European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

In order to protect Union industry from anticompetitive effects resulting from aid granted worldwide by non-Member States to their undertakings, the European Union has adopted a trade protection instrument - the anti-subsidy regulation - which authorizes measures aimed at countervailing the award of unfair public subsidies (referred to as anti-subsidy or countervailing measures). Like dumping prac …

Specific features of the anti-subsidy regulation

In order to protect Union industry from anticompetitive effects resulting from aid granted worldwide by non-Member States to their undertakings, the European Union has adopted a trade protection instrument - the anti-subsidy regulation - which authorizes measures aimed at countervailing the award of unfair public subsidies (referred to as anti-subsidy or countervailing measures). Like dumping practices, subsidizing an imported product is not penalized in itself but only because it causes significant damage to the Union industry.

In accordance with the WTO agreements , the European legislator has adopted two distinct provisions that govern the dumping and subsidy practices, which were previously falling within the same provision . The two practices do not differ by reason of their effect, which may be similar, but by reason of their origin. Subsidy results from a direct support of public authorities of third countries which gives rise to the granting of an advantage to producers or exporters allowing them to sell at low price in the Union.

Even if it includes many identical provisions to those in the anti-dumping regulation, particularly as regards product definition , determination of injury  and causal link , definition of Union industry  and Union interest , the anti-subsidy system governed by Regulation No 2016/1037 of 8 June 2016  is specific because of the perpetrator of the unfair practice - a non-Member State - which gives it a stronger political dimension than in the case of anti-dumping. Regulation No 2016/1037 thus fixes de minimis thresholds that are lower than the thresholds in the anti-dumping regulation. Below the 1% ad valorem threshold, countervailing measures generally have no interest since there is no significant injury resulting from the subsidy. This threshold is 2% for imports originating in developing countries and 3% for those developing countries members of the WTO (Art. 14(5)) . The Union interest is also differently assessed by the European authorities where the unfair practice has been removed in the course of the investigation, as there is less risk of reappearance of the behavior at issue regarding subsidy than anti-dumping . Where it is referred to of an anti-subsidy complaint, the Commission is required to engage in consultations with the State concerned with the aim of clarifying the situation and arriving at a mutually agreed solution before opening an investigation . Throughout the investigation, the Commission must afford the State a reasonable opportunity to continue consultations with a view to clarifying the factual situation and arriving at a mutually agreed solution . To undertakings by the exporter to revise its prices or to cease exports to the area in question of products benefitting from subsidies, the regulation adds the possibility for the State which applies the subsidy to agree to eliminate or limit it or take other measures concerning its effects . A State which offers undertakings has then exactly the same rights and obligations as an exporter.

Review procedures remain virtually identical since the anti-subsidy regulation provides for interim review procedures at the expiry of the measure and anti-absorption, following the example of the anti-dumping regulation . A doubt remained for the new exporter review system. The uncertainty has been removed since the inclusion of the conditions relating to the new exporter qualification contained in the anti-dumping regulation as part of an anti-subsidy procedure .

Lastly, the differences in the maximum period for investigation proceedings - thirteen months instead of fifteen months for anti-dumping  -, for provisional duties - four months without extension possibility for countervailing duties  - have no effect on the system applicable to anti-subsidy proceedings which are governed by the same rules as anti-dumping proceedings concerning initiation , progress of the investigation , imposition of provisional  or definitive measures , undertakings , termination of proceedings , general provisions on suspension and registration , consultations , verification visits , sampling , non-cooperation , confidentiality , anti-circumvention investigations  or the application of the traditional rules of the Treaty regarding remedies . In fact, the two systems differ mainly by their purpose - dumping, on the one hand, subsidy, on the other hand - and their perpetrator - an exporter for the anti-dumping proceedings, a State for the anti-subsidy proceedings. Anti-dumping duties and countervailing duties may therefore not be combined.

Like for the adoption of anti-dumping measures, the implementing powers previously shared by the Commission and the Council in application of the anti-subsidies regulations prior to Regulation No 2016/1037 and Council Decision No 1999/468 of 28 June 1999 , repealed by Regulation No 182-2011 , are now exercised exclusively by the Commission  according to two procedures, the advisory procedure or the examination procedure under the control of a committee composed of representatives of the Member States .

Final Act of the 1994 Uruguay Round of trade negotiations.

Council Regulation No 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community, OJ L 209 of 2 August 1988, 1; which replaced Council Regulation No 2176/84 of 23 July 1984 on protection against dumped or subsidized imports from countries not members of the European Economic Community, OJ L 201 of 30 July 1984, 1.

Regulation No 2016/1037, Article 10; see also Article 10(2)(c): the anti-subsidy regulation, and not the anti-dumping regulation, includes among the information which should be reasonably available to the complainant, evidence with regard to the existence, amount, nature and countervailability of the subsidies in question.

Regulation No 2016/1037, Article 13(1)(a); See, for examples of undertakings by the government of the third country: Commission Decision No 81/901 of 13 November 1981, imports of certain kinds of women's shoes (Brazil), LawLex201100000555JBJ, as regards an undertaking to apply a tax to exports calculated on the same basis as that on which the subsidy was calculated and which makes it possible to completely neutralize the effects thereof, and an undertaking to inform the Commission that it did not intend to adopt any fiscal, monetary or other measures which would weaken the scope of this tax; No 90/266 of 13 June 1990, imports of ball bearings (Thailand), LawLex201100000572JBJ, as regards an undertaking in the form of an export tax the rate of which must be exactly the same as the specific countervailing duty envisaged; Commission Regulation (EC) No 527/93 of 5 March 1993, imports of ball bearings (Thailand), LawLex200900002726JBJ, which considers that in order to strengthen the undertaking by the country of origin to apply an export tax on its products to the Union with an aim at eliminating the effect of the subsidies found, a provisional countervailing duty fixed at the same level as that tax may be imposed on indirect imports of the same products via a third country to which that tax does not apply.

Regulation No 2016/1037, Article 19; see for example Council Regulation (EU) No 193/2007 of 22 February 2007, imports of polyethylene terephthalate (India), LawLex200900002489JBJ, which decides the maintenance of countervailing measures which expire by reason of the existence of unused capacity; Commission Decision No 95/180 of 2 May 1995, imports of ball bearings (Thailand), LawLex201100000588JBJ, which considers that a change in the amount of the subsidy justifies, at the end of a review procedure, a reduction of the rate of the export tax that the government concerned has undertaken to apply in order to neutralize the effects of that subsidy; Council Regulation (EC) No 1027/83 of 27 April 1983, seamless tubes of non-alloy steels (Spain), LawLex200900002368JBJ, which considers that at the end of a review procedure on a definitive countervailing duty, initiated by reason of a strong increase in the rate of a turnover tax used as key element in the determination of the rate of subsidy, the countervailing duty may be reduced by an amount corresponding to the increase in the tax burden; Council Regulation (EU) No 930/2003 of 26 May 2003, imports of farmed Atlantic salmon (Norway, Chili, Faeroe Islands), LawLex200900002550JBJ, which considers that the expiry of countervailing measures is not such as leading to a continuation or recurrence of subsidization where the current level of subsidy is very close to de minimis, and it is likely to fall below that level in the reasonably foreseeable future.

Council Regulation (EU) No 2049/1999 of 27 September 1999, imports of stainless steel bars (India), LawLex200900002514JBJ; No 2744/2000 of 14 December 2000, imports of sacks and bags made of polyethylene or polypropylene (India), LawLex200900002597JBJ; a non-negligible effect of the initiation of a review procedure provided for in the anti-dumping regulation is however not included in the anti-subsidy regulation: the repeal of the existing duty regarding the new exporter concerned and the fact that its imports are subject to registration in order to allow a possible retroactive levying of anti-dumping duties to the date of initiation of the review.

Regulation No 2016/1037 Article 11(9) and Regulation No 2016/1036, Article 6(9).

Regulation No 2016/1037, Article 10 and Regulation No 384/96, Article 5; see, for example, Commission Decision No 2007/535 of 27 July 2007, imports of dihydromyrcenol (India), LawLex201100000552JBJ, which considers that anti-subsidy proceedings may be terminated without imposing countervailing measures where the complaint has been removed and no consideration shows that this termination would not be in the Union interest.

Regulation No 2016/1037, Article 11 and Regulation No 2016/1036, Article 6; see, for example, Case T-300/03 Moser Baer India v Council [2006] ECR II-3911, LawLex200900001346JBJ, which considers that information relating to a period subsequent to the investigation period, such as forecasts of future events, may be taken into consideration to assess subsidy and injury insofar as they are relevant and based on objective evidence obtained during the investigation; Commission Regulation No 618/1999 of 23 March 1999, imports of stainless steel wire importations (India, Korea), LawLex200900002886JBJ, which considers that preferential loan programs repealed before the investigation period remain liable to countervailing measures where loans granted are still on-going during that period.

Regulation No 2016/97, Article 12 and Regulation No 2016/1036, Article 7; see, for example, Commission Regulation No 1556/98 of 17 July 1998, imports of stainless steel bars (India), LawLex200900002859JBJ, which considers that the suppression of a subsidy system organized in the form of a credit corresponding to the amount of customs duties levied at the time of export of a finished product, and intended to be used to offset customs duties owed on future imports, does not preclude from imposing countervailing measures where exporters may still use the credit.

Regulation No 2016/1037, Article 2(c); see, for example, Council Regulation (EU) No 1601/1999 of 12 July 1999, imports of stainless steel wires (India, Korea), LawLex200900002507JBJ, which considers that fine stainless steel wires and large stainless steel wires are distinct given their physical characteristics and uses; Commission Regulation No 1556/98 of 17 July 1998, imports of stainless steel bars (India), LawLex200900002859JBJ, which considers that stainless steel bars produced in India and sold domestically or exported to the Union and stainless steel bars produced and sold in the Union by the complainant EU producers are like products given their physical characteristics and uses.

Regulation No 2016/1037, Article 15 and Regulation No 2016/1036, Article 9(4) to (6); see, for example, Council Regulation No 1781/93 of 30 June 1993, imports of ball bearings with a greatest external diameter not exceeding 30 mm (Thailand), LawLex200900002475JBJ, which considers that in order to take account of future price changes due to exchange rate fluctuations, the definitive countervailing duty may be express on an ad valorem basis; see, also, Case C-535/06 P Moser Baer India v Conseil [2009] ECR I-7051, LawLex201100000256JBJ, which specifies that the determination of the factors injuring the EU industry in an anti-subsidy proceeding requires an appraisal of complex economic situations and the judicial review of such an appraisal must be limited to verifying whether relevant procedural rules have been complied with, whether the facts have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers.

Regulation No 2016/1037, Article 13 and Regulation No 2016/1036, Article 8; see, for example, Commission Decision No 2006/37 of 5 December 2005, imports of sulphanilic acid (India), LawLex201100000551JBJ, which considers that a minimum price undertaking, offered by an exporting producer, indexed in order to address the cyclical nature of the price of one of the key ingredients used in the production of the product concerned, may be accepted insofar as it eliminates the injurious effects of dumping and subsidization.

Regulation No 2016/1037, Article 14 and Regulation No 384/96, Article 9 paragraphs 1 to 3; see, for example, Commission Decision No 2007/535 of 27 July 2007, imports of dihydromyrcenol (India), LawLex201100000552JBJ, concerning the termination of the proceedings following a complaint; see also Case 188/85 Fediol v Commission [1988] ECR 4193, LawLex200900001632JBJ, which states that the Commission has discretion to decide whether or not to terminate the proceeding where the adoption of protective measures seems inappropriate in view of the interests of the Union.

Regulation No 2016/1037, Article 24 and Regulation No 2016/1036, Article 14.

Regulation No 2016/1037, Article 25 and Regulation No 2016/1036, Article 15.

Regulation No 2016/1037, Article 26 and Regulation No 2016/1036, Article 16; see, for example, Council Regulation (EU) No 713/2005 of 10 May 2005, imports of certain broad spectrum antibiotics (India), LawLex200900002496JBJ, which considers that the claim to use new information instead of the information provided during the verification visit must be dismissed where such information was not made available in good time and not subject to verification; Commission Regulation No 1556/98 of 17 July 1998, imports of stainless steel bars (India), LawLex200900002859JBJ, which considers that the information provided by a EU producer cannot be taken into account for the investigation where it withdrew its cooperation during the verification visit.

Regulation No 2016/1037, Article 27 and Regulation No 2016/1036, Article 17; see, for example, Council Regulation No 74/2004 of 13 January 2004, imports of cotton-type bedlinen (India), LawLex200900002527JBJ, which considers that two out of the five EU producers in the sampling having supported the complaint, which were not able to submit a complete list of all transactions to unrelated customers during the investigation period, must therefore be considered to be only partially cooperating.

Regulation No 2016/1037, Article 28 and Regulation No 2016/1036, Article 18; see, for example, Council Regulation (EC) No 1741/2000 of 3 August 2000, imports of polyethylene terephthalate (India, Malaysia, Taiwan, Thailand), LawLex200900002851JBJ, which considers that in view of the high level of cooperation, the residual rate for non-cooperating companies may be determined as the rate of cooperating company with the highest subsidy margin.

Regulation No 2016/1037, Articles 29 and 30 and Regulation No 2016/1036, Articles 19 and 20; see, for example, Case T-300/03 Moser Baer India v Council [2006] ECR II-3911, LawLex200900001346JBJ, which traditionally recalls that the fact that final disclosure set out in Article 30 of the anti-subsidy regulation is incomplete renders the regulation imposing definitive duties unlawful only if, as a result of the omission, the parties were not in a position to defend their interests effectively.

Regulation No 2016/1037, Article 23 and Regulation No 2016/1036, Article 13; see, for example, Commission Regulation No 1228/2007 of 19 October 2007, imports of certain graphite electrode systems (India), LawLex200900002618JBJ, which terminates an anti-circumvention investigation because of the change in the pattern of trade; Commission Regulation No 283/2004 of 18 February 2004, imports of polyethylene terephthalate (India, Brazil and Israel), LawLex200900002627JBJ, which considers that it is justified to initiate an anti-circumvention procedure given the significant change in the pattern of trade having taken place following the imposition of measures on the product concerned, for which there is insufficient due cause or justification other than the imposition of the duty and which appears to stem from the transshipment of the product originating in the country concerned via other third countries, the noticeable undermining of the remedial effects of the existing countervailing measures in terms of quantities and the finding that the imported products still benefit from the subsidies as established in the original investigation.

Regulation No 2016/1037, Article 8; see, for example, Council Regulation (EU) No 713/2005 of 10 May 2005, imports of certain broad spectrum antibiotics (India), LawLex200900002496JBJ, which considers that the analysis of the EU economic situation regarding sales volume, sales prices, market share, growth, profitability, export volume and prices, must be limited to the free market insofar as sales on the captive market are not affected by subsidized imports; No 1628/2004 of 13 September 2004, imports of certain graphite electrode systems (India), LawLex200900002516JBJ, which considers that injury to the EU industry resulting from the granting by a third State of import duty credits in export transactions, lies in the competitively more advantageous position in which exporters are at the point in time when they are negotiating prices since they can reflect the subsidies through offering lower prices; Commission Regulation No 123/2000 of 20 January 2000, imports of polyester staple fibres (Australia, Taiwan, Korea, Thailand), LawLex200900002897JBJ, which considers that the decrease in the capacity of production and the resulting increase in the rate of utilization, do not constitute relevant criteria of assessment of the EU situation where they may be attributed to the fact that certain production lines and factories were closed or converted to the production of other products not covered by the investigation with the aim of obtaining a more efficient capacity utilization.

See Case 191/82 FEDIOL v Commission [1983] ECR 2913, LawLex200900001637JBJ, which establishes the right to lodge a complaint where rights which have been recognized specifically to the complainant by the anti-subsidy regulation are disregarded; Case T-58/99 Mukand and others v Council [2001] ECR II-2521, LawLex200900001381JBJ, which recognizes a direct and individual interest in bringing proceedings against a regulation imposing a definitive countervailing duty or collecting definitively a provisional countervailing duty.

Council Decision 1999/468 of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission, OJ L 184 of 17 July 1999, 23. 

Regulation No 182/2011 of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers, OJ L 55 of 28 February 2011, 13.

We will however continue to cite regulations adopted by the Council to illustrate certain points where they can be used as guidelines for the assessment of matters brought before the Commission.

See Regulation No 182/2011 to which Regulation No 2016/1037 refers, which no longer provides for the Council to have residual implementing powers. Recital 31 of Regulation No 2016/1037 states that "the implementation of this Regulation requires uniform conditions for adopting provisional and definitive duties, and for the termination of an investigation without measures. Those measures should be adopted by the Commission in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council". Likewise recital  32 provides that "the advisory procedure should be used for the adoption of provisional measures given the effects of such measures and their sequential logic in relation to the adoption of definitive measures. It should also be used for the acceptance of undertakings, initiation and non-initiation of expiry reviews, suspension of measures, extension of the suspension of measures and the reinstatement of measures given the effect of such measures as compared to definitive measures. Where a delay in the imposition of measures would cause injury which would be difficult to repair, it is necessary to allow the Commission to adopt immediately applicable provisional measures".

Regulation No 2016/1037, Article 8; see, for example, Case C-535/06 P Moser Baer India v Council [2009] ECR I-7051, LawLex201100000256JBJ, which recalls that, in determining injury, the Commission is under an obligation to consider whether the injury actually derives from subsidized imports and must disregard any injury deriving from other factors, particularly from anti-competitive behavior involving EU producers; Case T-300/03 Moser Baer India v Council [2006] ECR II-3911, LawLex200900001346JBJ, which considers that imports originating in a not concerned third country are not, even where prices are very low and volumes are high, such as to breach the causal link between imports at issue taken separately and the injury caused to the EU industry, where significant injury may be the result of imports from various countries, each of which may have a different effect; Commission Regulation No 1556/98 of 17 July 1998, imports of stainless steel bars (India), LawLex200900002859JBJ, which considers that imports from countries other than the countries concerned have had no decisive impact on the EU industry where they were made either in negligible quantities or at higher prices.

Regulation No 2016/1037, Article 31; see, for example, Commission Decision No 85/233 of 16 April 1985, imports of soya meal (Brazil), LawLex201100000562JBJ, which considers that the interests of the Union no longer require the collection of a countervailing duty from the importers concerned where the concessionary finance for exports, which accounts for virtually the whole subsidy found to have been given, has been repealed, thus removing the source of the injury caused to the EU industry.

Regulation No 2016/1037 of 8 June 2016 on protection against subsidized imports from countries not members of the European Union, OJ L 176 of 30 June October 2016, 1-33, which repeals and replaces Regulation No 597/2009 of 11 June 2009, itself having superseded Council Regulation No 3284/94 of 22 December 1994 on protection against subsidized imports from countries not members of the European Community, OJ L 349 of 31 December 1994, 22.

The de minimis level of the weighted average margin of dumping is 2%: Regulation No 2016/1036, Article 9(3).

Commission Decision No 85/233 of 16 April 1985, imports of soya meal (Brazil), LawLex201100000562JBJ: the risk of having a subsidy which has been removed in the course of an investigation subsequently reintroduced is not the same as the subsequent reappearance of dumping which had been stopped during an investigation where the subsidy is granted, not by an exporter, but by a government.

European Business Law

488. Specific features of the anti-subsidy regulation

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488. Specific features of the anti-subsidy regulation

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Les notions juridiques connexes

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