Commission Implementing Regulation (EU) 2023/104 of 12 January 2023 amending Implementing Regulation (EU) 2019/159 imposing a definitive safeguard measure on imports of certain steel products following a report adopted by the World Trade Organization’s Dispute Settlement Body

THE EUROPEAN COMMISSION,

Having regard to Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports (1) and in particular Articles 16 and 20 thereof,

Having regard to Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries (2), and in particular Articles 13 and 16 thereof,

Whereas:

(1) By Commission Implementing Regulation (EU) 2018/1013 (3) (‘the Provisional Regulation’), the Commission imposed a provisional safeguard measure on certain steel products. By Commission Implementing Regulation (EU) 2019/159 (4) (‘the Definitive Regulation’), the European Commission imposed a definitive safeguard measure on certain steel products (‘the safeguard measure’).

(2) On 13 March 2020, Türkiye requested consultations with the European Union pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (‘DSU’), Article XXIII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), and Article 14 of the Agreement on Safeguards (‘AoS’).

(3) Consultations between the European Union and Türkiye were held on 29 April 2020 but did not resolve the dispute.

(4) On 16 July 2020, Türkiye requested the establishment of a panel. A panel was established on 28 August 2020. The Panel Report was circulated on 29 April 2022. Since none of the parties appealed the panel report, it was adopted by the Dispute Settlement Body (‘DSB’) on 31 May 2022 (5).

(5) By communication to the WTO of 5 August 2022 (6), Türkiye and the European Union informed that, pursuant to Article 21.3(b) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, they had agreed that the reasonable period of time for the European Union to implement the recommendations and rulings of the DSB in the dispute European Union – Safeguard Measures on Certain Steel Products (DS595) will expire on 16 January 2023, which is seven months and sixteen days from the day of adoption of the DSB recommendations and rulings on 31 May 2022.

(6) As a result of these events, the Commission published on 24 August 2022 a Notice of Initiation (7) informing of its intention to implement the Panel Report by bringing the original measure into conformity with WTO rules in those instances where the Panel had found inconsistencies, and inviting interested parties to submit comments.

(7) Several parties submitted comments within the stipulated deadline, which were duly taken into account.

(8) Several interested parties submitted comments following the publication of the Notice of Initiation. As a preliminary observation, the Commission noted that some of the comments made by interested parties were mere repetitions of the Panel’s findings.

(9) The Commission first analysed the specific comments from the Government of Türkiye (‘GOT’), as it was the party challenging the safeguard measure before the WTO DSB, and then it analysed the comments submitted by the other interested parties.

(10) Regarding unforeseen developments GOT claimed that there is no evidence in the record that would allow the Commission to link the unforeseen developments with the increase in imports. It noted that there was a lack of coincidence in time between overcapacity and the increase in imports, that the Commission did not do the necessary examination of the TDI measures in third countries and their link to increase in imports, and that the US Section 232 were introduced after the increase in imports into the Union took place. GOT further claimed that if the Commission were to use new information should also consider the changes in the conditions that occurred during the period of time that the measure was in force, such as exclusion of several countries including the EU itself from Section 232 measures.

(11) The Commission disagreed with GOT’s views that this aspect of the measure could not be repaired. As shown in detail in Section 1.1 of the Annex, there was sufficient information available prior to the imposition of the Definitive Safeguard that showed clearly that imports into the Union had increased as a result of unforeseen developments. The Commission did not use any data that was not available at the time of imposing the definitive measure for the purpose of the Annex to this Regulation.

(12) Regarding the findings pertaining to the threat of serious injury, GOT considered that the anti-dumping and countervailing measures could not be the reason of the recovery of the domestic industry. As regards the other factors that the Commission had relied on to explain the partial improvement of the performance of the Union industry in 2017, GOT noted that the Panel had concluded that those factors affected the domestic industry and imports in similar ways and therefore, they could not be used as an explanation of such improvement and that there was no indication to show that changes in these factors would benefit the imports more than domestic industry.

(13) In this respect, the Commission referred to its findings in sections 1.2.1 and 1.2.2 of the Annex that contradict GOT’s claims.

(14) Lastly, GOT noted that the Panel had concluded that even if imports were set to increase in 2018, this does not automatically lead to the conclusion that there is a significant overall impairment in the position of the domestic industry, which is clearly imminent.

(15) In this regard, the Commission explained in the Annex to this Regulation all the elements it took into account to determine that: i) imports were likely going to continue increasing; ii) such increase would have negative effects on the economic situation of the Union industry in light of the recent and expected future developments of key factors in the steel market in the Union and worldwide. Therefore, the substantive analysis carried out by the Commission did not assume that an increase in imports would, in itself and without considering other pertinent elements, cause serious injury to the Union industry in the absence of a safeguard measure. Rather, the Commission conducted a detailed analysis of the relevant elements that led it to reach the conclusion that if no measure was adopted, the Union industry would suffer serious injury. Therefore, GOT’s claims were rejected.

(16) Concerning the comments received from other interested parties, some of them argued that the Commission should terminate the measure altogether because the Panel’s findings were of such nature that it made it impossible to implement the measure in a different way.

(17) With respect to this general claim, the Commission noted that under WTO rules it has the right to implement the measure and bring it into conformity with the rules in those few aspects that the Panel found to be inconsistent with them. As shown in the Annex to this Regulation, the findings of the Panel were of a kind of nature that allowed the Commission to bring the measure into conformity with the relevant WTO provisions, and therefore, the termination of the measure was not warranted as a result of the Panel Report.

(18) An interested party noted that several changes had occurred to the US Section 232 measure and that the risk of trade diversion did no longer exist or would be much smaller, and as a result, the safeguard measure should be terminated.

(19) The Commission noted that developments that took place after the imposition of the definitive measure fall outside the scope of data that can be relied upon for the implementation of the DSB report. The purpose of this investigation, as mentioned in the Notice of Initiation is to supplement the original findings with data already available at the time the original investigation was conducted. No ex-post facts were taken into account.

(20) An interested party claimed that the increase in imports into the Union did not occur as a result of any of the obligations undertaken by the Union under GATT 1994 and that the Commission did not mention any of these obligations in its original determination.

(21) The Commission referred to its explanations in section 1.3 of the Annex, which rebut this argument.

(22) An interested party considered that there had not been unforeseen developments resulting in an increase in imports and because of this, the Commission could not implement this aspect of the Panel Report.

(23) The Commission noted that this statement was factually incorrect as the Panel had confirmed (8) the unforeseen developments described by the Commission in the definitive safeguard. Therefore, this claim was rejected as unfounded.

(24) An interested party noted that the risk of trade diversion and increased imports as a result of US Section 232 were not pertinent to its country for a number of reasons.

(25) The Commission noted that the analysis of increased imports and risk of trade diversion was not done individually for each exporting country, but rather, as a whole, because the safeguard measure is to be applied erga omnes. In any event, the Commission wanted to point out that this interested party was focused not only on the specific situation of one exporting country but also on the specific situation of one steel-using industry, thus ignoring the performance from this exporting country in all the other steel-using segments. The Commission thus rejected this claim.

(26) Some interested parties considered that the findings of the Panel regarding this aspect of the measure were of such nature that did not allow the Commission to implement the measure without terminating it.

(27) The Commission disagreed with this type of claim for the reasons set out in the Annex to this Regulation, where it proved that the original findings were valid and their justification was strengthen by the additional data and explanations supplied in the Annex to this Regulation.

(28) Some interested parties recalled the Panel’s finding that the Commission’s explanation of the role of the anti-dumping and countervailing measures in the partial recovery of the Union industry was flawed.

(29) In this regard, the Commission acknowledged that the Panel took issue with the explanations provided in the definitive regulation. However, the purpose of the implementation exercise is precisely to allow the investigating authority to improve those aspects of the measure that the Panel considered flawed to some extent, such as the one referred to by these interested parties. Thus, the Commission provided the necessary additional information and explanations in Section 1.2.2 of the Annex as far as this finding of the Panel was concerned.

(30) An interested party argued that if the Commission did not explicitly refer to some factors as having an impact on the state of the Union industry, it could not use them in their reasoning when implementing the measure.

(31) The Commission noted that the Panel had taken issue with the level of details provided in some instances of the original measure. In the Annex to this Regulation, the Commission put forward those elements that it had considered when making the original decision but which were not spelled out in the definitive regulation. In the Commission’s view, accepting the interested party claim would amount to saying that whenever an investigating authority is condemned for not providing sufficient level of detail in its explanations or reasoning, it could no longer have the opportunity to remedy it by means of implementation. The Commission disagreed with this view, as it considered that precisely the purpose of an implementation is to allow an investigating authority to bring its measure into conformity by e.g. providing a better and more complete reasoning than in the definitive regulation, as those were the findings by the Panel. Accordingly, it rejected the claim.

(32) Some interested parties claimed that the mere prospect of a further increase in imports would not necessarily lead to a situation of serious injury for Union producers.

(33) The Commission performed a detailed analysis of how a further increase in imports would take place and the reasons whereby such increase would lead to a situation of serious injury to the Union industry. Therefore, this claim was rejected.

(34) Lastly, some interested parties brought up arguments such as performance of the Union industry in years after the imposition of the safeguard measure or developments that took place after such event, such as the situation of Union producers and other third countries under the US Section 232 measure, the evolution of imports or the ‘energy crisis’.

(35) The Commission rejected all these claims as they fell outside the substantive and timely scope of the implementation exercise, because they concerned events unrelated to the imposition of the definitive measure in early 2019.

(36) For the reasons contained in the Annex of this Regulation, the Commission considered that it fully implemented the WTO ruling. Implementing Regulation (EU) 2019/159 should be amended by adding the reasoning included the Annex of this Regulation, which supplements the findings made in the original investigation.

(37) The measures provided for in this Regulation are in accordance with the opinion of the Committee on Safeguards established under Article 3(3) of Regulation (EU) 2015/478 and Article 22(3) of Regulation (EU) 2015/755 respectively,

HAS ADOPTED THIS REGULATION:

Article 1

The text set out in the Annex to this Regulation is added as Annex V to Regulation (EU) 2019/159.

Article 2

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

It shall apply as of 2 February 2019.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 12 January 2023.

For the Commission The President Ursula VON DER LEYEN

(1) OJ L 83, 27.3.2015, p. 16.

(2) OJ L 123, 19.5.2015, p. 33.

(3) Commission Implementing Regulation (EU) 2018/1013 imposing a provisional safeguard measure against imports of certain steel products (OJ L 181, 18.7.2018, p. 39).

(4) Commission Implementing Regulation (EU) 2019/159 of 31 January 2019 imposing a definitive safeguard measure against imports of certain steel products (OJ L 31, 1.2.2019, p. 27).

(5) WT/DS595/R European Union – Safeguard Measures on Certain Steel Products, 29 April 2022.

(6) WT/DS595/13, 9 August 2022.

(7) OJ C 320, 24.8.2022, p. 47.

(8) See Panel Report, para. 7.117.