Subsidies and Remedies
Goods are deemed dumped if they are imported into the UK at the price which is lower than the price of goods that are being sold in the exporter domestic market ( normal value). There are exceptions where the exporter does not sell to the domestic market or there are distortions in that market so the prices in the market cannot be seen to reflect prices in the ordinary course of trade.
The WTO’s subsidy and countervailing measures agreements set out requirements to be met to impose anti-subsidy duties. The goods must have benefitted from a financial contribution from a foreign authority which is targeted at a particular company or group of companies or region. It may be granted either directly or indirectly for the manufacture, production, export and transport of the goods.
The subsidization is counter valuable if the goods caused or threatened to cause material injury to UK producers. Measures imposed to address subsidized goods must not exceed the amount of benefit which the exporter gained from the subsidy.
The Trade Remedies Authority must establish whether the goods have caused or threatened to cause material damage to UK producers, which produce comparable or like goods. They must have caused material injury, threatened to do so or have impeded the establishment of a relevant industry.
The Trade Remedies Authority carries out an dumping and subsidy investigation to establish the above particulars. The procedures for the investigation are set out in the legislation. The Trade Remedies Authority must have received a request by or on behalf of UK industry. It must be satisfied that the application demonstrates sufficient evidence of injury to UK industry by the dumped or subsidized imports.
Applications are subject to a UK market share threshold intended to screen out cases which are manifestly unlikely to result in measures being imposed. They will set out a market share threshold which may be higher than the WTO threshold. Where the complainant does not need to market share threshold, the Trade Remedies Authority may waive the requirement and has the discretion to decide to take to the case forward or not.
There is provision for the Trade Remedies Authority making a provisional and final termination. Interested parties must be given the opportunity to provide information. The Authority may at any stage make a provisional affirmative determination if it is satisfied that the interested parties have been given an adequate opportunity for input and they are satisfied that dumping that taken place. It may recommend imposing provisional measures to prevent injury being caused to UK industry during the course of the investigation process.
Determination and Recommendation
At the conclusion of the investigation, the Authority makes a final determination. If it is satisfied after investigation that dumping or subsidization causing injury to the UK industry has occurred and is satisfied that imposing measures is in the wider economic interest, it must recommend imposing defensive duties on the imports in question. The rate of duty must not exceed the margin of dumping or the amount of the subsidy.
The rate of duty recommended may differ according to different exporters or countries, to reflect that one exporter or country may be dumping or subsidizing to a greater degree or lesser degree than another. The remedies must be prospective.
After the Authority recommendation issues, the Secretary of State must decide whether or not to accept a recommendation. He may reject it on public interest grounds or on the grounds that the recommendation does not satisfy the economic interest test. A statement explaining the reasons for rejecting a recommendation must be led before the House of Commons.
Criteria for Recommendation
The Trade Remedies Authority must apply an economic interest test in considering whether measures are in the economic interests of the UK. If the test is not met the case will be dismissed or reviewed, etc., as appropriate. The criteria are the same as set out above.
The Authority must apply the economic test in determining whether to recommend provisional or definitive antidumping subsidy safeguarding measures and whether or not to recommend definitive duties be continued or varied following review. If the test is not met, the case will be dismissed or the secretary of state will be informed of the decision.
It is presumed that antidumping and antisubsidy measures are in the UK’s economic interest and the onus is on the authority to establish but this is not the case. The Authority must take account of
- the economic significance of the affected industries and consumers in the UK with reference to who is affected, their size and significance to the economy,
- the likely impact on affected industries and affected consumers
- the likely impact on geographical areas or particular groups in the United Kingdom
- whether measures or their absence would impact certain groups or geographical regions disproportionately
- the likely consequences for the competitive environment or the structure of markets and goods in the UK.
WTO agreement on safeguards set out requirements that must be met for WTO members to impose safeguard measures. There must be an increase in imports of relevant goods which have caused or threatened to cause serious injury to UK producers of like or directly competitive goods.
Goods are deemed considered to be imported in increased in quantities if there is an absolute increase in the actual volume of imports and relative increase in the market share as compared to production by UK producers. The remedy which may be imposed to address increased imports must not exceed the level of injury caused to UK producers. Serious injury is assessed in relation to UK producers of like or directly competitive goods.
The Authority may make a provisional affirmative determination on the basis of evidence that there has been a significant increase in imports which has caused serious injury to UK producers. At the conclusion of the safeguarding investigation, it may make a final determination. The secretary of state may either accept or reject recommendations to impose provisional measures. He may do so if the delay required for completing the investigation would be caused damage which is difficult to repair.
If at the conclusion of the investigation, the Authority concludes that there is a significant increase in imports and is causing serious injury to UK producers and is satisfied that imposing measures is in the wider interest of the UK and the producers have suitable adjustment plans, then it may recommend imposing definitive measures.
This must be in the form of a tariff duty or a tariff related quota. It must not exceed the amount which the Authority has satisfied is sufficient to remedy the serious injury being caused and facilitate adjustment by UK producers. In the case of certain proposed remedies, it must first consult with the Secretary of State. The recommendation has also included suggested timetable for progressive liberalization of the measure and n explanation of the UK producers adjustment plans
The Trade Remedies Authority must have received a preliminary adjustment plan setting out how UK producers intend to adjust to market conditions through the duration of the safeguarding measures. This is designed to ensure that they have a plan to improve their competitiveness alongside any measures that may be imposed.
Following a recommendation, the Authority may propose definitive measures. The Secretary of State decides whether to impose, accept or reject the recommendations. He or she may reject the recommendation on public interest grounds but must lay them before the House of Commons with the reason to do so.
Regulations may make provision, as to how imports from specific countries are exempted from the above. This may be necessary to give effect to free trade agreements in order to replicate provisions for countries that are trading partners under those agreements. There is also provision for exemption by regulations for exempting measures on imports from developing countries where those countries share relevant imports is within de minimum lower levels.
No new safeguarding measure can be applied again to a product that has been subject to a definitive safeguarding measure for a period that is equal to the duration of the earlier defensive measure, provided that the period of loan application is at least two years,
Review or Variation of Trade Remedies
The secretary of state must provide in secondary legislation an appeal mechanism for decisions made by the Trade Remedies Authority decisions made by the secretary of state
There are provisions for review of the safeguarding measures. There are provisions whereby they must or may be reviewed to consider why they are still necessary to address the injury to UK producers
The WTO agreement sets on instances where trade remedies must or may be reviewed. The intention is that this review should include an assessment of whether the intended effect of the measures is being undermined by circumvention activity.
Where a decision in an international dispute determines that the UK trade measures are incompatible with international law, the UK must bring measures into compliance. There is a procedure for a revocation or variation of measure to bring them into compliance with international law.
Regulations may provide for the reconsideration and appeal mechanisms of decisions made by the Trade Remedies Authority by the Secretary of State. There is to be an internal reconsideration before an appeal so that administrative errors may be rectified.
In cases where the Authority recommends measures, the exporters or relevant parties may give an undertaking in lieu of measures. If they choose to do so, this may involve revision of prices or a commitment to limit the injurious subsidy or otherwise mitigate the effects. If the Trade Remedies Authority is satisfied that the undertaking is sufficient to address the injury to UK producers is appropriate it may recommend acceptance.
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