Fourth AEGIS TDI Report on the EU's Trade Defence Instruments
Introduction and Executive Summary
The EU system to restore fair competition on the EU market needs a massive overhaul. This overhaul requires:
an immediate re-allocation of resources within the European Commission to allow greater and more imaginative use of the existing tools on anti-dumping, anti-subsidy and safeguards;
more flexibility in the use of the existing TDI instruments to address low levels of duties, circumvention of measures, environmental and social costs, vertical and horizontal supply chain threats;
the creation of new instruments to address overcapacities; and,
a revision of the existing trade defence instruments.
EU manufacturing faces an existential threat. This is happening today. Revision of the trade instruments and the creation of new instruments must start today. But revision of the law takes time. Many EU manufacturing sectors do not have the luxury of time. Thus, the re-allocation of resources within the European Commission to allow more and faster investigations under the existing imperfect rules, and a change in the Commission’s practice to help in better enforcing the rules for the benefit of EU industries, is an immediate demand and need.
The WTO rules, on which the EU law is based, are out of date and not fit for purpose. They were designed and adopted more than 30 years ago in 1994. The trade world has changed. Immediate efforts must be taken to revise those WTO rules. The EU must be at the forefront of designing the necessary new rules and, in the meantime, implement the new approaches in EU law in anticipation of global negotiations.
The Fourth AEGIS Europe Report on the EU’s trade defence instruments focusses on the most important of the many issues raised in this introduction that will allow for more and faster investigations, higher levels of duties, better enforcement, overcapacities and supply chain investigations.
Read the full report here.
Third AEGIS Europe Report on the EU's Trade Defence Instruments
EXECUTIVE SUMMARY
The AEGIS Europe Alliance represents more than 20 EU manufacturing sectors injured by unfair trade practices. The Alliance therefore has an interest in ensuring that the trade defence instruments (TDI) effectively counter the distortions caused by the dumping, and/or the subsidisation, of imports.
Since the COVID 19 pandemic and Russia’s illegal invasion into Ukraine, EU industries have been facing increasing competition from unfairly traded imports. This has to stop. At a speech at the Institute for Advanced Study in Washington DC on 9 April 2024 Commission Vice President Vestager, after listing success and failures in the implementation of EU trade defence policy, stated:
As you can hear, we’re making full use of the tools that we have. But I can’t help feeling that this is also playing whack-a-mole. We need more than a case-by-case approach. We need a systematic approach. And we need it before it is too late. We can’t afford to see what happened on solar panels, happening again on Electric vehicles, wind or essential chips.
The EU can have a new ‘systemic’ approach. This will require changes to EU law but within the scope of existing WTO law.
And to prevent more solar panels disasters, the EU can use the existing trade defence instruments to protect EU industries in a more robust manner.
This third AEGIS EUROPE Report on the functioning of the EU’s trade defence instruments sets out:
How DG TRADE can apply existing EU regulations to make them more effective;
Changes to EU law that do not require changes in WTO law.
AEGIS Europe considers that the Commission has not developed the full potential of existing TDI law to efficiently defend the EU industry against unfair trade.
AEGIS Europe asks for an immediate change in the DG TRADE’s application of the current TDI rules in order to respond to the extraordinary difficult market conditions, notably in the light of (i) global overcapacities, (ii) tariffs imposed by the US and Canada on Chinese imports resulting in the redirection of exports and domino effect to the detriment of EU industries and (iii) the decrease of the Chinese consumption boosting the need of Chinese exporting producers to dump on global markets.
AEGIS Europe asks for an immediate review of the functioning of the trade defence instruments by the Parliament and the Council.
This is the third AEGIS Europe Report reviewing the functioning of the European Union Trade Defence Instruments (TDI). The first and second Reports, examining in detail the functioning of the EU’s trade defence instruments are available on the AEGIS Europe website.
Read the full report here.
Second AEGIS TDI Report on the EU's Trade Defence Instruments
Executive summary
The AEGIS Europe Alliance represents more than 20 EU manufacturing sectors and companies often injured by unfair trade practices. The Alliance therefore has an interest in ensuring that the trade defence instruments work effectively to counter the distortions caused by the dumping, and/or the subsidisation, of imports.
This second AEGIS Europe Report on the Functioning of the Trade Defence Instruments (TDI) argues that the effective use of TDI contributes significantly to the economic security of the Union. The Trade Defence Instruments, if used robustly, remain the best tools to counter, and root out, the damage that unfair trade causes to European jobs and economic well-being. As President von der Leyen told the European Parliament in April 2023:
The second point is becoming bolder and better at using our existing trade defence instruments. We have given ourselves the right tools to deal with security concerns and economic distortions. So, we must be more assertive in using them when we need them.
The EU remains a very modest user of TDIs compared to other OECD economies such as Australia, Canada and the United States. In addition, the EU has a WTO+ policy for anti dumping which makes the instrument less effective than in other countries. By way of example, the EU almost lost its solar panel and magnesium industries because the anti dumping measures put in place at that time were ineffective.
The EU has not made sufficient use of the safeguard instrument. AEGIS Europe calls for more openness to the imposition of safeguards. In addition, there needs to be an “emergency brake mechanism” based on the GATT XXI Security Article. When shocks in the economy happen or when there is unfairness in the market place, a quicker and stronger response is needed.
In the past year, the Commission has acted to address problems related to the calculation of dumping margins where there is high inflation, or subsidies from one country boosting manufacturing in another county. However, much remains to be done. SMEs, the core of the Union’s manufacturing, still have difficulties in using TDI, and the lesser duty rule still applies in most cases to lower anti-dumping duties and makes them less effective and certainly lower than in other countries.
AEGIS Europe calls on the Member States to recognise the damage caused by unfair trade practices and to promote more robust implementation of the anti-dumping, the anti subsidy and the safeguard instruments now more than ever since the industrial base in the EU is shrinking to the detriment of the Union and its values.
Read the full report here.
First AEGIS TDI Report on the EU's Trade Defence Instruments
EXECUTIVE SUMMARY
The AEGIS Europe Alliance represents more than 20 EU manufacturing sectors injured by unfair trade practices. The Alliance therefore has an interest in ensuring that the trade defence instruments effectively counter the distortions caused by the dumping, and/or the subsidisation, of imports.
This is the first AEGIS Europe Report reviewing the functioning of the European Union Trade Defence Instruments (TDI). It’s starting point is the 2017 and 2018 reforms and a re-look at what those reforms sought to achieve. AEGIS Europe seeks to contribute to the debate between the EU institutions and EU manufacturing on the better functioning of the trade defence instruments.
The trade defence instruments must not be left out in the cold in the drive to improve the EU’s toolbox on trade. The new instruments to address anti-coercion, foreign subsidies and the international instrument on public procurement are all welcome and AEGIS Europe looks forward to their early adoption and implementation. But they complement rather than replace existing tools.
The notable improvements since the 2017/2018 reforms are:
The new methodology for determining normal value (the market price equivalent) in markets where prices are distorted has generally worked well and normally allows for the imposition of effective measures against distorted economies particularly China;
The Commission has adapted existing rules to successfully counter subsidies from the government of one country to an enterprise in another country (cross-country subsidisation), even if duties to counter subsidies remain frustratingly low;
The evolving practice of correcting errors in dumping, subsidy and injury calculations identified by the EU Courts in annulment proceedings and the application of the corrected duties from the date of the original measure ensures that measures remain effective.
In other areas, success in achieving the objectives of the 2018 reforms is less obvious:
The Lesser Duty Rule was changed so as to allow higher duties where there are distortions in raw material costs. This new rule has only been applied once despite numerous requests from Union producers;
Changes to encourage greater use of the trade defence instruments by small and medium sized enterprises need re-examination as problems remain;
TDI can be made more effective by earlier imposition of provisional measures and the registration of imports as a matter of course in all investigations;
Circumvention of measures remains a significant problem.
AEGIS Europe makes 23 specific recommendations for improvement. The Alliance welcomes a debate on these recommendations.
Read the full report here.