On 1 March 2023, the EU’s General Court delivered its judgment in Case T‑540/20, Jushi Egypt for Fiberglass Industry v Commission, ruling that the EU’s anti-subsidy Regulation does not preclude the countervailing of subsidies that are granted by a foreign state to companies in a third country, which can be attributed to the government of the country of origin or export of the products concerned. The Court’s ruling confirmed the Commission’s interpretation in Implementing Regulation (EU) 2020/870, which imposed a definitive countervailing duty on imports of continuous filament glass fibre products (‘GFR’) originating in Egypt.
On 14 December 2022, the Council of the EU (“Council”) and the European Parliament (“Parliament”) adopted Regulation (EU) 2022/2560 of the European Parliament and of the Council on foreign subsidies distorting the internal market (the “Foreign Subsidies Regulation” or “FSR”), which was published in the EU’s Official Journal on 23 December 2022. The FSR gives the European Commission (“Commission”) substantial new powers to investigate “financial contributions” granted by non-EU governments to companies operating in the EU and, where necessary, take measures to redress their distortive effects. Specifically, the Commission will be able to conduct such investigations through three new tools: two notification-based tools to investigate concentrations and bids in public procurements above certain thresholds and a general tool to investigate all other market situations and lower-value mergers and public procurement procedures.…
The much anticipated proposal for a Regulation prohibiting products made with forced labor on the EU market was published by the European Commission (“Commission”) on 14 September 2022, one year after the initiative was first announced by Commission President Ursula von der Leyen in her 2021 State of the Union speech. The proposed forced labor instrument has the potential to significantly impact the supply chains of not only EU companies, but also of any non-EU company that sells products into the EU. The instrument would apply to any company that exports products from the EU or that sells products on the EU market, irrespective of where those companies are based, to which products they are selling, and to which countries and suppliers they source from.
Continue Reading The Proposed EU Ban on Goods Made With Forced Labor
On 29 August 2022, the European Union’s (“EU”) International Procurement Instrument (“IPI”) will enter into force. The IPI was adopted on 23 June 2022 after more than a decade of legislative preparations and discussions. It provides for a new trade policy tool which is designed to address the perceived lack of a level playing field in global procurement markets.
The IPI will enable the European Commission (“Commission”) to impose measures limiting non-EU companies’ access to the EU public procurement market if these companies’ governments do not offer similar access to EU businesses. Specifically, the IPI envisages two types of measures that can be applied: i) a “score adjustment” penalty on tenders submitted by suppliers from the targeted third country; or ii) the exclusion of such tenders from the procurement process. Such IPI measures would be applied following an investigation by the Commission, and after consultations with the country concerned.
Continue Reading EU’s International Procurement Instrument to Enter into Force at the End of August
It is generally known that EU anti-dumping and anti-subsidy measures are usually imposed for a period of five years, and that they can be (and usually are) extended for further five-year periods further to expiry review investigations. Similarly, operators facing trade defense measures will typically be aware that the repeal or the reduction of the duties can be obtained with interim review investigations or duty refund procedures. It is instead far less known that there is another, temporary, and, until very recently, long unexploited solution available to EU importers and end-users to ease the pressure of EU trade defense measures, namely the suspension thereof. This tool can be particularly relevant to EU importers and end-users of goods that are currently suffering from supply chain disruptions.
Continue Reading Duty Suspension: An Interim Relief from EU Trade Defense Measures
2021 was an eventful year for international trade law and policy in the EU, with developments in several key areas.
The EU strengthens its trade policy toolbox
In the light of the recent ongoing problems with multilateralism and the continuing rise of China, the EU focused hard on strengthening its trade enforcement toolbox in a wide variety of trade related areas. This includes the use of recent tools and proposals for new instruments:
- The Amended Trade Enforcement Regulation entered into force on 13 February 2021. This greatly expands the EU’s capacity to adopt trade countermeasures against third countries. It can now do so even before dispute settlement proceedings at the WTO or under other international agreements have been concluded if these are blocked by the other party. This would include, for instance, situations where a trading partner appeals an adverse panel report “into the void” to the non-functioning Appellate Body at the WTO, as well as in relation to a broader range of violations. The Commission is due to undertake a review of the Trade Enforcement Regulation, to consider additional commercial policy measures in the field of trade-related aspects of intellectual property rights, by 13 February 2022.
- The FDI Screening Regulation, which has been in force since the end of 2020, has led to a growing number of FDI mechanisms notified or updated by Member States to the European Commission throughout 2021 (see here). For the EU, which did not have a role in FDI screening prior to this, this mechanism is starting to become a game-changer. In November 2021, the Commission published its first annual report on the screening of foreign direct investments into the EU. Of the 265 cases notified to the Commission between 11 October 2020 and 30 June 2021, 80% were closed by the Commission in Phase 1, whereas 14% of cases proceeded to Phase 2, with additional information being requested from the notifying Member State (the remaining 6% were still under assessment on 30 June 2021). The Commission issued an opinion, with recommended measures, in less than 3% of the notified cases. Actual prohibitions of investments by Member States appear to be limited for the moment, although there have been such instances (like Italy’s prohibition of the proposed acquisition of control in LPE, an Italian semiconductor equipment company, by a Chinese company). Moreover, parties sometimes abandon envisaged transactions prior to a formal prohibition. The imposition of conditions appears more common.
- On 5 May 2021, the Commission published its proposal for a new Regulation to address distortions by foreign subsidies. The Regulation introduces three new instruments that would give the Commission the power to investigate foreign subsidies granted to companies active in the EU and identify whether they are causing distortions in the EU single market. Should the Commission identify distortive foreign subsidies, it could impose redressive measures to counteract their effects (see our blog post describing the Commission’s proposal here). If adopted, which currently appears likely, it would give the Commission far-reaching new powers. The Committee on International Trade, the leading committee in charge of the file within the European Parliament, has released its draft report on the proposal on 17 December 2021, generally supporting the new instruments and suggesting additional protections against home-market monopoly advantages and known future subsidies.
- On 8 December 2021, the Commission published a proposal for a new anti-coercion instrument. The aim of this instrument would be to deter and, if necessary, retaliate against third countries exerting economic coercion against the EU or its Member States in order to influence their political decisions and policy choices (see our blog post describing the Commission’s proposal here). This is another example of a novel instrument in the field of trade that would grant the Commission with robust powers to address trade policy issues.
- Negotiations on a proposed new International Procurement Instrument have also progressed in 2021. This instrument would enable the EU to limit, on a case-by-case basis, access to its public procurement market by companies from third countries which restrict access to their own procurement markets by EU businesses. This would represent a significant overhaul of the EU’s current public procurement system, which is currently one of the more open ones globally.
On 5 May 2021, the European Commission proposed a Regulation which lays down rules and procedures for investigating foreign subsidies that distort the EU internal market, and with a view to creating a level playing field as between EU and non-EU market actors in the Single Market (the Proposal). Following its White Paper on foreign subsidies in the Single Market published on 17 June 2020, the European Commission proposed this new instrument with the intention of filling a regulatory gap in the existing EU toolbox. The latter already includes State aid disciplines, merger control and antitrust, public procurement and trade defense instruments. However, none of these EU tools aim at dealing with foreign (non-EU) government subsidies provided to foreign service providers who are active in the EU market, or with such subsidies otherwise facilitating acquisitions of EU companies or assets, or aimed at securing a competitive advantage in public contract tender procedures.
The Proposal, which lies at the intersection of competition and trade law, seeks to help implement the updated EU Industrial Strategy. The Industrial Strategy has as its objective promoting a fair and competitive Single Market by ensuring the development of appropriate conditions for European industry to thrive.…
Since 1 January 2021, the United Kingdom of Great Britain and North Ireland (the UK) has ceased to be part of the Single Market of the European Union (EU). This date marked the end of the transition period provided for under the Withdrawal Agreement of 31 January 2020 between the UK and the EU. During the transition period, the UK remained in the EU customs territory and thus continued to be integrated into EU trade policy and enforcement actions, including trade remedies. The UK’s departure from the EU at the start of 2021 will have multiple consequences for EU trade remedy investigations and for the EU’s approach to trade remedy measures more generally going forward.
In light of these changes, the EU published a notice on 18 January 2021, laying down some of the practical implications of the UK’s departure.
One immediate consequence of UK’s exit from the EU customs territory is that all trade remedy measures (anti-dumping, countervailing and safeguards) in force on 1 January 2021 will apply going forward only to imports into the 27 member states of the EU from third party States. This will include EU imports of UK originating steel products that are subject to EU steel safeguard measures. Likewise, any new trade remedy measures the EU may adopt after 1 January 2021 following an investigation initiated before or after that date will only affect imports into the EU-27, i.e. excluding the UK.
One complication is imports into Northern Ireland. Pursuant to Part Three of the Withdrawal Agreement, though theoretically no long part of customs territory of the EU, after 1 January 2021, Northern Ireland will continue to be subject to EU customs procedures and rules, in order to maintain borderless trade flows on the island of Ireland. EU trade remedy measures will therefore be applicable to goods entering Northern Ireland from outside the EU unless it can be proven that their final sales destination of sales is Northern Ireland. This includes goods entering into Northern Ireland from Great Britain, subject to any future amendments to the rules. The EU will soon make available a separate notice concerning the technical details in this respect.…
In early October, the European Commission launched “Access2Markets”, a web-based portal designed to provide practical information, tips and guidance to companies involved in import and export activities relating to the European Union (EU). This new online portal is set up in response to requests from stakeholders, in particular small and medium enterprises, for simplified and free access to guidance about customs and regulatory conditions for goods entering the EU from third countries, and about the equivalent conditions in third countries for goods originating from the EU.
The Access2Markets portal offers a single information point for useful information relevant to trading activities. It groups together information and guidance previously scattered in separate databases and tools, such as the Market Access Database, Trade Helpdesk, TARIC – EU Customs Tariff, and List rules concerning non-preferential origin. It also simplifies the complex set of EU-relevant import and export rules set out in the network of trade agreements the EU has entered into with over 70 countries and regions over the past 40 years. The new data pool covers a full spectrum of international trade-related topics encompassing information about tariffs (including both nomenclature and explanatory notes used for classification), applicable taxes at both the national and regional levels, rules of preferential and non-preferential origin, product requirements (e.g., labelling and marking), customs procedures and formalities, VAT/excise duties/sales taxes, non-tariff trade barriers in third countries, and trade statistics by individual good and country.
Continue Reading The EC Launches an Online Tool to Facilitate an Understanding of International Trade Rules