission’s stated aim of a ‘balanced approach’, typically interpreted by business as providing something for both sides.

Importers, including Eurocommerce’s members, have been pushing for a clause that would give them three weeks’ advance warning that duties will be imposed, to ensure that importers do not find that shipments ordered before the duties were imposed become subject to duty on arrival.

Manufacturers argue that such a clause could enable stockpiling, and is unnecessary since the Commission’s process is already transparent and predictable. The Commission typically imposes provisional duties after nine months of an investigation, and must decide on five-year duties within 15 months.

Retailers, for their part, have protested against the proposed removal of a rule that limits the EU’s duties on foreign producers. The Commission’s consultation paper also included a major innovation allowing the Commission to initiate investigations without requiring complaints from manufacturers who together represent 25% of European production.  

Energy issues

Producers will be looking closely at how the Commission addresses the problem of subsidies for energy and raw materials. Adrian Van Den Hoven of the business confederation BusinessEurope says this is a particular issue with Russia, China and Saudi Arabia. Russian energy subsidies have, for example, been a concern for the European fertiliser industry.

How the EU decides to grapple with the problem of subsidies in countries that are dominated by the public sector will be of wide concern.

Roderick Abbott, a former deputy director-general at the World Trade Organization (WTO), and former deputy director-general for trade in the Commission, says that this is a particularly difficult challenge in relations with China, whose banking system is “mostly state-controlled, in one way or another”. On this, and other issues, the Commission will be careful not to over-interpret WTO rules.

The pending trade-defence proposals will seek to respond to demands for greater transparency, predictability and flexibility. The planned publication of the Commission’s guidelines is welcomed by a range of industries, particularly retailers, though Stuart Newman of the Foreign Trade Association argues that lawyers should be given access rights to confidential Commission data comparable to those enjoyed by lawyers

in the United States.

The most significant of the four separate elements of the guidelines might prove to be the thinking on the Union interest clause, which requires EU trade officials to look beyond the potential benefits of anti-dumping and anti-subsidy measures for a particular industry. The clause enables the Commission to decide against duties on the grounds that the effect on the European economy as a whole would be greater than the damage caused to the industry hurt by cut-price imports.  

The Commission will publish its guidelines well before its trade-defence

proposals are turned into legislation – a move questioned by some stakeholders since the legislation could require the guidelines to be changed. Others, though, see this objection as an attempt to give the Parliament a say in shaping the guidelines.  

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