Overview
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).[1] 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.[2] 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.[3]
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.[4] 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.
The European Commission will review existing trade remedy measures to determine whether the findings leading to the adoption of the measures would have been significantly different if they had been based on information without the UK, therefore warranting an amendment of these measures. The rationale behind this review is very similar to that of transition review of the EU measures carried over and maintained by the UK: that is, to assess whether current trade remedy measures are necessary to offset the injurious effect caused by unfair trading practices by third countries and at which level going forward, absent the UK in the calculation. Nevertheless, unlike UK’s ex officio transition review, EU review of the existing measures will be conducted only at the request of interested parties and within the interim review framework. The EU notice of 18 January 2021 makes it clear that the withdrawal of the UK per se does not form sufficient basis for a review to be initiated. A party seeking such review will need to present additional evidence capable of resulting in significantly different findings, where information relating to EU-27 only (excluding the UK) is taken into account.[5] Factors that could potentially affect such findings include, for instance, the share of total imports of a product under investigation into the UK, out of total imports of that product calculated on an EU-28 basis, both globally and considered on an individual exporting producer basis, including their price level; sales of the product by EU producers to the UK and EU imports of the product from UK producers; and the performance of the relevant industry in the EU-27, excluding UK operators.
The UK’s departure from the EU customs territory has also practical consequences both for ongoing EU trade remedy proceedings initiated before 1 January 2021 but not yet concluded by that date, and for any future such proceedings the EU may launch. First, UK companies and associations no longer qualify as “interested parties” to EU proceedings. They therefore no longer will receive notifications and disclosures, nor will they be allowed to consult the open files of the proceedings which normally are solely accessible to interested parties. Previous submissions made by UK companies and associations will not be taken into consideration any more. Instead, the European Commission will invite concerned UK companies or associations to came forward in each specific ongoing proceeding within a designated time limit, normally within10 days after a note to this effect is added to the open files of each proceeding, to solicit interested party standing. UK companies and association may establish the latter standing by demonstrating their links within the EU to companies or operations relating to the product under investigation.
Second, findings of ongoing EU proceedings, including dumping and injury aspects, will be based going forward on information relating to the EU-27 only. That is, only the export sales to EU-27 will be used to establish the dumping margin of an exporting producer. Exports to any UK destination, including those to Northern Ireland, will be considered as sales to third countries, even though they were previously reported as sales to the EU in the questionnaire of the proceeding at the European Commission’s request. In proceedings where exporting producers are in the process of preparing replies to the questionnaire, the European Commission has directed them to exclude sales to any destination in the UK from the reporting of EU sales, and instead to treat them as export sales to third countries.[6] Likewise, injury assessment shall be limited to the local industry in EU-27, since only the latter is susceptible to be harmed by the dumped imports. UK trading of the product under investigation into the EU-27 will in turn be considered as arguably one of the causing factors of the injury suffered by EU local industry, and therefore possibly break the causal link that the dumped imports from subject country would otherwise have with the injury at issue.
Third, for some proceedings on the point of being concluded soon after 1 January 2021, where findings are made on EU-28 basis i.e. including information relating to the UK, the European Commission has analyzed the impact of the UK withdrawal on the conclusions reached in the proceedings. This is reflected, for example, in the latest disclosure document of the expiry review proceeding concerning imports of citric acid from China (R717). However, the European Commission’s practice has not been entirely consistent in this regard. For example, in the anti-dumping proceeding concerning aluminum extrusions from China (AD664), disclosed on 22 December 2020, the European Commission did not provide a separate impact assessment in its findings, excluding the UK.
Indeed, where the European Commission adopts trade remedy measures after UK’s exit of EU customs territory, but on the basis of conclusions drawn from EU-28 information and in the absence of an adequate impact assessment accounting for the UK’s departure, this potentially could trigger challenges before the General Court of the European Union and/or at the WTO DSB.
Now that the UK has fully withdrawn from the EU, economic operators who formerly traded products affected by trade remedy measures in the EU and UK may want to evaluate the impact and possible trade diversion effect any current revisions to such measures may cause to their supply chain. This is particularly so far as trade with Northern Ireland is concerned, where the new rules are especially complex and may lead to unexpected results. Remapping of supply chains may be required in order to safeguard a trader’s optimal position.
Meanwhile, Brexit-related review mechanisms provide traders unique opportunities to seek amendments to existing EU trade remedy measures, potentially resulting in more favorable treatment. Parties to ongoing trade remedy proceedings, on the other hand, will have to reassess their standing and position, adapting their reporting and analysis to account for the revised EU and UK datasets. Arguably, the European Commission will need to take into consideration the impact of such changes to its conclusions. Failure to conduct such a review may in turn provide valid grounds to contest European Commission findings.
[1] Northern Ireland is part of the customs territory of the United Kingdom and left the Customs Union of the European Union as of the end of the transition period. However, Northern Ireland is subject to a limited set of EU rules related to the Single Market for goods and the Customs Union pursuant to Protocol on Ireland/Northern Ireland to the Withdrawal Agreement. The Union's Customs Code, for example, applies to all goods entering or exiting Northern Ireland to the extent as defined in the Protocol. [2] Council Decision (EU) 2020/135 of 30 January 2020 on the conclusion of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, OJ L 29, 31.1.2020, p. 1. [3] Notice regarding the application of anti-dumping and anti-subsidy measures in force in the Union following the withdrawal of the United Kingdom and the possibility of a review, OJ C 18; 18.1.2021, p. 41. [4] This is so far the only trade remedy measure affecting the imports of UK originating products, further to the adjustment to the safeguard measures, particularly taking into consideration historical steel trade from the UK to the EU. See, in this respect, Commission Implementing Regulation (EU) 2020/2037 of 10 December 2020 amending Implementing Regulation (EU) 2019/159 imposing definitive safeguard measures against imports of certain steel products, OJ L 416, 11.12.2020, p. 32. [5] This approach to review existing trade remedy measures aligns with the EU’s practice during its enlargements in 2004, 2007 and 2013, when more countries became part of the EU customs union. See, in this respect, OJ C 231, 16.9.2004, p. 2, OJ C 297, 7.12.2006, p. 12, and OJ C 137, 16.5.2013, p. 9. [6] For instance, in the latest anti-dumping proceeding on imports of iron or steel fasteners from China (AD676). This is however not yet the case in the anti-subsidy proceeding on imports of optical fibre cables from China (AS677) initiated on the same day as fastener anti-dumping investigation.
[1] Northern Ireland is part of the customs territory of the United Kingdom and left the Customs Union of the European Union as of the end of the transition period. However, Northern Ireland is subject to a limited set of EU rules related to the Single Market for goods and the Customs Union pursuant to Protocol on Ireland/Northern Ireland to the Withdrawal Agreement. The Union's Customs Code, for example, applies to all goods entering or exiting Northern Ireland to the extent as defined in the Protocol. [2] Council Decision (EU) 2020/135 of 30 January 2020 on the conclusion of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, OJ L 29, 31.1.2020, p. 1. [3] Notice regarding the application of anti-dumping and anti-subsidy measures in force in the Union following the withdrawal of the United Kingdom and the possibility of a review, OJ C 18; 18.1.2021, p. 41. [4] This is so far the only trade remedy measure affecting the imports of UK originating products, further to the adjustment to the safeguard measures, particularly taking into consideration historical steel trade from the UK to the EU. See, in this respect, Commission Implementing Regulation (EU) 2020/2037 of 10 December 2020 amending Implementing Regulation (EU) 2019/159 imposing definitive safeguard measures against imports of certain steel products, OJ L 416, 11.12.2020, p. 32. [5] This approach to review existing trade remedy measures aligns with the EU’s practice during its enlargements in 2004, 2007 and 2013, when more countries became part of the EU customs union. See, in this respect, OJ C 231, 16.9.2004, p. 2, OJ C 297, 7.12.2006, p. 12, and OJ C 137, 16.5.2013, p. 9. [6] For instance, in the latest anti-dumping proceeding on imports of iron or steel fasteners from China (AD676). This is however not yet the case in the anti-subsidy proceeding on imports of optical fibre cables from China (AS677) initiated on the same day as fastener anti-dumping investigation.
