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Antidumping rules in the WTO

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Antidumping rules in the WTO

  1. 1. 1 University of Maribor Faculty of law International Trade Law Antidumping rules in the WTO
  2. 2. 2 Valerija Gregurek Table of Contents 1. Introduction .............................................................................................................................. 4 2. Dumping................................................................................................................................... 4 2.1 The ADA – Background & Content......................................................................................... 4 2.2 Overview on dumping.......................................................................................................... 5 2.3 Committee on Anti-Dumping Practices.................................................................................. 6 2.4 Dispute settlement and notifications .................................................................................... 6 3. Determination of dumping ......................................................................................................... 7 3.1 Determination of normal value.............................................................................................. 7 3.2 Alternative bases for calculating normal value ....................................................................... 7 3.3 Determination of export price ............................................................................................... 9 3.4 Alternative method of calculating the export price.................................................................. 9 3.5 Fair comparison of normal value and export price .................................................................. 9 4. Calculation of dumping margins and duty assessment.................................................................10 4.1 Calculation of dumping margins ..........................................................................................10 4.2 Duty assessment.................................................................................................................10 5. Determination of injury and causal link......................................................................................11 5.1 Overview............................................................................................................................11 5.2 Like product.......................................................................................................................12 5.3 Injury.................................................................................................................................13 5.3.1 Types of injury .............................................................................................................13 5.3.2 Material Injury..............................................................................................................13 5.3.3 Basic requirements for determination of threat of material injury .....................................13 5.3.4 Causation/Other Known Factors....................................................................................14 6. Investigation ............................................................................................................................15 6.1 Initiation ............................................................................................................................15 6.2 Standing Determination......................................................................................................15 6.3 Public Notices and Confidentiality........................................................................................16 7. Provisional Measures................................................................................................................17 8. Price Undertakings ...................................................................................................................17
  3. 3. 3 9. Anti-dumping Duties.................................................................................................................17 10. Retroactivity...........................................................................................................................18 11. Reviews .................................................................................................................................19 12. Judicial Review.......................................................................................................................19 13. WTO Secretariat reports drop in anti-dumping investigations and measures ...............................20 14. 32 WTO members take anti-dumping actions during first half of 2010 .......................................20 15. Case report – The shrimp case.................................................................................................21 15.1 Overview..........................................................................................................................21 15.2 Retaliation measures of the Indian government..................................................................22 15.3 The final conclusion of the case .........................................................................................23 16. CONCLUSION......................................................................................................................24 LITERATURE REFERENCES .............................................................................................................26
  4. 4. 4 1. Introduction In this essay I will cover the basic knowledge of anti-dumping, the anti-dumping agreement and the anti-dumping protocols that the agreement and other documents provide. The notion of dumping is not a new subject in the open market. Since the open market is a transnational and mostly autonomous mechanism when it comes to dumping, there is not much that can be done to prevent it entirely. However, the agreements and documents delivered require from the WTO members to abide and apply the provisions set. Even though these provisions are important, they still can’t undermine the authority of the member states and this, in my opinion, is the foundation of relationships between international organizations and their member states. 2. Dumping 2.1 The ADA – Background & Content Article VI of the earlier GATT1 was carried forward into GATT 1994. A new agreement, the Agreement on Implementation of Article VI, or the ADA, was concluded in 1994 as a result of the Uruguay Round Agreement. Article VI and the ADA now are applied together which is stated in Article 1 of the ADA; “An anti-dumping measure shall be applied only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement.2” Concerning the content of the ADA the first part includes Articles 1 to 15 which contain the definitions of dumping, injury and procedural provisions that must be complied with by importing Member authorities wishing to undertake anti-dumping measures. Articles 16 and 17 in Part two establish the WTO Committee on Anti-Dumping Practices and special rules for WTO dispute settlement. Article 18 in Part III contains the final provisions. Annex I provides procedures for conducting on-the-spot investigations while Annex II imposes restraints regarding the use of the best information available in cases where interested parties insufficiently cooperate in the investigation. 1 General agreement on tarrifs and trade 1994 2 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 145.
  5. 5. 5 2.2 Overview on dumping Dumping exists when the price of the product being sold in the importing country is less than the original price of the product produced in the exporting country. Because of that the prices are usually compared. However, sometimes simple comparison is not enough to ascertain the true dumping margin or even if dumping has occurred. So there needs to be a more detailed and in depth process of investigation and measures need to undertaken. In the following text the price of the product in the exporting country is usually called the „normal value“, and the price of the product sold in the importing country is called the „export value“. The anti-dumping agreement is based on the provisions of the Uruguay Round Agreement from 1986. and it states that members can impose anti-dumping measures, which include duties and other measures, and investigate and determine3: o that dumping is occurring o that the domestic industry of the importing country is suffering material injury o that there is a causal link between the dumping and the injury caused The reasons for dumping are irrelevant because all dumping is forbidden, however we can define some “types” of dumping like4:  predatory dumping- a type of anti-competitive strategy in which foreign companies or governments price their products below market values in an attempt to drive out domestic competition.  cyclical dumping or sporadic dumping- selling at low prices because of over-capacity due to a downturn in demand  market expansion dumping- selling at a lower price in the countries where the product is exported in order to gain market shares  state-trading dumping- selling at low prices in order to earn hard currency 3 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#ur; (29.05.2011) 4 Types of Dumping; Prof. Levich C45.000, Economics of IB Chapter 10, p.2; Source: http://pages.stern.nyu.edu/~rlevich/f1999/Chap-10.pdf (11.06.2011)
  6. 6. 6  strategic dumping or persistent dumping- dumping by benefiting from a calculated strategy which includes both low export pricing and maintaining a closed home market in order to reap monopoly or oligopoly profits 2.3 Committee on Anti-Dumping Practices The Committee on anti-dumping practices has certain obligation when it comes to the anti- dumping agreement, these obligations include: o Reviewing national legislation regarding anti-dumping in the WTO o Questioning national anti-dumping laws and regulations o Questioning the co ordination of domestic law with the Anti-Dumping Agreement o Reviewing notifications of anti-dumping actions taken by Members of the WTO The Committee has also created a separate body, the Ad Hoc Group on Implementation which is expected to focus on technical issues of implementation. The basis of notification is compliance with the anti-dumping agreement. In that sense the national legislature and authority has to revise their legislation in accordance with the Agreement and needs to notify the Committee on their progress. Additionally Member States are required to notify the Committee twice a year about all anti-dumping investigations, measures, and actions taken which are also subject to review by the Committee5. 2.4 Dispute settlement and notifications When it comes to dispute settlement the WTO provides a Dispute Settlement Body which bases its work on the provisions of the Dispute Settlement Understanding. This body usually consists of a panel. Since there is always room for dispute in international relations, in this case it’s no different. The member states have a right to challenge anti-dumping measures like anti-dumping duties imposed, and can challenge the Agreement when it comes to compliance with the Agreement. However, the national authorities have more autonomy when it comes to establishing facts and interpreting law which deters the panel’s point of view and makes the 5 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#ur; (29.05.2011)
  7. 7. 7 process less subject to the panel’s full discretion. All this represents the Standard of review and the standard as such is subject to revision when the circumstances require such revisions to be made. 3. Determination of dumping 3.1 Determination of normal value The „normal value“ is considered to be the value of the product in the exporting country market in the ordinary course of trade. However, if there are low sales or no sales of the product in question, or when the sales are considered not to be in the „ordinary course of trade“, it may not be possible to determine the normal value based on just the price of the product in question. In these circumstances alternative methods are provided. When it comes to insufficient or no sales in the exporting country there is no foundation for comparison. For a comparison to be made the agreement requires that the level of home market sales is sufficient if home market sales constitute 5 % or more of the export sales in the country conducting the investigation6 which is a basic requirement defined in footnote 2 of the ADA. 3.2 Alternative bases for calculating normal value Article 2.2 of the ADA provides two alternatives for the determination of normal value if sales in the exporting country market are not an appropriate basis7: a) the price at which the product is sold to a third country – taking into consideration the representative price of the like product when exported to a third country b) the “constructed value” of the product, which is calculated on the basis of the cost of production, plus selling, and expenses, and profits. The rules for determining whether sales are made below cost also apply to performing a constructed normal value calculation. 6 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm; (29.05.2011) 7 ibid.
  8. 8. 8 Also when determining normal value we can take these measures into account in the corresponding circumstances: o When the sales are not in the „ordinary course of trade“ that usually means that items are sold below the cost of production. We can conclude that items sold in this manner of trade can result in dumping when there is profit involved. So in a reasonable period of time this results in a reasonable amount of profits which in turn encourages dumping. o related party sales on the domestic market happen when domestic producers and distributors are related. Some WTO Members will then ignore the prices charged by the producer to the distributor and they will base normal value on the sales made by the distributor to the first independent buyer. This price will be higher and is therefore more likely to lead to a finding of dumping o If the product is indirectly exported or imported from a country that is not the manufacturer just the intermediate country, the normal value is determined on the basis of sales in the market of the exporting country. If the product is not produced in the exporting country or if it’s merely transshipped through the exporting country the normal value can be determined on the basis of the price of the product in the country of origin stated in article 2.5 ADA8. o There are countries which have so called „non-market economies“. The economy in these markets derives from government rule. We can conclude that these markets are substantially monopolized and do not provide a good basis for comparison in determining the normal value because the prices are usually fixed by the State. In these cases the importing country has significant discretion when it comes to such products and their prices. Article 2.7 provides that for these reasons some WTO Members, that is the investigating authority, will then resort to prices in a third country as the basis for normal value. This means that export prices from the non- 8 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 148.
  9. 9. 9 market economy to the importing Member will be compared with prices in this surrogate-analogue country9. 3.3 Determination of export price Article 2.1 of the ADA says that the „export value“ is the price of the product when it is sold to the importer in the importing country. But like in the case of normal value when it comes to export value there are also some irregularities. Such as when there is no export price or when the price is unreliable. There is no export price when the transaction is internal or the product has been exchanged for another through barter transfer. The price, however, is unreliable usually when there is an association or cooperation between the exporter and the importer. In cases like these there should be alternative methods of calculation implemented. 3.4 Alternative method of calculating the export price Article 2.3 of the ADA states that these alternative methods are founded on the notion of a „constructed export price“. And the constructed export price is determined on the basis of the price at which the imported products are first resold to an independent buyer. 3.5 Fair comparison of normal value and export price The Agreement in Article 2.4 requires that a fair comparison of the export price and the normal value be made. The basic requirements for a fair comparison are that the prices being compared are those of sales made at the same level of trade, normally the ex-factory level10, and of sales made at, as nearly as possible, the same time11. 9 GATT 1994, which was originally negotiated in 1947,contains a footnote to ArticleVI; AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 148. 10 „The ex-factory priceis the priceof a productat the moment that it leaves the factory“ ; Source: http://www.encyclo.co.uk/define/ex%20factory (11.06.2011) 11 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#comparison; (29.05.2011)
  10. 10. 10 The investigating authorities are obliged to inform the parties of the information needed for a fair comparison regarding:  adjustments – these regard either the normal value or the export price, or both because of certain differences which have to be rectified so the prices can be comparable  allowances – these regard costs, duties and taxes as well as profits between the importation of the product and its resale to the first independent purchaser  currency conversion12 4. Calculation of dumping margins and duty assessment 4.1 Calculation of dumping margins When it comes to calculating dumping margins we can differentiate between: Typical calculation – when we compare the weighted average normal value to the weighted average of all export prices or a transaction-to-transaction comparison of normal value and export price Atypical calculation – „targeted dumping“ – when there is pattern of export prices differing significantly among different purchasers. In these situations the normal value can be compared to the export prices based on individual transactions. So here we exclude the weighted average. 4.2 Duty assessment Duties are measures introduced to deter dumping. Member States are allowed to collect duties on a non-discriminatory basis on dumped imports that are causing injury. The duties must not exceed the dumping margin, although they may be a lesser amount. If the duties are collected on the „pay now, ask questions later“ principle, that is if the specific duty is not fully 12 ibid.„Where the comparison of normal value and export price requires conversion of currency, the Agreement provides specific rules governing that conversion(Article 2.4.1). Thus, the exchange rate used should be the one in effect on the date of sale. Moreover, the Agreement requires that exchange rate fluctuations be ignored, and that exporters be allowed at least 60 days to adjust export prices for sustained exchange rate fluctuations.“
  11. 11. 11 determined, the final determination of the amount must take place as soon as possible. This is important so the injured party could be refunded for the amount he was overcharged13. Anti-dumping duties work in tandem with dumping margins which should be calculated for each exporter individually. But when that is not possible, the number of the subjects individually considered is lowered and anti-dumping duties are imposed on uninvestigated sources on the basis of the weighted average dumping margins actually established for the exporters or producers actually examined. The investigating authorities are prohibited from including in the calculation of that weighted average dumping margin any dumping margins that are less than 2 per cent, expressed as a percentage of the export price ( de minimis, zero14 ), or based on the facts available rather than a full investigation. In addition we have the notion of „new shippers“. These producers or exporters were not taken into consideration during the initial periods of investigations. They were not considered sources of imports therefore they could not be seen as dumping instigators. The authorities need to determine a specific dumping margin for such shippers. However, during the review no duties can be imposed on these subjects but other restrictions may be imposed. 5. Determination of injury and causal link 5.1 Overview Article 3.1 says that the Agreement does not define the notion of “material”. However, it does require that a determination of injury must be based on positive evidence and involve an objective examination of15: (i) the volume of dumped imports and the effect of the dumped imports on prices in the domestic market for like products 13 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#margins „The Agreement provides that the final decision of the authorities must normally bemade within 12 months of a request for refund or final assessment,and that any refund should be made within 90 days.“ ; (29.05.2011) 14 Internet webpage, Source: http://www.sice.oas.org/dictionary/SACD_e.asp „(Latin meaning “of the least”). The margin of dumping is considered de minimis, or the volume of dumped imports, actual or potential,or the injury,is considered negligible,if this margin is lessthan 2 per cent, expressed as a percentage of the export price.The investigation is then terminated.“ ; (30.05.2011) 15AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 148.
  12. 12. 12 (ii) the consequent impact of the dumped imports on domestic producers of the like products 5.2 Like product Like products are defined in the Agreement Article 2.6 ADA as “products which are identical, i.e. alike in all respects to the product under consideration or, in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration”16. Determining like products is done by simple comparison. Basically you have the product that is alleged to be dumped and the domestic product in the importing country that the dumped product can „replace“. This is important for determining injury because such products effect the economic efficiency of the importing country, putting the like products and domestic industry at risk. As an exception to the principle that the domestic industry producing the like product must suffer injury because of the dumped imports and that this must be assessed, Article 3.617 says that when there is no sufficient information available regarding the aspects (production costs, sales) of the like product needed for assessment, the effects of the dumped imports shall be assessed based on production aspects regarding the narrowest group or range of products, which includes the like product, for which the necessary information can be provided. This is sometimes called the product line exception. Example; when the domestic industry brings an anti-dumping complaint against naturally cultivated fruit or vegetables, let’s say apples. It is possible that in such a case the domestic industry does not possess the information needed regarding the production aspects of the said product so it needs to generalize the spectrum of assessment and take into account all naturally grown apples. In such a case, Article 3.6 would permit the investigating authority to assess the effects of the dumped imports with respect to all naturally grown apples. 16 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#product; (29.05.2011) 17 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 149.
  13. 13. 13 5.3 Injury 5.3.1 Types of injury Regarding injury we can say that it is the prerequisite for anti-dumping measures to be imposed. For that reason there has to be a causal link between the injury and dumping, and the importing Member must make a determination of injury. The Agreement defines the term “injury” to mean either18: (i) material injury to a domestic industry (ii) threat of material injury to a domestic industry (iii) material retardation of the establishment of a domestic industry 5.3.2 Material Injury The determination of material injury must be based on positive evidence and involve an objective examination of the volume of the dumped imports, their effect on the domestic prices in the importing Member market and their consequent impact on the domestic industry. The Appellate Body19 has held that this determination may be based on a confidential case file and, overruled by a panel, finding and that the injury determination should be based on reasoning or facts disclosed to, or discernible by, the interested parties. 5.3.3 Basic requirements for determination of threat of material injury Article 3.7 of the ADA requires that when it comes to the threat of material injury we need to take into consideration these factors:  the rate of increase of dumped imports - investigating authorities need to consider whether there has been a significant increase in the dumped imports 18 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#injury; (29.05.2011) 19 „The Appellate Body was established in 1995 under Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). It is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought by WTO Members. The Appellate Body can uphold, modifyor reverse the legal findings and conclusions of a panel, and Appellate Body Reports, once adopted by the Dispute Settlement Body(DSB), must be accepted by the parties to the dispute. The Appellate Body has its seat in Geneva, Switzerland“ World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti-dumpingarticle;Source: http://www.wto.org/english/tratop_e/dispu_e/appellate_body_e.htm; (11.06.2011)
  14. 14. 14  the capacity of the exporter  the likely effects of prices of dumped imports - authorities need to consider whether there has been significant price undercutting and whether the effect of dumped imports is decreasing prices to a significant degree, or to preventing price increases. When it comes to these factors the Anti-dumping agreement requires that the determination of threat of material injury should be based on pure facts and that the circumstances where dumped imports caused material injury must be clearly foreseen and imminent. 5.3.4 Causation/Other Known Factors The causal link is imperative if any anti-dumping measure is to be undertaken. This situation represents a need for establishing a connection between the injury caused and the dumping that occurred. The demonstration must be based on an examination of all relevant evidence. The agreement does not specify how the relevant factor and evidence is to be evaluated20. I would also like to talk about cumulative analysis. This notion helps to broaden the scope of investigation. It enables combined assessment of the impact of dumped imports from more than one country on the domestic industry. So there is a greater possibility of an affirmative determination in a case involving cumulative analysis. The authorities must determine that the margin of dumping from each country is not de minimis, that the volume of imports from each country is not negligible, and that a cumulative assessment is appropriate. When it comes to other possible factors contributing or exclusively causing injury Article 3.5 of the ADA, as mentioned, states that the demonstration of the causal link must be based on an examination of all relevant evidence before the authorities, but also the authorities must examine any known factors other than the dumped imports which are additionally injuring the domestic industry, and the injury as a result of such other known factors must not be attributed to the dumped imports. Article 3.5 then provides a non-exhaustive list of other factors which may be relevant depending on the facts of the case. “…the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of 20 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#analysis „Article 3.5 does require, however, that known factors other than dumped imports which may be causinginjury mustbe examined, gives examples of factors which may be relevant, and specifies thatinjury caused by such “other factors”must not be attributed to dumped imports.“ ; (29.05.2011)
  15. 15. 15 consumption, trade-restrictive practices of and competition between the foreign and domestic producers…21” 6. Investigation 6.1 Initiation The investigation process is a crucial part when it comes to achieving the anti-dumping objectives of the agreement. The investigation is generally instigated on the basis of a written request which should contain important information in order for anti-dumping measures to be enforced. Article 5.2 contains the requirements for the contents of this application. However, in the event that the volume of imports is negligible or the dumping margin is de minimis investigations are terminated because they can’t be based on information founded on these circumstances, which is explained in Article 5.8. Article 5.10 provides that investigations shall normally be concluded within one year and in no case more than 18 months, after their initiation. The 18 months’ deadline seems absolute.22 6.2 Standing Determination An application is made by, or on behalf of, the domestic industry of the importing Member if it is supported by other domestic producers whose collective output accounts for more than 50 per cent of the production of the like product produced by the domestic industry. So we can see that in this case their approval or disapproval is influential, that is they have a standing position for the ADA application process. However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25 per cent of total production of the like product produced by the domestic industry. These tests are often called the 50 percent and the 25 per cent test and the following example may explain their operation. 21 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 149. The other known factors, Article 3.5 ADA 22 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 152.
  16. 16. 16 Example; suppose that there are two domestic producers X and Y, which produce 1,500 and 2,500 tons of the product in question. Producer X files the application while producer Y neither approves nor disapproves the application: o The 50 per cent test is met because producer X represents 100 per cent of those supporting or opposing the application; o The 25 per cent test is also met because producer X represents (1,500:4,000x100) = 37 per cent of the total production. If, however, producer Y would have expressed opposition to the application, producer X would not have met the 50 per cent test because in that case he would have represented only 37 per cent of those expressing support or opposing the application. 6.3 Public Notices and Confidentiality Article 12 implies that the facts regarding the investigation and other relevant non- confidential facts must be made public. For that reason there exists the public notice which is a form of „insurance“ or a safeguard because it ensures that the information gathered by the national authorities is based on true facts and evidence. These public notice requirements are intended to increase the transparency of determinations, with the hope that this will increase the extent to which conclusions are based on fact and solid reasoning23. When it comes to confidentiality Article 6.5 ADA states that whenever interested parties make a submission to the importing Member authorities, they should generally prepare both a confidential and a non confidential version of the submission. The confidential version will be accessible only to the importing Member authorities. The non-confidential version, on the other hand, will be placed in the non-confidential file and can be accessed by all interested parties in the investigation24. 23 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#notice; (29.05.2011) 24 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 153.
  17. 17. 17 7. Provisional Measures Provisional measures should preferably take the form of a security like a cash deposit or bond. These may not be applied sooner than 60 days from the date of initiation and may not last longer than four months or maximally six months. Under the system of the ADA, at the time that the importing Member decides to impose definitive duties, it must also decide whether to retroactively levy provisional anti-dumping duties.25 These kinds of implied obligations for the responsible party are differentiated from duties which is easy to conclude from their title. They are called measures. Why? Because these measures usually precede the anti-dumping duties. They are usually applied based on estimates of the duty that is, at some point, going to be applied. So they are used as a failsafe to prevent dumping before the final duties are determined. 8. Price Undertakings Article 8 states that anti-dumping investigations may be suspended or terminated without applying anti-dumping duties where exporters offer to revise their prices or cease export to the area in question so that the authorities are convinced that the detrimental effect of dumping is eliminated. Use of the word ‘may’ indicates that authorities have complete discretion in this regard and, indeed, some countries are reluctant, as a matter of policy, to accept price undertakings. Price undertakings are often the preferred solution by exporters26. 9. Anti-dumping Duties Imposition of anti-dumping duties where detrimental dumping has been found is discretionary and the use of a lesser duty rule is encouraged. Many WTO Members include a public interest 25AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (12.06.2011) - page 155. 26 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (12.06.2011) - page 156.
  18. 18. 18 clause27 in their national legislation to enable them to refrain from imposing duties, even where detrimental dumping is found. When it comes to duties being imposed as anti-dumping measures, their duration is determined by the agreement itself but these provisions are flexible. The “sunset” requirement establishes that dumping duties shall normally terminate no later than five years after first being applied. But in cases where there is a need for a longer period of application of such duties, then, based on the relevance of such a need, the duties can last longer than it is foreseen by the agreement. 10. Retroactivity Article 10 ADA28 provides for two types of retroactivity:  First, where a final determination of material injury has been made and where in retrospect the effect of the dumped imports, if there were no provisional measures, would have caused injury, anti dumping duties may be levied retroactively for the period in which provisional measures have been applied. This type of retroactivity is often applied by importing Members.  Second, a definitive anti dumping duty may be levied on products which were entered for consumption not more than 90 days prior to the date of application of provisional measures, when the authorities determine for the dumped product in question that: (i) there is a history of dumping which caused injury (ii) the injury is caused by massively dumped imports of a product in a relatively short time 27 „If the dumping affects the domestic producers,the anti dumping duty on the other hand can hurt the consumer. It is therefore imperative to inspectthe impact of anti-dumpingduties on the public beforethey are imposed.“...“ However, neither the ADA nor the GATT mention the anti-dumpingclause;the closestprovision regardingthis notion is found in Article6.12 which gives the right to the consumers to provide information relevant to the investigation.“ ; Source: http://www.sesric.org/jecd/jecd_articles/ART04070102-2.pdf Journal on economic cooperation,25, 4(2004) page 62/ page 82; Predation and public interestin the WTO anti- dumping duty determination; a Malaysian case (15.06.2011) 28AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (12.06.2011) - page 159.
  19. 19. 19 11. Reviews The ADA recognizes three types of reviews of anti-dumping measures:  First, Article 9.529 requires importing Member authorities to promptly carry out reviews needed for “new shippers”30, that is producers which did not export during the original investigation period and which will normally be subject to the residual duty that was imposed in the original investigation. During the course of the review, no anti-dumping duties shall be levied on the newcomers. However, the importing Member authorities may withhold appraisement or request guarantees to ensure that, should the newcomer review investigation result in a determination of dumping, anti- dumping duties can be levied retroactively to the date of initiation of the review. Article 1131 provides for what can be called interim and expiry reviews:  definitive anti-dumping duties shall normally expire after five years from their imposition, unless the domestic industry asks for a review within a reasonable period of time preceding the expiry, arguing that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury.  during the five year period - interim review, interested parties may request from the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. In both cases, the measures may stay in force pending the outcome of the review. 12. Judicial Review Article 1332 provides that Members, which do adopt anti-dumping legislation, must also maintain independent judicial, arbitral or administrative tribunals or procedures for the 29 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (12.06.2011) - page 158. 30 „They were not considered sources of imports therefore they could not be seen as dumping instigators.The authorities need to determine a specific dumpingmargin for such shippers.However, duringthe review no duties can be imposed on these subjects but other restrictions may beimposed.” Page 10. 31 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (12.06.2011) - page 160.
  20. 20. 20 purpose of prompt review, that is reviewing of administrative, final and review determinations of the anti-dumping procedure in question. 13. WTO Secretariat reports drop in anti-dumping investigations and measures „The WTO Secretariat reported that during the period 1 January — 30 June 2010, the number of initiations of new anti-dumping investigations showed a 29% decrease compared with the corresponding period of 2009. The number of new measures applied also decreased during the first semester of 2010 when compared with the first half of 200933. “ We can conclude that the agreement has achieved some of its objectives. Dumping has been decreased and the measures taken by the national authorities have been minimized. The latter proves that the requirement of anti-dumping measures has been reduced. Optimistically we can say that the need for duties and other measures has been lessened because dumping itself has been reduced. However, in some countries the problem of dumping continues. But if these reports are any indication we might see a steady decline of dumping in the WTO. 14. 32 WTO members take anti-dumping actions during first half of 2010 „At the meeting of the Committee on Anti-Dumping Practices on 26-27 October 2010, 32 WTO members reported taking anti-dumping actions during the first half of the year (the European Union counting as one). A number of these actions were questioned during the meeting, and the members concerned were urged to follow WTO rules34. “ This report concerns the implementation of anti-dumping measures. It is a review on how anti-dumping measures are enforced and if they are meeting the requirements of the agreement. Many countries question the corresponding countries national authority when it comes to the process of investigation and the measures taken. We can see that measures are subject to discussion and dispute, but the agreement provides provisions to alleviate such 32 AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf (11.06.2011) - page 162. 33 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/news_e/pres10_e/pr623_e.htm; (29.05.2011) 34 World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti- dumping article;Source: http://www.wto.org/english/news_e/news10_e/anti_26oct10_e.htm; (29.05.2011)
  21. 21. 21 circumstances which were stated above. We can conclude that the prevention of dumping has irregularities when it comes to the procedure, but the agreement can provide only so much in terms of protocols and rules and its relevancy is based on acceptance and proper implementation. 15. Case report – The shrimp case 15.1 Overview On the 31 of December 2003, the Ad Hoc Shrimp Trade Action Committee -ASTAC, an association of shrimp farmers in eight southern states of the United States, filed an anti- dumping petition against six countries — Brazil, China, Ecuador, India, Thailand and Vietnam. The petition alleged that these countries had dumped their shrimps in the US market35. On the 21 of January 2004 the US Department of Commerce -DOC announced the initiation of anti-dumping investigations against the six countries36. The Department notified the International Trade Commission -ITC of its decision on initiation. On the 17 of February 2004 the International Trade Commission announced its decision that there was a reasonable indication that the US shrimp industry is materially injured or threatened with material injury by imports, allegedly at less than fair value, from the six identified countries. As a result, the Department of Commerce continued with its investigations and gave its preliminary determination on the 28 of July 2004. The ratio of preliminary duty varies between 3.56% and 27.49% for three mandatory respondents selected by the DOC. The weighted arranged rate for India is 14.2%, and the average rate for China is 49.09%, for Brazil 36.91%, for Vietnam 16.01%, for Ecuador 7.3% and for Thailand 6.39%37. 35 The Indian Shrimp Industry Organizes to Fight the Threat of Anti-Dumping Action ; Source: http://www.wto.org/english/res_e/booksp_e/casestudies_e/case17_e.htm#history (12.06.2011) 36 Ibid. 37 Ibid.
  22. 22. 22 15.2 Retaliation measures of the Indian government The Indian government has played an important role in the promotion of marine product exports; including the development of shrimp farming. And since these exports are one of the foundations for economy growth in India the government needed to endeavor to suppress the action being imposed in this case. The MPEDA38 is a government-sponsored body whose mandate covers the development of the industry as a whole, including export promotion. It is under the administrative control of the Department of Commerce and is headed by a senior officer of the Indian Administrative Service. This body is responsible for the development of shrimp culture and it represents an organized „union“ of Indian shrimp farmers. On the other hand we have the Seafood Exporters Association of India -SEAI which is the base body of the exporter’s community and is represented on the MPEDA governing council. There is, therefore, close co-ordination between these two bodies which are primarily responsible for organizing the shrimp industry’s as well as the government’s response to the US anti-dumping investigations. The Association –SEAI realized the importance of other related regulatory provisions for Indian shrimp exports to the United States. The SEAI informed its members that the United States could start imposing anti-dumping duties which would be returned only if the Indian exporters won the case. Since this anti-dumping duty would have to be paid by the US importers, the SEAI cautioned that they might stay away from India and the product in question, and therefore the business would start to become affected long before the case came to its final conclusion. We can see that even the threat of a possible case like this has a wast impact on the social and economic workings of the market. The SEAI president said that in addition to calling for government support it would try to forge an alliance among the Asian exporters. Some twenty-five Indian companies export to the United States, and the industry estimated that the case might be filed against six or seven big players. However, the SEAI decided to fight the case anyway in hopes to prove a point and promote open market solidarity.“We will back each indicted company“, said the secretary-general of the SEAI, whose management committee decided that it would defend the industry’s position, meet the cost of the legal process and not leave the costs only to those 38 MarineProducts Export Development Authority
  23. 23. 23 Indian firms that might be selected for investigations. In order to fight the indictment the SEAI had worked out plans to contest the dumping allegations on various grounds. It put forward two major differences between the Indian and the US sea-caught shrimp and offered reasons why Indian shrimp is cheaper: I. there are specific variations between the shrimp caught off the south-west coast of the United States and in Indian waters, so that prices are bound to be different. „The threat for the domestic shrimp farmer in the United States comes from China, Thailand, Indonesia and Ecuador. India’s shrimp exports are predominantly of black tiger and scampi varieties which are not cultivated in the United States“, according to the president of SEAI. II. while fishing in the United States is a capital-intensive activity calling for major investment, in India shrimp farming is carried out with a very low level of capital and requiring hardly any investment. This makes the cost of production considerably lower in India compared with shrimp production in the US. When the ITC decision on the preliminary affirmative decision came on 17 February 2004, the Indian shrimp industry deemed it „discriminatory and unjust.“ Based on this the next step was for the Department of Commerce -ITA to prove whether there had been dumping and at what level. As part of that exercise, a few leading firms would be selected from each country and detailed questionnaires would be sent to them. After the announcement of the preliminary ITC determination, the Indian government determined that its economy had been badly affected. There was no shrimp export happening to the US at that point. It was said that Indian shrimp exporters had not received any export order from the United States since 17 February 2004 and later on we can only expect a logical decline in exports because of the imposed duties. 15.3 The final conclusion of the case What remains unaddressed is the issue which is in fact generic and therefore affects all cases, including the shrimp case. Anti-dumping cases take a long time to be finally decided. During this period, trade is affected because importers are risk-avoiders and will, therefore, be likely to shift to new sources of supply until the uncertainty is resolved. Industry people pointed out
  24. 24. 24 that an anti-dumping case was initiated against Indian leather goods in South Africa two years ago. Although the case was ultimately settled in India’s favor, the market was lost to India, because of the uncertainty caused by the transitional decisions. The shrimp industry in India had always focused on one or two major markets for growth. Previously it was Japan and during the last few years, it has been the United States. It has now learnt the importance of diversification. The SEAI president has said that they are exploring alternative markets to make up for the loss of the lucrative US market. „But it will be a long drawn-out process. It is not easy to establish your presence. “ 16. CONCLUSION The agreement is focused on preventing dumping, it ensures that actions shall and will be taken where there is a material threat of injury or if actual damage occurs to the competing domestic industry. The agreement provides many measures so that these objectives can be achieved. In that sense the Anti-dumping agreement is used to provide safeguards and procedures to insure the government can eradicate such problems and that the domestic industry is sufficiently protected. GATT allows countries to take action against dumping. Typically anti-dumping actions mean 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 it comes to calculating the dumping margin the document provides the basic and alternative methods to calculate the products „normal value“ and „export value“. The results of these calculations provide the information needed in further investigation, and these results are imperative in determining the required anti-dumping duties to be paid. And the agreement also specifies how a fair comparison can be made between the export price and what would be a normal price. Calculating the extent of dumping on a product is not enough. Anti-dumping measures can only be applied if the dumping is hurting the industry in the importing country. Therefore, a detailed investigation has to be conducted according to specified rules first.
  25. 25. 25 The agreement says member countries must inform the Committee on Anti-Dumping Practices about all anti-dumping actions. They must also report on all investigations twice a year. When differences arise, members are encouraged to consult each other. They can also use the WTO’s dispute settlement procedure which is base on the provisions of the Dispute Settlement Understanding. In conclusion the Anti-Dumping agreement provides provisions for Member states by defining the general and particular obligations and requirements to prevent, alleviate and investigate dumping. In that sense it strives to create equality in the open market and hold the responsible parties accountable for such actions. It is considered a good source of protection and it should be applied in general. Although much of the subject matter in regards to anti- dumping is at the disposal of the domestic legislature and even the Agreement does not define some aspects regarding measures that each country could take, however, it still introduces many protocols that could prove useful if not imperative.
  26. 26. 26 LITERATURE REFERENCES  World Trade Organization home page; http://www.wto.org/index.htm, Technical information on anti-dumping article; Source: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#ur  Internet webpage, Source: http://www.sice.oas.org/dictionary/SACD_e.asp  Internet webpage, Source: http://ideas.repec.org/p/lic/licosd/11902.html  Internet webpage, Source: http://www.cid.harvard.edu/cidtrade/issues/antidumping.html  The Indian Shrimp Industry Organizes to Fight the Threat of Anti-Dumping Action ; Source: http://www.wto.org/english/res_e/booksp_e/casestudies_e/case17_e.htm# history  Source: http://www.sesric.org/jecd/jecd_articles/ART04070102-2.pdf Journal on economic cooperation, 25, 4(2004) page 62/ page 82; Predation and public interest in the WTO anti-dumping duty determination; a Malaysian case  Internet webpage, Source: http://www.encyclo.co.uk/define/ex%20factory  Types of Dumping; Prof. Levich C45.000, Economics of IB Chapter 10, p.2; Source: http://pages.stern.nyu.edu/~rlevich/f1999/Chap-10.pdf  AGREEMENT ON IMPLEMENTATION OF ARTICLE VI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994; Source: http://www.wto.org/english/docs_e/legal_e/19-adp.pdf  General agreement on tarrifs and trade 1994

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