Verbatim report of proceedings

Tuesday, 24 October 2006 - Strasbourg

21. Third-country anti-dumping, anti-subsidy and safeguard action (debate)

  President. – The next item is the report (A6-0243/2006) by Mrs Muscardini, on behalf of the Committee on International Trade, on the annual report from the Commission to the European Parliament on third country anti-dumping, anti-subsidy and safeguard action against the Community (2004) (2006/2136(INI)).

  Cristiana Muscardini (UEN), rapporteur. – (IT) Mr President, Commissioner, ladies and gentlemen, the 2004 annual report on third-country anti-dumping, anti-subsidy and safeguard action, presented by the Commission services, has uncovered a piece of information that has raised a number of concerns within our parliamentary committee. It appears from the report that there has been an abnormal increase in the number of trade protection cases, involving both traditional users of these measures and more recently developed WTO member states. In many cases, WTO rules and case-law have been partially or completely disregarded, causing damage to Community industry.

For the developed countries, led by the United States, major problems arise as a result of the unilateral and half-hearted application of WTO rules. For some emerging countries, the application of countervailing duties is not intended to counteract illegal practices, but to give their local industries extra protection against European imports. In many cases, the investigating standards are low and raise a number of questions as to their full compliance with WTO rules.

The Commission report relates some of those significant cases, namely the 'Zeroing’ case with the United States, the Indian anti-dumping cases, the South American and Austrian farming cases and, in general, the extensive and unfair use of safeguards. In many of the cases brought against the European Community, the Community has succeeded in obtaining a satisfactory settlement for resolving the disputes within the WTO.

Nevertheless, a success such as that often comes too late, and irreparable damage is done to European industry. Faced with the picture presented to us by the Commission in its report, the Committee on International Trade could have acted on instinct and suggested adopting the same methods and behaviour as those trade partners that violate the anti-dumping, anti-subsidy and safeguard rules, but it has not done so. We are in fact convinced that respect for the trade rules established at international level and within a multilateral framework is the mainstay of economic growth and, more generally, of the peaceful relationship between nations. Two wrongs never make a right. Having established that, we should like to reaffirm that the rules must be applied and that, if they are not applied, corresponding sanctions must be swiftly imposed in order to guarantee that the law is upheld. If they are not swiftly applied, the damage will be irreparable.

In defence of the law and of that sector of European industry that feels unfairly affected by unlawful measures, we call on the Commission to take a firm stand in pursuing the WTO negotiations, which are aimed at making other WTO members apply trade protection measures in a less arbitrary way, and to act as the promoter of actions aimed at having the decisions of the WTO dispute settlement body applied more swiftly and effectively. These points should be included in the Doha Development Agenda if – as we hope – these negotiations are resumed.

We therefore call on the Commission to accord due importance to this matter as part of the initiatives aimed at increasing the external competitiveness of European industry, such as were recently announced by Mr Mandelson before the Committee on International Trade.

Finally, we recommend that the Commission refrain from giving preferential or special treatment to those trade partners that repeatedly fail to comply with WTO rules and case-law, giving rise to serious economic consequences for European industry.

The Committee on International Trade is of the opinion that, when faced with serious situations, we cannot remain completely passive. If we want to gain the citizens’ support for the new international trade rules, we need to strive for greater transparency, consistency and respect for the law on the part of all the actors, by implementing measures ranging from border controls to the application of common sanctions against those who trade in counterfeit or illegal goods on European soil.

We can associate the conclusions of this report with the recent Commission initiative in favour of a reform of the European Community's anti-dumping and anti-subsidy policy. The aim of this reform is to restrict the use of these instruments by the Commission as part of the efforts to ensure that the Community interest is looked at more carefully and more extensively.

  Peter Mandelson, Member of the Commission. Mr President, I would like to thank the rapporteur, Mrs Muscardini, and the Committee on International Trade for the excellent work that they have done on this important issue.

The European Union is a major exporter worldwide and this leaves us exposed to trade defence actions by third countries. When such actions are taken in compliance with WTO rules, we cannot and should not complain, and we do not. However, that is not always the case and these actions can easily become a serious and unjustified impediment to our legitimate market access opportunities.

Therefore, we must closely monitor third-country actions against our exports and intervene to minimise the negative impact of such actions on our companies. And we should certainly be vigilant. Whenever possible we favour the diplomatic route, which is the quicker and the most efficient way to solve those issues when we have partners who wish to solve them. But when diplomacy fails, we do not hesitate to resort to WTO panels, as it is our right to do.

Both the diplomatic and the litigation approaches have met with notable successes. Take, for example, the Indian cases mentioned in the report. Diplomacy has resulted in the removal of no fewer than 12 measures. We also hope for significant success on the agricultural products cases that you have identified.

It is well known that the United States is a recurrent problem for us in this context. It is pro-free trade, but its use of the trade defence instrument is seen by many as unreasonable on certain issues. This has been particularly marked in the steel sector, where we have been arguing against certain practices for years on a large number of their dumping and subsidy measures. We have had a considerable success in Geneva but, frankly, it is a long hard slog even getting them to implement the remedies to the disputes which they have lost.

We cannot solve everything through diplomacy or litigation. This is why we welcome your support for the proposals we have tabled in the Doha Round to strengthen the rules and the disciplines governing the use of anti-dumping and countervailing measures.

The Round is suspended, something I deeply deplore and regret, but we are fighting hard to get it restarted. For trade defence this would allow us to seek improved disciplines along the lines of the EU practice in this field, making it more difficult for countries to abuse the system, which I am afraid some are only too prepared to do. We need tightened disciplines in the anti-dumping system.

We need greater transparency in the operation of trade defence instruments. We need less arbitrariness on the part of governments. Such behaviour simply discredits the rules. It brings the system into disrepute and it does not reflect credit on the multilateral trade system and its principal institution, the WTO.

We agree with you that the dispute settlement mechanism is an essential feature of the WTO system, which needs protecting, but we are working hard to improve it so that faster remedies can be achieved.

We will take the opportunity of any bilateral trade agreement with third countries to ensure that our partner countries take on specific obligations on the fair use of trade defence instruments. This is not an alternative to strengthening and improving the rules at the WTO. On the contrary, it underpins that. It is a way of getting insurance in place, so that we can use all available methods to bring reason and discipline to the operation of these instruments. This would particularly apply for those countries that abuse them the most.

Good practices are as important as good rules. That is why the Commission’s departments devote a great deal of time and resources to providing technical assistance to third countries that become new users of trade defence instruments. Our aim is that they should apply them in a fair and balanced manner and in accordance with our own high standards.

These efforts seem to bear fruit. The end of 2005 saw a welcome change from the trend of previous years, with a significant fall in the number of trade defence cases initiated against Community exporters, from 33 in 2004 to 19 in 2005. Market access, including a fair and proper implementation of WTO trade defence instruments by our trading partners, features high on our priority list and we will continue to take any steps required to ensure that our exports are not unduly penalised.

Of course it is difficult to follow each and every case with our current resources and I would certainly like to do more for our exporters, in particular small and medium-sized companies, which often have little experience in this area. The EU must remain an example that others can follow.

As the report recalls, we are viewed as a moderate user of trade defence instruments. That reputation is deserved and that must remain so. It is in that spirit that I recently launched a reflection process on how Europe’s trade defence instruments such as the anti-dumping instrument operate in the modern global economy. A broad public consultation will take place early in 2007, based on a Green Paper expected in the coming months.

This consultation will allow the Commission to draw on a wide range of views and identify whether there is scope to improve our rules and practices further. Our trade defence instruments can make an important contribution to ensuring both free and fair trade, thereby stimulating our competitiveness. This will involve strong and close cooperation with all stakeholders, including Member States and industry, and, I would add, the support and involvement of the European Parliament.

  Syed Kamall, on behalf of the PPE-DE Group. – Mr President, I welcome the general tone of both the Commission’s and Mrs Muscardini’s reports in wanting to see a world trading system that is as open and fair as possible. However, when we consider the anti-dumping measures of third countries, we in the Community need to show moral leadership and avoid hypocrisy.

We can agree that trade defence mechanisms are often used as an excuse to protect domestic markets from competition; but we should also admit that the EU is sometimes guilty of using these mechanisms to protect uncompetitive companies from non-EU providers – shoes and textiles being recent examples. Fortunately, we continue to be sparing users of these mechanisms.

With the potential collapse of the Doha development round, we must work with our trading partners to ensure that their legislation and practices comply as far as possible with WTO rules. However, to have any moral authority in this area, our own anti-dumping and anti-subsidy investigations must be transparent and impartial.

I am concerned about the call for a Community approach to defend exporting SMEs faced with protectionism abroad. During last year’s ‘bra wars’, it was a so-called Community approach that suspended imports from China and caused SMEs in London’s fashion industry to lose contracts and to provide compensation to clients left waiting for unfulfilled orders. If that is a Community approach, then we in London want to see less of it.

When it comes to arbitration, I think we all agree that any ad hoc arbitration group should consist of relevant experts. But we must ensure that any experts serving on these groups are experts in the sector being investigated who understand the structure of the industry and costs involved, not simply experts in more general trade issues.

Overall, I would like to congratulate both the Commission and the rapporteur on this report.

  Francisco Assis, on behalf of the PSE Group. – (PT) Mr President, the increase in international trade in recent years has led, among other things, to increased competition and has tempted many countries to resort to trade protection mechanisms in order to protect their markets. It should not, therefore, come as a surprise that there have been increasing numbers of situations in which anti-dumping, anti-subsidy and safeguard measures have been adopted.

European exports, as the report before us clearly demonstrates, have been the target on a number of occasions of such measures on the part of third countries. Such cases have risen alarmingly. As well as the traditional countries, some of the new players to have arrived on the international trade relations scene are involved.

This phenomenon, which could significantly harm a number of European industries, must therefore be tackled seriously. Such an approach entails, first and foremost, carefully separating cases in which the use of these instruments arises entirely from the legitimate implementation of the principles of fair trade relations from those in which their use is merely a legal smokescreen to cover up illegal protectionist measures in the very worst sense of the term. This distinction can only be made completely clearly if we are committed to strengthening transparency in the processes aimed at assessing whether trade defence measures are being used legitimately or otherwise. The aim is therefore to ensure complete compliance with the rules and the case law of the World Trade Organisation. To this end, the Commission must channel its efforts into helping improve these procedures, thereby discouraging the illicit use of these instruments.

That being said, it is appropriate to mention the importance of the Commission's assistance to the Member States and to European industry in trade protection cases initiated by third countries. This support is particularly significant for SMEs, which by nature are less well equipped to deal with situations of this kind.

Lastly, we welcome the fact that the Commission is ready to take an active role within the WTO in jointly reviewing the provisions regulating the adoption of trade protection instruments, with a view to stressing the value of multilateralism. At no point in this debate, however, must it be forgotten that the EU is the most open trading area in the world and that the Europeans also have legitimate interests to safeguard.

  Daniel Caspary (PPE-DE). – (DE) Mr President, Commissioner, ladies and gentlemen, I should like to congratulate Mrs Muscardini on this successful report.

Freedom of access to foreign markets is vital to large numbers of European enterprises. This freedom of access does not exist in many cases today, with third countries hindering European enterprises’ market access in downright breach of agreements or in contravention of the WTO rules. In so doing, these third countries exploit the whole spectrum of tariff and non-tariff barriers to trade skilfully to their advantage and our disadvantage. The competitiveness of the European economy, and thus of the EU labour market, suffers tremendously as a result of these problems. These actions on the part of some of our trade partners are unacceptable.

Commissioner, the EU cannot allow other countries to treat us like this. All participants in world trade must abide by the rules. It also applies that the EU should not treat third countries like this. We, too, must abide by all the rules in order to take credible action against rule-breakers without any open flanks. Fair, free world trade is possible only if rules are in place that are binding and are observed by all parties without exception.

What is to be done, therefore? I would call on the Commission to do everything possible to ensure that we Europeans abide by the rules. I call on the Commission to take measures to protect our enterprises if it is established that individual trade partners have failed to abide by the rules. I call on the Commission to make consistent use of the existing – or even an improved – dispute-settlement procedure here if, in specific cases, no amicable settlement has been reached in the short term.

We must focus our future efforts on ensuring that all trade partners abide by the rules. Only if all parties, without exception, abide by the rules, can people draw long-term benefit from world trade.

  Małgorzata Handzlik (PPE-DE). – (PL) Mr President, I should like to thank the rapporteur for a very comprehensive report on the safeguard action taken by third countries against the European Union. Unfortunately, a study of Mrs Muscardini’s report and of the Commission’s own report confirms that European trade policy gives undue consideration to protecting producers at the expense of consumers. This is particularly true of the agricultural sector.

Import quotas, anti-dumping duties and administrative obstacles for agricultural products cost every European household approximately USD 1 500 a year. Clearly, there are occasions when it may be permissible to impose protective measures, but only in very limited and clearly defined cases. The circumstances in which they can be applied must be laid down in advance, and any decisions must be planned in good time and widely publicised, in order to enable entrepreneurs to make appropriate arrangements for their orders or supplies.

Unfortunately, market players are currently still paying too high a price for poorly planned trading policies and for sudden decisions to apply protective rates, which cause legal and commercial uncertainty and make it more difficult for those involved in trading to adjust quickly to any changes. It is therefore very important for trade policy to be stable and predictable. Preferential rates need to be understandable and easy to apply. Their implementation should be widely discussed in advance with all trading partners, so that each entrepreneur is properly informed, and can feel certain of the future and of his or her orders.

I would like to conclude by saying a few words about trade with developing countries, the World Trade Organisation and the European Union. Developing countries should be able to take advantage of all the opportunities arising from membership of the WTO. These countries should be treated as equal partners. It is therefore not acceptable for industrialised countries to protect the interests of large firms located mainly in the EU and in the USA.

  Georgios Papastamkos (PPE-DE). – (EL) Mr President, having congratulated the rapporteur, Mrs Muscardini, and thanked the Commissioner for his detailed statement, I should like to say by way of introduction that maintaining and strengthening the competitiveness of the European Union in the new globalised environment requires, firstly, increased European intervention in third country markets and, secondly, effective protection from unfair trading practices by our partners.

The Community – and this has already been said – is still firmly a moderate user of trade defence instruments. On the other hand, the constant increase in trade defence instruments against the Community is taking on worrying proportions.

The Union is – and must remain – an open market to international competition. We are against protectionism. At the same time, however, we are against distorting competition and against our partners' achieving competitive advantages by relying on underhand practices in infringement of international trade rules.

There is no sense in unilateral disarmament by the Union. Trade 'pacifism' operates only when applied by all parties. No one disputes that we are seeing increased use of trade defence instruments against the Community. This being so, the Commission should keep a close watch and ensure that abusive and non-compliant measures are withdrawn, either through consultations and/or by taking recourse to the judicial bodies of the WTO as and where needed.

We are also seeing a comparatively large number of trade defence instruments against European agricultural products. It is therefore the Commission's responsibility to ensure that the radical reforms of the CAP are taken into adequate account by our trade partners when activating anti-subsidy measures.

  Peter Mandelson, Member of the Commission. Mr President, I have never been a unilateral disarmer at any stage in my political career, in any context. I have always been a multilateralist, whether it be in respect of disarmament or the putting in place of international rules to create institutions of global governance or in the design of processes to create agreements or to solve disputes in the world. I bring those principles and that approach to this subject as I have done to others throughout my political career.

We have heard a call this evening for moral leadership. The morality that I bring to this subject of trade is my belief in free trade. I say it is moral because I believe that free trade is the best way to drive economic growth, to lever up living standards, to create opportunities for people and to attack poverty in our world. That is what I call ‘moral’.

However, one of the ways in which we ‘morally’ pursue free trade is by standing up for fair trade. When I look around me and see the public disquiet, uncertainty and unhappiness about what is going on in the global economy and the sense that people feel increasingly insecure and threatened by the dramatic changes that are taking place in the architecture and landscape of the global economy, I see people beginning to question whether free trade is a good idea. I see them beginning to wonder whether sheltering from the global economy would be better; whether erecting barriers between us and our trading partners might not be a better way of securing our jobs and our livelihoods.

I make a very strong argument against that reaction and instinct, but I will never help that argument against protectionism if I am seen to be or thought to be weak when it comes to standing up for the upholding and implementation of internationally agreed trade rules which stand out against anti-competitive behaviour, state interventions or trade distortions, which are designed to give one trading partner an unfair, unreasonable and unacceptable advantage in trade against another. That is why it is appropriate and proper to operate trade defence instruments within the rules created by our multilateral institutions.

However, I would never want to see those rules used as a weapon against others’ low-cost competition or against others’ legitimate use of their comparative advantage. That is not right and it is not acceptable, but nor, if I may say to Mr Kamall, was that the case either in respect of textiles or shoes. Shoes, yes, was an anti-dumping measure, arrived at after considerable investigation, analysis, recommendation, discussion, debate and finally decision amongst our Member States, as it properly should be. I would stand by the objectivity and the transparency with which that decision was arrived at, and it certainly was not adopted for protectionist purposes.

However, in the case of textiles, I never said it was unfair trading. I never said that the fierce competition that we were facing in the case of textiles was as a result of price or market distortions by the Chinese. I merely pointed to the fact that with the final lifting of quotas we in Europe were suddenly and unexpectedly faced with what amounted to an avalanche which, if it had not been resisted, would have had the likely effect of burying our market and severely distorting what people produce, how people sell, their profits, their livelihoods and, therefore, their jobs in such a sudden way that I believed it was appropriate – and, in the end, our Chinese trading partners also agreed that it was right and appropriate – to take voluntary cooperative measures to slow down the rapid increase in Chinese textile exports.

You are right that at all times, on all occasions and in all cases we should operate impartiality, transparency and truthfulness in the analysis we put forward, the conclusions we reach and how we seek to justify the measures we are advocating.

It is true, as Mrs Handzlik said, that any intervention of any sort in the market – legitimate, anti-dumping or other uses of trade defence instruments – is bound to create some uncertainty and weaken the ability of businesses to plan ahead. Mr Kamall made a similar point. I take this very seriously indeed, because I do not want my actions, as agreed by the Member States, to have the effect of making a bad situation worse by further disrupting or undermining the ability of companies to plan ahead and to organise their production, which, of course, is hampered if supply and production chains are undermined or disrupted by interventions such as these. Therefore we must minimise the disruption. One of the things I want to take very seriously in the context of our Green Paper and our examination of this matter, is how we can minimise disruption and offer the greatest possible predictability to companies that might be affected.

I just want to make this last point: Mr Caspary said – if I may elaborate on and embroider his words slightly – that we should keep to the rules and at all times seek to strengthen and improve them. I agree with that. That is precisely what we are doing in the DDA and why we have a multilateral system and process governing these rules and an institution that enables us to negotiate precisely the strengthening and the improvement that you advocate. That is why the WTO system is so important.

I would just like to say in conclusion that, whatever disruptions, interventions, distractions or diversions we have in a trade agenda which is very wide and very complex, I will always keep my eyes very carefully focused on the DDA, the importance of the agenda we are pursuing in the DDA and the vital importance of bringing those negotiations to a successful completion. I want to do that in respect not only of market access but also of trade rules and their strengthening, and that is what the Commission remains dedicated to achieving.

  President. The debate is closed.

The vote will take place on Wednesday at 12.30 p.m.