EU Trade

Trade Defense

Over the last year, many EU companies saw their economic activities being impacted by worldwide as well as EU-wide developments, such as rising inflation, high borrowing costs, the war in Ukraine, and the effect of economic sanctions. At the same time, some EU companies have been facing fiercer competition from abroad, as compared to the Covid era, with imports increasing as a result of a drop in freight prices, the re-opening of factories, and the elimination of supply bottlenecks. Moreover, European companies have also felt the pressure from higher energy costs as well as the need to adjust their operations to the EU's green objectives.

All these factors are coupled with a perception in the EU that European companies are disadvantaged compared to their non-European counterparts, due to an imbalance in terms of the availability of subsidies for various industries. The foregoing has created a fertile ground for the European Commission to launch new trade defense investigations, which in the previous year had not been so prevalent.

In total, nine new anti-dumping1 investigations and two anti-subsidy2 investigations were initiated by the European Commission in 2023. To put that into perspective, in 2022 only four new anti-dumping investigations and one anti-subsidy investigation were initiated. Moreover, it is likely that more trade defense investigations are in the Commission's pipeline.

Perhaps the most well-known of the investigations is the anti-subsidy probe against Chinese-made Electric Vehicles (EVs), heralded by the European Commission's President Ursula von der Leyen in her State of the Union address on September 13, 2023. Moreover, top trade officials have hinted at the possibility of initiating an investigation into solar modules from China, having received evidence of low prices and estimated excess capacity thereof. It is not unlikely that other clean energy products, or parts thereof, that are key for the EU's green transition may be subject to scrutiny under the EU's trade defense tools in the near future.

Level Playing Field

The EU has long considered that WTO rules (on which the classic trade defense instruments are based) do not sufficiently address certain practices that contribute to an uneven level playing field between EU and non-EU companies. In the last year, the EU has delivered a broad range of new policy tools aimed at re-balancing the rules, tackling practices that the EU considers to be unfair, and boosting EU companies' ability to compete with their foreign counterparts.

The Foreign Subsidies Regulation (FSR) entered into force on January 12, 2023, and started to apply as of July 12, 2023 (see our blog post on the Regulation here). It aims to address market distortions caused by foreign subsidies granted in relation to a wide range of economic activities – such as the provision of services, M&A, and public procurement bid. The FSR seeks to do so by introducing three new investigative tools to be operated by the EU Commission, namely:

  • A notification-based tool to investigation concentrations (M&A transactions and joint ventures) above certain thresholds;
  • A notification-based tool to investigation public procurement bids above certain thresholds; and
  • A general tool to investigate all other market situations ('ex officio' tool), except for the importation of subsidized products which is covered under the WTO's Agreement on Subsidies and Countervailing Measures.

The Anti-Coercion Instrument (ACI) was adopted on November 22, 2023 and entered into force just on December 27, 2023 (see our blog post on the Regulation here). The ACI allows the EU to act in instances of economic coercion imposed on the EU or its Member States by other third states. The primary goal is to discourage coercion and, when deemed necessary and as a last resort, impose countermeasures to respond to the third country's coercion. Such countermeasures could consist of the suspension of tariff concessions and increase of customs duties, quantitative restrictions on imports or exports, exclusion from public procurements, limitation on foreign direct investment, and so on.

According to the ACI, 'economic coercion' refers to a scenario in which a third country attempts to influence the European Union or an EU Member State into making a specific decision by implementing or threatening trade- or investment-related measures. The assessment of whether a measure by a third country represents an economic coercion will be conducted on a case-by-case basis by the European Commission and the Council, based on a set of pre-established criteria.

In addition to the above instruments, the EU has also recently launched a series of measures that are aimed at boosting EU companies' green capacities, in view of other countries' (especially the US and China) similar efforts in this respect. The Critical Raw Material Act (CRMA), the adoption of which was recently agreed on by the Council and the Parliament, aims to strengthen the EU's critical raw materials capacities across all stages of the value chain and to diversify EU's imports of raw materials. The Act identifies a list of critical and strategic raw materials (such as cobalt, lithium and rare earth elements for magnets) and sets a number of benchmarks for domestic extraction, processing, and recycling capacities in order to reduce supply risks. To achieve the targets, the EU will select a number of "Strategic Projects" which will benefit from reduced administrative burdens and streamlined access to finance (including financial support by Member States).

The Net Zero Industry Act proposal (NZIA) aims to scale up manufacturing of net-zero technologies in the EU (such as batteries, heat pumps, solar panels, electrolyzers, fuel cells, wind turbines, and carbon capture and storage). The proposal lays down a target of 40% of the Union's annual deployment needs for the manufacturing capacity of strategic net-zero technologies and aims to simplify the administrative burden of manufacturing projects. The NZIA was proposed on March 16, 2023, and is currently being negotiated by the Council and the European Parliament.


One of the most significant customs developments of 2023 was the Commission's proposal of a new EU Customs Reform package on May 17, 2023. The package aims to further harmonize national customs law and make it more suitable for the challenges of a digital and more assertive world.

The proposed EU Customs Reform will introduce significant changes with respect to online B2C sales, meant to facilitate online transactions. Specifically, for B2C transactions, importers can opt to rely on a simplified tariff treatment for goods if the transactions qualify as distance sales for VAT purposes.3 This simplified tariff treatment will consist of the possibility to rely on a five-tier bucket system under which different duty rates apply to specified categories of products, ranging from 0% ad valorem up to 17% ad valorem. The customs duty due would then be calculated by applying one of these new bucket tariffs to a customs value, which will also be determined in a simpler manner.

In addition, the proposed Customs Reform would make online platforms (which will be considered to be "deemed importers") responsible for ensuring that goods sold online into the EU comply with all customs obligations. This is a significant change from the current customs system, which put this responsibility on the individual consumer and carriers. Under the Commission's proposal, online platforms will be responsible for ensuring that customs duties and VAT are paid at purchase, as well as ensuring compliance of the goods with EU environmental, safety, and ethical standards and legislation.

Furthermore, pursuant to the proposal, the Commission will develop and implement the EU Customs Data Hub, which will be a platform dedicated to collecting and processing all the relevant data related to imports and exports of goods. Submitting data to this platform (covering multiple consignments) will gradually replace the requirement to lodge a customs declaration. The EU Customs Data Hub will run risk analyses and share information between the EU Customs Authority and national customs authorities as well as different stakeholders, such as the Commission, European Anti-Fraud Office and European Public Prosecutor's office.

In addition, an EU Customs Authority will be established, the role of which will be to carry out EU risk assessments based on the data submitted to the EU Customs Data Hub. The EU Customs Authority will then be able to issue control recommendations to national customs authorities. The EU Customs Authority will also collaborate with other non-customs authorities (such as law enforcement authorities).The Customs Reform proposal is currently discussed in the ordinary legislative procedure and a plenary sitting in the Parliament is scheduled for March 11, 2024.


1. AD694 Alkyl Phosphate Esters (certain) against imports from People's Republic of China; AD692 Electrolytic manganese dioxides (certain) against imports from People's Republic of China; AD699 Erythritol against imports from People's Republic of China; AD698 Mobile access equipment against imports from People's Republic of China; AD695 Optical fibre cables (OFC) against imports from People's Republic of China; AD693 Polyethylene terephthalate (PET) against imports from People's Republic of China; AD697 Polyvinyl Chloride against imports from United States of America and Egypt; AD696 Titanium dioxide against imports from People's Republic of China; AD700 Biodiesel against imports from People's Republic of China.

2. AS689 New battery electric vehicles for passengers against imports from People's Republic of China; AS701 Alkyl Phosphate Esters (certain) against imports from People's Republic of China.

3. As defined in Article 14(4), point (2), of Directive 2006/112/EC.

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