Many products and materials are produced by different companies in different countries, both inside and outside of the European Union. In regions that have, for example, lower labour rates, it is possible to produce these goods at a far lower cost than inside the European Union and thus sell them at a lower price. These products are then “dumped” at a far lower price on the EU market. Good examples of this are birch plywood from Russia and electric bicycles from China.
Why are Anti-Dumping Levies Charged?
One of the goals of the European Commission is to protect the European economy, the European market, and European companies. The European economy grows stronger if European companies buy from and sell to other European companies instead of buying from non-EU suppliers. When products are dumped on the European market, it is much more attractive for companies to do business with these cheaper non-EU suppliers. By levying anti-dumping duties, the European Commission wants to create a level playing field for European suppliers that want to compete with non-European suppliers from countries with low-cost labour (for example).
Anti-Dumping & Trade Wars
Imposing anti-dumping duties can lead to a trade war between the European Union and a third country. In a trade war, both sides take measures that restrict trade, like sanctions, export controls, or measures like anti-dumping duties. An example of this is China’s higher import duties on wine from the European Union after the European Union started levying anti-dumping duties on solar panels.
Targets of Anti-Dumping Duties
The European Union can impose anti-dumping duties on specific products or product groups from one country or a group of countries. These are general anti-dumping duties. If certain exporters are dumping products on the European market, the European Union can also impose duties on those specific products from that particular exporter. By levying these duties, the European Union makes the products less attractive to buyers in Europe and stimulates buying products produced in the EU or at a fair price outside of the EU.
Forms of Anti-Dumping Levying
The EU has multiple ways to levy anti-dumping duties. The most common way is to impose an “ad valorum”, which is a duty based on a percentage of the price of the goods. Other forms are imposing a fixed duty amount, setting a minimum price and levying duties to bring the price up to that level.
In rare cases, the European Union accepts a price agreed by the non-EU supplier. With this form of antidumping levying, the exporter offers to settle on not selling his product in the EU under a specific minimum price.
How the European Union Decides to Impose Anti-Dumping Duties
Anti-dumping levies are usually imposed after a complaint from a producer or group of producers in the European Union. These EU producers can complain to the European Commission (EC) about a non-EU producer dumping products on the EU market. After receiving the complaint, the European Commission starts an investigation and then decides whether or not to impose an anti-dumping levy. This procedure can take up to fifteen months.
Anti-dumping duties are imposed for a maximum of five years when the following criteria are met:
- European Union producers suffer from the dumping activities
- There is a causal link between the dumping and the adverse effects on the EU producers
- The imposed duties are not damaging to European interests.
The European Commission can at any time cancel the duties, or after an expiry review, prolong the anti-dumping policy.
Anti-Dumping & HS-Codes
The importer can check whether or not anti-dumping duties are levied on products purchased utilising the HS code. When looking up the HS Code of the product in the Combined Nomenclature, it mentions not only the import duty rate, but also if other measures apply to the import of it, such as anti-dumping.
A correct HS Code classification is key to avoiding additional anti-dumping duty payments.
Importers: Be Aware!
When buying a product from a non-EU country, it is always worthwhile to investigate whether or not antidumping duties are levied on it. Especially when it considers a new product, a new supplier or an exporting country you haven’t dealt with before.
Also, keep an eye on new anti-dumping measures that the EU announces. Unbeknownst to you, the European Commission could impose anti-dumping levies on one of your suppliers or one of the products you import. In those cases, it could be better to find an alternative supplier.
If you want to know more about anti-dumping duties or other measures from the European Commission, feel free to contact one of our experts. They will gladly answer all your questions and help you define the best import strategy for your company.