Disputes regarding legality of the EU‘s antidumping customs duties: situation and experience in the EU Member States (the Republic of Lithuania)

Application of the antidumping customs duties in the EU: current legal practice

In the context of economic shocks or crises, protectionist measures are often used to regulate economic activity and international trade and they are aimed towards protecting the interests of the internal market and domestic producers. We can see similar trends in the current situation worldwide. For example, as the international economy declined and the negative economic consequences, related to the Covid-19 pandemic became obvious, the European Union (EU) imposed new antidumping customs duties (amounting to more than 18% tariff) on steel products imported from China, Indonesia and Taiwan [1], as well as increased duties on many types of products imported from the USA [2], started new trade defence investigations against Turkey [3].

These trends are not new from a historical point of view, for example, the global financial crisis that began in 2007-2008 has also reinforced protectionist economic policy trends, which were based, inter alia, on the application of higher levels (tariffs) of customs duties to tax international trade operations. In this way, at the beginning of the 21st century, the number of trade defence investigations [4] increased in both the EU and the rest of the World, existing customs tariffs were increased or new customs duties were introduced [4], and tariff preferences were reviewed and withdrawn [5]. Thus, as we can see, one of the main regulatory measures that are applied in similar situations are customs duties, the impact of which on the regulation of international trade is considered to be extremely important, because, in addition to performing the fiscal function, they also have a protective effect. In individual cases, such as in the cases of imposition of trade defence duties (to protect the domestic market and domestic industry from the effects of imports of foreign goods), their application may lead to the emergence of significant barriers to international trade, as trade defence duties (tariffs) are generally sufficiently higher compared to other types of customs duties. They can reach up to 100 per cent or even more when the average rate of conventional customs duties does not exceed as much as 5 per cent ([4]; [6]). For this reason, the question of the possibilities of protection of the business entities, exporter‘s and importer‘s rights as well as legitimate interests in cases of application of such duties becomes critical and the possibilities of challenging them remain very important and will be discussed in this article, by analyzing judicial practice in the tax disputes in the EU courts, and, in particular, national courts in the EU Member States, namely, the Republic of Lithuania.

It should be noted that, under the general principles of Regulation (EU) No. 2016/1036 [8], the EU institutions may determine the amount of applicable antidumping customs duties, after having carried out the necessary investigation procedures, assessing the possible injury suffered by the EU industry from imports, carrying out methodological calculations to determine this injury and the level of the antidumping customs duty (it included determination of causation, dumping margin and calculation of other economic indicators). After the assessment of previously mentioned factors, The European Commission adopts a specific regulation imposing a specific antidumping duty, specifying the products originating in third countries which will be taxed, and the persons producing or exporting them (to which the duties will be applicable). It should be noted that EU regulations imposing antidumping duties can and are in practice subject to frequent legal disputes (which contains challenging of both substantive (e.g. inappropriate methodology for calculating the amount of duty) and procedural (e.g. infringements of the investigation procedure) elements of the imposition of such duties). This often raises the question about the legal status and interest of claimants – whether the particular subject (entity) can be considered an interested party to start an action before the EU courts (directly before the Court of Justice of the EU (CJEU)) for annulment of an EU legal act (specific EU antidumping regulation) under Article 263 of the Treaty on the Functioning of the EU (TFEU). Disputes of this type have recently been settled on several occasions in the case-law of the CJEU, such as in cases C-374/12, Valimar; C-143/14, TMK Europe, and C 419/08 P, Trubowest Handel GmbH and Viktor Makarov. In the light of the case-law developed by the CJEU in these and other previous cases (see Cases C-118/77, ISO v. Council, C-279/86, Sermes v Commission, etc.), the so-called “unrelated importers” i. e. persons liable to pay an antidumping duty on importation but not specifically mentioned in the EU regulation imposing the duty (e. g. traders importing goods to the EU from third countries, suppliers of goods) should normally seek judicial protection against trade defence measures imposed towards them before the national courts of EU Member States. Meanwhile, interested parties which belong to other categories (producers and exporters named in the EU‘s antidumping regulations, as well as those who participated in the antidumping investigations, had a significant share in the trade market and whose business data were used during the investigation) can apply directly to the EU Courts (CJEU) to challenge EU‘s anti-dumping legislation (individual regulations, applicable to them). However, it must be emphasized that in the event of a dispute being brought before the CJEU (in particular before the EU General Court), the persons (plaintiffs) challenging these EU legal acts (regulations) must be considered as directly concerned with them, and the mere fact of formal payment of anti-dumping customs duties is not being considered as sufficient enough to prove this link.

Legal instruments and procedures for challenging antidumping customs duties in the EU: possibilities of starting the dispute before the national courts of the EU Member States

It is important to note that the CJEU has emphasized and clarified in its case law that the right to challenge EU antidumping regulations is not limited only to directly interested („related“) third-country producers/exporters affected by these duties (which are bringing actions for annulment of EU acts directly before the EU General Court under Articles 263 and 265 of the TFEU), but also to domestic (unrelated) importers. For example, in case C-374/12, Valimar, the CJEU acknowledged that the applicant (plaintiff) – company „Valimar“ OOD, which imported steel ropes and cables from the Russian Federation as an independent (unrelated) importer, was entitled to challenge the antidumping regulation of EU indirectly, i. e. by submitting a request for a preliminary ruling of the CJEU before a national court of an EU Member State (in this particular case – Bulgaria). Thus, in such situation, the reference of a national court of EU Member State for a preliminary ruling (about the validity and legality of the EU‘s antidumping regulation) is considered as admissible by the CJEU. The CJEU reached a similar conclusion in another case in C-143/14, TMK Europe, in which the CJEU has found that the applicant, TMK Europe, although not possessing the status of a „related importer“, could object against the specific antidumping regulation of the EU, and, subsequently, the national court in the EU Member State was not bound by the definitive nature of the antidumping duty imposed by that EU regulation (the similar position was followed by the CJEU in the recent case C-251/18, Trace Sport SAS).

Thus, while facing with the imposition of anti-dumping duties and the EU regulations which impose them, interested parties always have not only a theoretical but also a practical opportunity to challenge the validity of the duty itself, its calculation structure and elements not only before the EU courts but also before national courts of EU Member States ( see, for example, CJEU cases C-374/12, C-533/10, C-205/16 P, C-204/16 P). In the following section, we will review how this system works in practice in the EU Member States, specifically in one of the Baltic States – the Republic of Lithuania, which is often used as a transit country for importing goods into the EU from Eastern countries and the country were customs procedures, related to importing of goods into the EU customs territory are often implemented by various business entities.

Disputes regarding the application of EU‘s antidumping customs duties in the Republic of Lithuania: an overview of the current situation and legal lessons which must be learned

It should be noted that after the accession of the Republic of Lithuania to the EU in 2004, the legality of antidumping duties (e. g. on goods originating in the People’s Republic of China and other third countries) has been repeatedly challenged in national courts of the Republic of Lithuania (Vilnius Regional Administrative Court, the Supreme Administrative Court of Lithuania). These tax disputes were related not only to the challenging of the calculation of antidumping duties due to incorrectly applied main factors of the determination of such duties, such as customs origin of the imported goods but were also related to other circumstances relevant to the imposition of antidumping duties, i.e. y. even the validity of the EU regulations imposing such duties and their specific provisions. For example, in the administrative case No. A-444-2863/2011 of the Supreme Administrative Court of Lithuania, the taxpayer had raised the issue of the legal protection of his legitimate expectations and the possible breach of the principle of legal certainty in a legal situation where the antidumping duty on imports was significantly increased (compared to the rate which was applicable at the time of acquisition of goods). Although the validity of the EU regulation increasing the antidumping duty was directly questioned in the case, the outcome of the case and the validity of the respective EU regulation was decided only by the national court itself by just making referrals to the practice of the CJEU, related to the application of the principle of protection of legitimate expectations (as the basic principle of EU law).

The Supreme Administrative Court of Lithuania followed a similar practice in other, subsequent cases in which requests to apply to the CJEU were submitted to contest the application of antidumping duties by the applicants (plaintiffs), e.g. case No. A-261-146/2014, A-261-144/2014, A-444-2727/2012. The scope of these disputes in Lithuania and the arguments of national courts were usually limited not to the challenging the legality of the correct application of the antidumping duty itself but to the other specific factors influencing the calculation of customs duty (such as tariff classification of goods and determination of their origin and value). It is noteworthy to mention that the possibility to challenge the legality of the antidumping duties imposed on the importers or to interpret exemptions from customs duties/import taxes following the practice of the CJEU in the above-mentioned Lithuanian cases may have also been negatively affected because of the unclear provisions of the national Law on Administrative Proceedings (Article 4). We should note, that the national law does not provide clear mandatory conditions under which the national courts, which settle tax disputes, are obliged to submit a preliminary reference to the CJEU itself (see also Kavalnė, Valančius, 2009 [9]; Valantiejus, Katuoka, 2019 [10]).

As none of these cases was referred to the CJEU, the question arises as to whether the extent of cooperation between the national courts and the CJEU in this particular category of cases (in the Republic of Lithuania) is, in fact, sufficient and should not be intensified (given the nature and complexity of the issues at stake). In this respect, the CJEU must be consulted on a mandatory basis in cases related to the application of EU‘s trade defence measures, when the validity of EU regulations imposing such measures is being challenged. Accordingly, existing national practices in this area are open to criticism from the point of view of the EU law and should be adjusted and changed in the future to allow importers to challenge the validity of EU regulations at the EU level and, when required, to refer cases to the CJEU to solve the questions regarding their legality.

Taking into account what was discussed above, it is important to note, that the importers which are liable to pay antidumping duties on imports into the Republic of Lithuania should be advised to step up their defence before national courts (in tax disputes), as the preconditions for such strategy were also formulated in the recent case law of the CJEU (C-251/18, Trace Sport SAS). It is obvious that under the current conditions persons liable to pay the antidumping duties imposed by the EU‘s institutions on goods imported into the Republic of Lithuania have other, additional and not yet sufficiently used legal possibilities to defend their rights and legitimate interests in the national tax dispute resolution institutions which have not been consistently exploited so far.

Sources and literature

[1] „EU puts anti-dumping duties on stainless steel from China, Indonesia and Taiwan“, REUTERS, https://www.reuters.com/article/us-eu-steel-dumping/eu-puts-anti-dumping-duties-on-stainless-steel-from-china-indonesia-and-taiwan-idUSKCN21T0GY?il=0;

[2] „EU targets more U.S. imports after U.S. metal tariff extension“, investing.comhttps://www.investing.com/news/commodities-news/eu-targets-more-us-imports-after-us-metal-tariff-extension-2132072;

[3] Juozas Radžiukynas ir kt., ES bendroji prekybos politika [EU‘s Common Commercial Policy] (Vilnius: MRU, 2011), 235;

[4] „7EU opens dumping probe into Turkish steel imports“, REUTERS, https://www.reuters.com/article/us-eu-turkey-steel/eu-opens-dumping-probe-into-turkish-steel-imports-idUSKBN22Q2L7;

[5] Miho Araki et al., International Trade after the Economic Crisis: Challenges and New Opportunities (Geneva: United Nations, 2010), 6;

[6] Prabodh Seth, „The Impact of the Global Economic Crisis on Customs“, World Customs Journal 3, 2 (2009): 136;

[7] Igor Bagayev et al., „Non-Tariff Barriers, Enforcement, and Revenues: The Use of Anti-Dumping as a Revenue Generating Trade Policy“, UCD Centre for Economic Research Working Paper Series, 6 (2017), 22;

[8] Regualtion (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union, Official Journal, L 176/21 (2016).

[9] Valančius, V., & Kavalnė, S. Europos Sąjungos teisės įgyvendinimas Lietuvos administracinėje teisėje: monografija [Implementation of European Union Law in Lithuanian Administrative Law: Monograph] (Vilnius: Registrų centras, 2009).

[10] Valantiejus, G., & Katuoka, S., Uniformity of Application of the EU Customs Law: Problematic Aspects in the Baltic States””, Economics and Culture 16, 2 (2019): 21-38.

Additional notes:

Original version of the article was published in the author’s personal LinkedIn account on 22.05.2022, see:

https://www.linkedin.com/pulse/disputes-regarding-legality-eus-antidumping-customs-eu-valantiejus/

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