European Anti Dumping Regulation: Latest developments

This article shall briefly explain the current climate in the European Union (“EU”) and apposite European Economic Community (“Community”) with regard to dumping legislation, inclusive of contemporary decisions which have attempted to address how intra-Community markets should indemnify EU industry from, inter alia, mass imports from foreign enterprise which could adversely affect Community industries.

Like most state systems, the EU region has developed measures for counteracting excessive intrusion from third-party providers/sellers that would have a significant effect on its industries. Rules regarding tariff and other measures were passed with respect given to World Trade Organisation (“WTO”) counterparts, most prevalently Article VI of the General Agreement on Tariffs and Trade (“GATT“), which attempts to define the principles and circumstances within which investigations, duties and remuneration for damage to business may be pursued. GATT rules attempt to ensure fair competition between state and third-party actors without unnecessary duties; the EU incorporated WTO articles to require investigations into anti-dumping be applied only as a matter of last resort, and when [EU] regional industry was suffering particular disadvantage via the predatory pricing of third-party goods, this in respect of pricing in their respective home markets.

What is dumping?

Dumping takes place when a third-party provider (in this, case a foreign enterprise outside the EU) sets the price of product for export at below the value of the product on its domestic market, thus giving the export an unfair advantage in its destination market.

World Trade Organization (WTO) law

Under WTO Law, dumping is considered an unfair trade practice which importing countries can counter by introducing an antidumping duty, as long as they prove: (1) the existence of dumping, (2) the existence of serious injury to the domestic industry, and (3) a causal link between dumping and that injury. As the EU is a signatory to GATT, its legislation uses its international treaty mechanisms as a model for its regional anti-dumping instruments.

EU Legislation

Current domestic measures pertaining to anti-dumping legislation can be found under the heading of Council Regulation 2016/1036 (hereafter “the Dumping Regulation”), which also sets out criteria within which anti-dumping duties may be addressed. Under Article I of 2016/1036, Dumping will have to have been shown to exist – i.e. the good in question will be shown to be less than a comparable price for a like product, in the ‘ordinary course of trade’, as established for the exporting country.

As part of GATT, anti-dumping investigations are to end immediately in cases where the authorities determine that the margin of dumping is insignificantly small (defined as less than 2% of the export price of the product); In other words, the price difference of the good in question has to have been shown to be significant enough to warrant anti-dumping measures. EU legislation reiterates that the volume of goods imported cannot be shown to be negligible (de minimis), and further states that the interest of the Community, i.e. the costs of taking measures must not be disproportionate to the benefits.

Finally, the causal link between harm to the industry and the imports in question must be proven to exist, this to satisfy both EU and WTO rules. There are rules governing what form or amount anti-dumping duties can take under the Regulation and WTO.

Current trends

The uptake of the codified Council Regulation 1225/2009 and its amendments on 20 July 2016 was a ‘response to the expiry of parts of China’s WTO accession protocol in December 2016 and to unfair trade practices from third countries’ (http://www.europarl.europa.eu/RegData/etudes/BRIE/2017/595905/EPRS_BRI%282017%29595905_EN.pdf). While the EU has sought to establish a market that allows free competition between all enterprises within a given industry, the obvious complexity of international trade – particularly in light of the malleability of markets in various sectors (e.g. the availability of low-prices imports of high-tech and textile goods) sometimes requires the market to be regulated via the mechanism of imposed duties to exporting agencies abroad, which is accepted as part of GATT’s article VI. This being said, anti-dumping, and trade defence cases in general have seen a significant decline, with average initiations of actions currently at an historical low. Moreover, the overall number of anti-dumping and anti-subsidy measures in force in the EU have been progressively less than in other major WTO members (http://ec.europa.eu/trade/policy/accessing-markets/trade-defence/actions-against-imports-into-the-eu/index_en.htm).

The EU therefore can be seen to apply certain mechanisms of the anti-dumping regime rather stringently – particularly as the EU moves more towards the imposition of duties rather than requesting the exporter to raise their price to avoid the imposition of duties. Arguably, this shift could be seen to have manifested trade conflicts with third-party producers in certain industries.

Latest reforms

The EU has been under increased pressure to reform anti-dumping investigate procedures and decision-making, particularly in light of imposed extra duties on Chinese and Tawainese imports of certain types of steel. In Mid-May 2017, the EU taxed Chinese imports with an added duty, this ranging from 29.2 percent to 54.9 percent, which has foreseeably resulted in complaints. This decision can be seen to be in line with various other applications of anti-dumping trade defence from the European standpoint, with the WTO upholding an Argentina complaint with regard to biodiesel exports, this in conjunction with a similar Indonesian filing.

Further, on 9 June 2016, the Court of Justice of the European Union ruled that the European Commission (EC) violated its own laws by issuing a country-wide anti-dumping (AD) duty on imports of U.S. ethanol (https://www.fas.usda.gov/data/eu-28-eu-s-general-court-rules-against-anti-dumping-duty-us-ethanol).

The European Union, in an attempt to avoid treating any industry or third-party producer as a special case, has reiterated its explanation that it will use international benchmark pricing to determine production cost of industry, this to assess whether manufacturers are dumping product or benefitting from unfair subsidies. However, these recent events have put the EU’s trade defence rules under pressure, and may cause changes to those rules in the near EC mid-term, including discussions of what is likely to happen during the ongoing dispute before the WTO’s Dispute Settlement Body initiated at China’s request.

Finally, the European Parliament and the Council have agreed to change the EU’s anti-dumping and anti-subsidy legislation. One of the main changes was the introduction of a new way to calculate dumping in anti-dumping investigations on imports from members of the WTO, in case prices and costs are distorted because of state intervention (http://europa.eu/rapid/press-release_MEMO-17-3703_en.htm).

The new rules have entered into force on 12 December 2017, date of the publication of the new regulation (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017R2321).

Authorisation of establishment in Luxembourg: Abrogation of the requests for special authorisations for big-box stores

A bill was introduced at the end of December 2017 (7228), in view of the abrogation of the specific autorisation requested for the establishment of superstores in Luxembourg (currently provided for under the amended law of 2 September 2011 on the right of establishment (the « Law of 2011 »).

Indeed, in 2016, the European Commission had considered that Luxembourg was the country in the European Union having the most restrictive regulation for retail businesses.

The bill states that these conclusions are in contradiction with the main attractiveness of the country which identifies itself as an open country.

The authors of the bill have pointed out that this procedure for obtaining a specific autorisation for the superstores nowadays duplicates the existing instruments in the fields of competition law and urban and spatial planning.

By removing that additional administrative burden, the authors of the bill hope to foster the competitiveness of Luxembourg in the Greater Region.

At the same time, the authors of the bill take this opportunity to revise some other aspects of the Law of 2011:

– elimination of the professional qualification requirement for merchants in general, for commercial activity in the HORECA and real estate sector (currently the Luxembourg DAP at the minimum), knowing that the accelerated training for the operators of drinks outlets, eating establishments or accommodation establishments will therefore be open to all,

– abrogation of the specific autorisation for fairs and markets,

– abrogation of the professions providing «economic advice» and «consulting» (whose activities are already covered by a simple authorisation of establishment for commercial activities and services).

Unjustified Absence : When does the employer have the right to dismiss a worker?

In case of sickness, the employee is required to inform the employer on the first day of sickness. Furthermore, they must provide the employer, within no more than 3 days, with a sickness certificate that indicates their inability to work as well as the foreseeable duration of the sickness.

A decision of the Court of Appeal dated 20 June 2016 gives a practical example how this rule is applied.

In that case, an employee, having learned of the passing of her father, absented herself from her workplace on a Saturday. The employer was informed of the absence indirectly by a work colleague of the latter and by the husband on the same day. An extraordinary leave had been requested (due to the death, article L. 233-16 of the Labour Code) as well as a 3 additional days’ ordinary leave.

However, at the end of the ordinary leave, the employee did not report to work for 3 consecutive days (January 28, 29 and 30), without informing the employer.

On the 4th day of absence (January 31), the employer received a sickness certificate for 3 days (indicating an inability to work from January 30 to February 2).

Following these absences, considered as unjustified by the employer, the latter proceeded with a dismissal with prior notice.

In the first instance, the court had declared that the dismissal was unfair on the ground that “by dismissing… – even with prior notice – solely on the ground that she returned three days late from the funeral of her father, lateness whose origin was brought to his attention by a certificate dated…, [the employer] acted in an unduly manner and with a blameworthy ease, the employee having been in his service for more than 6 years without receiving any warning.”

On appeal, the Court of Appeal recalled the legal rule:

The employee is contractually obliged to work the schedule days. In case of sickness, they are required to inform their employer from the first day of sickness. In case of impediment for another reason, they are also required to inform their employer about their impediment and they cannot merely explain their several-day absence upon their return.

The Court of Appeal noted again that, during the three days’ unjustified absence, the employer was without news from the absent employee.

In these circumstances, the Court of Appeal has considered the dismissal with prior notice as justified.

New investor status in Luxembourg

Since the Law of 8 March 2017 amending the Law of 28 August 2008 on free movement and immigration came into force (on 24 March 2017), the regulation for third-country nationals (i.e. nationals who are not citizens of a Member State of the European Union or the European Free Trade Association, “TCN”) have been modified.

One of the major changes with this law is the possibility for TCN investors to obtain a specific residence authorisation/permit based on four investment options:

  1. Who will invest at least 500,000 euros in an existing company, having its registered seat in the Grand Duchy of Luxembourg, while committing to maintain the investment as well as the employment level for at least 5 years (does not apply if the acquired company has financial difficulties and fulfills certain requirements) , or
  2. Who will invest at least 500,000 euros in a company to be created, having its registered seat in the Grand Duchy of Luxembourg, and having a commercial or artisanal activity with the commitment to create at least 5 jobs to be filled in collaboration with the Luxembourg Unemployment Authority (ADEM) within 3 years of the creation of the company, or
  3. Who will invest at least 3,000,000 euros in an existing or to be created investment and management structure with its registered seat in the Grand Duchy of Luxembourg and maintaining locally an appropriate structure, or
  4. Who will invest at least EUR 20,000,000 in the form of a deposit in a Luxembourg financial institution (cash or financial instruments) with the commitment to maintain this investment for a minimum period of 5 years.

The investments can be made by the applicant in his own name or through an investment structure.

Regarding the first 2 options, the investment shall be made into companies from a specific economical sector determined by Grand-Ducal Regulation

Regarding the first 3 options, the investments shall be composed of at least 75% of the applicant’s own funds whilst the remaining 25% may be borrowed for a period of 3 years at least.

The last option (deposit of at least EUR 20,000.000) was clearly aimed at high net worth individuals (HNWI) wishing to have (part of) their fortune managed by Luxembourg professionals (loans for this option are excluded).

One exception is that the investments cannot be related directly or indirectly to the real estate market (sale or lease).

The residence permit for investors will be valid for an initial period of 3 years, subject to renewal for further 3 years.

The TCN investor also authorizes to make an application for a business license (provided the requirements therefore are fulfilled).

Access to Luxembourg Working Market for highly skilled workers

Highly skilled workers from third countries (i.e. outside of the EU or the EEE) may apply for a special residence permit subject to an advantageous regime.

The residence title for which highly skilled third-countries nationals (“TCN”) can apply for after entering the country (a temporary authorisation to stay is mandatory before entering the territory) is referred to as « EU blue card ».

  • Requirements

To be considered as a highly skilled worker, the applicant shall meet the following requirements:

  • Have concluded an employment contract for a duration equal to or longer than 1 year ;
  • Provide documentary evidence for the required high professional qualifications in the relevant sector or activity ;
  • Receive a salary at least equal to an amount determined by Grand-Ducal regulation (depending on the activity, 1,2 – 1,5 times the average gross annual salary g. in 2016: EUR 58.636,80 or EUR 73,296)

 

  • Duration of the European blue card

With the latest reform in 2017, the duration of validity of the EU blue card was brought from 2 to 4 years (or the duration of the employment contract plus 3 months if the employment contract has been concluded for a period inferior to 4 years).

The EU blue card can be extended for 4 more years.

  • Advantages

Some of the advantages of the EU blue card are:

Full access to the Luxembourg working market

After 2 years, the EU blue card gives unlimited access to the Luxembourg labor market for all highly qualified jobs in the private sector (public sector is partially excluded)

Extension to family members

The family is allowed to immediately accompany the highly skilled workers when the person who has been delivered the residence permit arrives in Luxembourg or to join him afterwards.

Intra-Europe mobility

Under certain conditions, the card facilitates intra-European mobility and makes it possible to cumulate stays in different EU Member States in order to obtain long-term resident status.

Indeed, after 18 months of legal residence in the country that issued the EU blue card to a TCN, the TCN and his family members may move to another European Member State to exercise a highly qualified activity.

Maintain the status after termination of employment

Should the person face unemployment, the EU blue card is not automatically withdrawn. Indeed, the European blue card is not withdrawn if the unemployment lasts less than 3 months and occurs only once during the period of validity of the card.

  • Administrative steps

Before hiring a highly qualified TCN, the employer shall make a declaration of vacancy to the Luxembourg Unemployment Administration (ADEM) in advance, but the job will not be tested on the job market.

This means that the ADEM will not verify if the vacant position could be filled by a person available on the national or European labour market.

  • What to do in case of refusal

The residence permit for highly qualified TCN’s shall be delivered within 90 days as of the application (provided the application is complete).

If the applicant did not receive the residence permit within 90 days, the application is considered as rejected and the applicant may issue a claim against the refusal decision.

If the application was formally rejected, a claim may be issued within 3 months of the refusal.

Manni Case: Not everyone has the “right to be forgotten”

Mr. Manni was the sole director of Italiana Costruzioni Srl, an Italian building company which was awarded a contract for the construction of a tourist complex.

In 2007, he brought proceedings before the Lecce Court (Italy) against the Lecce Chamber of Commerce, claiming that the complex buildings were not selling. This was due to the fact that it appeared from the companies register that he had been, in the past, the sole director and liquidator of another company, Immobiliare e Finanziaria Salentina Srl, which had been declared insolvent in 1992 and struck off the companies register, following liquidation proceedings, on 7 July 2005.

By judgment of 11 August 2011, the Lecce Court ordered the Lecce Chamber of Commerce to anonymise the data linking Mr. Manni to the liquidation of the first company and to pay compensation for damages suffered by him.

The Lecce Chamber of Commerce appealed the decision before the Italian Corte suprema di cassazione (Court of Cassation), which decided to stay the proceedings and refer several questions to the European Court of Justice (“ECJ”), asking, in substance, if the provisions of Directive 68/151 (the first Company Law Directive) and Directive 95/46 ( the EU Data Protection Directive which will be repealed by the EU GDPR as of 25 May 2018)  must be interpreted as meaning that it is mandatory, or, on the contrary, that it is prohibited, for personal data appearing in the register of companies, after a certain period has elapsed and upon the request of the person concerned, to be removed, anonymised or blocked, or made accessible only to a restricted category of third parties, namely those who can demonstrate a legitimate interest in having access to such data.

First of all, ECJ reminded that for a public authority to maintain a companies register was considered “processing data” and that said authority was to be considered the “controller” under the EU Data Protection Directive.

The ECJ then noted that such processing was legitimate as it was satisfying several grounds for legitimation as foreseen in the EU Data Protection.

Finally, the ECJ analysed whether the authority responsible for keeping the register should, after a certain period has elapsed since a company ceased to trade, and on the request of the data subject, either erase or anonymise that personal data, or limit their disclosure.

The ECJ noted that the purpose of the disclosure of information contained in an official company register public is to protect the interests of third parties in relation to joint stock companies and limited liability companies, since the only safeguards these companies offer to third parties are their assets. The ECJ also reminded that the purpose of the First Company Directive was to provide legal certainty in relation to dealings between companies and third parties.

The ECJ also found that, even after the dissolution of a company, the rights and legal relations relating to this company continue to exist. In the event of a dispute, this data may be necessary to assess the legality of an act carried out on behalf of that company during the period of its activity or so that third parties can bring an action against the members of the organs or against the liquidators of that company.

In those circumstances, the ECJ said, Member States cannot guarantee that people whose data is included in the company register have the right to have their personal data erased after a certain period of time has passed.

In this case, the ECJ considered that the mere fact that, the properties of the tourist complex built by Mr. Manni’s company do not sell because of the fact that potential purchasers of those properties have access to that data in the company register, cannot be regarded as constituting as a sufficient legitimate interest to limit third parties’ access to data concerning Mr. Manni.

Nevertheless, the ECJ did not completely exclude the possibility that, in specific situations, overriding and legitimate reasons relating to the specific case of the person concerned may justify, exceptionally, that access to personal data concerning him/her should be limited.

National Courts, facing a similar case in the future, will need to assess, having regard to all the relevant circumstances and taking into account the time elapsed since the dissolution of the company concerned, the possible existence of legitimate and overriding reasons which, as the case may be, exceptionally justify limiting third parties’ access to the data.

 

Guidelines on Data Protection Impact Assessment for the purposes of GDPR

The new European Union’s General Data Protection Regulation (“GDPR”) was published on 4 May 2016.  It will be enforced after a two-year transition, beginning on 25 May 2018, replacing the national laws and regulations and reaching all companies that target EU consumers from outside the EU.

GDPR introduces the concept of a Data Protection Impact Assessment (“DPIA”).

The Article 29 Data Protection Working Party (“DPWP”) has adopted, on 4 April 2017, guidelines to further understand the concept of DPIA (DPWP is the European advisory body on data protection and privacy and is composed of a representative of the supervisory authority (ies) designated by each EU country, a representative of the authority(ies) established for the EU institutions and bodies and a representative of the European Commission).

GDPR does not give a formal definition of DPIA but only its minimal content (Article 35(7) GDPR).

DPWP gives the following definition of DPIA:  a process designed to describe the processing, assess the necessity and proportionality of a processing and to help manage the risks to the rights and freedoms of natural persons resulting from the processing of personal data (by assessing them and determining the measures to address them).

DPWP explains that DPIAs are important tools for accountability, as they help controllers not only to comply with requirements of the GDPR, but also to demonstrate that appropriate measures have been taken to ensure compliance with the Regulation. In other words, a DPIA is a process for building and demonstrating compliance.

DPWP further reminds that under the GDPR, non-compliance with DPIA requirements can lead to fines imposed by the competent supervisory authority. Failure to carry out a DPIA when the processing is subject to a DPIA, carrying out a DPIA in an incorrect way, or failing to consult the competent supervisory authority where required, can each result in an administrative fine of up to 10M€, or in the case of an undertaking, up to 2 % of the total worldwide annual turnover of the preceding financial year, whichever is higher.

Since GDPR only enters into force in May 2018, the requirement to carry out a DPIA applies to processing operations after this date.

However, DPWP strongly recommends to carry out DPIAs for processing operations already underway prior to May 2018.

This being said, the DPWP also indicates that carrying out a DPIA is not mandatory for every processing operation. A DPIA is only required when the processing is “likely to result in a high risk to the rights and freedoms of natural persons”.

The DPIA Guidelines provide useful information on when the processing is likely to present a high risk and, therefore a DPIA is required. Although this should only be considered as a “rule of thumb”, according to the DPWP, a DPIA should be carried out when a processing operation meets at least 2 criteria of those that are considered as relevant when assessing if a DPIA should be carried out or not.

The DPIA Guidelines provide the following list that give some concrete example of situations in which a DPIA may be required:

It should be noted however that this list cannot be considered as a strict rule for DPIA as several exceptions foreseen by GDPR may apply.

The DPIA Guidelines also provide insight on when the supervisory authority shall be consulted after a DPIA has been carried out. This may be the case when the identified risks cannot be sufficiently addressed by the data controller.