Studies in the Application of Anti-Dumping and Anti-Subsidy Measures

1
Studies in the Application of Anti-Dumping and
Anti-Subsidy Measures

• Stephen J. Orava
• ??
• WTO Practice Group
• steve.orava_at_bakernet.com
• www.bakerinfo.com

2
Overview

• What are the conditions for applying a measure?
• What is dumping?
• What is a countervailable subsidy?
• What is material injury or threat thereof?
• What is causation?
• What is the role of the domestic authority?
• What is the standard of review?

3
Background

• History
• Object and purpose
• Antidumping measures
• Countervailing duty measures
• Developments
• Deference to domestic investigating authorities
• Presentation gives highlights of obligations and
  prevailing interpretations

4
What are the conditions for applying a measure?
5
What is dumping? (1)

• introduced into the commerce of another country
  at less than normal value (Article 2.1 ADA)
• in other words - if the export price of the
  product exported from one country to another is
  less than the comparable price, in the ordinary
  course of trade, for the like product when
  destined for consumption in the exporting
  country (Article 2.1 ADA)

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What is dumping? (2)

• Like product - identical or closely resembling
  (Article 2.6 ADA)
• export price lt normal value (e.g., price in Chile
  lt comparable price when sold in the United
  States)
• ex-factory prices, with adjustments to achieve a
  fair comparison (Article 2.4 ADA)
• same level of trade
• same time
• differences affecting price comparability,
  including conditions and terms of sale, taxation,
  and physical characteristics

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What is dumping? (3)

• Sales outside the ordinary course of trade
• low volume of sales (footnote 2 ADA)
• sales below costs (Article 2.2.1.1 ADA)
• Third country for normal value
• Constructed value - cost of production plus
  reasonable amount for administrative, selling and
  general costs and for profits (Article 2.6 ADA)

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What is a countervailable subsidy? (1)

• Two conditions (Article 1 SCM)
• financial contribution
• a benefit is thereby conferred

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What is a countervailable subsidy? (2)

• financial contribution
• direct transfer of funds (grants, loans)
• potential direct transfer of funds (loan
  guarantees)
• government provision/purchase of goods or
  services
• government payments to a funding mechanism or
  government direction (or entrustment) to do one
  of the above

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What is a countervailable subsidy? (3)

• conferring a benefit - limitations on what
  constitutes for purposes of countervailing duty
  investigation (Article 14 SCM)
• equity capital, only if investment decision is
  inconsistent with the actual investment practice
• loan, only if amount paid is different from
  commercial loan/guarantee
• goods or services, only if for less (provision)
  or more (purchase) than adequate remuneration

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What is a countervailable subsidy? (4)

• Only a countervailable subsidy if specific
  (Article 2 SCM)
• specific if access is limited to an enterprise or
  industry or group of enterprises or industries
• not specific if access based on objective
  criteria or conditions, provided that they are
  automatic, strictly adhered to, and verifiable
• but, specific nevertheless if other factors
  indicate so

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What is a countervailable subsidy? (5)

• Only a countervailable subsidy if specific
  (contd)
• specific if access is limited to certain
  enterprises located within a designated
  geographical region
• specific if a prohibited subsidy under Article 3
  SCM
• contingent on export performance (Annex I SCM)
• contingent upon the use of domestic over foreign
  goods

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What is material injury or threat thereof? (1)

• Similar conditions for antidumping and
  countervailing duty measures (Article 3 ADA
  Article 15 SCM)
• Conditions govern the determination of injury
  not whether
• there is injury or threat thereof, or
• whether such injury is material
• positive evidence and objective examination
  (Article 3.1 ADA Article 15.1 SCM)

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What is material injury or threat thereof? (2)

• Volume of dumped/subsidised imports
• Effect on prices in the domestic market
• Impact on domestic producers

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What is material injury or threat thereof? (3)

• Volume of dumped/subsidised imports (Article 3.2
  ADA Article 15.2 SCM)
• consider whether there is a significant
  increase
• increase in either absolute terms or relative to
  production or consumption
• Interpretation

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What is material injury or threat thereof? (4)

• Effect on prices in the domestic market (Article
  3.2 ADA Article 15.2 SCM)
• consider whether there is significant price
  undercutting
• otherwise, whether the effect of such imports is
  to depress prices or prevent price increases to a
  significant degree
• Adjustments?
• Interpretation

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What is material injury or threat thereof? (5)

• Impact on domestic producers (Article 3.4 ADA
  Article 15.4 SCM)
• an evaluation of all relevant economic factors
  and indices having a bearing on the state of the
  industry, including actual and potential decline
  in sales, profits, output, market share,
  productivity, return on investments, or
  utilization of capacity factors affecting
  domestic prices the magnitude of the margin of
  dumping actual and potential negative effects on
  cash flow, inventories, employment, wages,
  growth, ability to raise capital or investments.
• Interpretation

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What is material injury or threat thereof? (5)

• Threat of material injury (Article 3.7 ADA
  Article 15.7 SCM)
• Change in circumstances to create injury must be
  clearly foreseen and imminent
• Factors
• significant rate of increase in dumped/subsidised
  imports
• available capacity
• depressing/suppressing on domestic prices
• inventories
• Interpretation

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What is causation? (1)

• Article 3.5 ADA Article 15.5 SCM
• must be demonstrated that the dumped/subsidised
  imports are causing injury
• through the effects means in terms of volume,
  price effects, and impact
• shall examine all relevant evidence before the
  investigating authorities
• any known factors other than dumped imports
  which at the same time are injuring the domestic
  industry

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What is causation? (2)

• Factors which may be relevant in this respect
  include, inter alia, the volume and prices of
  imports not sold at dumping prices, contraction
  in demand or changes in the patterns of
  consumption, trade-restrictive practices of and
  competition between the foreign and domestic
  producers, developments in technology and the
  export performance and productivity of the
  industry.
• Interpretation

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What is the role of the domestic authority? (1)

• Initiation
• Preliminary and final determinations
• Review

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What is the role of the domestic authority? (2)

• Initiation (Article 5 ADA Article 11 SCM)
• by or on behalf of the domestic industry -
  50/25
• contents of the application
• information reasonably available to applicant
  regarding applicant, product, prices, injury
• interpretation

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What is the role of the domestic authority? (3)

• Initiation (contd)
• The authorities shall examine the accuracy and
  adequacy of the evidence provided in the
  application to determine whether there is
  sufficient evidence to justify the initiation of
  an investigation
• Interpretation

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What is the role of the domestic authority? (4)

• Initiation (contd)
• notice (Article 5.5 ADA)
• notice of initiation
• de minimis
• dumping - margin less that 2 volume less than
  3 of total imports
• countervailing duty - subsidy less than 1 percent
  ad valorem volume of imports or injury
  negligible
• Interpretation

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What is the role of the domestic authority? (5)

• Preliminary and final determinations
• due process - full opportunity for defence
  (Article 6 ADA Article 12 SCM)
• provision of application, essential facts,
  hearings, etc.
• Confidential information, verification, best
  information available, sampling
• Notifications and explanations (Article 12 ADA
  Article 22 ADA)
• Interpretation

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What is the role of the domestic authority? (6)

• Preliminary and final determinations
• due process - full opportunity for defence
  (Article 6 ADA Article 12 SCM)
• provision of application, essential facts,
  hearings, etc.
• Confidential information, verification, best
  information available, sampling
• Notifications and explanations (Article 12 ADA
  Article 22 ADA)
• Interpretation

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What is the role of the domestic authority? (7)

• Review (Article 11 ADA Article 21 SCM)
• sunset review
• an antidumping or countervailing duty measure
  shall be terminated no later than five years
  from its imposition unless expiry would be
  likely to lead to continuation or recurrence of
  dumping/subsidisation and injury
• Interpretation

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What is the standard of review? (1)

• Antidumping measures (Article 17.6 ADA)
• (i) 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
• Interpretation

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What is the standard of review? (3)

• Antidumping measures (Article 17.6 ADA)
• (ii) 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, the
  panel shall find the authorities measure to be
  in conformity with the Agreement if it rests upon
  one of those permissible interpretations
• Interpretation

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What is the standard of review? (4)

• Countervailing duty measures (Article 11 DSU)
• a panel should make an objective assessment of
  the matter before it, including an objective
  assessment of the facts of the case and the
  applicability of and conformity with the relevant
  covered agreement
• Interpretation

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What is the standard of review? (5)

• Consequences for different standard of review
• Significance of Article 17.5 ADA
• panel to examine the matter based upon . . .
  (ii) the facts made available in conformity with
  appropriate domestic procedures to the
  authorities of the importing Member
• Relevance of confidential information

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Studies in the Application of Anti-Dumping and
Anti-Subsidy Measures

• Stephen J. Orava
• ??
• WTO Practice Group
• steve.orava_at_bakernet.com
• www.bakerinfo.com

33
Safeguards

• Stephen J. Orava
• ??
• WTO Practice Group
• steve.orava_at_bakernet.com
• www.bakerinfo.com

34
Overview

• What is the intent underlying the provision for
  safeguard measures?
• What are the conditions for applying a measure?
• What is serious injury or threat thereof?
• What is causation?
• What is the role of the domestic authority?
• Concluding remarks

35
What is the intent underlying the provision for
safeguard measures?

• Article XIX of GATT 1994 - Emergency Action on
  Imports of Particular Products
• safety valve
• Facilitate greater liberalisation
• Eliminate non-transparent grey area measures
• Deference?

36
What are the conditions for applying a safeguard?
(1)

• Article XIX applies
• result of unforeseen circumstances
• of the effect of the obligations incurred under
  this Agreement, including tariff concessions
• Interpretation

37
What are the conditions for applying a safeguard?
(2)

• A product is being imported into its territory
  is such increased quantities, absolute or
  relative to domestic production (Article 2.1 SA)
• Essentially, whether imports have increased in
  absolute or relative terms
• Interpretation

38
What are the conditions for applying a safeguard?
(3)

• and under such conditions as to cause or
  threaten to cause serious injury to the domestic
  industry that produces like or directly
  competitive products
• Interpretation of under such conditions
• Like or directly competitive products

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What is serious injury or threat thereof? (1)

• Determination (Article 4 SA)
• serious injury - a significant overall
  impairment in the position of the domestic
  industry
• threat of serious injury - serious injury that
  is imminent
• domestic industry - at least producers whose
  output constitutes a major proportion of total
  domestic production

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What is serious injury or threat thereof? (2)

• Authorities shall evaluate all relevant factors
  of an objective and quantifiable nature having a
  bearing on the situation of that industry, in
  particular, the rate and amount of the increase
  in imports of the product concerned in absolute
  and relative terms, the share of the domestic
  market taken by increased imports, changes in the
  level of sales, production, productivity,
  capacity utilization, profits and losses and
  employment
• Interpretation

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What is serious injury or threat thereof? (3)

• Interpretation of factors
• volume
• market share
• changes in other factors
• Relates to obligation to publish promptly . . .
  a detailed analysis of the case under
  investigation as well as a demonstration of the
  relevance of the factors considered

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What is causation?

• The authorities determination shall not be made
  unless this investigation demonstrates on the
  basis of objective evidence, the existence of the
  causal link between increased imports of the
  product concerned and serious injury or threat
  thereof. When factors other than increased
  imports are causing injury to the domestic
  industry at the same time, such injury shall not
  be attributed to increased imports.
• Interpretation

43
What is the role of the domestic authority? (1)

• Investigation (Article 3 SA)
• public procedures
• reasonable public notice and hearings
• other appropriate means of presenting views
• ability to submit views as to whether the
  safeguard is in the public interest

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What is the role of the domestic authority? (2)

• Investigation (Article 3 SA) (contd)
• public report of findings and reasoned
  conclusions reached on all pertinent issues of
  fact and law
• treatment of confidential information

45
What is the role of the domestic authority? (3)

• Applying the measure
• shall be applied to a product being imported
  irrespective of source (Article 2.2 SA)
• Interpretation

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What is the role of the domestic authority? (4)

• Applying a quantitative restriction (Article 5.1
  SA)
• only to the extent necessary to prevent or
  remedy serious injury and to facilitate
  adjustment
• shall not reduce the quantity of imports below
  the level of a recent period
• the average of imports in the last three
  representative years for which statistics are
  available
• clear justification

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What is the role of the domestic authority? (5)

• Duration and review (Article 7 SA)
• not exceed 4 years, but can extend for another 4
  years if necessity demonstrated
• progressive liberalisation
• mid-term review if duration is greater than 3
  years

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Concluding Remarks

• Prohibits even seeking voluntary export
  restraints, orderly marketing arrangements, or
  similar measures on the import or export side
  (Article 11 SA)
• WTO-related notification and consultation
  requirements (Article 12 SA)
• objective assessment under Article 11 DSU

49
Safeguards

• Stephen J. Orava
• ??
• WTO Practice Group
• steve.orava_at_bakernet.com
• www.bakerinfo.com