New Directions in EU Trade Defence
Protecting Whole Value Chains

The EU is suffering from the trade impact of subsidies and protectionism in other parts of the world. As a consequence, protectionist pressures are growing in Europe too. 

One reaction is to propose new measures, such as the new EU regime for steel, the proposed Industrial Accelerator Act with its “Made in EU” requirements, the Cloud and AI Development Act, with its AI sovereignty requirements, and the proposed Public Procurement Act, which will also provide for what it calls “European preference”, as explained in our recent article on the subject. 

Another reaction takes the form of proposals to adopt new tools for the toolkit – such as trade defence measures allowing the imposition of restrictive measures designed to counteract “overcapacity” in certain sectors or to reduce dependencies (the “resilience instrument”).

All such additions to the arsenal take time to devise and implement however and may ultimately only be of limited practical application, the salutary experience being the anti-economic coercion instrument, that still has never been applied.

More immediate relief from trade pressures on the EU may therefore require more frequent and more effective use of existing trade defence tools. We highlight a number of recent developments in trade defence policy below.

Broadening the scope of measures

A frequent criticism of trade defence measures, apart from their length and complexity, is that the process can resemble a game of “whack a mole”.  Increased and injurious imports of a given product from a given country are investigated and made the subject of measures only to be replaced by imports from up or down the value chain or even from a different country. 

This is a longstanding problem and there is already provision in WTO law and EU legislation for “anticircumvention” measures to be taken in defined circumstances and subject to due process. 

More recently, however, there has been a trend to adopt more effective protection by seeking to cut off circumvention avenues in advance.   

First, there is the possibility to define products more broadly, including by defining the product scope as “X and parts thereof” or “X, whether or not incorporated into Y”. Early examples of this trend are the EU antidumping measures on wind towers and on steel track shoes.  A further example, that we discuss in some detail below, is the recent safeguard measure on the steel used in transformers. The chemical industry is in the forefront of the pressure for whole value chain trade defence measures since circumvention can easily be achieved through imports of upstream and downstream products.

Second, there is the possibility of redefining the customs origin rules so as to capture products exported from a new exporting country based on components and materials from a country already subject to a trade defence measure.  Thus, for example, in the solar panels antidumping case, the imposition of provisional anti-dumping duties was accompanied by a customs regulation deeming the origin of solar panels to be the country of origin of the photovoltaic modules or cells. A further example is the EU’s adoption of a US-inspired “melt and pour” rule of origin for steel products in its new regime for steel products. If such expanded rules of origin were more widely adopted in the context of trade defence measures, they could pre-empt some circumvention strategies.

Recourse to Safeguard Measures

Safeguard measures are intended to deal with emergency situations, where increased imports cause injury. Importantly, they do not require any demonstration of “unfairness” in the form of dumping or subsidisation. They are widely used by developing countries that do not have the capacity to investigate dumping or subsidies. The instrument was avoided by the EU in the past – that even contested its use by other countries in numerous WTO dispute settlement proceedings and succeeded in rendering the conditions for its application stricter by insisting on the need for “unforeseen developments” that give rise to “sharp, significant, sudden and recent” increases in imports. 

Recently, however, the possible use of safeguard measures has been returning to favour in the EU.  They are now considered preferable to antidumping and antisubsidy measures because the investigations are shorter, there is less to investigate and the measures apply to all countries, not just to specified jurisdictions. It is also considered that the product scope can be broader and possibly cover the whole of a value chain.

A recent example – the case of Grain Oriented Electrical Steel 

The EU has subjected imports of Grain Oriented Electrical Steel (”GOES”) from major exporting countries to antidumping measures since 2015. The EU interests involved are complex and the antidumping measures on GOES applied by the EU therefore allow imports (from some suppliers at least) to be made free from any duty.  This is done by providing for the duty to be the amount by which the export price of those suppliers falls below a threshold price; in other words, by effectively imposing a minimum price that is more readily satisfied by the higher quality imports that are required in the EU. 

Recently, it appears that the EU GOES industry complained that their competitiveness was being undercut by the import of the downstream product, Steel Laminations and Cores (‘”SLC”s) manufactured in third countries from GOES. 

As a result, the EU opened a safeguard proceeding into both GOES and SLCs. This, it was thought, would provide the EU industry with protection from imports of both the main and the downstream product – with the additional advantages of not requiring an investigation into dumping or subsidisation and an application to imports from the whole world. 

The provisional safeguard measure adopted by the Commission on 18 September 2026 introduced protection in a similar manner to what was done with the earlier antidumping measures, but for both GOES and SLC.  As with the antidumping measure, no duty is payable if the products are imported at above a certain threshold price set out in the measure. 

There are two additional important innovations. 

First, a form of quantitative restriction is imposed. The quantities of GOES and SLC that can be imported without the payment of any duty is limited by tariff rate quotas which are distributed amongst the supplying countries. 

Second, the safeguard duty on SLCs applies to SLCs whether or not stacked and whether or not incorporated into transformers.  For SLCs incorporated into transformers there is no minimum price or duty-free quota; the duty is €1140 per ton of incorporated SLC. 

It is noteworthy that transformers were not included in the product description in the notice of initiation and the transformer industry was included in the “Union industry”.  Imports of transformers were also not investigated and nor was any potential injury.  The Commission simply established that measures on GOES and SLCs could be “circumvented” through increased imports of transformers.  In fact, the EU transformer industry opposed the imposition of protective measures on GOES and SLCs (their raw materials).  The extension of the safeguard measure to transformers could be considered to be not only a means of pre-empting possible “circumvention” but also a means of countering the opposition by offering it protection as well. 

Issues arising

As noted above, safeguard measures are meant to be subject to stricter conditions than antidumping and antisubsidy measures, because they are measures that restrict “fair” rather than “unfair” trade. Current trends are however making safeguards easier to obtain and more effective at pre-empting circumvention. 

In fact, a broader product scope, whether of antidumping, antisubsidy or safeguard measures, should require a broader and more wide-ranging investigation in order to establish the existence of the required conditions for the whole range of products and in particular that the imports are the actual cause of the injury.  The use of anticircumvention reasoning appears to be having the opposite effect.

The move to safeguard measures in the EU will also raise the additional issue of double protection.  The antidumping duties for GOES are still in force and the combination of the measures will give rise to disproportionate protection in many cases.  The solution provided for in the recent GOES/SLC safeguard measures is to provide that:

“For imports subject to this provisional safeguard duties which are also subject to anti-dumping duties imposed by Commission Implementing Regulation (EU) 2022/58, the anti-dumping duties will not be levied for the period of application of this regulation, because these duties are lower than the provisional safeguard duties.”

This is an unclear provision. The intention appears to be that antidumping duties will not be levied when these are lower than the safeguard duties. If so, it is not specified what happens when the antidumping duties are not lower that the provisional safeguard measure (as will sometimes be the case).  What may make sense is that only the higher duty should apply, but that is not what the provision says  In addition, the Commission has no power to amend an antidumping measure by means of a safeguard measure; there is a separate legal basis and procedure for that in EU law, which has not been followed. It is not clear therefore how customs authorities will react.

Another double protection issues that the Commission examined (but dismissed) is that arising from the forthcoming application of the EU carbon border adjustment mechanism (“CBAM”) that will apply to imports of GOES.  While it is true, as the Commission reasons, that the EU industry was subject to additional costs arising out of the EU emission trading system (“ETS”) during the investigation period whereas imports mostly were not, it is also the case that imports will be subject to the additional cost of CBAM charges in the future precisely to offset the cost of the ETS for the Union industry.  

Conclusion

EU trade defence policy is developing rapidly with a view to achieving greater efficiency and effectiveness.  However, political and economic pressures leading to innovations and short cuts will inevitably lead to more legal disputes.