WTO Anti-Dumping Rules
Article VI of the GATT (as restated) enables member states to put in place anti-dumping measures to deal with cases, where third country goods are imported or sent to the state at less than their value in such a way that threatens or causes material injury to existing industries in the member state or materially retards establishment of a domestic industry producing like products.
A product is deemed to be introduced into the commerce of the importing state at less than normal value if the export price is less than the comparable price in the ordinary course of trade for the like product destined for consumption in the exporting state. If there is no such domestic price, if it so deemed if it is less than either of the following:
- the highest comparable price for the like product for export to any third country in the ordinary course of trade;
- the cost of production of the product in the state of origin plus a reasonable markup for selling costs and profit.
Where the above circumstances apply, the state of import may apply an anti-dumping levy up to the amount of the difference on that product. This is determined by the price differential based on the export price and either of the above measures.
In some cases, dumping etc. may be more readily shown than in others, such as where there is an immediate financial impact followed the dumping of significant volumes of a product. Economic evidence may be required to show how prices and domestic injury would be affected, if the facts were otherwise.
The Anti-Dumping Agreement seeks to elaborate on the above definition, given the issues of interpretation that may arise. A product is deemed dumped if its export price is less than the comparable price in the ordinary course of trade for the like product destined for consumption in the exporting state.
Where there are no sales in the ordinary course of trade in the exporting state or when because of particular market conditions or low sale volumes in that domestic market (assuming at least a sufficient quantity would normally constitute 5% of the sales of the product to the importing state), the sales do not allow a proper comparison, the margin of dumping is based on a comparison with the comparable price for a like product exported to a third country or alternatively based on the cost of production plus a reasonable markup for administration, sales, general costs and profit.
Sales in the exporting country below cost (cost of production plus general administration and sales costs), may be disregarded if such below-cost selling extends for a substantial period (a year plus) or for substantial quantities of transactions (more than 20%).
In the absence of a home market or other sales, the costs/value may be determined based on inputs, general and administrative expenses and a profit. The comparison between the export price and value is required to be fair. They should be based on weighted average comparisons rather than the basis of specific isolated transactions.
“Injury” requires evidence of the volume of imports dumped and its impact on the domestic market of the importer. Other factors must be considered which may injure the domestic market, and they must be isolated from the injury caused by the imports.
De minimus and negligible margins are disregarded. De minimus is 2% of normal value. Negligible is when the imports are less than 3% of imports of the like product unless countries accounting for less than 3% collectively account for more than 7% of imports.
A provisional measure may be applied at the commencement of the investigation where preliminary affirmative determination has been made of dumping and injury. Provisional measures may be by way of provisional duty or security. Proceedings may be terminated on receipt of an undertaking to cease exports at the dumping price.
Under the WTO Anti-dumping Agreement dispute settlement proceeding, a panel assesses whether the domestic authorities have properly established the relevant facts on an objective and unbiased manner. It does not determine the matter and will not necessarily overturn the domestic decision unless even if they would have determined the matter differently.
Complaints may be made to the panel in respect of an anti-dumping measure. In the EU, a complaint in relation to dumping is made to the European Union and it is determined in the first instance by the Commission. The matter may be the subject of a complaint under the dispute resolution procedures under the Anti-dumping Agreement.
Anti-dumping provisions complement domestic provisions in relation to competition. They seek to counteract price discrimination and predatory pricing.
In the European Union, the matter is determined by the European Commission. It must make a determination in relation to dumping, injury and causation. Dumping is determined by reference to the above values and costs. Evidence of injury requires evidence of the impact on the domestic producers or most them. This may be a decline in profitability, sales, market share, return or another measure. The causul connection between the dumping and the material injury must be shown.
Under Article VI of the GATT, Member States may apply countervailing duties on imports into their state of up to the estimated bounty or subsidy determined to have been granted directly or indirectly on the production, manufacture or export of such products in the state of origin or exportation.
There must be a determination that the subsidy is such that it causes or threatens material injury to an established domestic industry or retards materially the establishment of a domestic industry producing like products.
A product may not be subject to countervailing duty by reason of its exemption from taxes borne by like products when destined for consumption in the country of origin or by reason of the refund of taxes and duties. This would apply in respect of VAT and customs reliefs which are normal incidents of national taxation systems and seek to avoid double taxation.