12 things importers should know about UK trade remedies
This briefing only covers anti-dumping and countervailing (anti-subsidy) duties - Note that these comments relate to dumping and subsidy investigations. Safeguard investigations are different in that they are initiated against all sources of imports where there is a sudden surge in imports that causes serious injury. They involve imports from countries exporting to the UK and the measures are not company specific as they are for anti-dumping and countervailing duty cases. Safeguard investigations are relatively rare in major economies such as the EU and US and this is likely to be the case in the UK also.
1. Trade remedy investigations are targeted at exporters
Investigations are country specific - A trade remedy investigation is initiated by the Trade Remedies Authority (TRA) when an applicant is able to provide sufficient evidence that imports from a particular country are dumped and/or subsidised. Investigations are initiated by country, meaning that every manufacturer that is exporting to the UK from that country will be included in the investigation. However, individual companies can obtain an individual rate so that the level of duty applicable to imports from a particular country will vary according to the particular rates that apply to each company. Sometimes cases are initiated against more than one country where the applicants are able to provide sufficient evidence that there are multiple sources of dumping and/or subsidies.
Anti-dumping and countervailing duties are applied by exporter - Although it is the importer that pays a trade remedy duty, the level of duty is not based on the importer but the exporter. When trade remedies are applied to imports from a particular country, a general level of duty will apply to all imports from that country except where individual exporters have their own level of duty calculated. This means that the duty paid by the importer will depend on which exporter they purchase from.
2. How do trade remedy measures affect importers?
Trade remedy measures increase the customs cleared price of exports to the UK - Anti-dumping and countervailing duties are paid by importers at the same time as regular import duties. Ultimately, therefore, the outcome of a trade remedy investigation will often be to increase the customs cleared price of the products that importers bring into the UK.
3. What role can importers play in the investigation?
The precise role played by importers depend on a couple of key factors:
Related or unrelated? - the role that importers play in the investigation depends on whether they are related to any of the exporters in the investigation or not. In order for an exporter to be considered cooperating, any related importer must also participate in the investigation. For unrelated importers, any information they provide is not critical to the investigation but still be very useful to the TRA.
Interested party or contributor? - Contributors do not have the same rights as interested parties. For example, contributors are not able to request hearings or reviews. They also cannot request reconsideration of decisions by the TRA or challenge TRA or Secretary of State determinations in the UK Upper Tribunal.
Importers are considered to be interested parties in the investigation. The UK legislation defines an ‘importer’ as the ‘person liable to pay import duty in respect of the goods’. Companies that use the imported product subject to investigation will, therefore, only be considered interested parties if they are actually the importer of the product. If this is not the case, the user of the imported product will be treated as a contributor.
Although the role of contributors is somewhat limited as described above, any submissions made by contributors must be considered and taken into account by the TRA. In terms of the consideration of evidence by the TRA, therefore, it does not really make a significant difference if the information is submitted by an interested party or a contributor. Whilst the ability to request hearings, reconsideration or challenge in the Upper Tribunal is limited, all of these things could still be done in cooperation with an interested party.
Where importers can have a significant impact on the investigation is in relation to the economic interest test. Evidence on the negative impact of a trade remedy measure on the importing or using industries, or even consumers, will help the TRA in making its EIT assessment.
4. Do I have to fill out a questionnaire?
There is no statutory requirement to fill out a questionnaire. As raised in the previous question, the significance of importers in the process depends on whether the importer is related to one of the cooperating exporters in the investigation. In order to be considered fully cooperating, and to have a chance of an individual level of duty, an exporter’s related importer must complete a questionnaire. If the related importer does not complete a questionnaire then the exporter can be considered non-cooperating and disqualified from obtaining an individual duty. It is likely in this situation that the exporter would be subject to the highest level of duty.
For unrelated importers, there is no specific benefit to completing a detailed questionnaire.
5. What is the Economic Interest Test?
The economic interest test is the part of the investigation where the interests of importers are explicitly considered.
Once it has been determined that dumped or subsidised imports are causing injury, the TRA is required to assess whether measures are in economic interest of the UK. The EIT looks at the impact of adopting a measure both positive and negative. It considers the wider impact of measures, not only in terms of removing injury to the industry affected by dumped or subsidised imports but also in terms of wider interests. The fact that importers and users of the product will be subject to an additional duty will be taken into account in the EIT.
The UK legislation contains a starting presumption that the EIT is met, so the TRA will only find that the EIT is not met if the negative impacts are disproportionate to the positive impacts. Importers can, therefore, provide evidence on the negative impact of measures in order that the TRA has enough information to be able to ensure that the interests of importers are fully taken into account.
6. Evidence on the negative impact of measures
Importers and users should provide relevant evidence on the negative impact of the proposed trade remedy, including information on the following:
the economic significance of importers and their downstream customers
the impact of the increased duty on their supply chain
likely impact on particular geographic areas or particular groups in the UK
likely consequences for competition in the market
Of course it is the case that the effect of a trade remedy measure is to increase the import price for the products concerned. It is not sufficient, therefore to only claim that the increased prices will have a negative impact. Importers must provide evidence that the negative impact is disproportionate in relation to the benefit of the measures.
If the measures will particularly affect a specific region, or a particular group of people, the TRA is obliged to take this into account.
7. What is the most effective way for importers to provide information to the TRA?
Because individual importers are not necessarily directly relevant to the outcome of the investigation, information from importers can have more impact if it is submitted in a co-ordinated way. Evidence submitted from a coalition of importing interests will potentially have much more influence than individual submissions.
8. What is the role of political strategies and lobbying?
The way in which the UK trade remedies system has been set up is to make it a technical, legal process that will produce decisions based on evidence. WTO rules set out many technical requirements in order for a country to adopt trade remedy measures and the TRA has been set up to be free from any political pressure to make these technical determinations.
That said, it is a fact that there are many political aspects to the investigation. As mentioned in the previous question, a coalition that submits robust evidence can have a significant outcome on the investigation. The economic interest test, in its very nature, does have kind of political element to it.
Also, the Secretary of State makes the final determination whether to adopt measures or not based on the recommendations of the TRA. Thus, some political engagement with DIT and the Secretary of State might influence the outcome.
A good political strategy can have a significant influence on the outcome of the case. However, the most effective lobbying will be based on robust technical and economic evidence.
9. How does the public interest differ from the economic interest?
In making a decision on whether to adopt measures or not, the Secretary of State is also required to take into account the public interest. What is covered by the public interest is not specified. It is arguable that the economic interest test is a part of the broader public interest. However, some openness is left here to allow the Secretary of State to consider broader issues that might be relevant to the UK’s interest in adopting measures or not.
10. When do measures apply?
Measures will not be applied at least until the point at which the TRA makes provisional findings and they are published on the TRA and DIT websites. Importers will not actually have to pay duties at this stage but will have to provide guarantees such that, if the final determination is that duties should be applied, they will be collected from the date of provisional application.
As a general rule, imports made after initiation but before provisional duties will not be subject to any measures. However, in exceptional cases, duties may be backdated for a period prior to the date of provisional measures. This can only happen when the TRA has published an intention to register imports and duties can only be backdated for a maximum period of 90 days prior to the provisional determination.
11. Are trade remedies payable if the imported goods are to be re-exported?
Trade remedies are payable at the point that products are cleared through customs. Without using any special customs schemes, the duty is payable regardless of what happens to the product after it has been imported. In this situation, if the product is re-exported, the duty cannot be reclaimed.
If a customs scheme is used (e.g. bonded warehouse, inward processing or a freeport), it is possible that product can be brought into the relevant customs area and re-exported without paying any applicable trade remedy. The specific rules and requirements need to be checked according to the scheme used.
Following Brexit some importers have been caught out with double duty when products have been re-exported to the EU. Where a trade remedy is applied by both the EU and UK (this is the case at least initially for all the EU measures that have been transitioned by the UK), importing the product into the UK will incur the UK trade remedy. However, if the product is then re-exported to the EU, the EU duty will also be applied. If it is known that the product will be re-exported, the double duty can be avoided by using an appropriate UK customs scheme. In this case, only the EU duty would be payable when the product clears customs into the EU. In the latter situation, the EU duty would not necessarily have to be paid if the imported product is transformed such that a different customs code applies that is not subject to the EU trade remedy. However, it should be noted that the EU has anti-circumvention rules that apply if the goods have not undergone sufficient transformation so care needs to be taken in ensuring that the appropriate requirements are met.
12. Can measures change once they are applied?
Measures will be adopted for a specified period, normally 5 years. However, various issues can arise once the measures are in place;
Changed circumstances - where circumstance change that would affect the level of measures, interested parties can request an interim review. For example, if a new production line had reduced the normal value for a particular exporter to a point where dumping is no longer occurring, a request for a recalculation can be made to the TRA. Also, if circumstances in the UK industry had changed such that measures were no longer required, a changed circumstances review could be requested.
Refunds - Importers can request a refund where the actual import price paid eliminated the dumping, subsidy or injury (depending on how the duty was calculated). In practice, this provision is difficult to use and would require the involvement of the exporter concerned i.e. an importer could not merely assert that a refund was due without detailed evidence that could only come from the exporter.
Circumvention - Importers should be aware that, where there is evidence of circumvention of measures, the TRA may take actions to ensure that the measures are not undermined. There are legitimate ways of avoiding trade remedy measures (e.g. by changing the product so that it falls in a tariff code not covered by the measures). However, care must be taken to avoid fraudulent declarations (which can also be investigated as a customs offence) and when parts & components are imported and assembled into a final product that is covered by a trade remedy measure.
Newcomers - Exporters that did not export during the original investigation period, and are not related to any of the companies in the original investigation, can request a newcomer review to get a specific duty rather than being subject to the residual (highest) duty.
Suspension - measures can be temporarily suspended where where market conditions have changed.
Expiry review - The TRA will recommend how long measures will apply. This will normally be five years. The measures will automatically expire at this date unless UK industry requests an expiry review. An expiry review will consider whether dumping/subsidy and injury are likely to re-occur if the measures are removed. This will be a full investigation like the original investigation so interested parties will again be required to complete questionnaires.