The World Trade Organisation (WTO) Appellate Body has upheld the findings of a WTO panel which declared that the European Union's basic anti-dumping laws are partially incompatible with global trade rules.
Pursuant to the ruling, which was circulated on 15 July 2011, the European Union must amend its laws governing anti-dumping investigations and assure fairer treatment of imports coming from, among other countries, China. This should make it easier for exporters from so-called "non-market economies" (NMEs) to defend their interests during EU anti-dumping investigations.
In 2009 China opposed tariffs imposed by the European Union on steel fasteners and challenged the European Union's anti-dumping law before the WTO. In its report, which was published in December 2010, the WTO panel sided with China by declaring certain aspects of the EU rules concerning imports from countries deemed to have NMEs to be in violation of global trade rules.
The findings of the panel were appealed by both the European Union and China, but the Appellate Body endorsed most of the panel's views.
According to the Appellate Body, the EU's basic anti-dumping Regulation consistently led to the imposition of a blanket duty on Chinese exporters unless the latter proved that they complied with the so-called "individual treatment" criteria. As a result, the regulation violated the WTO Anti-dumping Agreement, which imposes no conditions with which exporters must comply in order to benefit from an individual dumping margin. On the contrary: the agreement stipulates that individual dumping margins should be awarded "as a rule". The Appellate Body considered that the Anti-Dumping Agreement provides for an obligation to determine individual margins of dumping, which is only subject to the exceptions provided for in the covered agreements. In this respect, the Appellate Body stated that there is no provision in the covered agreements that would allow importing WTO Members to depart from that obligation only in respect of imports from NMEs.
Furthermore, the Appellate Body reversed the finding of the panel that the EU's determination of the domestic industry was consistent with WTO law. The Appellate Body found that the EU violated WTO law in this determination. In this respect, the Appellate Body criticized the EU's application of a minimum benchmark of 25 per cent in defining what constituted a major proportion. The Appellate Body explicitly rejected the proposition that it is permissible that producers that represent 25 per cent or more of domestic production can legitimately represent a major proportion of total production. In addition, the Appellate Body pointed out that by limiting the domestic industry definition to those producers willing to be part of the sample, the EU excluded producers that provided relevant information and introduced a material risk of distorting the injury determination.
In addition, the appellate body confirmed that the panel correctly concluded that the EU failed to provide timely information concerning the product types used in the determination of the normal value. In addition, the Appellate Body ruled in favour of China by concluding that the EU did not comply with its obligations under WTO law by failing to indicate to the Chinese exporters what information was necessary to ensure a fair comparison between product types.
The EU will have to implement the findings within a reasonable period of time. The EU's obligations in this respect are twofold. First, it will have to amend the provision of its basic anti-dumping Regulation which provides for the individual treatment regime. This will have repercussions for anti-dumping investigations carried out after the date of the amendment. Second, it will have to implement the findings relating to the fasteners investigation.
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