Commission denies charges that it is too quick to wield EU anti-dumping weapons

Date: 23/11/00

By Simon Coss

CRITICISMS that the EU is too quick to launch anti-dumping investigations into allegedly under-priced imports appear to have done nothing to dampen the Union's enthusiasm for the practice.

According to the European Commission's latest report on the subject, published in July this year, the number of anti-dumping cases opened by the Union almost tripled last year. The study reveals that the Commission began 86 new anti-dumping investigations into allegedly under-priced imports - mainly of primary products like steel and cotton - from countries as far apart as Poland and China in 1999, compared with just 29 new cases the previous year.

The unprecedented rise in anti-dumping investigations meant that by the end of last year, the Commission had a total of 130 ongoing cases on its books. Critics say this shows that the trade directorate-general's claims that it is trying to moderate the use of anti-dumping measures amount to little more than hot air.

But the Commission insists it is not being overzealous and argues that last year's exceptionally high anti-dumping figures were just that - an exception.

It says 1999 saw a global upswing in anti-dumping cases which was directly linked to the Asian economic crisis of 1997. The crash sent domestic demand plummeting, leading governments in the region to pin their hopes for a swift economic recovery on a concerted export drive. This, says the Commission, led to the increase in anti-dumping complaints not only by the EU but also by the US and Japan.

"It is alleged that governments in South East Asia subsidised the maintenance of steel-making facilities, even in conditions of over-capacity," the institution said in its recent report. "This allegation is lent credibility by the sudden growth in new anti-subsidy investigations."

The Commission stresses that the Asian financial crisis was a one-off eventwhich is unlikely to be repeated in the near future. It insists that with the benefit of hindsight, last year's huge increase in anti-dumping cases will be seen as a blip rather than the beginning of a new trend.

"Between 1995 and 1999, the number of new initiations has been rather stable, and even decreased between 1997 and 1998," stated the report. "EU policy remains unchanged and does not promote broader use of anti-dumping and anti-subsidy regulations.".

The Commission insists anti-dumping rules are needed to protect Union firms from unfair trading practices by global competitors. Under the EU's anti-dumping laws, which are in line with World Trade Organisation rules, a European company can ask the Commission to open an investigation if it believes that a non-Union competitor is selling a product at an unrealistically low price. This usually means the product in question is either being sold for less than it would have been at home or that its price is lower than its production cost. Dumping can also occur if the export has been unfairly subsidised by the manufacturer's home state.

But many companies in developing countries complain that the Commission is too quick to open anti-dumping investigations and claim the institution abuses the EU's own rules. Once a case is opened, for example, the firm under investigation has to pay provisional tariffs on its exports until the probe has been completed.

This means that even if it is ultimately 'acquitted', the company concerned will still have lost a considerable amount of money.

Exporters from poor countries also complain that they often cannot meet the huge legal costs of anti-dumping investigations. The Confederation of Indian Industry (CII), which wants international anti-dumping rules changed, recently highlighted a US case against Japan in which the legal bills ran to well over 1 million euro a day.

At the end of last month, the WTO delivered good news to the CII, when it ruled that EU anti-dumping duties on imports of Indian bed linen violated fair trade rules. If that judgement is upheld, it could have a knock-on effect on other Union anti-dumping cases.

Article forms part of a survey on trade.