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The World Trade Organisation (WTO) agreement contains 3 principal trade defence instruments. These are the anti-dumping, anti-subsidy and safeguard instruments.
Anti-dumping is designed to allow countries to take action against dumped imports that cause or threaten to cause material injury to the domestic industry. Goods are said to be dumped when they are sold for export at less than their normal value. The normal value is usually defined as the price for the like goods in the exporter’s home market.
Anti-subsidy measures allow importing countries to take action against certain kinds of subsidised imports. Broadly speaking, "subsidies" are defined as financial assistance from a government to a company or group of companies. Some types of subsidy (eg export subsidies) are prohibited under the WTO Agreement; others are "actionable", which means that an importing country has to demonstrate that the subsidised imports have caused damage to the domestic industry of the importing country.
Safeguards. The rationale behind both anti-dumping and anti-subsidy is that countries are entitled to take action in cases of unfair foreign competition. Safeguards carry no such accusation that the competition is unfair. Safeguards are designed to protect countries from unforeseen surges in imports that cause or threaten to cause serious injury to the domestic industry.
The WTO also provides a dispute settlement procedure for the resolution of disputes over the use of the instruments. The UK is party to all the WTO trade defence instruments, namely the Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures and the Agreement on Safeguards.
The purpose of all these agreements is to ensure consistency in the use of trade defence instruments by all WTO members. The UK attends the separate WTO committee on Anti-dumping measures, Subsidies and Countervailing measures and Safeguards, although the European Commission speak for the EU in these groups.
As a result of the WTO agreement at Doha in November 2001, there will be negotiations aimed at clarifying and improving disciplines under the Anti-Dumping and Anti-Subsidy Agreements. There will also be negotiations to address issues and concerns that have been raised by developing countries over the implementation of the existing instruments.
The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, the Anti-Dumping Agreement (AD), governs the application of anti-dumping measures by Members of the WTO. Anti-dumping measures are unilateral remedies which may be applied by a Member after an investigation and determination by that Member in accordance with the provisions of the AD Agreement, that the dumped imports are causing material injury to a domestic industry producing the like product. Measures usually take the form of additional duties but occasionally take the form of an agreement by the exporters of the product in question not to sell that product below a certain price.
The Agreement sets out certain substantive requirements that must be fulfilled in order to impose an anti-dumping measure, as well as detailed procedural requirements governing the conduct of anti-dumping investigations and the imposition and maintenance of anti-dumping measures. A failure to respect either the substantive or procedural requirements can be taken to the WTO’s Dispute Settlement Body and the offending country may be required to bring the measure into conformity with the Agreement and face retaliation if it fails to do so.
The Agreement on Subsidies and Countervailing Measures (ASCM) addresses two separate but closely related topics: multilateral disciplines regulating the provision of subsidies (financial assistance given to an enterprise by a government) and the use of countervailing measures to offset injury caused by subsidised imports. Multilateral disciplines are the rules governing whether or not a subsidy may be provided by a Member. They are enforced through the WTO dispute settlement mechanism. Countervailing duties (CVDs)are a unilateral instrument which may be applied by a Member after an investigation by that Member and a determination that the criteria allowing the application of CVDs, as set out in the ASCM, are satisfied.
The Agreement forbids export subsidies and subsidies contingent on the use of domestic over imported goods. Other subsidies are permitted but subject to the right of other WTO Members to challenge them in individual cases and, following an investigation in accordance with the provisions of the Agreement, to impose countervailing duties on the subsidised products where they cause injury to domestic suppliers. The Agreement also provides for much greater transparency through a system of notifications and reviews of measures.
It is important to note that the Agreement does not apply to trade in agricultural products, where export subsides are common in some countries. There are also special rules for developing countries which provide some scope for the maintenance of export subsidies under certain conditions.
The Agreement on Safeguards contains the rules for application of safeguard measures provided for in Article XIX of the General Agreement on Tariffs and Trade 1994.
Major principles of the Agreement with respect to safeguard measures are that such measures must be temporary; that they must be imposed only when the imports are found to cause or threaten serious injury to a competing domestic industry; that they be applied to imports from all sources on a non-selective basis; that they be progressively liberalised while in effect; and that the Member imposing them may be required to compensate the Members whose trade is affected.
The WTO trade defence agreements are incorporated into European law and are applied at a European level. The European Commission are the investigating authority on behalf of member states. Anti-dumping, anti-subsidy or safeguard investigations are carried out by Directorate General Trade of the European Commission in response to complaints lodged by EU industry. Measures are adopted by the Council of Ministers.
The relevant EC legislation is as follows. Anti-dumping is covered by Council Regulation (EC) 384/96 as amended by Council Regulation (EC) 2331/96, Council Regulation (EC) 905/98, Council Regulation (EC) 2238/2000, and Council Regulation (EC) 1972/2002. Council Regulation (EC) 461/2004 and Council Regulation (EC) 2117/2005. Anti-subsidy measures are covered by Council Regulation (EC) 2026/97 as amended by Council Regulation (EC) 1973/2002 and Council Regulation (EC) 461/2004. Safeguards are covered by Council Regulation (EC) 3285/94, Articles 16-22 and Council Regulation (EC) 519/94, Articles 15-19 (state trading and former state trading nations).
For further information including guidance on how to lodge a complaint,the EU Commissions comprehensive list of cases and copies of EU Regulations governing these issues see related links.
Cynthia Reid - Senior Policy Adviser, Anti-Dumping & Anti-Subsidy in the Steel sector
Tel: 020 7215 5139
E-Mail: cynthia.reid@bis.gsi.gov.uk
Bob Box – Senior Policy Adviser, Anti-Dumping and Anti-Subsidy in other sectors.
Tel: 020 7215 5057
E-mail: Robert.Box@bis.gsi.gov.uk
Colin Wray – Policy Adviser, general enquiries on Anti-Dumping and Anti-Subsidy in all sectors.
Tel: 020 7215 5059
E-mail: colin.wray@bis.gsi.gov.uk
Trade defence unit fax: 020 7215 2234
