EU Begins Modernisation Review of TDI

The European Commission announced that it would launch a review of how it supports European companies in the face of unfair competition from across the globe. The EU uses its so-called 'Trade Defence Instruments' to counter the dumping of under-priced products on its markets, re-establish a level playing field for its businesses in the face of unfair subsidies and ensure healthy competition through safeguards, in the event of sudden shifts in trade flows.

The last revision of these mechanisms was in 1995 and the European Commission believes there is now a need for an examination of their efficiency and effectiveness. This debate, which will call for input from all stakeholders including producers, importers, exporters, business organisations, EU capitals, the European Parliament as well as independent experts on trade defence, has been highlighted as an essential element of Commissioner De Gucht's five year-long mandate for Trade.

"Open trade based upon a global system of rules, fair competition and a level-playing field for all businesses are the very foundations of EU trade policy. Our trade defence system is vital to ensure that this is maintained in the face of unfair practices. But, we need to make sure our mechanism remains cutting-edge and effective in the face of challenges from an increasingly globalized economic environment. That's why I want to encourage everyone with an interest to be involved in this debate. I'm launching this review to examine in a transparent, balanced and constructive way how we should modernise our trade defence mechanism", stated EU Trade Commissioner Karel De Gucht.

Background

In line with WTO rules, the EU has three trade remedy instruments at its disposal to address unfair or suddenly rising imports due to unfair practices by non-EU countries: anti-dumping, anti-subsidy and safeguards, of which anti-dumping is the most frequently used. As an example, when an EU industry considers that imports of a product from a non-EU country are subsidised or sold at prices lower than the market value and therefore injuring the EU industry producing the same product, it can lodge a complaint with the European Commission, providing evidence of the unfair practice and economic difficulties caused. The European Commission is responsible for investigating these allegations of dumping or subsidisation. Its Trade Defence Instruments (TDI) are provided for in the framework of the World Trade Organisation (WTO). All WTO members have the right to initiate such investigations and to impose measures in accordance with well defined criteria.

The European Union is a moderate user of the instruments in relation to its trade volume and when compared to other trading partners. The EU had 124 anti-dumping (AD) measures and 11 anti-subsidy (AS) measures in force at the end of 2010. In comparison, the other big users of the instruments are the USA with 250 AD and 48 AS, India with 208 AD, Turkey with 121 AD and 1 AS, China with 118 AD and 2 AS and Argentina with 91 AD and 1 AS measure in force at the end of 2010. 15 new anti-dumping investigations and 3 anti-subsidy investigations were initiated in the EU in 2010, and 11 AD and 3 AS investigations are ongoing in 2011 to date. However, EU trade defence measures affected only around 0,5 % of imports into the EU in 2010.

In today's globalised economy, with a general tendency to remove obstacles to trade, these instruments are often the only means that companies have in order to restore fair trading conditions. Therefore, it is essential that the instruments are effective and able to defend the interest of all stakeholders involved, i.e. producers, importers and consumers, in the best possible way. Indeed, the EU is the only WTO member to systematically assess the interests of all parties likely to be concerned by the imposition of trade defence measures.