 
  WORLD TRADE  
ORGANIZATION  TN/RL/GEN/18 
15 September 2004 
 (04-3856) 
Negotiating Group on Rules Original:   English 
  
 
PROPOSALS ON MODEL MATCHING 
 
Communication from Brazil;  Chile;  Colombia;  Costa Rica;
 
Hong Kong, China;  Japan,  Korea, Republic of;  Norway;  Switzerland;  
the Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu;  and Thailand  
 
  The following communication, dated 13 September 2004, is being circulated at the request of the Delegations of Brazil;  Chile;  Colombia;  Co sta Rica;  Hong Kong, China;  Japan;  Korea, 
Republic of;  Norway;  Switzerland;  the Separate  Customs Territory of Taiwan Penghu, Kinmen and 
Matsu;  and Thailand. 
  The submitting delegations have requested that this paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(04)/ 124), also be circulated as a formal document. 
 
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I. DESCRIPTION OF THE PROBLEMS 
 
 Article 2.4 of the ADA requires that author ities make a “fair comparison” between export 
price and the normal value of the product under consid eration.  Authorities must ensure that a fair 
comparison is made at the same level of trade, with due allowance being made for differences that 
affect price comparability.  However, the language of the current ADA is very general, and lacks 
specific disciplines.  As a result, authorities ofte n fail to make a fair comparison.  This paper 
addresses the issue of model matching which is one of the interrelated issues of fair comparison.  
 
 Article 2.1 of the ADA states that a product is  to be considered as “dumped” if the export 
price of the product is less than the comparable pri ce, in the ordinary course of trade, for the like 
product when destined for consumption in the ex porting country.  Article 2.6 defines the “like 
product” as “a product which is identical, i.e. alike in all respects to the product under consideration, 
or in the absence of such a product, another product which, although not alike in all respects, has 
characteristics closely resembling those of the product under consideration”.   
  When calculating the dumping margin, the exported products and the like product in the home market will usually be further sub-divided into  models, and the comparison between the normal 
values and export prices will first be performed between corresponding models, as an interim step, 
and then aggregated in order to arrive at a dum ping margin for the product as a whole.  This sub-
dividing into models is done in order to minimize the problems relating to comparability between the 
normal values and export prices. The methodology to id entify models of the like products to be used 
for comparison with models of the exported produc ts often is crucial to the outcome of the dumping 
margin calculation, and the determination of dumpi ng.  Yet respondents often have little or no input 
regarding the methodology.   
 TN/RL/GEN/18 
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  The ADA, however, provides no guidance for id entifying each model or  determining which 
models are “closely resembling” models to be co mpared. In the absence of the guidance, authorities 
are free to arbitrarily identify each model and deci de which models for the normal value, if any, 
“closely resemble” the exported model when there are no models of like products that are “identical” to a particular model of the exported products.  This excessive discretion causes uncertainty for 
exporters.  It also exposes authorities to possible WTO challenges by respondents.  Both respondents 
and authorities would therefore benefit from cl earer rules regarding model matching.   
 
II. ELEMENTS OF A SOLUTION 
 
Proposals: 
 1. Impose disciplines on authorities’ selectio n of the characteristics to be used in 
identifying the “identical” and “most closely resembling” models; impose limits on products that may be deemed “Closely Resembling”  
 
• Amend the ADA to require that, for purposes of identifying the “identical” and “most closely 
resembling” models (“model matching”), the aut horities must use all characteristics that have 
a significant effect on the commercial value or the end use of the product.  Moreover, the authorities must put priority on those character istics which affect the product’s commercial 
value or its end use more than the others.   
 
• The classification of each model must be based on product codes used by the respondents in 
the course of business, or alternatively, on indus try product standards used in the country of 
exportation, to the extent that such codes or standards reflect the commercial value or the end 
use of the product. 
 
• The FANs will further discuss possible ways of  imposing outer boundaries on the selection of 
models for normal value that may be deemed to  closely resemble the exported models.  One 
useful way to accomplish this could be to exam ine the difference in the per-unit  costs of 
manufacture of the models. 
 
2. Calculation of allowances for differences in physical characteristics  
 
• Amend the ADA to require that, where there ar e no models for determining normal value that 
are identical to an export model, allowances for differences in physical characteristics for 
purposes of Article 2.4 shall be made based on the difference in the per-unit cost of 
manufacture between the exported model and the mode l used as the basis for normal value.     
 
3. Require authorities to permit responding  parties to comment on model matching  
 
• Amend the ADA to require that, where a product under consideration consists of more than 
one model, responding parties be given adequate opportuniti es to make proposals on model 
matching, including model classification, that determine identical and most resembling models, and to respond to those proposed by  the petitioners and the authorities.   
 
Explanations: 
  Model matching methodologies determine the univer se of models that authorities will use to 
calculate the “normal value” for a particular exported model.  This can significantly affect the result 
of an anti-dumping investigation.     TN/RL/GEN/18 
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  As discussed above, some authorities define  “models” based on “product codes” arbitrarily 
without taking into account of the effect on the comm ercial value and the end use of the product.  The 
codes are used to identify products that are “iden tical” or, if there are no “identicals”, to establish 
which model among various models sold in home market (or third country) is most “closely 
resembling” the exported model unde r consideration.  We believe, as discussed above, that the ADA 
should set forth rules both to guide authorities in the creation of the criteria for determining 
“identical” and most “closely resembling” products, but also to impose some objective limit on products that can be considered “closely resembling”.   First, it would be useful to specify that the model matching must be based on all 
characteristics that have a significant effect on th e commercial value or the end use, including the 
technical specifications of the product, and that th e identification of each model must be based on  
product codes used by the exporters in the regular  course of business or, alternatively, on industry 
product standards of the exporting country.  The ASTM and DIN standards for steel are examples of such industry product standards.  This would provid e an objective and verifiable basis for constructing 
product codes.  It also would make mode l matching more predictable for exporters. 
  Second, it is important to ensure that mode ls are similar enough to provide a meaningful 
comparison.  Again, model matching is highly case-specific, and it is not possible to devise a comprehensive definition of “closely resembling” that could apply to all cases.  However, it is 
important to define the “outer boundaries” of models  that could be eligible for comparison.  For 
example, because cost is an important factor in  determining price, it does not seem appropriate for 
authorities to compare models that differ significantly in cost.  A large-screen projection TV should not be compared with a portable small-screen model.   The cost structures of these models would differ 
so much that no adjustment could adequately acc ount for the resulting price differences. As discussed 
above, clearer rules regarding model matching would benefit responding parties as well as authorities.  
 
 We also are of the view that respondents should have opportunities to comment on model matching.  First, as discussed, model matching is  an issue of fundamental importance which can 
profoundly affect the dumping margin calculation.  Second, respondents have  expert knowledge of the 
products and product standards.  Thus, respondents’ input could be invaluable to authorities. Yet 
authorities often create product codes without significant input from respondents.  Typically, the 
petitioner will propose the codes.  Authorities ofte n use these codes in the questionnaire, without 
giving responding parties an adequate opportunity  to comment.  Respondents usually find it 
impossible to convince authorities to change product codes after the questionnair e has been issued.   
  Because product codes are very case-specific, we  are of the view that, although general rules 
regarding product codes (such as those set forth a bove) would be useful to provide necessary guidance 
for authorities in this matter, it is equally impor tant that responding parties be given reasonable 
opportunities to propose product codes, and to comme nt on those proposed by the petitioner and the 
authorities.  
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