RESTRICTED
WORLD TRADE G/ADP/W/304
G/SCM/W/312
ORGANIZATION 18March 1996
(96-0951)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
REPLIES TOQUESTIONS POSED BYAUSTRALIA1,CANADA2,
EUROPEAN COMMUNITIES3,HONG KONG4,JAPAN5,KOREA6,
SINGAPORE7AND THE UNITED STATES8
CONCERNING THE NOTIFICATION OFLAWS
AND REGULATIONS OFMALAYSIA9
Thefollowing communication, dated 26February 1996, hasbeenreceived fromthePermanent
Mission ofMalaysia.
_______________
QUESTIONS RAISED BYAUSTRALIA AND ANSWERS THERETO
Q1. Towhatextent would "comparable" and"similar" merchandise usedofthedetermination of
normal value onthebasisofexport prices toathirdcountry differ from"likeproducts"? (Seesubsection
16(2)(a), page15,andregulations 27(a) and28(1)(a) onpage41.)
Answer
Theterm"likeproduct" and"comparable merchandise" forthepurpose oftheA-Dproceeding
isactually synonymous. Thedifference intheterminology wasadopted forthepurpose tofacilitate
thedifferent stage oftheinvestigation. TheMalaysian lawintroduced theterm "comparable
merchandise" fordetermining normal value andadopted theterm"likeproduct" indetermining injury.
Thisprovision wasadopted inthedomestic legislation priortothecoming intoforce oftheWTO A-D
Agreement. Thisprovision willbeaddressed accordingly inthecurrent review onthedomestic
legislation toensure conformity withtheWTO A-DAgreement.
1G/ADP/W/219-G/SCM/W/229,2G/ADP/W/234-G/SCM/W/244,3G/ADP/W/158-G/SCM/W/165
+Suppl.1, G/ADP/W/260-G/SCM/W/270,4G/ADP/W/184-G/SCM/W/191,5G/ADP/W/160-
G/SCM/W/167,6G/ADP/W/170-G/SCM/W/177,7G/ADP/W/237-G/SCM/W/247,8G/ADP/W/203-
G/SCM/W/212 andG/ADP/W/250-G/SCM/W/260.
9G/ADP/N/1/MYS/1-G/SCM/N/1/MYS/1.G/ADP/W/304
G/SCM/W/312
Page2
Q2. Howwould "primarily" bedefined inexclusion (B)fromthedefinition ofdomestic industry
(Section 2(1),paragraph 2,page5)?Onwhatbasisaretheseproducers excluded fromtheconsideration
ofdomestic industry forstanding andinjury purposes?
Answer
Theterm"primarily" isnotdefined intheParent Act. However, inadministering theA-D
proceeding, theA-Dauthority hasinterpreted "primarily forexport" toinclude companies whoexport
80percentormore oftheirproduction. Thereason fortheirexclusion from forming partofthe
domestic industry forCVD orA-Dproceedings isduetothefactthattheyarenotlikely tobeaffected
bythealleged dumping orsubsidy ascompared tothedomestic producers defined therein. However,
inviewthattheWTO A-DAgreement seems toadopt adifferent definition ondomestic industry in
asfarasproducers forexport purposes areconcerned, wewilladdress thematter inourcurrent review
onthedomestic legislation toseeconformity bythedomestic legislation withtheprovisions ofthe
WTO A-DAgreement onthissubject.
Q3. Isthereference to"exporters" insubsection 2(2)(a)(ii) (page 6)tobereadasareference to
"export subsidy" defined inregulation 24(3) (page 40)?
Answer
Theterm"exporters" inSection 2(2)(a)(ii) refers toanyperson referred insub-paragraph (i)
ofSection 2(2)(a) whoenjoys subsidy asreferred inRegulation 24(3).
Q4. WillMalaysia bepublishing regulations prescribing non-actionability ofsubsidies other than
onthebasis ofnon-specificity?
Answer
Thecurrent review onthedomestic legislation ismeant toensure compliance bythedomestic
legislation withtheprovisions oftheWTO A-DandSCM Agreements inaccordance withArticles 18.4
and32.5oftheWTO A-DandSCM Agreements, including Article 8oftheWTO SCM Agreement.
Q5. Canundertakings beaccepted before therehasbeenanaffirmative preliminary determination?
Could Malaysia explain theoperation ofsubsections 12(1) and(3)(pages 11and12),subsection 27(1)
and(3)(page 20),andregulation 18(4) (page 37)? Canundertakings beaccepted fromgovernments
inthecaseofanti-dumping investigations?
Answer
Sections 12(1) and(3)andSections 27(1) and(3)oftheParent Actwere legislated prior to
thecoming intoforce oftheWTO A-DAgreement. Assuch, wedidnothavethebenefit ofknowing
whatwould befinally adopted intheWTO Agreement. Therefore, these provisions willbetaken care
ofaccordingly inthecurrent review onthedomestic legislation toconform withArticles 8.2and18.2
oftheWTO A-D andSCM Agreements.G/ADP/W/304
G/SCM/W/312
Page3
Q6. Whyisthere thequalification of"public interest" fortheholding ofandadministrative review
under subsections 13(1) (page 13)and28(1) (page 21)?
Answer
Toensure thatmembers ofthepublic willnotbeaffected totheirdetriment from anyresult
oftheadministrative review iftheGovernment were todecide toholdone.
Q7. What isrequired tobedemonstrated by"good cause "insubsections 13(6) (page 14)and28(6)
(page 22)? (Regulation 35(3), page44,appears nottorequire ademonstration ofthecontinuation
ofdumping orsubsidization.)
Answer
Section13(6)andSection28(6)oftheParentActoughttobereadtogetherwithRegulation35(3).
Therefore, theterm"good cause" referred inSections 13(6) and28(6) oftheParent Actwould mean
thatthere shallbeestablished reasonable andjustifiable reasons thatthetermination oftheimposition
ofduties would leadtoinjury tothedomestic industry.
Q8. IsitMalaysia 'sintention topublish further regulations tocover some ofthedetail ofthe
agreements suchasstanding forinitiation, deminimis margins, negligible volumes, insufficient sales,
sales ataloss,treatment ofcurrency conversions, andspecificity?
Answer
Yes,upon thefinalization ofthecurrent review exercise onthedomestic legislation.
Q9. Article 14oftheSubsidies Agreement requires thatanymethod usedbytheinvestigating
authorities tocalculate thebenefit totherecipient beprovided forinlegislation orimplementing
regulations consistent withtheguidelines inthatArticle. Does Malaysia intend tosupplement
Regulations 24(2) and25(pages 40and41)inthisregard?
Answer
Thecurrent review onthedomestic legislation isaimed toensure conformity bythedomestic
legislation withtheWTO A-DandSCM Agreements including Article 14oftheWTO SCM Agreement
bywayofanamendment totheexisting legislation oranyother method astheGovernment deems
fit.
QUESTIONS RAISED BYCANADA AND ANSWERS THERETO
Definitions
Q1. Sub-section 2.(1) oftheMalaysian legislation provides thedefinition ofdomestic industry.
Sub-section 2.(1)(c) specifies thatthedefinition ofdomestic industry includes regional producers of
thelikeproduct.
TheMalaysian lawdoesnotrequire thatanyconditions bemetfordomestic industry tobe
limited toregional producers ofthelikeproduct. However, according totheWTO Anti-Dumping (A-D)
Agreement, definition ofdomestic industry:G/ADP/W/304
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Page4
inexceptional circumstances theterritory ofaMember may, fortheproduction in
question, bedivided intotwoormore competitive markets andtheproducers within
eachmarket mayberegarded asaseparate industry if(a)theproducers within such
market sellalloralmost alloftheirproduction oftheproduct inquestion inthatmarket,
and(b)thedemand inthatmarket isnottoanysubstantial degree supplied byproducers
oftheproduct inquestion located elsewhere intheterritory. Insuchcircumstances,
injury maybefound toexistevenwhere amajor portion ofthetotaldomestic industry
isnotinjured, provided thereisaconcentration ofdumped imports intosuchanisolated
market andprovided further thatthedumped imports arecausing injury totheproducers
ofalloralmost alloftheproduction within suchmarket.
WillMalaysian authorities limittheuseoftheregional aspect ofthedomestic industry definition
tothatspecified intheWTO A-DAgreement, Article 4.1(ii)?
Answer
Theanswer tothisquestion isthesame astotheanswer toQ.15. raised bytheECintheEC's
additional questions.
Q2. TheWTO A-DAgreement, Article 2.6defines likeproduct as:
aproduct which isidentical, i.e.alikeinallrespects totheproduct under consideration,
orintheabsence ofsuchaproduct, another product which, although notalikeinall
respects,hascharacteristicscloselyresemblingthoseoftheproductunderconsideration
(emphasis added).
According totheMalaysian laws:
"likeproduct" means aproduct which isidentical oralikeinallrespects tothesubject
merchandise, andmayinclude anyother product which hasphysical, technical or
chemical characteristics, applications orusesthatresemble those ofthesubject
merchandise astheGovernment deems themappropriate.
Could theMalaysian delegation please clarify whether theexpanded definition oflikeproduct
would onlyapply intheabsence ofaproduct which isalikeinallrespects?
Answer
Yes.Generally, theA-Dauthority willhavetodetermine thatthelikeproduct mustbeidentical
oralikeinallrespects tothesubject merchandise. Theconnotation "andmay" inSection 2(1)onthe
definition of"likeproduct" would onlybeapplicable where there could notbefound aproduct which
isidentical oralikeinallrespects. Under suchcircumstances, onlyproducts which havephysical or
technical orchemical characteristics tothesubject merchandise maybeconsidered.
Normal Value Considerations
Q3. Sub-section2.(1)oftheMalaysianlawprovidesdefinitionsforthetermscomparablemerchandise,
likeproduct andsubject merchandise. Forthepurposes ofdetermining normal value, Section 16of
theMalaysian lawrefers tothetermcomparable merchandise while WTO A-DAgreement, Article 2
refers tolikeproduct. According toSub-section 2.(1):G/ADP/W/304
G/SCM/W/312
Page5
"Comparable merchandise" means merchandise soldinthedomestic market ofthe
exporting country ortoanythirdcountry orcountries thattheGovernment considers
appropriate foruseinthecalculation ofadumping margin.
"subject merchandise" means theclass orkindofmerchandise imported orsoldfor
importation intoMalaysia thatisthesubject ofanycountervailing oranti-dumping
dutyaction under thisAct,asdetermined bytheGovernment tobeappropriate for
establishing thescope oftheaction.
Could theMalaysian delegate please provide clarification ofthedifference between thethree
definitions andexplain whyMalaysian lawdoesnotusethelikeproduct definition forthepurposes
ofcalculating normal value?
Answer
Theanswer tothisquestion isthesame astheanswer toQ.2raised byAustralia.
Q4. WTO A-DAgreement, inArticle 2.2.1, provides specific conditions thatmustbesatisfied for
authorities tousetheconstructed costmethod. Could theMalaysian delegate please indicate where
Malaysian laws/regulations specify these conditions?
Answer
Theanswer tothisquestion isthesame astheanswer toQ.6raised bytheUnited States.
Q5. Subsection 16.(4) oftheMalaysian lawsspecifies that:
Forthepurpose ofdetermining thecostofproduction referred toinparagraph (2)(b)
andSubsection (3),thecostofproduction shallbecomputed onthebasis ofallfixed
andvariable costs ofmaterials andmanufacturing intheordinary course oftrade in
theexporting country, plusareasonable amount forselling, administrative andother
general expenses (emphasis added).
WTO A-DAgreement, Article 2.2.1.1 requires that:
Authorities shall consider allavailable evidence ontheproper allocation ofcosts,
including thatwhich ismade available bytheexporter orproducer inthecourse of
theinvestigation provided thatsuchallocations havebeenhistorically utilised bythe
exporter orproducer, inparticular inrelation toestablishing appropriate amortization
anddepreciationperiodsandallowancesforcapitalexpendituresandotherdevelopment
costs. Unless already reflected inthecostallocations under thissub-paragraph, costs
shallbeadjusted appropriately forthosenon-recurring itemsofcostwhich benefit future
and/or current production, orforcircumstances inwhich costs during theperiod of
investigation areaffected bystar-up operations.
Thefootnote toWTO A-DAgreement, Article 2.2.1.1 states that:
Theadjustment made forstart-up operations shallreflect thecosts attheendofthe
start-up period or,ifthatperiod extends beyond theperiod ofinvestigation, themost
recent costswhich canreasonably betaken intoaccount bytheauthorities during the
investigation.G/ADP/W/304
G/SCM/W/312
Page6
Could theMalaysian delegate please indicate where Malaysian lawsandregulations stipulate
thatMalaysian authorities account forthese fixedcostadjustment requirements?
Answer
There arenocorresponding provisions inthenational A-Dlegislation withArticle 2.2.1 and
2.2.1.1 andthefootnote thereto. TheA-Dauthority willhowever apply theprovisions oftheWTO
A-DAgreement onthismatter pending theoutcome ofthereview onthenational A-Dlegislation.
Q6. Malaysian regulation 28.(2) provides that:
TheGovernment mayaggregate sales tomore thanasingle thirdcountry inorder to
findadequate volume ofsales forthepurpose ofparagraph (1)(a).
Could theMalaysian delegate please clarify thebasis under theWTO A-DAgreement forthis
aggregation methodology ofthird country normal value comparisons?
Answer
Thisprovision wasintroduced intothenational A-Dlegislation prior tothecoming intoforce
oftheWTO A-DAgreement. However, theWTO A-DAgreement didnotadopt thisprovision in
theFinal Agreement, neither doesitprohibit suchmethod. Inaggregating thesalestherein, theA-D
authority willensure thatallcriteria provided inparagraphs (a)to(d)ofRegulation 28(1) willbemet
with.
Q7. Itappears thatMalaysian lawsandregulations donotinclude thefaircomparison provisions
forthetreatment ofexchange ratemovements. Could theMalaysian delegate please indicate how
Malaysia intends totreathedged transactions andtransactions during aperiod characterised bya
sustained movement inrelevant exchange rates?
Answer
Inviewofthefactthatnosuchprovision wasprovided inthenational A-Dlegislation, Malaysia
willadopt theprinciples asoutlined inArticle 2.4.1 oftheWTO A-DAgreement pending thereview
onthenational A-Dlegislation.
Initiation andInvestigation
Q8. WTO A-DAgreement, Article 5.4specifies that:
theapplication shallbeconsidered tohavebeenmade "byoronbehalf ofthedomestic
industry," ifitissupported bythose domestic producers whose collective output
constitutes more than50percentofthetotalproduction ofthelikeproduct produced
bythatportion ofthedomestic industry expressing either support fororopposition
totheapplication.However,noinvestigationshallbeinitiatedwhendomesticproducers
expressly supporting theapplication account forlessthan25percentoftotalproduction
ofthelikeproduct produced bythedomestic industry.
Could theMalaysian delegate please indicate whether Malaysian lawsandregulations contain
industry support requirements?G/ADP/W/304
G/SCM/W/312
Page7
Answer
Yeswedo.Section 20(1) oftheParent ActandRegulation 7(b)provides thattheA-Dpetition
besubmitted byproducers orassociation ofproducers ofthelikeproduct onbehalf ofthedomestic
industry.Section2(1)inthedefinitionof"domesticproducer"definedonbehalfofthedomesticindustry
tomean amajor proportion ofthedomestic industry. Thereview onthenational A-Dlegislation will
beaddressed onthismatter toconform withtheWTO A-DAgreement.
Q9. Malaysian regulation 15.(3) specifies thattheGovernment shall make anegative final
determination:
where theamount ofsubsidy ordumping orthevolume ofsubsidized ordumped imports,
actual orpotential isnegligible.
Malaysian lawsdonotprovide athreshold value below which thedumping/subsidy margin
and/or thevolume ofdumped/subsidized imports aretobeconsidered negligible.
Could theMalaysian delegate please indicate whether Malaysia intends toemploy thecriteria
fordeminimus margin andnegligible volume contained inArticle 5.8oftheA-DAgreement?
Answer
Thecurrent review onthedomestic legislation which isforthepurpose ofensuring conformity
withtheprovisions oftheWTO A-DAgreement would naturally takethismatter intoaccount.
Q10. Sub-section 20.(3)(b) requires thatMalaysian authorities determine whether ananti-dumping
investigation isinthepublic interest prior toinitiating aninvestigation. Could theMalaysian delegate
please indicate thecriteria usedtodetermine public interest considerations?
Answer
Thecriteria thatwillbeconsidered indetermining public interest would bethedegree ofreliance
bymembers ofthepublic tothealleged dumped product, theleveloffaircompetition deduced from
thebehaviour ofconsumers fromtheimpact ofthepresence ofthealleged dumped subject merchandise
inthedomestic market oftheexport country asagainst thelikeproduct produced bythedomestic
industry andthelikely effect ontheconsumers 'behaviour iftheinvestigation isinitiated andthepossible
subsequent imposition oftheanti-dumping duties thereto.
Q11. Sub-section 38.(1) ofMalaysian legislation specifies thatinterested parties shallbeaccorded
notice ofinformation andopportunities topresent evidence. DoesSub-section 38.(1) apply toallstages
ofanA-Daction (initiation, preliminary determination, finaldetermination, reviews)?
Answer
Yes.
Provisional Measures
Q12. WTO A-DAgreement, Article 10.6allows definitive A-Dduties tobelevied onproducts which
wereentered forconsumption notmore than90daysprior tothedateofapplication ofprovisional
measures incases where there isahistory ofdumping orwhere there ismassive dumping. InadditionG/ADP/W/304
G/SCM/W/312
Page8
tothesetwocircumstances, Sub-section 25.(7)(a) oftheMalaysian legislation alsoallows fordefinitive
A-Dduties tobelevied onproducts which wereentered forconsumption notmore than90daysprior
tothedateofapplication ofprovisional measures when theGovernment finds injury thatisdifficult
torepair.
Could theMalaysian delegate please clarify theWTO A-DAgreement-basis forthisadditional
reason forlevying A-Dduties onproducts which wereentered forconsumption notmore than90days
priortothedateofapplication ofprovisional measures? Could theMalaysian delegate please indicate
whatismeant by"injury thatisdifficult torepair?"
Answer
Asexplained earlier, thedomestic legislation came intobeing andwasenforced prior tothe
coming intoforce oftheWTO A-DAgreement. Therefore, Section 25(7) wasenacted intheParent
Actnotasaresult ofreliance onanyprovisions oftheWTO A-DAgreement. However, thesaid
provision canbejustified onthebasis thatthenational A-Dlegislation emphasises theresults ofthe
twocircumstances asstated inparagraphs (a)and(b)ofthatSection, which happens tobeconsistent
withthetwocircumstances asprovided inArticle 10.6oftheWTO A-DAgreement, ascausing injury
thatisdifficult torepair, forretrospective duties tobejustified forapplication. Injury thatisdifficult
torepair would bearthemeaning asdamage beyond repair.
Q13. Could theMalaysian delegate please indicate whether Sub-section 25.(7) allows Malaysian
authorities toapply retro-active duties prior tothedateofinitiation?
Answer
Section 25(7) willnotbeinterpreted toallow theA-Dauthority toapply theretroactive duties
toanyperiod prior totheinitiation oftheinvestigation. Section 25(7) oftheParent Actwillhave
tobereadtogether withRegulation 10(1) andRegulation 13(1).
Regulation 10(1) permits theA-Dauthority tomake preliminary determination within aperiod
of90daysfromthedateoftheinitiation oftheproceedings while Regulation 13(1) provides thatthe
provisional measures canonlybeapplied afterthepublication ofthenotice ofaffirmative preliminary
determination andthatnoprovisional anti-dumping duties canbeapplied earlier than60daysfrom
thedateoftheinitiation oftheinvestigation.
Inlinewiththeprovisions ofRegulation 10(1) and13(1) thereof, theA-Dauthority willonly
applythemaximumperiodof90daysfortheimpositionoftheretroactivedutiesthereofonlyininstances
where theaffirmative preliminary determination waspublished onthe90thdayoftheinitiation ofthe
investigation. Where theaffirmative preliminary determination ismade earlier thanthe90thdayof
theinitiation oftheinvestigation butnotearlier thanthe60thdaythereof, theperiod fortheapplication
oftheretroactive duties thereof shallbelessthan90dayssothatitwillnotbeapplied toanyperiod
prior totheinitiation oftheinvestigation.
Undertakings
Q14. Sub-section 27.(3), which provides that:
Ifundertakings areaccepted bytheGovernment priortothepreliminary determination,
theGovernment shallsuspend theinvestigation andpublish anotice stating thereasons
fortheacceptance ofsuchundertakings.G/ADP/W/304
G/SCM/W/312
Page9
appearstobeinconsistentwithWTOA-DAgreement,Article8.2,whichprohibitstheacceptance
ofprice undertakings prior toapreliminary determination ofbothdumping andinjury caused bysuch
dumping. Could theMalaysian delegate please clarify theWTO-basis forthisprovision?
Answer
Theanswer tothisquestion isthesame astheanswer toQ2.raised byJapan.
Injury
Q15. Forthepurposesofdetermininginjuryinregionalmarketcases,WTOA-DAgreement,Article4.1
allows forafinding ofinjury inregional market cases described inthatArticle evenwhere amajor
proportion ofthetotaldomestic market isnotinjured solongasthere isaconcentration ofimports
intotheregional market anddumped imports arecausing injury toproducers ofalloralmost allof
theproduction within thatmarket. Could theMalaysian delegate please clarify howMalaysia will
determine injury inregional market cases?
Answer
Inlinewiththeanswer toQ8.above, Malaysia willapply theprovisions ofArticle 4.1ofthe
WTO A-DAgreement pending theoutcome ofthecurrent review onthenational A-Dlegislation.
General Issues
Q16. Sub-section 33.provides fortheMinister ofFinance to:
make special provision toregulate those specified areas forthepurposes ofthisAct.
Could theMalaysian delegate please clarify theintent ofthisprovision?
Answer
Thepurpose ofthisSection istoensure thatanyregulations concerning financial expenditures,
receipt orcollection tobemade bytheMinister charged withresponsibility onfinance, inaccordance
withtheFinancial Procedure Act,Malaysia andtherelevant provisions oftheFederal Constitution
ofMalaysia.
Q17. Sub-section 37.states that:
TheGovernment maytakeaction toprevent circumvention oftheapplication of
countervailing andanti-dumping duties asmaybeprescribed.
However, WTO A-DAgreement, Article 18.1prohibits Members fromtaking specific action
against dumping except inaccordance withtheprovisions oftheGATT 1994. Could Malaysia indicate
howitintends toconduct anti-circumvention investigations inamanner consistent withtheGATT 1994?
Answer
Theanti-circumvention measures provision inthenational A-Dlegislation wasadopted inthe
Parent Actpriortothecoming intoforceoftheWTO A-DAgreement. However, itcanbeimplemented
only inaccordance with such regulations asmay beprescribed bytheMinister pursuant toG/ADP/W/304
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Section 50(2)(d) oftheParent Act. Todate,nosuchregulation hasbeenprescribed bytheMinister,
rendering theanti-circumvention measures toremain unenforceable under thenational A-Dlegislation.
Whether ornotMalaysia willbeimplementing theanti-circumvention measures would depend onthe
finaldecision tobeadopted bytheCommittee ontheCountervailing Duties Measures andtheAnti-
Dumping Duties oftheWTO astothefateofthisprovision.
Q18. Wewould appreciate anexplanation ofthelegalmechanism inMalaysia fortheimplementation
ofdecisions rendered bytheWTO.
Answer
Theanswer tothisquestion isthesame astheanswer toQ.3raised byHong Kong andQ.18
raised bytheUnited States.
Q19. Which competent authority within theMalaysian Government willberesponsible foraccepting
complaints, initiating investigations, making apreliminary determination andapplying provisional
reviews? Willthesame authority examine boththedumping andinjury aspects ofaninvestigation?
Answer
TheTrade Practices UnitoftheMultilateral Division oftheMinistry ofInternational Trade
andIndustry, Malaysia. Yes.
Subsidy Provisions
Q20. Thedefinition ofwhatconstitutes asubsidy assetoutunder PartV,Section 24isonlyinpart
consistent withtheWTO Subsidies Agreement (SCM). Thelegislation, forexample, includes an
exhaustivelistofpracticesthatconstituteasubsidyasprovidedunderArticle1.1(a)oftheWTOSubsidies
Agreement, butdoesnotinclude therequirement under Article 1.1(b) thatabenefit beconferred for
asubsidy toexist. WilltheGovernment ofMalaysia befurther clarifying theWTO Subsidies Agreement
requirement thattheexistence ofasubsidy requires thatabenefit beconferred?
Answer
Yes,thiswillbetaken careofinthecurrent review exercise onthedomestic legislation.
Q21. Further toSection 24.1(e), doestheGovernment ofMalaysia consider income orpricesupports
inthesense ofArticle XVIofGATT 1994 tobesubsidies?
Answer
Yes.
Q22. WilltheGovernment ofMalaysia confirm thatSection 24ofPartVelaborates onthedefinition
ofsubsidy asprovided under Section 2,PartIIofthelegislation?
Answer
Yes.G/ADP/W/304
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Q23. WilltheGovernment ofMalaysia clarify theintent andmeaning ofSection 3ofPartIIofthe
legislation. WillMalaysia clarify whether thislegislation willbethelawofgeneral application and,
intheevent ofconflict, willsupersede anyother Malaysian lawsthatmayconflict withthelegislation?
Answer
Section 2(3)wasintroduced specifically duetothesituation asexplained intheanswer toQ1.
raised byHong Kong, toenable Malaysia toimplement anyprovisions oftheWTO A-DandSCM
Agreements pending stepstoalignitsnational legislation toconform withthesaidWTO Agreements.
Thedomestic legislation isastatute ofgeneral application andwillprevail inanyevent ofinconsistency
withanyother Malaysian legislation inasfarasmatters relating toA-DandCVD areconcerned.
Q24. Section24.3ofPartV,inrespectofexportsubsidiesdoesnotreflectthestandardfordetermining
export subsidies assetoutunder Article 3oftheWTO Subsidies Agreement (including Footnote 4of
theWTO SCM andtheexception relating totheWTO Agriculture Agreement). WilltheGovernment
ofMalaysia clarify howitintends todefine export subsidies? Istheprohibition ofsubsidies governed
byother lawsorregulations?
Answer
Inviewofthecurrent review exercise stillpending, thereviewed definitions on"export subsidy"
willbenotified accordingly totheCommittee uponfinalization thereof towhich Canada willhaveaccess
thereto.
Q25. Withrespect tonon-actionable subsidies asprovided under Article 8oftheWTO Subsidies
Agreement, willtheGovernment ofMalaysia clarify whether allfinancial contributions relating to
research,regionaldevelopmentandenvironmentwillnotbeconsideredtobesubsidieswithinthemeaning
ofArticle 8oftheWTO Subsidies Agreement?
Answer
Inview ofthecurrent review exercise stillpending, theGovernment ofMalaysia willtake
thenecessary steps toensure conformity thereto inthedomestic legislation withtheWTO A-Dand
SCM Agreements, including conformity withArticle 8oftheSCM thereto.
Q26. Inconsideringthespecificityofasubsidy,Section24.4ofPartV,thelegislationrelatesspecificity
todomestic subsidies. WilltheGovernment ofMalaysia clarify whether thedejureanddefactotests
ofspecificity, under Article 2.1(b) and2.1(c) oftheWTO SCMAgreement willbeapplied indetermining
specificity ofasubsidy? Willthelegislation require specificity tobesubstantiated onthebasisofpositive
evidence? Thelegislation doesnotappear tocontain provisions relating tosub-federal subsidies.
WilltheGovernmentofMalaysiaclarifywhyprovisionsforsub-federalsubsidieshavenotbeenincluded?
Answer
Thecurrent review exercise onthenational CVD andA-Dlegislation willenable thedomestic
legislation toconform withtheprocedures andprovisions asadopted bytheWTO A-DandSCM
Agreements, including matters related toArticle 2oftheWTO SCM Agreement. Thesub-federal
subsidies werenotincluded inthedomestic legislation inviewoftheconditions asstated inthefirst
paragraph oftheanswer toQ8.above.G/ADP/W/304
G/SCM/W/312
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Q27. What isthelegal mechanism inMalaysian lawfortheimplementation ofdecisions rendered
byaWTO panel?
Answer
InviewofArticle 18.1, Malaysia willapply andenforce thedecision oftheWTO panel.
Q28. IsthereanymeansbywhichdomesticinterestscoulduseMalaysianlaws(suchasaconstitutional
challenge) toprevent thegovernment fromimplementing aDSBpanel decision?
Answer
Wedonotanticipate any.
QUESTIONS RAISED BYTHE EUROPEAN COMMUNITY AND ANSWERS THERETO
Countervailing dutylegislation ofMalaysia
Withregard toMalaysia 'scountervailing dutylegislation, notified on27February 1995under
Article 32.6 oftheWTO Subsidies Agreement (G/ADP/N/1/MYS/1-G/SCM/N/1/MYS/1), the
European Community would liketoaskthefollowing questions:
Q1. Could youexplain thelegal relationship between Countervailing andAnti-Dumping Duties
Regulations 1994andtheCountervailing Duties Act1993? What willhappen ifprovisions oftheLaw
andtheRegulations conflict?
Answer
TheCountervailing andAnti-Dumping Duties Act1993isthemainCVD andA-Dlegislation
ormore oftenreferred astheParent Act.Itembraces thebasicprovisions onCVD andA-Dproceedings
inMalaysia andwasgazetted on17July1993. TheCountervailing andAnti-Dumping Duties
Regulations 1994isasetofregulations which regulates theCVD andA-Dproceedings andissubject
totheprovisions oftheParent Act.Inotherwords, theprovisions oftheRegulations mustbeconsistent
withtheprovisions oftheParent Act. Intheevent ofanyinconsistencies thatmayarisebetween the
two,theprovisions oftheParent Actshall prevail totheextent ofsuchinconsistencies thereof.
Naturally, boththeParent ActandtheRegulations must bereadtogether intheadministration and
interpretation ofanyCVD andA-Dproceedings. BoththeParent ActandtheRegulations came into
force on28April 1994.
Q2. CouldMalaysiaexplainwhynoprovisionintheLawortheRegulationsdealswithnon-actionable
subsidies asdefined inArticle 8oftheWTOSubsidies Agreement? HasMalaysia theintention toprovide
foranexception fornon-actionable subsidies (greenlight subsidies)?
Answer
Theanswer tothisquestion would bethesame asprovided inthefirstparagraph oftheanswer
toQ.1raised byHong Kong.
Q3. Could Malaysia explain whynospecificity requirements, asprovided byArticle 2oftheWTO
Subsidies Agreement, areincorporated initslegislation?G/ADP/W/304
G/SCM/W/312
Page13
Answer
Thedomesticlegislationhastoacertainextentprovidedtheprinciplesonspecificityrequirements
aslaidintheWTO SCM Agreement inSection 2(2)(a)(i) oftheParent ActandRegulation 24(4) of
theCVD andA-DRegulations. However, wewillbelooking intothedetails ofthespecificity principles
asprovided inArticle 2oftheWTO Subsidies Agreement inthereview onthedomestic legislation
toinclude those principles which havenotbeenprovided for.
Countervailing Duties Act1993
Q4. Section 2(2)givesabasic definition ofasubsidy. However, Section 2(2)(b) states thatasubsidy
isdeemed toexistwhere "anyother conditions asmaybeprescribed havebeenmet". Could youclarify
whatthese conditions maybeandwhattherelationship isofSection 2(2)(b) toSection 2(2)(a)? How
canMalaysia reconcile Section 2(2)(b) withtheprecise criteria ofArticle 1.1oftheWTO Subsidies
Code?
Answer
Thephrase "anyother conditions asmaybeprescribed" provided inSection 2(2)(b) refers
totheconditions prescribed intheCVD andA-DRegulations. Regulation 24(1) oftheCVD andA-D
Regulations prescribed thekindoffinancial benefit orcontribution which would betreated asamounting
tosubsidy. Section 2(2)(b) wasincorporated forthepurpose ofproviding clarity andtoavoid
Section 2(2)(a) frombeing unnecessarily toolengthy. Byincorporating Section 2(2)(b), Malaysia would
beabletoincorporate theinstances ofsubsidy which aresimilar tothataslaiddown inArticle 1.1
oftheWTO SCM Agreement.
Q5. CanMalaysia explain whyitleftoutfromitsdefinition ofasubsidy thatthisshould be"within
acountry"?
Answer
Theanswer tothisquestion would bethesameasprovided inthefirstparagraph oftheanswer
toQ.1ofHong Kong.
Q6. Section 39(1) states thatanyinformation which isprovided onaconfidential basis byparties
toaninvestigation, shall"forgood cause shown" betreated assuchbytheGovernment. Could you
provide clarification ontheconcept "forgood cause shown"? Inthisrespect, whatcriteria willbe
applied ingranting arequest forconfidentiality (asstated inSection 39(7)(a))? Howdoyoureconcile
thisprovision withSection 39(4)?
Answer
Theconcept of"forgoodcause shown" asadopted inSection 39(1) oftheParent Actrequires
anyparty furnishing information inaCVD investigation andclaiming fortheconfidentiality protection
ontheinformation sofurnished thereof toprovide reasonable andjustifiable reasons forsuchprotection
having regards tothenature ofthesaidinformation inrelation totheinvestigations tothesatisfaction
oftheCVD Authority ofMalaysia. Section 39(7)(a) oftheParent Actprovides fortheimplication
onanyrequest forconfidentiality protection oninformation provided under sub-section (1)butfails
tosatisfy theconditions ofsub-section (1).Themain criteria thatwould beconsidered bytheCVD
Authority ingranting arequest forconfidentiality would restonthecredibleness oftheinformation
totheinvestigation andtheseriousness oftheconfidence thatissought tobeprotected. Only suchG/ADP/W/304
G/SCM/W/312
Page14
information thatsatisfies therequirements ofsub-section (1)would enjoy theprotection conferred by
Section 39(4). Therefore, anyinformation submitted thatfailstogainconfidential protection under
anyofthegrounds aslaidinSection 39(7)(a) willnotbeentitled toenjoy theprotection asprovided
forinSection 39(4).
Q7. Pursuant toSection 43,ifnoapplicable international obligation oncountervailing oranti-
dumping duties existbetween Malaysia andtheinterested foreign government, countervailing oranti-
dumping duties maybeimposed without regard toaninvestigation. Could youprovide clarification
onthissection andspecify howyoudefine "applicable international obligation"?
Answer
ThisSectionprovidesforanexceptionfromtheapplicationofcertainexpressproceduresprovided
under thedomestic legislation onanypartywhose government doesnothaveanyapplicable international
obligation suchasbilateral international agreement withMalaysia onthemethodology tobeadopted
inconducting CVD proceedings; orisnotaparty tooraMember ofanymultilateral international
agreement ororganization which provides amethodology forconducting CVD proceedings towhich
Malaysia isaparty oraMember.
Countervailing andAnti-Dumping Duties Regulations 1994
Q8. Pursuant toSection 9(1), theGovernment ofMalaysia willdistribute questionnaires within
a"reasonable time" fromthedateofpublication ofthenotice ofinitiation. Could youprovide more
detailed information ontheapplicable timeframe?
Answer
Regulation 9(1)adopted thewords "may distribute questionnaires" andnot"will distribute
questionnaires". Thiswould mean thatitisuptothediscretion oftheA-DAuthority ofMalaysia
whether ornottogather information through questionnaires orotherwise. Intheevent iftheyshall
decide toobtain information through questionnaires, such questionnaires willbeissued within a
reasonable timefrom thedateoftheinitiation ofproceedings.
Thereasonableness ofsuchtimewilldepend onthetimetaken bytheA-DAuthority ofMalaysia
todetermine therelevant questions tobeincluded inthequestionnaires, necessary fortheinvestigation.
TheA-DAuthority ofMalaysia willthenhave toassess thetimeframe thatwillbeincurred in
distributing thequestionnaires sothatthecompulsory period forresponse bytherelevant parties thereof
andthetimerequired bythesaidAuthority inverifying theanswers thereto andtofinally make the
preliminary determinations donotexceed theperiod of90daysfrom thedateofthepublication of
theinitiation oftheinvestigation orasmaybeextended bythesaidA-DAuthority forafurther period
notexceeding 30daysthereafter.
Q9. Section 14(1) states thatapetitioner maymake awritten request fortheretroactive imposition
ofcountervailing duties. Neither theLawnortheRegulations contain anyprovisions ontheprinciples
ofretroactiveimpositionofcountervailingduties.CouldMalaysiaprovideclarificationontheretroactive
imposition ofcountervailing duties? Could Malaysia explain whytheconditions ofSection 20.2of
theWTO Subsidies Agreement havenotbeenincorporated intheLawortheRegulations?G/ADP/W/304
G/SCM/W/312
Page15
Answer
Under theParent Act,aprovision isprovided forthecollection ofretroactive countervailing
duties inSection 10(7). Theimposition ofretroactive countervailing duties willbecollected uponthe
A-DAuthority being satisfied thatallofthegrounds asprovided insub-paragraphs (a)to(c)ofthat
Section being fulfilled.
Theconditions ofArticle 20.2 oftheWTO SCM Agreement hasbeen taken careofin
Section 10.5(b) ofthenational CVD legislation.
Q10. Section 24(2) states that"ifnocashfloweffect canbecalculated, theGovernment maymake
anestimate ofthefinancial benefit". Could Malaysia provide details onthecalculation ofthefinancial
benefit andwhatspecific criteria willbeapplied?
Answer
Themanner forthecalculation ofthefinancial benefit andthecriteria thatwillbeadopted
willsolely depend onthenature ortypeofsubsidy provided bysuchgovernment tosuchparty under
investigation.
Q11. Willthecalculation oftheamount ofsubsidy according toSection 25reflect theguidelines
ofArticle 14WTO Agreement?
Answer
There isnotexpress corresponding provisions ontheguidelines asunderlined inArticle 14
oftheWTO Countervailing Agreement inRegulation 25(1) under thedomestic legislation. Pending
theoutcome ofthereview onthenational CVD legislation, Malaysia willapply theprovisions ofthe
WTO SCM Agreement administratively inanyCVD proceedings asandwhen itisrelevant.
Q12. Pursuant toSection 25(1)(b) theGovernment mayuseanyotherreasonable method todetermine
whenasubsidy isreceived provided thattheprescribed terminology willsignificantly distort thesubsidy
level. Could Malaysia clarify thissection?
Answer
Section 25(1)(b) basically establishes theprinciple thatthesubsidy isreceived atthetimethere
isacashflow"effect onanenterprise ...".Therefore, theGovernment would notnormally calculate
asubsidy unless anduntilthereisacasheffect intheinvestigation period. However, astrictadherence
tothecashbasis canleadtoadistortion inthesubsidy calculation. Anexample iswhere acompany
receives a$500million grant intheyear1992, theyearofinvestigation, butthedisbursement thereof
wasnotfullymade within theyearofthegrant butover1993 and1994. Astrict adherence tothe
cashbasiscalculation would distort thelevelofsubsidy calculation fortheyearofinvestigation under
suchcircumstance andthatthecompany mayargue thatthere wasnosubsidy from thegrant inthe
years 1993 and1994. Under thisinstance, theGovernment willuseanyother reasonable method to
determine when asubsidy isreceived.G/ADP/W/304
G/SCM/W/312
Page16
ADDITIONAL QUESTIONS RAISED BYTHE ECAND ANSWERS THERETO
Malaysian Anti-Dumping andCVD Rules: consistency withGATT
TheMalaysian rulesarecontained intwopieces oflegislation: theCountervailing andAnti-
Dumping Duties Act1993(the'Act'),andtheaccompanying Countervailing andAnti-Dumping Duties
Regulations 1994 (the'Regulations ')which came intoforce on28April 1994.
Obviously, theActwaswritten before theGATT Agreement came intoforce, soonewould
expect itsdeficiencies tobecovered inthe1994 Regulations. However, thisisnotalways thecase,
aswillbeshown inthelistofquestions which follows. Some gaps were leftover, andsome
inconsistencies withtheAgreement remain.
Wedonotagree withtheperception oftheECastotherelationship between theParent Act
andtheRegulation inrelation totheWTO A-DandSCM Agreements. Asinouranswer toQ1.raised
byHong Kong, wewishtostatethattheParent ActandtheRegulation came intoforce simultaneously
on28April 1994, wellbefore theWTO A-DandSCM Agreements came intoforce. TheRegulation
wasenacted forthepurpose ofproviding thedetailed procedure asunderlined under theParent Act
pursuant toSection 50oftheParent Act.Therefore, thestatement thattheRegulation wasintroduced
forthepurpose ofcovering upthedeficiencies intheParent ActwiththeWTO Agreement stands to
becorrected.
Q1. There ispossibly ageneral problem concerning theorder ofprecedence ofthetwotypes of
legislation. What happens iftheActcontains provisions atoddswiththeRegulations? Thisisthe
case, forexample, inSection 21oftheActandSection 4oftheRegulations which bothdealwiththe
question ofamendments topetitions, butwhich contain different andirreconcilable provisions. Which
piece oflegislation takes precedence insuchcases? IfitistheAct,thentheresults willnotconform
totheAgreement, since theActwaspassed before theAgreement, andimportant inconsistencies exist
between them.
Answer
Theprovisions oftheParent Actshallprevail totheextent ofsuchinconsistencies thereof.
Thealleged irreconcilable inconsistencies oftheprovisions inSection 21oftheParent Actand
Regulation 4oftheRegulations arenotcorrect. Bothrelevant provisions oftheParent Actandthe
Regulation ought tobereadtogether since thelatter wasmeant tosupplement theformer. Section 21
oftheParent Actprovides that"Apetition requesting ananti-dumping dutyinvestigation beinitiated
maybeamended subject tosuchconditions astheGovernment deems fit".
Section 50(1) oftheParent Actfurther empowers theMinister tomake anyregulations asmay
benecessary orexpedient forgiving fulleffect totheprovisions oftheParent Act. Pursuant thereto,
theMinister hasincluded intheRegulations theprovision inRegulation 4astothemanner the
Government would deem fitforamendments toanypetition requesting theinitiation ofananti-dumping
investigation tobemade byanyrelevant petitioner. Inviewthatthetwoprovisions areconsistent,
thequestion ofwhich provision prevails overwhich doesnotarise. Thestatement bytheECthatif
theprovisions oftheParent Actwillprevail intheevent ofinconsistency between thetwoprovisions
willamount tobeing inconsistent withtheprovisions oftheWTO Agreement justbecause theParent
Actwaspassed before theWTO Agreement isnotcorrect andisamisinterpretation bytheEConthe
domestic legislation.G/ADP/W/304
G/SCM/W/312
Page17
Normal Value
Q2. InPartIIIoftheAct,Section 16(5) deals withdetermining thenormal value where there are
sales which werenotmade intheordinary course oftrade. Article 2.2.1 oftheAgreement states the
conditions which apply before suchsales maybedisregarded.
WhydotheMalaysian rules notinclude alltheconditions contained inArticle 2.2.1 ofthe
Agreement?
Answer
Because theRegulations wereintroduced before theWTO Agreement came intoforce sothat
wewere notabletoanticipate whatwould beadopted intheWTO Agreement. Thecurrent review
onthedomestic legislation ismeant toensure conformity bythedomestic legislation with the
WTO A-DAgreement.
Comparison ofnormal value andexport price
Q3. Section 18(1) oftheActomits much ofthedetail provided forinArticles 2.4,2.4.1 and2.4.2
oftheAgreement. Forexample, there isnomention ofthecasewhere conversion ofcurrencies takes
place intheprice comparison. Furthermore, there isnodiscussion oftheconditions relating tothe
choice ofweighted average-to-weighted average ortransaction-to-transaction comparisons (Art.2.4.2
oftheAgreement).
Whyisthisso?
Answer
Theanswer isthesame astheanswer toQ.2above.
Petitions
Q4. Section2oftheRegulationsdoesnotexplicitlysaythatthepetitionersshouldprovideinformation
about thevolume ofdomestic production accounted forbythemsuchasisrequired inArticle 5.2(i)
oftheAgreement.
ThisflawisemphasisedbythefactthattheRegulationscontainnoprovisionsontherepresentivity
ofapetition: theconditions contained inArticle 5.4oftheAgreement seem nottobepresent inthe
Malaysian rules.
Whyisthisso?
Answer
Theanswer toQ.2above applies tothisquestion. Pending theoutcome ofthesaidreview,
theinvestigating authority willapply theprinciples aslaiddown inArticle 2oftheWTO A-DAgreement
relating totheconditions ofdomestic industry requirement, administratively.G/ADP/W/304
G/SCM/W/312
Page18
Notification
Q5. TheMalaysian rulesdonotexplicitly statethatpublicizing ofthepetition shallbeavoided before
theinitiation ofaninvestigation (Article 5.5oftheAgreement). Neither isthere aprovision stating
thatananti-dumping proceeding shallnothinder theprocedures ofcustoms clearance (Art.5.9ofthe
Agreement).
There isnoequivalent tothefirstpartofArticle 6.1.3 oftheAgreement intheMalaysian rules:
theydonotstatethattheexporters shall begiven, upon initiation ofaninvestigation, acopyofthe
written application fortheinitiation oftheA-Dproceeding.
Whyisthisso?
Answer
Theanswer toQ.4above would apply tothisquestion. Ontheother hand, acareful reading
oftheParent Act,particularly toSection 47thereof, would availthebenefit tothereader ofdiscovering
thatthedomestic legislation does have acorresponding provision onArticle 5.9ofthe
WTO A-DAgreement.
Negative preliminary determination anddeminimis rules
Q6. Section 11oftheRegulations, aswellasSection 23(2) oftheAct,omitsome ofthedetails
inArticle 5.8oftheAgreement which states thataninvestigation shallbeterminated immediately in
deminimis circumstances. TheMalaysian rulescontain nodiscussion ofdeminimis conditions. The
Malaysian rules simply allow theoption ofcontinuing withaninvestigation evenafter anegative
preliminary finding, ignoring deminimis considerations.
Whyisthisso?
Answer
Section 23(2) oftheParent ActandRegulation 11doesnotomitthedeminimis ruleforreason s
similar totheanswer toQ.1raised byHong Kong. Theanswer tothisquestion would bethesame
asthatraised inQ.4bytheRepublic ofKorea.
Defence ofinterested parties 'interests
Q7. Theprovisions ofArticle 6.2oftheAgreement arelargely ignored intheMalaysian rules.
Thepossibility of"confrontation meetings" isnotprovided for.Therelated requirement forwritten
summaries ofevidence provided orally atsuchmeetings (Art.6.3oftheAgreement) isalsomissing
fromtheMalaysian rules.
Answer
Regulations 37(3) and(8)explicitly regulate theprocedure forwritten summaries ofevidence
providedorally,andRegulation39unequivocallyregulatestheproceduresfortheso-called"confrontation
meetings", asquoted bytheEC.G/ADP/W/304
G/SCM/W/312
Page19
Verification ofinformation
Q8. Section 40oftheActprovides forthepossibility ofverification ofsubmitted information, but
ithasnoneofthedetails contained inArticle 6.7oftheAgreement. Mostofthemissing detail ispresent
inSection 38oftheRegulations, butoneitemisleftout:therequirement "tomake theresults ofany
verifications available orprovide disclosure thereof tothefirms towhich theypertain, ...etc."
(Article 6.7oftheAgreement).
WhydotheMalaysian rulesnotspecifically allow fordisclosure oftheresults ofverifications?
Also: whydotheMalaysian rulesnotcontain allthedetails ofAnnex 1oftheAgreement about
procedures foron-the-spot investigations?
Answer
Theanswer tothisquestion would bethesame astheanswer toQ.2above.
Bestinformation available
Q9. TheMalaysian rulesdonotcontain allthedetails ofAnnex IItotheAgreement which concerns
theuseofbestinformation available. Forexample paragraphs 5and7ofAnnex IIarenottobefound
intheMalaysian rules.
Whyisthisso?
Answer
Theanswer tothisquestion would bethesame astheanswer toQ.2above.
Individual dumping margins
Q10. TheMalaysian rules could beclearer instating thatdumping margins aretobecalculated
individually foreachexporter, asprovided forinArticle 6.10oftheAgreement. Section 25(8) ofthe
Actusesthephrase "intheappropriate amount onacompany-specific basis", which istoovague.
CanSection25(8)oftheActbeclarifiedtoconformmorereadilytotheprovisionsofArticle6.10
oftheAgreement?
Answer
Weareoftheopinion thattheterm"company specific basis" iscapable ofmeaning each
individual exporter. InasfarasArticle 6.10oftheWTO A-DAgreement isconcerned, Section 25(8)
shallbereadtogether withRegulation 38(3). Pending thefinalization ofthereview onthedomestic
legislation, theinvestigating authority willadministratively apply thenecessary details oftheprovision
ofArticle 6.10oftheWTO A-DAgreement toensure strict compliance withArticle 18.1ofthe
WTO A-D Agreement.G/ADP/W/304
G/SCM/W/312
Page20
Users 'groups
Q11. TheMalaysian rules appear nottoprovide opportunities forindustrial users oftheproduct
concerned, orforconsumer organizations tosubmit information onthecase.
WhydotheMalaysian rules notinclude theprovisions ofArticle 6.12oftheAgreement?
Answer
Section 38(1) oftheParent Actprovides thatinterested parties shallbegiven opportunity to
submit information onanyinvestigation proceedings. Section 29(1) oftheParent Actdefines interested
parties toinclude association ofproducers. Thecurrent review willfurther address thematter forfull
conformity withtheWTO A-DAgreement.
Undertakings
Q12. Section 27(3) oftheActisatoddswithArticle 8.2oftheAgreement which states thatprice
undertakingscannotbeacceptedbeforeapreliminaryaffirmativefindingofdumping,injuryandcausality
hasbeenmade.
HowdoestheMalaysian Government explain thisinconsistency?
Answer
Theanswer tothisquestion isthesame astheanswer toQ.2above.
Retroactivity
Q13. Section 14onretroactive imposition ofcountervailing andA-Dduties appears nottocontain
theprovisions ofArticle 10.2oftheAgreement which place atime-limit onhowfarbacktheretroactivity
maygo.
Whyisthisso?
Answer
Regulation 14onlyprovides forarighttothepetitioner tomake application fortheimposition
ofretroactive dutyoncountervailing andanti-dumping duties. Thecorresponding provisions inthe
national A-Dlegislation onArticle 10.2oftheWTO A-DAgreement isSection 25(5) oftheParent
Act. Further, Section 25(7) oftheParent Actprovides fortherange oftimefortheimposition of
definitive dutywhich shall be90daysprior totheapplication oftheprovisional measures which
correspond withArticle 10.6oftheWTO A-DAgreement.
Injury: cumulation
Q14. TheMalaysian rulesappear nottocontain theprovisions ofArticle 3.3oftheAgreement dealing
withcumulation oftheeffects ofimports where more thanonecountry isinvolved.G/ADP/W/304
G/SCM/W/312
Page21
Answer
Thecumulation effects ofimports isprovided inSection 35oftheParent Act.
Definition ofdomestic industry
Q15. Section 2(1)(c) oftheActdoesnotinclude thedetails onregional producers which isstated
inArticle 4.1(ii) oftheAgreement. Thisoversight isnotcorrected forintheRegulations.
Whyisthisso?
Answer
Theanswer tothisquestion isthesame astheanswer toQ.2above.
ANSWERS TOORAL QUESTIONS FROM THEEUROPEAN COMMUNITY ATTHEA-DCVD
COMMITTEE MEETING OF4-8DECEMBER 1995
Q1. Thelegislation ofMalaysia doesnotappear tocontain anyprovisions concerning thestanding
ofthecomplainant andthedomestic support requirements contained inArticle 5.4oftheA-DAgreement
andArticle 11.4oftheCVD Agreement.
Incaseapetition wasfiledbythedomestic industry which metalltherequirements ofMalaysian
legislation butdidnotmeettherequirements ofArticle 5.4oftheA-DAgreement orArticle 11.4of
theCVDAgreement, whatlegalbasis could theMalaysian authorities invoke toreject suchapetition?
Answer
There arenoexpress provisions similar totheprovisions ofArticle 5.4andArticle 11.4of
theA-DandCVD Agreements respectively intheMalaysian national A-Dlegislation. Thisisdue
tothefactthatatthetimeoflegislating thenational legislation, theWTO A-DandSCM Agreement
isyettocome intoforce sothatMalaysia didnothavetheopportunity toknow theprovisions that
would subsequently beadopted bytheWTO inthesaidtwoWTO Agreements. However, thisdoes
notmean thattheinvestigating authority ofMalaysia would disregard suchafactor before determining
whether ornottoinitiate ananti-dumping orcountervailing investigation.
Section2(1)oftheActwhichdefines"domesticindustry"industryclearlyprovidesinparagraph
(b)ofthedomestic industry definition thatthe"domestic industry shallberepresented bythedomestic
producers whose collective output ofthelikeproduct constitutes amajor proportion ofthetotal
domestic production ofthose products" .Asamatter ofpractise, theinvestigating authority would
onlyconsider anoutput which collectively represents more than80percentofthedomestic production
ofthelikeproduct toconstitute "major proportion ofthetotaldomestic productions ofthose products
(likeproducts) .Thiswould mean thatinactual fact,theinvestigating authority shallalways ensure
thattheelements asenvisaged inArticles 5.4and11.4ofboththeWTO A-DandSCM Agreements
would befullycomplied withindetermining whether ornottoinitiate theinvestigations.
Based ontheabove explanation, thehypothetical caseraised bytheECinQuestion 1could
andshould notarise. Thepresent review onthenational legislation would however address thisissue
inorder toeradicate whatever doubts astocompliance withArticles 5.4and11.4oftheWTO A-D
andSCM Agreements.G/ADP/W/304
G/SCM/W/312
Page22
Q2. Paragraph 36(7) oftheRegulations provides: "Ifthemargin ofdumping isfound tobegreater
thantheanti-dumping dutypaid, theimporter shall paythedifference".
Would thisprovision imply thatafinding ofhigher dumping margin inareview would beapplied
retroactively? Ifnot,howcanthisprovision beenforced?
Answer
Paragraph (b)ofRegulation 37doesnotauthorize theapplication oftheanti-dumping duties
retrospectively. Itmustbereadinthelightofsub-regulation (5),thatistheexporter ortheimporter
shallbeimposed withthehigher anti-dumping duties based onthegreater dumping margin forallentries
ofthesubject merchandise made afterthereview iscompleted. Thiswould beinlinewiththeprovisions
oftheWTO A-DAgreement which doesnothaveanyprovisions justifying theapplication ofhigher
anti-dumping duties retrospectively following afinding of"higher dumping margin" inarefund review.
Q3. CouldtheMalaysianauthoritiesquoteordescribethelegalprovisionsenablinginterestedparties
torequest judicial review ofdecisions taken inthefieldcovered bytheCountervailing andAnti-Dumping
Duties Act?
Answer
Aninterested party mayrequest forjudicial review ofanydecision made bytheGovernment
ofMalaysia under theCountervailing andAnti-Dumping Duties Act1993 totheHigh Court, inthe
absence oftheTribunal byvirtue ofSection 25(2) oftheCourts ofJudicature Act1964readtogether
withparagraph 1oftheSchedule ofthesaidAct.
Section 25(2) oftheCourts ofJudicature Act1964 provides:
"25(2) Without prejudice tothegenerality ofsubsection (1)theHigh Court shallhavethe
additional powers setoutintheSchedule:
Provided thatallsuchpowers shallbeexercised inaccordance withawritten lawor
rules ofcourt relating tothesame."
Paragraph 1oftheSchedule inthesaidActprovides asfollows:
" SCHEDULE
(Section 25(2))
ADDITIONAL POWERS OFTHE HIGH COURT
1. Power toissue toanyperson orauthority directions, orders orwrits, including writs ofthe
nature ofhabeas corpus, mandamus, prohibition, quowarranto andcertiorari, oranyothers, forthe
enforcement oftherights conferred byPartIIoftheConstitution, oranyofthem, orforanypurpose."
Article 13ofPartIIoftheFederal Constitution oftheFederation ofMalaysia which deals
onmatters relating to"Rights toProperty" would cover anydecision made under theCountervailing
andAnti-Dumping Duties Act,1993; whilst theprovisions "...orforanyother purpose." attheend
ofparagraph 1oftheSchedule under theCourts ofJudicature Act1964 asproduced above iswideG/ADP/W/304
G/SCM/W/312
Page23
enough tocover therights ofanyaffected interested parties byanydecisions made under the
Countervailing andAnti-Dumping Duties Act,1993.
QUESTIONS RAISED BYHONG KONG AND ANSWERS THERETO
Q1. Malaysia 'snotification contains theCountervailing andAnti-dumping Duties Act1993 and
theCountervailing andAnti-dumping Duties Regulations 1994 entered intoforce on28April 1994.
ApparentlynumerousprovisionsoftheWTOA-DAgreementarenotfeaturedintheMalaysianlegislation
andsome Malaysian provisions maybeatoddswiththeWTO provisions.
(a) What isthelegal status oftheWTO A-DAgreement inMalaysia? Does ithavethe
forceoflaw? Ifaprovision ofthedomestic legislation isinconflict withtheAgreement,
which willtakeprecedence?
(b) AreMalaysian A-Dofficials required, legally orotherwise, toabide bytheA-D
Agreement intheconduct ofA-Dproceedings, ortoconsult theA-DAgreement, for
example ontheinterpretation ofdomestic legislation?
(c) What steps hasMalaysia taken, andwhat further steps willittake, toensure the
conformity ofitslaws, regulations andadministrative procedures withtheprovisions
oftheWTO A-DAgreement, inaccordance withArticle 18.4?
(d) HowwillMalaysia ensure compliance withtheprovisions oftheWTO A-DAgreement
before itslawsarebrought intototalconformity withtheWTO A-DAgreement?
(e) IfMalaysia iscontemplating adoption ofnewlegislation induecourse, what isthe
intended purpose andcoverage? What isthetimetable oftheenactment?
Answer
Asthedelegates ofHong Kong arefairly aware, thedomestic legislation came intoforce on
24April 1994, prior tothedatetheWTO A-DAgreement came intoeffect. Itincorporates allthose
provisions which wasfeltnecessary, asitwasthenrelating totheadministration andinvestigation of
CVD andA-Dproceedings. Thus, itwasnotpossible forMalaysia then, oranyother country, to
anticipate andincorporate alloftheprovisions which would befinally adopted intheWTO A-D
Agreement. Thiscondition haseventually leftusinasituation where some oftheprovisions which
werefinally adopted bytheWTO A-DAgreement werenotincorporated inourdomestic legislation;
orthatsome oftheprovisions inthedomestic legislation wererendered inconsistent bytheadoption
ofsome oftheprovisions intheWTO A-DAgreement either expressly orconstructively. Malaysia
iscurrently intheprocess ofreviewing itsdomestic legislation toensure conformity withtheprovisions
oftheWTO A-DAgreement.
(a) TheWTO A-DAgreement doesnothaveanylegalstatus nordoesitenjoy anyforce
oflawperseinMalaysia. Itishowever aninternational commitment andundertaking
byMalaysia tobebound andcomply withtheWTO A-DAgreement under thesingle
undertaking. Assuch, theWTO A-DAgreement willserve asthebasisforMalaysia 's
domestic legislation. Inorder forittobeenforceable, theParliament shallhaveto
promulgate anational legislation adopting theWTO A-DAgreement thereof either
intotalorwithsome adjustment thereto, tosuchextent thatitwillnotcontradict any
oftheprovisions oftheWTO A-DAgreement inorder tomeetwithlocalcircumstances.G/ADP/W/304
G/SCM/W/312
Page24
Intheevent ofanyinconsistencies thatmayarisebetween theprovisions of
theWTO A-DAgreement andthedomestic legislation, theprovisions ofthedomestic
legislation shallprevail. Atpresent, theexisting domestic legislation istoasubstantial
extent incompliance withtheprovisions oftheWTO A-DAgreement. Thereview
which Malaysia iscurrently undertaking ismeant toensure conformity ofthedomestic
legislation withtheremaining provisions oftheWTO A-DAgreement.
(b) TheA-Dofficials ofMalaysia arerequired toapply and/or interpret theapplication
oftheWTO A-DAgreement inconducting A-Dproceedings onlyininstances where
therearenocorrespondingprovisionsinthedomesticlegislationorwheretheprovisions
inthedomestic legislation arenotinlinewiththeprovisions oftheWTO A-D
Agreement. Thisisbeing doneadministratively pending theoutcome ofthereview
exercise.
(c) Theanswer tothisquestion isthesame asinthesecond paragraph of(a)andin(b)
above.
(d) Theanswer tothisquestion isthesame asinthesecond paragraph of(a)andin(b)
above.
(e) Malaysia doesnothaveanyintention tointroduce anynewlegislation onthissubject.
Q2. What judicial review procedures hasMalaysia putinplace inobservance ofitsobligations
under Article 13oftheWTO A-DAgreement?
Answer
Atthemoment, anyrequest forjudicial review canbeaddressed totheJudiciary Body of
Malaysia. Suchrequest shallbemade totheHighCourt ofMalaya inaccordance withtheHighCourt
Rules 1980.
Q3. What isMalaysia 'spolicy andlawfortheimplementation ofWTO Panel Reports?
Answer
Since theWTO panel reports arearesult oftheconduct oftheWTO, asaMember, Malaysia
willabide andcomply withanyrecommendation oftheWTO panel reports inaccordance withthe
principles thereof aslaiddown bytheWTO.
Q4. Article 37oftheActprovides thattheMalaysian Government maytakeaction toprevent
circumvention oftheapplication ofA-Dduties asmaybeprescribed.
(a) What measures under thisArticle arecontemplated bytheMalaysian Government?
Doesitrequirefull-fledgedinvestigationsonaproductpursuanttoproceduresprescribed
intheWTO A-DAgreement andproof ofdumping, injury andcausal linkbefore any
anti-dumping duties canbeimposed? Howwould Malaysia reconcile thisArticle with
itsobligations under theWTO A-DAgreement?
(b) Does Malaysia anticipate amendment orrepeal ofthisArticle inthelight ofits
obligations under theWTO A-DAgreement?G/ADP/W/304
G/SCM/W/312
Page25
Answer
Theanswer tothisquestion would bethesame astheanswer toQ.3raised byJapan.
QUESTIONS RAISED BYJAPAN AND ANSWERS THERETO
Q1. Cross-cumulation
Article 3.3oftheA-Dauthorizes under certain conditions acumulative assessment oftheeffects
ofimports ofaproduct frommore thanonecountry indetermining material injury when more than
onecountry issimultaneously subject toanti-dumping investigations. TheA-D, however, doesnot
permit across-cumulation ofimports forsimultaneous A-DandCVD cases.
Section 35oftheMalaysian Anti-Dumping andCountervailing Duties Actprovides that:
"Where imports ofmerchandise frommorethanonecountry aresimultaneously subject
tocountervailing oranti-dumping dutyinvestigations orboth, theGovernment may
cumulatively assess theeffects ofsubsidized anddumped merchandise orbothonthe
domestic industry."
Assuch, Section 35oftheActspecifically seems toallow fordumping andsubsidy investigations
tobecombined inawayinconsistent withtheA-D.
Does Malaysia agree thattheauthorization initslawsofcross-cumulation isinconsistent with
theA-D? Ifnot,why?
Answer
Thisissue hasbeendiscussed onanumber ofoccasions whilst reviewing thelegislation of
some other Members suchasCanada, theECandAustralia where there seems tobedifferences in
interpretations. There seems tobealacunae intheWTO A-DandSCM Agreements onthismatter
anduntiltheWTO makes anyruling astohowthisprovision should beinterpreted, Malaysia isof
theopinion thattherelevant provision initsdomestic legislation doesnotcontradict theWTO A-D
orSCM Agreements.
Q2. Acceptance ofundertakings
Article 8.2oftheA-Dspecifically states that:
"Priceundertakingsshallnotbesoughtoracceptedfromexportersunlesstheauthorities
oftheimporting Member havemade apreliminary affirmative determination ofdumping
andinjury caused bysuchdumping."
TheMalaysian legislation, however, expressly allows fortheacceptance ofundertakings prior
tothepreliminary determination. Section 27(1) oftheActallows thesuspension ofaninvestigation
"atanytimeifundertakings areaccepted bytheGovernment". Moreover, Section 27(3) oftheAct
refers tothepossibility ofundertakings being accepted prior tothepreliminary determination: "Ifthe
undertakings areaccepted bytheGovernment prior tothepreliminary determination ...".
HowdoesMalaysia justify accepting undertakings prior tothepreliminary determination in
lightofArticle 8.2oftheA-D?G/ADP/W/304
G/SCM/W/312
Page26
Answer
MalaysiaisawarethatSections27(1)and(3)andSections12(1)and(3)ofitsdomesticlegislation
isnotinlinewiththerelevant provisions ofArticle 8.2oftheWTO A-DAgreement. Therefore, there
isnonecessity tojustify these provisions inourdomestic A-Dlegislation forwantofcompliance with
Article 8.2oftheWTO A-DAgreement. Asexplained earlier, thedomestic legislation wasenacted
andcame intoforce on28April 1994, prior tothecoming intoforce oftheWTO A-DAgreement.
Malaysia isintheprocess ofreviewing itsdomestic legislation comprehensively toensure compliance
withtheprovisions oftheWTO A-DAgreement.
Q3. Anti-circumvention
Although theparticipants oftheUruguay Round considered theinclusion ofrules andnorms
fortheapplication ofanti-circumvention measures, theA-Ddoesnotinclude anyauthorization for
anti-circumvention measures. TheMalaysian law,however, authorizes theapplication ofanti-
circumvention measures (Section 37oftheMalaysian Act).
Where intheA-DdoesMalaysia findthebasis foritsanti-circumvention provision?
Answer
Theanti-circumvention provision inthedomestic legislation isacreature created prior tothe
coming intoforce oftheWTO A-DAgreement. Inviewofthefactthatitcould notbeascertained
astowhether theanti-circumvention provision would befinally adopted intheWTO A-DAgreement,
theanti-circumvention provision inthedomestic legislation ismade applicable subject toaprocedure
asmaybeprescribed intheRegulations. Todate, nosuchprocedure hasbeenprescribed forthe
application oftheanti-circumvention provisions thereof. Inother words, whether ornotMalaysia
would enforce these provisions would depend onthefinalruling oftheWTO onthisissue.
QUESTIONS RAISED BYTHE REPUBLIC OFKOREA
Q1. General Questions
(a) Incases where there arenorelevant provisions inthedomestic legislation, doestheWTO
Agreement apply?
(b) Iftheprovisions oftheexisting domestic legislation donotconform totheWTO Agreement,
dotheprovisions oftheWTO Agreement apply?
Answer
Incaseswhere therearenorelevant provisions inthedomestic legislation, legally theprovisions
oftheWTO A-DAgreement donotapply. However inviewoftheprovisions ofArticle 18.1ofthe
WTO A-DAgreement, theA-DAuthority ofMalaysia hasapplied theinterpretations oftheprovisions
oftheWTO A-DAgreement administratively inviewofthefactthatMalaysia iswithin theprocess
ofreviewing itsdomestic legislation toconform withtheprovisions oftheWTO A-DAgreement.
Thismethod hasalsobeenadopted where theprovisions ofthedomestic legislation arenotinlinewith
theprovisions oftheWTO A-DAgreement.G/ADP/W/304
G/SCM/W/312
Page27
Q2. Determining Selling Costs &Profits
Indetermining theamount ofselling costs andprofits, WTO A-DAgreement 2.2.2 states that
"The amounts foradministrative selling andanyother costs andforprofit shall bebased onactual
datapertaining toproduction andsalesintheordinary course oftrade ofthelikeproduct bytheexporter
orproducer under investigation."
Article 16(4) ofMalaysia 'sA-DActstipulates, "...thecostofproduction shallbecomputed
onthebasis ofallfixedandvariable costs ofmaterials andmanufacturing intheordinary course of
trade intheexporting country plusareasonable amount forselling, administrative andother general
expenses andreasonable margin ofprofit."
Canthereasonable amount ofSG&A andprofit inMalaysian A-DActbeconstrued same as
those intheArticle 2.2.2 oftheAgreement?
Answer
Theprovisions inSection 16(4) ofthedomestic legislation arenotthecorresponding provisions
ofArticle2.2.2oftheWTOA-DAgreement.Section16(4)ofthedomesticlegislationmerelyelaborates
Section 16(2), which isconsistent withArticle 2.2oftheWTO A-DAgreement. Thecorresponding
provisionsinthedomesticlegislationwhichareconsistentwithArticle2.2.2oftheWTOA-DAgreement
isSection 16(1) which provides:
"16.(1) Forthepurpose ofthisAct,thenormal value shallbethecomparable price
actually paidorpayable intheordinary course oftrade forcomparable merchandise soldfor
consumption inthedomestic market oftheexporting country."
Q3. Adequacy ofpetition
According toWTO A-DAgreement 5.4,"Noinvestigation shall beinitiated when domestic
producers expressly supporting theapplication account forlessthan25percentoftotalproduction
ofthelikeproduct produced bythedomestic industry."
Wewerenotabletofindtherelevant content inMalaysia 'sA-DAct.Please provide guidelines,
ifany.
Answer
Thedomestic legislation doesnothave theprovisions corresponding withtheWTO A-D
Agreement which requires thatnoinvestigation shallbeinitiated when thedomestic producers expressly
supporting theapplication forinitiation ofA-Dproceedings account forlessthan25percentofthe
totalproductionofthelikeproductproducedbythedomesticindustry.However,pendingthefinalization
ofthereview onthedomestic legislation thereof, theA-DAuthority ofMalaysia willadministratively
adopt theprovisions oftheWTO A-DAgreement onthismatter.
Q4. Deminimis rule
According toWTO A-DAgreement 5.8,ananti-dumping investigation should beterminated
when thedumping margin islessthan2percentordumped imports fromaparticular country isless
than3percent....G/ADP/W/304
G/SCM/W/312
Page28
Where aresuchprovisions inMalaysia 'sregulations?
Answer
Malaysia 'sdomestic legislation doesnotdefine thedeminimis rule. Incarrying outanyA-D
investigations,MalaysiawilladoptthedeminimisruleaslaiddownintheWTOA-DAgreementpending
thefinalization ofthereview onthedomestic legislation.
Q5. Start-up operation costadjustment
According toWTO A-DAgreement 2.2.2.1, start-up operation costshall bereflected in
calculating normal price when itisnecessary.
Where aresuchprovisions inMalaysia 'sregulations?
Answer
Thedomestic legislation doesnothaveaprovision for"start-up operation cost" andpending
thefinalization ofthereview onthedomestic legislation, therelevant provisions intheWTO A-D
Agreement willbefollowed administratively.
Q6. Proper Comparison
(a) Deminimis volume
Forproper comparison, WTO A-DAgreement 2.2states that"Sales ofthelikeproduct destined
forconsumption inthedomestic market oftheexporting country shallnormally beconsidered asufficient
quantity forthedetermination ofthenormal value ifsuchsales constitute 5percentormore ofthe
sales oftheproduct under consideration totheimporting country, provided thatalower ratioshould
beacceptable magnitude toprovide foraproper comparison.:
However, inMalaysia 'sA-DRegulation 26(2)(a), "thequantity ofmerchandise soldfor
consumption inthedomestic market during theperiod being examined issosmall inrelation tothe
quantity soldto...."
Please clarify whether "sosmall ...quantity" means "5percent" asspecified intheWTO
Agreement ornot?
(b) Exchange rate
According toWTOAgreement 2.4.1, whenthepricecomparison under thisparagraph requires
aconversion ofcurrencies, suchconversion should bemade using therateofexchange onthedate
ofsale,provided thatwhen asaleofforeign currency onforward markets isdirectly linked totheexport
saleinvolved, therateofexchange intheforward saleshallbeused. Fluctuations inexchange rates
shallbeignored and,inaninvestigation theauthorities shallallow exporters atleast60daystohave
adjusted theirexport prices toreflect sustained movements during theperiod ofinvestigation.
WherearesuchprovisionsinMalaysia'sregulations?Inaddition,whichisthestandardcurrency
between theexporter 'scountry andimporter 'scountry incalculating A-Dmargin?G/ADP/W/304
G/SCM/W/312
Page29
Answer
(a) Thephrase "sosmall inrelation tothequantity" isfeltwould beabletocover the5per
centratioormore orevenalesser ratioasprovided forintheWTO A-DAgreement.
(b) There arenoexpress provisions onthissubject matter inthedomestic legislation.
However, paragraph 32(g) oftheCVD andA-DRegulations would becapable of
embracingthismatterandtheprovisionsoftheWTOA-DAgreementwouldbefollowed
attheadministrative levelforinterpretation andguideline thereof pending theoutcome
ofthereview onthedomestic legislation. Inanyevent, therateofexchange thatwill
beusedwould bethestandard currency oftheimporting country. Thecurrent review
onthedomestic legislation willaddress thismatter.
Q7. Sales below costs
WTO A-DAgreement 2.2.1 paragraph 2states that"Ifprices which arebelow perunitcosts
atthetimeofsaleareabove weighted average costs fortheperiod ofinvestigation, suchprices shall
beconsidered toprovide forrecovery ofcosts within areasonable period oftime."
Cantheabove Article beapplied toMalaysia?
Answer
Inviewofthefactthatthedomestic legislation doesnothavethecorresponding provisions
asprovided forinArticle 2.2.1 oftheWTO A-DAgreement, these provisions willbelooked into
inthereview onthedomestic legislation toenable these provisions tobeapplied inMalaysia.
QUESTIONS RAISED BYSINGAPORE AND ANSWERS THERETO
Q1. Normal value: 16(1) oftheActprovides that"thenormal value shallbethecomparable price
actuallypaidorpayableintheordinarycourseoftradeforcomparablemerchandisesoldforconsumption
inthedomestic market oftheexporting country".
Further PartIoftheActdefines "comparable merchandise" asa"merchandise ...thatthe
government considers appropriate foruseinthecalculation ofadumping margin".
Article 2.1oftheWTO A-DAgreement refers to"thecomparable price ...forthelikeproduct
when destined forconsumption intheexporting country". Wewould liketoseekclarification onthe
scope ofcoverage for"comparable merchandise". Itwould appear thatthedefinition provided inthe
Malaysian Actisverybroad andgivesflexibility fortheauthorities toextend beyond the"likeproduct"
requirement setoutinArticle 2.1oftheWTO A-DAgreement.
Answer
Theanswer tothisquestion issimilar totheanswer toQ.1raised byAustralia.
Q2. Normal value: 16(3) oftheActprovides that"whenever there arereasonable grounds for
believing orsuspecting thattheprices atwhich comparable merchandise isactually soldforconsumption
...arelessthanthecostofproducing thatproduct".G/ADP/W/304
G/SCM/W/312
Page30
Wewouldliketoseekclarificationontheterms"comparablemerchandise"andthecircumstances
bywhich "reasonable grounds forbelieving orsuspecting" willbeestablished bytheauthorities. It
would appear thatthese terms areveryloose andprovides fordiscretionary determination.
Answer
Theanswer tothisquestion issimilar totheanswer toQ.5raised bytheUnited States.
Q3. Normal value: 16(5)(a) oftheActprovides thatnormal value maybedetermined onthebasis
oftheremaining salesinthedomestic market made atapricewhich isnotlessthanthecostofproduction
provided thatsuchremaining sales arein"sufficient quantities".
Please clarify whatisdeemed tobe"sufficient quantities"?
Answer
Sufficient quantities would mean thatthesalesofthecomparable merchandise inthedomestic
market oftheexporting country intheordinary course oftrade should besufficient enough toenable
afaircomparison tobemade indetermining normal value. Inanyevent, theprovisions ofArticle 2.2
oftheWTO A-DAgreement willbefollowed.
Q4. Normal value: 16(4) oftheActrefers todetermination ofcostofproduction forconstructing
normal value.
Itisnotclearhowtheauthorities would dealwithcostadjustments forcompanies inastart-up
orexpansion phase. Wewould likemore clarification.
Answer
Theanswer tothisquestion issimilar totheanswer toQ.5raised bytheRepublic ofKorea.
Q5. Normal value: 16(3) oftheActrefers tosituations when salesmaybeconsidered asnothaving
beenmade intheordinary course oftrade.
Itisnotclear whatcriteria would beusedfordetermining thatsales arenotintheordinary
course oftrade. Thisprovision isvague andwould notbeinlinewithArticle 2.2.1 oftheWTO A-D
Agreement. Wewould likesome clarification.
Answer
Theanswer tothisquestion issimilar totheanswer toQ.5raised intheEC'sadditional
questions.
Q6. Determining normal value byexamining salesinA-Dinvestigations: 26(2)(a) oftheRegulations
provides that"sales ofthecomparable merchandise inthedomestic market donotpermit aproper
comparison where thequantity ofmerchandise soldinthedomestic market issosmall ...".
Please clarify whatisdeemed tobe"sosmall"? Article 2.2oftheWTO A-DAgreement defines
whatthesufficient quantity should beforthedetermination ofthenormal value. Theuseofthedefinition
"sosmall" intheMalaysian Regulations would beopentoarbitrary interpretations.G/ADP/W/304
G/SCM/W/312
Page31
Answer
Theanswer tothisquestion issimilar totheanswer toQ.6raised bytheRepublic ofKorea.
Q7. Comparison ofnormal value andexport price: 18(1) oftheActprovides that"theexport price
andthenormal value shall beexamined onacomparable basis toaccount fordifferent physical
characteristics ofthemerchandise ...".
18(3) alsorequires that"where anexporter orimporter claims foranadjustment under sub-
section (1),itmustprove thatitsclaim isjustified.
Article 2.4oftheWTO A-DAgreement provides that"afaircomparison shallbemade between
theexport price andnormal value". Itwould appear thatthelanguage intheMalaysian Actdoesnot
contain themandatory requirement forafaircomparison.
Answer
Even though Section 18oftheParent Actdoesnotcontain thewords "afaircomparison shall
bemade between export price andnormal value", Regulation 32(1) doescontain suchprovisions and
Regulation32(1)whichlistsdowntheinstancesofadjustmentthatwillbemadetoensurefaircomparison
between normal priceandexport priceshould bereadtogether withSection 18(1) and(2)oftheParent
Actiscapable andisinfactandinsubstance would leadtoafaircomparison tobemade between
normal value andexport price.
InanA-Dproceeding, itwillbetheinvestigating authority whowillgenerally determine what
adjustment shallbemade thereto toensure afaircomparison tobemade between normal price and
export price where circumstances areappropriate. Section 18(3) provides forinstances where such
circumstances arenotobvious andarepersonally known totheexporter ortheimporter. Assuch,
theexporter orimporter shallhavetojustify suchaclaim byadducing information ordocumentation
which would bereasonable insuchcircumstances. Wedonotagree withtheallegation bytheSingapore
delegate thatSection 18(3) imposes anunnecessary burden ofproof intheabsence ofanycorroborative
evidence either bytheinterpretation oftheprovisions ofSection 18(3) itselforbyanyactual experience
ofanA-Dproceeding initiated byMalaysia.
Q8. Preliminary andfinaldetermination ofdumping andinjury: 23(1)(b) and25(1)(b) oftheAct
provide that"injury isfound toexistwhen thedomestic industry inMalaysia producing thelikeproduct
ismaterially injured byreason ofthesubject merchandise.
21(1)(4) oftheRegulation further explains that"byreason of"shall beinterpreted tomean
thatthemerchandise under investigation mustbeacause ofinjury tothedomestic industry.
Wewould likeclarification onwhether thecausality requirement would bemetbytheterm
"byreason ofthesubject merchandise". Article 3.5oftheWTO A-DAgreement requires that"itmust
bedemonstrated thatthedumped imports arethrough theeffect ofdumping, causing injury. Hence
theWTO A-DAgreement requires thatthecaused linkmustbeclearly established. Injury iscaused
bytheimpact ofthedumped imports onthedomestic industry. Injury should notbeattributed toother
factors other thanthedumped imports ....Itwould appear thattheterm"byreason ofthesubject
merchandise" intheMalaysian Actdoesnotmeetthecausal linkrequirement assetoutintheWTO
A-DAgreement.G/ADP/W/304
G/SCM/W/312
Page32
Answer
Regulation 24(4) asquoted bySingapore clearly defines thewords "byreason of"tomean
that"themerchandise under investigation must beacause ofinjury tothedomestic industry". We
aresurethatsuchdefinition waswritten inplain English andisinfactconsistent withArticle 3.5of
theWTO A-DAgreement. Weareoftheviewthatthedifference inchoice ofwords should notrender
anyprovision tobeinconsistent withtheprovisions oftheWTO A-DAgreement perseaslongas
thesubstance thereto isconsistent withtheprovisions oftheWTO A-DAgreement.
Q9. Final determination ofdumping/injury: 25(8) oftheActprovides forimposition ofA-Dduty
onacompany specific basis, where practicable, andonanon-discriminatory basis onallimports of
suchmerchandise intoMalaysia fromthecountry found tobedumping thesubject merchandise.
Wewould likeclarification onhowtheMalaysian authorities would treatnegligible imports,
newcomers, andcompanies thathavenotbeeninvestigated?
Answer
Theanswer tothisquestion issimilar totheanswers toQ.4raised byKorea andQ.13 raised
bytheUnited States.
Q10. Cumulation: (35)oftheActallows theMalaysian Government "tocumulatively assess the
effects ofsubsidized anddumped merchandise orbothonthedomestic industry.
Weareconcerned withtheprovision. TheWTO A-DAgreement doesnotprovide forcross-
cumulation. Theeffects ofinjury caused bydumped imports should notbecumulated withtheeffects
ofinjury caused bysubsidized imports.
Answer
Weareofadifferent view tothatoftheSingapore delegate. Theanswer toQ2.raised by
Japan would apply tothisquestion too.
Q11. Anti-circumvention measures: (37)oftheActprovides that"theGovernment maytakeaction
toprevent circumvention oftheapplications ofcountervailing andanti-dumping duties asmaybe
prescribed".
Weareconcerned withthisanti-circumvention provision asitisclearly inconsistent withGATT
Article VIandtheWTO A-DAgreement which donotcontain anyanti-circumvention provisions.
Answer
Theanswer tothisquestion issimilar toQ3.raised byJapan andQ4.raised by
Hong Kong.G/ADP/W/304
G/SCM/W/312
Page33
Q12. Conduct ofinvestigation where nointernational obligations apply: 43(1) oftheActallows
theMalaysian Government touseanymethodology orprocedures withregard totheinvestigations.
Could weseekclarification onwhatarethecircumstances envisaged foruseofsuchflexible procedures.
Answer
Itwould depend onthecircumstances peculiar toeachcasetoensure ajustandfairproceeding.
Q13. Undertakings andsuspension ofinvestigations: 18(1)(b) oftheRegulations provides that"the
government oftheexporting country ortheexporters agree totakesuchother action soastoeliminate
theinjurious effects ofthedumping".
Wewould likeclarification onwhatisenvisaged under "other actions". Article 8oftheWTO
A-DAgreementprovidesforonlypriceundertakings.Henceotheractionslikemarketsharearrangements
would beinconsistent withtheAgreement.
Answer
Regulation 18(2)(b) wasintroduced prior tothecoming intoexistence oftheWTO A-D
Agreement. Theanswer toQ.1raised byHong Kong willapply.
QUESTIONS RAISED BYTHE UNITED STATES AND ANSWERS THERETO
Anti-dumping methodology
EPandCEPSales: Generally, export price shall betheprice actually paidorpayable for
thesubject merchandise. When theexported andtheimporter arerelated orlinked bya"compensatory
arrangement" (notdefined), 17(2) oftheAct(page 15)callsforexport price tobeconstructed onthe
basis oftheprice atwhich themerchandise isresold toanindependent buyer, or,ifitisnotresold
toanindependent buyer, "onanyreasonable basis".
Q1. Canyougiveanyindication ofwhat"reasonable basis" willapply insuchcircumstances?
Answer
The"reasonable basis" referred toinSection 17(2) oftheParent Actwould beinterpreted in
accordance withRegulation 29(3) which provides thatitshallbebased onthebestinformation available
astowhattheamount would havebeenifthetransaction hadoccurred between unrelated parties or
parties without thecompensatory arrangements.
Adjustments: 18oftheAct(page 16)callsforexport price andnormal value tobeexamined
onacomparable basis astophysical characteristics, selling conditions, contemporaneity ofperiod
ofsale, and"any other differences affecting price comparability" andforadjustments tobemade
accordingly. Anexporter orimporter claiming anadjustment under thissection mustprove thatits
claim isjustified.
Q2. Under Malaysian law,which adjustments willbemade tonormal value, andwhich toexport
price?G/ADP/W/304
G/SCM/W/312
Page34
Answer
There isnofastruleastowhatwould beadjusted fornormal value andwhich toexport price.
Whether normal value orexport price, thetypeofadjustment willdepend onwhatisclaimed forby
theexporter ortheimporter andjustified thereto orthesignificant nature ofsuchfactors which affect
thefaircomparison thereof.
Price Averaging: 31oftheRegulations (Page 42)states (infull): "[a]s ageneral matter, a
specific company export price andnormal value willbecalculated onaweighted average basis."
Q3. What exceptions tothisprocedure arethere?
Answer
Thenational A-Dlegislation doesnotprovide foranyexception thereto.
Q4. Howisthisconsistent withA-DArticle 2.4.2?
Answer
Inorder tobeconsistent withtheWTO A-DAgreement, theinvestigating authority willapply
theexceptions provisions asprovided forinArticle 2.4.2 oftheWTO A-DAgreement pending the
outcome ofthereview onthenational A-Dlegislation.
Exclusion ofSales Below COP: Pursuant to16(3) oftheAct(Page 15),salesinthedomestic
market maybeexcluded fromuseincalculating normal value iftherearereasonable grounds tobelieve
orsuspect theyweremade below costofproduction.
Q5. Willsales beexcluded based upon mere suspicion thatthey maybebelow cost? Howwill
Malaysia determine whether sales were, infact,made below thecostofproduction?
Answer
No.Sales below costs ofproduction perunitwillbebased ontheactual datamaintained by
theexporter upon them being made available bytheexporter; orbycomparison withthesaleprice
ofanycomparable merchandise inthedomestic market oftheexporting country orotherwise based
onbestinformation available.
Q6. Article 2.2.1 oftheA-DAgreement applies thecostrecovery testtothesalesbelow cost. How
willMalaysia implement thisrequirement?
Answer
Section16(3)oftheParentActprovidesthatwhenevertherearereasonablegroundsforbelieving
orsuspecting thattheprices atwhich comparable merchandise isactually soldforconsumption are
lessthanthecostofproducing thatmerchandise, salesatsuchprices maybeconsidered asnothaving
beenmade intheordinary course oftrade. Inviewofthefactthattherearenocorresponding provisions
ofArticle 2.2.1 oftheWTO A-DAgreement inthenational A-Dlegislation forthecostrecovery test,
theinvestigatingauthoritywillapplytheprovisionsofArticle2.2.1oftheWTOA-DAgreementpending
theoutcome ofthereview onthenational A-Dlegislation.G/ADP/W/304
G/SCM/W/312
Page35
.....Andcountervailing measures
Definition ofSubsidy/Specificity 2(2)oftheAct(Page 6)defines asasubsidy anyfinancial
benefit orcontribution provided byapublic entity to(i)aspecific enterprise, industry orgroup of
industries; or(ii)"exporters", adding thegeneral caveat "where other conditions asmaybeprescribed
....
TheMalaysian lawwould appear toindicate thatanybenefit provided toanexporter were
apersesubsidy. Isthisaccurate? Ifsocanyouplease explain howthisisconsistent with
Article 3.1(a)n.4 oftheSCM Agreement provides that"[t]he mere factthatasubsidy isaccorded to
enterprises which export shallnotforthatreason alone beconsidered tobeanexport subsidy within
...ofthisprovision."
Q7. HowwillMalaysia define "specific"?
Answer
No.Inorder fortheinvestigating authority totreatwhether anybenefit provided toanexporter
amounts tosubsidy, itmustfirstsatisfy itselfthatallingredients ofeachrelevant respective provisions
inthenational CVD legislation havebeenfulfilled. Aninstance would beRegulation 24(3) where
theinvestigating authority shallconsider afinancial benefit orcontribution asanexport subsidy where
theeligibility for,ortheamount of,benefit orcontribution under aprogramme isassociated, inlaw
andinfact,toactual oranticipated exportation ortoexport earnings. Where suchbenefit orcontribution
under aprogramme isnotassociated, inlawandinfact,toactual oranticipated exportation ortoexport
earnings, suchbenefit orcontribution willnotfallwithin theexport subsidy referred therein. This
isconsistent withfootnote 5ofArticle 3.1oftheSCM Agreement which provides that"Measures
referred toinAnnex Iasnotconstituting export subsidies shallnotbeprohibited under thisorany
other provision ofthisAgreement". Footnote 4ofArticle 3.1oftheSCM Agreement should notbe
readinisolation andinstead should bereadtogether withfootnote 5.
Q8. HowwillMalaysia implement theprovisions ofArticle 8?
Answer
TheMalaysian CVD legislation doesnothaveadefinition on"specificity" asprovided for
intheSCM Agreement. Therefore, pending theoutcome ofthereview onthenational A-Dlegislation,
theinvestigating authority willapply thedefinition asprovided forinArticle 2oftheWTO SCM
Agreement.
Investigation procedures
Initiation/Industry Support: TheMalaysian lawdoesnotappear tocontain provision concerning
industry support comparable tothe50percent-25percentstandard ofArticle 5.4oftheA-D
Agreement.G/ADP/W/304
G/SCM/W/312
Page36
Q9. HowwillMalaysia implement theprovisions ofArticle 5.4?
Answer
Pending theoutcome ofthereview onthenational legislation, theinvestigating authority will
apply theprovisions ofArticle 8oftheWTO SCM Agreement administratively.
Standard forObtaining Reviews
Q10. AreMalaysian authorities required toconduct refund reviews uponrequest byaparty making
thenecessary evidentiary showing asrequired byArticle and9.3.2 oftheA-DAgreement?
Answer
Pending theoutcome ofthereview onthenational legislation, theinvestigating authority will
apply theprovisions ofArticle 5.4oftheWTO Agreement administratively.
Q11. Article 19oftheSCM Agreement provides thatcountervailing duties shall notbelevied on
anyimported product inexcess oftheamount ofthesubsidy found toexist. Intheabsence ofrefund
reviews inCVD cases, howdoesMalaysian lawcomply withthisprovision?
Answer
Yes. Therelevant provisions areSection 10(6)(b) oftheParent ActandRegulation 36ofthe
Regulations.
NewShippers
Q12. TheMalaysian lawdoesnotappear toprovide fornewshipper reviews, which arerequired
pursuant toArticle 9.5oftheA-DAgreement andArticle 19.3oftheSCMAgreement. Isthisaccurate?
Answer
Section 10(6)(b) oftheActandRegulation 36oftheRegulations provides themechanism for
refund review oncountervailing measures under thenational legislation. Therefore thestatement that
there isanabsence ofprovisions onrefund review under thenational legislation would appear tobe
inappropriate. Thisquestion should nothavebeenraised. Pending theoutcome ofthereview onthe
national legislation, theGovernment willapply theprovisions oftheWTO SCM Agreement
administratively intheevent where theprovisions ofthenational legislation arefound tobenotin
linewithorlacking therequirement asenvisaged under theWTO SCM Agreement.
Q13. Sunset 13(6)(CVD) (page 14)and28(6)(AD) (page 22)oftheActprovide thatduties shall
notbecollected onimports made afterfiveyears fromthedateofpublication ofthefinaldetermination
unless theGovernment determines onthebasis ofanadministrative review "that there isgoodcause"
forthecontinued imposition ofsuchduties.
Answer
Theanswer would bethesame asparagraph 1oftheanswer toQ.1raised byHong Kong.G/ADP/W/304
G/SCM/W/312
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Q14. Article 11.3oftheA-DAgreement andArticle 21.3oftheSCMAgreement provide thatduties
shall beterminated notlaterthanfiveyears fromtheirimposition absent adetermination that"the
expiry ofthedutywould belikely toleadtocontinuation orrecurrence ofsubsidization/dumping and
injury". Howdothevague "good cause" standard oftheActandthe"injury [only]" standard ofthe
regulations implement these provisions?
Answer
Theterm"good cause" referred toinSections 13(6) and28(6) oftheCVD andA-DParent Act
isnotavague terminology. Itrequires thatanydecision toreview andeventually tocontinue onthe
imposition ofthecountervailing duties ortheanti-dumping duties bytheadministrative reviewing
authority ought tobedetermined onreasonable andjustifiable grounds. Theterm"injury" adopted
inRegulation 35(3) elaborates further thattheadministrative reviewing authority shallconsider whether
injury tothedomestic industry islikely tocontinue indetermining whether ornottheimposition of
theanti-dumping duties orthecountervailing duties should continue.
Q15. Article 11.5oftheA-DAgreement andArticle 21.5oftheSCMAgreement callfortheprovisions
ofArticles 11(A-D) and21(SCM)(including thesunset provisions) toapply, mutatis mutandis, to
undertakings. HowwillMalaysia implement these provisions?
Answer
Theanswer would bethesame astheanswer toQ.8above.
Judicial review
Q16. HastheTribunal called forin32oftheAct(page 23)beenestablished?
Answer
No.
Q17. Article 13oftheA-DAgreement andArticle 23oftheSCMAgreement require thateachmember
provide forjudicial, arbitral oradministrative tribunals forreview ofA-D/CVD determinations, and
thatsuchtribunals "beindependent oftheauthorities responsible forthedetermination orreview in
question". Given theconsiderable control oftheMinister overthetribunal which would review AD/CVD
determinations forwhich heserved asadecision-maker, canyouclarify howindependent review is
available inMalaysia forA-DandCVDdeterminations, asrequired bytheA-DandSCMAgreements?
Answer
Forthetimebeing, anyapplication forjudicial review canbeaddressed totheJudiciary of
Malaysia which isindependent enough todecide onanymatter, including A-DandCVD matters.
Implementation ofadverse panel reports:
Q18. IfMalaysia chooses toimplement anadverse WTO panel report, arethereanyprovisions under
Malaysian lawspecifically forimplementing thepanel reports?G/ADP/W/304
G/SCM/W/312
Page38
Answer
There arenospecific provisions forimplementing thepanel reports under theMalaysian CVD
andA-Dlegislation. However, Section 2(3)oftheCVD andA-DParent Actprovides aprovision
forgeneral application which enables theMinister totake regard ofanyactivities (oftheWTO)
recognized asMalaysia 'sinternational obligations tobeactivities which shallorshallnotbesubject
toaction under theCVD andA-Dlegislation. Therefore, pending theoutcome ofthereview onthe
national CVD andA-Dlegislation, theWTO Panel Report shallbeimplemented through Section 2(3)
ofthenational CVD andA-Dlegislation.
REPLIES TOORAL QUESTIONS POSED BYTHE UNITED STATES
Q1. HasMalaysia initiated anyanti-dumping orcountervailing dutycases sincetheentryintoforce
oftheUruguay Round Agreements?
Since theentry intoforce oftheUruguay Round Agreement, Malaysia hasinitiated oneanti-
dumping proceeding onthealleged dumping ofPVC floor covering inrollsoriginated orexported
fromtheRepublic ofKorea, Thailand andSingapore. Theproceeding wasconducted under thenational
legislation readtogether withtheWTO A-DAgreement where theprovisions ofthenational legislation
arefound tobenotinlinewithorlacking therequirements asenvisaged under theprovisions ofthe
WTO A-DAgreement.
Q2. Could youplease explain theMalaysia system ofjudicial review asitapplies toanti-dumping
andcountervailing dutycases?
DuetothefactthattheTribunal tohearjudicial reviews onanti-dumping andcountervailing
dutycases under Section 32oftheActisyettobeestablished, judicial reviews foranyanti-dumping
orcountervailing dutycases, forthetimebeing, maybereferred totheJudiciary Body. Theappropriate
court would theHigh Court.