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 put an end to the “screwdriver plants” practices, Article 13(2) of the anti-dumping regulation settles circumvention by assembly operations in the Union or a third country. In order to circumvent the anti-dumping measures, the product concerned is sometimes exported in the form of spare parts for assembly, in the Union or a third country, for purposes of resale of the product concerned …

Circumvention by assembly operation

In order to put an end to the “screwdriver plants” practices, Article 13(2) of the anti-dumping regulation settles circumvention by assembly operations in the Union or a third country. In order to circumvent the anti-dumping measures, the product concerned is sometimes exported in the form of spare parts for assembly, in the Union or a third country, for purposes of resale of the product concerned in the Union. Several cumulative conditions must be met for the assembly operation being described as an unfair circumvention:

- The operation started or substantially increased since, or just prior to, the initiation of the investigation (Art. 13(2)(a)). The Commission retained circumvention whereas the operation started more than three years before the initiation of the investigation .

- The parts must be from the country subject to measures (Art. 13(2)(a)). Depending on the different language versions of the anti-dumping regulation, the definition of circumvention implies either that the parts concerned originate in the countries subject to measures, or that they come from that country. According to the General Court , although it is sufficient to simply refer to where the parts used for assembling the final product are “from”, it may be necessary in case of doubt, to verify whether the parts “from” a third country in actual fact originate in another country .  The Court of Justice does not share that view: it held on the contrary that while it is for the EU institutions to demonstrate that parts used in assembly operations are from the country subject to anti-dumping measures, they are not required to demonstrate that those parts also originate in that country, within the meaning of customs law . The trader contesting the unfair character of the circumvention must provide the Union institutions with proof that those parts originated in another country. 

- Parts which are from the country subject to anti-dumping duties must constitute 60% or more of the total value of the parts of the assembled product and the value added to the parts brought in, during the assembly or completion operation, must be equal to or less than 25% of the manufacturing cost (Art. 13(2)(b)). When calculating the value of the imported parts taken into consideration for the “60% of the value of the parts” test, all elements manufactured, assembled or developed by the exporting producer in order to be incorporated into the finished product are considered as an individual part where its manufacture, assembly or development cannot be reversed to any extent without significantly diminishing the value of that element . The value added to the parts brought in, during the assembly or completion operation, corresponds to the sum of labor and depreciation costs and other manufacturing overheads incurred by the assembler in respect of those parts, to the exclusion of selling, general and administrative expenses, as well as the amounts of State grants related to the manufacturing costs of the assembled product . Labor costs and factory overheads relating to packing are particularly excluded from the calculation of that value added .

- The practice in dispute undermines the remedial effects of the duty in terms of the prices and/or quantities and evidence of dumping in relation to the normal values previously established for the like or similar products must be brought (Art. 13(2)(c)) .

Commission Regulation (EC) No 984/97 of 30 May 1997, imports of certain electronic weighing scales (Japan, Singapore), LawLex200900002795JBJ.

Case T-80/97 Starway v Council [2000] ECR II-3099, LawLex200900001387JBJ.

Case T-435/15 Kolachi Raj Industrial (Private) Ltd, Judgment of 10 October 2017, : Although the "Form A" certificates of origin have evidentiary value in relation to the origin of the goods to which they relate, that is not absolute, such a certificate, completed by a third country, cannot bind the Union authorities with regard to the origin of those goods by preventing them from verifying the origin by other means where there is objective, sound and consistent evidence creating a doubt as to the true origin of the goods covered by those certificates.

Case C-709/17 P Commission v Kolachi Raj Industrial (Private) Ltd, European Bicycle Manufacturers Association (EBMA), Judgment of 12 September 2019, LawLex201900001044JBJ: Article 13(2)(a) of the basic regulation must be interpreted broadly to the effect that parts "are from the country subject to measures" not only in cases involving direct importation, but also in cases where it can be demonstrated, on the basis of an analysis of all the relevant circumstances of the case, that parts initially manufactured in the country subject to anti-dumping measures were imported into the country of assembly from an intermediate third country through which they were transshipped or in which a small amount of work was done on them, and therefore by limiting the concept of 'from', within the meaning of that provision, solely to cases in which the parts in question are directly imported and by imposing on the EU institutions the burden, in circumstances such as those of the present case, of demonstrating the origin of the parts in question, the General Court erred in law. 

Commission Regulation (EC) No 985/97 of 30 May 1997, imports of certain retail electronic weighing scales (Japan, Indonesia), LawLex200900002797JBJ.

Commission Regulation (EC) No 799/2000 of 17 April 2000, imports of certain magnetic disks (China, Taiwan), LawLex200900002881JBJ.

See for a textbook case regarding circumvention by way of assembly: Council Regulation (EU) No 71/97 of 10 January 1997, imports of bicycles and certain bicycle parts (China), LawLex200900002414JBJ: in order to avoid that imported parts be subject to the anti-dumping duty, suppliers applied a rather costly and complex practice consisting in spreading parts destined for the same assembler across different containers, sent on different dates and sometimes unloaded at different ports. This practice enabled classification of the imported parts in the common customs tariff, which is different from the finished product, and therefore outside the scope of application of the anti-dumping regulation. But, one of the companies liable to circumvention changed its sourcing pattern towards the end of the investigation period, and started to assemble the bicycles by using more than 40% of non-Chinese parts, which it purchased either directly from manufacturers located in these countries of origin or from subsidiaries of these manufacturers located in the Union. The Council took an extension regulation in order to extend the anti-dumping duty in force to certain bicycles parts originating in or consigned from China with the exception of those parts of proven non-Chinese origin.

European Business Law

481. Circumvention by assembly operation

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

481. Circumvention by assembly operation

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise