Studies in the Application of Anti-Dumping and Anti-Subsidy Measures
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Transcript of Studies in the Application of Anti-Dumping and Anti-Subsidy Measures
WTO practice group
Studies in the Application of Anti-Dumping and Anti-Subsidy Measures
Stephen J. Orava
WTO Practice [email protected]
www.bakerinfo.com
WTO practice group
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?
WTO practice group
Background
History Object and purpose
Antidumping measures Countervailing duty measures
Developments Deference to domestic investigating
authorities Presentation gives highlights of obligations
and prevailing interpretations
WTO practice group
What are the conditions for applying a measure?
WTO practice group
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)
WTO practice group
What is dumping? (2) Like product - identical or closely resembling
(Article 2.6 ADA) export price < normal value (e.g., price in
Chile < 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
WTO practice group
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)
WTO practice group
What is a countervailable subsidy? (1)
Two conditions (Article 1 SCM): “financial contribution” “a benefit is thereby conferred”
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
What is a countervailable subsidy? (5)
Only a countervailable subsidy if “specific” (cont’d)
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
WTO practice group
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)
WTO practice group
What is material injury or threat thereof? (2)
Volume of dumped/subsidised imports
Effect on prices in the domestic market
Impact on domestic producers
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
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”
WTO practice group
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
WTO practice group
What is the role of the domestic authority? (1)
Initiation Preliminary and final
determinations Review
WTO practice group
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
WTO practice group
What is the role of the domestic authority? (3)
Initiation (cont’d) “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
WTO practice group
What is the role of the domestic authority? (4)
Initiation (cont’d) 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
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
Studies in the Application of Anti-Dumping and Anti-Subsidy Measures
Stephen J. Orava
WTO Practice [email protected]
www.bakerinfo.com
WTO practice group
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
WTO practice group
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?
WTO practice group
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
WTO practice group
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
WTO practice group
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”
WTO practice group
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
WTO practice group
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
WTO practice group
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”
WTO practice group
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
WTO practice group
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
WTO practice group
What is the role of the domestic authority? (2)
Investigation (Article 3 SA) (cont’d) public report of “findings and reasoned
conclusions reached on all pertinent issues of fact and law”
treatment of confidential information
WTO practice group
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
WTO practice group
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
WTO practice group
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
WTO practice group
Concluding Remarks
Prohibits even “seek[ing] 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