Anti-dumping resources recycled

Date: 13/06/1996

By Ian S. Forrester QC

AT a bar association meeting in Chicago in 1988, I described European uneasiness about the US arsenal of trade protection laws which menace honest traders. Another speaker replied that once Europe became accustomed to imports, we would realise that measures to block them were really necessary.

Europeans are impressed by the rigour with which the US applies its anti-dumping rules (which have been very influential upon the EC) and its other procedures against supposedly unfair trade practices.

The most famous of these instruments of legal torture is Section 337 of the US Trade Act, which offers American companies the possibility of completely blocking imports of a product which can be characterised as unfair.

In effect, US firms have two separate fora through which to pursue a dispute with a foreign exporter concerning, say, the alleged infringement of a process patent: the US district courts, which are orthodox, and the International Trade Commission, which can propose the blocking of “unfair” imports.

The European reaction to the use of Article 337 has been generally hostile: it is unfair, says the Commission, that a special jurisdiction exists to protect US companies (and not foreign firms) by the initiation of burdensome procedures with draconianly-short deadlines and awesomely-high legal fees.

If the target firm does not defend itself, it risks being totally excluded from the US market, yet if it does, the cost of doing so may literally be greater than the total profit (in at least one case the total turnover) earned by making the unwelcome exports to the US.

The Commission made a successful complaint to the GATT about the abuses associated with Section 337 in the specific context of a patent dispute about aramid fibres.

However, the concept of a special administrative procedure offering a remedy against foreign unfairness was attractive.

The first step taken by the Community was the adoption of the New Commercial Policy Instrument, which has now been replaced by the so-called Trade Barriers Regulation.

Let us suppose that a video games producer in the UK discovers that the largest publisher in Ruritania is selling unauthorised copies of the game, that Ruritarian court procedures are mysteriously slow and that in an election year the government of Ruritania is very reluctant to interfere with its national champion. So the UK firm consults the British Embassy and ministries in the UK, asking for support.

Letters are written, shoulders are shrugged, but the software piracy continues. The producer asks that the matter be brought to the attention of the defender of trading liberties, the Commission.

In past years, many complaints have been made to the Commission on a variety of topics: member state breaches of Article 30 (free movement of goods), breaches of environmental legislation, breaches of GATT obligations by third countries. Sad to say, the great majority of such complaints go nowhere. It is arguably an abuse of process for the Commission to pretend, by numbering, registering and acknowledging them, that an effective procedure will be opened. I suspect that no one knows how many complaints lie unanswered.

Leaning on the national government may be equally disappointing. In the context of complaints against a friendly foreign government, there are likely to be other sensitivities: should the producer's complaint be allowed to cast a pall over a ministerial visit or over the possible sale of 20 fighter jets?

If there is no procedural framework for moving a complaint forward, and no judicial remedy if it is ignored, there is a virtual certainty that inconvenient complaints will languish.

By contrast, where the Commission is duty-bound to enquire, and where the Court of First Instance is ready to chastise it if it does its duty wrongly or fails to act, the attractiveness of leaving out the 'middlemen' member states is obvious.

Moreover, in a world where GATT panel reports can no longer linger unadopted for years and where the adoption of World Trade Organisation findings has become obligatory, the Commission believes that its Trade Barriers Regulation really does offer attractions to EC groups which are having problems in third countries.

The staff assigned to anti-dumping and trade protection duties in DGI (responsible external relations) has risen ten-fold in about 15 years.

Although member states have approved a massive reinforcement of anti-dumping resources, the number of new cases is not increasing to match the number of officials. Underemployment threatens.

To respond to these changes in the patterns of consumer demands for their services, Commission officials are drumming up business for the Trade Barriers Regulation. They are now “open for business”, according to Sir Leon Brittan, and next week the responsible officials will display their wares to European trade lawyers, encouraging the filing of complaints about foreign governments.

Such a recycling of official effort towards the achievement of market opening appears more economically wholesome than continually using legal yet exotic arithmetical techniques to justify barring imports into the Community.

Will lawyers in Brussels wax as fat and happy as their Washington counterparts? Probably not.

This article reflects the personal views of the author.