Multi-layer protection
In trade defence matters, anti-dumping investigations have been the traditional tool to address unfair competition from third countries.
However as economic relations and global markets became more complex, the mere imposition of anti-dumping duties on imports of unfairly traded products has often proved insufficient to re-establish a level playing field on the EU market, especially after the EU industry had been materially injured by unfairly priced imports for a prolonged period.
If the duties are not adequate, the third country producers simply absorb them by lowering their prices. In other cases, third country producers make slight product adjustments or move certain production or finishing steps to other third countries, and continue in that way to compete unfairly on the EU market.
For a number of our clients, we have implemented various approaches to address such situations. Here are some examples:
Making use of anti-subsidy investigations of imports from China – an eye-opener of the vast amount of state support available to Chinese companies
In 2009, we submitted the first anti-subsidy complaint against imports of Coated fine paper from China. Before that case, there was ample discussion in the academic world whether the treatment of China as a non-market economy at the time would allow the use of the anti-subsidy instrument, and whether the imposition of countervailing measures would be possible in the face of challenges of double counting.
Since the initiation of that investigation in early 2010, the filing of parallel anti-dumping and anti-subsidy complaints against imports from China has become the standard in EU TDI cases. This practice has also brought a much improved understanding of how widespread and extensive State intervention and support in China is, and how much of an artificial competitive advantage Chinese industries have vis-à-vis EU producers because of this state intervention.
Transnational subsidies
In the context of the Belt and Road Initiative, the Chinese government has extended government fundings, subsidies and support also to Chinese companies opening overseas subsidiaries. One of these companies has been the Jushi group, a major State-owned producer of glass fibre reinforcements (GFR) and glass fibre fabrics (GFF) (see also Value chain integration).
When the EU imposed additional anti-dumping and anti-subsidy duties on imports of GFR from China, Jushi “simply” created a new €600 million greenfield plant in Egypt. It was able to do so because the governments of China and Egypt had reached a political agreement on the creation of a special zone for Chinese investments – TEDA, which is majority owned and de jure and de facto controlled by China. In the TEDA Zone, Jushi received ample subsidies and government support from both the Egyptian and the Chinese governments. On the basis of the complaint we drafted, the Commission started anti-subsidy investigations of imports of GFR and GFF from Egypt and countervailed not only the subsidies provided to Jushi by the Egyptian government but also those provided by the Chinese government. That was the first time any investigating authority countervailed that which came to be known as transnational subsidies.
Read more on the coming about of the first measures against transnational subsidies.
Addressing absorption, circumvention and offshore use
After the imposition of anti-dumping and anti-subsidy measures on imports of glass fibre fabrics (GFF) from China and Egypt, the Chinese State-owned producer in Egypt simply lowered its prices to absorb the additional duties. It also moved certain of its weaving machines and employees to Turkey to continue its operations from there. Similarly, another Chinese producer moved Chinese machines and Chinese employees to Morocco and announced in its financial statements that this was done to “circumvent the anti-dumping duties” on direct exports from China to the EU. Finally, several Chinese producers and importers tried to circumvent the anti-dumping and anti-subsidy measures by using complicated import procedures on the grounds that the final products would be used in wind turbines installed offshore (where the anti-dumping and anti-subsidy duties allegedly did not apply).
All these measures were aimed at undermining the remedial effect of the anti-dumping and anti-subsidy measures and basically allow an uninterrupted inflow of dumped and subsidised Chinese products to continue to push the EU industry out of the market. We helped the EU industry to work with the European Commission to get each of these loopholes closed.
