The EU General Court ruled on Wednesday 1 March that a subsidy granted by China can be attributed to Egypt as the country of origin or export of a product subject to countervailing measures (cases T-480&540/20).
Two companies under Egyptian law but owned by Chinese entities - Hengshi and Jushi - are established in Egypt in the in the China-Egypt Suez Economic and Trade Cooperation Zone (‘SETC Zone’), a location that allows them to benefit from financial support from Chinese public authorities. They produce and export to the EU glass fibre fabrics (GFF) and Jushi also produces glass fibre products (GFR), the main raw material for GFF.
Both companies are challenging the anti-dumping measures (implementing regulations 2020/776 and 2020/870) that the European Commission imposed in 2020 on GFR and GFF (see EUROPE 12506/11).
The General Court dismissed both actions. According to it, the ‘anti-subsidy’ regulation (2016/1037) does not preclude a financial contribution granted to companies in Egypt by Chinese public bodies, and not directly by Egyptian public authorities, from being imputed to the latter as the government of the country of origin or export.
The SETC Zone allows the Chinese public authorities to directly grant all the facilities inherent in the ‘Belt and Road’ initiative to Chinese companies established there. Under these circumstances, it cannot be accepted that an economic and legal construction of such magnitude as the SETC Zone should be exempted from the basic ‘anti-subsidy’ regulation, according to the General Court.
According to the European judge, the government of the country of origin or of the case may be consulted on issues such as preferential loans granted by Chinese entities, a process that the Commission has indeed initiated in this case. The Egyptian authorities also had the option of ending or mitigating the effects of Chinese financial support.
It follows that the ‘anti-subsidy’ regulation does not preclude a financial contribution by China from being attributed to Egypt, as the country of origin or export, as in the case at hand. This conclusion, the General Court points out, is supported by the fact that the Regulation defines a subsidy as a financial contribution by any governmental body within the territorial jurisdiction of a WTO member, an organisation to which China acceded at the end of 2001.
See the judgment: https://aeur.eu/f/5k9 (Original version in French by Mathieu Bion)