Industry News

The process by which anti-dumping duties are applied is arguably not the most transparent but when it comes to determining whether to remove them the European Commission appears to be operating behind hermetically sealed doors.

Clearly the final set of rulings from the WTO Appellate Body on Dispute DS397, published in January, were even more critical of the EU process of calculating anti-dumping duty levels based on an analogue country than previous rulings from the Dispute Settlement Body.

Having reached this final stage in a seven-year dispute with China over the legitimacy of Regulation 91/2009, WTO rules require the EU to bring its measures into compliance or face retaliatory measures from China, likely to hit far more sensitive imports than fasteners.

Media statements from Chinese officials, not surprisingly, say they expect the EU to remove the anti-dumping duties, which were extended by five years following an Expiry Review last year (Regulation 519/2015). The latest statements, though, suggest China has not yet received confirmation the EU will do this. The next meeting of the WTO Dispute Settlement Body takes place this Friday (26th February), at which China is expected to demand the right to apply tough retaliatory measures unless the EU has taken action.

The Commission has not made any information publicly available and does not appear to have initiated consultations with the key stakeholders in this issue. However, EU rules require that it obtain approval for the repeal of trade defence measures from the member states via the Trade Defence Instruments Committee. It is understood the Commission made a proposal for immediate repeal to a meeting of the committee on 17th February but the final decision was postponed until this week. A simple majority of member states is required to approve a Commission’s proposal. Rejection requires a qualified majority, which means sixteen member states representing 65% of the EU population must vote against.

European fastener manufacturers are understandably deeply concerned about these developments - as are many importers holding substantial inventory likely to be devalued by the abrupt re-entry of China to the EU market. The European Industrial Fasteners Institute, representing fastener makers, has urged members to energetically lobby against repeal of the anti-dumping duties on the basis this would be extremely damaging to their businesses.

The odds, however, appear stacked in favour of repeal with member states facing the dilemma that protecting their fastener manufacturing industry would almost certainly bring down Chinese retaliatory measures on other, potentially more sensitive, industries.

Repeal of the measures would make it highly probable the EIFI lodges new anti-dumping, and possibly anti-subsidy, complaints against imports from China based on the threat of dumping and material injury recurring. Conventionally there is a delay between termination of measures and the Commission agreeing to new investigations but in this case it could well be sympathetic to manufacturers’ concerns and act much more quickly.

That scenario means a repeal would not represent an unqualified ‘green light’ for importers to recommence trade with Chinese factories. While provisional duties, albeit almost certainly at a lower level, might not be determined for the normal nine months, the danger to importers could well be exacerbated if the Commission determines the risk of injury as so great to warrant making provisions to back date the duties.

Fastener + Fixing Magazine today asked the EU Trade Commission to explain what was happening. Its response in full was: “The Commission has carefully analysed the Appellate Body’s findings from January and is now considering possible further steps to take.”

Keep your eye on www.fastenerandfixing.com for the latest information and the March issue of Fastener + Fixing Magazine for in depth coverage.