RESTRICTED
WORLD TRADE G/ADP/W/17
G/SCM/W/24
ORGANIZATION 12July1995
(95-1967)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
QUESTIONS CONCERNING THE NOTIFICATIONS PROVIDED BYTHE
GOVERNMENT OFTHE UNITED STATES OFLAWS AND
REGULATIONS UNDER ARTICLES 18.5AND 32.6OF
THE AGREEMENTS
Thefollowingcommunication,dated5July1995,hasbeenreceivedfromthePermanentMission
ofJapan.
_______________
With reference toWTO/AIR/78 -Schedule forReview ofAnti-Dumping andCountervailing
Legislation, Iamsending youenclosed Japan'sComments andQuestions inviewofthespecial joint
meeting oftheCommittee onAnti-dumping Practices andonSubsidies andCountervailing Measures
on17-21 July1995.G/ADP/W/17
G/SCM/W/24
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1. Captive production
Article 3.6oftheAnti-Dumping Agreement directs Members toassess theeffect ofthedumped
imports "inrelation tothedomestic production ofthelikeproduct". United States law,however,
authorizes anassessment oftheeffect ofthevolume ofimports onasubset ofdomestic production -
the"merchant market". (SeeSection 771(7)(C)(iv) ofTitleVIIoftheTariff Actof1930).
Question. CantheUnitedStatesexplainwhichArticleintheAnti-DumpingAgreementprovides
authority tocompare thevolume ofimports, andtheir effects, onanything other thanthefull
domestic production ofthelikeproduct?
2. Profit deduction from constructed export price
Article 2.4oftheAnti-Dumping Agreement directs Members tomake allowances for"cost,
including duties andtaxes, incurred between importation andresale, andforprofits accruing" when
comparing normal value toconstructed export price. United States lawmandates thatthecalculation
of"profits accruing" inconnection withUnited States saleswillbebased onaformula which includes
profits associated withhome market andthirdcountry sales. (SeeSection 772(f)).
Question 1. Although aliteral reading ofArticle 2.4oftheAnti-Dumping Agreement makes
itclear thatthe"profits accruing" refers toprofits associated withUnited States salesonly, why
would "profits" under United States lawrefer toactivities notassociated withsales intheUnited
States?
Question 2. While United States lawrequires thededuction ofprofit ontheconstructed export
price, howistheprofit onthesideofnormal value dealt with?
3. Level oftrade adjustment tonormal value
Under United States law,constructed export price isadjusted backtoanex-factory price by
subtracting profits andcosts. Thus, netUnited States priceisalways equivalent toanex-factory price
atthewholesale level. Under United States law,however, where thestarting price fornormal value
isatanadvanced levelofdistribution, normal value isadjusted backtothisex-factory levelonlyif
leveloftrade adjustment conditions aremet. Thus, while theadjustment toUnited States price tothe
ex-factory level isautomatic, thedownward adjustment ofnormal value isconditional.
(SeeSection 773(a)(7)(A)).
Question 1. Since Article 2.4oftheAnti-Dumping Agreement requires dueallowances and
adjustments forprice symmetry inallcircumstances, isnottheUnited States lawinconsistent
withtheAnti-Dumping Agreement because theadjustment process isasymmetrical?
Question 2. Where intheAnti-Dumping Agreement doestheUnited States Government find
justification forthisdouble standard?
4. Offset captonormal value
Article 2.4oftheAnti-Dumping Agreement specifically directs Members tomake "due
allowances" toensure thatprice comparisons aresymmetrical. United States lawcontemplates a
downward adjustment toconstructed export price forselling expenses andprofits. However, there
isnoparallel andunconditional provision authorizing adownward adjustment tonormal value. Rather,G/ADP/W/17
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thedownward adjustment tonormal value iscapped bytheamount oftheadjustment toconstructed
export price. (SeeSection 773(a)(7)(B)).
Question 1. Upon which Article intheAnti-Dumping Agreement doestheUnited States base
itsdecision tocaptheamount ofdeduction tonormal value?
Question 2. Assuming there isnobasis intheAnti-Dumping Agreement forthisasymmetry,
what isthelegal reasoning orpolicy for"capping" theselling expense deduction from normal
value?
5. Identification ofnormal value
Article 2.2oftheAnti-Dumping Agreement indicates thateither sales from afactory inits
home market, toanappropriate thirdcountry, orcostofproduction should beusedfornormal value.
Article 2.2,however, doesnotauthorize theuseofsalesmade from aseparate (butrelated) factory
located inaseparate country asabasis fornormal value. TheUnited States MNC (special rulefor
certain multinational corporations) provision, however, directs theCommerce Department tousea
normal value notauthorized under theAnti-Dumping Agreement. (SeeSection 773(d)).
Question. GiventhedefinitionsofnormalvalueinArticle2.2oftheAnti-DumpingAgreement,
howistheMNC provision inUnited States lawconsistent withArticle 2.2?
6. Anti-circumvention
TheMarrakesh Ministerial Decision onAnti-Circumvention recognized thatnouniform rules
andprocedures wereadopted withrespect toanti-circumvention. Thedecision pledged thatMembers
should adopt uniform anti-circumvention rules assoonaspossible. Thedecision didnot,however,
authorize Members toadopt anti-circumvention rules which were inconsistent with thecurrent
Anti-Dumping Agreement. (SeeSection 781)
Question. Onwhich Article intheAnti-dumping Agreement istheUnited States
Anti-Circumvention provision based?
7. Cross cumulation ofimports subject toADandCVD investigation
Article 15.3oftheAgreement onSubsidies andCountervailing Measures permits cumulation
ofimports subject tosimultaneous CVD investigation. Article 3.3oftheAnti-Dumping Agreement
alsopermits cumulation. However, neither theAnti-Dumping Agreement northeSubsidies and
CountervailingAgreementauthorizescross-cumulationunderanycircumstances.(SeeSection771(7)(G).
Question 1. Does United States lawpermit cross-cumulation ofimports subject toADorCVD
investigations?
Question 2. Ifcross-cumulation ispermitted, which Article ineither theAgreement onSubsidies
andCountervailing Measures ortheAnti-Dumping Agreement authorizes thiscross-cumulation?