To offset subsidies that are granted in order to benefit goods from a third country, the EU can impose so-called countervailing duties on imports. This is intended to prevent damage to the EU market through the importation of artificially cheap goods. A recent example is the countervailing duties now being levied on electric cars from China. The amount of the countervailing duties depends on the extent of the subsidization of the particular goods. The EU must provide evidence of  the existence of the subsidies and their extent. Two examples where this has not been successful are shown by the recent decision of the General Court of the European Union (GCEU) in case T-122/23 (Ege İhracatçıları Birliği and others).

 

The European Commission conducted an investigation into the importation of rainbow trout originating in Turkey. It concluded that Turkish exporters received subsidies in connection with imports into the EU. In response, it introduced countervailing duties by means of Implementing Regulation (EU) 2021/823, in order to prevent EU market damage.

 

The European Commission considered several supplies made by the Turkish government to various parties to constitute subsidies, including the following two: The plaintiff, Gümüșdoğa, received a refund for participating in a trade fair in the United States. The European Commission considered this grant to be a subsidy and included it in the calculation of the amount of countervailing duties. It justified this in the proceedings before the General Court on the grounds that the funds were generally available to the plaintiff. The plaintiff had failed to prove that the funds were used exclusively for a trade fair exhibition in the USA. It had therefore failed to prove that they did not benefit the goods imported into the EU.

 

The same plaintiff also received a financial contribution during the investigation period to reduce the burden of air freight transport in 2020 (May to July). During this period, the plaintiff did not transport any goods to the EU by air freight. Again, the European Commission considered these funds to be a subsidy. The plaintiff had not furnished any proof that it had used the funds exclusively for exports to markets other than the EU. It would have been possible for it to use the subsidies granted for exports to the EU without any problems, as it had received the funds as cash payments.

 

The plaintiff objected to the inclusion of the above-mentioned subsidies granted in the calculation of the subsidy amount. In particular, it complained that the European Commission had included subsidies granted that were not related to the export of goods to the EU. However, this was required under Art. 1 para. 1 of Regulation (EU) 2016/1037. The burden of proof in this regard lay exclusively with the European Commission.

 

The General Court upheld the plaintiff’s arguments on both points. The European Commission had incorrectly classified the grants as subsidies. In particular, the General Court criticized the specific link between the subsidies granted made by the Turkish State and the export of goods to the EU. With regard to the subsidy granted for participation in a trade fair in the USA, no link was found to exist between the grant and the export of goods to the EU. The same applied to the subsidies granted for air freight transport costs. It was undisputed that no exports to the EU had been made by air freight during the period in question. The European Commission’s assertion that the funds could have been used in connection with the export of goods to the EU did not constitute proof.

 

Since the European Commission bears the burden of proof, it is irrelevant that the plaintiff did not provide further evidence of its use of the subsidies. Economic operators are not responsible for refuting allegations or uncertain assumptions made by the European Commission.

 

With this decision, the General Court puts a stop to the unlimited inclusion of all grants in the calculation of subsidies during the investigation period. It rules, with welcome clarity, that the burden of proof in the European Commission’s investigation lies with the Commission. Only subsidies granted  that are traceably related to the cases referred to in Article 1(1) of Regulation (EU) 2016/1037 can be regarded as subsidies within the meaning of the Anti-Subsidy Regulation.

 

The decision may have an impact on existing anti-subsidy measures and ongoing and future anti-subsidy investigations. The imposition of countervailing duties on imported goods should also be critically reviewed with regard to the lawfulness of the implementing regulation.