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Press Release

Council agreement on Lesser Duty Rule in trade defence package needs rethink

Brussels, 13 December 2016 - After three years of being blocked, the Council has finally agreed on Trade Defence Instrument (TDI) modernisation. Unfortunately, the agreement the body has actually reached does not live up to its objective of strengthening the effectiveness of the EU’s trade defences against cases of blatant dumping.

“The adaptation of the Lesser Duty Rule (LDR) is one of the most important issues in making EU trade defence more effective in the face of massive dumping on the EU market. However, the compromise now found to deviate from the LDR in cases of raw material and energy distortions is, despite the huge efforts of the Slovak Presidency, a long way from what the recent European Council had asked foreign ministers to achieve on the TDI modernisation file”, said Axel Eggert, Director General of EUROFER.

Understanding the implications of dumping on the EU’s economy, environment and society, the Heads of State in the European Council of 20 October adopted the clear conclusion that:

“Unfair trade practices need to be tackled efficiently and robustly, [with] an agreement on the Council position [on TDI modernisation] by the end of 2016. Adequate provisions should address situations in which market conditions are not prevailing.”

“However, in the Council agreement the form of the LDR adaptation when there are raw material or energy distortions has become arbitrary, unpredictable and unworkable. It will be unable to address situations in which market conditions do not prevail[1]

“Moreover, the period of advanced notice for exporters and traders about the imposition of provisional measures has been stretched from 2 to 4 weeks, undermining the remedial effect of duties to be applied,”, said Mr Eggert.

More positively, EUROFER supports the improvement of the target profit methodology, despite this only producing marginal duty improvements. The lifting of the LDR in anti-subsidy cases is also a plus, but subsidy margins tend to be low so the effect of this change will be limited.

“We urge Heads of State and the European Parliament to insist on a workable solution for the LDR in anti-dumping proceedings. EUROFER has put forward proposals that would ensure that duties adequately address unfair trade and reflect the actual degree of dumping – not by removing the LDR, but instead through its readjustment. Our proposals accounted fully for some member states’ fears that duties would end up being too high. We still believe that our proposals could form the basis for common agreement between the EU institutions”, concluded Mr Eggert.

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Notes for Editors

This Press Release was updated on 13/12/2016 with corrections to the title and content.

Lesser Duty Rule adaptations – details

[1] Under the Council agreement, the principle behind LDR adaptation in cases where there are raw material or energy distortions has become arbitrary, unpredictable and unworkable.

  • It now requires a cumulative threshold of 27% of raw material total cost input into production, with 7% minimum per raw material.
  • There is the condition that the price of the distorted raw material must be significantly lower as market prices and,
  • most critically, there is an obligation to demonstrate, on a case by case-by-case basis that a LDR adaptation would be clearly in the interest of the Union (based on examination of factors such as spare capacity in the exporting county, competition for raw materials and the effect on supply chains for European companies).

Contact

Charles de Lusignan, Communications Manager, +32 2 738 79 35, (charles@eurofer.be)

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