RESTRICTED
WORLD TRADE G/ADP/Q1/EEC/3
G/SCM/Q1/EEC/3
ORGANIZATION 23April 1997
(97-1759)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
NOTIFICATION OFLAWS AND REGULATIONS UNDER
ARTICLES 18.5AND 32.6OFTHE AGREEMENTS
Replies oftheEUROPEAN COMMUNITY1
toQuestions from HONG KONG2
Thefollowing communication, dated 16April 1997, hasbeenreceived from thePermanent
Delegation oftheEuropean Commission.
_______________
Q.1. Prices ofother exporters
Reply
TheECdoesnotresort totheuseofexport price tothirdcountries when establishing normal
value because ouressential purpose istofindavalue which represents anormal selling price forthe
product inquestion ontheexporter 'sdomestic market .When dumping isfound tobeactionable, for
instance, itmaybeprecisely because theexporter isexploiting anadvantage conferred asaresult of
thestructure ofthedomestic market. Bydefinition, athirdcountry market maynotreflect thatstructure.
Inanyevent, Article 2.2oftheWTO Anti-Dumping Agreement doesnotimply anyhierarchy among
thepermitted alternative methods forestablishing normal value intheabsence ofsufficient domestic
sales.
The"other sellers andproducers" under Article 2.1arenecessarily under thesameinvestigation.
Iftherearenosuch"other sellers orproducers" intheexporting/originating country, thenormal value
willbeestablishedaslaiddownintheWTOADAgreement,i.e.byconstructingfromcostofproduction,
SG&A andprofit.
Thecircumstances envisaged intheEC'sformer Article 2.3(c) arenowcovered byArticle 2.1
(second sentence). Asunder previous legislation, when anexporter intheexporting country neither
produces norsellsthelikeproduct, weestablish normal value onthebasis ofprices orcosts ofother
sellers orproducers. Thenewlegislation implies nodifference inthedetails ofourpractice.
1G/ADP/N/1/EEC/2 &Corr.1 +Suppl.1, G/SCM/N/1/EEC/1.
2G/ADP/Q1/EEC/1-G/SCM/Q1/EEC/1.G/ADP/Q1/EEC/3
G/SCM/Q1/EEC/3
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Q.2. The5%rule
Reply
TheCommunity hasnotused, initspractice, thepossibility ofrecurring toprices ofsalesnot
reaching the5%threshold. Nopractice exists therefore onselecting factors which would determine
therepresentativity oftheprices referred tointhequestion.
Q.3. Start-up operations
Reply
TheECisoftheviewthatagenuinely newproduct cannot bemanufactured fromunchanged
production facilities.
The"period ofcostrecovery" isnormally 12months asthisduration ischosen tomatch the
investigation period. Theactual start-up phase mustnecessarily beshorter asitfallsbydefinition within
thisperiod.
Q.4. SGAandprofit inconstructed value
Reply
TheEChasnotusedthefacility provided forinArticle 2.6(b) or(c)forproduction andsales
costcalculations. TheWTO Anti-Dumping Agreement andECanti-dumping legislation contain precise
rules fortheacceptance orotherwise ofloss-making salesasbeing intheordinary course oftrade;
theseshould presumably beapplied inthesamewaywhether theproduct investigated isthelikeproduct,
orfrom thesame general category.
Q.5. Constructed export price
Reply
Inorder toselect anappropriate profit forusewhen constructing export price, information
isgathered primarily fromunrelated importers. Inthepastacommonly usedfigure bytheCommunity
hasbeen5%gross profit.
Q.6. Allowances
Reply
Ifanexporter candemonstrate theeffect ofaleveloftrade difference onprice comparability,
thenaleveloftrade adjustment willbemade.
Theimpact oftheEC'srecent revision ofArticle 2.10willbeexplained separately.G/ADP/Q1/EEC/3
G/SCM/Q1/EEC/3
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Q.7. Examination ofthestateoftheindustry
Reply
Consideration ofthefactthat"anindustry isstillintheprocess ofrecovering fromtheeffects
ofpastdumping" would notonitsownleadtoadetermination ofinjury.
Q.8. Standing
Reply
TheECwillonlyusethefindings resulting fromconsultations when thesemeettherequirements
oftheWTO Anti-Dumping Agreement; thatis,when consultations demonstrate thata
sufficient/insufficient degree ofsupport isexpressed bydomestic producers. Ifconsultations donot
demonstrate thatrequirements forstanding havebeenmet,theECwillproceed withother methods.
Q.9. Newexporter reviews
Reply
Newcomersmakingthemselvesknownasexportersofaproductwhichissubjecttoanti-dumping
measures, thelevelofwhich wasestablished bymeans ofsampling, willbeliable totherateofduty
applicable tocooperating producers notincluded inthesample. They arenotsubjected totheresidual
duty, buttothedutycalculated astheaverage forthesample originally selected. Allcooperating firms
outside theoriginal sample (newcomer orotherwise) arethereby given equal treatment.