Anti-dumping duties: not always a foregone conclusion!

In certain cases, Customs imposes anti-dumping duties. These duties are designed to counteract the practice of selling products on the European market at a (too) low price. Such anti-dumping duties are established at the request of the European market, and a comprehensive procedure must be followed before the duty can be imposed. In recent years, the Court of Justice has ruled on several occasions that regulations imposing anti-dumping duties were invalid. This means that the anti-dumping duty was – retrospectively – not owed. In such cases, you must make sure to file a timely objection or request a refund.

Why anti-dumping duties?

It is not unusual to see significant price differences between various countries, producers, and exporters in global trade. A large price difference alone is not a direct reason to impose an anti-dumping duty. This is only necessary if products are being dumped.

Typically, dumping occurs when an exporter wants to capture a new market. This is permissible and not prohibited. However, if dumping causes harm to the EU industry, the European Council may impose anti-dumping measures in the form of an anti-dumping dutyitional duty, known as an anti-dumping duty.

How is the duty established?

The initiative for the anti-dumping duty usually comes from those who are harmed by the dumping. Complaints about dumping are typically submitted by a European industry or interest group, at the European Commission. The Commission then investigates whether the complaints are justified. Four criteria are assessed:

  •          Is there actual dumping?
  •          Is there evidence of losses?

  •          Is there a causal link between the losses and the dumping?

  •          Are potential anti-dumping measures in the interest of the European Community?

The last criterion is particularly challenging. The European Commission must evaluate the impact not only on the "complainants" (usually European producers) but also on importers and users. It is a balancing act: weighing the interests of consumers, importers, and retailers against those of producers.

Because the entire procedure can take up to 15 months (which is also the maximum period), the European Commission can decide to impose a provisional anti-dumping duty in the meantime. This is set for up to six months but can be extended. The final anti-dumping duty is decided by the Council of European Ministers and typically has a duration of five years.

Avoidance and anti-dumping dutyitional measures

Once the anti-dumping duty is imposed, various trade parties will naturally anticipate it. In many cases, trade from the country subject to the anti-dumping duty may halt. Trade might also shift to other – often neighbouring – countries, leading to continued dumping from these new countries. If it is demonstrated that this shifting constitutes a circumvention of the anti-dumping duty, the anti-dumping duty can be extended to cover trade from these "circumvention countries."

For this extension, a formal investigation must be conducted, and the parties suspected of circumvention must be asked for anti-dumping dutyitional information. There have been cases of circumvention for various products in the past, such as the importation of solar panels or fasteners.

For example, initially, the anti-dumping duty applied only to imports from China. However, the Commission soon believed that dumping was occurring from other countries as well. Therefore, an anti-dumping dutyitional anti-dumping duty was applied to imports from several surrounding countries.

Invalidation of the regulation

As described, there are various conditions for imposing an anti-dumping duty. These conditions are, of course, more detailed. If the anti-dumping duty is circumvented, there are also various conditions for its extension.

The Court of Justice has ruled in several cases that an anti-dumping duty regulation was invalid.

For instance, on December 17, 2015, the Court of Justice (Apex GmbH Internationale Spedition, C-371/14) ruled on the anti-dumping duty imposed on non-refillable gas lighters with flint. Initially, this anti-dumping duty applied to imports from China, but later it was investigated whether the anti-dumping duty should also be extended to goods shipped from Vietnam due to circumvention. The European Commission found, based on statistical data (note the years), that imports from China had significantly declined since 1991 – when the anti-dumping duty was first imposed – and had remained low. Additionally, the Commission found that imports from Vietnam had rapidly increased since 2007 and that imports from China to Vietnam had increased since 1999.

The Court of Justice deemed the data insufficient to prove circumvention and therefore declared the regulation extending the anti-dumping duty to imports from Vietnam invalid.

This was not the only interesting judgement. On February 4, 2016, the Court of Justice (C & J Clark International Ltd. and Puma SE, C-659/13 and C-34/14) ruled on regulations imposing a definitive anti-dumping duty on footwear originating from China and Vietnam. This regulation was also partially declared invalid.

Another interesting case is the Eurobolt case (C-644/17). This ruling, on July 3, 2019, followed preliminary questions from the Supreme Court of the Netherlands. The question was whether an implementing regulation that extended the existing anti-dumping duty on certain fasteners from China to certain types sent from Malaysia was valid. The Court of Justice ruled that this regulation was invalid as it was in conflict with the basic anti-dumping regulation (Regulation (EC) No 1225/2009).

The previous three examples show that an anti-dumping duty imposed is not always justified.

Previous articles

We have previously written several articles about anti-dumping duties, including the fact that an anti-dumping duty can be imposed retroactively. In these articles we also discussed the risks related to the verification and anti-dumping duty, noting that customs brokers face significant risks when a declaration may be subject to an anti-dumping duty while verification is pending. Given that Customs sometimes holds up verification for more than a year, this requires extra attention. You can find the publication HERE.

Conclusion

For an importer or customs broker, an anti-dumping duty can have significant consequences. An anti-dumping duty can also be extended to other countries if it is found that the anti-dumping duty is being circumvented.

However, in many cases, the imposition of an anti-dumping duty may not be justified. As shown by the case law, there are situations where errors were made during the investigation and imposition of the anti-dumping duty or where conclusions were drawn too quickly. It may, therefore, be worthwhile to critically review the regulation imposing or extending the anti-dumping duty to determine whether all conditions have been met. If not, the regulation should be declared invalid, and the anti-dumping duty would not be owed. 

Although the utmost care has been taken in the preparation of this publication, Customs Knowledge accepts no liability for any errors or omissions, nor for the consequences thereof. This article is not intended as specific advice. Please also refer to the General Terms and Conditions of Customs Knowledge BV.