Trade Defence Mechanisms under Review (updated for 2009)

MAARSSEN, the Netherlands - European Commissioner Peter Mandelson and his DG External Trade’s team had been charged to boost Europe’s competitiveness in the changing global economy. One of the actions they undertook for that purpose was the review of the European trade defence instruments, i.e. anti-dumping, anti-subsidy and safeguard measures. In the meantime, Chatherine Ashton has succeeded Peter Mandelson. The review has disappeared with him.

When these trade defence instruments were first developed in 1994, the starting point was that the world economy had to be ruled by the principle of free trade. However, that principle is still often violated, whilst there is no international organisation that has the authority to sanction those breaches. That is why the European Union has developed its own trade defence instruments.

They are meant to protect European producers against unfairly traded or subsidised imports and against dramatic changes in trade flows that may harm the European economy. But since 1994, the world has changed quite a bit, so much so that a review of the trade defence instruments seemed inevitable.

Green Paper

At the end of 2006, the European Commission has adopted a Green Paper aimed at launching a reflection on the EU trade defence mechanisms. The document did not question the essence of trade defence instruments. It rather called on all stakeholders, i.e. political authorities, producers, importers, exporters, consumers, academics and any other interested party to reflect on the best way for the EU to continue to apply the measures.

For that purpose, the relevant issues were grouped into 6 themes:

• the role of trade defence instruments in a changing global economy;
• the weighting of different EU interests in trade defence investigations;
• the launch and conduct of trade defence investigations;
• the form, timing and duration of trade defence measures;
• the transparency of trade defence investigations and;
• the institutional structure of trade defence investigations.

For each theme, the Commission raised a number of questions to which all stakeholders were invited to respond in the first trimester of 2007.  In the meantime, all comments were published on DG Trade’s website, unless a specific request for confidentiality was made.

Public Hearing

Furthermore, in March 2007, a public hearing took place. Well over 350 people attended that meeting. They represented a very wide range of stakeholders, not only producers, importers and exporters, but also retailers, consumers, law firms, universities, member states, third countries, etc. The bicycle business was very well represented with some 20 participants.

After more than 6 hours of debate, a number of issues clearly transpired. The stakeholders were divided in two distinct groups. On the one hand were those, mainly producers, who pleaded not to change anything to the current trade defence instruments.

Some of them had clearly overlooked the Commission’s statement that “the Green Paper does not question the fundamental value of trade defence instruments, but invites a public reflection on how the EU can continue to use them to best effect in the European interest.” Those stakeholders seemed to be under the impression that any change would result in further dismantling the European industry and more outsourcing to countries outside the European Union.

Balance of interests

A second group commented on the current legislation with a very wide variety of ideas, suggestions and proposals for a better and more effective application of the trade defence instruments. The key elements of these reactions were transparency in the investigations, more weight for the Community interest in weighing the balance of interests in anti-dumping cases and a stricter and more effective of application of the measures.

That very same division reigned in the bicycle business. COLIPED, ESMA, EBMA and ZIV, backed up by a large number of mainly Italian companies, called upon the Commission for a status quo. ETRA, ECF and Halfords were in favour of far-reaching changes.

Since the Green Paper and the public hearing, there has been no further news from the Commission on the review apart from one fact: the appointment of a hearing officer with a view to making the procedure more transparent. 

Ashton policy statement:

In her presentation to the European Parliament, October 2008, Commissioner Ashton did not reveal any details of her working programme. She did make the following statement on fair trade policy:

“It is our special responsibility in Europe that we make trade policy from a position of wealth and strength. For me fair trade means trade that helps build European prosperity without making other countries worse off - and which actively helps lift people out of poverty wherever it can. I believe that everybody has the right to trade their way out of poverty and that no part of our trade policy should prevent them doing that. Our trade policy should respect comparative advantage and fair competition. But it should never reward disregard for internationally accepted labour and social standards. I don't think economies grow behind long term trade barriers and there is no evidence that any economy has ever grown sustainably without some kind of engagement with trade. But I don’t think there is any single model for trade liberalisation that works everywhere and at all times. There are only tailored solutions to the specific needs and the potential strengths of different countries”.