The EU needs action on Trade Defence now

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The EU needs action on Trade Defence now

European manufacturing is under extreme pressure from unfairly traded imports: state-controlled and export-driven economies, overcapacities in many sectors and in many countries, as well as imports that disregard EU environmental and social standards, create an uneven playing field, leaving European industries at a disadvantage.

The Draghi Report has highlighted the urgent need for a resilient and competitive European industry that aligns with Europe’s strategic interests1. The Report highlighted the gaps in the EU’s current trade defence mechanisms that need to be addressed. We need flesh on the Draghi bones.

In recent strategy papers, the European Commission seems to have recognised the need for a more effective trade defence toolbox, but it has not backed up these easy statements with effective action. In the meantime, world class, efficient and innovative EU industries are dying. AEGIS Europe has been calling for more action for many years.

In this paper we set out some of the actions needed.

• Changes to current practice

Allocation of additional human resources: There must be the immediate allocation of additional human resources to DG Trade. This will allow for more investigations into unfair practices, more time to understand and address changes in state-run trade strategies, more creative use of current instruments and to make proposals for legislative change.

A value chain approach: Investigations encompassing a whole supply chain: The Commission must initiate one or more simultaneous investigations covering the full value chain to address similar unfair trading practices at all levels of a value chain.

Duties on downstream products incorporating upstream products: Duties on incorporated products: the Commission must impose, as they do in the USA, measures not only on the upstream product itself but also on that part of the downstream product that is made up of the upstream product. This can be done by drafting the NOI sufficiently broadly.

Social and Environmental Costs in dumping calculations: Social and environmental costs are factored, by law, into the injury calculations. To avoid an unfair comparison between the dumping and the injury, they must be factored into the calculation of the dumping margin.

Better SMEs Support: The Commission must establish an office, not only to explain TDI but to actually assist sectors, dominated by Small and Medium Enterprises, in the filing of complaints and in the completion of the injury questionnaire.

Better monitoring of trade patterns: The Commission must improve the trade monitoring system with the obligation to advise industry and build cooperation with industry on ex-officio investigations.

More robust use of circumvention rules to address new forms of circumvention practices: Third-country exporting producers hit by trade defence measures, or the imposition of unilateral tariffs, are becoming more and more skilled and innovative to immediately circumvent the duties in place. Boosted by domestic subsidies, third-country exporting producers subject to duties, are engaging in “duty offshoring” practices, which consist in establishing a production presence, whether partial (through finishing operations) or total (through production) outside their home country (in the EU or outside the EU), in order to bypass a duty (tariff, anti dumping duty).

Duty offshoring practice is a practice for which there is insufficient due cause or economic justification other than the imposition of the duty, and for which there is evidence of dumping and injury and evidence that the remedial effects of the duty are being undermined in terms of the prices and/or quantities.

Third-country exporting producers subject to duties are also circumventing duties by adding an additional processing step to their products initially subject to duties to avoid the measures and export downstream products. This results in displacing the issue of unfair trading practices from Chinese exporters in the value chain, from upstream producers to downstream producers, equally affected by these systemic unfair trading practices.

When there is a change in the pattern of trade which consists in an increase of imports of a product immediately derived from products subject to anti-dumping duties and belonging to the same value chain, the Commission should qualify this practice as a new form of circumvention practices falling under Article 13(1) of the Basic Anti-Dumping Regulation.

More extensive use of particular market situation: Increasingly, an input from one country (often China) is exported at dumped or distorted prices into a second country (often another Asian country), which then exports a finished product to the EU at injurious prices. This is sometimes referred to as “input dumping”. The Commission should be more robust in finding a particular market situation (to adjust the distorted input from the first country) in such scenarios to enable the EU industry to have an effective remedy.

• Changes to the law

Improvement of the safeguard instrument: Reform the voting system in safeguards procedures: the current rule of a qualified majority voting only adds another obstacle to a procedure which already asks the concerned industries to meet very strict conditions. As done for the anti-dumping instrument, the voting rule should change in blocking a proposal from the Commission only if a qualified majority votes against the Commission’s proposal. Allowing the EU industry to file a safeguard complaint would also streamline the procedures – rather than having to provide the data via Member States.

Removal of the Lesser Duty Rule: In cases where the dumping margin is higher than the injury margin, and only in these cases, the simplest and most straightforward solution is to remove the need to make a comparison between the dumping margin and the injury margin. In other words, to remove the lesser duty rule. The lesser duty rule is not required by WTO law. It is a WTO + provision of EU law. There is nothing to prevent the Union from removing this requirement. The removal of the lesser duty rule must become the priority for EU policy makers, therefore, AEGIS Europe supports the reference to this important change in the Steel and Metals Action Plan. The lesser duty rule should be automatically not applied where there is evidence on the file of significant overcapacities in the countries of origin of the dumping.

A new instrument to deal with overcapacities: The Commission is proposing an overcapacities instrument for steel. The EU needs a similar instrument for other sectors: The instrument must allow for the imposition of punitive tariffs, or any equivalent measure, at the border, on goods sourced in third countries which have given support directly or indirectly to the rise of economically irrational overcapacities.

This instrument: i) must be available independent of the Safeguard instrument; ii) must result in measures made effective at the EU border; and iii) must be triggered by the EU industry (and not a Member State) to give the initiative to industry.

AEGIS Europe Feedback on the Revision of the Public Procurement Directives

AEGIS Europe welcomes the opportunity to provide its input to the revision of the Public Procurement Directives.

We are an industry alliance bringing together more than 30 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products.

Public procurement is a strategic tool that can be used to strengthen Europe’s industrial base, competitiveness, and strategic autonomy. Its revision should ensure strong enforcement and alignment with EU industrial, trade, and climate policies to prevent price-driven practices that allow unfairly subsidised or non-market products to undercut European production. If effectively structured, public procurement can incentivise high environmental and social standards and contribute to strategic autonomy.

Below, you may find some of our suggestions, based on our members’ input:

• Exception on international rules: Article 20, Directive 2014/25/EU allows the derogation of EU public procurement rules ‘pursuant to international rules’ (e.g. through an international agreement). This has created a route for the undisputable circumvention of EU public procurement rules and unfair competition, especially through China’s Belt and Road Initiative projects in certain Member States (e.g. Hungary). AEGIS Europe calls for the removal of Article 20, which threatens the general interest of European Union. The uniform application of EU procurement rules across all contracting entities will then be ensured, and vital EU public interest objectives such as transparency and non-discrimination will be upheld.

• Systematic exclusion of Foreign Bidders in strategic sectors. Clear and more uniform rules for the participation of Foreign Bidders – understood as bidders from countries which are not a party to the WTO Agreement on Government Procurement (GPA) or other trade agreements with the EU, i.e. in line with EU international obligations – must be ensured to provide legal certainty to bidders and contracting entities alike. As the EU has exclusive competence on this matter, we call on the systematic exclusion of these bidders for public procurement procedures related to strategic sectors, especially for State-owned economic operators since they are of direct concern for the security of the Union.

• A long-term vision for European content: In the longer term, EU content must become the cornerstone of a credible public procurement policy. Public procurement should aim for a high share of European-based production, with limited exemptions where products are unavailable.

• Definition and enforcement of “Made in Europe”. The concept of “Made in Europe” is central to the effectiveness of EU preference in public procurement, yet it currently lacks a clear and robust definition. Experience from trade and climate policies show that origin-based criteria can be easily circumvented if they rely on formalistic or minimal transformation rules. Public procurement should therefore rely on substantive production criteria rather than formal origin labels.

• Strategic alignment with the Foreign Subsidies Regulation (FSR): The current Regulation allows a suspicious bidder already targeted by an in-depth investigation of the European Commission that has not yet been completed to bid on – and potentially be awarded – new projects. Given the systemic risks this represents for the procurement market, no such bidder should be allowed to participate in procurement procedures, be it alone or part of a consortium, unless they cooperate and facilitate the completion of an ex officio investigation. Additionally, public procurement should also consider the presence of industrial subsidies and structural overcapacities in the country of origin. In non-market economies, such factors often result in systematically underpriced products that cannot be matched by EU producers operating under normal market conditions.

• Very low bids and distortion of competition: Public procurement rules already provide contracting authorities with the possibility to exclude tenders where there is a distortion of competition, including in cases linked to dumping practices (abnormally low tenders). However, this possibility is rarely used in practice, and very low bids are often treated as a purely commercial issue. This approach ignores the reality that many such bids are the result of non market practices, including state subsidies, environmental dumping or structural overcapacities. The provisions on abnormally low tenders should therefore be reinforced, in full alignment with the FSR rules.

AEGIS Europe Statement on European content and preference

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AEGIS Europe Statement on European content and preference

AEGIS Europe supports the inclusion of European content and European preference considerations in forthcoming legislative initiatives, notably the Industrial Accelerator Act and the revision of the Public Procurement Directives.

Against a backdrop of global overcapacities, persistent unfair competition and rising economic security concerns, EU policy must more effectively support manufacturing capacity located in Europe, both for sectors already facing economic dependency and for those likely to be at risk in the coming years due to their strategic nature and ongoing market evolutions. European industries operate under high standards in terms of sustainability, safety and innovation.

Forthcoming EU legislation should therefore enable greater transparency on where products are manufactured, allowing public authorities and market actors to better align purchasing, investment and policy decisions with Europe’s industrial, climate and security objectives, while remaining proportionate and adaptable to sector-specific needs and constraints.

In situations where simple but reliable and mandatory information is seen as an effective instrument to promote products proudly made in Europe, and provided that clear and representative customs rules of origin or European content criteria are supported and recognised as such by the sector and value chain concerned, mandatory origin marking should be considered as a mean to achieve these objectives and should be proposed under the Industry Accelerator Act.

In any case, European content considerations must be addressed in a coherent manner across EU instruments and not confined to public projects alone. As a strategic lever, public procurement should also fully contribute to supporting European industrial capacity. The revision of the Public Procurement Directives should therefore allow for a genuine European preference, including through clear thresholds and criteria reflecting the proportion of value originating outside of Europe.

Contracting authorities should exclude economic operators from countries that are not parties to the WTO Government Procurement Agreement (GPA) or to equivalent agreements with the EU, as well as tenders where a substantial share of the products or components originates from third countries.

Overall, the Industrial Accelerator Act and the revision of the Public Procurement Directives should rely on consistent principles and criteria, ensuring that demand-side measures, funding, and procurement rules jointly contribute to strengthening European production, resilient supply chains, and strategic autonomy.

AEGIS Europe and its members stand ready to engage constructively with the European Commission to help deliver a balanced framework that promotes European manufacturing, preserves an open but fair internal market, and reinforces Europe’s long-term industrial strength.

AEGIS Europe urges the Commission to take action on global overcapacities and support the safeguard case on ferroalloys and silicon

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Brussels, 14 October 2025 – AEGIS Europe welcomes the European Commission’s initiative to address the negative trade-related effects of global overcapacity in the steel sector, and warns that the challenge of overcapacities extends far beyond steel. This requires a solution for the steel value chain as well as for other sectors facing similar challenges.

Overcapacities have become a value-chain problem, affecting upstream and downstream industries alike – from raw materials to final goods. China alone can meet Europe’s entire industrial demand several times over in many manufacturing sectors, while other third countries are also expanding production, making overcapacity a truly global phenomenon. This systemic distortion, largely – but not exclusively - driven by state-supported production, is undermining Europe’s drive toward strategic autonomy, deterring investment, and accelerating deindustrialization.

Recent developments in the ferroalloys and silicon sector, in particular, illustrate the scale of the challenge. With existing spare capacity exceeding 21 million tonnes and planned capacity increases of more than 13 million tonnes worldwide, global overcapacity for manganese and silicon-based alloying elements has reached unprecedented levels. These volumes cannot be absorbed by the market, especially amid declining European consumption and shrinking export opportunities as third countries adopt their own trade defence measures.

This crisis has brought Europe’s ferroalloys and silicon industry to the brink of collapse. As noted by Euroalliages – the European federation representing that industry, and active member of AEGIS Europe, the last silicon-metal producer in the EU recently closed. Silicon and ferro-alloys materials are indispensable for the production of steel, aluminium, batteries, and advanced defence applications – from cars and energy storage to drones and strategic infrastructure. Without them, Europe’s industrial resilience and economic security are at risk.

AEGIS Europe therefore expresses its strong support to the imposition of measures in the framework of the safeguard case on manganese and silicon-based alloying elements. The adoption of effective safeguard measures is essential not only to preserve the future of the ferro alloys and silicon industry, but also to prevent further deindustrialization across interconnected value chains.

AEGIS Europe believes this case is an example of the urgent need to adopt a comprehensive approach to overcapacities, extending to all affected sectors. This includes:

• Establishing a regular EU monitoring system of overcapacities risks by country and sector, building on the model of import surveillance;

• Creating an EU instrument to counter overcapacities based on the rationale behind the new steel measures. This instrument should be applicable across all sectors, independent of the safeguard mechanism, and triggered by industry;

• Enabling effective border measures, including punitive tariffs or equivalent actions, against imports originating from countries that directly or indirectly subsidize overcapacity.

As Commission President Ursula von der Leyen stated, “Global overcapacity is damaging our industry. We need to act now.” AEGIS Europe fully supports this call and urges the Commission to translate this recognition into a robust and forward-looking policy response.

AEGIS Europe reacts to the European Parliament endorsement of the European Commission proposal for simplifying the CBAM

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Brussels, 23 May 2025. Yesterday, the European Parliament endorsed the European Commission’s proposal to simplify the Carbon Border Adjustment Mechanism (CBAM). The text was adopted with 564 votes in favour, 20 against, and 12 abstentions, reflecting broad political consensus. MEPs introduced only technical amendments for clarification and supported the inclusion of a new de minimis mass threshold of 50 tonnes.

We welcome the remarks made by MEP Antonio Decaro, Chair of the ENVI Committee and rapporteur, following the vote:

“The CBAM is a crucial instrument to help the EU prevent carbon leakage and incentivise climate action outside the EU. (...) This approach enables us to simplify matters for companies without dismantling or weakening the CBAM. We will continue to work quickly to bring legal clarity and certainty to all CBAM stakeholders.”

While we support this progress, we urge legislators to consider some key recommendations to ensure that the CBAM remains both effective and industry-friendly:

• AEGIS Europe has been advocating for the adoption of an export adjustment for several years: CBAM needs a WTO-compatible export solution for CBAM sectors to avoid carbon leakage and the replacement of EU low-carbon products with high-carbon alternatives on global markets, in a context where European producers already face several challenges in the export market, including high production costs (especially energy costs), global overcapacities, and aggressive industrial and trade policies by third country competitors.

• Furthermore, anti-circumvention rules must be strengthened to ensure the effectiveness of the measure and avoid practices such as resource shuffling which allows the exporting to the EU only products with lower carbon footprint while deviating other products to other markets, or cost absorption, where producers could absorb partially or totally the cost of the CBAM by reducing the price of the products at the EU border and/or by spreading the levy across his entire production. The risk of circumvention must be monitored at customs level, and the authorisation process for CBAM declarants should ensure that they are sufficiently skilled to detect this. Effective enforcement of the new exemption threshold for small importers at 50 tonnes of CBAM goods per year as introduced by the Omnibus package is necessary to prevent circumvention, as economic operators could try and avoid CBAM obligations by artificially importing through multiple entities falling below the threshold. Moreover, while AEGIS sees the benefits of simplifying CBAM for importers, it draws the legislator’s - attention to the need to reciprocally simplify the EU ETS for small emitters on the EU manufacturing side.

• AEGIS Europe supports a CBAM that is efficient in addressing carbon leakage risks while ensuring a level playing field on both European and foreign. To achieve these goals, we believe it is imperative to assess CBAM effectiveness before any extension of its scope: this assessment should have as a departing point a consultation of the industry. To do so, it is important to define the assessment criteria which will be used and to conduct a prior thorough impact assessment by consulting the industries concerned. Moreover, for some ETS sectors with very specific value chains, products, and global trade flows, a CBAM cannot effectively address carbon leakage and reduce emissions. For these sectors a stronger carbon leakage protection is needed.

In conclusion, AEGIS Europe members agree on the ultimate importance of finding a balance between simplification, accuracy and effectiveness of the mechanism in preventing carbon leakage. Moreover, simplification should not facilitate or lead to circumvention, and any effort in this sense should be subject to a comprehensive evaluation. A thorough consultation of the industry, including both CBAM sectors and sectors which might be covered by CBAM, should be conducted, keeping in mind that CBAM alone cannot solve the carbon leakage issue for all sectors, and further measures are needed to achieve decarbonisation.

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AEGIS Europe is an industry alliance that brings together more than 25 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our Members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.

AEGIS Europe Position on the European Commission’s proposal for CBAM simplification

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Brussels, 8 May 2025. On February 26th, the European Commission adopted the Omnibus package, a series of proposals to simplify EU rules and boost competitiveness in several legislative fields, among which the Carbon Border Adjustment Mechanism (CBAM). Further to that, the European Commission announced a comprehensive CBAM review for Q3 2025, assessing the feasibility of extending CBAM scope to other EU ETS sectors at risk of carbon leakage, to downstream sectors and to indirect emissions, and to evaluate support for exporters. The steel and metals action plan (March 19) announced that a communication on options for an export adjustment might already be published by the EC in Q2 2025. Another interesting announcement concerns the release of an anti-circumvention strategy in Q4 2025 together with the legislative proposal on the extension of the scope of CBAM.

We welcome the European Commission’s commitment to simplify the CBAM to foster fair trade. While simplification is essential and a step in the right direction, allowing to significantly reduce the administrative burden for declarants – especially SMEs, AEGIS Europe members agree on the ultimate importance of finding a balance between simplification, accuracy and effectiveness of the mechanism in preventing carbon leakage. Moreover, simplification should not facilitate or lead to circumvention, and any effort in this sense should be subject to a comprehensive evaluation. A thorough consultation of the industry, including both CBAM sectors and sectors which might be covered by CBAM, should be conducted.

AEGIS Europe would like to express its position on some of the key proposals outlined in the Omnibus package on CBAM simplification:

• Exemption threshold for small importers at 50 tonnes of CBAM goods per year. This proposal would allow to exempt around 90% of importers from CBAM obligations, while keeping 99% of embedded emissions in the scope, thus reducing administrative burden and maintaining the environmental objective of CBAM. However, as noted above, effective enforcement, for example through establishing robust and comprehensive risk assessment mechanisms, is necessary to prevent circumvention, as economic operators could try and avoid CBAM obligations by artificially importing through multiple entities as subsidiaries, falling below the threshold, or by splitting EORI numbers. Furthermore, the same logic of simplification applied here to importers under the CBAM should apply to EU producing small emitters under the EU ETS (Art. 27 of the ETS Directive) by increasing from 25Kt to 50KtCO2/year the threshold below which EU producers can opt out and be subject to national equivalent measures, thereby decreasing the administrative burden without lowering the decarbonisation ambition and efforts of EU producers.

• Simplification for EU precursors is also welcomed. As AEGIS Europe stated on other occasions, it is important to avoid double reporting for EU ETS installations in order to reduce the administrative burden. However, for legal coherence, the sentiment expressed in Recital (14)1 which creates a derogation for reporting EU-produced precursors should be materialised in an Article. The European Commission should update its existing guidance document to avoid double reporting already during the transitional period.

• Amendment of art. 26 of the CBAM regulation with the inclusion of a paragraph 1(a) stating that competent authorities can, under certain conditions, decrease the amount of the penalty imposed for the failure to surrender a given number of CBAM certificates. AEGIS Europe believes that the proposal creates an uneven playing field and legal uncertainty and inconsistencies across Member States, as the derogation is not predicted under EU ETS. This could open the door for non compliance and failing to follow the conditions set out in art. 16(1) of the EU ETS directive, stating that penalties should be “effective, proportionate and dissuasive”. Finally, CBAM penalties should always be equivalent to ETS penalties.

• Entry into force of CBAM financial obligations in 2027. The kicking in of financial obligations should be maintained in 2026, as its delay undermines the effectiveness of the tool because goods enter the EU market in 2026 without any certainty that declarants will be able to fulfil the surrendering obligation in late 2027.

• Default values for countries where there is not enough available data. The Commission’s proposal suggests using an average of the ten high emitting countries to calculate default values for countries where there is not enough reliable data. Using such a wide sample could result in default values lower than the actual emissions of the country, thus failing to encourage reporting of actual emissions. We recommend the use of a smaller sample, such as the top three-highest emission exporting countries where there is enough reliable data.

Overall, the Omnibus proposal seems to go in the right direction, although there are still further steps that can be taken to strengthen CBAM effectiveness and prevent circumvention while simplifying the system:

• Foreign operators should be able and strongly encouraged to provide their emission data directly through a submission in the CBAM registry. This would enhance the quality of the data as the same operators would be subject to a third-party verifier scrutiny and to the verification of the EU CBAM Authorities. If this cannot be guaranteed, CBAM declarants should use default values. This would allow the simplification of the reporting system of emission data by CBAM declarants, as they would be able to refer to the submissions made by the foreign installation and tie it to the specific imports they have made.

• The same level of transparency of the ETS should apply to CBAM: the information in the CBAM Registry will be confidential, while the EU ETS Registry Regulation provides public access to most of the relevant information included in the registry.

Background

AEGIS Europe supports a CBAM that is efficient in addressing carbon leakage risks while ensuring a level playing field for European and foreign producers. To achieve these goals, we believe it is imperative to assess CBAM effectiveness before any extension of its scope to other goods: this assessment should have as a departing point a consultation of the industry. To do so, it is important to define the assessment criteria which will be used and to conduct a prior, thorough impact assessment by consulting the industries concerned. Moreover, for some ETS sectors with very specific value chains, products, and global trade flows, a CBAM cannot effectively address carbon leakage and reduce emissions. For these sectors a stronger carbon leakage protection is needed.

Secondly, anti-circumvention rules must be strengthened to ensure the effectiveness of the measure and avoid practices such as resource shuffling which allows the exporting third country producers to only export to the EU products with lower carbon footprint while deviating more carbon-intensive products to other markets, or cost absorption, where producers could absorb partially or totally the cost of the CBAM by reducing the price of the products at the EU border and/or by spreading the levy across his entire production. The risk of circumvention must be monitored at customs level, and the authorisation process for CBAM declarants should ensure that they are sufficiently skilled to detect this. Effective enforcement of the new proposed exemption threshold for small importers at 50 tonnes of CBAM goods per year as introduced by the Omnibus package is necessary to prevent circumvention, as economic operators could try to avoid CBAM obligations by artificially importing through multiple entities falling below the threshold.

Finally, AEGIS Europe has been advocating for the adoption of an export adjustment for several years: CBAM needs a WTO-compatible export solution for CBAM sectors to avoid carbon leakage and the replacement of EU low-carbon products with high-carbon alternatives on global markets. European producers already face several challenges in export market, including high production costs (especially energy costs), global overcapacities, and aggressive industrial and trade policies by third-country competitors. An ERCST report stressed that failing to adequately address export issue could lead to a diminished competitiveness, suboptimal capacity utilization, reduced profitability, and eventual plant closures, further exacerbating the financial pressure within the sectors concerned and impacting substantial investment decisions in the near future. We are pleased to see that the need to support EU exporters is gaining increasing prominence in the European Commission’s legislative agenda and industrial discussions, and we eagerly wait for the presentation of the EC’s proposals to solve the exports loophole in CBAM coming in Q2 2025.

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AEGIS Europe is an industry alliance that brings together more than 30 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our Members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.