European Commission Directorate-General for Trade

Start here

Types of trade defence instruments

Anti-dumping

Dumping occurs when manufacturers from a non-EU country sell goods in the EU below the sales prices in their domestic market or below the cost of production.

If the Commission can establish – through an investigation – that this is happening, it may correct any damage to EU companies by imposing anti-dumping measures.

Typically these are duties on imports of the product from the country in question. The duties can be fixed, variable or a percentage of the total value (ad-valorem).

They can last up to 6 months (provisional measures) and, if the EU Council decides to make them definitive, 5 years.

Anti-subsidy

Subsidisation is when a non-EU government provides financial assistance to  companies to produce or export goods.

The Commission is allowed to counteract any trade-distorting effects of these subsidies on the EU market – after an investigation into whether the subsidy is unfair and injuring EU companies.

The countermeasures are duties on imports of the subsidised products (fixed, variable or ad-valorem).

They can last up to 4 months (provisional measures) and, if the EU Council decides to make them definitive, 5 years.

Safeguards

Unlike subsidies and dumping, safeguards are not taken to address unfair trade practices. Rather they are concerned with imports of a certain product that increase so suddenly and sharply that EU producers can’t reasonably be expected to adapt immediately to the changed trade situation.

In such cases, WTO and EU rules allow for short-term measures to regulate the imports, giving EU companies temporary relief and time to adapt to this unforeseeable surge.

Such measures usually apply to imports of the product from all non-EU countries. In return, the affected EU industry is required to restructure.

Provisional safeguard measures may last up to 200 days and definitive measures up to 4 years. Where they exceed 3 years, they must be reviewed at mid-term and can be extended for up to 8 years in total.

What is the role of the Commission?

Commission role in trade defence:

• examines evidence provided by complainants and decides whether to launch investigations or review existing measures
• conducts investigations
• decides on certain action (after consulting an advisory committee of EU governments) - imposing provisional measures and accepting or rejecting undertakings/refunds made by offending parties or termination without measures
• proposes action to the EU Council – whether to impose or cease definitive trade defence measures (such action is decided by the Council, by simple majority).

Hearing officer

The Commission has a trade hearing officer to ensure that the rights of interested parties are protected in trade defence investigations – in particular that:

• due consideration is given to all relevant facts and arguments
• confidential treatment of business secrets is respected
• access to the investigation file is granted

Who decides, Commission or Council?

• Dumping and subsidy cases - the Commission may adopt provisional measures within 9 months of starting the investigation.
• The Council may subsequently decide to impose definitive measures, on the basis of proposals from the Commission.
• Safeguard cases - all measures are decided on by the Commission – though if its decision is referred to the Council by an EU government, it must then obtain the support of a qualified majority of member governments.

How measures can be reviewed

• Interested parties to an investigation may ask for an interim review of measures if circumstances have changed. This can result in measures being amended, repealed or continued.
• Before the end of the 5-year period, EU producers may request an expiry review, which may result in measures being extended or repealed.
• Importers may request a refund if they believe their exporting producer is not dumping/subsidised or its dumping/subsidy margin is less than the duties paid by the importers.
• The EU rules also contain clauses to prevent measures being circumvented or absorbed by exporters. The Commission regularly monitors the effectiveness of the measures in force.
• Trade defence measures may be also reviewed by the European Court of Justice and the WTO Dispute Settlement Body.

Trade defence measures by other countries against EU exporters

The Commission advises companies on possible lines of defence and often participates in proceedings and intervenes at technical and political level if a non-EU country is suspected of breaching its international trade obligations.

Other

Air transport and shipbuilding – special rules

For more detailed information, see Civil aviation and Shipbuilding respectively

Because these sectors have been the subject of unfair trade practices, the EU has specific rules to ensure fair trade in newly-built ships and counter unfair pricing practices and subsidies in air transport.

The shipbuilding rules are currently in abeyance, pending the USA's ratification of the OECD agreement on shipbuilding and ship repairing.

Contacting us

Trade helpdesk for small businesses answers trade-related questions for small and medium EU firms.

Supporting information

• Annual reports on third country trade defence actions against the Community (Document search)