RESTRICTED
WORLD TRADE G/ADP/Q1/JPN/6
G/SCM/Q1/JPN/6
ORGANIZATION 12August 1996
(96-3180)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
NOTIFICATION OFLAWS AND REGULATIONS UNDER
ARTICLES 18.5AND 32.6OFTHE AGREEMENTS
Replies ofJAPAN1
toquestions posed byKOREA2
Thefollowingcommunication,dated29July1996,hasbeenreceivedfromthePermanentMission
ofJapan.
_______________
NecessarynotificationsoflawsandregulationsandtheGuidelineareinthecourseofpreparation,
andwillbesubmitted bythenextmeeting oflegislation review.
1. General Questions
(a) Incases where there arenorelevant provisions inthedomestic legislation, doesthe
WTO Agreement apply?
(b) Iftheprovisions oftheexisting domestic legislation donotconform totheWTO
Agreement, dotheprovisions oftheWTO Agreement apply?
Necessary changes tothedomestic legislation havebeenmade inorder toimplement
theWTO Agreement. TheCustoms Lawconfirms thattheprovisions oftheWTO Agreement
canbedirectly applied.
Ifthere should beanyconflict, theWTO Agreement prevails overthedomestic
legislation.
2. Market Viability
Could Japan explain itsstandard fordetermining lowsales volume? TheWTO Agreement
stipulates 5percentormore ofthesales oftheproduct inthedomestic market tobeconsidered a
sufficient quantity forthenormal value.
Japan'slawsandregulations donotdefine "low volume ofsales".
Therefore, therelevant provisions oftheADAgreement (Footnote toArticle 2.2)aredirectly
applied withregard to"low volume ofsales".
1G/ADP/N/1/JPN/2+Corr.1-G/SCM/N/1/JPN/2+Corr.1.
2G/ADP/W/169-G/SCM/W/176.G/ADP/Q1/JPN/6
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3. Constructed Export Price
Could Japan clarify whatitmeans by"value added bysuchproduction"? Could Japan explain
what costs andprofits itwilladjust asallowances between importation andresale? More
specifically, could Japan explain thecalculation method ofvalue added andprofits deductible?
"Value added bysuchproduction" normally includes profit forproducers whoprocess the
imported products, costforadded material, processing feeandfactory expense.
Article 3oftheCabinet Order stipulates thattheselling price forexport shallbecalculated,
when thepricefordomestic saleisthepriceatwhich theyaresoldafterhaving processed theimported
products asrawmaterials, onthebasis oftheprice fordomestic sale,minus thevalue added bysuch
processing.
4. DueAllowance
Does the"necessary adjustment" incabinet Order 2.3includes thedifferences inconditions
andterms ofsale,taxation, levels oftrade andphysical characteristics? Could weconsider
"transaction stages" intheorder thesame as"levels oftrade" intheWTO Agreement? If
so,could Japan clarify howitcalculates theadjustment forthedifference intransaction stages?
Itseems thattheOrder 2.3onlyrefers tothenormal value. Does Japan adjust thedifferences
frombothsides (export price andnormal value) forcomparison attheex-factory, ordoesit
onlyadjust thedifferences affecting price comparability fromoneside? Ifthelatter, howdoes
itreconcile thiswithWTOAgreement 2.4,which normally requires comparison attheex-factory
level?
"Transaction stage" ismeant asthe"level oftrade" intheADAgreement.
"Necessary adjustment" ismade inorder toensure a"faircomparison" asprovided forin
Article 2.4oftheADAgreement andinArticle 3oftheGuidelines withregard tothedifferences which
affect price comparability suchas:
- thedifference inquality ofproduct which mayaffect themarket priceinthesupplying
country;
- thedifference inconditions andterms ofsalesuchaspayment terms, quality guarantees
andafter-sale service; and
- thedifference intaxation
Theadjustment oftheelements affecting pricecomparability isnormally made onbothnormal
value andexport priceinorder toensure comparison atex-factory levelinaccordance withArticle 2.4
oftheADAgreement.
5. Ordinary Course ofTrade
HowdoesJapan define "ordinary course oftrade" incabinet Order 2.1? Does Japan adopt
thedefinition of"extended period oftime" and"substantial quantity" inArticle 2.2andfootnotes
oftheWTO Agreement todecide whether thesales areintheordinary course oftrade?G/ADP/Q1/JPN/6
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Japan'slawsandregulations donotdefine theconcept of"ordinary course oftrade".
Therefore, theprovisions ofArticle 2.2.oftheADAgreement aredirectly applied withregard
to"ordinary course oftrade".
6. CostCalculation/Start-up Cost
Could Japan confirm thatitcalculates costs onthebasis ofrecords keptbytheexporter or
producer forthepurpose ofcosts calculation inCabinet Order 2.1? Could Japan clarify
whether there willbeadjustment fornon-recurring items andstart-up operation forthecosts
calculation inOrder 2.1asspecified intheWTO Agreement 2.2.1.1?
Japan'slawsandregulations donothaveprovisions concerning theadjustments tobemade
incalculation ofthenormal value.
Therefore, theprovisions ofArticle 2.2.1.1 aredirectly applied.
7. SG&A, Profit forC/V
Onwhat basis doesJapan determine theamounts forSG&A andprofit forthepurpose of
Cabinet Order 2.1(3)? Could Japan clarify what"normal profit" means inOrder 2.1.(3)?
Could Japan confirm thatitwillbasethecalculation ofSG&A andprofit onactual data
pertaining toproduction andsales bytheexporter orproducer under investigation?
Theterm"normal profit" means theprofit stipulated inArticle 2.2oftheADAgreement.
Japan'slawsandregulations donothaveprovisions concerning thedataforthecalculation
ofSG&A andprofit. Therefore, theprovisions ofArticle 2.2.2 oftheADAgreement aredirectly
applied.
8. Comparison
Itseems thattheCustoms Tariff LaworCabinet Order relating toanti-dumping dutydoesnot
specify thecomparison method between normal value andexport transactions. Could Japan
clarify thatitestablishes theexistence ofdumping margin onthebasis ofacomparison of
aweighted-average normal value withaweighted-average export price orbyacomparison
ofnormal value andexport prices onatransaction-to-transaction basis inaccordance with
Article 2.4.2 oftheWTO Agreement?
Japan'slawsandregulations donothaveprovisions concerning thiscomparison method.
Therefore, therelevant provisions including Article 2.4.2 oftheADAgreement aredirectly
applied.
9. Cumulative Assessment ofInjury
Could Japan clarify whether itcumulatively assesses theeffects ofsimultaneous imports from
morethanonecountry? Ifso,could Japan clarify theconditions forthecumulative assessment?
Isitconsistent withArticle 3.3oftheWTO Agreement?
Japan'slawsandregulations donothaveprovisions concerning thecumulative assessment of
injury.G/ADP/Q1/JPN/6
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Therefore, theprovisions ofArticle 3.3oftheADAgreement aredirectly applied.
10. Standing
Itseems thatArticle 5ofthecabinet Order onlystipulates 25percentoftotalproduction
condition asastanding requirement. Does thismean thattheapplication shallbeconsidered
asfulfilling therequirements asfarasthe25percentproduction requirement ismetwithout
testing whether itissupported bythose domestic producers whose collective output constitutes
more than50percentofthetotalproduction ofthelikeproduct produced bythatportion of
thedomestic industry expressing either support fororopposition totheapplication?
Article5oftheCabinetOrderstipulated25percentoftotalproductionasastandingrequirement
forinitiating aninvestigation.
Further, astothe50percentsupport rule,theprovisions ofArticle 5.4oftheAgreement
aredirectly applied andthemanner tofindthedegree ofsupport isprovided forinArticle 5(2)of
theGuidelines.
11. Undertaking
Could Japan explain howArticle 8.8oftheCustoms Tariff Lawisreconciled withArticle 8.2
oftheWTOAgreement, which stipulates thatpriceundertakings shallnotbesought oraccepted
from exporters unless theauthorities oftheimporting Member have made apreliminary
affirmative determination ofdumping andinjury?
Could Japan clarify how "canbepresumed" inArticle 8.8oftheCustoms Tariff Lawcan
bereconciled with"affirmative determination" inArticle 8.2oftheWTO Agreement?
According toArticle 8.8oftheLaw, theGovernment shallnotaccept suchanundertaking
untilitcanbepresumed thatthere isthefactoftheimportation ofdumped products andthefactof
thematerial injury etc.Thispresumption corresponds tothepreliminary affirmative determination
onArticle 8.2oftheADAgreement.
Therefore, itisconsistent withArticle 8.2oftheAgreement.
12. Sampling
Itseems thattheCustoms Tariff LaworCabinet Order doesnotstipulate thecases where the
number ofparties istoolarge tomake individual margin determination. Inthisrespect, does
Japan always determine theindividual margin ofallexporters concerned regardless ofthe
number ofexporters? IfJapan limits thenumber offirms tobeexamined, please clarify the
conditions.
Inthecaseofsampling, theprovisions ofArticles 6.10and9.4oftheADAgreement aredirectly
applied.
13. DeMinimis/Negligible Volume
Could Japan confirm thatthere shallbeimmediate termination incases where theauthorities
determine thatthemargin ofdumping isdeminimis orthatthevolume ofdumped imports or
injury isnegligible? Ifso,what isthedefinition ofthedeminimis dumping margin and
negligible imports volume inthecustoms tariff laworcabinet order?G/ADP/Q1/JPN/6
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Japan'slawsandregulations donothaveprovisions concerning "deminimis "margin and
negligible volume ofimport.
Therefore, theprovisions ofArticle 5.8oftheADAgreement aredirectly applied.
Aninvestigationisimmediatelyterminatedinthecaseswheretheinvestigatingauthoritiesfinding
thatthemargin ofdumping islessthanthedeminimis levelorthatthevolume ofdumped imports
isnegligible.
14. Time limitforQuestionnaire Response
Does Japan giveexporters atleast 30days toreply toquestionnaires, asstipulated in
Article 6.1.1 oftheWTO Agreement?
With regard tothetimelimit, noprovisions arelaidinthedomestic lawsandregulations.
Theprovisions ofArticle 6.1.1 aredirectly applied andatleast30daysareallowed forreplying to
thequestionnaires.
15. Conversion ofCurrency
Could Japan explain what exchange rateitwould usewhen thecomparison requires a
conversion ofcurrencies?
Japan'slawsandregulations donothaveprovisions concerning theconversion ofcurrencies
inthecalculation ofthedumping margin.
Therefore, theprovisions ofArticle 2.4.1 oftheADAgreement aredirectly applied.
16. Industrial Users orConsumer Organizations
Does Japan provide opportunities forindustrial users orconsumer organizations toprovide
information asspecified inArticle 6.12oftheWTO Agreement?
InArticle 13oftheCabinet Order, theauthorities provide opportunities forindustrial users
orrepresentative consumer organizations toprovide information asspecified inArticle 6.12ofthe
Agreement.
17. Judicial Review
Could Japan clarify whether independent judicial, arbitral oradministrative tribunals or
procedures areavailable? Please explain therelevant laworregulation andprocedures for
filing judicial review.
The litigation will befiled tocourts. Administrative measures including anti-
dumping/countervailing measures arecovered byJapanese judicial review systems.