This blog concerns an update of our previous blog on the extension of the definition of “consigned from”, to be found here.
In 2023, the EU applied anti-dumping or anti-subsidy duties (together “AD/AS duties”) on imports of 141 products from 20 countries. The EU regularly extends these duties to imports of these products from other countries to counter circumvention.
As context, to see whether AD/AS duties apply, you need to look at the non-preferential origin of imported products. For example, EU AD/AS duties on Indonesian stainless steel apply on stainless steel with non-preferential origin Indonesia, regardless of the country of export.
By contrast, in case of circumvention, AD/AS duties apply on imports of products consigned from a country, regardless of origin. For example, to counter circumvention of the EU AD/AS duties on Indonesian stainless steel, the EU extended the duties to all imports of stainless steel consigned from Taiwan, regardless of origin (unless the steel is made by a company that obtained an exemption from the anti-circumvention duties). Therefore, stainless steel originating in, say, the U.S. but shipped via Taiwan is subject to duties.
The question arose before Dutch customs what the definition of the term “consigned from” is. Does “consigned from” cover (1) only products shipped to the EU from the country concerned or (2) also products first shipped to third countries for further processing, with these goods later shipped to the EU from the third country. For option (2), take, for example, solar cells from Malaysia, which were subject to anti-circumvention duties. The cells are shipped to Japan to be incorporated into solar panels, which have non-preferential origin Malaysia. If these panels are shipped to the EU, are they “consigned from” Malaysia?
Traditionally, Dutch customs used option (1). But after an intervention from the European Commission, customs changed its position, and used option (2).[1] This means, of course, that more products risk being deemed to be “consigned from” a country subject to anti-circumvention duties.
At the time of writing, Dutch customs did not yet retroactively apply anti-circumvention duties on imports that are “consigned from” under option (2). We see several legal issues if Dutch customs were to do so, including:
- Option (2) does not sit well with the ordinary meaning of the term “consigned from” as compared to “originating from.” Option (2) conflates both concepts, which are legally separate.
- Because option (2) is a far-reaching interpretation of “consigned from,” legitimate expectations of importers are arguably breached, strengthened by the fact that importers should not suffer from a misinterpretation of the authorities.
- Option (2) results, in effect, in an extraterritorial application of anti-circumvention duties, which are already an extraterritorial application of AD/AS duties. The Commission did not investigate circumvention via the third country (in our example, Japan), and companies in the third country (Japan) did not benefit from the rights they have in an anti-circumvention investigation
In the meantime, importers are well advised to check their supply chain for exposure to the EU’s broad interpretation of “consigned from” whenever the non-preferential origin of imports is not the same as the country of consignment.
Update: On 5 September 2024, the Court of Justice of the European Union (“CJEU”) rendered judgment in case C-67/23 S.Z. The judgment touches on the interpretation of the terms “originating from” and “exported from” (although not the term “consigned from”) (see here).
The judgment concerns the application of restrictive measures on (teak) wood from Burma/Myanmar that was processed into planks in Taiwan. At the material time, the EU imposed import restrictions on logs, timber and timber products “originating from Burma/Myanmar” or “exported from Burma Myanmar.” The CJEU was asked to consider whether the expression “exported from Burma/Myanmar” meant that only goods directly exported from Burma/Myanmar to the EU were subject to the import restrictions.
The CJEU looked at the context of the term “exported from” in the restrictive measures and ruled that the import restrictions specifically distinguished between “originating from” and “exported from” to ensure that goods that “originate in Burma/Myanmar” were within scope of the import restrictions. Based on that context, the CJEU found that the term “exported from” in the restrictive measures only covered goods directly consigned from Burma/Myanmar to the EU.
While the CJEU’s finding is specific to the restrictive measures at issue, this judgement arguably supports an interpretation of the term “consigned from” that only covers products directly shipped to the EU from the targeted country. An interpretation of the term “consigned from” that includes products indirectly shipped to the EU – as now used by Dutch customs – conflates the meaning of “originating from” and “consigned from.”