On July 4, 2024, the European Commission announced provisional anti-subsidy measures of up to 38% on Chinese electric vehicles. In response, on August 9, China submitted the EU's provisional anti-subsidy measures to the WTO dispute settlement mechanism. This all stems from the European Commission’s self-initiated anti-subsidy investigation on October 4, 2023. Therefore, when your industry encounters foreign anti-dumping and anti-subsidy investigations, should you cooperate with the investigation, and how should you respond?

Key Considerations:

1. Active Participation

It is generally wise to participate in the investigation, as it allows you to directly influence the outcome, especially the final determination of tariffs. For instance, in this EU case, the anti-subsidy rate for those who cooperated in the investigation was 20.8%, whereas non-cooperating parties were subject to a significantly higher rate of 37.6%.

2. Data and Evidence

The submission of data and evidence, as well as feedback, helps the investigating authorities to more accurately calculate the dumping margin and subsidy amounts. For example, in the EU case, market forecasts were based on predictions by the European Federation for Transport and Environment (T&E), estimating that Chinese brands and European brands acquired by Chinese companies would achieve a market share of 11% by 2024, 14% by 2025, and 20% by 2027. However, this forecast was based on a linear growth model, which is not suitable for assessing market share in the automotive sector. The automotive market is influenced by technological advancements, policy changes, and intense competition, leading to non-linear fluctuations in market share. Moreover, when the market nears saturation, growth potential becomes limited, and a linear model tends to overestimate future market shares. Therefore, using a linear model to predict market share is clearly unreasonable.

3. Filing Appeals and Legal Opinions

It is crucial to submit appeals and legal opinions on matters such as investigation procedures, whether anti-dumping or anti-subsidy exist, whether injury has occurred, and whether there is a causal relationship. For example, in the current investigation, the European Commission initiated the investigation under Article 10, paragraph 8 of the Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union. However, according to this regulation, a self-initiated anti-subsidy investigation must be based on sufficient evidence of subsidies, injury, and a causal link to justify the investigation's legitimacy.