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1.1 Introduction Antidumping is one of the most controversial issues in the field of international trade. It divides the main exporting countries from the main importing countries. Companies and industries that find them slipping in the international market often abuse antidumping measures for protectionist purposes. The increase in the number of antidumping cases all over the world has been a matter of great concern for all World Trade Organization (WTO) members as it tends to impair the WTO’s core objective of achieving market access liberalization between the contracting parties. The working of the regime under the Anti-dumping Agreement (ADA) for more than a decade and the analysis of the Panel/Appellate Body Reports reveals a number of substantive and procedural flaws. These flaws in interpretation of the Anti-dumping Agreement are the major cause leading to invalidation of the Anti-dumping measures at the Panel/Appellate Body level. Evidencing the existence of flaws, the European Union recently on 19th February, 2010 triggered an arbitration process at the World Trade Organization asking United States to drop a controversial method of tackling unfairly priced imports. WTO courts have repeatedly ruled against Washington's use of zeroing-a method of calculating anti-dumping duties rejected by all other WTO members. The European Union said it was seeking retaliation because the United States had failed to comply with these rulings, missing a deadline of April 2007 and December 2009 deadline to comply in a second case over zeroing. Results of the study also shows that there is an agreement among the participating firms that the current anti-dumping laws of different countries are often confusing and there is no uniform definition of what may be called as ‘dumping’. Article VI was included in the General Agreement on Tariffs and Trade (GATT), 1994 with an objective of regulating ‘unfair trade’, but later came to be a shield to protect domestic industries. The historical and empirical evidence, combined with recent Appellate Body (AB) jurisprudence, supports the conclusion that the use of anti-dumping is not aimed primarily at stemming dumping. It is rather used to address specific industry issues, disrupting imports through political protectionism, favoring domestic industries. Most of 1
the supporters of anti-dumping agree that it has nothing to do with keeping trade ‘fair’. There is a general perception among the participating firms that more and more governments are using this as another non-tariff barrier in favour of their domestic industries. The implication of this is that, to make international trade a leveller playing field WTO should try to standardize the definition and application of anti-dumping laws among its member countries. The study of the anti-dumping measures at the Panel and Appellate level indicates that there are substantive and procedural flaws in the working of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement). The analysis revealed the following issues of concern which circumscribes the effective working of the Anti-dumping Agreement which will be discussed in detail later: Confusing definition of ‘dumping’ and its determination. Various methodologies used for proving dumping are not standardized and extremely tentative in nature and the most popular methodologies are not consonant with the ADA itself and the most controversial been the use of “zeroing” methodology and ‘arm’s length’ test by U.S. and other members’ to determine margin of dumping. Appellate Body in its decision held such methodologies as contrary to ADA provisions. However, it never banned the use of this particular methodology for calculating normal value. In addition, ADA has also not addressed the situation where a foreign exporter sells overseas at prices higher than those offered to domestic consumers. Lack of specific guidelines in Article 2.1 of ADA allows members to adopt different protectionist methodologies to find dumping.
Article 2.2 of the ADA is one of the most frequently disputed provisions before the AB. The concept of “ordinary course of trade” is not defined in ADA nor does it prescribe what transactions would come within the meaning of “ordinary course of trade”.
Selection of a surrogate country in the case of Non-Market Economies (NME’s) is not consistent with the economic realities existing in dumping and dumped upon countries.
No causal link between injury and dumping as Article 3 of ADA does not define ‘injury’ except as a footnote to Article 3, though Article 3.1 states that the determination of injury shall be based on positive evidence and it involves an objective examination of many economic factors. It is sometimes very difficult to distinguish and prove the causal link between the injury and dumping. Material injury not clearly defined as a result of which defending countries find it difficult to submit evidence as to the material injury even when there is actual injury to the domestic industry.
Definition of ‘domestic industry’ in Article 4 of ADA is vague. Article not clear with respect to what proportion of the domestic producers could be considered as constituting the domestic industry. It would be useful to provide more specific parameters as to what minimum percentage of the domestic production can be considered to be “major proportion” within the meaning of Article 4.
Problem of non-disclosure of confidential information. WTO provisions concerned deprive interested parties from a meaningful way to defend their interests because under the leeway provided by the ADA, too much information is in practice treated as confidential. This includes both reports prepared by the administering authorities as well as non-confidential summaries of confidential information submitted by interested parties. The accuracy and adequacy of 3
The interpretation of Special and Differential Treatment provisions in ADA by the Appellate Body in many cases has rendered the very purpose of introducing 4 .8 and Annex II of the ADA authorizes the use of ‘facts available’ when a party refuses access to or does not provide.6 of ADA requires that Panels must make an ‘objective assessment of the matter’. the evidence should not only be sufficient but objective as well. without applying the standard in Article 17. the AB found.6(ii).A are using this provision either as a coercive measure or for reaching a finding of dumping by rejecting the submitted data. that the interpretations of the importing authorities were inconsistent. The Appellate Body through its interpretations various decisions made no distinction between the special standard under Article 17.6 of ADA and the uniform standard under Article11 of the DSU. or when a party significantly impeded the process of investigation. However. Many countries especially U. In the EU-Indian Bed Linen dispute. the AB deliberately left unanswered the question as to whether the action of the EC was consistent with the standard of review provision in the ADA. this requirement does not specify the precise nature or intensity of the review that panels must undertake. Article 6.S. In the Japan Hot-rolled Steel case.evidence for initiation of an investigation has also been raised in many disputes before the Dispute Settlement Body (DSB).3 of ADA stipulates that the authorities should examine the accuracy and adequacy of evidence provided in the application to determine whether there is sufficient evidence to justify the initiation of an investigation. the necessary information within a reasonable period of time. Article 17. Article 5. For the purpose of preventing abuse of antidumping investigations.
based in large part upon whether the country is a main exporting or importing country. Many exporting 5 . and has not followed it in numerous instances where the importing country appears to have offered a plausible interpretation of the provisions to support its action.the said provision a failure. The existence of Article 17.6(ii) has had no visible impact on the WTO review of national antidumping decisions. The need to introduce ‘public interest clause’ in anti-dumping actions should be reconsidered and negotiated. Article 15 of ADA does not mention any development policy criteria on the basis of which either anti-dumping measures are to be withdrawn or certain ‘constructive remedies’ have to be taken. The Appellate Body in its various decisions barely mentioned the standard of review. This is mainly due to the shortcomings in the language of the provision. The quantitative and qualitative analysis of the anti-dumping cases proves the hypothesis that it is more responsive towards the concerns of the developed countries than towards the interests of the developing countries. which make it a soft law rather a hard law obligation. Opinions on this issue vary drastically among nations. The consideration of producer interests dominates the rationale for antidumping laws and there is nothing to indicate that there is an interface between importcompeting interests and the interests of wider society. Another issue being the potential for governments to invoke antidumping laws abusively has created controversy over the level of evidence required to initiate an investigation.
One complication that has arisen is the interplay between these antidumping guidelines and those in place in the individual member nations. governments are under increasing pressure to make their domestic regulations conforms with the WTO regulations. This pressure is in large part due to the more serious sanctions available to WTO dispute resolution panels than existed under the GATT. countries have sought to reduce the risk of being found in violation of the WTO regime.companies argue that the level of evidence required should be high to guard against the use of investigations as a weapon to restrict exports. In contrast. First. Both the major trading countries and the developing countries employ antidumping investigations more frequently today. it has been a source of contention since the first GATT Antidumping Code. As a result. Second. This Comment contrasts these procedures. A threshold that is too low will encourage unwarranted complaints and investigations. as well as the imposition of sanctions upon positive findings. the debate over the appropriate threshold for initiating an investigation and its resolution will have an impact on the WTO itself. Determining the appropriate evidentiary threshold is a significant issue. The threshold issue is important for many reasons. Third. The need to find a balance between these two extremes is the crux of the problem and one of the foci of this research work. the issue of whether a petitioner has provided sufficient evidence to initiate an investigation is likely to arise more frequently. The WTO structure builds upon that of the General Agreement on Tariffs and Trade ("GATT") and includes guidelines for the initiation and execution of antidumping investigations. As a result. particularly those relating to the initiation of an antidumping investigation under the rules of the WTO and those of the United States. which will in turn result in protectionism and deter international trade and investment. This issue has already arisen at the GATT/WTO level on two occasions discussed in more detail later in this dissertation. The threshold issue may very well be one of the most divisive and politically-charged issues yet faced by the new 6 . many of the importing countries argue that investigations prevent unfair competition and advocate a more flexible evidentiary requirement. The research work also analyzes the impact that the initiation threshold has on antidumping investigations. A threshold that is too high will lead to increased and unchecked dumping and other unfair trade practices.
organization. like due to a desire to protect domestic industry anyway. many supporters and critics are eager to see how the WTO will withstand this challenge. The paper would address the substantive and procedural flaws in working of Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (AntiDumping Agreement). which has led the member countries to interpret the anti-dumping provisions in their favour for imposition of the anti-dumping measures on the exporting country. due to weaknesses in the national laws that are not fully consistent with ADA. 1. “A Critical Analysis of the Anti- dumping Litigations since 1995” is to critically study how the WTO Anti-dumping Agreement is been implemented and interpreted by the Member nations in their domestic legislations in resolving the disputes relating to ‘dumping’ of product causing injury to their domestic market. revealed from the analysis of the Panel/Appellate Body decisions. It is been observed that in almost all the cases that went to Panels and/or Appellate Bodies. It is only in approximately 10% of cases that the anti-dumping measures have been held to be valid. Summarily.2 Objectives of the Study The Object of research work on the topic. The study would also focus on what the Panel/Appellate Body has decided in the cases of dual interpretation of the anti-dumping provisions and whether there is consistency in 7 . the anti-dumping measures were found to be inconsistent with Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement). The research paper through the critical analysis of the antidumping litigations would address the issue on the problem of dumping in WTO. The said analysis would be done by analysis of the anti-dumping cases went before the Panel/Appellate Body challenging the validity of the imposition of the anti-dumping measures. the study would focus on the analysis of the arguments put forth by the Complainant and Respondents members in selected Anti-dumping litigations brought before the Panel/Appellate Body justifying the imposition or nonimposition of the anti-dumping measures and the decisions of the Panel/Appellate Body on the issues raised before it. due to lack of training of the national staff etc. The percentage of such number of cases would be approximately 90% and above. Consequently. The said result could be due to a variety of reasons.
interpretations made by the Panel/Appellate Body on those legal issues that came before it while deciding as to the validity of the imposition or non-imposition of the antidumping measures. The critical analysis of the anti-dumping cases initiated before the Panel/Appellate Body clearly reveals the flaws in the working of the anti-dumping agreement.. Statistical data reveals that out of total 74 number of antidumping measures reported on website of the World Trade Organization. The scope of the study would focus on cases where Panel and Appellate Body both has validated the imposition of the anti-dumping measures by the Designated Authority of the importing country and cases where Panel has validated the imposition of the anti-dumping measures by the Designated Authority. Considering all the above aspects as mentioned above in research questions and to facilitate the discussion and perfect solutions for above problems and for thematic development of the subject the 8 . which are the subjectmatter of the research in the present study. more than half the total number of cases) are still at the consultation stages and 35 cases (including three mutually agreed solutions) went before the Panel and Appellate Body on different legal issues arising out of the Anti-dumping Agreement. 1. 39 cases (i. 1.3 The Scope of the Study The scope of the research work is confined to analysis of selected Panel/Appellate Body Reports related to anti-dumping measures. Finally.4 The Scheme of Study The dissertation topic on “A Critical Analysis of Anti-dumping litigations since 1995” is taken with a view to study the problem of dumping in WTO. The said analysis would be made with an objective to locate the reasons and interpretation given by the Panel/Appellate Body for validating or invalidating the imposition of the anti-dumping measures initiated by the importing member country.e. the study would be concluded with suggestions for bringing clarity in the interpretation of Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement). but the Appellate Body has overruled the decision of the Panel as being contrary to the Anti-dumping Agreement.
research work is divided into seven chapters. Internet has provided with a major contribution of most relevant and latest information on the web which has helped the researcher to explore the subject through various dimensions. Opinions of research scholars. experts in respective fields who have dealt with this subject are used as real contribution to this work. Brief overview of the chapters is as follows:Chapter–I Chapter-II Introduction The Concept and History of Anti-dumping Chapter-III Overview of the Agreement on Implementation of Article VI of the GATT. The methodology adopted for the present research paper is doctrinal. analytical and descriptive. Journals and Websites. 9 . Dr. professors.S. Articles. analysis of the selected Panel and Appellate Body Decisions of Dispute Settlement Body. Legal Text of WTO. The research has been carried out primarily with the help of a comprehensive literature survey of available Commentaries. Anti-dumping Sunset Review Regime Chapter –VIII Conclusion and Suggestions 1. 1994 Chapter–IV Dumping and its Interpretation under the WTO Framework Chapter-V Chapter-VI Issues in Determination of Injury and Causation Procedural Issues in Anti-dumping Cases Chapter-VII Issue of Zeroing Methodology in calculation of Dumping Chapter–VII Analysis of the WTO Dispute Findings on the U.5 The Methodology of the Study Researcher in this work has been done having relied mainly on ‘Doctrinal Method’ of research.
1 ‘Dumping’: The Concept Definition of Dumping There is immense confusion about the meaning of dumping. Indian Law Institute and its library had also contributed in collection of relevant materials for the research work. In legal terms. under Article VI of the GATT and in the ADA.Ram Manohar Lohiya National Law University. Chapter 2 The Concept and History of Anti-dumping 2. The normal value is the domestic price of the goods in the country of export. ‘dumping’ is selling a product at low prices in the international market. Lucknow and its e-resources have played a crucial role in bringing out special material for the dissertation. Anti-dumping was considered a derivative of antitrust. dumping was defined as a form of either monopolistic price discrimination or predatory behaviour on the part of oligopolists to preserve cartels and drive competitors out of business. dumping is defined as the sale of a product at a price less than its ‘normal value’.1. Dumping can be explained in three contexts: (1) (2) In a layman’s view. 10 .1 2. (3) In the pre-World War II period.
It does not cover all forms of international price discriminations.According to Hoekman and others. that is whether it is voluminous so as to cause ‘injury’ to the domestic industry or is ‘de minimis’. in the ordinary course of trade for the like product when destined for consumption in the exporting country. there is a serious mismatch between what antidumping rules actually do and what their supporters say they are supposed to do so. Neither Article VI of GATT 1994 nor the Anti-dumping Agreement disapproves of dumping per se. Further. Unfortunately. Freight dumping. The “degree” of dumping is reflected by the margin of dumping judged by the quantum element of dumping. differences in taxation. is never so simple and more often than not involves a series of complex analytical steps. or (ii) the cost of production of the product in the country of origin. is less than either: (i) the highest comparable price for the like product for exports to any third country in the ordinary course of trade. Exchange dumping.” 11 . Due allowances shall be made in such cases for differences in conditions and terms of sales.1 The concept of dumping is relatively simple. Viner defined it as price discrimination between national markets. or (b) in the absence of such domestic price. dumping occurs when similar products are sold by a firm in an export market for less than what is charged in the home market. 1 Article VI of the GATT 1947 provides that:“A product is considered as introduced into the commerce of an importing country at less than its normal value if the price of the product exported from one country to another: (a) is less than the comparable price. it may occur if the export price of the product is less than the total average costs or marginal costs. but it is defined more restrictively in the WTO context. But determining. The “effect” of dumping has reference to the impact of dumping on the domestic industry in the context of injury caused by the volume of dumping of the product under investigation. and any other differences affecting price comparability. The first internationally accepted definition of dumping is provided in Article VI of the GATT. Bounty dumping and Social dumping. Alternatively. Some of the practices that have been excluded from its domain are: Service dumping. whether or not to impose anti-dumping measures. it is to be noted that the said definition is restricted to the concept of price discrimination between national markets in relation to goods. plus a reasonable addition for selling cost and profit. Dumping is condemned only if it causes or threatens to cause material injury to a domestic industry in the importing country or materially retards the establishment of a domestic industry.
then it would become a protectionist device in its own right. However. Dumping per se is not against GATT obligations. the driving out of competitors from the market. the so-called advantage claimed by the dumpers is not true for two reasons:(a) (b) no economically legitimate justification. The difference in variable costs of goods and competitive edge of a particular industry in reducing production costs can cause variations in the prices of products. too. can also be a reason for the price difference in the domestic and international markets. 2. The practice is condemned only when it causes injury to the domestic industry. or the sale of surplus stock leading to a price rise in a monopolistic market.The anti-dumping provisions enable the governments to take defensive actions against unfair trade practices in an exporting country.1. Recognizing that dumping. But the authorities need to be cautious because if the defensive measure exceeds its purpose and intent. Exchange rate fluctuations. if causing injury to the domestic industry is to be 12 .3 Rationale for anti-dumping measures The fundamental objective of anti-dumping is to remove the injurious effects of dumping. The dividing line between what is fair and unfair and to distinguish as to what is defensive or protectionist retaliation in the importing countries is not easy and therefore the relevant issues require to be properly addressed. In short. Other economic factors.1. such as subsidies provided to the goods in the domestic market. and the benefits flowing from the advantage possessed by the dumper are temporary and unreliable. 2. can be a reason for the price difference and subsequent finding of dumping. the reasons for dumping can vary from case to case.2 Rationale for Dumping The general objectives of dumping is the maximization of profits of a company.
condemned. which may be temporary and not based on true comparative cost advantages. it results from a contrived rather than a true comparative advantage. • Thirdly. but subsequently faces injurious competition. ‘Dumping’ may displace more efficient domestic producers. This could be true in situations where local businessman correctly assesses the market. it stems from market isolation due to factors such as high tariffs and other non-tariff barriers in the exporting country. which prevents the producers in the importing country from competing with the foreign supplier on his own ground while allowing him to invade their domestic market. the WTO Members framed. 13 . formalized and codified the rules for imposing anti-dumping measures to redress the injury to the domestic industry. including an assessment of the possibility of the product being supplied more efficiently by the competitors. as the low price may not result from cost-efficiency. which are found in the Anti-dumping Agreement. it causes uncertainty. Thus. Member countries have framed their own Rules in their domestic legislation and have been imposing anti-dumping measures on such dumped imports in conformity with the WTO Anti-dumping Agreement. especially when production is of large scale and requires the commitment of highly specific factors of production and therefore. The question that arises is: Whether dumping is unfair and whether its condemnation is justified? While it certainly corresponds to a “felt need” and to the conception of fairness but had it serve its stated objective or in the process does it act as an undue protection to the local industry? Reasons. why dumping is considered as constituting unfair competition: • Firstly. requires a considerable degree of planning and research. • Secondly.
The nature of Anti-dumping duty has been commented upon by the Rajasthan High Court in the matter of J.K. employed in a way in which we have some advantage. 14 . Civil Writ Petition No.B.2 The Hon’ble Court observed: “Anti Dumping Duty is primarily levied not so much with object of raising revenue. legislation.. As already stated Anti-dumping Agreement under the WTO does not treat ‘dumping’ as an unfair trade practice per se and as such the Agreement does not discipline dumping but rather disciplines imposition of anti-dumping measures. In the present age of globalization and free trade. i. Even the most ardent votaries of free trade founded on market economic principles do not favour unfair trade.S. WTO Members’ reactions to dumping.” Given that injurious dumping is unfair. seek advice of Adam Smith in his celebrated work “The Wealth of Nations” that ‘never attempt to make at home what it will cost more to make than to buy.’ This advice has been refined to contend that ‘if foreign country can supply us with commodity cheaper than we ourselves can make it. the anti-dumping legislation provides one of the most reasonable means of dealing with it. It assures the domestic producers of the possibility that the effect of injurious dumping will be neutralized.e. which refers to ‘dumping’ as an unfair trade practice in their Regulations imposing provisional Anti-dumping duties and definitive Anti-dumping duties. Union of India. 2 3 D. 2005 (186) ELT 3 (Raj). better buy it from them which some part of the produce of our own industry.’ This argument is marketed as theory of comparative advantage. but to protect the domestic industry from injury that is caused or likely to be caused due to imports at lower than normal price from exporting economy. Industries v. 1994 and pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement”.3 This is in contrast with the U. para 91 Article 1 of the Anti-dumping Agreement provides that “An anti-dumping measure shall be applied only under the circumstances provided for in Article VI of GATT.548 of 2005. decided on 21-04-2005. Subsidizing home product and dumping imports in buyer territory are recognized by most as unfair trade which hurt competitive market which is considered essential bedrock of free trade. the developed nations and economists favouring barrier free trade.
Here it is important to understand the neutrality of the Anti-dumping Agreement with respect to dumping practices per se, and the fact that the Agreement is an instrument to regulate the use of Anti-dumping measures. This needs to be appreciated because Antidumping measures cause WTO Members to deflect from the general principles of tariff binding/predictability and non-discrimination (MFN, GATT Article 1), and therefore, need to be restrained. Therefore, Article VI of GATT 1994 and the Anti-dumping Agreement should be interpreted in a restrictive way, that is, if more than one possible interpretation exist, the interpretation most restrictive of the use of the Anti-dumping should prevail.4 Thus, these restrictive rules should be designed to further competition (at least not to restrict fair competition) between domestic and imported goods and between imported goods inter se. Ensuring fair competition amongst domestic products and imported products and amongst imported products inter-se is one of the cardinal principles of the WTO. Since dumping practices are not treated as anti-competitive per se, the Anti-dumping measures are not supposed to counter dumping practices, which do not affect fair competition 2.2 Various Schools of thought on Anti-dumping Duties By and large, there are three theories pertaining to imposing anti-dumping duties. These theories consider anti-dumping as: a response to unfair trade; special protection; and a strategic weapon
The first school of thought believes anti-dumping to be a protection against ‘unfair trade’. According to this school of thought, anti-dumping duties are imposed in response to unfair practices by exporters. The oldest theory describes dumping as price discrimination between markets. Various authors argue that the increased use of antidumping was largely due to the liberalization of markets, and is not an indication of ‘out
Article 17.6 of the Anti-dumping Agreement, which, inter-alia, states: In examining the matter referred to in paragraph 5(i): in its assessment of the facts of the matter, the panel shall determine whether the authorities’ establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. If the establishment of the facts was proper and the evaluation was unbiased and objective, even though the panel might have reached a different conclusion, the evaluation shall not be overturned;
of control’ dumping. In all anti-dumping legislations, actions are taken after occurrence of dumping. The ADA provides for the imposition of anti-dumping duties in cases in which the dumped imports are found to have caused material injury to the domestic industry and there is a causal link with the injury and dumping. The ADA does not consider dumping as a response to unfair trade. Supporters of the second school argue that anti-dumping measures facilitate trade liberalization, by allowing countries to raise tariffs to protect domestic industries injured by imports. According to this theory, anti-dumping initiations act as a safeguard mechanism, and without this ‘special protection’ the countries could never have agreed to reduce the tariffs achieved during the Tokyo and Uruguay Rounds of GATT negotiations. This school views ‘special protection’ as a short-term remedy for protecting domestic industries from international competition. The third school believes that anti-dumping is essentially a strategic or protectionist policy. It argues that there is sufficient evidence to show that anti-dumping protection was granted to politically significant industries. There are other reasons as well for suggesting that anti-dumping measures are used as a strategic weapon. For example, authors on international trade argue that countries that use anti-dumping protection form a ‘club’ and tend to apply anti-dumping against one another rather against ‘non club’ members. Similarly, it is argued that countries target anti-dumping actions against those countries that have previously investigated them, suggesting a kind of ‘tit-for-tat’ behaviour. Both the arguments suggest that countries are using anti-dumping action as a strategic weapon to punish trade rivals. Summarily, the first two theories view anti-dumping as welfare enhancing measure, whereas the third perceives dumping as a loophole in the GATT/WTO regime and the growth of anti-dumping initiations as a threat and impediment to free trade. In my opinion the second theory is the most appropriate one and without any shortcomings as compared to other two theories. The first theory reasons the imposition of anti-dumping measures from the view point that exporting country exploits the importing country’s 16
market conditions by method of ‘price discrimination’ which may be wrong as ‘dumping’ per se is not illegal. The third theory on the other hand addresses the possibility of misuse of anti-dumping measures which states that the importing country on the ground of claiming‘ fair market conditions’ rather retard the WTO objective of market liberalization. Hence, the interpretation of anti-dumping measures must be made in the light of the reasons put forward in the second theory which states that dumping per se is not against WTO objectives and the only dumping which causes or threatens to cause material injury to the domestic market of the importing country is liable for imposition of anti-dumping measures. Any other interpretation would lead to misuse of the antidumping measures. 2.3 Different Kinds of Dumping Economists have traditionally identified three kinds of dumping: sporadic, short run or intermittent and persistent or continuous dumping. Mostly this classification is based on the duration of the dumping and the motive of the dumper. 2.3.1 Sporadic Dumping As the term implies, this is an occasional, unforeseen trade phenomenon. This kind of dumping is usually used to dispose of surplus stocks at low prices in an unknown market. Usually this will be for a short period; at the end of every season, the producers and dealers will try to get rid of their surplus unsold stocks at a lower price. Sometimes, manufacturers are compelled to sell at a lower price when the demand reduces in a highly capitalized industry, simply in order to maintain output at full capacity. 2.3.2 Intermittent Dumping This is more of a regular, planned and frequent practice, with the motive of entering into a new market or retaining the existing market share or driving away other competitors from the market. It can also be as a response to market fluctuations or for creating customer goodwill and generating a dominant position in a new foreign market.5
Ehrenhaft, author on international trade suggested three reasons for intermittent dumping: to achieve a foothold in the export market, to prevent the loss of global market share, and to monopolize the export market.
selling below cost of production in an Dumping in order to drive competitors out of business and establish a monopoly. Sometimes intermittent dumping can also be used as retaliation against dumping by foreign competitors.8 state trading dumping. Mostly. 11 Situation in which difference in wage standards.3 Persistent or Continuous Dumping This is a practice motivated by the intent to reach new markets or to maintain existing ones. social security measures. none of the distinctions are made in the ADA.3. and 2. with consequent reductions in the average unit cost of production for the entire output.11 However.4 Other categories of Dumping Other kinds of dumping include predatory dumping.9 strategic dumping10 and social dumping. etc. Price dumping. 2. It may be the result of an enlarged scale of production. because of over-capacity due to a downturn in demand in the domestic market 8 Selling at a lower price in order to gain market share 9 Selling at a lower prices in order to earn foreign exchange 10 Dumping upon reliance on an overall strategy including both low export pricing and maintaining a closed home market in order to reap monopoly or oligopoly profits. Most of the economists are of the view that an importing country benefits from continuous dumping. It conceptually distinguishes only between two forms of dumping: 1. 18 .3. the importing country is concerned about elimination of competitors from markets.It resembles strategic dumping because price discrimination in this case is produced by strategic behaviour aimed at enhancing a firm’s competitive behaviour. selling at a lower price in a foreign market than in the home market. Selling at low prices. that is.6 cyclical dumping. 6 7 Cost dumping that is. Governments may encourage persistent dumping through granting export bounties for earning foreign exchange. are responsible for an unfair competitive advantage which the foreign exporter ahs over the domestic producer. 2.7 market expansion dumping.
Where did the right of imposing anti-dumping duties originate? It seems to start with the medieval notion that sale to different people at different prices is unfair. The critics argue that the fear that some foreign industries. Since dumping serves the consumer's interests in 12 Ibid 19 . particular those of developing countries. international trade policy rules have generally recognized dumping as a practice to be condemned. service. exchange and social 12. neither legal nor economic analysis finds a definitive link between anti-dumping investigations and the detection of anticompetitive practices. this is reflected in governmental concerns with predatory anti-competitive behaviors of big corporations. and eventually raise prices and reap monopoly profits. During the GATT negotiations. In modern times.4 2. has found that imports posed no threat to the existence of competition in more than 90 percent of the cases in which the U. However. may be attempting to destroy the domestic market through dumping. rhetoric aside. One recent OECD study. the US submitted a proposal containing an explanation of four types of dumping: price.export market.S. Exchange dumping is the manipulation of exchange rates in favour of the exporter to get advantage in the export market.4. only price dumping was included in Article VI of the GATT. if ever. using their market leverage. and EU imposed anti-dumping duties in the 1980s. These companies. and have allowed an importing country to take certain countermeasures when the dumped goods cause "material injury" to competing industries in the importing country. Defenders of dumping. 2. argue that the interests of consumers should be paramount. Ultimately. including some economists. All these definitions and explanations reveal the economic complexity of the problem in the determination of dumping. for example. This means providing subsidies or incentives that enable the exporter to sell the products in the foreign market for a cheaper price. rarely. exists. Service dumping refers to ‘freight dumping’. drive small competitors out of business.1 Historical Development of Anti-dumping Laws Origin and Justifications of Anti-Dumping For almost 100 years.
or of any other intentional efforts to drive competitors out of business. 20 . Massachusetts (2 June 1999) [cited in United States . or whether national welfare should also be considered. antidumping duties are levied when foreign average prices are below average cost of production. in the view of many economists. Trade and technology: Remarks Before the Alliance for the Commonwealth." Alan Greenspan. CONFERENCE ON INTERNATIONAL BUSINESS. it is not required to show evidence of predatory behaviour. However. which would be a more relevant standard. for those cases where anticompetitive behaviour is involved. Typically. Another argument is that the anti-dumping laws should be dispensed because of the practical problems associated with anti-dumping investigations and the lack of accuracy of the results. have campaigned to re-open the talk and to revise the AD 13 US Federal Reserve Chairman Alan Greenspan recently criticized the use of anti-dumping measures to erect trade barriers: "There are reasons to be concerned that the benefits of increasingly open trade may not be allowed to be as readily forthcoming in the future as they have been in the past half century. But that also describes a practice that often emerges as a wholly appropriate response to a softening in demand. or intention to monopolize. respected economists have raised concerns that proliferating and undisciplined anti-dumping measures pose a serious problem for world trade. under US and WTO law. Antidumping initiatives should be reserved. Boston. But at least. (28 February 2001) [hereinafter US-Japan Steel]. While these forms of protection have often been imposed under the label of promoting "fair trade." often times they are just simple guises for inhibiting competition. Administrative protection in the form of antidumping suits and countervailing duties is a case in point. carried over to the Uruguay Round agreements. FN49]. Some even argue that an importing country should welcome the cheaper goods as they enhance overall welfare and release resources for more productive uses in the global economy. Korea. many developing countries believe that the antidumping measures in Article VI of the GATT.13 If not properly disciplined. the application of anti-dumping measures will lead to a dangerous level of protectionism around the world. Consequently.Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan. are in reality sophisticated trade protection measures employed by developed countries against the exports of the developing countries. it is questionable whether the anti-dumping laws are simply consumer welfare statutes. Anti-dumping measures have become far more effective at shielding domestic markets in the United States from foreign competition than were the gray area measures employed in the 1980's and 1990's or the tariff and nontariff barriers that were eliminated in multiple rounds of multilateral trade negotiations over a five-decade period. and Brazil. such as Japan.14 Many WTO members. it should be allowed. WT/DS184/R.obtaining cheaper goods. Annex 1. It is the rare case that prices fall below marginal cost. Contrary to popular notions about antidumping suits.
Indeed. the anger of ten European countries over the dumping of sugar led them to sign an antidumping agreement that would remain in place for eighteen years. and the negotiating parties drafted Article VI of the GATT the following year. 96-97 (1999). 37 (1966). Dumping: A Problem in International Trade. upon a finding of ‘dumping’ and ‘injury’. In 1902. warning of foreign practices of underselling competitors. with public discussion and legislative attempts to deal with it during most of the nineteenth century. a country could impose a duty on the company or industry in violation in an amount not greater than the dumping margin. however.S. Hizon. 2. And we shall see how the current round of negotiation initiated at the Doha meeting develops. 81. The Tokyo Round Code provided further detail on how governments 14 Ernesto M.15 Instances of allegations of "dumping" by British manufacturers into the new American market were also reported. and led eighteen GATT contracting parties to supplement the GATT in 1967 with the Agreement on the Implementation of Article VI. Int’l & Comp. 21 .Agreement. there were reports of "bounty" practices by Adam Smith and Alexander Hamilton. 5 Ann.2 Origin of Anti-dumping Regulations Jacob Viner discovered that in 1791. Participating countries eventually incorporated this agreement into the GATT through the Tokyo Round Code. The lack of specificity in the agreement quickly became apparent. the United States offered its national antidumping law as a model. laws relating to international trade. Surv. one of the first U. Countries unilaterally began to legislate against dumping at this time. 15 Jacob Viner. L. Article VI defined dumping and also established that. was concerned with practices we might identify as dumping today. the Tariff Act of 1816. Virtual Reality and Reality: The East Asian NICs And The Global Trading System.4. When the GATT negotiations began in 1947.
codified the procedure for initiating and conducting an investigation. Canada and Australia were concerned about attempts to circumvent antidumping duties. 1994. The countries also wanted to expand the discretion of nations investigating dumping claims. and included provisions that would allow action against circumvention on the other. 22 . in particular. It raised the threshold for dumping and injury findings on the one hand. many of the countries most commonly targeted with antidumping claims wanted to enact substantive changes that would impede the use of antidumping laws for protectionist purposes. The resulting Draft Final Act was. of necessity. The United States. Agreement on antidumping was reached only at the very end of the round. there was little room or inclination to compromise. The result was the WTO Antidumping Code. Morocco in April. Many participants feared that a holdout on the part of the United States would threaten the success of the entire round. Given these two extremes. These targeted countries wanted to reduce the discretion of governments in interpreting the Code by maximizing the transparency of the GATT rules. and the much politicized nature of the issue. the participants made several concessions to the United States. Antidumping was one of the most contentious issues during the Uruguay Round. Agreement on anti-dumping has put into motion the resolution of the remaining open issues and successfully encouraged over 100 countries to sign the Uruguay Round Final Act in Marrakesh. including when and how an investigation should be terminated. consequently. set out questions that assisted in dumping and injury determinations.could establish dumping and injury. was not satisfied with the text and continued to propose new changes. and determined the level and duration of the application of duties. In the end. as much a product of decree by the Secretariat as a product of negotiation among the parties. It is no surprise that the gap remained as the round progressed. Conversely. they sought the inclusion of certain anticircumvention procedural devices in the agreement. the European Union. The United States.
4. measures against imports of a product at an export price below its "normal value" (usually the price of the product in the domestic market of the exporting country). resort to the WTO procedures cannot take place until provisional duties are in place.2. In addition. the new Agreement clarifies the role of dispute settlement panels in disputes relating to anti-dumping actions taken by domestic authorities. Conditions for ensuring that all interested parties are given an opportunity to present evidence are set out. The procedures are also speeded up somewhat and the conciliation steps removed to arrive more rapidly at multilateral resolutions. the criteria to be taken into account in a determination that dumped imports caused injury to a domestic industry. clear-cut procedures have been established on how anti-dumping cases are to be initiated. if such dumped imports cause material injury to a domestic industry in the territory of the importing contracting parties. these efforts focused on the procedural rules as well as the material conditions to be fulfilled before protective measures can be taken. which led to the creation of the WTO and to the detailed AD Agreement. In particular. the method of determining that a product is dumped. 2. the revised WTO AD Agreement provides for greater clarity and more detailed rules in relation to the procedures to be followed in initiating and conducting anti-dumping investigations. First.3. and how such investigations are to be conducted. Particularly during the last GATT round (the Uruguay Round). the AD Agreement considerably strengthens the requirements to establish a good prima facie case. These major changes are summarized in the following.3 GATT to WTO: Changes in Anti-Dumping Laws Article VI of the GATT 1947 provided its contracting parties a right to apply anti- dumping measures.1 Procedural Changes On the procedural side. considerable efforts have been made to harmonize the rules relating to trade policy instruments. and the implementation and duration of antidumping measures.4. However. Complainants are required to represent at least 25% of domestic producers of "like products" and have the tacit support of 50% of them. Since then.e. 23 . i.
provisional duties may only be levied after a preliminary determination of dumping and injury. in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reason-able period of time prior to that date. the AD Agreement requires the immediate termination of the anti-dumping investigation in cases where the authorities determine that the margin of dumping is de minimis (which is defined as less than 2 per cent. for example. one significant addition is the so-called "sunset" provision which requires WTO members to revoke anti-dumping measures after five years unless "the national authorities determine. Fourth. expressed as a percentage of the export price of the product) or that the volume of dumped imports is negligible (generally when the volume of dumped imports from an individual country accounts for less than 3 per cent of the imports of the product in question into the importing country). price undertakings (that is. the AD Agreement requires prompt and detailed notification of all preliminary or final anti-dumping actions to the Committee on Anti-dumping Practices. Third. Imposition of the provisional duties must not exceed six or. raising export prices) are now given somewhat more encouragement. Fifth. and not at the start of an investigation as had been the practice of some countries.Second. nine months. there has always been reluctance to accept undertakings because of their possible anti-competitive effects. in exceptional cases. The agreement will afford parties the opportunity of consulting on any matter relating to 24 .. that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. though it is still at governments' discretion as to whether to accept them. Sixth. In the U." Anti-dumping measures will be revoked unless the sunset review concludes that the measures are necessary to ensure the non-occurrence of dumping.S.
but after 60 days the exporter is deemed to have adjusted its prices.4. 2. Some allowance is made for currency fluctuations. subject to a few exceptions.2 Substantive Changes On the substantive side. For example. refers to the domestic producers as a whole 25 . along with relevant issues. there is now a provision in the AD Agreement that requires an averaging of the domestic and export prices." which. Consequently. Here. specific provisions were added to the AD Agreement. is discussed below. It allows 20% sales below cost to be taken into account. however. The agreement confirms the existing interpretation of the term "domestic industry. The examination of the dumped imports on the industry concerned must include an evaluation of all relevant economic factors bearing on the state of the industry concerned. one Chinese textile company sets up a wholly-owned subsidiary in Jamaica. The AD Agreement strengthens the requirement for the importing country to establish a clear causal relationship between dumped imports and injury to the domestic industry. a fair comparison is required to be made between the export price and the normal value of a product so as not to arbitrarily create or inflate margins of dumping. which. the role of panels is substantially restricted in that a new standard of review was established.the operation of the agreement or the furtherance of its objectives. and to request the establishment of panels to examine disputes. On the issue of "constructed" normal value. The AD Agreement recognizes that sales below cost that occur during start-up operations do not always represent an exporter's true costs. Finally. when actual data is not available. not on artificial calculations. two of the most contentious issues are circumvention and country hopping. In the calculation of dumping margins. Constructed value should now be based on actual data. Certain discretion is allowed. a related issue is the use of rules of origin.3.
it is said to be “dumping” the product.) The legal definitions are more precise. loss of profitability and so on. OVERVIEW OF THE AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GATT. and show that the dumping is causing injury or threatening to do so. and it is often called the “Anti-Dumping Agreement”. GATT (Article 6) allows countries to take action against dumping. They allow countries to act in a way that would normally break the GATT principles of 26 . and the two operate together. calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price).of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products. The WTO agreement does not pass judgment. However. Is this unfair competition? Opinions differ. such as economic recession. many substantive legal issues still remain. including such matters as loss of market share. The AntiDumping Agreement clarifies and expands Article 6. 3. Above all it has to be demonstrated that it was the dumping that had actually caused the injury and not some other factors. price undercutting. 1994 3. but many governments take action against dumping in order to defend their domestic industries. but broadly speaking the WTO agreement allows governments to act against dumping where there is genuine (“material”) injury to the competing domestic industry. The injury test is a fairly strict one that considers all the circumstances of the case. (This focus only on the reaction to dumping contrasts with the approach of the Subsidies and Countervailing Measures Agreement. Its focus is on how governments can or cannot react to dumping — it disciplines antidumping actions.1 Introduction to anti-dumping in WTO If a company exports a product at a price lower than the price it normally charges on its own home market. In order to do that the government has to be able to show that dumping is taking place.
two alternatives are available — the price charged by the exporter in another country. how the investigations are to be conducted. other expenses and normal profit margins. the exporting company can undertake to raise its price to an agreed level in order to avoid anti-dumping import duty. Anti-dumping measures must expire five years after the date of imposition. The agreement narrows down the range of possible options. If the investigation shows dumping is taking place and domestic industry is being hurt. Calculating the extent of dumping on a product is not enough. Therefore.binding a tariff and not discriminating between trading partners typically anti-dumping action means charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the “normal value” or to remove the injury to domestic industry in the importing country. When this cannot be used. The investigation must evaluate all relevant economic factors that have a bearing on the state of the industry in question. The main one is based on the price in the exporter’s domestic market. and the conditions for ensuring that all interested parties are given an opportunity to present evidence. or a calculation based on the combination of the exporter’s production costs. unless an investigation shows that ending the measure would lead to injury. It provides three methods to calculate a product’s “normal value”. And the agreement also specifies how a fair comparison can be made between the export price and what would be a normal price. Anti-dumping investigations are to end immediately in cases where the authorities 27 . Detailed procedures are set out on how anti-dumping cases are to be initiated. There are many different ways of calculating whether a particular product is being dumped heavily or only lightly. a detailed investigation has to be conducted according to specified rules first. Anti-dumping measures can only be applied if the dumping is hurting the industry in the importing country.
The agreement says member countries must inform the Committee on AntiDumping Practices about all preliminary and final anti-dumping actions. warranty services. before an anti-dumping duty to be applied. dumping is a concept that is easy to define but difficult to apply. Other conditions are also set. together account for 7% or more of total imports). When differences arise. including packaging. including a complex series of adjustments. They must also report on all investigations twice a year.2 Basic Rules of WTO Anti-Dumping Laws As established in Article VI of the GATT 1994 and the WTO AD Agreement. For example. First of all.2. if the volume from one country is less than 3% of total imports of that product — although investigations can proceed if several countries.1 Dumping Dumping occurs when the imported goods are sold at a price below the comparable price by which they are sold in the home market (price discrimination). etc. or below the cost of production (normal value). promptly and in detail. three elements need to be satisfied: (1) there is dumping.determine that the margin of dumping is insignificantly small (defined as less than 2% of the export price of the product). each supplying less than 3% of the imports. 28 . However. the investigations also have to end if the volume of dumped imports is negligible (i. (2) there is "material injury" (or threat) to the domestic industry of the importing country (or retarding the establishment of such an industry) and the causation between the dumping and the material injury must be shown. 3. 3. members are encouraged to consult each other. They can also use the WTO’s dispute settlement procedure. calculating home market sales prices and export sales prices involves formidable tasks. and (3) the importing country is obligated to keep its procedures and provisional remedies consistent with WTO rules. advertising costs.e.
"all relevant economic factors and indices having a bearing on the state of the industry" shall be evaluated.2. in calculating the dumping margin. preferably under the same competitive conditions. An additional complication is raised by non-market economies (NMEs) including the economies in transition. But if this is not happening. preferably by the same process." investigators sometimes find it necessary to know the price of products being sold in some third markets. where reliable and meaningful prices or costs often are not available to construct a home market price. It is noted that the AD Agreement sets a de minimus threshold of 2 per cent.The calculation becomes even more complicated when the producer is not selling in the home market. a "surrogate country" is often selected and the home market price is calculated based on prices in the surrogate market where like products are manufactured. productivity. or utilization of 29 . To find some equivalent measure to the home market price or "normal value. expressed as a percentage of the export price. The list includes "actual and potential decline in sales. determinations must be made regarding whether there is "material injury" to the domestic industries and whether the material injury has caused the dumping.2 Material Injury and Causation After a dumping has been found. The AD Agreement stipulates that in examining the impact of the dumped imports. 3. with certain exception. the value of the home market price has to be "constructed" on the basis of production costs. Some scholars have recommended increase to the de minimus threshold for the dumping margin and the import share for developing countries. market share. return on investments." one of the most controversial practices in anti-dumping. In such cases. In addition. output. This is the so-called "analogue price. profits. the volume of dumped imports is regarded as negligible if the volume of dumped imports from a particular country is found to account for less than 3 per cent of imports of the like product in the importing Member. and sold.
nor can one or several of these factors necessarily give decisive guidance. The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry. developments in technology and the export performance and productivity of the domestic industry. the volume and prices of imports not sold at dumping prices.5 stipulates how this demonstration shall be made: "The demonstration of shall be based on an examination of all relevant evidence before the authorities. This view is further emphasized in Article 9. The most important limitation." 3. provides that the function of anti-dumping measures is to "offset" dumping or "prevent" dumping in the case of threat of material injury." This list is not exhaustive. It sets precise maximum quantitative limits to the permissible level of the anti-dumping duty. material injury and causation are all established.1 of the AD Agreement. which may be less than the full dumping margin." The provision cannot be clearer. and the injuries caused by these other factors must not be attributed to the dumped imports. wages.capacity. contraction in demand or changes in the patterns of consumption. trade restrictive practices of and competition between the foreign and domestic producers. growth. where it is suggested to limit the duty to the amount necessary to offset the injury suffered by the domestic industry. and that an anti-dumping duty may "not be greater in amount than the margin of dumping in respect of such product. Factors which may be relevant in this respect include. Article 3. inventories. actual and potential negative effects on cash flow. WTO rules impose several limitations on the measures that can be taken. factors affecting domestic prices. then duties may be applied at the border up to the amount of the margin of dumping. inter alia. employment. The AD Agreement also requires the national authorities to demonstrate that dumped imports are causing injury within the meaning of the Agreement.3 Anti-Dumping Measures If dumping. under Article VI:2 of the GATT 1994. 30 . ability to raise capital or investments. But.2. the magnitude of the margin of dumping.
Particularly. Negotiations in the Uruguay Round have resulted in a revision of this 31 . i. More detailed rules governing the application of such measures are currently provided in an Anti-dumping Agreement concluded at the end of the Tokyo Round. when Article VI:2 of DSU is read in the context of Article VI:1. It declared that. or even rumors of possible initiation. The initiation of an anti-dumping investigation." Upon appeal. it is still widely believed that the Agreement should be further revised. the Appellate Body endorsed the view of the Panel. it is clear that the word "may" simply means that the imposition of duties is optional. many WTO members and scholars have expressed concerns that the antidumping investigation is such a powerful and damaging device that the AD Agreement should provide more protection to exporters. measures against imports of a product at an export price below its “normal value” (usually the price of the product in the domestic market of the exporting country) if such dumped imports cause injury to a domestic industry in the territory of the importing contracting party. 3. 3. It is a signal calling the importers to switch to other sources of supply. particularly for small and medium sized exporters from developing countries.2.4 Existing Problems of WTO AD Agreement Although the AD Agreement clarified many issues unresolved in the pre-WTO period. and that the amount of any such duty may not be greater than the margin of dumping. The costs of replying to the investigation are often prohibitive. often causes grave damages to the exporting industries. these limitations would be meaningless if "WTO Members were free to choose any other type of measure and then with no maximum limits as to amount and impact.e.3 Brief Summary of Agreement on Implementation of Article VI (Anti- dumping) Article VI of the GATT provides for the right of contracting parties to apply antidumping measures.As the WTO Panel in the Act of 1916 case correctly pointed out.
the revised Agreement provides for greater clarity and more detailed rules in relation to the method of determining that a product is dumped. Clear cut procedures have been established on how anti-dumping cases are to be initiated and how such investigations are to be conducted. The agreement strengthens the requirement for the importing country to establish a clear causal relationship between dumped imports and injury to the domestic industry. Conditions for ensuring that all interested parties are given an opportunity to present evidence are set out. the new Agreement adds relatively specific provisions on such issues as criteria for allocating costs when the export price is compared with a “constructed” normal value and rules to ensure that a fair comparison is made between the export price and the normal value of a product so as not to arbitrarily create or inflate margins of dumping. Provisions on the application of provisional measures. the criteria to be taken into account in a determination that dumped imports cause injury to a domestic industry. and on the duration of anti-dumping measures have been strengthened. Thus. and the implementation and duration of anti-dumping measures. the new agreement clarifies the role of dispute settlement panels in disputes relating to anti-dumping actions taken by domestic authorities. In addition. “domestic industry” refers to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products. the procedures to be followed in initiating and conducting anti-dumping investigations. The examination of the dumped imports on the industry concerned must include an evaluation of all relevant economic factors bearing on the state of the industry concerned. Subject to a few exceptions. a significant improvement over the existing Agreement consists of the addition of a new 32 . the use of price undertakings in anti-dumping cases. In particular. On the methodology for determining that a product is exported at a dumped price. The agreement confirms the existing interpretation of the term “domestic industry”.Agreement which addresses many areas in which the current Agreement lacks precision and detail.
3. unless a determination is made that. that an imported product is “dumped” and that the dumped imports are causing material injury to a domestic industry producing the like product. The agreement will afford parties the opportunity of consulting on any matter relating to the operation of the agreement or the furtherance of its objectives. in the event of termination of the measures. in accordance with the provisions of the AD Agreement. The agreement calls for prompt and detailed notification of all preliminary or final anti-dumping actions to a Committee on Anti-dumping Practices. expressed as a percentage of the export price of the product) or that the volume of dumped imports is negligible (generally when the volume of dumped imports from an individual country accounts for less than 3 per cent of the imports of the product in question into the importing country). as well as detailed procedural requirements regarding the conduct of anti-dumping investigations and the imposition and maintenance in place of anti-dumping measures. The AD Agreement sets forth certain substantive requirements that must be fulfilled in order to impose an anti-dumping measure. and to request the establishment of panels to examine disputes. Unlike the Agreement on Subsidies and 33 .4 Explanation of the Anti-dumping Agreement The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the “AD Agreement”) governs the application of anti-dumping measures by Members of the WTO. Anti-dumping measures are unilateral remedies which may be applied by a Member after an investigation and determination by that Member. A failure to respect either the substantive or procedural requirements can be taken to dispute settlement and may be the basis for invalidation of the measure. A new provision requires the immediate termination of an anti-dumping investigation in cases where the authorities determine that the margin of dumping is de minimis (which is defined as less than 2 per cent. dumping and injury would be likely to continue or recur.provision under which anti-dumping measures shall expire five years after the date of imposition.
Countervailing Measures. Article 2 contains detailed provisions governing the calculation of normal value and export price. that there are dumped imports. threat of material injury. and elements of the fair comparison that must be made.4. 3. and a causal link between the dumped imports and the injury. and thus not within the direct reach of multilateral disciplines.1 Substantive rules Article 1 of the AD Agreement establishes the basic principle that a Member may not impose an anti-dumping measure unless it determines. the AD Agreement does not establish any disciplines on dumping itself.2 Determination of dumping Article 2 contains substantive rules for the determination of dumping. or material retardation of the establishment of a domestic industry. Material injury is defined as material injury itself. Article 3 contains specific rules regarding factors to be considered in making 34 . The basic requirement for determinations of injury is that there must be an objective examination.4. 3. material injury to a domestic industry. based on positive evidence of the volume and price effects of dumped imports and the consequent impact of dumped imports on the domestic industry. 3. Dumping is calculated on the basis of a “fair comparison” between normal value (the price of the imported product in the “ordinary course of trade” in the country of origin or export) and export price (the price of the product in the country of import).3 Determination of injury Article 3 of the AD Agreement contains rules regarding the determination of material injury caused by dumped imports. primarily because dumping is a pricing practice engaged in by business enterprises.4. pursuant to an investigation conducted in conformity with the provisions of the AD Agreement.
which term is defined in Article 2. in establishing the causal link between dumped imports and material injury. 3. 3. and that injury caused by these factors must not be attributed to dumped imports. Article 3.5 requires. or in the absence of such a product. Article 4 contains special rules for defining a “regional” domestic industry in exceptional circumstances where production and consumption in the importing country are geographically isolated. and that a cumulative assessment is appropriate in light of the conditions of competition among the imports and between the imports and the domestic like product. that the volume of imports from each country is not negligible.5 Procedural requirements A principal objective of the procedural requirements of the AD Agreement is to 35 3.3.4 Definition of industry Article 4 of the AD Agreement sets forth a definition of the domestic industry to be considered for purposes of assessing injury and causation. one that has characteristics closely resembling those of. Article 4 also establishes that domestic producers may be excluded from consideration as part of the domestic industry if they are “related” (defined as a situation of legal or effective control) to exporters or importers of the dumped product. known factors other than dumped imports which may be causing injury must be examined.6 as a product that is identical to.1 Overview . authorities must determine that the margin of dumping from each country is not de minimis. while specifying that no one or several of the factors which must be considered is determinative. Under the rules.determinations of material injury.4. and for the evaluation of injury and assessment of duties in such cases. establishes the conditions in which a cumulative evaluation of the effects of dumped imports from more than one country may be undertaken.5.4. A significant new provision. Article 3. the imported dumped product under consideration. The domestic industry is defined as producers of a “like product”.4.
at their discretion. Additional procedural requirements relate to the offering. The AD Agreement requires investigating authorities to give public notice of and explain their determinations at various stages of the investigative process in substantial detail. and recognize that “special regard” must be given by developed country Members to the situation of developing country Members when considering the application of antidumping duties. It also establishes rules for the timing of the imposition of antidumping duties. a full opportunity for parties to defend their interests. and that individual exporters are not subjected to anti-dumping duties in excess of their individual margin of dumping. There are detailed provisions guiding the imposition and collection of duties under various duty assessment systems. intended to ensure that anti-dumping duties in excess of the margin of dumping are not collected. The extensive and detailed procedural requirements relating to investigations focus on the sufficiency of petitions (through minimum information and “standing” requirements) to ensure that meritless investigations are not initiated.ensure transparency of proceedings. 3. and adequate explanations by investigating authorities of their determinations.2 Specific Provisions Initiation and conduct of investigations Article 5 establishes the requirements for the initiation of investigations. acceptance. the duration of such duties.5. on the establishment of time periods for the completion of investigations. Other provisions establish that Members may. The AD Agreement specifies that investigations should generally be initiated based on a written request submitted “by or on behalf of” a domestic industry. This “standing” requirement is supported by numeric limits for determining whether there is sufficient support by 36 . and obliges Members to periodically review the continuing need for anti-dumping duties and price undertakings. and administration of price undertakings by exporters in lieu of the imposition of antidumping measures. along with reasonable opportunities to present their views and arguments.4. Article 13 of the AD Agreement requires Members to provide for judicial review of final determinations in anti-dumping investigations and reviews. take anti-dumping actions on behalf of and at the request of a third country. and on the provision of access to information to all interested parties.
In order to minimize the trade disruptive effect of investigations. and other matters. injury. Article 7 includes the requirement that authorities make a preliminary affirmative determination of dumping. Imposition of provisional measures Article 7 relates to the imposition of provisional measures. and the requirement that no provisional measures may be applied sooner than 60 days after initiation of an investigation. Article 5. Price undertakings 37 . importers. exporters.8 provides for immediate termination of investigations in the event the volume of imports is negligible or the margin of dumping is de minimis. and establishes numeric thresholds for these determinations.domestic producers to conclude that the request is made by or on behalf of the domestic industry. and causality. injury. in written applications for antidumping relief. as well as other information regarding the product.10 specifies that investigations shall be completed within one year and in no case more than 18 months. It requires authorities to guarantee the confidentiality of sensitive information and verify the information on which determinations are based. injury. and causality. and specifies that. industry. after initiation. in special circumstances when authorities initiate without a written application from a domestic industry. In addition. including the right to meet with parties with adverse interests. In order to ensure that meritless investigations are not continued. Article 6 sets forth detailed rules on the process of investigation. The AD Agreement establishes requirements for evidence of dumping. and causality before applying provisional measures. to ensure the transparency of proceedings. potentially disrupting legitimate trade. including the collection of evidence and the use of sampling techniques. and thereby warrants initiation. they shall proceed only if they have sufficient evidence of dumping. Article 5. authorities are required to disclose the information on which determinations are to be based to interested parties and provide them with adequate opportunity to comment. for instance in a public hearing. and establishes the rights of parties to participate in the investigation.
and if a final determination of no dumping. authorities impose duties at a level lower than the margin of dumping but adequate to remove injury. injury. and establishes the desirability of application a “lesser duty” rule.3 requires procedures for determination of the actual amount of duty owed. but only after a preliminary affirmative determination of dumping. depending on the duty assessment system of a Member. In addition. It also establishes that undertakings are voluntary on the part of both exporters and investigating authorities. Article 10 contains rules for the retroactive imposition of dumping duties in specified circumstances. or refund of excess duties paid. recognizing that injury may have occurred during the period of investigation. injury. However. the undertaking shall automatically lapse. Article 9. and causality have been made.Article 8 establishes the principle that undertakings to revise prices or cease exports at dumped prices may be entered into to settle an investigation. Article 9. and causality has been made. or that exporters may have taken actions to avoid the imposition of an anti-dumping duty.5 provides for expedited reviews to calculate individual margins of dumping for exporters or producers newly entering the market of the importing Member. no injury. even if all the requirements for imposition have been met. Imposition and collection of duties Article 9 establishes the general principle that imposition of anti-dumping duties is optional. Under a lesser duty rule.4 establishes rules for calculating the amount of duties to be imposed on exporters not individually examined during the investigation. or no causality results. normally within 12 months of a request. Article 10 establishes the general principle that both provisional and final antidumping duties may be applied only as of the date on which the determinations of dumping. as opposed to threat of 38 . Article 9. In order to ensure that anti-dumping duties in excess of the margin of dumping are not collected. Article 9. an exporter may request that the investigation be continued after an undertaking has been accepted.3 establishes that anti-dumping duties may not exceed the dumping margin calculated during the investigation. and in no case more than 18 months. If the imposition of anti-dumping duties is based on a finding of material injury.
Duration. the product. and requirements for periodic review of the continuing need. and the reasons for the determinations made by the authorities. These public notice requirements are intended to increase the transparency of determinations. massive dumped imports. and undertakings.6 provides for retroactive application of final duties to a date not more than 90 days prior to the application of provisional measures in certain exceptional circumstances involving a history of dumping. for the imposition of antidumping duties or price undertakings. antidumping duties may be collected as of the date provisional measures were imposed. The “sunset” requirement establishes that dumping duties shall normally terminate no later than five years after first being applied.material injury or material retardation of the establishment of a domestic industry. and potential undermining of the remedial effects of the final duty. a refund of provisional duties is required. or if the imposition of duties is based on a finding of threat of material injury or material retardation. Article 10. Public notice Article 12 sets forth detailed requirements for public notice by investigating authorities of the initiation of investigations. if any. The public notice must disclose non-confidential information concerning the parties. with the hope that this will increase the extent to which determinations 39 . termination. This five year “sunset” provision also applies to price undertakings. unless a review investigation prior to that date establishes that expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. If provisional duties were collected in an amount greater than the amount of the final duty. These requirements respond to the concern raised by the practice of some countries of leaving anti-dumping duties in place indefinitely. including the reasons for accepting and rejecting relevant arguments or claims made by exporters or importers. The AD Agreement requires authorities to review the need for the continued imposition of a duty upon request of an interested party. and review of anti-dumping measures Article 11 establishes rules for the duration of anti-dumping duties. preliminary and final determinations. the facts revealed during the investigation. the margins of dumping.
Under Article 18. This standard gives a degree of deference to the factual decisions and legal interpretations of national authorities. and notify semi-annually all actions taken during the relevant reporting period.4 requires Members to bring their laws into conformity with the AD Agreement by the date of entry into force of the AD Agreement. Annex II to the AD Agreement sets forth provisions on the use of “best information available” in 40 . Article 17 establishes that the Dispute Settlement Understanding is applicable to disputes under the AD Agreement. The committee and dispute settlement Article 16 establishes the Committee on Anti-dumping Practices. Final provisions Article 18. Article 17. regarding this provision establishes that its operation will be reviewed after three years with a view to consideration whether it is capable of general application.5. Members are required to notify their anti-dumping laws and regulations to the Committee. which are generally undertaken in the territory of an exporting Member to verify information provided by foreign producers or exporters. However. Article 18. A Ministerial Decision.6 establishes a special standard of review to be applied by panels in examining disputes in anti-dumping cases with regard both to matters of fact and questions of interpretation of the Agreement.3 establishes the effective date of the AD Agreement.are based on fact and solid reasoning. and is intended to prevent dispute settlement panels from making decisions based purely on their own views. which is not part of the AD Agreement. and sets forth requirements for Members to notify without delay all preliminary and final actions taken in anti-dumping investigations. Annex I to the AD Agreement establishes procedures for “on-the-spot” investigations. providing that it is applicable to investigations and reviews of existing measures initiated pursuant to applications made on or after the entry into force of the AD Agreement.
which is open to participation by all Members. the first issue confronted is who bears the burden: Whether the importing country (the country imposing the anti-dumping duty) is required to demonstrate its antidumping practices complying with the AD Agreement.investigations.1 Burden of Proof Burden of proof is a crucial issue in reaching conclusions of law and fact. ten panel reports and five appellate body reports had been circulated. However. and referred the matter to the Committee for resolution. 3. The Ministerial Decision on Anti-Circumvention. It was 41 . These reports have greatly enhanced our understanding of rights and responsibilities under the AD Agreement. In the following three legal standards that have been involved in all anti-dumping disputes would be discussed. GATT Standard Outside of the anti-dumping and countervailing duties context. When the panel sits down to determine whether one country acted in accordance with the AD Agreement. which is not part of the AD Agreement.5. noted that the negotiators had been unable to agree on a specific text dealing with the problem of anti-circumvention. 2001. The Committee has established an Informal Group on Anti-Circumvention. recognized the desirability of applying uniform rules in this area as soon as possible. dumping was not unfair trade practice per se. 3. specifying the conditions under which investigating authorities may rely on information from a source other than the person concerned. The evolution of these standards under the WTO is of great importance for understanding WTO anti-dumping disputes and litigations. or whether the exporting country shall demonstrate a lack of compliance on the side of the importing country. GATT practice was to put the bur-den on the complaining party to demonstrate either violation or infringement. to carry out the task assigned by the Ministers.5 Legal Standards in GATT/WTO Anti-Dumping Cases Until August 31. They have provided certainty much needed to participants of the international trade.
The Panel continued to rule that Article VI:3.Anti-Dumping Duties on Audio Tapes and Cassettes Originating in Japan. methodology would result in overstating the dumping margins. had to be interpreted narrowly and that it was up to the United States. 17 EC -. the burden should be on 16 United States -. ADP/136. in both Salmon16 and Audio cassettes17 cases. It found that GATT Article VI:3 was an exception to basic principles of the General Agreement. so that the importation must not be subject to charges other than ordinary customs duties (Article II:1(b)). that was the target of disciplinary action under the GATT (as well as the WTO).Imposition of Anti-dumping Duties on Imports of Fresh and Chilled Atlantic Salmon From Norway. rather than the dumping. and that charges of any kind imposed in connection with importation must meet the MFN standard (Article I:1). respectively). as an exception to basic principles of the General Agreement. However. (27 April 1994) [hereinafter "Salmon"].S. albeit only the defending parties had access to relevant facts. Article XX). Most scholars considered and still consider GATT Articles VI (antidumping) as permitted exceptions to the basic GATT principles and concepts.. The GATT Panel in the Canada Pork case endorsed this position. (28 April 1995) (unadopted) [hereinafter "Audio Cassettes"]. the Panels not only refused to rule on whether Article VI is an exception. as the party invoking the exception. it should be required to bear the burden of demonstrating that its actions are consistent with that exception. This is because the imposition of anti-dumping duty is contrary to the fundamental principles of "tariff bindings" (by raising import duties above the bound rates) and Most Favorite Nation (MFN) (by applying different tariff rates to different GATT Members). ADP/87.g. Norway (the exporting country) argued that since it had demonstrated that there was a likelihood that the U. therefore. In the Salmon case. When an accused party claimed reliance on one of the exceptions to the basic GATT principles (e. to demonstrate that it had met the requirements of Article VI:3. but they placed burdens of proof on the complaining parties (Norway and Japan. 42 .the anti-dumping. Panel Report.
methodology had in fact overstated the margins.S. has routinely argued in those cases in which it is the defending party that Article VI of the GATT is not an exception. 1999) [hereinafter "Korea DRAMS"]. United States-. since Japan had absolutely no access to any of the relevant factual information.S. in fact. Similar to the Salmon case. It reasoned that although Norway had presented a hypothetical case of overstating margin with the U. the burden of proof should have been on the EC to demonstrate its calculation was correct. (the importing country) to demonstrate that it had not." would constitute an impermissible failure to respect this balance. methodology. On the contrary. However. argued that anti-dumping measures do not constitute exceptions from the rest of the WTO framework that these measures are subject to the same rules of interpretation as any other provision of the other WTO 18 WTO Panel Report. In the Audio cassettes case. the U." Similarly. this Panel rejected Japan's argument on the grounds that Japan had not shown that there would have been no dumping but for the average normal value to individual transaction and zeroing.S.77-4. Japan argued that the EC overstated the dumping margins by comparing an average normal value to individual transactions when combined with the practice of zeroing out above normal value sales.80. paras. it argues that Article VI and the AD Agreement confer a right to impose anti-dumping duties. overstated the margins. Nevertheless. 43 . the U. had the necessary confidential information to demonstrate the soundness of its methodology.S. WTO Standard the U. no evidence was proffered to show that the U.the U.S. by characterizing Article VI and the AD Agreement as "derogations.Anti-Dumping on Dynamic Random Access Memory Semiconductors (DRAMS) of One Megabit or Above from Korea. 4.S. (Jan.18 For example. while Norway did not have access to such information. 29. in the Korean DRAMS case.S. Moreover. argued that the Panel in the Canada Pork case was "conclusory in nature" and that aspect of the Panel's decision was only "dicta. in the US-Japan Steel case. the U. To diminish this right. the panel rejected Norway's argument. WT/DS99/R.
should normally adduce sufficient evidence to raise a prima facie case that each of its claims has merit. it is up to the Panel to weigh the evidence as a whole. injury. Once both parties have submitted evidence meeting those requirements. The EC. However. while the anti-dumping measures themselves are erecting higher and higher barriers to trade. in the Act of 1916 case. However. it is for the defending party to provide an "effective refutation" by submitting its own evidence and arguments in support of the assertion that the challenged activities are consistent with its obligations under the AD Agreement. requires a panel.S.S. The Panels have generally required the complaining party (the exporting country) to present a "prima facie case" of violation of the AD Agreement. for application of anti-dumping measures is becoming lower and lower. WTO members have tried to constrain the use and abuse of antidumping measures to protect the trade liberalizing principles that underlie other WTO obligations. In the US-Japan Steel case. to rule in favor of the complaining party presenting the prima facie case. as the complainant. The WTO cases seem to have adopted a relatively middle ground. As a result. the Panel ruled: "This rule however is only applicable to determine whether and when a party bears the burden of proof. and causation by the U. either explicitly or implicitly. in the absence of effective refutation by the defending party. although anti-dumping measures are authorized under international trade rules. except that they enjoy a more deferential standard of review." Where the complaining party presents a prima facie case in respect of a claim. Act of 1916 violated various provisions of the GATT 1994 and the WTO AD Agreement. the position that.S. the EC challenged that the U.Agreements." 44 . The WTO Appellate Body has defined a prima facie case as "one which. in that case. Therefore the Panel should reject the result-oriented and economically dubious determinations of dumping. Japan forcefully argued that the threshold of the U. as a matter of law. the WTO permits only anti-dumping measures that comply with a specific and detailed set of legal disciplines. some other WTO members have endorsed. On the other hand.
20 and (3) "shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury. It reasoned that antidumping measures may be levied only "in order to offset or prevent dumping." including a proper determination of both dumping and injury. on a prima facie basis. so also a panel's extensive authority to put questions to the parties in order to inform itself of the relevant facts of the dispute and the legal considerations applicable to such facts is not conditional in any way upon a party having established. WT/DS122/R.4. It stated: "We believe that just as the extensive discretionary authority of a panel to request information from any source (including a Member that is a party to the dispute) is not conditional upon a party having established."21 The Panel seemed to agree with Poland. Art." 19 Thailand -. 20 Arts." The Panel claimed that it "must examine whether and how the Thai investigating authorities evaluated all the relevant factors having a bearing on the state of the industry under Article 3. 2.Anti-Dumping Duties on Angles. under the AD Agreement. Poland argument para. a claim or defence. Shapes and Sections of Iron or Non-Alloy Steel and HBeams from Poland. (2) "where all requirements for the imposition have been fulfilled. 3. 9.A more important case on the burden of proof is the Poland Steel case19. on a prima facie basis. We view this authority as essential in order to carry out our mandate and responsibility under the DSU and the AD Agreement." since WTO Members have agreed that anti-dumping measures may be applied only (1) "under the circumstances pro-vided for in Article VI. and pursuant to investigations initiated and conducted in accordance with AD Agreement". of ADA 21 45 . 11. anti-dumping duties are an "exception" to the otherwise applicable freedom to trade between WTO members. 48. (28 September 2000) [hereinafter "Poland Steel"].1. There.1 and Article VI:1. Poland argued that. a claim or defence. VI:6 GATT 1994." The Panel further stated: "the complaining party bears the burden of establishing a violation of a provision of a covered agreement does not 'freeze' a panel into inaction.
WT/DS122/AB/R. (23 August 1999). 25 Canada -. para. (12 March 2001) [hereinafter "Poland Steel AB Report"]. as a claimant."23 The Appellate Body also stated. WT/DS98/AB/R. it alleged that the Panel did not make specific and explicit findings whether Poland. para. that a party has met its burden of proof in respect of a particular claim."24 The Appellate Body also cited approvingly its ruling in Canada Aircraft case. 137. In conclusion.25 where it dismissed the view that a panel has no authority to ask a question relating to claims for which the complaining party had not first established a prima facie case. WT/DS90/AB/R.Measures Affecting the Export of Civilian Aircraft. had established a prima facie case of violation. (20 August 1999).Definitive Safeguard Measure on Imports of Certain Dairy Products. 23 Korea -. Textile and Industrial Products. 46 . (14 December 1999)."22 Specifically. 22 Thailand -. it seems that some WTO panels are sympathetic to the "exception" argument. or that a party has rebutted a prima facie case. and that the panel improperly made Poland's case for it. The Appellate Body upheld the Panel decision. while some others tend to be stricter in demanding a showing of "prima facie" case by the complaining party. and stated that such an argument was "bereft of any textual or logical basis.Thailand appealed to the WTO Appellate Body and challenged the Panel decision under the "burden of proof. 24 India -. Appellate Body Report. 145. It cited its ruling in the Korea Dairy case: "We find no provision in the DSU that requires a panel to make an explicit ruling on whether the complainant has established a prima facie case of violation before a panel may proceed to examine the respondent's defence and evidence. citing its ruling in India Textile case that "We do not consider that a panel is required to state expressly which party bears the burden of proof in respect of every claim made. Shapes and Sections of Iron or Non-Alloy Steel and HBeams from Poland.Quantitative Restrictions on Imports of Agricultural.Anti-Dumping Duties on Angles." The Appellate Body concluded that a WTO panel is not required to make a separate and specific finding. in each and every instance. WT/DS70/AB/R.
ADP/117. 875-76 (2000) 27 GATT Dispute Panel Report on United States -.S. 1994) (unadopted).2 Standard of Review When evidence and arguments are presented on both sides.3. 28 Steven P. national authorities much less deference that they would like to see. and considered information that was not part of the administrative record. the standard of review problem was also a matter of great interest in intellectual property.26 In those antidumping duty cases that the U. WTO Standard during the Uruguay Round. and Deference to National Governments.. the question of standard of review arises: What is the standard that a WTO panel should adopt in reviewing the decisions of the national authorities? Whether the authorities should be given any deference? GATT Standard in the late 1980s. the most frequent user of anti-dumping duties. particularly in anti-dumping and countervailing duty cases. lost under the GATT.S. so that to determine whether the importing country indeed acted inconsistently with its obligations under the AD Agreement. 47 . 193-95 (1996). Jackson..5. wanted to secure WTO protection of intellectual property rights. negotiators tried to ensure that the WTO standard of review would give substantial deference to decisions of the DOC and ITC. the U. 1994 GATTPD Lexis 6 (Feb. Rosenthal & Robert T. the panel will proceed to weigh and assess those evidence and arguments. Crowley & John H. Vermylen. many of which lacked rigorous administrative processes. The compromise resulted from this dilemma was the establishment of two standards of review: one particular to the AD and Subsidies Agreements. WTO Dispute Procedures.S.S.Anti-Dumping of Imports of Stainless Steel Plate from Sweden. 90 Am.28 But at the same time. Standard of Review. the panels accorded the U. If the U. less deferential standard in 26 Paul C. 27 This less deferential standard certainly did not satisfy the U. 24. Thus.S. Part II: Review of Key Substantive Agreements: Panel II E: Antidumping Agreement (AD) and Agreement on Subsidies and Countervailing Measures (SCM): The WTO Antidumping and Subsidies Agreements: Did the United States Achieve Its Objectives During the Uruguay Round? 31 Law & Policy Int'l Bus. GATT panels began to issue decisions adverse to the U. and the other.. panels reviewing matters arising under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) could not defer to national governments.S. Int'l L. J.C.
6(i) provides: "in its assessment of the facts of the matter. Article 17. With regard to factual issues. If the establishment of the facts was proper and the evaluation was unbiased and objective. 48 . the question for the court is whether the agency's answer is based on a permissible construction of the 29 Chevron U. Inc.6(ii) provides: "the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation.A. 467 US 837 (1984).S. even though the panel might have reached a different conclusion. to all disputes arising under non-AD Agreement violations. it may proceed to consider legal issues.6 of the Anti-dumping Agreement provided for special standard of review for both factual issues and legal (interpretation) issues. Inc.29 The Chevron Court held that "if the statute is silent or ambiguous with respect to the specific issue. v. Natural Resources Defense Council. Article 17.Article 11 of the DSU. Article 17. the evaluation shall not be overturned. Chevron.. the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations." It is noted that the terms of the legal prong are nearly identical to those of a leading United States Supreme Court decision. the panel shall determine whether the authorities' establishment of the facts was proper and whether their evaluation of those facts was unbiased and objective. With regard to legal issues." If a panel concludes that the establishment of the facts with regard to a particular claim is proper.
which requires the investigating authority to examine the "accuracy and adequacy" of the evidence when determining whether there is "sufficient evidence to justify the initiation of an investigation. Guatemala argued. in the Mexico cement case. negotiators really got what they wanted by this special standard of review." The U.6(i). 49 .S. However. WT/DS156/R. These decisions seem to suggest that the WTO panels are conscious of the tremendous power held by the national authorities in anti-dumping actions."30 The Panel made it clear that the standard for factual determination is the "objective sufficiency" of the evidence. the Appellate Body reversed and held that. (24 October 2000). On the factual prong of the standard.6(i). not any subjective standard adopted by the investigating authority.49.Definitive Anti-dumping Measures on Grey Portland Cement from Mexico.S. More importantly. in the Poland Steel case. that its administrative authority had considered all the facts that was "reasonably available" to it and made the factual determinations according to Article 17. On appeal. in order for a panel to properly determine whether the investigating authorities' establishment of the 30 Guatemala -. Guatemala needed to look at Article 5. the Panel rejected Guatemala's argument and hold that in addition to the factors in Article 17.statute. the Panel agreed with Thailand (the importing country) that factual evaluation by the national authority could be limited to non-confidential facts. argues that the language reflects an evident recognition that the task of panels would be similar to that of domestic courts reviewing the actions of administrative agencies. The WTO decisions to date have raised questions whether the U. and are willing to limit the degree of the deference to the decisions of the national authorities. 7.3. Para.
If the panel determines that the provisions allow more than one interpretation. (22 December 2000) [hereinafter "US-Korea Steel"].31 The first sentence requires a panel to interpret the AD Agreement in accordance with customary rules of treaty interpretation. With that power.facts was proper. 50 . WT/DS179/R.Anti-Dumping Measures on Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea. 6. it must "evaluate all of the facts made available to it by the defending party. If so the Panel must defer to the interpretation given to the provision by the national government. 32 EC -. In the Korea DRAMS case. WT/DS141/R. (30 October 2000) [hereinafter "India Linen"]. the Panel made it clear that it had the power under Article 17. argument of "permissible interpretation" on the basis that they were not consistent with the AD 31 United States -. para." On the legal prong of the standard. WTO panels are capable of overturning an authority's decision by declaring that the member's interpretation of the WTO provision is not within the set of "permissible" interpretations. The panel considers the interpretation of the WTO Agreements. these may include confidential facts that were part of the administrative record. The rules of treaty interpretation set forth in Articles 31 and 32 of the Vienna Convention on the Law of Treaties (the "Vienna Convention") have achieved the status of a rule of customary international law and are customarily used by the panels. there seems to be some tension between the two sentences of Article 17.32 The second sentence leads the panel to uphold "permissible interpretation" by the national authorities. Annex 1-1.46.6(ii). it shall proceed to consider whether the national interpretation is within the set of permissible interpretations. The panel may also consider the legislative (negotiation) history to divine the original intent of the provision. The Panel rejected the U.S. in accordance with the principles set out in the Vienna Convention on the Law of Treaties.Anti-dumping Measures on Imports of Cotton-type Bed-linen from India. including the AD Agreement.6(ii) to determine the set of "permissible" interpretations of a provision of the WTO Agreements.
Part II: Review of Key Substantive Agreements: Panel II E: Antidumping Agreement (AD) and Agreement on Subsidies and Countervailing Measures (SCM): Presentation Summary and Comments. the Appellate Body affirmed and stated: "the Panel was not faced with a choice among multiple 'permissible' interpretations which would have required it. it might become more difficult for the national authorities to defend their decisions in the future. to give deference to the interpretation relied upon by the European Communities.6(ii). the WTO cases to date seem to suggest that the WTO Panels and the Appellate Body are suspicious of the high level of deference to the national authorities as favored by the U. the national authority has to assess whether the material injury established is caused by the dumped 33 Paul C. 'impermissible'. The Panel there concluded that the DOC's "not likely" criterion was not a "permissible" interpretation of Article 11. under Article 17.6(ii)." In conclusion.4. On appeal. to borrow a word from the European Communities. 3.33 which certainly a good news for many challengers of the U. 51 .2 of the AD Agreement. 907. and have been willing to scrutinize the decisions of national authorities. Consequently. the Panel was faced with a situation in which the interpretation relied upon by the European Communities was.S. Similar results are found in other Panel reports. 908-10 (2000). Rosenthal.2 of the AD Agreement as a "permissible interpretation" within the meaning of Article 17.S.5.6(ii) of the AntiDumping Agreement. The India Linen case is a typical one. the Panel did not accept the interpretation given by the EC of Article 2. Victor Luiz do Prado.Agreement and. We do not share the view of the European Communities that the Panel failed to apply the standard of review set out in Article 17. The Panels and the Appellate Body have used more rigorous standards. Rather. 31 LAW & POL'Y INT'L BUS.3 Causation of Material Injury Under the AD Agreement. Richard Cunningham. in reaching such a view it applied the customary rules of interpretation of public international law. & Angela Ellard. anti-dumping practice. besides analyzing the materiality of injury. There.
imports.S. The U. as in the Salmon case. several different interpretations were enunciated in the same report.-Japan Steel case. The following sentences of this provision clarify how this causal link is to be established. the WTO Panel considered the question whether the 52 . the authorities are to make sure that injuries caused by these other factors are not attributed to the dumped imports.. Indeed. Instead.5 requires that the demonstration of a causal relationship be based on an examination of all relevant evidence. as set forth in Article 3. In the U. when acting as defendant. However. and then determine whether the effect of those imports is such as to constitute injury within the meaning of the Code. through the effects of dumping. Article 3. the importing country (through its national authority) must demonstrate that dumped imports are. Third. before making an affirmative determination of injury.5 of the WTO AD Agreement. Determination of causation is still another contentious issue in anti-dumping disputes. causing injury within the meaning of the Agreement.S. not the only cause. The GATT panels gave different interpretations from panel to panel. Article 3.S. read this provision to require that dumped imports must merely be "a" cause of injury among other factors. Second. GATT Standard Most scholars and many GATT parties have interpreted relevant provisions in the Tokyo Round AD Code to require that national authorities separate the injury caused by the dumped imports from the injury caused by other factors. does not support this interpretation. WTO Standard Under Article 3.2 and 3.5 clarifies the previous GATT Code language and supports the interpretations espoused by the scholars and many GATT parties. Certain commissioners at the ITC do not separately analyze the causation question.4.5 provides that the authorities shall examine any known factors other than the dumped imports which are at the same time injuring the domestic industry. First. national authorities such as the ITC of the U. Article 3. they consider material injury and causation together as part of a "unity" econometric analysis.
(19 January 2001).5 of the WTO AD Agreement from Article 3:4 of the Tokyo Round AD Code.5 of the AD Agreement.34 the Panel held that the ITC was not obligated under the AD Agreement to demonstrate that "dumped imports alone have caused material injury by deducting the injury caused by other factors from the overall injury found to exist. and (2) failed to ensure that injury caused by these other factors was not attributed to the dumped imports. the U." Japan appealed. the injunction that "the injuries caused by other factors must not be attributed to the dumped imports. pointed to the various paragraphs in the ITC report in which other factors affecting the industry are discussed. It argued that: (1) the ITC was not required under the AD Agreement to establish that dumped imports are the "sole cause of injury" and (2) its analysis did ensure that any injuries that were caused by other factors were not attributed to dumped imports. 53 . holding it "at odds" with the interpretive approach for Article 3. Japan alleged that the ITC (1) inadequately analyzed other factors affecting the industry.S. There. the Panel found the decision of the Panel in Salmon. Thus. in order to determine whether the remaining injury rises to the level of material injury. to be useful and persuasive on this issue. a GATT decision under the Tokyo Round AD Code. It completely rejected the Salmon reasoning.ITC established a causal relation-ship between the dumped Japanese steel imports and the injury to the domestic industry consistently with Article 3. The Panel observed that the operative language at issue. WT/DS166/AB/R. Based on the Salmon and another WTO case where Article 4." is unchanged in Article 3.5 of the AD Agreement) was considered.Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities. In response. the Panel held that the ITC was not required by the AD Code to identify the extent of injury caused by other factors in order to determine the injury caused by the imports from Norway.5 of the AD 34 United States -.2(b) of the Safeguards Agreement (similar language as Article 3. The Appellate Body reversed.
therefore.5.4 need to be evaluated in examining the impact of the dumped imports on the domestic industry. Indeed. in reality.5. It seems reasonable to expect an affirmative answer if the above issue is confronted by a future WTO panel. some scholars have recommended the exact same answer. 54 . the Panel in the India Linen case rejected the EC's assertion that not all factors listed in Article 3. The Appellate Body clearly recognized that "it may not be easy.5 of the AD Agreement must be evaluated by the investigating authorities before the causal relationship can be established. caused by other factors.4 of the AD Agreement must be evaluated by the investigating authorities in each case in examining the impact of the dumped imports on the domestic industry concerned. to separate and distinguish the injurious effects of different causal factors. as a practical matter.Agreement." There has been no WTO case has directly hold on the issue whether all factors listed in Article 3. there is simply no means of knowing whether injury ascribed to dumped imports was." but stated: "Although this process may not be easy. If the injurious effects of the dumped imports and the other known factors remain lumped together and indistinguishable. the injurious effects of dumped imports from those of other known causal factors. However. requires investigating authorities to undertake the process of assessing appropriately. this is precisely what is envisaged by the non-attribution language. The Panel concluded that "each of the fifteen factors listed in Article 3. and separating and distinguishing. Article 3." The same logic of the India Linen decision should apply to Article 3.
Shapes and sections of Iron or Non-Alloy Steel and H-Beams from Poland (Thailand-H-Beams).e. 22 Dec.37 The definition of dumping in the 35 United States-Anti-dumping Measures on Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea. 55 . WT/DS122/R. i. i. then no dumping has occurred.35 37 The following general formula can be formulated for the calculation of dumping margin: Dumping margin= Normal Value.119 36 Panel Report. then dumping has occurred. Normal Value= Domestic Price. DUMPING AND ITS INTERPRETATION UNDER THE WTO FRAMEWORK 4.35 Article 2 of the ADA contains multiple obligations relating to the various components that enter into complex process of determining the existence of dumping and the calculation of the dumping margin. para. that is.4. WT/DS179/R. It deals with the very essence of the subject: the determination of dumping.7.. if it is zero or negative. Sometimes dumping margins are expressed in percentage terms.e.Export Price. para.1 Overview of Article 2 The Panel in the US-Stainless Steel dispute made it clear that the purpose of Article 2 as a whole is to provide a methodology for determining whether a product is being dumped.2000. If the dumping margin is positive. Thailand-Anti-dumping Duties on Angles. it provides different options and leaves the decision of the methodology and various requirements under Article 2 to the investigating authorities.36 But in some instances the ADA does not provide clear guidance. Export Price= Foreign Price. the price the exporter charges in its home market. At the same time.6.. whether the export price is less than the normal value. Article 2 is one of the most important Articles of the ADA. the price the exporter charges in the importing country where dumping is alleged.
or of the cost of production. Then the formula becomes: 38 Dumping Margin= Normal Value-Export Price/Export Price x 100 Usually the normal value is the domestic market price. as a percentage of the export price. for the like product in the exporter’s domestic market’. Article 2.1 of the ADA states that ‘a product is considered as dumped. if the export price is less than the comparable price. the margin of dumping is to be determined by comparison with the export price to a third country or with the cost of production in the country of origin plus a reasonable amount of administrative. All export sales are averaged to obtain export price based on average-to-average and transaction-to-transaction comparisons. selling. which has always been controversial. The issues while calculation of dumping margin revolves around four important terminologies: ‘export price’. Fixing the export price below the home-market price signifies price discrimination.3 covers the construction of export price. For calculating the dumping margin. These methodologies are questioned before the DSU several times. Article 2. However. the product is considered as dumped. and Article 2. ‘ordinary course of trade’. Article 2. There are two prevailing methods of calculating normal value. The difference between the two is ‘dumping margin’.ADA is an inclusive one. the WTO members are using different methodologies like the ‘arm’s length test’ and ‘zeroing’ which are contained in the members. ‘comparable price’ and the ‘like product’. But only those sales ‘in the ordinary course of trade’ will be averaged to obtain normal value.4 contains detailed rules for making a fair comparison between export price and normal value. It may be calculated on the basis of the price charged in the home market.2 of the ADA provides: “if there is no sales of the like product in domestic market in the ordinary course of trade or due to particular market situations or low volume of sales in the domestic market of the exporting country. The key phrase in Article 2. A comparison must be made between the export price of the product and the ‘normal value’38 of the like product in the exporting country. 39 Article 2. ‘normal value’. domestic anti-dumping laws. general costs and profits (constructed value) 56 . there is namely. in the ordinary course of trade. If the export price is lesser than the normal value.239 sets out an alternative method of calculating normal value in the case where there are no sales of a ‘like product’ in the ‘ordinary course of trade’ in the domestic market of the exporting country. while the export price below cost signifies loss-making sales. such sales do not permit a proper comparison.1 is ‘in the ordinary course of trade’.
57 . general and administrative expenses plus profits. a comparable export price of a ‘like product’ originating from a surrogate third country. there are two alternative methods of determination of ‘Normal Value’:(1) a comparable price of the ‘like product’ when exported to an appropriate third country. the authorities may use the domestic market price of a ‘like product’ in the importing country/investigating Member subject to suitable adjustment. the domestic market price of a ‘like product’ in a surrogate country. such as comparing the export price with: a constructed value which covers all costs plus profit margin in a related third country. or If the above three methods do not provide a reasonable basis. In such cases. the cost of production in the country of origin plus a reasonable amount for selling. When there are no home market sales or third country sales available to do a comparison and domestic sales do not permit a proper comparison because (a) volume of domestic sales is insufficient in relation to the volume of export sales to the country of import of a ‘like product’. that is. provided that this price is representative or (2) the constructed value. There are different methods adopted by national legislations in pursuance of this exception. or (b) where a particular market situation prevents a proper comparison with export sales.an exception in determining the normal value of imports from ‘non-market economies’. which may be due to association between the parties or due existence of compensatory arrangement or (c) domestic market sales of the “like product” are made to related parties.
the importer may sell the product at a lower price than that invoiced by the associated exported. transport. customs duties. Article VI of the GATT40 recognizes that when exports are made between associated companies.Now as to the export price it may be the ‘actual export price’ or it may be a ‘constructed export price’. or not resold in the condition as imported. allowance has to be made for all costs incurred between the point of importation and resale. in the 1920s. which include: (i) (ii) the cost of handling. loading. the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer. on such reasonable basis as the authorities may determine. the presumption being that the loss incurred by the importer would. a reference was made to the 1958/1959 GATT Group of Experts. insurance and ancillary costs. As to the actual export price initially in the GATT doubts were expressed as to whether the normal value be compared with the price of the product when it left the exporting country or with the price after the product entered the importing country. The Anti-dumping Code and Anti-dumping Agreement confirm this view by stressing that the export price should be the price of the “product exported from one country to another. the Anti-dumping Agreement specifies that in cases where there is no export price or where it appears to the authorities concerned that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party. 40 First footnote to Article VI of the GATT 58 . In such cases. For resolving the doubts about which price should be compared. or if the products are not resold to an independent buyer. be borne by the exporter. The issue arose because. in fact. anti-dumping duties and other taxes payable in the importing country on the importation or sale of goods. The practice is referred to as hidden dumping. While constructing the export price. The Group held that normal value be compared with the price of the product when it left the exporting country and not the price at which it was imported. some countries’ legislation stipulated that the price should be that at which the product was offered for sale in the importing country.
A comparison of these prices is made at the same level of trade. especially the developing countries.(iii) a reasonable margin for overheads and profits and/or any commission usually paid or payable. Article 2. or not resold in the same market condition as imported. There may be case. taxation. conditions and terms of sale. which affect price comparability.2. The ‘constructed value’ methodology under Article 2. quantities. and in respect of sales it is made as much as possible at the same time. Many WTO members. The usage of different methods for calculating the dumping margin in anti-dumping investigations is another cause of concern due to absence of specific 59 .2 is liberally used at the slightest pretext. the Anti-dumping Agreement provides for construction of the export price on any reasonable basis.4 requires that a ‘fair’ comparison shall be made at the same level of trade. levels of trade. normally at the ex-factory level. normal value shall be established at the level of trade equivalent to the level of trade of the constructed export price. are dissatisfied with this. The standard of ‘fairness’ is not defined anywhere in the ADA. such differences include those regarding. and physical characteristics of the products. The provision stipulates that a fair comparison shall not impose an unreasonable burden of proof on the parties. when there is no export price or the export price is unreliable because the goods are not resold in the importing country. This margin determines the amount of anti-dumping duties that will be imposed in the event of affirmative dumping and injury determinations. In such cases. The ADA provides that a fair comparison shall be made between the export price and the normal value. It also provides that if the ‘price comparability has been affected’. It can be concluded that the dumping margin is the difference between the exporter’s ex-factory price for sales in its home market (the normal value) and the exporter’s ex-factory price for sales in the importing country (export price). expressed as a percentage of the export price. Allowances are made for differences.
41 The Agreement does not define “reasonable period of time”. 4. The text is silent regarding transactions involving affiliated suppliers and odes not define ‘affiliation’. selling and general costs may be treated by the authorities as not being in the ordinary course of trade by reason of price.2.2 Determination of Normal Value The practice of authorities varies while addressing whether the home-market sales to affiliates could be included in.1 of the Anti-dumping Agreement 60 . It is a moot point whether the definition of affiliation as provided in Footnote 11 of the Agreement in the context of determining the domestic industry could serve the purpose in the context of normal value because it does not specify how and when transaction prices between affiliates could be accepted or rejected.methodology under the ADA. 4.2. or excluded from.2 Issues relating to determination of dumping 4.1 Definition of ‘reasonable period of time’ while determining ‘Sales in the Ordinary Course of Trade’ As stated earlier sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative. It also leads to application of improper adjustments on normal value. the determination of normal value.2. The lack of clarity compels the exporters to needlessly submit extensive sales and cost data of affiliates and other market data to the authorities. based on alleged ‘affiliation’ by the authorities. 41 Article 2. These may be disregarded in determining normal value only if the authorities determine that such sales are at prices which do not provide for the recovery of all costs (prices which are below per unit costs at the time of sale are below weighted average per unit cost) within a reasonable period of time.
2. the circumstances. 4. But the criteria for choosing ‘appropriate third country’ for the determination of Normal Value in this regard has not been specified in the Agreement. leading to anomalous results. even though he has kept the accounting records in accordance with GAAP and accounting method. need to be elaborated in the text. provided that these records are in accordance with the generally accepted accounting principles (“GAAP”) of the exporting country and reasonably reflect production and sales costs of the product under consideration 61 . It is submitted that such a practice keeps an exporter/producer on tenterhooks as regards his dumping margin. which needs to be laid down so that investigative process becomes more predictable.3 Determination of ‘Normal Value’. may be determined by comparison with a comparable price of the ‘like product’ when exported to an appropriate third country.2.2. comprehensive and representative criteria to be adopted by the authorities while making these calculations.4 Constructed Value The authorities use immense discretion while calculating constructed value. Thus. 4. which would require the authorities to accept the cost data as recorded in the producer’s accounts books or reject it. contending that the particular cost accounting method does not “reasonably” reflect the costs. An appropriate country in this context could be a country that has a similar market development of the subject goods as compared to the country of exports.1 of the Anti-dumping Agreement states that costs shall normally be calculated on the basis of producers’ own accounting records.Criteria of ‘Appropriate Third Country’ As already mentioned that in case the domestic sales in the country of exports are not accepted for determination of ‘Normal Value’. there is not only the need to define the ‘affiliates’ in the context of determining normal value but also the circumstances which may be considered as distorting the determination of ‘Normal Value’ in the ordinary course of trade.42 The ambiguity in the texts permits the authorities to reconstruct a producer’s costs in their own manner. then the margin of dumping.even though the affiliation may not have distorted the transaction prices. 42 Article 2. Therefore. inter alia.1. There is a need for clearer.
2.44 Also there is possibility of manipulation in calculating dumping margin by investigating authorities since the calculation of Administrative. TN/RL/W/26.5 Determination of Administrative.2 (i) as well.2.2 (i) to (iii) is without any hierarchical significance and that Members have complete discretion as to which of the three methodologies they use in their investigations.2. selling and general costs and profits on actual data on production and sales in the ordinary course of trade for the ‘like product’ by the exporter under question. 44 62 . Though Article 2.6 Constructed Export Price: Methodology for Construction The authorities are permitted to construct the ‘Export price’ from the price of the importer to unaffiliated buyers. 2002. Further. This ruling may be applicable for profits under Article 2. As per Article 2.wto.org WTO Document No: India.2. In EC-Bed Linen Case.4. Selling and General Costs and Profits.2. It would be better if a consensus may be developed to codify this ruling in the Anti-dumping Agreement.43 the Appellate Body ruled that while calculating an amount for profits under Article 2.4 stipulates that a ‘fair comparison’ shall be made between the export price and the normal value but these guidelines are far from clear. 4.2. WT/DS141/9. It is submitted that a careful reading of the text suggests that the options are set out in a hierarchal order and should be explicitly stated so in the text as also suggested in India’s paper. Different WTO Members have adopted different practices resulting in 43 Panel Report on EC-Bed Linen. http://www.2 (ii) an investigating authority may not exclude sales by other producers or exporters that are not made in the ordinary course of trade.1 while constructing the normal value. dated 17th October. although Panels have ruled that “the order in which the three options are set out in Article 2. Selling General Costs and Profits (SG&A) always depends on more than one economic variable.docsonline. authorities have to base the amounts for administrative.
8 Application of ‘All others’ Rate when Sampling done The authorities are obligated to determine an individual margin of dumping for each known exporter or producer of the product under investigation. or as per the largest percentage of the volume of the exports from the country in question which can reasonably be investigated.2. where the number of exporters. while determining the dumping margin. Although Article 2. The Agreement also requires the authorities to disregard such actual information if the resulted margins are zero or de minimis. Therefore. as well while determining dumping margins. at the expense of fairness.2. Presently. or those influenced by the seasonality or the cyclicality of the market. This problem is accentuated in sectors such as perishable goods.asymmetrical deduction of costs and profits from ‘constructed export price’ and normal value resulting into an unfair comparison between the two prices. the Agreement permits the authorities to limit their examination either to a reasonable number of interested or products by using statistically valid samples on the basis of information available to the authorities at the time of the selection. importers or types of products involved is large. producers. However. 4. Article 2. the authorities do not consider the market realities. cyclicality of products etc. the authorities are obliged to calculate the “all others” rate based only on actual sales and cost information. the text of the Agreement should expressly obligate the authorities while conducting a fair comparison to consider seasonality. which were supplied by exporters/producers and used to calculate their individual margins.4 of the Anti-dumping Agreement stipulates that any comparison between ‘Normal value’ and Export price’ must be ‘fair’. 63 . yet some times authorities apply the rules mechanically. Therefore. 4.4 should state clearly that such an asymmetry is ruled while comparing the export price and normal value.7 Seasonality or Cyclicality of Products At times.
on account of high import duties. Further.4 the authorities are required to make a ‘fair comparison’ between the normal value and export price. so that 64 . in case the dumping margins for all the sampled exporters are based partly on facts available.2. The Anti-dumping Agreement does not contain any guideline for legitimate duty drawback scheme. these authorities have insisted upon the exporters/producers to positively establish that domestically purchased raw materials have at no time been used in exported finished products. Detailed guidelines for legitimate duty drawback scheme. The issue particularly arises in cases where the bulk products are involved because in practice.The rationale of ignoring the zero or se minimis margins is not clear as zero and de minimis margins also represent actual performance of exporters/producers from the exporting country. including effective monitoring systems and procedures are laid down in Annexes II and III of the Agreement on Subsidies & Countervailing Measures (ASCM). These guidelines have been applied by authorities on analogous basis to adjudge duty drawback claims in the context of Anti-dumping proceedings as well. It is therefore. It is submitted that besides taking into consideration the zero or de minimis margins. no distinction is made in the warehouse for raw materials on the basis of imported raw materials and those procured indigenously. In many developing countries. submitted that appropriate guidelines must be incorporated in the Anti-dumping Agreement text. these rates could also be determined. necessary changes in the text of the Agreement should be incorporated. 4. This onus is an insurmountable burden in cases where inputs are both imported and purchased domestically. For doing so. But the problems arise as monitoring system and procedures in developing countries are not strictly as per these requirements and thus the schemes have been treated as countervailable by certain investigating authorities.9 Fair Comparison: Adjustments for Duty Drawback As per Article 2. adjustments for duty drawback claims become extremely significant.
Comparing the average price of sales to each affiliated customer to the average price of sales of the same product by the same producer to all unaffiliated customers is known as the USDOC’s arms length test. Japan argued before the Panel that the United States Department of Commerce’s (USDOC) exclusion of certain home market sales to affiliates from the determination of normal value.Anti-dumping Measures on Certain Hot rolled Steel Products from Japan45 In United States .4 of the Anti-dumping Agreement “99.5 Percent” or “arms length test”.5 percent” or the “arms length” test used by the US. based on the application of the “99. 2.1. and replacement of those sales with sales to unaffiliated downstream purchasers.3 Analysis of the United States . The AB considered those issues among others. 4.1 of the ADA in excluding certain home-market sales to affiliated parties. whether the so-called methods of “99. and the replacement of such sales with re-sales by the affiliates to unaffiliated customers. about the exclusion and replacement of certain home market sales to parties affiliated with an investigated exporter from the calculation of normal value.authorities do not disregard genuine duty drawback claims. This test excluded low-priced home market sale and skewed the normal value upward. from the calculation of normal value on the basis of the “arm’s length” test.1 of ADA.5 per cent” or “arm’s length” test. 45 WT/DS184/R. thereby making a finding of dumping. were consistent with Article 2.Anti-dumping Measures on Certain Hot rolled Steel Products from Japan (the “Panel Report”) the United States (US) and Japan appealed to the AB on certain issues of law and legal interpretations contained in the Panel Report.2 and 2. In this case the Panel held that the US acted inconsistently with Article 2. This dispute was concerning the US imposition of anti-dumping duties on imports of certain hot-rolled flat-rolled-carbon-quality steel products (“hotrolled steel”) from Japan. or in most of the cases a higher margin of dumping. was inconsistent with Articles 2. 28 February 2001 65 .
46 Japan asserted that there was nothing in the ADA that supported the premises of the “arm’s length” test .The Panel in its finding held that the USDOC’s “arm’s length” or 99. According to Japan. 66 . which was used to determine whether home market sales to affiliated customers were made “in the ordinary course of trade”. with the normal value based on downstream sales. This might always lead to found dumping.that sales made to affiliates at average prices more than 0. and that the “arm’s length” test is too mechanical and not consistent with the rigorous tests applicable to determining whether sales below cost may be considered outside the ordinary course of trade. without making any adjustments to address difference in price comparability due to the reseller’s costs and profits. comparison was made of an export price at ex-factory level. Finally. According to the AB.4 of the ADA to make a “fair comparison” between normal value and export price. Japan argued that the USDOC practice of excluding sales. a 0. Japan also asserted that a “fair” comparison did not permit statistically arbitrary rules that reject low-priced sales from the calculation of normal 46 AB Report on United States Anti-dumping Measures on Certain Hot-rolled steel Products from Japan.1 of the ADA. which fail the “arm’s length’s” test violates the requirement of Article 2.5 percentage point average price differential is too small a difference upon which to base a finding that sales to affiliates are not made in the ordinary course of trade.5 percent test. para. Japan also submitted that Article 2. such as those above and those below arm’s length prices. “the ADA does not compel investigating authorities to use the same test to determine whether different categories of sales.2 of the ADA made it clear that the exclusion of sales as outside the ordinary course of trade is a rigorous undertaking. WT/DS184/AB/R. According to the US calculation method. 14. are outside “the ordinary course of trade”. was not a permissible interpretation of Article 2.5 per cent below the average prices for the same product sold to unaffiliated customers are outside the “ordinary course of trade”.
According to the US. Brazil.1 of ADA. Within the third parties those who had appeared before the AB.1 Findings of the AB Article 2. The EU agreed with the US position and argued that the investigating authorities acted consistently with Article 2. on an average. and Korea supported Japan’s argument.value thereby artificially inflating the dumping margin.5 per cent of the prices charged to unaffiliated customers. all of the sales to that affiliated party is treated as being made outside "the ordinary course of trade" and are disregarded in calculating normal value. all the sales to that affiliated party is treated as being made "in the ordinary course of trade".3. and the “arm’s length” test was one permissible way of making this determination.5 percent test” treats the home market sales made at an arm’s length by an exporter to an affiliated customer when the prices to that affiliated customer is. in the absence of guidance in the ADA on how to assess whether sales are outside the ordinary course of trade. the weighted average selling price for the product in the case of an exporter to an affiliated party.5 per cent is significant or not. The US contended that Article 2.5 percent threshold. If the weighted average sales price for sales to an individual affiliated party falls below the 99. it is calculated by taking the weighted average price. If the weighted average sales price to an individual affiliated party is 99. 67 . if it is a group as a whole. at least 99.5 percent or more of the weighted average price of sales to all non-affiliated parties. The US “arms length test” or “99. Chile. the authorities are free to consider whether a difference of 0.1 of the ADA did not specify how to determine whether sales were made in the ordinary course of trade. In the case of non-affiliated parties.1 of the ADA stipulates that determination of dumping must be based on transactions made “in the ordinary course of trade”. The USDOC applied the “arm’s length” test. when they used downstream domestic sales made by affiliated companies in the determination of an exporter’s normal value. on the basis of consideration whether sales to affiliates were made at prices that were comparable to those of sales to unaffiliated customers. 4.
under Article 2. or a higher margin of dumping.1 of the ADA are to look into whether the sales price is higher or lower than the “ordinary course” price. thereby making a finding of dumping.47 According to the Panel. But the disputed fact in this case was whether the test used by the US to determine the unaffiliated customers was consistent with the ADA. It is merely one of the terms and conditions of a transaction. which are not made “in the ordinary course of trade” should be excluded by the investigating authorities from the calculation of normal value. Hence the application of the “99. and establishes no general tests for determining whether sales are made in the ordinary course of trade. In conclusion the Panel found that the application of the "arm’s length" test excluded low-priced home market sale and skews the normal value upward. Thus. or not. 47 The parties are generally in agreement that the home market sales to all affiliated parties are not always in the ordinary course of trade and the investigating authorities need to verify whether such sales are made in the ordinary course or not.5 percent test” does not rest on a permissible interpretation of the term “sales in the ordinary course of trade”. the Panel observed that the ADA does not define the concept of "ordinary course of trade.. whether a sale price is higher or lower than the “ordinary course” is not simply a question of comparing prices. sales.1 or elsewhere. and irrespective of the reason why the transaction is not “in the ordinary course of trade”.1 of the ADA provided that normal value to be calculated “the price of the like product in the home market of the exporter or Producer” must be established on the basis of sales made "in the ordinary course of trade". The AB observed on this point. According to the AB." either in Article 2. It also observed that .the duties of investigating authorities. there is no reason to suppose. that Article 2.With regard to Japan’s claim. and the US has not proposed that affiliation only results in sales that are outside the ordinary course of trade because they are low priced on average than sales to unaffiliated customers. 68 .
1 of the ADA.1 of the ADA with regard to assessing whether the sales are in the ordinary course of trade. the US applied a general “bright line” test to identify low priced sales between affiliates that excluded such sales from the calculation of normal value. unless the weighted average sales price of sales to an affiliate lay within or above a very narrow. which was a 0. Thus. those rules must reflect. The absence of clear guidelines in Article 2. This may lead to the usage of tests like “arms length” test by countries like the US countries for their own benefits and finding dumping in all cases. downward range of the weighted average sale price to all non-affiliates. But this discretion was not without limits. even-handedly. 69 . But it clarified that “the methods for verifying whether high and low. a great range of low-priced sales to affiliates could be excluded from the calculation of normal value because they are deemed not to be "in the ordinary course of trade". the burden is on the investigating authorities to ensure that the calculation of normal value was based on sales made “in the ordinary course of trade”.5 percent test does not rest on a permissible interpretation of the term “sales in the ordinary course of trade”. gives too much discretionary power to the national authorities and legislations. 48 In the present case. under the 99. the AB came to the conclusion that the 99. in particular discretion must be exercised in an even-handed way that is fair to all parties affected by an anti-dumping investigation.5 percent test. In conclusion the AB upheld the Panel’s finding that the application of the 99. If a Member elects to adopt general rules to prevent distortion of normal value through sales between affiliates. It also pointed out that under Article 2.5 percent test applied by the US in this case was not even-handed. the fact that both high and low-priced sales between affiliates might not be "in the ordinary course of trade". This practice work against the developing countries and the provision should be amended to include clear guidelines in this regard.priced sales to affiliates were “in the ordinary course of trade” need not be identical”.5 percent range.48 The AB observed that. and not on the exporters.The AB held that it is for WTO members to determine how to ensure that the normal value is not distorted through the inclusion of sales that are not "in the ordinary course of trade".
32. Prusa.6986.This decision shows an urgent need to define what constitutes “ordinary course of trade” under Article 2.1 of the ADA and also the need for specific guidelines for the calculation of dumping margin.org/papers/w6986. Kolev and Thomas J. at p.nber. failing which domestic investigating authorities will once again misuse these terms for finding inflated dumping margins and the same method can be used against the developing countries.49 49 Dobrin R. 70 . Dumping and double crossing in the (in) effectiveness of costbased trade policy under incomplete information. 1999. This paper is available at http://www. NBER Working Paper No. Dobrin R. Kolev rightly suggested that the GATT/WTO parties would raise welfare by additional restrictions on cost-based allegations.
first. the effect of dumped imports on prices in the domestic market and the consequent impact on domestic producers. the investigating authorities are required to make objective examination of the volume of dumped imports.2 of ADA 54 A. unless otherwise specified.51 In determining whether dumped imports are injuring the domestic industry. Vermulst. threat of material injury or material retardation of an industry producing a like product.52 In examining the effects of such imports on prices. 52 Article 3. and second.1 ISSUES IN DETERMINATION OF INJURY AND CAUSATION Overview of Article 3 A critical determination in any anti-dumping proceeding is the amount of anti- dumping duties to be levied.53 The determination of injury also requires interpretation and the ‘combined evaluation’ of a number of economic factors in each market. profits. dumping must cause material injury. and there must be a ‘causal link’ between the injury to the domestic industry and dumping. establishing that the product has been ‘dumped’. the existence of ‘injury’50 caused to the domestic industry producing a like product in the importing country. the investigating authorities shall consider whether there has been a significant increase in dumped imports either in absolute terms or relative to production or consumption in the importing Member. be taken to mean material injury to a domestic industry. ‘Injury in Anti-dumping Proceedings: The Need to Look Beyond the Uruguay Round Results’.1 of ADA 53 Article 3. Journal of World Trade 28.54 The economic factors to be considered by the authorities includes: actual and potential decline in sales. On the other hand while determining the volume of the dumped imports.5. 5. the authorities must consider whether there has been significant undercutting of price due to dumped imports as compared with price of the like product of the importing member or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases. Mere existence of dumping is not sufficient to impose an anti-dumping duty. threat of material injury to a domestic industry or material retardation of the establishment of such an industry and shall be interpreted in accordance with the provisions of Article 3.9 to Article 3 states that the term “injury” shall. Pangratis & E. 51 For imposing such a duty. no. 50 Foot Note No. A successful anti-dumping investigation requires two steps.5 (1994):62 71 .
the importing country is not authorized to respond with anti-dumping duties unless it can be established that the imported goods have caused ‘material injury’ to the competing industry of the like product in the importing country. market share.55 But this list is not exhaustive.7 and 3. but impact of ‘injury’ to the industry as a whole.5 of ADA 72 . Such a possibility of misuse must not arise in my opinion. Other relevant factors include the volume and price of imports not sold at dumped prices. in the case of dumped goods.5 also prohibits the national authorities from attributing the injury caused by these factors to the dumped goods. The investigating authorities must also examine any known factors other than the dumped imports that are injuring the domestic industry at the same time.4 of ADA Article 3. In the said context it is submitted that in determination of injury.6 deals with assessment of the domestic production of the like product and product line exception and Article 3. Article 3.8 of ADA deal with the determination of threat of material injury. 55 56 Article 3. Rather. wages. and actual and potential negative effects on cash flow. employment.56 Article 3. and none of these factors necessarily give decisive guidance. what constitutes ‘material’ remains a moot question. inventories. the authority investigates whether the critical situation of the domestic industry can be improved by introducing an anti-dumping duty. factors affecting domestic prices. productivity. the magnitude of margin of dumping. return on investment and utilization capacity. fluctuation in demand or changes in patterns of consumption. growth and the ability to raise capital or investments. The injury to a single firm is not sufficient. developments in technology and the export performance and productivity of the domestic industry. The developing countries have noted that the lack of adequate published documents on injury determinations in certain countries and products makes it difficult to understand how the causal requirement is treated. The objective behind this provision is that.output. National authorities usually do not construe injury analysis at the very beginning of imports.
Thus.000 tonnes of a total production of 100. 73 .000 tonnes of hot-rolled steel from one unit of a certain company is consumed by another unit of the same company in the production of hot-rolled pipes.60 The Panel held that the US Tariff Act was not inconsistent with Articles 3. 3.S. and the exclusion clause always leads to findings of injury to the domestic industry. section 771 (7) (c) (iv) of the Tariff Act of 1930.4. or the subsidiary itself.2. 1930 as amended by 19 U. 3.AntiDumping Measures on Certain Hot-Rolled Steel Products from Japan.1 of the ADA. 28th Feb. 60 Japan also argued that the captive production provision forces the USITC to ignore the economic reality of the importance of the captive market and volume of domestic shipments shrinks due to the authority’s focus on merchant instead of examining the industry as a whole. 3. Threat of Material Injury Test and Causal Determination of Injury in the United States ‘Captive Production’ and In most manufacturing industries. The quantity of imports is a vital factor in injury determination. United States. 2001. The said issue was raised in the dispute between the US and Japan in.1. 59 WT/DS 184/R.C. It is submitted that the exclusion of captive production from total domestic production of the product in question reduces the total production and consequently increases the percentage of imports quantities.5. for the calculation of the dumping margin.1 Issues in determination of Injury. 58 Section 771(7) (c) (iv) Tariff Act. exaggerates the market share of imports relative to all domestic production. the products are consumed by their own units ‘Positive Evidence’ Provision for the production of another product.1 of the ADA. 30.57 US law58 provides that the International Trade Commission (ITC) should not consider the portion of production consumed by the company.2. the production of a product by consumption of a significant portion of a similar product produced by a domestic company is known as captive production. thus was inconsistent with Article 3.5. the Panel observed that ‘the requirement to make a determination of injury to the domestic industry read in the light of the definition of the domestic industry of Article 4.59 Japan alleged that the captive production provision of the US law. 3.2 of the ADA. The Panel reasoned their findings on the basis of the fact that the US ‘captive production’ provision provides that USITC ‘shall focus primarily’ on a particular segment of the ‘domestic industry’ when determining market share and the factors affecting financial performance as a part of the injury determination.2 Link 5. implies that the injury must be analyzed with regard to domestic 57 For example.6 and 4. In examining the ‘captive production’ provision.
However. and ignores the fact that a significant part of the domestic industry was protected from the effects of allegedly dumped imports. The AB actually opined that the ITC must apply the captive production provision without ignoring the captive segment of the domestic industry. and it thus helped to evaluate relevant factors in an ‘objective manner’ under Article 3. But the Appellate Body reversed the Panel’s findings that the US had acted consistently with Articles 3.producer as a whole of the like product or to those whose collective output constitutes a major proportion of the total domestic production of those products’. as it allowed the ITC to examine both the merchant market and the captive market. Therefore.2 Effect of Volume of Dumped Imports in Determination of Injury Another issue that concerns the injury determination is the effect of dumped imports on the domestic market in determination of injury. The Panel on the basis of the above reasoning held that the US statute does not require an exclusive focus on the merchant market when considering market share and industry performance and further held that the said provision does not require a determination of injury based solely on consideration of the merchant market. India was of view that 74 . Many times members exclude some parts of downstream industries. Japan appealed from the findings of the Panel before the AB and argued that the captive production provision prevents a balanced assessment of the situation of the domestic industry as a whole. The US is using this provision as an analytical tool for ‘comparative analysis’ of domestic and captive markets for finding of injury. along with the market as a whole. the direct implication of the decision may be that it legalized the practice of the ‘captive production’ provision. 5. The conflicting interpretations of the Panel and the AB emphasize the need for a clear and objective provision prohibiting the selective examination of one part of the domestic industry in injury determinations.1 and 3.4 of the ADA. the Appellate Body upheld the Panel’s finding that the captive production provision in the US statute was not inconsistent as such with Article 3. there is a need for removal of the provision in the US statute supporting the exclusion of captive production in injury determination. In conclusion.2. captive production or consumption and include non-dumped imports to the injury calculation for finding dumping.
H-Beams61 dispute was of view that the term ‘positive evidence’ means ‘formally or explicitly stated. disinterested’. irrespective of the fact that such evidence is confidential or not. data. unquestionable (positive proof)’ and the term ‘objective’ is defined as ‘concerned with outward things or events. However. The Panel was of the view that if a particular producer/exporter has been found not dumping. 3. the causation between the two. and must involve an objective examination of the volume of dumped imports.Articles 3. it is pertinent to note that the GATT report in the US-Cement from Mexico dispute was not 61 62 WT/DS122/R. The Panel in Thailand.1 requires that the reasoning supporting the determination be ‘formally or explicitly stated’ in documents in the record of the AD investigation to which interested parties have access. Resolving the said issue in Argentina-Definitive Anti-dumping Duties on Poultry from Brazil where Brazil alleged that CNCE violated Articles 3. their effect on the domestic prices in the importing member market and their consequent impact on the domestic industry. The question of positive evidence was raised in the US-Cement from Mexico dispute before the GATT Panel. The AB found that the scope of the evidence that can be examined under Article 3. and also the lack of positive evidence. 2000 The textual reference to ‘positive evidence’ and the requirement of an ‘objective examination’ in Article 3.2. then there is no basis for including that producer/exporter’s imports in the category of ‘dumped imports’. opinions.2 do not permit determination of injury to be based on imports from producers for which there is ‘no evidence of dumping’. This was done as a means to understanding the determination of dumping.2 and 3.1. definite.2.5 by including the effects of non-dumped imports in its injury analysis. 28th September. 3. calculation methodology and other such matters. injury. The Panel in this case explored the technical details in the decision-making process. at least from the time of the final determination. 5. 75 .1 of ADA requires that the determination of material injury must be based upon positive evidence.1 depends on the ‘nature’ of the evidence.62 The Appellate Body in the same case held that the anti-dumping authorities while determining injury need not base its determination solely upon the evidence disclosed to interested parties during investigation. presenting facts uncolored by feelings.1 and 3.3 ‘Positive Evidence’ and ‘Objective Examination’ in Injury Determination Article 3. or personal bias.
on a country-by-country basis.Anti-dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil.3 with respect to the volume of imports from individual countries is that the volume of such imports must not be negligible.2.3 expressly requires an investigating authority to examine country-specific volumes. as a pre-condition to ‘cumulative assessment’ under Article 3.3.64 But it clarified that the text of this provision contains no additional requirement for the authorities to consider.63 the Panel concluded that a country-by-country analysis of volume and prices under Article 3. whether there has been a significant increase in country-by-country imports.2 of the ADA are not a precondition to cumulative assessment under Article 3. The obligatory condition contained in Article 3. but not in the manner suggested by Brazil. their effects may be assessed cumulatively for injury purposes as long as they do not qualify for de minimis or negligibility thresholds. WT/DS219/AB/R.2 requires investigating authorities to consider imports. 5. 22nd July. It was of view that Article 3.4 ‘Cumulation’ under Article 3. AB refusing the said contention of Brazil held that though Article 3. injury determination is common to all defendant firms. before making a cumulative assessment.3 of the ADA provides that where imports from several countries are simultaneously subject to anti-dumping investigations. which is done individually for each defendant firm. Unlike the dumping margin determination. But the said view is disadvantageous from the point of view of developing countries as empirical analysis also shows that Cumulation across many small exporters leads to an increased probabilities of affirmative determinations in injury determinations. In European Communities. 76 . 2003. Cumulation has also been unfair to small exporters whose exports would 63 64 EU-Brazil Cast Iron Dispute.3. Brazil appealed from the findings of the Panel. due to the objections from US.3. and was of the view that Article 3. but for purposes of determining whether the ‘volume of imports from each country is negligible’.3 contains a condition requiring attention to the ‘volume’ of imports. The said GATT report needs to be taken into consideration for the effective working of the ADA provisions.adopted. The Panel concluded that there were no mandatory obligations relating to the assessment of import volumes in Article 3.3 The principle of Cumulation in Article 3.
the Panel considered whether the list of factors in Article 3.4 strongly suggests that the evaluation of listed factors in the provision was properly interpreted as mandatory in all cases. These are: (1) Proof of dumping. causing injury within the meaning of this Agreement. members have been reluctant to consider it precedent which leads to finding of inflated injury and dumping margins.2. Article 3.5 of the ADA: Causal Link In order to impose an anti-dumping duty.not have caused injury but for having been cumulated with exports of other exporters. through the effects of dumping.4 by failing to consider ‘all’ injury factors listed in Article 3. due to the absence of a provision in the ADA or in the DSU binding the decision on all questions of law decided by the Panel and the AB.4 In determining whether a material injury exists. The national antidumping authorities during investigation must make specific findings with respect to all factors listed in Article 3.4 is illustrative or mandatory.4. In the EC-India Bed Linen dispute.5 of the ADA.5 states: “It must be demonstrated that the dumped imports are. The ordinary meaning of the provision is that the examination of the impact of dumped imports must include an evaluation of all the 15 listed factors in Article 3. and (3) A causal link between the dumped imports and injury.4. 5. 5. The causation provision is provided for in Article 3. The Panel was of the view that the use of phrase ‘shall include’ in Article 3.5 Mandatory or Illustrative Nature of the List of ‘Economic Factors’ under Article 3. at least three criteria should be satisfied. But the despite the Panel decision.65 The 65 Article 3. (2) Material injury or threat of material injury to the domestic industry.6 Article 3. The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based 77 . This occurs frequently.4. as set forth in paragraphs 2 and 4. The Panel in EC-Bed Linen found that the EC acted inconsistently with Article 3.4 requires national antidumping authorities to consider a number of economic factors.2.
demonstration of the causal link must be based on an examination presented to the authorities of all relevant evidence including any known factors other than dumped imports which also may be injuring the industry. 2001 78 .5 prohibits authorities from attributing the injury caused by other factors to dumped imports. adopted on 19th January. Japan submitted that the USITC had ‘failed to ensure’ that injury caused by other factors was not attributed to dumped imports. 3. without attributing injuries caused by other factors to the dumped imports.Wheat Gluten67 decision where the Appellate Body made it clear that an antidumping investigating authority must ensure that when injury caused by alternative factors is subtracted. Japan alleged that the USITC’s injury causation analysis was inconsistent with Articles 3.5 of the ADA to demonstrate a causal relationship between dumped imports and material injury.3 of ADA is only directed to examine and ensure that these factors do not break the causal link that appears to exist between the dumped imports and material injury. the Panel concluded that the USITC’s analysis of the effects of the dumped imports on the domestic industry is consistent with the requirement of Article 3.4 and 3. adopted on 28th February. The issue of causation and non-attribution was raised in the United States-Anti-dumping Measures on Certain Hot-Rolled Steel Products from Japan66 dispute. Article 3. Japan challenged the Panel finding before the Appellate Body on the ground of failure by US to fulfill the causation and non-attribution requirement as laid down in Article 3.1. the remaining injury will still rise to the level of ‘material injury’. Japan cited the Appellate Body decision in the United States. WT/DS166/AB/R. and the injuries caused by these factors other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include.5. 66 Panel Report. contraction in demand or changes in the pattern of consumption. WT/DS184/R. The Panel refusing the contention made by Japan held that the authorities under Article 3. trade restrictive practices of and competition between the foreign and domestic producers. The authorities shall also examine any known factors other than the dumped imports.5 of the ADA. developments in technology and the export performance and productivity of the domestic industry’. Japan contended before the Appellate Body that USITC had failed to separate on an examination of all relevant evidence before the authorities. the volume and prices of imports not sold at dumping prices. 2001 67 AB Report. Accordingly. inter alia. which at the same time are injuring the domestic industry.
establishing a causal connection between dumping and injury to the industry is extremely difficult.7 Interpretation of Article 3. The authorities must be able to conclude that the injury they ascribed to dumped imports is actually caused by those imports. Regardless of which test is applied.2. The AB observed that the assessment under Article 3. the investigating authorities will have no rational basis to conclude that the dumped imports are indeed causing injury. The AB further observed that if the injurious effect are not appropriately separated and distinguished from the injurious effects of other factors.5 of ADA by a finding that this language does not require the investigating authorities to separate and distinguish injurious effects of other known causal factors from injurious effects of dumped imports. or to assess properly their influence or effect on the domestic industry.and distinguish other factors. the AB held that the Panel erred in its interpretation of nonattribution language in Article 3. In conclusion. then the authorities will be unable to do so. This is mainly on account of infinite factors and indicators that can be taken into consideration for the injury determination. but is threatened with material injury that will develop into 79 . in the absence of such separation and distinction of the different injurious effects. Thus. The Panel and Appellate Body decisions has found US anti-dumping laws to be inconsistent with Article 3. 5.7 of the ADA: ‘Threat of Material Injury’ Threat of injury may occur when a domestic industry alleges that it is not yet suffering material injury. The complexity of making a causal link and the structure of the present rules currently applicable is advantageous to the complainants.5 involves separating and distinguishing the injurious effect of other factors from the reason for injury. rather than by other factors.5 of ADA which is matter of concern and hence needs to addressed for effective and fair use of anti-dumping provision.
It is stated that the list of factors must be defined for determination of threat of material injury. In evaluating the existence of a threat of injury. or the existence and magnitude of inventories of the product are being investigated. The goal of the ADA is to serve as an effective instrument in controlling unfair competition in the international market. The AB considered the material injury test in Mexico. consequently national laws may include other factors not mentioned in the ADA. Further. the terms ‘threat of material injury’ and ‘material retardation’ are also not defined in ADA. investigating authorities should consider. 80 . in their present state. not merely on allegation. foreign exporters’ excess capacity or substantially increasing capacity indicates the likelihood of increased exports to the importing country’s market.Anti-dumping Investigation of High fructose Corn Syrup (HFCS) from the United States.7 of ADA provides strict rules for its determination.material injury unless anti-dumping measures are taken. The list of the factors to be considered is not exhaustive. Determination of threat must be based on facts. Threat of material injury investigations are always based on speculation and Article 3. among other factors whether: dumped imports have substantially increased. The above analysis of the injury provision reveals that. The ADA should be amended to facilitate the playing its intended role. the existing provisions are used for domestic industry protectionism.Anti-dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States (WT/DS132/R). conjuncture or remote possibility. the protecting of competitive markets all over the world. imports are entering at prices that would have a significant depressing or suppressing effect on domestic prices and would most likely increase demand for further imports.68 In this case Mexico found 68 Mexico .
2. The decision whether to define ‘industry’ broadly or narrowly often has a significant effect on the outcome of the investigation. This decision makes it clear that countries are in a difficult position to prove the complex requirements of the ADA. even where they find that increased imports threaten their domestic industry. 5. exceptions to this principle are provided in footnote 11 to Clause (1) of Article 4(1) of the ADA. or are themselves importing the dumped products. The AB also failed to give specific guidelines for imposing antidumping duties in the case of a “threat of material injury” to the domestic industry.8 Definition of ‘Domestic Industry’ One of the crucial phases in the whole anti-dumping investigation is identification and determination of injury to the ‘domestic industry’. Under the ADA. the US alleged that the Panel’s recommendations were not implemented and the Mexico’s actions were not consistent with the earlier recommendations of the AB. So it is necessary to define what constitutes threat of material injury in the ADA itself. However. The original Panel held that Mexico’s finding was inconsistent with the ADA. Such a conclusion is debatable and it would be difficult to predict future consequences in such circumstances. When domestic producers are related to exporters or importers. but Mexico failed to prove that such imports are “clearly foreseen and imminent”. The object of the anti-dumping law itself is to protect the domestic industry from injurious dumping. The AB found the increased amount of imports into Mexico. Exclusions are discretionary decisions of the anti81 . The Panel in this case held that Mexico’s supposition of material injury was not supported by evidence. and this was not appealed by Mexico.that HFCS import from the US threatened material injury to Mexico’s sugar industry. Article 4. or the whole collective output of the products that constitutes a ‘major proportion’ of the total domestic production.1 of the ADA defines domestic industry as ‘the domestic producers as a whole of the like products’. they may be excluded from the definition of the domestic industry. The ADA has not defined the term ‘major proportion’.
In practice. PROCEDURAL ISSUES IN ANTI-DUMPING CASES 6. national legislations have been loosely interpreted to include even individual petitioners within the meaning of the term ‘domestic industry’.dumping authorities of the importing country. 6.1 Overview of the Procedural Issues This is chapter deals with procedural issues starting from initiation of anti-dumping 82 . and the ADA does not provide any further guidelines.
1993 83 . Article 5. Article 17 deals with Standard of Review under Anti-dumping Agreement. Article 9 which deals with Imposition and Collection of Duties. Article 5. It also held that the ‘quantum and quality of evidence required at the time 69 BISD 40S/358. and as a result. many developing countries are subjected to repeated anti-dumping investigations on the same product.3 is to establish a balance between the competing interests of domestic industry in the importing country and the interest of the exporting country in avoiding investigations.3 of the ADA. different national governments have adopted different national procedures. the problem of back-to-back investigation. and a causal link between dumping and injury.investigations to the imposition and collection of anti-dumping duties raised by WTO Members which are: Article 5 which deals with initiation and subsequent investigation along with discussion on the adequacy of evidence required to initiate the investigation.1 of ADA requires that an application be filed by or on behalf of the domestic industry and the said application must include relevant evidence of dumping. However.6. The silence as to what kind of evidence is needed to lodge a complaint or to justify the initiation of an investigation is potentially critical omission in the ADA. Article 15 deals with Special and Differential Treatment for developing country Members when considering the application of anti-dumping measures. ADA does not specify the details of the procedures to be adopted. Article 11 which deals with Sunset Review of Anti-dumping duties and Price Undertakings. adopted 27th Oct. Article 6 which sets forth the procedural and evidentiary requirements for an anti-dumping initiation with special emphasis on use of ‘facts available’ provision. Article 5. 6.1 further stipulates that anti-dumping investigations are not to be initiated unless the authorities determine the degree of support for or opposition to the application.2 Initiation and Subsequent Investigation of Anti-dumping Cases Except as provided for in Article 5. Due to these ambiguities in Article 5. as expressed by domestic producers of the ‘like product’ or on behalf of the domestic industry.3 imposes an obligation on the importing country to examine the adequacy of evidence before the commencement of the investigation. injury or threat of injury. In United StatesMeasures Affecting Softwood Lumber from Canada69 the Panel observed that the purpose of Article 5.
or final. As to the de minimis provision contained in Article 5. However the difference in the provision between the words ‘prompt’ and ‘immediate’ in Article 5. It should be increased to 7% and 15%. actual or potential is negligible. As to the negligible injury requirement in the context of the liberalization of most of the economies of the world. and with more and more developing countries entering into the untapped market. The volume of dumped imports shall normally be regarded as negligible if the volume of imports from a particular country account for less than 3% of the imports of ‘like products’ in the importing Member.8 possibly reflects a recognition by the drafters that findings of the de minimis dumping and negligible injury can often only be made when the investigation is well advanced. But Article 5. The Appellate Body however in its subsequent decisions avoided answering the issue of ‘adequacy of evidence’. Article 5. respectively.of initiation is less than that required for a preliminary. determination of dumping. According to the final interpretation. that is. The circumstances under which the investigation shall be terminated is when the dumping margin is de minimis. if the authorities find that there is insufficient evidence of either dumping or injury to justify the proceedings. in the cases of dumped imports from single country and collectively from different countries. the margin of dumping is less than 2% and the injury or the volume of dumped imports.8 of ADA it submitted that the said provision contains certain loopholes as well.8 provides that an application shall be rejected and an investigation terminated promptly.8 of ADA does not provide a time limit within which the determination has to be made as to whether the volume of dumped imports is negligible or within the prescribed threshold. On the other hand as to the de minimis dumping margin it is submitted that the said standard is concerned with preventing 84 . Article 5.3 requires investigating authorities to determine whether there is sufficient evidence to justify initiation. injury and causation made after investigation’. The Panel or the AB neither define what constitutes ‘sufficient evidence’ or the quantum of evidence for initiating an investigation nor gave any decisive guidelines to fix the problem. the de minimis level of 3% and cumulative 7% is too small.
6. This is important when considering that initiation of an anti-dumping investigation is ‘disastrous’ and harassing to an exporter who would never venture again to export the product to the same market.6 of the ADA: ‘Permissible Interpretations’ The issue of standard of review arises where a Panel is examining the domestic law of a Member as interpreted by domestic authorities and tribunals to determine whether the law or the actions of those and the tribunals. Hence. The crucial question is how much difference the Panels can show to the findings of the national authorities when reviewing their determinations. providing a differential standard of review for anti-dumping cases. No equivalent Article exists in any of the other multilateral or plurilateral agreements covered by the WTO Agreements.3. Standard of review refers to the degree to which a Panel has power to substitute its judgment for that of the national authorities imposing the trade remedy measure. In addition to the above no investigation should be initiated for a period of 365 days from the finalization of a previous investigation for the same product resulting in non-imposition of duties.1 Article 17.6 of the ADA. or both are in compliance with 85 .3 Standard of Review under the Anti-dumping Agreement The standard of review provision is an important principle in the Anti-dumping Agreement (ADA) that is crucial to developing countries. The standard of review provision is provided for in Article 17. Finally from the developing country’s perspective it is been observed that the impact of anti-dumping investigations and resulting duties adversely affect the developing country exports.frivolous cases when the economic impact is negligible.6 is a unique provision.6 is the only exception to Article 11 of DSU which requires the Panels to consider an ‘objective assessment’ of the facts and law related to overall consideration of the case. Article 17. an investigation against developing-country exporters should be initiated only if it has the support of 50% of the domestic industry of the importing developed country. 6. The 2% de minimis level must be raised to 5% to reduce the harassment of anti-dumping actions. Article 17.
Article 17. The second part of Article 17..e. the objective of the Vienna Convention is to give a single meaning to the treaty text. nor is there any guidance on how to read the first and second sentences of Article 17. even though the Panel might have reached a different conclusion.6 reiterates that the Panels should rely upon the customary rules of interpretation. i. 71 In essence. 86 .6(ii) needs to be clarified in future negotiations. the Panel shall find the authorities’ measure to be in conformity with the Agreement and WTO consistent if it rests upon one of those permissible interpretations. It states: “Where the Panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation. Articles 31 and 32 if the Vienna Convention stipulate that when the treaty text is ‘ambiguous or obscure’. This is mainly because the first part refers to Articles 31 and 32 of the Vienna Convention and these two Articles do not seem to foresee the possibility of co-existing permissible interpretations. It is not clear in the light of the Vienna Convention whether or how a WTO Panel could over reach the conclusion that provisions of an agreement admit more than one interpretation.6(ii) of the ADA is inconsistent with the first sentence. the Panel must give considerable weightage to the domestic investigating agency’s determinations. ‘the ordinary meaning’ of the treaty should be given effect. the evaluation shall not be overturned.6 of the ADA stipulates that ‘if the establishment of the facts was proper and the evaluation was unbiased and objective. it may be towards the nationalization of international obligations.provisions of the covered agreements. The existing disparity between the first and the second sentences of Article 17.”71 Critics have noted that the second sentence of Article 17.6(ii) of the ADA is a constraint on the powers of the Panel.6(ii) so as to harmonize both obligations. From the above analysis it can be said that there are no specific guidelines as to which provision admits of multiple permissible interpretations.70 The first sentence of Article 17. not the multiple permissible interpretations available in the second part of Article 17.6(ii). 70 It means that this provision allows the Panel to show deference towards the determination of the national authority’s decisions. Rather.
The interpretation of Article 3.6 will prevail over the other. The Appellate Body answering to the question as to whether the general obligation under Article 11 of the DSU or the special obligations under Article 17. It is clear from the recent jurisprudence that the AB has not dared to deliver any interpretation in favour of the developed world with regard to this provision. the AB observed that Article 11 requires the Panel to make an ‘objective assessment of the matter’ as a whole. The AB in this case has taken a middle path and slightly deviated from the well known maxim lex specialis generalia specialibus non derogant72.6 of the ADA were considered by the AB in Thailand’s Anti-dumping Duties on Angles. This is the principle of lex specialis. a special law will prevail over the general law.2 Article 11 of DSU and Article 17. both factual and legal.6 of the ADA. and to fill in the gaps through evolving jurisprudence. 73 Panel Report.73 The Panel concluded that 72 In the International Law of Treaties there is a great deal of support for the principle that more specific treaties or provisions are generally take precedence over more general provisions dealing with the subject matter.6. But the AB took the path of beneficial interpretation and held that the special dispute settlement rules in the ADA and the DSU provisions together create a ‘comprehensive. It further held that it is not that the former replaces the more general rules in the DSU unless there is a conflict between Article 11 of the DSU and Article 17. According to this maxim. integrated dispute settlement system’. It is the duty of the AB to interpret the ADA in accordance with the needs of Members. 6.Alloy Steel and H-Beams from Poland (Panel Report).3. Shapers and Sections of Iron or NonAlloy Steel and H-Beams from Poland (Panel Report). 28 September 2000 87 .3.6 of the ADA Article 11 of the DSU sets a uniform standard of review for Panels regarding all covered agreements under the umbrella of WTO. Article 11 imposes upon Panels a comprehensive obligation to make an ‘objective assessment of the matter’. this obligation embraces all aspects of a Panel’s examination of the ‘matter’. WT/DS 122/R. Shapers and Sections of Iron or Non. The study of various Appellate Body decisions it is very difficult to advance any definitive opinion on what should be the right standard of review in ADA cases.3 Thailand Anti-dumping Duties on Angles.1 and 17.
factors affecting domestic prices. or discernible by the parties to an anti-dumping investigation prior to the final determination. the parties to an anti-dumping investigation at the time of the final determination. the Panel did not err in its application of the standard of review under Article 17.1 of the ADA. growth and the ability to raise capital or investments. These features include: actual and potential decline in sales. profits. actual and potential negative effects on cash flow. The AB opined that the ordinary meaning of the words “unbiased” and “objective” also appears to have no logical link to whether those facts are disclosed to or are discernible by. output. Article 17. the magnitude of the margin of dumping. In conclusion the AB observed that Article 17.4 of the ADA is mandatory before imposing anti-dumping duties. productivity. From the perspective of the developing countries this conclusion is important because. market share. The Panel observed that the factual basis relied upon by the authorities should be discernible from other documents that were available to the interested parties and their counsel in the course of investigation and at the time of the final determination.5 and 17. return of investments. therefore. or discernible by. The AB was of the view that based on the ordinary meaning. wages.4 requires a mandatory evaluation of all the factors listed in that provision. 88 . investment.Thailand’s imposition of anti-dumping duties on H-beams originating from Poland was inconsistent with Article 3.6 do not prevent a Panel from examining facts that were not disclosed to. or utilization of capacity.6(ii) of the Anti-dumping Agreement. the interested parties at the time of the final determination. and that. The AB was of the view that the obligations under Articles 3.1 apply to all injury determinations undertaken by all members. the word “proper” meant “accurate” or “correct” which appeared to have no logical link to whether those facts are disclosed to. It concluded that the Panel was correct in its interpretation that Article 3.5 and 17. for the first time the AB held that the evaluation of all factors mentioned in Article 3.6 apply only when an injury determination was to be examined by a WTO Panel.
‘otherwise does not provide’ necessary information within a reasonable period. India also challenged the Panel’s finding that the EC was not obligated to look at available information outside the sample.Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India case. In this case also it deliberately left unanswered the question of whether the action of the EC was consistent with the standard of review provision in the ADA. as this was not consistent with the standard of review set out in Article 17. The AB pointed out that. India argued that the failure to take into account the available information of an exporting producer included in the reserve sample for the calculation of normal value was not an “unbiased and objective” investigation. Bombay Dyeing. rather it is bound to increase confusion among the Members.6(i) of the ADA. as a sample representing the whole domestic industry. The AB also discussed the standard of review provision in European Communities. 74 In this dispute the EC selected a single company.Where in the past the investigating agencies undermined these factors while examining the impact of the dumped imports on the domestic industry. This “ostrich policy” of the AB will not resolve the problems or settle an issue in question.6(i). 6. Other additional producers were ignored by the EC. there was no need to examine whether the Panel in making the finding acted inconsistently with Article 17. or 74 WT/DS 141/AB/R 89 . It is a well-recognized principle that every dispute settlement body has to answer all the issues raised by the parties. In almost all the disputes we can see this “escapism” on the part of the AB to deal with the issue of standard of review in the ADA. now it is made mandatory for the countries to consider these economic factors for the determination of injury. Therefore a mandatory provision should be included for the functioning of the Panel and the AB to answer all the issues raised by the parties.8 of the ADA authorizes the use of the ‘facts available’ provision if an interested party ‘refuses access to’ necessary information within a reasonable period. and calculated the normal value.4 Use of ‘Facts Available’ Provision in Anti-dumping Cases Article 6.
The same calculations cannot be used against the respondent co-operating in the investigation and the Member not cooperating with the investigation. There has also been a controversy on how to apply the ‘best information’ available in cases where there are multiple defendants. Further the rules under Article 6. in many disputes. However.‘significantly impedes the investigation’. covered in the same investigation. In such a case. the investigating authority may make determinations on the basis of the facts available. or is this only when ‘adverse inferences’ are used? How might an administrative authority create incentive for cooperation by responding parties if adverse ‘facts available’ is not an option? What source of information should be used by Members when exporters do not co-operate? 90 . The following questions were raised by US to the Rules Negotiating Group of WTO: On the subject of ‘facts available’. The objective of the facts available provision is to balance the requirement to complete the appropriate calculation of the margin of dumping with the requirement to complete an anti-dumping proceeding within the time period prescribed. affirmative determinations are made on the basis of ‘facts available’ in spite of the fact that respondents have acted to the best of their ability and been co-operative in the anti-dumping investigations. Abuse of the provision needs to be prevented in addition to a strict limitation upon the application of adverse facts available. whether in the same country or in different countries. should more ‘stringent rules’ be developed for determining when the ‘facts available’ provision should be used in an investigation? Is the submission referring to the general use of ‘facts available’.8 and Annex II of the ADA are not clear enough as to the circumstances under which the facts available may be applied and also with regard to the standard.
The US argued that Article 6. necessary information within a reasonable period or significantly impedes the investigation.1 United States . or otherwise does not provide. who is grounded in hyperbolic fantasy. Down in the Dumps.4.S.C). second part of the first paragraph stipulated that the authorities should also ensure that the party is aware that if information is not supplied within a reasonable time. The Panel held that the United States Department of Commerce (USDOC) had acted inconsistently with Article 6. 75 WT/DS184/R. sec.1. the authorities will be free to make determinations on the basis of the facts available.8 of the ADA provides that: In the cases in which any interested party refuses access to.1. preliminary and final determinations. Edts.Anti-Dumping measures on Certain Hot-rolled Steel Products from Japan75 The issue of interpretation of the “facts available” provision was raised in the case of United States-Anti-Dumping measures on Certain Hot-rolled Steel Products from Japan. Usually this calculation is based on the information supplied by the complainant. 77 19 U.A. 1677e(c).8 and Annex II paragraph 7 of the ADA.76 The US law77 stipulates in the absence of verified information supplied by the exporter. yield high dumping margins. 78 David Palmeter N. these where rejected for being submitted after the stipulated deadline. this provision is used as a coercive mechanism to extract information from the respondents. In the initial stage these companies expressed their inability to calculate weight conversion factors. Wahington.1 provided the deadline for the submission of questionnaire responses. Mostly. 78 Annex II. The provisions of Annex II shall be observed in the application of this paragraph. 6. D. The anti-dumping law: A legal and administrative non-tariff barrier. p. 70 91 . Litan.1 of the ADA provides minimum time periods for submitting the required information requested by the investigating authorities.These questions remain un-answered even after a decade of the world trading system being in place. USDOC will use the best information available in its place.C. may be made on the basis of the facts available. But later on when they submitted the information to USDOC. affirmative or negative. the two Japanese steel giant to reply to a long questionnaire regarding the weighted conversion factors. Article 6.. The US gave 87 days to Nippon Steel Corporation (NSC) and NKK. (The Brooking Institution. Richard Boltuck and Robert E. 76 Article 6.
1.1. According to the US. Annex II of the ADA made it clear that the parties must comply with at least three requirements: the information must be submitted within applicable deadlines. it must be variable.1. The AB on this point observed that. The U. After examining the requirement under the provision. 92 . So the AB was of the view that Article 6.1 of the ADA does not explicitly use the word “deadline” anywhere in the provision.S interpretation of the words “timely fashion” in paragraph 3 of Annex II as “deadline”. The AB rightly held that neither Article 6. The AB rejected the U. such an extension should be granted whenever practicable.” The main argument of the US was that the NSC and NKK submitted the questionnaire responses after the deadlines. The AB’s findings may be a relief to other countries that are facing investigations.1 of the ADA provides: Exporters or foreign producers receiving questionnaires used in an anti-dumping investigation shall be given at least 30 days for reply. and it must be usable by the authorities without undue difficulty.S also pointed out that Article 6. The AB clarified it as a “reasonable period” or a “reasonable time”. Due consideration should be given to any request for an extension of the 30-day period and.8 nor paragraph 1 of Annex II expressly addresses the question of the circumstances under which the authorities can reject the information submitted by the respondents. Developing countries in particular.179 of the ADA specifically provides for the use of pre-established deadlines for questionnaire responses. 79 Article 6. upon cause shown. “Article 6.including those contained in the application for the initiation of the investigation by the domestic industry. which the Panel ignored deliberately.1.1 indicated that the time limits imposed by the investigating authorities for responses to questionnaires were not necessarily absolute and immutable”.1 stipulated only the minimum time limits.1. the Panel observed that “an unbiased and objective investigating authority evaluating that evidence could not have reached the conclusion that NSC and NKK had failed to provide necessary information within a reasonable period. The second sentence of Article 6. are finding it difficult to submit long response sheets within a short span of time as stipulated by investigating authorities like the USDOC. and in appropriate cases these time limits can be extended.
93 . In the ADA. (v) whether acceptance of the information would compromise the ability of the investigating authorities to conduct the investigation expeditiously. 30. 80 Raj Krishna. The AB meticulously enumerated such circumstances as: (i) the nature and quantity of the information submitted. and therefore this provision must be amended in the next round of negotiations. (iv) whether other interested parties are likely to be prejudiced if the information is used. The EU-India Bed Linen proves that Article 15 does not have a more serious meaning.5 Special & Differential Treatment in Anti-dumping Agreement One of the most contentious issues faced in the multilateral trading system is the debate over differentiated rights and obligations between the developed and developing countries. The second part stipulates that ‘constructive remedies’ should be explored before imposing anti-dumping duties. It may be expected that these guidelines act as a benchmark in issuing questionnaires and fixing time frames for the submission of responses from the respondents. at p. Many writers criticize the provision as a methodology worked as “worst information available”. and (vi) the number of days by which the investigated exporter missed the applicable time-limit.The AB’s interpretation of “timely” provision as “reasonable time” will now depend upon the facts and circumstances of each case. Anti-dumping in law and practice. (iii) the verifiability of the information and the ease with which it can be used by the investigating authorities in making their determination. World Bank Working Papers (1995). Members of the WTO generally consider Article 15 as a dead letter in the form of political declaration. The first part of the agreement is in the form of advice to the developed country Members when imposing the anti-dumping duties. The WTO agreements contain at least 155 ‘special and differential treatment’ provisions. (ii) the difficulties encountered by an investigated exporter in obtaining the information. Article 15 is too general to implement. Ever since the Panel’s ruling in the Brazilian Cotton Yarn.80 6. The DSB jurisprudence interpreting Article 15 is not found on a realistic premise. such provisions are contained in Article 15.
the findings during the original investigation are made on the basis of the future collection of anti-dumping duties.3 establishes that the dumping may be assessed retrospectively or prospectively. any duty shall remain in force as long as. however.7 Issues relating to Duration and Review of Anti-dumping Duties Article 11 establishes rules for duration of anti-dumping duties. it is not mandatory to impose duties. though more expensive and time-consuming for all parties. All anti-dumping duties are collected on a non-discriminatory basis on imports from all sources that are found to be dumped and causing injury. the importer obtains a refund.6 Levy and Collection of Anti-dumping measures Under the ADA. The EU and other countries follow the prospective system.6. an investigation ends with an estimate of future liability. As to retrospective and prospective collection of duty. But it does not expressly address the issue if how to calculate the ceiling in a circumstance in which all margins are to be excluded from the calculation under the prohibitions. covering the preceding one-year period. except the sources from which price undertakings have been accepted. and the requirements for periodic review and continuance of anti-dumping duties. the actual amounts of anti-dumping duties are to be paid in the course of annual reviews. The AB in one of its decisions held that Article 9. If the actual duty is higher than the cash deposit rate. In this method. Under Article 11. Article 9. 6.4 contains lacuna. and to the extent necessary to counteract the dumping which is causing injury. The importer can request a review to reduce or eliminate the duty. it prohibits the use of certain margins in calculation of the ceiling for the ‘all others’ rate. even where all conditions for imposition of anti-dumping duties are met and total discretion is given to national authorities. including for the importing country authorities. and requires prompt refund of excess payments. The retrospective system is mainly used by the US.1. normally for five years following the publication of final determination. The retrospective system is more precise than the prospective system. Here. The continuation of duty may be reviewed by the authorities on their own initiative or after a lapse of a reasonable period of time or on the request of any 94 .
makes little sense. thus eliminating the injurious effect of dumping. A high threshold requirement for the petitioner that would effectively require conclusive proof of dumping and injury . to determine whether it is necessary for the duty to remain in place beyond five years in order to prevent the continuation or recurrence of dumping and injury. If the authorities decide that duty is no longer warranted after the review. There is a fine line between these two extremes. the number of investigations would surge because domestic producers would be able to use investigations as a tool to stifle foreign competition.3 stipulates that duties shall be terminated on a date not later than five years from its imposition. The burden lies on the administering authorities. 95 . 6. few complaints would result in an investigation and dumping would effectively go unchecked.the purpose of the investigation itself . Investigating authorities may not seek or accept undertakings unless they have first made affirmative preliminary determination of dumping and injury. Conversely. and duties not imposed. and not with the exporters. it shall be terminated forthwith. Article 11.interested party. An anti-dumping investigation may be suspended.8 The Debate over a Higher Threshold for Initiation of Investigations: The Issues of Standing and an Evidentiary Burden The threshold for initiating an antidumping investigation has a considerable effect on the number of investigations that a nation conducts. This five years sunset provision applies to price undertakings as well. if am exporter agrees to enter into a ‘price undertaking’ and revision of prices or to cease exports at dumped prices. Clearly. if there were no minimum filing requirements. if the threshold is extremely high. as well as the number of complaints that parties file. one that the main exporting and importing countries believe should be drawn in very different places.
and the draft provisions were then carried over into the Final Act (i. and a 96 . a request for an investigation must include sufficient evidence of dumping. whether workers or their representatives should have the ability to bring a petition. To date. Although the Tokyo Round Antidumping Code of 1979 included two provisions to clarify the standing issue. how fragmented industries should be treated. Coupled with the Members' polarized views. During the Uruguay Round. the standing issue has been the more contentious of the two. Such issues included whether countries should have an affirmative obligation to confirm the standing information asserted by a petitioner before commencing an investigation.. With regard to the evidentiary burden. the provisions lacked definition. the countries that are most often investigated cited an excessive number of frivolous cases and argued that the standing requirement should be clarified and made a mandatory prerequisite to any investigation. issue in the Uruguay Round. the issues of standing and an evidentiary burden comprise the threshold requirement of initiation. this ambiguity made standing a controversial.e. a cognizable injury under Article VI. and how silence on the part of particular industry members should be interpreted. The breakdown of positions among the WTO Members with respect to the appropriate threshold tends to depend on whether the Member is primarily an exporting or importing country. the WTO Agreement).As mentioned above. and therefore critical. During the Uruguay Round deliberations on antidumping. looser standards. The countries most often initiating investigations pushed for more discretion. how producers who are related to foreign producers under investigation or who are themselves importers should be treated. and a presumption of industry support in the standing determination. The Draft Final Act settled many of the previously unresolved threshold issues. what percentage of an industry must be represented when the entire industry is not the petitioner. many aspects of the standing issue were contentious.
while the issue of an evidentiary burden remained vague and untested. (5) workers are interested parties. in which this issue was determinative: United States . may be excluded from the standing determination.Antidumping Investigation Regarding Portland Cement from Mexico ("Portland Cement"). 6. and Guatemala . (2) the petition must be supported by domestic producers who account for at least twenty-five percent of the domestic production.1 GATT/WTO Case law considering sufficiency of Evidence Requirements in Antidumping Cases Cases before GATT or WTO dispute resolution panels on the issue of an evidentiary threshold are rare.Measures Affecting Softwood Lumber from Canada ("Softwood Lumber"). and producers who are themselves importers. however. The Portland Cement panel's reliance upon the Softwood Lumber case is illustrative of this tendency. the authorities must determine that the petition has been filed by or on behalf of the industry. (3) authorities may use sampling to determine industry positions in the case of fragmented industries.8.causal link between the dumping and injury. then. 97 . The Code also delineated specific standing requirements including the following: (1) prior to an investigation. and (6) silence on the part of particular industry members does not expressly count for or against initiation. These cases are indicative of the confusion that exists over the threshold evidentiary requirement in antidumping law and also of how the threshold that nations apply can influence the outcome of a case. the issue of standing was largely settled. There are two cases in particular. Although there is no stare decisis principle in effect in GATT/WTO law. precedents can still be influential. (4) producers who are related to foreign producers subject to investigation. As a result of the Uruguay Round.
the outcome should provide considerable insight into the way future panels may apply the standing requirements of the WTO Antidumping Code. 98 ." Portland Cement Portland Cement is the first antidumping dispute to be considered by either a WTO dispute settlement panel or the WTO Appellate Body. The panel attempted to pinpoint the amount of evidence that would be sufficient for the purposes of initiating an investigation. as with the GATT Antidumping Code.Softwood Lumber In Softwood Lumber. The relevant provisions are substantially similar in GATT antidumping and countervailing duty laws. The panel noted that. the countervailing duty agreement contained no interpretative guidance as to the meaning of "sufficient evidence. It placed the appropriate level somewhere between the amount and type of evidence that "would be required of that authority at the time of making a final determination" and "mere allegation or conjecture." The panel read the provision as reflecting a balance between the interest of the domestic industry in securing the initiation of an investigation and the interest of the exporting country in avoiding the potentially burdensome consequences of an investigation initiated on an unmeritorious basis. a GATT dispute resolution panel examined the threshold evidentiary requirements of the GATT countervailing duty agreement. injury. Despite the ruling of the Appellate Body that the matter was not properly before it. and causation. The dispositive provisions in both require that the petition be "on behalf of the industry affected" and include "sufficient evidence" regarding the existence of either a subsidy or dumping." The threshold that the panel finally settled on was "evidence that provides a reason to believe that a subsidy exists and that the domestic industry is injured as a result of subsidized imports.
On October 15, 1996, Mexico requested consultations with Guatemala regarding the initiation and conduct of Guatemala's antidumping investigation of grey portland cement from Cruz Azul, a Mexican Producer.81 In January, 1997, based on a petition from the sole Guatemalan cement producer, Guatemala's Ministry of Economy levied an antidumping duty of 89.54% on imports of grey portland cement from Cruz Azul. Mexico then requested the establishment of a panel on February 4, 1997. The Dispute Settlement Body established a panel on March 20, 1997. The panel, finding for Mexico, released its final report to the parties on May 18, 1998 and to the public on June 19, 1998. Guatemala appealed the decision on August 4, 1998. On November 2, 1998, the Appellate Body concluded that the dispute had not properly been before the Panel. As a result, it was unable to review the substantive findings of the Panel regarding Guatemala's initiation of the antidumping investigation. The Appellate Body did, however, leave open the possibility of Mexico "seeking consultations with Guatemala regarding the latter's imposition of definitive anti-dumping duties on imports of portland cement from Mexico and pursuing another dispute settlement complaint under the provisions of Article 17 of the Anti-dumping Agreement and of the DSU." As a result, the Panel Report does not carry the weight of other Panel Reports; it has, in effect, been overturned on procedural grounds. Nevertheless, it is dispositive of how future panels may evaluate the substantive issues relating to standing. Mexico cited a number of reasons indicating that Guatemala's evaluation of the facts was not objective. First, according to Guatemalan law, the Ministry must accept the validity of any evidence submitted to it by an applicant; the burden is on other interested parties to rebut this presumption. Second, the Ministry endeavored to bolster the application by requesting additional information from the applicant. Third, the application was insufficient. Finally, the investigating authority "assumed the role of applicant" and requested information from the customs agency to supplement the application, and then it initiated its investigation before receiving the information it
Anti-Dumping Investigation Regarding Portland Cement from Mexico: Request for Consultations by Mexico, WT/DS60/1 (Oct. 24, 1996). Consultation is required by Article 4 of the DSU as well as Article 17 of the WTO Antidumping Code.
sought. According to Mexico, the national authority was not justified in launching an investigation merely because the application contained all the information reasonably available to the applicant. Rather, it had an obligation to evaluate the accuracy and adequacy of the evidence submitted in the petition. With regard to Mexico's third claim, Mexico argued that the petitioner did not substantiate its claims of dumping with relevant evidence; that it did not submit any evidence regarding threat of injury to the Guatemalan industry, but instead made allegations and conjectures; and that it was able to supply only allegations as to the causal relationship between the alleged dumping and threat of injury. Guatemala made a number of arguments in response. It asserted that the quantity and quality of evidence necessary to justify the initiation of an investigation was significantly lower than that necessary to make an affirmative preliminary or final finding. It also argued that a national authority is justified in initiating an investigation based on an application that includes all of the information reasonably available to the applicant regarding each of the categories of information described in Article 5.2(i)-(iv). Guatemala thus suggested that Article 5.3's requirement that the authorities examine the accuracy and adequacy of the evidence to make a determination of its sufficiency is satisfied when the petition includes all the information reasonably available to the petitioner. The United States filed a third-party submission in the matter. Concerning the issue of sufficiency of evidence, the United States generally discussed the threshold level that a petitioner must meet to invoke an investigation properly. The United States cited Article 5.2 of the Antidumping Code, requiring that a petition contain more than "simple assertions, unsubstantiated by relevant evidence." The United States also affirmed the rule, set out in Article 5.2, requiring that the domestic industry's petition contain information "reasonably available" to it. The United States argued that the national authorities have a responsibility to examine the petition for accuracy and adequacy of evidence. Moreover, it advocated that the antidumping arena adopt the balancing test 100
used for countervailing duties in Softwood Lumber. The United States focused its analysis on "the adequacy of the information provided in the application and on which the initiation was based," which was dependent upon the meaning of the term "reasonably available to the applicant." The United States suggested that the standard was "intended to prevent the imposition of unreasonable information requirements that go beyond not only the normal capacity of a private entity to develop, but also beyond those of a particular applicant in a given case." As a result, confidential information such as pricing, cost of production, and profitability information would not be required, nor would information whose obtainment would be practically or legally prohibitive. Although the Antidumping Code contains no such requirement, the United States suggested that a petitioner claiming that critical data is unavailable should provide some explanation for its unavailability. If the authorities would expect the domestic industry to have access to such data, an explanation for its absence would be particularly essential, in the view of the United States. In the case at hand, the United States advised the panel to pursue the issue of the reasonable availability of data pertaining to the dumping and import volume, as Guatemalan authorities provided no justification for the meager amount of evidence submitted with the petition. The determination of the panel in fact hinged on this issue namely its interpretation of Article 5.3 of the Anti-dumping Code. The panel ultimately concluded that, considering the information available to the Guatemalan authorities at the time that they made the determination to initiate an investigation, there was not sufficient information regarding dumping, injury and causation to warrant the initiation of an investigation. The panel first looked at whether Article 5.3 imposes an additional obligation upon the national authority above the requirements set out in Article 5.2. The panel determined that compliance with the requirements of Article 5.2 is not determinative of 101
2 and 5. injury. the investigating authority would be precluded from initiating an investigation. According to the panel. as well as what-ever information is reasonably available to the applicant regarding the factors in Article 5. respectively.'" The Portland Cement panel thus adopted the balancing test set out in the Softwood Lumber panel report.whether there is sufficient evidence to justify initiation. The panel described the further requisite examination of the evidence and information in the application as follows: "If the investigating authority were to determine that the evidence and information in the application was not accurate. and the causal link between the two.8.3.3 as imposing separate obligations on the applicant and the national authority.3 that is determinative of the sufficiency of an application." The panel also considered relevant Article 5. the panel looked to the purpose of the initiation requirements in general. which states." For further guidance in interpreting Article 5. or that it was not adequate to support a conclusion that there was sufficient evidence to justify initiation of an investigation. it found that it is the obligation inherent in Article 5.2(i)-(iv). The panel interpreted the requirements in Articles 5. On the contrary. the investigating authority's obligation is invoked after it has determined that the application contains evidence on dumping.3 advocated by Guatemala "would undermine the balancing of competing interests in initiation and non-initiation established in Article 5. the panel found that the interpretation of Article 5. which it determined is to establish a balance "between the competing interests of "the import competing domestic industry in the importing country in securing the initiation of an investigation and the interest of the exporting country in avoiding the potentially burdensome consequences of an investigation initiated on an unmeritorious basis. Considering the requirements in this context. "An application under paragraph 1 shall be rejected and an investigation terminated promptly as soon as the authorities concerned are satisfied that there is not sufficient evidence of either 102 .
the quantum and quality of the evidence required for the Guatemalan initiation determination was less than that required for a preliminary or final determination of dumping. contrary to Guatemala's arguments. injury or the causal link. It said. For example.8. with respect to evidence of dumping. Nonetheless.dumping or of injury to justify proceeding with the case." The panel also agreed with Guatemala with regard to the amount of evidence and information required for a determination to investigate allegations raised in an application. The panel made it clear that the Antidumping Code does not contain a prohibition against the initiation of an investigation in situations in which sufficient evidence is not reasonably available to the applicant. According to the panel. the panel made clear that the substantive provisions of Articles 2 and 3 of the Antidumping Code were relevant to the initiation determination insofar as they set out the elements of a calculation of dumping and injury respectively. decided that the provision implied that an investigation may be initiated only if the application contains sufficient evidence of dumping and injury. "There is nothing in this Agreement to prevent an investigating authority from seeking evidence and information on its own." Guatemala argued that the provision did not apply to the initial determination of whether to initiate an investigation but. it did not accept Mexico's argument that the Guatemalan authorities had acted inappropriately by independently seeking information to supplement the application." According to the panel: Article 5. applied only after the investigation had begun.3. that would allow any gaps in the evidence set forth in the application to be filled. rather. the panel was clear that "an investigating authority may not ignore the provisions of Article 2 of the Antidumping Code. While the panel agreed with Mexico's arguments regarding Article 5. The panel focusing particularly on the "as soon as" language of Article 5.2 of the Agreement requires an application to include evidence of 103 .
an unbiased and objective investigating authority could properly determine that there is sufficient evidence of threat of material injury to justify initiation in a case in which threat of material injury is alleged.7. while there were higher standards for assessing the evidence in a preliminary or final determination than the determination to initiate an investigation. As mentioned above. The application compared transactions involving significantly different volumes and occurring at different levels of trade. the panel ultimately concluded that there was insufficient evidence in the application regarding dumping. Specifically. There was also insufficient evidence of material injury.2 to "dumping" must be read as a reference to dumping as it is defined in Article 2.2. as well as with the object and purpose of Article 5. Article 2 of the Antidumping Code sets forth the technical elements of a calculation of dumping. According to the panel: We cannot see how. because Mexico was claiming threat of injury. With regard to the elements of dumping and injury.4 to make a fair comparison in presenting evidence of dumping.7. in the absence of information pertaining to the factors set forth in Article 3. injury and causation to substantiate the initiation of an investigation. In our view. rather than evidence. the Ministry did not meet the obligation inherent in Article 2."dumping" and Article 5. the subject matter or type of evidence was the same. and it did so without even acknowledging the necessity of making adjustments. the reference in Article 5. The panel found that Guatemala had offered unsubstantiated statements. The panel stated that. the panel made the observation that.3 requires a determination that there is "sufficient" evidence to justify initiation. of the threat of material injury that did not allow for the objective evaluation of 104 . its application should have included evidence of threat of material injury as set out in Article 3. To find otherwise would be inconsistent with the text.
accuracy and adequacy required by Article 5. the panel pointed out that both the Antidumping Code and Guatemalan law provide for the confidential treatment of such information. may begin to reconsider doing business in country x. not coincidentally. the targeted companies. Finally. companies from that market may petition their government. thus diverting their attention from production and marketing Country x will usually find the presence of dumping. This was particularly disturbing to the panel because much of the relevant evidence was in the possession of the applicant and no one else. In response to the suggestion that some of the information was withheld because of its sensitivity. injury and causation.2 Analysis and Recommendations The Current State of Antidumping Measures and Evaluation of a Threshold Evidentiary Requirement Currently. Business becomes an economic gamble because of the price an investigation exacts. the Ministry could not possibly have correctly determined that there was sufficient evidence of causation when there was not sufficient evidence of dumping or injury. These investigations are invasive (often as invasive as the investigating country can possibly make them). When country x's domestic market is unable to keep up with foreign competition. This is.8. Antidumping investigations also cause other competing companies to expect such an experience if investigated. 6. which is then under considerable political pressure to launch an antidumping investigation. Once country x has brought a sufficient number of investigations. at which time it will levy a duty that further cripples the targeted company. many countries use antidumping measures as protectionist weapons. as well as other foreign companies that have not yet been investigated.3. and their scope and length force the company under investigation to divert its attention from competing in the market. The alternative for companies is to redirect their export trade to a country whose government is less willing than country x to resort to antidumping investigations as a means to protect its domestic market from healthy and fair competition. perhaps causing it to lose its competitive edge. the result that the petitioners most often intend to 105 .
In the United States. They harm imports that are both fairly and unfairly priced. any attempt to weed out frivolous. Individual members of the WTO currently have substantial flexibility in setting their own standards for initiation requirements. Perhaps most importantly. 106 . the fact that the ITA launches investigations on nearly all of the petitions that U. pre-textual petitions should focus on the threshold for initiation. A higher threshold would serve as a sieve." Some critics go further and accuse the United States of engaging in behavior that is incompatible with the GATT/WTO. The GATT traditionally avoided the issue of a threshold requirement.produce by initiating investigations. As such. evaluating it in very few instances in relation to the considerable controversy surrounding it. The frequency of both antidumping investigations and findings of dumping in the United States has caused the antidumping system to be widely criticized "as a club that domestic companies use to batter the competition. companies file suggests the low level of scrutiny currently attached to the amount of evidence required to initiate a petition.S. allowing through authentic cases of predatory pricing and truly unfair trade while blocking cases in which antidumping is being used for protectionist purposes. Antidumping measures stifle competition and deter trade and investment. The Threshold for Initiation of an Antidumping Investigation Should Be Higher The sufficiency of evidence threshold has a direct and powerful effect on the number of investigations that are filed and initiated. They are inconsistent with antitrust laws. The Portland Cement panel report raises the possibility that the WTO will change this policy. they are bad for the domestic consumer.
the panel raised the threshold that an application must meet.3 of the Antidumping Code. injury. which set out the elements of dumping and injury. the panel stood fast in requiring that the national authorities present evidence of dumping in terms that can be compared and in not allowing mere statements to take the place of evidence when assessing a case for the existence of injury. In the process of providing interpretations of the elements that a national authority must consider in making its initiation determination.The Effect of the Portland Cement Panel Report on the Threshold for Initiation of an Investigation In the Portland Cement panel report. are relevant to the initial investigation determination as well as the preliminary and final determinations. Finally. The fact that the panel granted the national authority the right to act independently to supplement the application does not affect the threshold that an application must meet. The report will have perhaps its most significant impact as a result of its interpretation of Article 5. the WTO undeniably took the strongest stance that it or the GATT has taken to date with regard to insisting that applications meet a minimum threshold before a national authority can initiate an antidumping investigation. the panel's determination that Article 5.3 contains requirements distinct from those in Article 5. the panel's application of the rules to the case at hand was demonstrative. and causation. As mentioned above. investigating country. this test balances the interests of the exporting. The panel also noticeably raised the requirements by ruling that Articles 2 and 3. The panel concluded that the Guatemalan authorities wrongly initiated an investigation because the application in question did not provide sufficient evidence of dumping. allegedly dumping country and those of the importing. Whereas the antidumping law generally appears to be tipped in favor of the investigating country and applicant company or industry. this report is a strong statement for the WTO in this area of trade. the impact of the panel report has yet to 107 .2 clearly increases the burden on both the applicant and the national authority contemplating investigation. the panel evened the field to some degree by applying the balancing test proposed for countervailing duty cases in the Softwood Lumber panel report. As a result of the Appellate Body report.
injury and causation.or any other case .be determined. it remains to be seen whether future panels will use that framework. should be examined. the panel sent a message that the threshold requirements are more than a formality. the investigation should terminate prior to the preliminary determination of dumping. In particular. and decisions to initiate investigations. If investigators conclude that the petitioner does not present sufficient evidence to support a petition. The WTO Should Codify a Threshold Requirement for the Initiation of Antidumping Investigations in Precise Language that Leaves Little Room for Interpretation by Individual Countries The WTO should decide on a higher initiation requirement and codify it in the Antidumping Code. It appeared to establish a framework through which applications. The WTO should codify the results of the Portland Cement panel report. For the reasons discussed above. in effect. the WTO should codify the balancing test discussed in the countervailing duty context in Softwood Lumber and 108 . The Portland Cement panel report was the WTO's first move toward clarifying the threshold for the initiation of antidumping investigations. no different from the panel report being approved by the Appellate Body. The panel in that case . Through its analysis. WTO members will not be able to take full advantage of the clarifications that the panel made to the threshold requirements. This is. Until it does so.will have the opportunity to rely on the analysis and conclusions of the Portland Cement panel report. The evaluation of sufficient evidence should be a required part of the preliminary determination. Mexico may begin the DSU process again.
The prospect of facing retaliatory measures will encourage Member countries to comply with their obligations under the WTO. but the WTO's dispute resolution regime would also incite Member states to apply the standard. Third. countries will continue to see that the effectiveness of the WTO system is contingent upon compliance. either at the initial stage of investigation or following the final determinations as to injury and dumping. will have an even greater incentive to strengthen the WTO system. Second. is that Members are not likely to agree to a higher initiation threshold. This system is far stronger than the one that existed under GATT. The test would require the WTO to weigh the interest of the domestic industry in securing the initiation of an investigation based on a deserving claim against the interest of the exporting country in avoiding the burden of an investigation initiated on a petition that is without merit. The reality of the situation. the great divergence in views.adopted by the panel in Portland Cement. however. Not only would WTO obligations compel Member states to implement such changes in their national laws. The WTO should also require the national authorities to evaluate each petition for accuracy and adequacy of evidence. the WTO should require that the petitioner provide an explanation for the absence of any missing information. the WTO should implement a public/national interest analysis. First. it is arguable whether the Members are capable of even negotiating a more precise 109 . and it should require the petitioner to base its allegations of dumping and injury on the criteria of Articles 2 and 3 of the Antidumping Code. and thus should be more willing to comply. such as the United States. Furthermore. the WTO should raise the standard by defining what "reasonably available to the petitioner" means with respect to information. Countries that frequently resort to the WTO's dispute settlement mechanism. The WTO should implement several other changes to the initiation procedures as well. Based on the controversy that has historically surrounded this issue. and political factors influencing countries' positions.
future panels will see the wisdom in following this tradition. abide. Conversely. in order to accomplish the same goals. it also must set standards for international trade. as well as the new and improved dispute settlement mechanism. Concluding. The stance that the United States took in the Portland Cement case.definition of the current standard. but they no longer do. In sum. The standard must be one by which all countries can. It needs to establish a clear requirement of an evidentiary threshold in antidumping investigations. or the WTO will risk becoming meaningless. it must not shrink from its responsibility to promote fair and free trade. and will.S. While it must be flexible out of political necessity. suggests a possible auspicious shift in U. The organization must realize its limitations and accept that if it pushes its members too far. and at a sufficiently high level. and squarely took on the issue of an evidentiary burden. decisions of the WTO dispute settlement panels and the Appellate Body may be the most practical method of effecting change in the threshold for initiation. the initiation threshold must now be set clearly. in which it argued for a more defined standard that would bar unmeritorious petitions. The panel ruled strongly in favor of having a meaningful threshold for investigations. they will not comply and the organization will lose all credibility. the panel took advantage of the "clean slate" that it faced on the initiation issue. the WTO has obligations to the international community. 110 . Antidumping measures may have met this balance in the past. In the Portland Cement dispute. and the WTO dispute resolution system will act as a vehicle for reform. Hopefully. Great diplomacy on the part of powerful members such as the United States and the European Union certainly would be necessary. policy on the matter.
instead taking into account only those sales where the export price is less than the normal value. The practice varies somewhat. individually or as a subgroup. In essence. proponents contend that it offers 111 . one of the most contentious issues in World Trade Organization dispute settlement has been the use of "zeroing" in the context of calculating anti-dumping duties in domestic trade remedy proceedings. but in general terms it refers to a dumping calculation that ignores import sales for which the export price exceeds the "normal value" (usually the value in the home market). as "dumped. Critics of the practice argue that zeroing inflates the dumping margin unfairly.7. the difference between the zeroing and nonzeroing approaches is the following: zeroing calculates dumping based only on the export sales that could themselves be classified. ISSSUE OF ZEROING METHODOLOGY IN CALCULATION OF THE DUMPING MARGIN Over the past several years." whereas non-zeroing calculates dumping based on all export sales.
S. 7. the United States remains a staunch defender of "zeroing." in the context of "periodic reviews" of past antidumping determinations.S. modifying Panel Report.S. Almost all WTO members who have expressed a view on the issue oppose the practice in most situations. Mexico alleged that the U. the Appellate Body found that the U. Decisions of the panels and Appellate Body are available at <http://www." as well as their application in specific cases. Its findings in this regard offer some important new interpretations relating to zeroing. rules and procedures relating to "simple zeroing in periodic reviews.wto.--Stainless Steel (Mexico)82 case.htm>.org/english/tratop_e/dispu_e/dispu_status_e. 2008). "simple zeroing in periodic reviews" refers to a method whereby the authorities compare individual export transactions against monthly weighted average normal values and do not fully take into account the results of comparisons where the export price exceeds the monthly weighted average normal value when such results are aggregated in order to calculate the margin of dumping for the product under consideration as a whole in a periodic review. According to Mexico.an accurate calculation of the total amount of dumping. 2008) [hereinafter U. Article VI of the General Agreement on Tariffs and 82 Appellate Body Report.1 Analyzing the DSB’s findings in United States-Final Anti-dumping Measures on Stainless Steel from Mexico In the U." and all of the recent complaints related to the practice have been brought against that country. WT/DS344/R (adopted May 20. United States--Final Anti-dumping Measures on Stainless Steel from Mexico. Mexico's complaint referred to several aspects of zeroing.S. WT/DS344/AB/R (adopted May 20. as well as some clarifications of the role of precedent in the WTO dispute settlement system. Department of Commerce of a practice called "simple zeroing. violated the WTO's antidumping rules--in particular. 112 . zeroing measures at issue violate WTO rules.S. United States--Final Anti-Dumping Measures on Stainless Steel from Mexico. By contrast.-Stainless Steel (Mexico)]. At issue in the appeal was the use by the U.
and 'margins of dumping' can be calculated for individual import transactions". the scope of that definition determines the scope of the authorities' dumping determination.3 of the Anti-dumping Agreement (AD Agreement). 14.Trade (GATT)83 and Articles 2. in its view. WTO Agreement. or in relation to individual import transactions." Mexico thus asserted. supra note 3. Mexico appealed the panel's conclusions.or importer-related concepts for the purpose of Article 9.1. Marrakesh Agreement Establishing the World Trade Organization [hereinafter WTO Agreement]. 1994. THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS: THE LEGAL TEXTS 486 (1995) [hereinafter THE LEGAL TEXTS]. the Appellate Body noted three questions that.1 and 9. is it 83 Apr. 84 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994." such that "dumping cannot exist in relation to a specific type. margins of dumping need not necessarily be established on an aggregate basis for the "product as a whole" and that "'dumping' can be found to exist each time that a weighted average normal value exceeds the export price in a particular export transaction. in WORLD TRADE ORGANIZATION.3 of the Anti-Dumping Agreement?" (2) "Can 'dumping' and 'margin of dumping' be found to exist at the transaction and importer-specific level for the purpose of Article 9. in THE LEGAL TEXTS. arise based on the panel's reasoning and the arguments advanced in the appeal: (1) "Are the terms 'dumping' and 'margin of dumping' exporter. arguing that "once the investigating authorities define the product under consideration. that "‘the margin of dumping must be calculated in respect of the individual exporters or foreign producers subject to such proceeding and for the product under consideration taken as a whole. model.3 of the Anti-Dumping Agreement?" (3) "In duty assessment proceedings under Article 9. arguing that under GATT Article VI and AD Agreement Article 2.3 of the Anti-Dumping Agreement.3. supra note 3. Annex 1A. At the outset of its analysis. Annex 1A.84 The panel had concluded that "simple zeroing in periodic reviews" is not inconsistent with those provisions. The United States countered that the panel's findings should be upheld.' without disregarding any export transaction". at 168. or category of the product under consideration. under Article 9. 113 .
the Appellate Body concluded that the elements of the definition of "dumping" namely." Moreover. "whether 'dumping' and 'margin of dumping' can be found to exist at the transaction. but on the basis of the totality of an exporter's transactions of the subject merchandise over the period of investigation. The Appellate Body found support for this conclusion in various contextual provisions. 114 ." It then stated that a "proper determination as to whether an exporter is dumping or not can only be made on the basis of an examination of the exporter's pricing behaviour as reflected in all of its transactions over a period of time. as "carried over" into AD Agreement Article 2.1 of the AntiDumping Agreement address the pricing practice of an exporter. Based on the definitions and uses of these terms in those provisions. it recalled its earlier consideration that "dumping arises from the pricing behaviour of an exporter.permissible to disregard the amount by which the export price exceeds the normal value in any export transaction?" Recognizing that these questions are "interconnected. Starting with the question of whether "dumping" and "margin of dumping" are exporter or importer-related concepts.3 of the Anti-Dumping Agreement". Next." the Appellate Body examined each of them in turn. the Appellate Body began by examining those concepts under GATT Article VI. On this point.1. it added: Contrary to what the Panel indicates. the notion that "a product is introduced into the commerce of another country at less than its normal value" in Article VI:1 of the GATT 1994 suggests to us that the determination of dumping with respect to an exporter is properly made not at the level of individual export transactions. the Appellate Body addressed the second question. that "dumping" occurs when a product is "introduced into the commerce of another country" at an "export price" that is less than the "comparable price for the like product in the exporting country"--suggest to us that Article VI:1 of the GATT 1994 and Article 2.and importer-specific level for the purpose of Article 9.
In this context the Appellate Body stated. whether it is permissible to use "simple zeroing".As to the third question. Moving beyond the initial three questions that it had set out. it recalled past Appellate Body precedents finding the practice of zeroing to be inconsistent with AD Agreement Articles 2. "We see no basis in Article VI:2 of the GATT 1994 or in Articles 2 and 9." In this regard. Recalling its discussion above concerning the term "margin of dumping.4. In addition. regarding "the implications for importer-specific duty assessment in periodic reviews" that flow from the Appellate Body's previous interpretations of Article 9. "the margin of dumping established for an exporter in accordance with Article 2 operates as a ceiling for the total amount of anti-dumping duties that can be levied on the entries of the subject merchandise from that exporter.3." the Appellate Body explained that under Article 9. the Appellate Body considered whether under AD Agreement Article 9. the Appellate Body addressed "concerns.3 and GATT Article VI:2. "It appears to us that the United States and the Panel have not correctly 115 .3 of the Anti-Dumping Agreement for disregarding the results of comparisons where the export price exceeds the normal value when calculating the margin of dumping for an exporter." as expressed by the United States and the panel." The Appellate Body then stated. it is "permissible" in duty assessment proceedings to "disregard the amount by which the export price exceeds the normal value in any transaction"--that is.2 and 9.3.3. noting that a product definition applies throughout a dumping investigation and that "dumping" can "be found to exist only for the product under investigation as a whole". the Appellate Body stated: We fail to see a textual or contextual basis in the GATT 1994 or the AntiDumping Agreement for treating transactions that occur above normal value as "dumped" for purposes of determining the existence and magnitude of dumping in the original investigation and as "non-dumped" for purposes of assessing the final liability for payment of anti-dumping duties in a periodic review.
the Appellate Body noted that the amount of duties collected on a prospective basis is subject to review and that while duties are "collected" in individual export transactions only "where the prices are less than the prospective normal value. Mexico asserted that the panel's interpretation and the issue of "mathematical equivalence" would be valid only under the assumption that the weighted average-normal value used in the weighted average-to-transaction (W-T) comparison methodology is 116 . second sentence. the Appellate Body emphasized that the AD Agreement is neutral as to the different systems for the levy and collection of antidumping duties.understood the Appellate Body's interpretation of Article 9. In response.2 would always yield the same mathematical result as that obtained by applying the [weighted average-to-weighted average (W-W)] comparison methodology of the first sentence. Next. because it would mean that the application of the second sentence of Article 2. The panel had found it "quite illogical" that the drafters of the AD Agreement would have intended to allow the existence of prospective normal value systems. the Appellate Body examined the question of whether the context of the AD Agreement Article 2. including those where the export prices exceed the normal value".3.3 in which authorities would be required to calculate a dumping margin on the basis of aggregated data pertaining to exporters.2. The Appellate Body then turned to the panel's analysis relating to "prospective normal value" systems." In this regard. justified the panel's decision not to follow the Appellate Body's established approach.4.2 inutile.3 in previous disputes. but then envisaged a duty assessment system under Article 9. a review can be requested if the prospective normal value has been improperly determined so as to result in collection of anti-dumping duties in excess of the ceiling prescribed in Article 9. the Appellate Body explained that a "margin of dumping is properly calculated under the Anti-Dumping Agreement only if all transactions are taken into account. thereby rendering the second sentence of Article 2.4." In particular. The panel had found that an interpretation that prohibits zeroing in all contexts would be contrary to the principle of effective treaty interpretation.4.
However.S. arguments concerning Article 32. For the following reasons. Given that its analysis under Article 31 of the Vienna Convention on the Law of Treaties had neither left the meaning of the relevant provisions of the Agreement "ambiguous or obscure" nor led to a "manifestly absurd or unreasonable" result. In response to Mexico's arguments. system does not follow that approach: it uses contemporaneous monthly normal values in W-T situations but mandates period-long normal-value averages (typically. in any event. the Appellate Body stated that in its interpretation it had "been mindful of the standard of 117 . Finally." had been terminated. however. the 1960 Group of Experts Report was of "little relevance" and did not shed light on the determination of the margin of dumping under Article 9. and also referred to U. the Appellate Body concluded that simple zeroing "results in the levy of an amount of anti-dumping duty that exceeds an exporter's margin of dumping.S. the same historical materials were examined by the Appellate Body in previous cases and had been rejected. the Appellate Body addressed the "historical background" of the AD Agreement. which operates as the ceiling for the amount of anti-dumping duty that can be levied in respect of the sales made by an exporter. the Appellate Body said that it would examine the U. one year) for W-W comparison. On that basis. the Appellate Body noted that the United States did not contest Mexico's assertion." such that simple zeroing in periodic reviews is inconsistent with GATT Article VI:2 and AD Agreement Article 9.3. the Appellate Body stated that it was "not persuaded" that the historical materials provide guidance as to whether simple zeroing is permissible under Article 9.identical to that used in the W-W comparison methodology.3. statements suggesting that there is uncertainty as to how the W-T comparison methodology would be applied in practice.3: the parties had various different viewpoints as to the meaning of the negotiating proposals submitted during the Uruguay Round.S. Nevertheless. Mexico pointed out that the U. and the Tokyo Round Anti-dumping Code was "legally separate from the GATT 1947. the Appellate Body did not find it "strictly necessary" to have recourse to the supplementary means of interpretation identified in Article 32. As a final note. and. had different wording than the current AD Agreement.
GATT Article VI:2 and AD Agreement Article 9.S. however.1 and 9. WT/DS294/AB/R (adopted May 9. the Appellate Body observed that it is "well settled that Appellate Body reports are not binding. The panel had decided not to follow the legal interpretation of the Appellate Body in U. United States--Laws. Mexico argued that the panel's approach was inconsistent with the first sentence of Article 11 of the WTO's Dispute Settlement Understanding (DSU). the Appellate Body also addressed the role of precedent in relation to the issue of zeroing.6(ii)" but that." As further support. "which stipulates that the function of panels is to assist the [Dispute Settlement Body (DSB)] in discharging its responsibilities under the DSU. Department of Commerce in the five periodic reviews at issue in this dispute. On appeal.3 "do not admit of another interpretation as far as the issue of zeroing raised in this appeal is concerned"." It noted. when interpreted in accordance with the customary rules of interpretation of public international law.review provided in [AD Agreement] Article 17. that it would be incorrect to infer that "subsequent panels are free to disregard the legal interpretations and the ratio decidendi contained in previous Appellate Body reports that have been adopted by the DSB". Instead.3.86 in which the Appellate Body had found that simple zeroing in periodic reviews is inconsistent with GATT Article VI:2 and AD Agreement Article 9. 23.S. Regulations and Methodology for Calculating Dumping Margins (Zeroing). In addition to the substantive law issues. United States--Measures Relating to Zeroing and Sunset Reviews. 2007). 118 . 86 Appellate Body Report. is not inconsistent with GATT Articles VI:1 and VI:2 and AD Agreement Articles 2.S. 2006).3. The Appellate Body further explained that dispute settlement practice demonstrates that WTO Members attach significance to reasoning provided in previous panel and 85 Appellate Body Report.--Zeroing (EC)85 and U. the panel found this kind of zeroing to be consistent with the GATT and the AD Agreement.2 and 3. as applied by the U. the Appellate Body reversed the panel's finding that simple zeroing.3. except with respect to resolving the particular dispute between the parties. Mexico referred to DSU Articles 3. For the same reasons. WT/DS322/AB/R (adopted Jan. In examining this issue.--Zeroing (Japan).
" The Appellate Body further stated that "ensuring 'security and predictability' in the dispute settlement system. the Appellate Body said that it was "deeply concerned about the Panel's decision to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues" as those involved in this dispute." Thus.Appellate Body reports. and to ensure the 'prompt settlement' of disputes. It pointed out that the "creation of the Appellate Body by WTO Members to review legal interpretations developed by panels shows that Members recognized the importance of consistency and stability in the interpretation of their rights and obligations under the covered agreements. With all this in mind." Nevertheless. panels and the Appellate Body have distinct roles to play" referring to DSU Articles 17." which "is essential to promote 'security and predictability' in the dispute settlement system." According to the Appellate Body. and that the panel's approach had "serious implications for the proper functioning of the WTO dispute settlement system." and the "relevance of clarification contained in adopted Appellate Body reports is not limited to the application of a particular provision in a specific case".2 of the DSU. it said.2 of the DSU. the Appellate Body explained. "Clarification. implies that. the Appellate Body considered that "the 119 . as envisaged in Article 3. "The Panel's failure to follow previously adopted Appellate Body reports addressing the same issues undermines the development of a coherent and predictable body of jurisprudence clarifying Members' rights and obligations under the covered agreements as contemplated under the DSU. absent cogent reasons." Here. an adjudicatory body will resolve the same legal question in the same way in a subsequent case".13. "the legal interpretation embodied in adopted panel and Appellate Body reports becomes part and parcel of the acquis of the WTO dispute settlement system. elucidates the scope and meaning of the provisions of the covered agreements in accordance with customary rules of interpretation of public international law. and are relied upon by panels and the Appellate Body in subsequent disputes." which (if adopted) are "often cited by parties in support of legal arguments in dispute settlement proceedings. The Appellate Body then noted that "in the hierarchical structure contemplated in the DSU. as contemplated in Article 3.6 and 17.
as the Appellate Body is the highest judicial body in the WTO dispute settlement system. First. the Appellate Body has found all types of zeroing brought before it to violate WTO rules. and in view of the special standard of review for legal issues under 120 . the Appellate Body's reasoning on the issue of zeroing has met with some strong criticism in the legal literature. the Appellate Body's clear stance on zeroing makes it seem that the issue has been definitively addressed.—Zeroing (Japan) panel. given that the text of the agreements does not address the issue explicitly. In the dispute at hand--for the second time recently--a WTO panel declined to follow a prior ruling by the Appellate Body on the permissibility of a particular type of zeroing (the U. despite the strong opposition to zeroing from most WTO members. in essence. Second. the issue of zeroing has been actively discussed as part of the ongoing negotiations on trade remedies in the Doha Round. In particular. was the first). though many other members have been quite critical of the most recent draft. However. Finally. from its misguided understanding of the legal provisions at issue. several panels have differed with the Appellate Body regarding the permissibility of certain types of zeroing. while allowing it in others. Thus.S. the current draft text prohibits zeroing only in one specific situation. there was no need for "an additional finding that the Panel also failed to discharge its duties under Article 11 of the DSU". there are several countervailing forces at work." regardless of the type of zeroing or the type of antidumping proceeding in which it is used. Its decision in this case continues that trend. the United States has been somewhat successful in pushing its views. To date. despite its minority position.Panel's failure flowed. To some degree. mentioned above. The Appellate Body has made clear in a series of decisions that it does not look favorably on the practice of "zeroing." and because the panel's findings have been reversed. with yet another condemnation of zeroing.
The European Communities made its preliminary affirmative determination of dumping. India. will the standard apply differently to the Appellate Body itself. the Appellate Body stated. the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.2 of the DSU. the European Communities initiated an anti-dumping investigation into certain imports of cotton-type bed linen from. India and Pakistan. implies that. 7.90 The European Communities made its final affirmative 87 In this regard." Alternatively. Since there are several ongoing zeroing disputes. injury and causal link on 12th June 1997. 44 COLU . inter alia. an adjudicatory body will resolve the same legal question in the same way in a subsequent case". the panels in question may have the opportunity to test the boundaries of the Appellate Body's new standard.the AD Agreement. No L 156.87some have argued that the Appellate Body's findings constitute "overreaching." 88 Roger P. 121 .”88 In addition to these substantive legal issues relating to zeroing.2 APPELLATE BODY FINDINGS ON EUROPEAN COMMUNITIES – ANTI-DUMPING DUTIES ON IMPORTS OF COTTON-TYPE BED LINEN FROM INDIA89 On 13th September 1996. Official Journal. In addressing this issue. For instance. inter alia: "'Ensuring 'security and predictability' in the dispute settlement system. as opposed to panels? Note that the Appellate Body refers to "an adjudicatory body"--in the singular--perhaps implying that only the Appellate Body may depart from prior rulings on the basis of "cogent reasons. TRANSNATL L 196 (2006) 89 WT/DS141/AB/R 90 Commission Regulation (EC) No 1069/97 of 12 June 1997 imposing a provisional anti-dumping duty on imports of cotton-type bed linen originating in Egypt. the instant dispute also raised a systemic issue concerning panels that ignore the Appellate Body's prior legal interpretations related to zeroing. Alford. which would thus include panels. absent cogent reasons. and imposed provisional anti-dumping duties with effect from 14 June 1997. the "adjudicatory body" it mentions may be the Dispute Settlement Body. The implications of the Appellate Body's statements on this issue leave a bit of uncertainty. as contemplated in Article 3. AD Agreement Article 17.J.6(ii) states: "Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation.Zeroing: A Study in Judicial Overreaching by the WTO Appellate Body. Reflections on US.
91 Council Regulation (EC) No 2398/97 of 28 November 1997 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt. injury and causal link on 28 November 1997. a Member may exclude sales by other exporters or producers that are not made in the ordinary course of trade.91 The European Communities and India appeal certain issues of law and legal interpretations in the Panel Report.2. 7. European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India (the "Panel Report"). 13 June 1997.2 of the Anti-Dumping Agreement. India and Pakistan.2(ii) of the Anti-Dumping Agreement may be applied where there is data on administrative.2. Official Journal. is inconsistent with Article 2. selling and general costs and profits for only one other exporter or producer. 1.1 Issues raised in the Appeal: The appeal raised the following issues: (a) Whether the Panel erred in finding that the practice of "zeroing" when establishing "the existence of margins of dumping".92 The Panel was established to consider a complaint by India with respect to definitive anti-dumping duties imposed by the European Communities on imports of cotton-type bed linen. and imposed definitive anti-dumping duties with effect from 5 December 1997. 92 WT/DS141/R.2. and (b) Whether the Panel erred in finding that: (1) the method for calculating amounts for administrative. selling and general costs and profits provided for in Article 2. 30 October 2000. and (2) in calculating the amount for profits under Article 2. p.determination of dumping. No L 332. 11.4.2(ii) of the Anti-Dumping Agreement. as applied by the European Communities in the anti-dumping investigation at issue in this dispute. 4 December 1997. p. 122 .
2 provides no guidance as to how the "margins of dumping" for each of the types or models should be combined in the second stage in order to calculate an overall margin of dumping for the product under investigation. "zeroing" cannot be inconsistent with Article 2. therefore. combine those "margins" in order to calculate an overall margin of dumping for the product under investigation. and contends that Article 2. Article 2. the European Communities asserts that.4.2. as applied by the European Communities in the anti-dumping investigation at issue in this dispute.1 Analysis of the Panel and AB findings: The Panel held that Article 2.2 93 Infra 123 .2 of the word "comparable". as we understand it. then. the margins of dumping to which Article 2. is consistent with Article 2. it explains how they must proceed in establishing that there is dumping. where the product under investigation consists of various "non-comparable" types or models.4.4.4. According to the European Communities.4. at a subsequent stage. On this reasoning. that is.2. it is clear to us that the Anti-Dumping Agreement concerns the dumping of a product. Emphasizing the presence in Article 2. in the view of the European Communities. as "zeroing" takes place during this second stage of the domestic anti-dumping process.2 Article 2. which.2 of the Anti-Dumping Agreement explains how domestic investigating authorities must proceed in establishing "the existence of margins of dumping".2 of the Anti-Dumping Agreement The first issue raised in this appeal is whether the practice of "zeroing" when establishing "the existence of margins of dumping". is not the same as requiring a comparison with a weighted average of all export transactions. Thus.7.2 of the Anti-Dumping Agreement.193 It held that from the wording of this provision. and. the European Communities identified two stages in calculating margins of dumping in such an anti-dumping investigation.4.4. and that.2. 7.4.2. The Panel analyzed the wordings of Article 2. the European Communities maintains that. the investigating authorities should first calculate "margins of dumping" for each of the "non-comparable" types or models.2 requires a comparison with a "weighted average of prices of all comparable export transactions".
and any other differences which are also demonstrated to affect price comparability. but applies.4.4.4 deals more broadly with a "fair comparison" between export price and normal value and "price comparability".2. and in respect of sales made at as nearly as possible the same time.2. physical characteristics. This is a general obligation that informs all of Article 2. The Panel clarified that whatever the method used to calculate the margins of dumping the margins must be and can only be. in particular. Article 2.4 and by Article 2. Due allowance shall be made in each case. the European Communities argued that export transactions involving different types or models of cotton-type bed linen are not "comparable" because different types or models of cottontype bed linen have very different physical characteristics.4.2.94 The interpretation of the word "comparable" in Article 2. established for the product under investigation as a whole. The Panel disagreeing with the said argument stated that all types or models falling within the scope of a "like" product must necessarily be "comparable". This comparison shall be made at the same level of trade.2 relates to the comparability of export transactions. the European Communities suggests that the differences between the various models or types of bed linen involved in the relevant export transactions are "so substantial that they cannot be eliminated by making adjustments for differences in physical characteristics".2 provides no guidance as to how to calculate an overall margin of dumping for the product under investigation.refers are the margins of dumping for a product. quantities. In support of its appeal of the Panel's interpretation of Article 2.4.4. it was also of the view that a comparison between export price and normal value that does not take fully into account the prices of all comparable export transactions – such as the practice of "zeroing" is not a "fair comparison" between export price and normal value. normally at the ex factory level. levels of trade. as required by Article 2. for differences which affect price comparability.2 is reinforced by the context of Article 2. and export transactions involving those types or models must therefore be considered "comparable export transactions" within the meaning of Article 2.4 sets forth a general obligation to make a "fair comparison" between export price and normal value. It disagreed with the European Communities that Article 2.4.4. to Article 2.2. including differences in conditions and terms of sale. Specifically.2 which is specifically made "subject to the provisions governing fair comparison in Article 2. While the word "comparable" in Article 2.4. In addition to the above argument the European 94 A fair comparison shall be made between the export price and the normal value. Article 2. 124 . Furthermore. taxation. on its merits.4.
neither Article 2. the amounts for administrative.4. or targeted to certain time periods.4.4. second sentence.2. 22.214.171.124.296 sets forth how the amounts for SG&A and profits are to be 95 A normal value established on a weighted average basis may be compared to prices of individual export transactions if the authorities find a pattern of export prices which differ significantly among different purchasers. The AB further emphasized that had the drafters of the Anti-Dumping Agreement intended to authorize Members to respond to such kind of "targeted" dumping.95 The Appellate Body asserted that the said provision allows Members.2 of the Anti-Dumping Agreement. in certain circumstances.2. The AB concluded that European Communities has not demonstrated that any provision of the Agreement implies that targeted dumping may be examined in relation to specific types or models of the product under investigation and hence the practice of "zeroing" when establishing "the existence of margins of dumping". However. 96 For the purpose of paragraph 2.3 Article 2. selling and general costs and for profits shall be based on actual data pertaining to production and sales in the ordinary course of trade of the 125 . to address three kinds of "targeted" dumping. be determined by comparison of the export price of the product with a constructed normal value consisting of the cost of production of the product in the country of origin plus a reasonable amount for administrative. they would have done so explicitly in Article 2. nor any other provision of the Anti-Dumping Agreement refers to dumping "targeted" to certain "models" or "types" of the same product under investigation. the margin of dumping for the product under investigation may.Union further in appeal argued that the interpretation given by the Panel as to comparable export transactions would not allow Members to counter dumping "targeted" to certain types of the product under investigation. regions or time periods. selling and general costs ("SG&A") as well as for profits. and if an explanation is provided as to why such differences cannot be taken into account appropriately by the use of a weighted average to weighted average or transaction to transaction comparison. targeted to certain regions. namely dumping that is targeted to certain purchasers.4. second sentence.2.2.2(ii) of the Anti-Dumping Agreement. With respect to the notion of "targeted" dumping. Pursuant to Article 2.2(ii) of the Anti-Dumping Agreement The two other issues raised in this appeal both concerns the Panel's interpretation of Article 2. as applied by the European Communities in the anti-dumping investigation is inconsistent with Article 2.2. Article 2. in structuring their antidumping investigations. the Appellate Body pointed towards second sentence of Article 2.
When such amounts cannot be determined on this basis.2(ii).calculated in such circumstances. 7.3.2(ii) may be applied where there is data on SG&A and profits for only one other exporter or producer.2.2. the Panel found: The interpretation of Article 2. and therefore did not act inconsistently with Article 2.2. the Panel found: It concluded that Article 2.1 Analyzing the Appellate Body’s Findings: like product by the exporter or producer under investigation.2. a Member may exclude sales by other exporters or producers that are not made in the ordinary course of trade. in calculating the amount for profits under Article 2. With respect to the second issue. and hence the European Communities was not precluded from applying the methodology set out in that provision in this case.2. provided that the amount for profit so established shall not exceed the profit normally realized by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin. the weighted average of the actual amounts incurred and realized by other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin. The first issue raised is whether the method of calculating amounts for SG&A and profits set out in Article 2. any other reasonable method.2.2(ii) may be applied in a case where there is data concerning profit and SG&A for only one other producer or exporter.2(ii) in this regard. The second issue is whether. It concluded that the European Communities did not err in its application of paragraph (ii) by using data only on transactions in the ordinary course of trade.2(ii) under which sales not in the ordinary course of trade is excluded from the determination of the profit amount to be used in the calculation of a constructed normal value is permissible. With respect to the first issue. the amounts may be determined on the basis of: (i) the actual amounts incurred and realized by the exporter or producer in question in respect of production and sales in the domestic market of the country of origin of the same general category of products. (ii) (iii) 126 .
2.2(ii) precludes.2.2(ii) is confirmed by the chapeau of Article 2. an "average" of amounts for SG&A and profits cannot be calculated on the basis of data on SG&A and profits relating to only one exporter or producer. India argues that the text of Article 2. relating to the exclusion of sales by other exporters or producers that are not made in the ordinary course of trade. and.India appeals both these findings. AB stated first of all. India argues that the text of Article 2.2(ii) where there is data for only one other exporter or producer.2. the textual directive to "weight" the average further supports this view because the "average" which results from combining the 97 "Average" is defined in The Concise Oxford Dictionary of Current English. which. in this particular provision.2(ii) cannot be applied where there is data for only one other exporter or producer. supra as follows: "an amount obtained by dividing the total of given amounts by the number of amounts in the set". in particular. when this method is chosen by the investigating authorities.2. the amounts for SG&A and profits must be calculated on the basis of the weighted average of the actual amounts incurred and realized by other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin. in contrast with Article 2. On the first of these two issues on appeal. The use of the phrase "weighted average" in Article 126.96.36.199.97 Moreover.2.2(ii) states that the amount for profits must be based on "amounts incurred and realized". clearly indicate that Article 2. the use of the terms "amounts" and "exporters or producers" in the plural. this reading of Article 2. relating to the applicability of Article 2. explicitly excludes sales made outside the ordinary course of trade. and that nothing in these terms suggests that they relate only to profitable sales.2. According to India. understanding the phrase "other exporters or producers" in the plural as including the singular case.2(ii). The Appellate Body disagreed with the Panel opinion that reference to other producers or exporters in the plural necessarily must be understood to include resort to option (ii) in the case where there is only one other producer or exporter of the like product. With respect to the first of these two findings of the Panel.2(ii).2. the Appellate Body recalled that Article 2.2(ii) states that.2(ii) makes it impossible to read "other exporters or producers" as "one exporter or producer". and obviously. With respect to the second of these two findings of the Panel. 127 .2. in combination with the reference to a "weighted average" of the "amounts". AB held that the phrase "weighted average" in Article 2.
2.2. the first sentence of the chapeau of Article 2. A member is not allowed to exclude those sales that are not made in the ordinary course of trade from the calculation of the "weighted average" under Article 2.2. On the second issue relating to the Panel's interpretation of Article 2.2.2. AB concluded that the method for calculating amounts for SG&A and profits set out in this provision can only be used if data relating to more than one other exporter or producer is available.2(ii).2.2. The method set out in Article 2.2.2(ii) in the context of this provision can be located in the first sentence of the chapeau of Article 2. Vol.2.2 refers to "actual data pertaining to production and sales in the ordinary course of trade". The AB stated that in the calculation of the "weighted average". 3651. 1993). Thus. clearly anticipates the use of data from more than one exporter or producer. calculated on the basis of the weighted average of the actual amounts incurred and realized by other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin.2.2(ii). p. In contrast to Article 2. The New Shorter Oxford English Dictionary (Clarendon Press.2. combined with the use of the words "amounts" and "exporters or producers" in the plural in the text of Article 2.data from different exporters or producers must reflect the relative importance of these different exporters or producers in the overall mean. 128 . the drafters of the Anti-Dumping Agreement have made clear that sales not in the ordinary course of trade are 98 "To weight" is defined as "multiply the components of (an average) by factors to take account of their importance".2(ii). The textual interpretation of Article 2.2. "Weighted average" is defined as "resulting from the multiplication of each component by a factor reflecting its importance". which sets out the principal method for calculating amounts for SG&A and profits.2(ii).2.2(ii) refers to "the weighted average of the actual amounts incurred and realized by other exporters or producers". regardless of whether those amounts are incurred and realized on production and sales made in the ordinary course of trade or not. all of "the actual amounts incurred and realized" by other exporters or producers must be included.98 The use of the phrase "weighted average". under Article 2. II.2(ii) is one of three alternative methods which may be applied only in circumstances where the amounts for SG&A and profits cannot be determined by the principal method set out in the chapeau of Article 2.2(ii) the Appellate Body recalled that the amounts for SG&A and profits for an exporter or a producer under investigation are. The AB asserted that Article 2.
The Appellate Body concluded that in calculating the amount for profits under Article 2.2.S.2 is not justified either by the text or by the context of Article 2. Article 2.2.2(ii) contains its own specific requirements.2. trade authorities. ANALYSIS OF THE WTO DISPUTE SETTLEMENT BODY FINDINGS ON THE U. 1994. ANTIDUMPING SUNSET REVIEW REGIME 8.2. The exclusion in the chapeau leads us to believe that. in the ordinary course of trade. Article 2. Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade.2. This aspect is aptly demonstrated by the number of U. for the like product when destined for consumption in the exporting country. where there is no such explicit exclusion elsewhere in the same Article of the Anti-Dumping Agreement.2.2(ii) a requirement provided for in the chapeau of Article 2.2(ii).2(ii) of the AntiDumping Agreement.1 (hereinafter AD) 129 .to be excluded when calculating amounts for SG&A and profits using the method set out in the chapeau of Article 2. Article 2.2.2.S. no exclusion should be implied. On their face. a Member may exclude sales by other exporters or producers that are not made in the ordinary course of trade.2(ii) provides for an alternative calculation method that can be employed precisely when the method contemplated by the chapeau cannot be used. antidumping duty orders imposed upon foreign producers which stands at 229 according 99 A product is considered to be dumped if the export price of the product exported from one country to another is less than the comparable price. these requirements do not call for the exclusion of sales not made in the ordinary course of trade.2.S. Reading into the text of Article 2. And there is no such explicit exclusion in Article 2. 8.1 Overview of this Chapter The antidumping mechanism by which a country protects its domestic industry from an alleged dumping99 by foreign producers has always been a trade remedy-of-choice utilized by U.2(ii).
Carbon Steel. rules and regulations implementing WTO law and that the cases were subsequently brought to the DSB disputing their WTO consistency.org/english/tratop e/adp e/adp e. at http://www. antidumping duty impositions since 1995 when the DSB adjudication procedure was stipulated into the WTO system. US .S. through numerous cases that were brought to the WTO Dispute Settlement Body ("DSB") challenging the consistency of the U. addressed sunset review issues. Antidumping Measures: By Exporting Country. law. The former refers to the issues addressing the WTO consistency of the U. one area that had been noticeably absent from the issues analyzed by the DSB pertained to the sunset review regime. sunset review rules and regulations and the latter refers to the issues addressing the WTO consistency of the actual implementation of the rules and regulations. Therefore. and US . World Trade Organization Anti-Dumping Gateway.S. fourteen main issues are surveyed in this chapter. "as applied.S.OCTG (Argentina).OCTG (Mexico).100. The second part surveys various sunset review issues that were raised by the cases brought to the DSB. This chapter surveys the WTO DSB's decisions regarding the U." However. With such a large number of antidumping duties being imposed.wto. sunset review was initiated in accordance with the U. Complex as is the antidumping regime. it was only after 1998 that the first U. 2005.S. it is natural for those countries subject to the orders to explore ways to curtail them. However. Such position has materialized in various WTO fora. in particular. From these findings by the DSB.to available statistics. the DSB cases address almost every technical issue that is involved in the decision making process of the antidumping duty determination. 130 . This is due to the temporal aspect of sunset reviews which requires a mandatory review of the antidumping duty after five years from its original imposition. The first part of the chapter summarizes the WTO provisions on antidumping sunset reviews and the relevant U. The third part of the 100 As on of June.S. this research would be confined to “as applied” issues. namely US . antidumping sunset review process. The issues are divided into two types: "as such" issues and "as applied" issues.htm (last visited on 01/01/2010). Three DSB cases.S.
unless the authorities determine. Unless the antidumping authorities determine that "the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. Sunset reviews will determine whether the antidumping duty should be continued.S. or under this paragraph). any definitive anti-dumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury. Finally.1 ANTIDUMPING SUNSET REVIEW LAW Overview of Antidumping Sunset Reviews Antidumping sunset reviews establish mandatory reviews of antidumping duties after five years from the initial imposition. WTO Antidumping and Subsidy Agreements 6 (2005). 1994. at art. AD. see also." the antidumping measure will be terminated.102 The sunset review provision was incorporated into the WTO antidumping regime after the Uruguay Round.2 WTO Law Article 11."101 Article 11. The rationale behind the review is that "antidumping duties should remain in force only so long as they are generally necessary to counteract dumping which is causing or threatening material injury to a domestic industry.2. 8. in a review initiated before that date on their own 101 102 Joseph E. AD art. Pattison. 131 .2 8. 11. implementation of the DSB findings which pertains to the findings in US .3. when member states signed the GATT Final Act Embodying the Results of the Uruguay Round of Multilateral trade Negotiations on April 15. 8. some comments and policy considerations are suggested with regard to the case law examined in the previous sections.1.2. It is stated as follows: “Notwithstanding the provisions of paragraphs 1 and 2 (of Article 11).chapter examines the U.OCTG (Argentina). 11. supra note 1.3 of the AD addresses antidumping sunset reviews.3 of the AD which stipulates the threshold duration of five years signifies this presumption that five years is enough to counteract the dumping.
4809 (Dec.4 states that provisions of Article 6 regarding evidence and procedure shall be applied to sunset reviews. 8. Pub. 17.initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date. in accordance with Section 1675a of this title. 19.2 provides transitory measures for the antidumping duty orders imposed before the date of entry into force of the WTO Agreement.2. 29 U. Article 18. that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury.3. the Uruguay Round Agreements Act ("URAA")103 provides the statutory foundation that governs the antidumping sunset review process. sunset reviews differ from original investigations that are governed by extensive legal and procedural framework provided in Articles 3 and 5 of the AD. the administering authority and the International Trade Commission shall conduct a review to determine. whether 103 Uruguay Round Agreements Act.” There are few AD provisions that describe in detail the actual procedure and substantive analysis that the investigating authority must observe. L. No. Article 11.C. 132 . The relevant provision is as follows: “5 years after the date of publication of an antidumping duty order. 108 Stat.3 U.). The duty may remain in force pending the outcome of such a review.S. 8. Law (a) Statutory Provisions Consistent with the WTO provisions. 18. In this respect. 1994) (codified in scattered sections of 7. 103-465.S.
§351. the Panel then examined the DOC's determination and found that the DOC had ignored the data 133 . Factors such as the weighted-average dumping margins determined in the investigations and the volume of imports must be considered by the Department of Commerce ("DOC") in implementing sunset reviews.3. ANTIDUMPING SUNSET REVIEW PROVISIONS "AS APPLIED" 8.revocation of the antidumping duty order would be likely to lead to continuation or recurrence of dumping and of material injury." (b) Administrative Guidelines There is also an administrative guideline called the Sunset Policy Bulletin ("SPB") which is "intended to complement the applicable statutory and regulatory provisions by providing guidance on methodological or analytical issues not explicitly addressed by the statute and regulations.3 of the AD. More detailed rules and regulations on sunset reviews are provided in 19 U.3 DSB FINDINGS ON U.S.OCTG (Mexico) held that the DOC's determination of the likelihood of continuation or recurrence of dumping ("LCRD") in the sunset review was inconsistent with Article 11.218." It delineates a detailed guideline as to how sunset reviews should be administered.S. Additionally.C." In accordance with the standard. there is "The Uruguay Round Agreement Act Statement of Administrative Action" ("SAA") interpretation and application of the law. The Panel there held that the investigating authority administering sunset reviews "must act with an appropriate degree of diligence and arrive at a reasoned conclusion on the basis of information gathered as part of a process of reconsideration and examination.1 The DOC's Determination of the Likelihood of Continuation or Recurrence of Dumping The Panel in US -. For example.R. n17 which provides an "authoritative expression by the United States of its views concerning the 8. section II of the Bulletin covers the determination of likelihood of continuation or recurrence of dumping and the magnitude of the margin of dumping that is likely to prevail. §1675a and 19 C.F.
3. it had failed to support its decision by a reasoned and adequate conclusion as mandated by Article 11. the AB in US -. The Panel in US -. Ultimately." The Panel's finding was not appealed." The Panel noted that where the DOC failed to incorporate any information submitted by the exporters.3 of the AD. the AB held that there were sufficient justifications for the DOC's reliance on dumping margins and import levels. In contrast. It then found that the DOC used two factual findings that the dumping continued over the life of the measure and that the import volumes declined following the antidumping duty imposition. 8. prospective likelihood determination and based its determination exclusively on historical data relating to dumping and the volume of dumped imports. found that the DOC had in fact considered the information submitted by the Japanese exporter and that the DOC was entitled to reject the information submitted in an untimely fashion. For the former finding. The Panel held that "the original determination of dumping by itself cannot represent a sufficient factual basis to conclude that dumping is likely to continue or recur after the expiry of the order. thus the determination was not inconsistent with Article 11. The Panel's finding was not appealed.3. the DOC was found to have only relied on the original dumping margin to determine the continued dumping over the life of the measure.Carbon Steel held that the DOC's determination of LCRD in the sunset review was not inconsistent with Article 11.3. Japan argued that "the DOC failed to make a proper.3." The AB.submitted by Mexican exporters and relied "exclusively on the basis of a decline in import volumes. The Panel first noted that the investigating authority has an obligation to make a "reasoned finding on the positive evidence" in determining the likelihood of dumping. however." The Panel concluded that the DOC was required "to at least consider the information and take it into account before making its determination.OCTG (Argentina) also held that the DOC's determination of the LCRD in the sunset review was inconsistent with Article 11.2 Injury The ITC's Determination of the Likelihood of Continuation or Recurrence of 134 .
and (5) the level of export dependency. disagreed and denied the applicability of Article 3 process in sunset reviews because the determination was made "regarding the likelihood of injury rather than injury. On all three accounts.S. and 11.3 of the AD." The Panel then noted that the ITC had based its determination on a proper establishment of facts and an unbiased and objective evaluation of the facts. (2) the likely price effects of dumped imports. The Panel. 3. (4) the existence of import restrictions faced by the interested party. The Panel deemed such explanation of the ITC to satisfy the requirement of Article 11.3. This issue was not appealed but it was indirectly affirmed through the AB's finding on the causation issue. the AB held that the ITC presented a sufficient factual basis for determining the LCRI. Mexico first argued that the ITC must undergo a detailed injury determination process that is provided in Article 3. (3) the price level of the products concerned.3. The AB noted that "positive evidence" does not mean incontrovertible evidence. and (3) the likely impact of dumped imports on the U.3 of the AD. With regard to the likely volume of dumped imports.OCTG (Argentina) held that the ITC's determination of the LCRI in the sunset review was not inconsistent with Article 11. Similarly.S.3 The ITC's Determination of the Likelihood of Continuation or Recurrence of Injury within a Reasonably Foreseeable Time 135 .The Panel in US -. the following five factors were held sufficient to support the ITC's conclusion: (1) the importance of the U. the AB in US -.1. market.2." 8.OCTG (Mexico) held that the International Trade Commission's ("ITC") determination of the likelihood of continuation or recurrence of injury ("LCRI") in the sunset review was not inconsistent with Articles 3. industry. however. (2) the profitability of the products concerned. and that the standard may be satisfied even when "the inferences drawn from the evidence on record are projections into the future. by presenting five reasons why the likely volume of import after the revocation of the dumping duty would be significant to cause injury. Argentina argued that the panel erred in its determination of the following three issues: (1) the likely volume of dumped imports.
but also with Article 11." 8.4. relying on dumping margins that resorted to "zeroing" methodology. this could give rise to an inconsistency not only with Article 2.OCTG (Argentina).S. needs not be applied to sunset reviews. the U. the AB declined to rule on the consistency of the DOC's determination because the factual basis was insufficient to determine whether the DOC had actually resorted to the zeroing as defined in EC .5 THE U. however. which specifies the methodology of calculating dumping margin. the AB held that "should investigating authorities choose to rely upon dumping margins in making their likelihood determination. has so far made limited progress in 136 .4. Argentina argued that the failure to "specify the relevant timeframe for the injury determination is not a 'properly reasoned and supported determination' and does not have a 'firm evidentiary foundation.4 Zeroing used in Sunset Reviews The AB in US -.3 of the AD. Nevertheless. The AB added that "Article 11.3.3 textually does not provide any requirement for the specification of timeframe and that the lack of timeframe can still provide the properly reasoned and sufficient factual basis required for the likelihood of continuation or recurrence of injury.3 of the AD.3 of the AD.Bed Linen. the calculation of these margins must conform to the disciplines of Article 2.S. was inconsistent with Article 11.3 does not expressly prescribe any specific methodology for investigating authorities to use in making a likelihood determination in a sunset review.3. 8.OCTG For those issues that were held to be inconsistent with WTO law by the Panel and (ARGENTINA) the AB in US -. IMPLEMENTATION OF THE DSB FINDINGS IN US .Carbon Steel noted that the investigating authority's determination of the likelihood of continuation or recurrence of injury. Article 2.4." Therefore." The AB reasoned that "if these margins that resorted to 'zeroing' were legally flawed because they were calculated in a manner inconsistent with Article 2.The AB in US--OCTG (Argentina) held that the ITC's basis for the determination of the likelihood of continuation or recurrence of injury in the sunset was not inconsistent with Article 11.'" The AB disagreed and held that Article 11. As for its application to the actual case.
it is interesting to note that the DOC did initiate the (annual) administrative review on antidumping duty imposed on Oil Country Tubular Goods from Argentina.C. nor the application of any such provision to any person or circumstance. without an act of implementation domestically. §1675(c)(4)(B). Argentina and the U.implementing the findings.S. measure found to be inconsistent with WTO law cannot be challenged within the U. has yet to fulfill its obligation in bringing its measures into conformity with the DSB findings. With the deadline already passed. The notification does not indicate that the review is initiated as a new sunset review. that is inconsistent with any law of the United States shall have effect.F.R.106 104 The U. provides that U. the U. underwent an arbitration process under Article 21. 2005. 70 Fed.3(c) of the DSU. Second. by stating that "by modifying the waiver provisions. The relevant provision reads: "Every statement of waiver must include a statement indicating that the respondent interested party waives participation in the sunset review before the [DOC]. the date on which the DSB adopted the Panel and AB Reports. the requirements for a statement of waiver were revised by adding a statement where the waiving respondent party in effect pronounces that it is likely to dump in case the antidumping order is revoked. 19 C.S.S.R. Initiation of Antidumping and Countervailing Duty Reviews and Request for Revocation in Part..218(d)(2)(1) (2006). (19 U.S. Section 102(a)(1) of the Uruguay Round Agreements Act.C. 106 Although no sunset review has been initiated. 2004." This is a foregone conclusion since the waiving parties would already have pronounced that they are likely to dump if the antidumping order were revoked. therefore. 56. 2005 and invited public comments. §351.104 With regard to the inconsistency of the waiver provision. a statement that the respondent interested party is likely to dump . First." Id.S. 2005 thus complying with the above deadline. to implement the findings was determined to be twelve months from December 17.105 These amendments were made effective on October 31.S.F. The DOC has not yet initiated a new sunset review that will determine the revised likelihood of continuation or recurrence of dumping that would be consistent with Article 11.3.631 137 . §3512(a)(1) (2000)." 105 19 C.S.S.. and the reasonable period of time for the U. if the order is revoked or the investigation is terminated. The expiration date. law will prevail in conflict and that "no provision of any of the Uruguay Round Agreements. The DOC denied the need to amend 19 U. Two amendments were subsequently made to the relevant regulations.218(d)(2)(iii) was deleted. §351. Reg. the DOC proposed the amendment of the relevant regulations on August 15. the DOC has eliminated the possibility that its order-wide likelihood determinations would be based on assumptions about likelihood of continuation or recurrence of dumping due to interested parties' waiver of participation in sunset reviews. was December 17.
cumulation.6 OBSERVATION The three cases that the DSB addressed with regard to the sunset reviews follow roughly two prongs of legal reasoning. sunset reviews as governed by Article 11. 138 .3.8.3 does not offer any cross-reference clause that links it with other articles of the AD. The important point is that although the second prong does provide a limitation to this discretion. and de minimis topics previously mentioned. The first prong leads to a simple corollary that the antidumping authority enjoys discretion in determining the LCRDI. such as Articles 3 and 5 which govern original investigations and any mention of rules or standards for the determination. Under such a formulation. It is only at the application stage of the (Sept. Examples of this reasoning are found in the waiver and "as applied" issues discussed above. Although Article 11. The standard spans the range from the highest level where the burden of the authority is to prove beyond doubt that there is the LCRDI. The first prong establishes that original investigations and sunset reviews are two distinct processes and the antidumping authority administering the sunset review enjoys wide discretion. automatic self-initiation. The DSB at this point has an opportunity to set the evidentiary standard of what constitutes a sufficient factual basis. to the lowest level where the burden of the authority is to provide minimal evidence which would be enough to establish the LCRDI. which is aptly framed as the requirement of a sufficient factual basis. it does not apply to the discretion in selecting the methodologies used to determine the LCRDI. the role of the second prong is to provide the outer contour of that discretion.3 of the AD are procedurally different from original investigations. As held by the DSB numerous times. Examples of this reasoning can be found in most of the "as such" issues like the timeframe. The second prong relates to the requirement of a sufficient factual basis for the determination of the continuation of the duty order. The combination of the two prongs results in an interesting synthesis. The first prong focuses on the difference between original investigations and sunset reviews. 28. 2005). this is an acceptable formulation.
. 108 The word "likely" was also absent from the text.3) that will support the continuation of the antidumping duty and dispense with procedures (such as the de minimis rule in Article 5.3 providing the textual basis for such discretion. 139 . 677 (2002). The draft of Article 11. Dwyer.8) that will support the termination..S. 36 J. Department of Commerce Administration of Antidumping Sunset Reviews: A First Assessment. antidumping authority enjoys a free hand in selecting any procedures (such as the cumulation rule in Article 3. The Hague. the DSB is obliged to give deference to antidumping authorities in their choice of the LCRDI determination methodologies.3 does not provide any detailed guideline as to how the LCRDI determination should proceed.3 from the New Zealand Draft reads. Both contained the language "necessary to offset" or "necessary to prevent" requiring the antidumping authority to verify the necessity of the antidumping duty in order to continue the measure. But the textual structure of Article 11. World Trade 675. The negotiation history of Article 11. and would have to provide a rationale 107 Michael Moore. Canada.3 implies that the termination should be the default position. The combination of the two meant that the objective of sunset reviews. Stewart & Amy S. 108 The relevant passage of Article 11." The relevant passage from the Dunkel Draft reads. not its mere likelihood. would be procedurally and substantively protected from abuse by those seeking to continue the measure. " that the continued imposition of the duty is necessary to prevent the continuation or recurrence of injury by dumped imports. A balancing issue arises at this junction. One is the revocation of the antidumping duty after five years.3 during the Uruguay Round also provides the relevant background of this tension and of a balance reached in the negotiation process. which was to terminate the antidumping duty order after five years. 1998). This is because the antidumping authority would have to prove the continuation or recurrence.that the continued imposition of the duty is necessary to offset dumping and prevent the continuation or recurrence of the injury. It is true that the text of Article 11.3 does present two conflicting interests.methodology chosen that the second prong kicks in.107 The other is the determination of LCRDI that warrants the continuation of the duty order. ". the European Union. WTO Antidumping and Subsidy Agreements: A Practitioner's Guide to "Sunset" Reviews in Australia. The language of Article 11. With Article 11. This is why the cases hold that the U." Terrence P. and the United States Appendix I (Kluwer Law International.3 proceeded from the New Zealand and Dunkel versions.
The negotiating parties paid attention to the "exception" clause of Article 11. as warranted by Article 11. the DSB must ensure that some balance is reached. The DSB must respect that discretion. The authority has large discretion. objected to the Dunkel Draft language and proposed the deletion of the word "necessary" and the insertion of the more flexible term.for the necessity of the duty order.without simply relying on conjecture lacking any evidence . The consistency finding for the LCRDI determination in US -OCTG (Argentina) demonstrates that as long as the antidumping authority considers some relevant factors. These cases hold that the antidumping authority cannot base its likelihood determination on a mere conjecture with no evidentiary basis. With the two conflicting interests apparent in both the text and the history of Article 11. 140 .S. The DSB simply confers the antidumping authority deference where as long as the authority has relied on some reasonable evidence . The inconsistency finding for the LCRD determinations in US -. the DSB has little role to play with regard to the first prong. The U.the determination would be deemed acceptable. The first prong clearly supports whatever objective that antidumping authorities seek.OCTG (Mexico). US -. Then the DSB's role is to rely on the second prong in order to balance the two interests. as held by numerous cases examined above.3 and is free to choose whatever methodology it sees fit.3. which demonstrates that the termination and the continuation interests were of equal significance. which is usually to continue the antidumping duty in order to protect domestic producers." which would be deemed sufficient to justify the continuation of the duty order. An examination of the DSB findings does not indicate that the DSB has considered the balancing rationale as is proposed here.3.OCTG (Argentina). the determination is deemed to satisfy the sufficient factual basis. This is achieved through an adjustment of the evidentiary standard in determining the LCRDI. and the waiver issue demonstrate the level of evidence that does not satisfy the sufficient factual basis. It appears that a compromise was reached when the word "necessary" was deleted and the word "likely" was inserted. Thus. "good cause.
more weight should be conferred to evidence denying the LCRDI than is the case under the current evidentiary standard. Mavroidis. in the context of sunset review cases. 141 . For example.although not necessarily amounting to the complete procedure of original investigations . The AB in US -. A somewhat related issue with the above evidentiary standard has to do with the burden of proof. the DSB appears to be reluctant to take this route as demonstrated by the SPB issue. it is clear that the findings favor the possibility of continuation of the antidumping duty measure over the possibility of termination.the jurisprudential tilt which currently favors the continuation of antidumping duty orders can be alleviated. US -. The World Trade Organization: Law. Practice. Thomas J. Schoenbaum & Petros C.that satisfies the evidentiary standard of beyond doubt of the likelihood of continuation or recurrence of dumping and injury. WT/DS33/AB/R (April 25. Also cited in Panel Report. and Policy 38 (Oxford University Press 2003) (citing Appellate Body Report. bears the burden of proof. P 14. The DSB must ensure that the termination and the continuation interest be balanced.The above position of the DSB is reasonable if the finding for each issue is considered separately.109 This means that by lowering the burden of proof that must be overcome by a party to successfully establish a prima facie case . The DSB must also recognize the need for a stronger evidentiary standard that will balance wide discretion that the antidumping authority enjoys in selecting the method to determine the LCRDI.United States Measure Affecting Imports of Woven Wool Shirts and Blouses from India. The widely accepted WTO rule is that a party which makes an affirmative claim. The standard that the DSB has set in the three cases. Nevertheless. 1997)).OCTG (Mexico). when the balancing requirement is brought into the picture. is weaker than is warranted. whether it is the complaining party or the defending party.OCTG (Mexico) did not address the burden of proof issue while discussing the 109 Mitsuo Matsushita. although per se reasonable. But. a complaining party claiming inconsistency of the antidumping authorities LCRDI determination . Every sunset review case that is brought to the DSB will inevitably contain issues that pertain to either the first prong or the second prong. Antidumping authorities should administer a more rigorous review .for example.
Sunset reviews currently face heavy criticisms for being abused by antidumping authorities where far too many antidumping duty orders are continued after sunset reviews through the exception clause of Article 11.. Kinmen and Matsu. Costa Rica. Proposal on Sunset. Penghu. Rep.S. Communication from Chile. Korea.3 of the AD. These proposals emphasize the goal of sunset reviews. an average of 40% of them is not terminated. Norway. Kinmen and Matsu. and Thailand. TN/RL/W/76 (Mar. Colombia. Of.110 Rough statistics show that for those antidumping duty orders imposed by developed countries between 1995 and 1999. 111 WTO Negotiating Group on Rules. Japan.S. 111 WTO member states have brought numerous proposals to the WTO Negotiating Group on Rules to improve the sunset review system. TN/RL/W/111 (May 27.3 will face a stiff opposition from the U. Chile. Switzerland. Korea suggests an "automatic sunset. Paper from Brazil. Korea's View on the Improvement of the Sunset System. which is against any changes made to the WTO antidumping regime. Further Submission of Proposals on Sunset. China. Hong Kong. Hong Kong. Penghu. 142 . thus significantly raising the burden of proof of the complaining party. 110 WTO Negotiating Group on Rules. Submission of the Republic of Korea. the AB has effectively ruled that Mexico did not establish a prima facie case. Israel. Japan. Norway. Thailand and Turkey. Annex I (Oct. 19. For example. Switzerland. In this respect. 17. 2005). a "judicial" construction of the antidumping sunset review regime that balances the interest of the termination and the continuation of sunset reviews by the DSB will provide another venue to address the concerns of the WTO Member States. Canada proposes the explicit enumeration of factors within the AD that antidumping authorities must consider in making the LCRDI decision. But it is also true that the attempt on the outright amendment of Article 11. 2003). Another report states that 54% of antidumping duty orders imposed by the U. TN/RL/GEN/74. China. Korea. 2003). which is to terminate antidumping duty measures after five years. despite the extensive evidence provided to the Panel.SPB." the outright termination of the antidumping duty order after five years. Singapore. the Separate Customs Territory of Taiwan. Nevertheless. by denying that the Panel's qualitative analysis was based on fact. Separate Customs Territory of Taiwan. WTO Negotiating Group on Rules. between July 1998 and March 2003 still remain in place after sunset reviews.
at p. 3. Journal of World Trade. The purpose of Article VI truly was to limit the possibility of taking measures to counteract dumping. Vol. 143 . Vol. but the purpose has gone largely unfulfilled. 43.30.9. A Commentary on the WTO anti-dumping Code. at p. adding detailed procedural and substantive requirements. 112 But nowadays national laws generally treat foreign respondents in a systematically unfair fashion and discourage competition.1 Conclusion CONCLUSIONS AND SUGESTIONS Article VI of GATT allows countries to take action against dumping. Journal of World trade. August 30 (1996).33 (4). 9. The ADA clarifies and expands Article VI. 113 Michael O. (1999).113 112 David Palmeter. Anti-dumping reform in the United States. Moore.
Under the ADA, dumping per se is not actionable. National governments cannot prevent foreign companies from dumping. The object of the ADA is to provide a remedial mechanism to counter injurious dumping based on a uniform set of rules applicable to all countries. However, countries have started using anti-dumping measures in a manner so as to protect their domestic industries. During the early years (1994-99) of the implementation of the ADA it was the developed countries that were largely using these measures. The four developed countries, viz., the US, the EC, Canada and Australia accounted for 90 percent of the total anti-dumping investigations during this period. More recently, its use by developing countries has burgeoned. Interestingly, most of those investigations are not against the developed world but against other developing countries themselves.
The dispute settlement provisions under the ADA are unique and are not applicable to other WTO agreements. The interpretations of the ADA in various disputes have important repercussions on the developing countries. In the coming days countries like the US, EU and others will use methodologies like “zeroing” in their domestic antidumping legislations “stamped” by the AB in various cases as ADA consistent, against the developing countries as a non-tariff barriers and consequently the developing countries will loose the export opportunities in those countries. The ADA allows governments to act against dumped imports where there is material injury to the competing domestic industry. In order to impose anti-dumping duties the importing government has to determine, after investigations, that dumping has taken place, the extent of dumping and the extent of injury to the domestic industry. Although the Uruguay Round considerably improved the GATT rules governing anti-
dumping, the number of anti-dumping cases has risen sharply. Since tariffs have largely been reduced, anti-dumping has become a popular means to protect domestic industry. Moreover, the increased use of anti-dumping procedures undermines the credibility of the rules-based world trading system. The last Ministerial Conference held at Doha114 considered these developments and included the concerns of Members in the “Doha Declaration” which states: In the light of experience and of the increasing application of these instruments by Members, we agree to negotiations at clarifying and improving disciplines under the Agreements on Implementation of Article VI of the GATT 1994, while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least developed participants. The last ministerial conference therefore decided to renegotiate the issue in question. It is the time of the WTO members to think along the lines of a revision of the ADA as an important subject of discussion and place it on the agenda for the next round of multilateral trade negotiations proposed to be held in September 2003 at Cancun in Mexico. Members, in particular the developing countries must make concerted efforts to amend a number of problematic provisions in the ADA through negotiations. Any reform of the ADA should result in a restriction of the use of anti-dumping measures. Article 2.2 of the ADA is one of the most frequently disputed provisions before the AB. Nowhere in the ADA the concept of “ordinary course of trade” is defined, nor does it prescribes what are the transactions coming under the above section. The Panel held that the US “arms length” test or “99.5 percent” test did not rest on a permissible interpretation of the term “sales in the ordinary course of trade”. There is an urgent need to define the term and to specify guidelines for the calculation of dumping margins. According to Jarl Hagel Stam, “the definition of dumping is very mechanical, without any reference to anti-competitive behaviour or intent.”115
WTO Ministerial Conference, Fourth Session at Doha, 9-14 November 2001. Jarl Hagelstan, Some short Comings of International Dispute provision, Journal of World Trade, Vol. 25 (1991), at p. 99.
The developed countries are using this agreement for back-to-back investigations as in the case of EU-India bed linen case. In this dispute also the AB held that the EU “Zeroing” practice is against the letter and spirit of the ADA. However the dispute remains unresolved. A new provision should be added in the ADA to prohibit new investigations within one year after the finding of non-dumping in a previous investigation. In the Doha Ministerial declaration the Members were agreed on a Framework Agreement on Special and Differential Treatment provision. But benefit of this provision was frequently denied to the developing countries by the developed world. Presently material injury is not clearly defined, and domestic laws allow for a number of injury factors. The defending countries find it difficult to submit evidence as to the material injury even when there is actual injury to the domestic industry. The “facts available” provision contained in Article 6.8 and Annex II of the ADA cannot be misused for extracting trade secrets from the competing industries of respondents.
Another criticism against the anti-dumping provision is that it is over protectionist. Phedon Nicolaides and Remco Van Wijngaarden116 opined that as the “Common objective of both anti-dumping rules and domestic competition rules is to prevent distortions to competition, the most natural reform would be for trade authorities to use the competition policy criteria in their investigations of dumping." The above authors’ adds that short term, dumping harms local firms but benefits consumers. He observed that problem with anti-dumping lies in the fact that the duration of those benefits may be short-lived and that the short term gains to consumers may not out weigh possible long term costs to producers and consumers. Nowhere has the ADA dealt with the aspirations of consumers and of a common sense provision to resolve situations where domestic supply is non-existent or insufficient to satisfy the demand for merchandise subject to anti-dumping duties.
Nicolaides and Renco Van wingaa Rden, Reform of Anti-dumping Regulations the case of E.C., Journal of World Trade, Vol-27, (1993), at pp. 31, 36.
at p. 147 . “Rethinking the “like product” definition in WTO anti-dumping law”. The definition of “like product” in the ADA may be clarified so as to ensure that the term is used in a narrower sense. Anti-dumping is an industry or company specific action. It is independent of government policy and its determination involves market-based variables such as prices and costs. The “anti-dumping duties cannot reduce market fluctuations nor can they raise the degree of integration of national economies. All market variables can be used in many different ways and involve a wide range of interpretations. injury and casual link. This is an extra burden on domestic industries associated with anti-dumping. instead they are more likely to contribute towards further market segmentation and shield domestic oligopolies from foreign competition. Journal of World Trade Vol. they are concerned with the size of the dumping margin and the effects that it already has. the importer tends to drop imports of that product from the targeted country and supplier. Journal of World Trade 33(3). This is a barrier to the domestic industry.”117 Therefore the enormous power vested in the domestic anti-dumping authorities. This might be accomplished by specifying the clear cut aspects in which product must “closely resemble” one another by explicitly stating that inputs and finished products shall not be considered in similar manner. Also. later developed and minor altered products should be determined separately.24.118 It is the duty of the applicant to submit prima facie evidence of dumping. 91.Existing anti-dumping regulations do not ask why and how a firm dumps and what the effect of continued dumping is likely to be. 117 Phedon Nicolades. 118 Macro bronckers and Natalie Mc Nelis. The comparison must be of “like” with “like” and avoiding arbitrary comparisons between apples and oranges in anti-dumping proceedings. for determining the normal value. Instead. which is not equipped to investigate and collect evidence that is sufficient to prove a prima facie injury. 1274. The Competition Effect of dumping. at p. A weak anti-dumping case can cause as much damage as a reasonable one. (1999). This is because as soon as an investigation is initiated. is likely to be misused by the domestic industry by manipulating the criteria of determination of normal value as a protectionist measure. (1990).
But none of these have been put into practice. 3% and collectively account of 7% is necessarily to be increased up to 7% and 15% respectively.119 The real object of including this rule in the ADA is to weed out “nuisance” cases and to provide special and differential treatment for developing countries. Hoekman find the motive behind the practice of antidumping. 120 Bernard Hoekman. Article 17. (Washington. Many developing countries feel that the way anti-dumping rules 119 Tom Emrich. 148 . The negligible level contained in Article 5. 61. Tracy Murray argued for raising the de minimis standard level..”120 He suggests antitrust measures instead of anti-dumping for the benefit of the home market sales. Therefore the WTO Panel should be given complete authority to take decision on all issues. Down in the Dumps. as in the case of other agreements. D. subsidies and state involvement in industry.The de minimis dumping margin is unrealistically low (at present 2%) and should be increased. which may be misused by the developed countries against the developing countries. Free trade and deep integration: anti-dumping and antitrust in regional agreements. edts. The WTO-DSB has a limited role in settling anti-dumping disputes.8 of the WTO AD Agreement. It is also to be noted that the de minimis rule in the ADA does not distinguish between developed and developing countries. “A final potential strategic rationale for anti-dumping is as an instrument to counteract foreign industrial policies such as investment restrictions.6 invests discretionary powers to the national authorities. at p. 1998). principle should be made mandatory. 12. World Bank Working Paper (April 13. Richard Boltck and Robert E. According to him. at p. Their role is limited to examining whether the facts have been determined properly and whether the evaluation of the facts has been done in an unbiased and objective manner.1991). comment to the article “The administration of the anti-dumping duty law by the department of commerce” by Tracy Murray.C. More over the lesser duty. Litan.
but also to convince the farmer that is the way things ought to be. it has been argued that: 121 Mehdi Shafaeddin. the domestic industry needs to be educated about the Anti dumping provisions.2. Many developing country members however. 149 . Finger.153. as in the words of Finger. free trade or fair trade. More over these countries administrative systems should be free form corruption in investigation and the determination of dumping.2 Suggestions In this research work. it would be necessary to hold consultations with. Failing which. 26. 1991). 122 Michael J. feel that the present definition is advantageous to the developed world.121 In order to counter these actions of the developed countries.1 Reviewing the definition of Dumping Margin in Article 2 The enormous leeway in construing the dumping margin should be reduced. The definition in Article 2 is fraught with a number of ambiguities that can lead to problems at the operational level. and to avail the expertise of high calibre professionals and legal experts in the mechanism are decisive. 9.2 is very vague and mechanical. It lacks the necessary focus on which to rely for developing arguments during negotiations. The following recommendations suggest structural reform of the ADA. “Anti-dumping is the fox put in charge of the hen house: trade restrictions certified by GATT. at p. The aim has been rather to draw broad attention to the emerging legal jurisprudence in this area. WPS 783 (23 October. Specifically. (December. In addition. an enquiry into the causes of failure in recent trade negotiations? UNCTAD Discussion Paper No.have been used in practice is in contradiction with the spirit of WTO rules governing trade liberalization. The fox is clever enough not only to eat the hens.The Origin and Evolution of Anti-Dumping Regulation. the analysis of the Panel and Appellate Body decisions has revealed a number of deficiencies in the framework of the present ADA. The definition of dumping in Article 2.”122 9. 2000). The arguments and issues raised above may not have covered all the questions. World Bank Working Papers.
If a price dumping case is initiated. if a below cost dumping case is initiated. leading to an increase in dumping margins. 9. A direct comparison between the domestic price and export price is often not possible. These are some of the operational level problems. normal value should be based on cost of production. as well. and - dumping with predatory intent or monopolistic intent should be made actionable under the ADA. normal value calculation should be based on home market prices.2 Specifying Rules to Calculate Constructed Normal Value The disputes that come before the DSB suggest manipulation of the exporter’s financial information.2. or because of the particular market situation or the low volume of sales in the domestic market of the exporting country.- definitions of price dumping and cost dumping under the ADA need to revised to target only systematic dumping. while incidental dumping should be excluded. This could be because of no sales of the like product in the ordinary course of trade in the domestic market of the exporting country. The first choice may be price-to-price comparisons of export and home market sales. The exclusion of sales below cost from the calculation of normal value will inflate the normal value and consequently the finding of dumping. There should be a common mathematical formula applicable to all Members. The second choice should be a specific provision stipulating a requirement for the domestic industry to choose either price-dumping or cost dumping allegations. Article 2 should be revised to provide two alternatives bases for calculating normal value. The procedures provide considerable discretionary power to the administrators who carry out the dumping determinations. - the focus of determination of dumping based on differences between foreign and domestic prices should be shifted to the selling of products at below cost prices. 150 .
3. practices like ‘zeroing’ should not be applied in the calculation of dumping margin.2 (purchasers.3. Furthermore. In a later case as well. On an exceptional basis. 9. investigating authorities must be subjected to higher standards of accountability and burden of proof when employing the exceptional price comparison method. the Panel affirmed the earlier decision. Members may employ a comparison of weighted average normal values with prices of individual export transactions.4. The calculation of profits of a company depends on many factors.4.4 Prohibiting ‘Zeroing’ The Panel and the AB in the EU-Indian Bed Linen dispute categorically held that the practice of ‘zeroing’ is inconsistent with the ADA. or by comparison of normal values and export prices on a transactionto-transaction basis. and the present procedures allow considerable scope for inflating the normal value estimates in the home market. and a uniform procedure should ideally be laid down for the calculation of normal value. Article 2.2 Under the ADA. The exceptional price comparison method is subject to misuse and criteria for its use must be streamlined. and when accompanied by an explanation as to why such differences cannot otherwise be taken into account appropriately. regions and time periods) must be tightened. 9. It was reported that the developed countries 151 . Zeroing eliminates ‘negative dumping margins’ from dumping calculation. The exceptions contained in Article 2. This ‘exceptional price comparison method’ can be used only when the pattern of export prices differs significantly among different purchasers. the existence of a dumping margin is established by comparison of a weighted average normal value with a weighted average of prices of all comparable export transaction. regions and time periods.3 Restraining the Use of ‘Exceptional Price Comparison Method’ in Article 2. But the Members have not been willing to discard this protectionist measure.Further it is submitted that the inclusion of profit in constructed value serves to inflate dumping margins incongruously. that of USIndia Steel.2 of the ADA should be revised to exclude profit from the calculation of cost of production.
frequently use this practice for finding dumping. Article 2 should be amended to prohibit zeroing, to treat negative dumping margins as such and to give their actual weight in the calculation of the overall dumping margin calculation. 9.3.5 Limiting the Use of Cumulative Assessment of Injury In most of the cases, the exporters were aggrieved by the arbitrary calculations of dumping and injury margins. Cumulation of imports from different exporting countries is a common practice used by investigation authorities to penalize small exporters. Article 3.3 of the ADA provides that where imports from two or more countries are simultaneously subject to anti-dumping investigations, a cumulative assessment of the effect of these imports ‘may’ be made. However, many members have made this provision mandatory while determining injury. The Panel in the case of Corrosionresistant Steel Products from Japan upheld the US argument that the investigating authority is not required to carry out a cumulative analysis in a sunset review. There are cases where injury was not found in individual cases, and it is not fair to impose duties only on the ground that cumulative assessment was made along with other exporters. The terminology used in the ‘cumulation provision’ of the ADA is vague and allows conflicting interpretations. The cumulation of imports from different countries always inflates the dumping margin; hence, this provision should be amended to exclude imports from different countries. 9.3.6 Prohibiting the factor of ‘Captive Production’ and Selective Examination of Domestic Market. In determining injury to the domestic industry, the factors mentioned under Article 3.4 of the ADA should be applied to the industry ‘as a whole’, and not only to a part of the industry. The ‘captive production’ provision of the US Tariff Act, 1930 allows the domestic authorities to examine a certain part of the industry for the purpose injury determination. Domestic industry mentioned here is the industry ‘as a whole’, and not a section of the industry. The exclusion of captive production from total domestic production of the like product reduces the quantity of total production, and consequently 152
increases the percentage of imports over that production. Thus, the words ‘as a whole’ should be added after ‘domestic industry’ mentioned in the first line of Article 3.4. Article 3 should be amended to prohibit selective examination of one part of a domestic industry. The AB in the Thailand-Anti-dumping Duties on Angles, Shapers and Sections of Iron or Non-Alloy Steel and H-Beams from Poland dispute held that it is mandatory to consider the list of economic factors mentioned in Article 3.4 of the ADA when examining the impact of dumped imports on the domestic industry. This provision should be made operational by including clear guidelines in Article 3.4 of the ADA. 9.3.7 Curtail Discriminatory power in Injury Test Injury is only one of the conditions required for anti-dumping measures, even though most investigations are injury-driven. The injury to the domestic industry could be due to many other reasons, such as the nature of market structure, lack of competitiveness, mismanagement, competition from new domestic companies, changes in consumer preferences, rising cost of inputs and so on. It is not easy to unravel the various causes of injury, and therefore there is a tendency to ascribe it all to ‘dumping’. In most of the investigations, the investigating authorities are not able to ascertain how the condition of that industry would differ from its current state. Moreover, the thresholds for excluding negligible imports from injury determinations should be based on market share rather than on the share of total imports. The level of negligible imports should be increased to a level higher than the current 3%, on the basis of empirical research demonstrating a positive trade impact. Hence, there is an urgent need to curtail the discretionary powers of the authorities in evaluating injury factors contained in Article 3.4. 9.3.8 Defining the ‘threat of material injury’ and ‘causal link’ According to the ‘threat of material injury’ standard in Article 3.7 of the ADA, injury to the domestic industry must be ‘clearly foreseen and imminent’. However, in many cases, the threat perception was based on allegations and conjecture, which are prohibited under Article 3.7. The determination of ‘threat of material injury’ to a 153
domestic industry should be in accordance with the basic concepts, principles and objectives of the ADA. If the imports are not materially affecting the domestic industry, then it is presumed that there is no threat to the domestic industry. As to the determination of causal link in many cases it was found that the causal link between dumped imports and injury to a domestic industry are missing. The absence of any requirement to weigh all relevant factors causing material injury will result in a finding of dumping even if such actions occur simultaneously with a downturn in the industry’s performance, regardless of the actual causal relationship between the trade distorting action and injury. There should be high analytical standards in finding a causal link between injuries to the domestic industry and dumping. 9.3.9 Prohibiting Back to Back Complaints The repeated recourse to anti-dumping actions against the same product has been identified as one of the problems in the implementation of the ADA. New investigations are often initiated immediately after the termination of one investigation for the same product. This causes much hardship to the exporters in defending cases in foreign countries. Moreover, their export interests will suffer during the pendency of the proceedings. Chain complaints constitute a serious abuse and misuse of the ADA, as these undermine the original purpose of the anti-dumping remedies. In order to eliminate the abuse, a new provision should be included, stipulating that if an investigation is terminated without the imposition of anti-dumping measures or if the application has been rejected or withdrawn, a new application concerning the same product and country may be admissible only after the lapse of one year. 9.3.10 Fix De Minimis and ‘Negligible Import’ upwardly in Article 5.8 Article 5.8 of the ADA does not provide a time-limit within which the determination has to be made as to whether the volume of dumped imports, are negligible or within the prescribed threshold. This gives rise to arbitrary and unilateral decisions of determining an appropriate time frame. The present de minimis dumping margin level is 2%. Considering the fact that computation of the margins is often arbitrary and unsound, 154
The margin of dumping should be at least 10% of the export price. If it cannot be proven that these minimum values are exceeded.8 of the ADA provides that the volume of dumped imports shall normally be regarded as negligible if the dumped imports are found to account for less than 3% of imports of like product and the collective imports from more than one country account for 7%. and of the fact that an increasing number of developing countries are entering into previously untapped markets. Moreover.3. The competitive situation in the domestic market and the origin of trade distortions in the exporting country markets need to be given proper consideration. The imports concerned should account for a market share of at least 25%. 9. that is.there is a case for increasing this limit to a more realistic level. In short. the investigation should be terminated immediately.11 Introducing a ‘Consumer Interest. The minimum threshold for the volume of allegedly dumped imports and the margin of dumping should be raised. The most neutral reform would be for trade authorities to use competition policy criteria in their investigations of dumping. In view of the liberalization of trade. A high de minimis threshold would act as a kind of final check on the abuse of dumping as a trade remedy. the consumer loses the pleasure of having a choice of products in the market. or they should not be initiated in the first place. clause in the ADA in Article 6. The ADA should include an evaluation of ‘interests’. Shortterm dumping harms the local firms but benefits consumers. taking into due account of evaluating objectively the interests of all parties concerned. The ADA should be amended to include a public interest clause. of importers. as well as of users and consumers. as prices are increased in the market. enabling the participation of consumer 155 . Presently. with the market share of each supplier country amounting to atleast 5%. a public interest test should be introduced in the ADA. Article 5.12 The common objective of both anti-dumping rules and domestic competition rules is to prevent distortions in the market. Antidumping duties negatively affect the consumers’ interests. it is necessary to increase these percentage levels.
Article 9.3 The first decade of the working of the ADA has proven that the ‘sunset’ provision is used as a ‘sunrise’ provision in most of the investigations. there would be significant reductions in the anti-dumping duty rates. then it should be adopted. in order to avoid attempts to circumvent the intent of the ADA’s review provision.1 of the ADA should be revised to stipulate that if lesser duty is sufficient to remove the injury to the domestic industry. Article 11. If a particular rate of duty is sufficient to eliminate injury to the domestic industry. A public interest clause should take care of a narrow domestic industry interest and a country’s larger interest. If the lesser duty rule were applied.12 Making the ‘Lesser Duty Rule’ mandatory in Article 9. Some countries are approaching anti-dumping not only as a mere dispute but as a conflict of interest between the domestic industry and a foreign rival. specifically in many industries like textiles and steel. In most of the cases. norms and criteria should be established to implement the ‘lesser duty’ rule in terms of ‘adequacy’ to remove injury. 156 . countries are unwilling to phase out the anti-dumping duties.13 Strictly following Sunset Review provisions in Article 11.3 should be amended to provide for automatic termination of anti-dumping duty decision after five years. Further the WTO members should establish specific burden of proof standards for sunset reviews.3. The ADA does not establish rules.3. especially when a developed country is investigating the alleged dumped imports from developing countries. there is no justification for imposing a higher margin of duty. The period of imposition of definitive anti-dumping duties as specified in the Article should be reduced from the current five years to three years.representative in the basic anti-dumping proceedings. 9. In addition to this. 9. procedures or specific criteria for the proceedings leaving all discretion of review to the investigating authorities. There is ample justification to have a special provision to make the application of the lesser duty rule mandatory.1 The ADA recommends but does not mandate the imposition of a lesser rate of duty. The discretion is absolutely with the domestic authorities and the review is mostly on speculations.
A provision should be incorporated in the ADA for the refund of duties collected when a Panel or AB holds that the levy is not justified.9.15 Enforcing Special & Differential Treatment Mandatory in Article 15 The most negative impact of an anti-dumping action is its influence on exports. 9. The mere threat of starting an investigation induces a drop in exports. The process of opening an investigation has negative effects on trade flow regardless of whether a duty will be finally imposed or not. These well-intended provisions lack clarity and have become practically inoperative due to their nature as soft law. The developed countries have rarely explored the possibility of constructive remedies before taking anti-dumping action against exports from developing countries. Article 15 of ADA recognizes the special situation of developing countries. In the Bed-Linen case. and help in eliminating cumulation of their exports.3. since it cuts off trade in crucial export markets. 157 . This could be accomplished.3. inter alia. This may often have a devastating effect on the economies and societies of developing countries. There is a need to make the best-endeavour provision of Article 15 of the AD operational. The lack of such provision encourages national authorities to use ADA provisions as a protectionist measure and also to retain proceeds of such a levy even when the same does not stand up to WTO scrutiny. by increasing the de minimis threshold for dumping and injury at all levels.14 Including Provision for Refund of Duties Presently there is no provision in the ADA to refund the collected duties even after the Panel or the AB found no dumping in disputes. where price undertakings were offered on behalf of the Indian exporters. It says that constructive remedies should be explored before imposing anti-dumping duties on developing countries. the anti-dumping authorities did not respond to the same. This would provide meaningful trade advantages for developing countries.
9. refunding the collected duties.16 Amending the ‘Best Information Available’ Provision Usage of the ‘facts available’ provision in anti-dumping cases is very high. When a Panel determines that anti-dumping measures have been unduly imposed. and providing appropriate compensation within a reasonable period of time. then Panels do not have full authority to review the action of the anti-dumping authorities. Article 17 should be suitably amended so as to apply the general standard of review 158 .17 Strengthening the Standard of Review Provision in Article 17. Under the present provision. If the information submitted is verifiable and in paper form. A restoration of this provision would help the developing countries and give a chance to amicably settle the disputes.6 The function of a WTO Dispute Settlement Panel on the anti-dumping issue is confined to assessing the objectivity or appropriateness of fact verification by investigative authorities of the Member countries. it must be accepted. with out giving sufficient time to the developing country exporters. It is necessary to make the provision more efficient. with specific factors and situations supplied where the methodology can be applied.3. The use of ‘best available information’ is used against developing countries due to their comparatively lower levels of computer technologies and available data. and also to explicitly forbid its application where its applicability would be clearly unfair. 9. The anti-dumping authorities are seen to make use of the ‘best available information’ at the slightest pretext. The ADA lacks a basic framework on how this discretion should be used. The investigating authorities in many cases have abused this methodology. the ADA should contain provisions for terminating anti-dumping measures. It is recommended that the WTO members give the Panels much broader authority. the mandatory conciliation procedure which had been provided for in Article 15.Finally.3. There is an urgent need to control the use of the ‘facts available’ provision and to lay down broad and general standards for tightening up the process.3 of the Tokyo Round Anti-dumping Code was not retained in the Uruguay Round.
the WTO members did not reach a consensus on anti-circumvention regulations during the Uruguay Round Negotiations.3.18 Introduce Anti-Circumvention Regulations Anti-dumping investigations are country-specific and industry-specific. 9. 159 . The US and the EU have nevertheless unilaterally implemented their own anti-circumvention regulations. Re-routing goods to another country. It is recommended that WTO members establish unified anti-circumvention rules and procedures.laid down in the Agreement on DSU. and deferred the issue to future considerations. and then importing from that intermediate country is a pre-WTO practice. The members have found circumvention as an antidote for the sake of evading anti-dumping duties. However.
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