When it comes to concluding a trade defence proceeding in the European Union (EU), the regulations allow for three alternative outcomes: (1) a termination without measures, (2) the imposition of a protective duty or (3) the acceptance of a price undertaking. Price undertakings are voluntary offers by foreign exporters to revise their prices so that the Commission is satisfied that the subsidization or dumping margin and their injurious effects are removed.
Some welfare economists have concluded that 'a rational policy maker will always prefer duties' (Pauwels and Springael, 2002, 135). Thus, there is no rationale for price undertakings from an income maximization perspective. However, others have highlighted the role of price undertakings as a diplomatic tool in the EU's neighbourhood policy, which is powerfully evidenced by a sharp decline in the frequency of price undertakings after the EU's Eastern enlargement in 2004 (Appendix 1). Yet, a paradox persists: Out of fourteen price undertakings accepted between 2006 and 2015, only four accounted for countries in the EU's immediate neighbourhood. In contrast, price undertakings were accepted by ten countries that fell outside of Europe, with the BRIC countries accounting for nine, and China alone for five (Appendix 2).
In response to this paradox, the paper reviews the following question: What are the political economic determinants of accepting price undertakings in the EU? I find the acceptance of price undertakings arises from an institutional conflict that can be foreign induced. In contrast to judicialized systems, an incomplete delegation of trade defence in the EU has led to a politicization of the trade defence proceeding. This is characterized through the empowerment of three veto-players: Community industry, Commission, and Council. Powerful foreign parties actively capitalize on the engagement of political actors and - in an effort to achieve a less harmful outcome than duties - influence the three veto-players. Eventually, price undertakings are accepted by the Commission, if only the Council signals to exert its veto-rights.
Table of Contents
1. Introduction: Friend or Foe?
2. Related Literature on the Determinants of Price Undertakings
2.1. Economic Approaches
2.2. Political Economic Approaches
3. The Argument in Brief
4. The Incomplete Delegation of EU Trade Defence and Three Veto-Players
4.1. The Optimal Delegation of Trade Defence
4.2. Veto-Players at Different Stages of the Trade Defence Procedure
4.2.1. Initiation
4.2.2. Investigation
4.2.3. Provisional Measures
4.2.4. Undertakings
4.2.5. Definitive Measures
5. EU Trade Defence in the Case of Solar Panels from China
5.1. Foreign Pressures on the Community Industry
5.2. Foreign Pressures on the Commission
5.3. Foreign Pressures on the Member States
6. Conclusion: The Need for Further Reform
7. Bibliography
8. Appendix
Research Objectives & Core Themes
This paper investigates the political economic determinants behind the European Union's acceptance of price undertakings in trade defence cases. It specifically explores how an incomplete delegation of trade defence powers leads to a politicized environment where three key veto-players—the Community industry, the Commission, and the Council—interact under foreign pressure.
- Institutional conflict and incomplete delegation in EU trade policy.
- The role of the Commission, Council, and Community industry as veto-players.
- The influence of foreign state actors on EU trade defence decision-making.
- Case study analysis: Solar panels from China and its impact on trade remedies.
- The emergence of price undertakings as a "messy compromise."
Excerpt from the Book
5. EU Trade Defence in the Case of Solar Panels from China
So far, I have argued that EU trade defence is politicized and marked by three veto-players at different stages of the trade defence proceeding. In a setting where Community industry and Commission favour measure imposition, but the Council opposes such, price undertakings result as a 'messy compromise'. In this part, I review these findings during the procedure of a EU trade defence case that resulted in price undertakings: the anti-dumping case of solar panels from China. After the European solar industry's global market share was quartered in the half-decade preceding 2012 and prices plunged (Appendix 4), EU ProSun, an initiative comprising 25 European solar producers lodged a complaint with the European Commission on 25 June 2012. On 3 August 2013, the Commission officially accepted a price undertaking by Chinese producers.
Different trade defence cases typically vary over several dimensions, such as different products, counterparties, investigation periods or outcomes. Therefore, it is difficult to select a case that is representative of a broader number of cases. However, the case selected is representative for a wider set in the sense that it is (i) one out of five cases that resulted in price undertakings since 2010, and (ii) it involved China as a counterparty as did four out of the five cases. Since informal decision-making procedures are also to be considered in this analysis, the logical time period observed is from May 2012 until August 2013, when the key decisions had been made. Observing a case with China as a counterparty shows why one of the EU's main trading partners and a non-market economic state capitalist system is in some cases 'rewarded' with an amicable solutions. It also allows to depart from theories highlighting price undertakings as diplomatic tool for the EU's neighbours. Therefore, special regard to the actions of the foreign parties has to be paid, which played a key role in inducing the veto-players' conflict.
Summary of Chapters
1. Introduction: Friend or Foe?: Introduces the three outcomes of EU trade defence proceedings and outlines the research question regarding why price undertakings are chosen despite welfare losses.
2. Related Literature on the Determinants of Price Undertakings: Reviews existing economic and political economic research, identifying the gap in literature regarding foreign influence on EU trade policy.
3. The Argument in Brief: Summarizes the thesis that EU trade defence is politicized through three veto-players and that price undertakings arise from foreign-induced institutional conflicts.
4. The Incomplete Delegation of EU Trade Defence and Three Veto-Players: Analyzes the institutional design of EU trade defence and the roles of the Commission, Council, and Community industry.
5. EU Trade Defence in the Case of Solar Panels from China: Provides an empirical case study examining how foreign pressures were applied to the three veto-players in the solar panel anti-dumping case.
6. Conclusion: The Need for Further Reform: Summarizes the findings and proposes institutional reforms to depoliticize the EU trade defence process.
7. Bibliography: Lists the academic and official sources used in the research.
8. Appendix: Provides statistical data and visual representations regarding EU trade defence cases and the solar industry.
Keywords
Trade Defence, European Union, Anti-Dumping, Price Undertakings, Veto-Players, Institutional Conflict, Political Economy, Solar Panels, China, Lobbying, Delegation, Trade Policy, Union Interest Test, Foreign Influence, Protectionism.
Frequently Asked Questions
What is the primary focus of this research?
The work examines the political and economic reasons behind the European Union's tendency to accept price undertakings in trade defence cases instead of imposing protective duties.
What are the central themes discussed in the book?
Key themes include the politicization of EU trade defence, the influence of interest groups, the role of international diplomacy, and the institutional structure of the EU's decision-making process.
What is the central research question?
The paper addresses the question: "What are the political economic determinants of accepting price undertakings in the EU?"
Which scientific methodology is employed?
The research uses an analytical political economic approach, combining institutional analysis with a detailed case study of the EU-China solar panel trade dispute.
What is covered in the main section of the text?
The main part of the book breaks down the roles of the Community industry, the Commission, and the Council as veto-players and explains how foreign actors influence them at different stages of the trade defence procedure.
How would you characterize the main keywords?
The study is characterized by terms such as Veto-Players, Incomplete Delegation, Price Undertakings, and EU Trade Policy.
How does the author explain the "amicable" solution?
The author argues that price undertakings are less a sign of friendship or diplomatic neighbourhood policy, and more a "messy compromise" driven by foreign threats and institutional constraints.
What role does the "Union interest test" play in the author's argument?
The author argues that while the Commission has broad discretion in theory due to this test, it is often unassertive in practice, leading it to act as a quasi-judicial agent unless external political pressures force a change in approach.
What solution does the author propose for the identified problems?
The author suggests completing the delegation design by establishing binding rules for the Commission to reduce political interference and limiting the Council’s involvement to oversight.
- Citar trabajo
- Dominik Kümmerle (Autor), 2015, 'Amicable Solutions' in Trade Defence. What are the Political Economic Determinants of Accepting Price Undertakings in the EU?, Múnich, GRIN Verlag, https://www.grin.com/document/311804
