Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (codification)

Article 1

Principles

Article 2

Definitions

For the purposes of this Regulation:

(a) a product is considered to be subsidised if it benefits from a countervailable subsidy as defined in Articles 3 and 4. Such subsidy may be granted by the government of the country of origin of the imported product, or by the government of an intermediate country from which the product is exported to the Union, known for the purposes of this Regulation as ‘the country of export’;

(b) ‘government’ means a government or any public body within the territory of the country of origin or export;

(c) ‘like product’ means a product which is identical, that is to say, alike in all respects, to the product under consideration, or, in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration;

(d) ‘injury’, unless otherwise specified, means material injury to the Union industry, threat of material injury to the Union industry or material retardation of the establishment of such an industry, and shall be interpreted in accordance with the provisions of Article 8.

Article 3

Definition of a subsidy

A subsidy shall be deemed to exist if:

(i) a government practice involves a direct transfer of funds (for example, grants, loans, equity infusion), potential direct transfers of funds or liabilities (for example, loan guarantees); (ii) government revenue that is otherwise due is forgone or not collected (for example, fiscal incentives such as tax credits). In this regard, the exemption of an exported product from duties or taxes borne by the like product when destined for domestic consumption, or the remission of such duties or taxes in amounts not in excess of those which have been accrued, shall not be deemed to be a subsidy, provided that such an exemption is granted in accordance with the provisions of Annexes I, II and III; (iii) a government provides goods or services other than general infrastructure, or purchases goods; (iv) a government: — makes payments to a funding mechanism, or — entrusts or directs a private body to carry out one or more of the type of functions illustrated in points (i), (ii) and (iii) which would normally be vested in the government, and the practice, in no real sense, differs from practices normally followed by governments; or (b) there is any form of income or price support within the meaning of Article XVI of the GATT 1994; and

Article 4

Countervailable subsidies

In order to determine whether a subsidy is specific to an enterprise or industry or group of enterprises or industries (‘certain enterprises’) within the jurisdiction of the granting authority, the following principles shall apply:

(a) where the granting authority, or the legislation pursuant to which the granting authority operates, explicitly limits access to a subsidy to certain enterprises, such a subsidy shall be specific;

(b) where the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, provided that the eligibility is automatic and that such criteria and conditions are strictly adhered to;

(c) if, notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in points (a) and (b), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered. Such factors are: use of a subsidy programme by a limited number of certain enterprises; predominant use by certain enterprises; the granting of disproportionately large amounts of subsidy to certain enterprises; the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy. In this regard, information on the frequency with which applications for a subsidy are refused or approved and the reasons for such decisions shall, in particular, be considered.

For the purpose of point (b), ‘objective criteria or conditions’ means criteria or conditions which are neutral, which do not favour certain enterprises over others, and which are economic in nature and horizontal in application, such as number of employees or size of enterprise.

The criteria or conditions must be clearly set out by law, regulation, or other official document, so as to be capable of verification.

In applying point (c) of the first subparagraph, account shall be taken of the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation.

Notwithstanding paragraphs 2 and 3, the following subsidies shall be deemed to be specific:

(a) subsidies contingent, in law or in fact, whether solely or as one of several other conditions, upon export performance, including those illustrated in Annex I;

(b) subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods.

For the purposes of point (a), subsidies shall be considered to be contingent in fact upon export performance when the facts demonstrate that the granting of a subsidy, without having been made legally contingent upon export performance, is in fact tied to actual or anticipated exportation or export earnings. The mere fact that a subsidy is accorded to enterprises which export shall not, for that reason alone, be considered to be an export subsidy within the meaning of this provision.

Article 5

Calculation of the amount of the countervailable subsidy

The amount of countervailable subsidies shall be calculated in terms of the benefit conferred on the recipient which is found to exist during the investigation period for subsidisation. Normally this period shall be the most recent accounting year of the beneficiary, but may be any other period of at least six months prior to the initiation of the investigation for which reliable financial and other relevant data are available.

Article 6

Calculation of benefit to the recipient

As regards the calculation of benefit to the recipient, the following rules shall apply:

(a) government provision of equity capital shall not be considered to confer a benefit, unless the investment can be regarded as inconsistent with the usual investment practice, including for the provision of risk capital, of private investors in the territory of the country of origin and/or export;

(b) a loan by a government shall not be considered to confer a benefit, unless there is a difference between the amount that the firm receiving the loan pays on the government loan and the amount that the firm would pay for a comparable commercial loan which the firm could actually obtain on the market. In that event the benefit shall be the difference between those two amounts;

(c) a loan guarantee by a government shall not be considered to confer a benefit, unless there is a difference between the amount that the firm receiving the guarantee pays on a loan guaranteed by the government and the amount that the firm would pay for a comparable commercial loan in the absence of the government guarantee. In that case the benefit shall be the difference between those two amounts, adjusted for any differences in fees;

(d) the provision of goods or services or purchase of goods by a government shall not be considered to confer a benefit, unless the provision is made for less than adequate remuneration or the purchase is made for more than adequate remuneration. The adequacy of remuneration shall be determined in relation to prevailing market conditions for the product or service in question in the country of provision or purchase, including price, quality, availability, marketability, transportation and other conditions of purchase or sale. If there are no such prevailing market terms and conditions for the product or service in question in the country of provision or purchase which can be used as appropriate benchmarks, the following rules shall apply: (i) the terms and conditions prevailing in the country concerned shall be adjusted, on the basis of actual costs, prices and other factors available in that country, by an appropriate amount which reflects normal market terms and conditions; or (ii) when appropriate, the terms and conditions prevailing in the market of another country or on the world market which are available to the recipient shall be used.

Article 7

General provisions on calculation

In establishing that amount, the following elements may be deducted from the total subsidy:

(a) any application fee or other costs necessarily incurred in order to qualify for, or to obtain, the subsidy;

(b) export taxes, duties or other charges levied on the export of the product to the Union specifically intended to offset the subsidy.

Where an interested party claims a deduction, it must prove that the claim is justified.

The amount so calculated which is attributable to the investigation period, including that which derives from fixed assets acquired before that period, shall be allocated as described in paragraph 2.

Where the assets are non-depreciating, the subsidy shall be valued as an interest-free loan, and be treated in accordance with Article 6(b).

Article 8

Determination of injury

A determination of injury shall be based on positive evidence and shall involve an objective examination of:

(a) the volume of the subsidised imports and the effect of the subsidised imports on prices in the Union market for like products; and

(b) the consequent impact of those imports on the Union industry.

Where imports of a product from more than one country are simultaneously subject to countervailing duty investigations, the effects of such imports shall be cumulatively assessed only if it is determined that:

(a) the amount of countervailable subsidies established in relation to the imports from each country is more than de minimis as defined in Article 14(5) and the volume of imports from each country is not negligible; and

(b) a cumulative assessment of the effects of the imports is appropriate in the light of the conditions of competition between imported products and the conditions of competition between the imported products and the like Union product.

In making a determination regarding the existence of a threat of material injury, consideration should be given to factors such as:

(a) the nature of the subsidy or subsidies in question and the trade effects likely to arise therefrom;

(b) a significant rate of increase of subsidised imports into the Union market indicating the likelihood of substantially increased imports;

(c) whether there is sufficient freely disposable capacity on the part of the exporter or an imminent and substantial increase in such capacity indicating the likelihood of substantially increased subsidised exports to the Union, account being taken of the availability of other export markets to absorb any additional exports;

(d) whether imports are entering at prices that would, to a significant degree, depress prices or prevent price increases which otherwise would have occurred, and would probably increase demand for further imports;

(e) inventories of the product being investigated.

No one of the factors listed above by itself can necessarily give decisive guidance, but the totality of the factors considered shall be such as to lead to the conclusion that further subsidised exports are imminent and that, unless protective action is taken, material injury will occur.

Article 9

Definition of Union industry

For the purposes of this Regulation, the term ‘Union industry’ shall be interpreted as referring to the Union producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total Union production of those products, except that:

(a) when producers are related to the exporters or importers, or are themselves importers of the allegedly subsidised product, the term ‘Union industry’ may be interpreted as referring to the rest of the producers;

(b) in exceptional circumstances, the territory of the Union may, for the production in question, be divided into two or more competitive markets and the producers within each market may be regarded as a separate industry if: (i) the producers within such a market sell all or almost all of their production of the product in question in that market; and (ii) the demand in that market is not to any substantial degree met by producers of the product in question located elsewhere in the Union. In such circumstances, injury may be found to exist even where a major portion of the total Union industry is not injured, provided that there is a concentration of subsidised imports into such an isolated market and provided further that the subsidised imports are causing injury to the producers of all or almost all of the production within such a market.

For the purpose of paragraph 1, producers shall be considered to be related to exporters or importers only if:

(a) one of them directly or indirectly controls the other;

(b) both of them are directly or indirectly controlled by a third person; or

(c) together they directly or indirectly control a third person, provided that there are grounds for believing or suspecting that the effect of the relationship is such as to cause the producer concerned to behave differently from non-related producers.

For the purpose of this paragraph, one shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter.

Article 10

Initiation of proceedings

Complaints may also be submitted jointly by the Union industry, or by any natural or legal person or any association not having legal personality acting on behalf thereof, and trade unions, or be supported by trade unions. This does not affect the possibility for the Union industry to withdraw the complaint.

The complaint may be submitted to the Commission or to a Member State, which shall forward it to the Commission. The Commission shall send Member States a copy of any complaint it receives. The complaint shall be deemed to have been lodged on the first working day following its delivery to the Commission by registered mail or the issuing of an acknowledgement of receipt by the Commission.

Where, in the absence of any complaint, a Member State is in possession of sufficient evidence of subsidisation and of resultant injury to the Union industry, it shall immediately communicate such evidence to the Commission.

The SME Helpdesk shall make available standard forms for statistics to be submitted for standing purposes and questionnaires.

A complaint under paragraph 1 shall include sufficient evidence of the existence of countervailable subsidies (including, if possible, of their amount), injury and a causal link between the allegedly subsidised imports and the alleged injury. The complaint shall contain such information as is reasonably available to the complainant on the following:

(a) the identity of the complainant and a description of the volume and value of the Union production of the like product by the complainant. Where a written complaint is made on behalf of the Union industry, the complaint shall identify the industry on behalf of which the complaint is made by a list of all known Union producers of the like product (or associations of Union producers of the like product) and, to the extent possible, a description of the volume and value of Union production of the like product accounted for by such producers;

(b) a complete description of the allegedly subsidised product, the names of the country or countries of origin or export in question, the identity of each known exporter or foreign producer and a list of known persons importing the product in question;

(c) evidence with regard to the existence, amount, nature and countervailability of the subsidies in question;

(d) the changes in the volume of the allegedly subsidised imports, the effect of those imports on prices of the like product in the Union market and the consequent impact of the imports on the Union industry, as demonstrated by relevant factors and indices having a bearing on the state of the Union industry, such as those listed in Article 8(2) and (4).

The Commission shall also offer consultations to the country of origin and/or export concerned with regard to other subsidies identified in the course of the investigation. In those situations, the Commission shall send to the country of origin and/or export a summary of the main elements concerning other subsidies, in particular those referred to in point (c) of paragraph 2. If the additional subsidies are not covered by the notice of initiation, the notice of initiation shall be amended and the amended version published in the Official Journal of the European Union. All interested parties shall be given additional and sufficient time to comment.

It shall state the periods within which interested parties may make themselves known, present their views in writing and submit information, if such views and information are to be taken into account during the investigation. It shall also state the period within which interested parties may apply to be heard by the Commission in accordance with Article 11(5).

Article 11

The investigation

For the purpose of a representative finding, an investigation period shall be selected which in the case of subsidisation shall, normally, cover the investigation period provided for in Article 5.

Information relating to a period subsequent to the investigation period shall not, normally, be taken into account.

They shall send to the Commission the information requested together with the results of all inspections, checks or investigations carried out.

Where that information is of general interest or where its transmission has been requested by a Member State, the Commission shall forward it to the Member States, provided that it is not confidential, in which case a non-confidential summary shall be forwarded.

Member States shall take whatever steps are necessary in order to give effect to such requests from the Commission.

Officials of the Commission shall be authorised, if the Commission or a Member State so requests, to assist the officials of Member States in carrying out their duties.

Provision of such opportunities shall take account of the need to preserve confidentiality and of the convenience to the parties.

There shall be no obligation on any party to attend a meeting, and failure to do so shall not be prejudicial to that party's case.

Oral information provided under this paragraph shall be taken into account by the Commission in so far as it is subsequently confirmed in writing.