Chapter 4: Price Undertakings under the EU Anti-Dumping Law
4.4 Investigation Procedures and Effects of Price Undertakings
4.4.6 Expiry, Withdrawal or Violation of Undertakings
A definitive anti-dumping measure shall expire five years from its imposition. Such an expiry review shall be initiated on the initiative of the Commission, or upon request made by or on behalf of Community producers. A notice of impending expiry shall be published in the Official Journal of the European Union at an appropriate time in the final year. The Community producers shall lodge a request no later than three months before the end of the five-year period. An expiry review shall be initiated by the Commission where the request contains sufficient evidence that the expiry of the measures would be likely to result in a continuation or recurrence of dumping and injury.
Otherwise, the undertaking will automatically lapse when the anti-dumping measure expires, while a notice will be published in the Official Journal. Apart from the case of natural
95 Article 8(6) of the Basic Regulation
expiration, undertakings may terminate by withdrawal or violation. In other words, the undertakings will remain in force until:
(1) Automatically lapse:
In the case of the natural expiration of anti-dumping measures or making negative determination of dumping or injury, price undertaking will be automatically lapse. (except in cases where such a determination is due in large part to the existence of an undertaking)96
(2) Withdrawal or violation of undertakings:
If undertakings are withdrawn, violated, or suspected of being violated, the Community authorities may impose provisional or definitive duties as follows:
A. A provisional duty may, after consultation, be imposed in accordance with Article 7 on the basis of the best information available, where there is reason to believe that an undertaking is being breached or in case of breach or withdrawal of an undertaking where the investigation which led to the undertaking has not been concluded.97
B. In case of breach or withdrawal of undertakings by any party to the undertaking, or in case of withdrawal of acceptance of the undertaking by the Commission, the acceptance of the undertaking shall, after consultation, be withdrawn by Commission Decision or Commission Regulation, and the provisional duty which has been imposed by the Commission or the definitive duty which has been imposed by the Council shall automatically apply, provided that the exporter concerned has, except where he himself has withdrawn the undertaking, been given an opportunity to comment.98
96 Article 8(6) of the Basic Regulation
97 Article 8(10) of the Basic Regulation
98 Article 8 (9) of the Basic Regulation
The Community Institutions have been confronted with a number of violations of undertakings, and the Commission would inform the exporters on the basis of which the acceptance of the joint undertaking should be withdrawn and the definitive anti-dumping duties should apply. The common cases of violating the undertakings and being withdrawn by the Commission are as follows:
(1) To issue misleading declarations regarding the origin of the product concerned.99
(2) To issue the undertaking invoices by selling the product concerned together with other products to the same customer, this is violating the cross-compensation clause of the undertaking.100 (The product not covered by the undertaking may be sold at artificially low prices in order to compensate the MIPs for the product concerned by the undertaking.)
(3) The exporters set up a compensatory arrangement with at least one customer in the EU whereby an official invoice price at or above the MIPs and a “real” sales price below the MIPs were agreed and the difference was re-transferred to the customer in the EU as “refund”.101
(4) To make misleading declarations regarding the identity of the exporter by issuing undertaking invoices for sales of the product concerned produced by the other company not subject to the undertaking. This practice is to avoid payment of the residual anti-dumping duty rate. 102
(5) The company fails to allow officials of the European Commission to perform on-spot investigations at the premises of the Company to verify all information and data furnished.103
99 Castings (China), 2010 O.J. (L179) Page 8 , at recital 20
100 Sweet corn (prepared or preserved, in kernels), 2009 O.J. (L246) Page 29,at recital 15, 21
101 Castings (China), 2010 O.J. (L179) Page 8, at recital 12
102 Castings (China), 2010 O.J. (L179) Page 8, at recital 17
103 Color television receivers2006O.J. (L93) Page 63 , at recital 10
(6) The companies fail to submit quarterly reports which are complete, exhaustive and correct in all particulars.104 Non-compliance with reporting requirements also constitutes a breach of the undertaking.105
(7) The company issues credit notes with no other economic justification but to lower the price shown on the invoice, which result in the resale price on average falling below the minimum re-sale price (MRP). Furthermore, it fails to take due account of the calculation of the MRP on ”cash or equivalent basis” , which lead to the average re-sale price of these transactions falls below the MRP.106
(8) The volatility in prices on the market cannot be merely explained by an increase in the price of the main cost input, and thus it is not possible to index the MIPs.107 (Article 8(9) of the basic Regulation and the relevant clauses of the undertaking authorize the Commission to unilaterally withdraw the acceptance of the undertaking.)
(9) After having consulted all parties concerned, the undertakings in their current form are not appropriate to counteract the injurious effect of dumping, since they present both considerable monitoring and enforcement difficulties and unacceptable risks. On this basis, and in accordance with the relevant clauses of the undertakings, which authorize the Commission to unilaterally withdraw the acceptance of the undertakings, thus the Commission has decided to withdraw the acceptance of the undertakings.108
104 Sweet corn (prepared or preserved, in kernels), 2009 O.J. (L246) Page 29,at recital 23; Urea (Bulgaria), 2006 O.J.
(L12) Page 1,at recital 6
105 Steel ropes and cables (South Africa), 2007 O.J. (L326) Page 25 , at recital 21
106 Castings (China) 2008 O.J. (L153) Page 37 , at recital 16,17
107 Ferro-Silicon (the former Yugoslav Republic of Macedonia), 2008 O.J. (L55) Page 23 , at recital 4
108 PET film (India), 2006O.J. (L68) Page 37 , at recital 4
(10) The company issued undertaking invoices for product concerned which were not covered by the undertaking and these transactions benefited from the exemption from the payment of the anti-dumping duty upon importation. This practice constitutes breaches of the undertaking.109
Any interested party or Member State may submit information showing prima facie evidence of a breach of an undertaking. The subsequent assessment of whether or not a breach of an undertaking has occurred shall normally be concluded within six months, but in no case later than nine months following a duly substantiated request. The Commission may request the assistance of the competent authorities of the Member States in the monitoring of undertakings.