EU General Court Weighs in on Anti-Dumping Duties

December 14, 2015

In its judgment of 26 November 2015 (Case T-425/13), the General Court of the European Union set out limits to the refusal to grant individual anti-dumping duties on the basis of non-cooperation. It further affirmed that the European Institutions could not rely on hypothetical risks with regard to the existence of circumvention and application of a countrywide anti-dumping duty.

Back in 1993, the Council of the European Union (hereafter “the Council”) had imposed anti-dumping duties on imports of bicycles originating in China. These duties had been increased to 48.5% after an interim review in 2005 and maintained to that amount following a new expiry review in 2011. Following the latter, the Commission indicated that with regard to dumping and injury, the circumstances on the basis of which the existing measures were imposed could have changed. Moreover, that change could be of a lasting nature. Consequently, the Commission initiated, ex officio, an interim review.

The applicant, a Chinese company (Giant) which is part of a group of companies (Giant Group) ultimately held by a Taiwanese company, submitted Market Economy Treatment (MET) forms. It nevertheless did not include Jinshan, a company partly held by the Chinese government and which entered a joint-venture agreement with the Giant group – which the applicant is part of.

The applicant thereby declared that he and Jinshan were not forming a single entity, while the Commission and the Council considered that the applicant had actually refused to cooperate under Article 18 of the Basic Regulation. The Council stated, in the contested regulation, that the applicant refused to provide necessary information about the structure of the group, and essential information with regard to production, export sales volume and prices of the product concerned. To that extent, the Council had applied Article 18(1) of the Basic Regulation in order to determine the export price, and therefore imposed a countrywide anti-dumping duty instead of an individual anti-dumping margin.

In its examination of the applicant’s arguments, the Court focused on two main points: (1), whether the Council actually had the information necessary for determining an individual anti-dumping margin and (2), whether a risk of circumvention, due to the fact Jinshan is partly owned by the Chinese State, can be considered by the Council as a relevant factor in refusing to grant the applicant individual treatment.

With regard to the first main concern, the Court noted that the applicant had provided complete responses for anti-dumping questionnaires within the time limits as well as detailed transaction-by-transaction information concerning their sales and purchases, listing their supplies and customers. On such basis, the Court estimated that the Council could consequently verify the existence of any other transactions between the companies acting under applicant’s control, and the other companies in which Jinshan had invested. Moreover, the Council was unable to specify to what extent additional information concerning the Jinshan group would have proved necessary for the calculation of the applicant’s export price. Thus, the Court declared that the request of the Council was based on too vague allegations and that the Council was wrong in applying Article 18(1) of the basic regulation since it had the information necessary to calculate a reliable export price and therefore, to establish an individual dumping margin and an individual anti-dumping duty.

The second concern was based on the risk of circumvention, which the Council considered being “intrinsic” to the concept of “related companies”. However, the Court made it clear that no provision of the Basic Regulation provides that the existence of a risk of circumvention may justify the refusal to grant an individual anti-dumping duty to an exporting producer. The Court considered that the Council could not rely only on a hypothetical risk to refuse the grand of an individual duty. Moreover, the fact that certain exporters may be able to circumvent higher duties by means of channeling exports through exporters subject to lower duty rates, thereby rendering the individual anti-dumping duties ineffective, cannot in itself justify the application of the countrywide duty rate to related exporters.

In any case, the Court considered that the Council had enough information to conclude there was no risk of circumvention between the applicant and Jinshan. Moreover, the fact that the applicant was related to a bicycle manufacturer in China back in the years could not be deemed to be relevant, as it had been indicated that the latter manufacturer had ceased its production since 2011 it was unlikely that its activity would resume in the future.

Again, the Council could not rely on a simple risk of circumvention to justify the refusal to apply an individual anti-dumping duty to the applicant. The contested regulation is annulled by the Court.

This alert was co-authored by Samantha Zakka and originally appeared on the blog of GreenLane, the Association of European Customs and Trade Law Firms.