INTERNATIONAL TRADE REMEDIES SEMINAR

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INTERNATIONAL TRADE REMEDIES SEMINAR

• ANTI-CIRCUMVENTION
• JOSE MANUEL VARGAS
• SEOUL, KOREA, 2005

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CIRCUMVENTION OF AN ANTIDUMPING DUTY

• Members of WTO have traditionally recognized two
  patterns
• The first involves marginal alterations to the
  product itself and
• The second, modifications in the pattern of
  shipment and assembly.

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WTO DECISION ON ANTICIRCUMVENTIONadopted by the
Trade Negotiations Committee on December 15, 1993.

• Circumvention of an antidumping duty formed part
  of the negotiations which preceded the ADA,
  negotiators were unable to agree on specific
  text
• Desire for the application of uniform rules
• Refer this matter to the Committee on
  Anti-Dumping Practices for resolution. For that
  reason, the Committee decided to have an
  Anticircumvention Working Group that has been
  discussing the issue for 10 years, without
  solutions.

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WTO MEMBERS VIEW(Against the implementation)

• Hong Kong, China (G/ADP/IG/W/8 April 28,
  1998)
• Slightly modified products Mere product
  modifications should not be considered
  circumvention. There is a risk of expanding the
  scope of the original investigation.
• Assembly operations Whenever a trade measure
  is applied, and there is a significant difference
  in duty treatment between imports of parts and
  imports of finished products, exporters may
  naturally choose to export in parts. This is
  already subject to international rules and,
  therefore, are not likely to pose circumvention
  (Rules of Origin, Custom classification rules).

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WTO MEMBERS VIEW(Against the implementation)

• Korea (G/ADP/IG/W/17 - May 28, 1999) A case
  involving the possibility of circumvention should
  be treated as a separate dumping case, therefore
  a new investigation should be conducted.

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WTO MEMBERS VIEW(Advocating for the
implementation)

• México (G/ADP/IG/W/31 March 21, 2001) In the
  absence of regulation, Mexican investigating
  authority conducts such investigations with its
  own legislation, being careful of ensuring legal
  certainty and security and affording parties a
  full opportunity for their defense.
• New Zealand (G/ADP/IG/W49 April 24, 2003)
  Clearly identify and agree on the circumstances
  and behaviors that are not circumvention. Develop
  some common principles to deal with
  circumvention.

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NEGOTIATING GROUP ON RULESWTO MEMBERS
VIEW(Advocating for the implementation)

• United States (TN/RL/GEN/29 February 8,
  2005) The absence of rules could lead Members to
  craft measures more broadly than necessary. Lack
  of procedural guidelines means that parties do
  not have necessarily opportunity for defense.

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LEGISLATION OFUNITED STATES (US)

• Prevention of circumvention of antidumping and
  countervailing duty orders

• Merchandise completed or assembled in US
• Merchandise completed or assembled in other
  foreign country
• Minor alterations of merchandise
• Later-developed merchandise

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LEGISLATION OF US

• Factors to consider
• The pattern of trade, including sourcing
  patterns,
• Whether the manufacturer or exporter of the parts
  of components is affiliated with the person who
  assembles or completes the merchandise sold in
  the in the US from the parts or components
  produced in the foreign country with respect to
  which the order or finding applies, and
• Whether imports into the US of the parts or
  components produced in such foreign country have
  increased after the initiation of the
  investigation which resulted in the issuance of
  such order or finding.

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LEGISLATION OF EUROPEAN UNION (EU)
Circumvention must be defined as a change in the
pattern of trade between third countries and the
EU or between individual companies in the country
subject to measures and the EU, which stems from
a practice, process or work for which there is
insufficient due cause or economic justification
other than the imposition of the duty, and where
there is evidence of injury or that the remedial
effects of the duty are being undermined in terms
of the prices and/or quantities of the like
product, and where there is evidence of dumping
in relation to the normal values previously
established for the like product.
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MEXICAN LAW

• The Mexican law states that circumvention could
  be presented in antidumping, countervailing and
  safeguard measures.
• Circumvention applied for
• Imports of inputs or supplies, parts or
  components for production or assembly of a
  product subject to a measure.
• Imports of products subject to a measure
  assembled in a third country.

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MEXICAN LAW

• Imports of products that have minor differences
  from the product subject to a measure.
• Imports of products subject to measure at a rate
  lower than the applicable duty.
• Any other action resulting in failure to pay the
  duty imposed.

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MEXICAN PRACTICE

• According to the Mexican law the investigating
  authority (IA) pursues and analyzes the alleged
  circumvention practice and give full opportunity
  to all interested parties to defend themselves.
• The Mexican IA has analyzed circumvention on four
  antidumping cases (none on countervailing and
  safeguards measures) with different circumstances
  as follows

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MEXICAN PRACTICE

• Imports of the product on a different container
  (additive for gasoline).
• Imports of a slightly different product (methyl
  parathion technical grade).
• Imports of an input or supply to produce the
  product (high fructose corn syrup).
• Imports through a different exporter (bovine
  meat).

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CONCLUSIONS

• In the circumvention analysis there is no
  obligation for the IA to demonstrate the
  existance of the three elements involved in
  antidumping, countervailing and safeguards
  investigations.
• WTO guidance is needed in order to have common
  rules for a circumvention analysis.