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

The three methods of calculation of the normal value set out in Article 2 of the regulation apply in the order they are mentioned. It is only when none of those methods may be applied that use is made of the general provision set forth in Article 2(6)(c), according to which costs and profits are to be determined on “any other reasonable method” . The two methods which depart from the method based  …

Order of application

The three methods of calculation of the normal value set out in Article 2 of the regulation apply in the order they are mentioned. It is only when none of those methods may be applied that use is made of the general provision set forth in Article 2(6)(c), according to which costs and profits are to be determined on “any other reasonable method” . The two methods which depart from the method based on actual prices, are exhaustive and both relate to the characteristics of the sales effected rather than to the price of the product .

The normal value must be determined having regard primarily on the price actually paid or payable in the ordinary course of trade , the Commission enjoying a margin of discretion regarding the order of application of the two other subsidiary methods of calculation . The first method is used where the domestic prices are regarded as representative, which is in principle the case where the volume of sales in the ordinary course of trade on the domestic market is at least 5% of the volume of sales of the product concerned in the Union . Where the domestic prices are not representative, the Commission is free to determine the normal value based on the price of product when exported to a third country or using the method of constructed value . The criterion relating to market size is not in principle a factor capable of being taken into consideration in the choice of a reference country, provided that that market is representative in relation to exports .

Thus, the basic method consists in calculating the normal value based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country (Art. 2(1)) or on the basis of prices of other sellers or producers, where the exporter does not produce or does not sell the like product in the exporting country. According to the General Court, the circumstances in which the ‘cost structure’ or ‘sales prices’ of the applicant and an exporting producer related to the applicant were significantly different are not covered by the derogations from the method of establishing the normal value on the basis of actual prices . 

A second method (the so-called constructed value) consists in calculating the normal value on the basis of the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits. It constitutes the most used alternative method.

A third method takes account of the export prices, in the ordinary course of trade, to an appropriate third country, provided that those prices are representative. This method is rarely used by the Commission since it is particularly difficult to define the concept of appropriate third country. To base itself on export prices on markets other than European markets, it must be able to demonstrate that these prices are not dumped and some international currency fluctuations would make it even more difficult to choose an export market in an appropriate third country . The condition of representative prices further implies that the sales on export markets are sufficient in volume and that the products concerned are fully and directly comparable to the products exported to the Union . 

Lastly, where there is no representative sales volume on the domestic market, the normal value may also be determined on the basis of a combined use of the domestic prices of the country of origin and the export prices to a third country, both countries constituting one large competitive market having the characteristics of a single market .

Case 277/85 Canon v Council [1988] ECR 5731, LawLex200900002332JBJ, considering that the Commission enjoys a margin of discretion regarding the order of application of the two other subsidiary methods of calculation; C-76/98 P Hamptaux v Commission [1999] ECR-SC I-A-59, II-303, LawLex200900001174JBJ, stating that the normal value must be established having regard primarily to the price actually paid or payable in the ordinary course of trade.

Case C-76/98 P Hamptaux v Commission [1999] ECR-SC I-A-59, II-303, LawLex200900001174JBJ.

Case T-164/94 Ferchimex v Council [1995] ECR II-2681, LawLex200900001275JBJ.

Case 277/85 Canon v Council [1988] ECR 5731, LawLex200900002332JBJ.

Commission Regulation (EC) No 3643/84 of 20 December 1984, imports of electronic typewriters (Japan), LawLex200900002659JBJ.

Case T-675/15 Shanxi Taigang Stainless Steel Co. Ltd., Judgment of 23 April 2018, LawLex201800000627JBJ: the Commission had not erred in choosing the United States as a more appropriate analogue country than Taïwan due to the level of competition and the size of the market since there were at least four large producers of a like product in the United States whereas in Taïwan, the market and prices of the products concerned are driven, to a large extent, by one group of companies are not due to a normal competitive interaction.

Case T-383/17 Hansol Paper Co. Ltd, Judgment of 2 April 2020, LawLex202000001666JBJ.

Council Regulation (EU) No 341/90 of 5February 1990, imports of ferro-silicon (Iceland, Norway, Sweden, Venezuela, Yugoslavia), LawLex200900002386JBJ.

Commission Regulation (EC) No 2376/94 of 27 September 1994, imports of color television receivers (Malaysia, China, Korea, Singapore and Thailand), LawLex200900002743JBJ.

European Business Law

400. Order of application

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

400. Order of application

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise