The proposed Council Regulation was considered by Sub-Committee E (Law and Institutions) at its meeting on 15 October. The Committee decided to retain the document under scrutiny. We would be grateful if you could clarify a number of matters.

  You say that your "legal experts are not convinced by the Commission's argument or that the only way to effect the change in the value of abstentions is by moving from an essentially Council-based procedure to a Commission-based procedure". It would be helpful if you could clarify these statements. Further, what are the reactions of other Member States to the Commission's proposal to the institutional issues which it raises? Is there another "coalition of the indifferent" on this issue? Finally, what sort of changes to other parts of the anti-dumping and anti-subsidy Regulations would the Government be looking for in order for it to accept the Commission's current proposal?

  We look forward to receiving your response to these questions.

16 October 2003

  Thank you for your letter of 16 October, in which your Committee seeks clarification on a number of points in explanatory memorandum (Doc 11035/03). I will deal in sequence with each point raised.

DTI LEGAL EXPERTS' VIEW THAT THE COMMISSION'S ARGUMENT IS UNCONVINCING, PARTICULARLY THAT THE COMMISSION'S APPROACH OF MOVING FROM A COUNCIL-BASED TO A COMMISSION-BASED PROCEDURE IS THE ONLY WAY TO EFFECT CHANGE IN THE VALUE OF ABSTENTIONS

  Ostensibly, the rationale behind the Commission's proposal is to address the increasing likelihood (particularly in a future expanded Community of 25 Member States), that its proposals for specific anti-dumping or anti-subsidy measures might be defeated by large numbers of abstentions being counted as votes against the Commission's proposal. This might occur because in an expanded Community a larger number of Member States would not be directly affected by specific product-related anti-dumping or countervailing measures. Such Member States might well abstain, if they have no interest in cases.

  The UK agrees that the way abstentions are currently treated as negative votes is anomalous. The UK believes that abstentions should be treated as entirely neutral and have neither a positive nor a negative effect. In the UK's view, such an approach would achieve the Commission's stated aim of not being defeated by the so-called "coalition of the indifferent", while allowing decisions to be taken on a simple majority of positive or negative votes cast. Under the UK proposal, abstentions would be disregarded, whereas under the Commission's proposal they would be treated as positive votes in favour of the Commission's proposal.

  The Commission has consistently argued that it is following its legal advisers' opinion that there is no other way of preventing its proposals for specific measures being defeated by abstentions, than to treat abstentions as positive votes. In order to do so, it argues that the power to take decisions about the imposition of definitive (final) anti-dumping and anti-subsidy measures should be handed to the Commission. This is clearly a non sequitur, as:

(a)  even if one were to accept, (and the UK does not), that abstentions should be treated as positive votes, there is no need to remove the decision-making power from the Council. It should suffice to amend the basic regulations to state that in the absence of simple majority against a proposal, the proposal may be adopted by the Council; and

(b)  conferring the decision-making power on the Commission leads to a direct diminution of the Council's influence on anti-dumping and anti-subsidy issues. It is therefore disproportionate in relation to the intended objective of preventing the loss of measures through abstentions.

  To date, the UK has received no satisfactory explanation, orally or in writing, as to why its proposal is not practicable. The Commission has blandly stated that it would not be permitted under the EC Treaty, without giving reasons. When the Commission produces a detailed explanation as to why it believes the UK's proposal is untenable we would be happy to review our position.

REACTION OF OTHER MEMBER STATES TO THE COMMISSION'S PROPOSAL AND ITS INSTITUTIONAL IMPLICATIONS

  Setting aside the views of Belgium, which consistently supports Commission proposals, most Member States are not yet committed to either supporting or opposing the Commission. Most are still in the process of understanding and evaluating the implications of the proposed changes.

  The following are necessarily very preliminary assessments of how other Member States may react, based on informal contacts with officials:

(a)  Germany, while not content with the detail of the proposal might accept an amended version of it, provided other amendments are made to other parts of the basic regulations, for instance, deadlines for the presentation of working documents. Germany also wants a longer timescale than a month for the Council to act on proposals referred to it by the Member States.

(b)  France has expressed reservations about how the decision-making process would work in future. However UK officials understand that France may probably support the Commission for political reasons, despite its reservations.

(b)  Italy, who holds the Presidency, has expressed some support for the UK line in the margins, though as the Presidency it feels bound to adopt a strictly neutral role. It may, for political reasons, support the Commission, though its officials may not be convinced of the merits of the proposal.

(c)  Spain, Portugal and Greece will probably support the Commission.

(d)  Finland, Denmark and Sweden may oppose the proposal, because they have a liberal trade policy and tend to oppose anti-dumping and anti-subsidy measures.

(e)  Ireland, Austria and the Netherlands could take either view. Austria will probably follow Germany's lead. Ireland might go either way. The Netherlands might be expected to oppose, unless there are overarching Benelux reasons for not doing so.

(f)  Luxembourg is an unknown quantity but may follow Belgium.

  The only prediction that can be made with any degree of certainty is that there will be no "coalition of the indifferent" on the Commission's proposal, as each Member State has a strong reason to support or oppose.

UK PROPOSED CHANGES TO OTHER PARTS OF THE BASIC ANTI-DUMPING AND ANTI-SUBSIDY REGULATIONS IN EXCHANGE FOR SUPPORT FOR THE COMMISSION'S PROPOSALS

  I enclose a letter sent to the Italian Presidency in September setting out a detailed UK shopping list.

7 November 2003

  I am writing to you, as President of the Commercial Questions Group, to convey the UK's views on the Commission's proposal to amend the decision-making process in the basic anti-dumping (AD) and anti-subsidy (AS) Regulations.

  In discussions at the Anti-Dumping/Anti-Subsidy Committee and in bilateral contacts, the Commission has clearly stated that the objective of changing the decision making process in the AD and AS Regulations is to nullify the perceived adverse effect of abstentions on Commission proposals. These must currently be treated as negative votes by default of not being positive. The Commission has stressed, in making its proposal, that it has no legal alternative to reversing the way in which abstentions are counted. The UK would like to suggest that there is an alternative which achieves the objective of nullifying the effect of abstentions without attributing to them the unintended force of a positive vote in favour of a Commission proposal.

  The UK would propose that the expression "simple majority of the votes cast" should replace the current wording of "simple majority" in Articles 9(4), 11(6), 12(3), 13(3), 14(4), of the AD Regulation and in Articles 15(1), 22(2), 23(2) and 24(4) of the AS Regulation. The effect of such a change would be to attribute to abstentions their intended value, that is total neutrality. It would also permit only positive and negative votes to be counted for the purposes of the AD and AS Regulations and would ensure that the outcome of the Hot Rolled Coils case could not be repeated.

  The Commission has suggested that the provisions of the EC Treaty, and in particular Article 205 thereof, would not allow abstentions to be discounted. UK does not share that analysis and can find no support for the Commission's interpretation either in the Court's jurisprudence or in leading EC law textbooks. However if UK were to accept the case that Article 205 prohibits the Commission from ignoring abstentions, quod non, we would like to explore the possibility of changing the voting base throughout both the AD and AS Regulations from simple to qualified majority. That at least would mean that those Member States who were so indifferent as not to take a firm position on cases could only influence the outcome in proportion to their relative size. However, this is not our preferred solution.

  The UK also has some separate suggestions on improving some of the other provisions of the basic AD and AS Regulations. These are attached in the Annex. I hope it will be possible for the Commission to give these suggestions its fullest consideration.

  I am sending a copy of this letter to the other Member States' representatives on the Commercial Questions Group.

3 September 2003

1.  BINDING TIME LIMITS FOR REVIEWS

  A time limit should be imposed for the completion of all reviews. This would affect expiry, interim and new exporter reviews as provided for in Article 11 of the basic Anti-Dumping Regulation, and expiry, interim and accelerated reviews as provided for in Articles 18, 19 and 20 of the basic Anti-Subsidy Regulation.

  Binding time limits should enhance transparency and predictability for traders affected by anti-dumping and anti-subsidy proceedings. The current absence of clear deadlines for reviews causes real difficulties for traders, as can be demonstrated by the case on polyester textured filament yarn originating in Taiwan. This case resulted in the adoption of measures on 14 June 1996 which were due to expire on 14 June 2001. However an expiry review was initiated on the day the measures were due to expire (14 June 2001) which maintained the measures in force until the request for the expiry review was withdrawn on 2 May 2003—that is almost two years after the normal expiry date. On 2 September 2003, the measures still had not been formally terminated. Clearly this is not satisfactory for traders.

2.  BINDING DEADLINES FOR THE CIRCULATION OF WORKING DOCUMENTS

  A common complaint among Member States is that Working Documents are not circulated sufficiently in advance of Anti-Dumping/Anti-Subsidy Committee meetings to enable delegates to reach a considered view. Occasionally discussion of the Working Document has had to be postponed until the next meeting, resulting in avoidable delays.

  Again, in order to streamline the operation of the Anti-Dumping/Anti-Subsidy Committee, the UK would suggest inserting a provision in both of the Regulations requiring Working Documents to be despatched to the Member States so that administrations have at least 10 working days from the receipt of the document and the convening of a meeting of the Advisory Committee to establish a position. This might be achieved by amending Article 15(2) of the AD Regulation and Article 25(2) of the AS Regulation to read:

"The Committee shall meet when convened by its chairman. He shall provide the Member States with all relevant information as promptly as possible and no later than 10 working days before a meeting of the Advisory Committee is convened."

3.  MORE PRECISE RULES ON THE CONTENT OF DISCLOSURE DOCUMENTS

  Another provision that could be improved with a view to greater transparency is Article 20 of the AD Regulation and Article 30 of the AS Regulation governing what information may be disclosed to complainants and other interested parties. Currently disclosure is limited to "essential facts and considerations". These need to be more precisely defined, perhaps in footnotes to the Regulations. The aim would be to give interested parties an insight on how conclusions in investigations are reached.

4.  FORMALISE THE SEPARATION OF INVESTIGATION ACTIVITIES AND THE DETERMINATION OF INJURY

  The UK believes that the Commission employs separate teams to conduct anti-dumping/anti-subsidy investigations and to work out whether the dumping or subsidy causes injury. If that is the case, it would do no harm to formalise the separation of the investigation function from the determination of injury by explicitly stating it in the AD and AS Regulations. This would further enhance the Commission's reputation for handing cases fairly and show regard for due process.

5.  ESTABLISH REGULAR CONTACT WITH DG COMPETITION ON ANTI-DUMPING CASES

  The UK believes that it is possible that information from non-trade defence cases can have a bearing on anti-dumping and anti-subsidy cases and, conversely trade defence cases may be relevant to eg competition cases. Therefore there would seem to be a case for establishing a formal communications channel between DG Trade and DG Competition, not least to establish whether or not certain anti-dumping/anti-subsidy complaints are a disguised attempt at eliminating the competition.

  The UK would also like to suggest that before a formal investigation is commenced, the Community industries bringing a complaint may want to enter into informal consultations with the Commission prior to submitting the complaint. DG Trade could then advise on whether an anti-dumping or anti-subsidy case is the best way to proceed or if there are other alternatives.

  Perhaps, again suitable provisions could be inserted in the AD Regulation under the consultations provisions of Article 15 and in the AS Regulation under the similar provisions of Article 25.

  Thank you for your letter of 7 November which was considered by Sub-Committee E (Law and Institutions) at its meeting on 19 November. The Committee is most grateful for the information supplied and in particular for your analysis of the legal position and also for the helpful description of the likely reactions of other Member States. We agree with the Government that the anti-dumping and anti-subsidy measures in question should be decided by the Council and not by the Commission after a comitology procedure. The Committee has decided to clear the document from scrutiny but would be grateful if you would keep us informed of developments.

20 November 2003