The European Union has various instruments at its disposal – trade defence instruments – to protect the European industry from unfair competition from imported products from third countries. A well-known example are anti-dumping duties, about which you can read more on our information portal www.anti-dumping.eu.
A lesser-known but equally powerful instrument is the set of anti-subsidy measures set out in Regulation (EU) 2016/1037 on protection against subsidised imports from countries that are not members of the European Union. In this context, 'subsidy' means a financial contribution or other benefit provided by or on behalf of a government to a producer or exporter, giving them a competitive advantage.
If such an advantage leads to artificially lowered import prices or unfair price pressure on the internal market, this may damage the European industry. When the subsidies are specific and a particular industry in the Union suffers material damage, these are referred to as improper subsidies. In that case, the European Commission ("Commission") can intervene by imposing import duties or other measures to restore the level playing field.
Why are anti-subsidy measures relevant?
In our global economy with large international trade flows, it is very important for the EU internal market that imported products are not favoured by foreign subsidies, which would put European industry at an unfair competitive disadvantage. Anti-subsidy measures are a powerful tool for maintaining a level playing field and ensuring that imports do not take place under artificial market conditions.
When and how is an investigation into foreign subsidies initiated?
An anti-subsidy procedure is usually initiated following a complaint from European industry, but can also be initiated by the Commission on its own initiative. Within 45 days of receiving a valid complaint, the Commission decides whether there is sufficient evidence of subsidised imports, material injury to the EU industry, and a causal link between the two. During the investigation, it is examined in more detail whether the imports are indeed subsidised, whether the EU industry is suffering damage, whether that damage is caused by the subsidised imports, and whether it is in the EU's interest to take measures. To this end, the Commission requests detailed information from foreign importers and may conduct on-the-spot investigations to verify the information provided. If the conditions are met, the Commission may take provisional measures and, after completing the investigation, impose definitive measures that will remain in force for in principle five years.
What types of measures can be imposed?
If the investigation shows that imported products are subsidised and that these imports are causing damage to the EU industry, the Commission may decide to impose countervailing duties on the imports. The purpose of these measures is to remove the artificial price advantage of the subsidised products, thereby restoring a level playing field.
The duties may be a percentage or a fixed amount per unit. In addition, the Commission may apply a minimum import price or conclude a price undertaking with the exporter whereby the latter undertakes to sell the product under investigation above a minimum price, in exchange for which the Commission does not impose any other obligations. Once measures have been imposed, the Commission may carry out reviews if relevant circumstances change or if interested parties request this.
How do anti-subsidy measures relate to anti-dumping measures?
Although both instruments are part of the EU's trade defence instruments, there are clear differences in their cause, legal basis, and application. Anti-dumping concerns products being imported at prices below the normal market level (dumping), while anti-subsidy concerns imports with artificially reduced costs due to a foreign government providing a subsidy. The legal basis for anti-dumping measures is Regulation 2016/1036 on protective measures against dumped imports from countries that are not members of the European Union, while anti-subsidy measures, as mentioned above, are laid down in Regulation 2016/1037.
Both procedures require demonstrable damage to the EU industry and a causal link, but the nature of the unfairness differs: subsidies versus dumping. Therefore, it is possible that both anti-dumping and anti-subsidy measures may be taken for a single product if both dumping and subsidisation are found to exist. Finally, these instruments must comply with the rules of the World Trade Organisation (WTO) and must not go beyond what is necessary to remedy the unfair competition.
In practice
The Commission is increasingly launching anti-subsidy investigations. In October 2024, the Commission concluded an investigation into electric vehicles (BEVs) from China and imposed definitive measures for five years. This investigation showed that the BEV value chain in China benefits from unfair subsidisation, posing a high risk of damage to the European car industry. The Commission has imposed countervailing measures for five years, specifically a percentage duty on imported vehicles ranging from 17% to 35% depending on the importer.
The market for electric bicycles was also investigated. The first set of import measures came into force in 2019. In this case, both anti-dumping and anti-subsidy measures were imposed for a period of five years. Before the measures expired, a new investigation was carried out, which showed that electric bicycle manufacturers in China were still benefiting from unfair subsidies and that imports into the EU were taking place at dumped prices. The Commission therefore considered it necessary to extend the measures for another five years. The anti-dumping duties range from 10.3% to 70.1% and countervailing duties to offset the subsidies range from 3.9% to 17.2%.
For more information on anti-dumping investigations, see the information portal for businesses: www.anti-dumping.eu
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