EU is a political and economic union made up of 27 member countries .It was founded in 1st November 1993 with the Main of enhancing economic, political and social co-operation among the member states. The members are located in Europe and include Austria, Bulgaria, Belgium, Cyprus, Czech republic, German, Greece, Italy, the UK among others just to mention a few. Created after the Second World War, its first objective was to foster economic cooperation. Since countries involved in trade with one another depend on each other economically, there was need to form such a union to set logistics for such association. Since its inception, the EU has made long strides in the deliverance of peace and stability. It has also increased the overall living standards in the member countries, launched a single currency, and built a strong market for goods and services in Europe alongside enhancing the movement of capital among member states. This has happened freely irrespective of geographical boundaries. The EU has developed into a vast single market with the euro as a single currency. In its process of expanding markets, the European Union has also promoted democracy and human rights as well as advocating for environmental conservation .
Decisions in EU are made intergovernmental through critical discussion by the member states. It has commissions such as the European Parliament, the European central bank, the court of justice of the EU, the council of the EU and the European Commission. EU has formulated laws on various aspects that are followed by its members. The main objectives of EU are to ensure free movement of Capital, services, goods and people and enhancement to a single market within the member states. In regard to this, UE has made legislations in justice, home affairs, fisheries, agriculture and regional development. The total population within its jurisdiction is approximately 500 million and they generated about 26% of world economy.
The EU has not overlooked the role which agriculture plays in the development of member states, as captured in its official website ‘Agriculture and forests cover the vast majority of our territory and play a key role in determining the health of rural economies as well as the rural landscape. Agriculture still has a valuable contribution to make to their sustainable economic. Farmers perform many different functions ranging from food and non-food agricultural products to countryside management, nature conservation, and tourism. Farming can thus be described as having multiple functions.’ This has led to formulation of laws to ensure that food production forster survival in the country side as a place to live and work.
The CAP is a policy in the EU community that aims at hampering agricultural production. Formulated in 1950’s, the CAP was charged with the responsibility of ensuring better agricultural productivity in order to increase the supply of affordable food to the consumers. However, the CAP faced a challenge. Since food commodities were imported with subsidies, this consequently led to lot of surpluses of major farm commodities; which were ultimately disposed. This was too expensive for the affected countries leading to distortion of world markets and did not benefit the farmer. The CAP was later restructured to address these challenges. It has since then ensured adequacy in food supply, high-living standards for farmers, market stabilization and ascertaining reasonable prices for farmers on agricultural products. EU uses this agricultural policy to prevent dumping.
Dumping is and economic term that means predatory pricing. Apparently, international laws define dumping as a an act where a manufacturer in a country manufactures and exports its products to another country at a price that is either below the charges of the same product in the country of it can be proven that the product increase substantially in the country. It is where companies take advantage of their country’s low cost of production to produce and export cheap products to another country that anticipates high cost of production hence high price of the same product. It involves selling less than the ‘fair value’. This is something that has happens to almost all products including agricultural products. Under the international laws, dumping is condemned but not prohibited .
The European Union has formulated anti dumping laws to fight dumping. The general agreement on tariffs and Trade of 1994 was completely in cooperated in European Union law. This agreement contains the anti dumping rules that include calculation of dumping, the procedure involved in all investigations on dumping issues, the different measures to be imposed upon dumping as well as review and duration of anti-dumping measures.
An act is formulated, The Council Regulation (EC) of November 2009 to protect countries which do not belong to this union from dumping in their exports to the European Union. The act clearly distinguishes dumping from low price sales so as to avoid a situation where commodities fetch low prices, and the exporters ignorantly label this as dumping. To avoid such situation, the criterion used is not pegged on the relationship between the price of the commodity in the country of import, but the relationship between the value of the product and its price. In this case, a commodity is labeled dumped only under conditions where the export price to the EU is less than the comparable price of a similar product which has been established during the trade with the exporting country.
In this regard, the value which is considered in determining if dumping exists is pegged on payable or paid price, within the trading period, by customers in the exporter country. The price may also be established based on prices of other sellers. If a case exist where the exporter in the exporting county does not sell a like product nor produce it.
To further curb dumping, if the import is from non- market economy countries, the price in a market economy third country is used in determining the normal value. All these measures are put in place to avoid a situation where the actual price of the commodity cannot be established.
The dumping margin is the difference between the normal value and the export price. This is done by comparing sales which were made nearly on the same day and those that are on the same commercial stage. Adjustments are then made to account for the difference in taxation, sale conditions and any other difference that may affect the comparability of these prices.
Investigations on dumping are per foamed by a commission together with the European countries. There is an established investigation period; where different methods of data collection such as questionnaires are used to gain information from the involved parties. The committee may also use other methods as meeting to address the situation with all the involved parties. These meetings then come up with the measures.
If it is established that dumping exist, the council may impose anti- dumping duty. It’s worth noting that such duty should not be discriminatory.
Since 1992, EU has played its part in dumping policy. However, this was meant as an anti-dumping policy to protect its citizens from dumping practices. Using its CAP policy, it has protected its member state citizens from selling their products at low prices. However, they end up selling the same products at lower prices in international markets. The CAP of the EU has been accused of dumping via the ‘agreement on agriculture that was made in Uruguay round of the GATT negotiations in the year 1992.’ These reforms were advanced in 2003 in the Luxembourg agreement of 2003.
The initial objective of CAP as aforementioned was to increase agricultural production and enhance the living standards of the EU farmers. This was done by setting up a special fund known as EAGGF. This gave the European farmers and guaranteed price for their agricultural products. The fund was used to buy agricultural products when the market prices fell below the ‘fair value’. There was an anti-dumping price for agricultural products in the EU markets.
In addition, they ensured that European exports could be sold to international markets at prices that are slightly below the local markets without having detrimental effects on the European producers. This policy distorted world agricultural trade because consumers preferred cheaper, yet same quality products from the US than those expensive locally manufactured ones.
The EU was accused of dumping and the policy underwent severe criticism in 1992. Since then, the policy has concentrated mouth on direct payment of farmers and not market intervention.
The EU has been given the mandate to investigate dumping allegations by producers from non-EU countries. The community producers in EU give dumping allegations to EU and the EU starts the investigation. However, EU can start investigation out of its own speculation. The EU opens anti-dumping proceeding against the non-EU producer and this is published in the EU’s official Journal. Such proceedings take less than fifteen months to be processed. If the producer is found guilty of dumping, anti-dumping measures are imposed immediately. The non-EU producer is sectioned and the import tender is terminated.
Anti-dumping measures are imposed under various circumstances within the EU. If the company is found guilty of dumping, anti duping measures are put in place. Second, if the foreign company is found to have caused material injury to the community industry concerned, and third, if some casual links exist between the injury fund and the dumping. Also, the investigation must prove that imposition of punitive measures is not against the interest of the community.
Besides termination of imports, anti-dumping measures are also imposed. Anti-dumping measures take the form of an ‘ad valorem duty’. It can also impose price undertakings or specific duties. The producer continues to import goods but pays some duties to the EU. These duties are then collected by EU concerned state through the national custom authorities.
Alternatively, the producer cracks an undertaking deal with EU. An undertaking deal involves an agreement where the company agrees to sell the product at a minimum price dictated by EU. In this case, anti-dumping duties are put off and are not collected on import.
However, this depends on the findings of the EU investigations regarding dumping. Otherwise, the commission is at liberty to accept or decline such an offer.
Ideally, The EU has made towering strides in the antidumping campaign.