RESTRICTED
WORLD TRADE G/ADP/W/30
G/SCM/W/37
ORGANIZATION 12July1995
(95-1960)
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 32.6THE AGREEMENTS
Thefollowing communication, dated 7July,hasbeenreceived fromtheHong Kong Economic
andTrade Office.
_______________
Myauthorities haveasked metoforward toyouthequestions andcomments ontheUSA-D
lawsandregulations forthepurpose oftheSpecial JointA-DandSCM Committees meeting scheduled
fortheweek of17Julyforcirculation toallMembers.
(Title VIIofTariff Act1930, asamended, unless otherwise stated)
Section 732Procedures forInitiating AnAnti-Dumping Duty Investigation
1. Sec.732(c)(1)(A)(i) -Petition Determination
Article5.3oftheWTOA-DAgreementrequirestheimportingauthoritiestoensuretheaccuracy
andadequacy oftheevidence provided intheapplication forthedetermination ofwhether there is
sufficient evidence tojustify theinitiation ofaninvestigation.
Sec.732(c)(1)(A)(i) (p.227)onlyrequires theUStoexamine theaccuracy andadequacy of
theevidence onthebasis ofsources readily available .Moreover, itonlyrequires theUStodetermine
"whether thepetition alleges theelements necessary fortheimposition of[ananti-dumping duty] and
contains reasonably available tothepetitioner supporting theallegations" (emphasis added).
Comment :Thephrase "onthebasis ofsources readily available totheadministering authority"
maywaterdown theUSobligation under Article 5.3oftheWTO ADAgreement.
Another issue ofconcern isthatthelawonlyrequires thedetermination of"whether
thepetition alleges theelements necessary fortheimposition of[ananti-dumping duty]
andcontains information reasonably available tothepetitioner supporting the
allegations", which obviously isamuch looser requirement thanthatstipulated in
Article 5.3oftheWTO A-DAgreement to"determine whether there issufficient
evidence tojustify theinitiation ofaninvestigation".
Question :Ifnosuchreadily-availablesourceexists,whatothersourceswouldtheUSadministering
authority explore? Or,would theadministration simply takethepetitioner 'sword onG/ADP/W/30
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itsface? WhydoestheUSlawprovide foramuch looser requirement thanthatof
Article 5.3?
2. Sec.732(c)(4)(A) -Determination ofIndustry Support
Article 5.4oftheWTO A-DAgreement requires thatthewritten complaint should besupported
bydomestic producers expressing either support fororopposition tothecomplaint. Footnote 14to
theArticle provides thatemployees ofdomestic producers ortheirrepresentatives maymake orsupport
acomplaint.
Insetting outthequantitative criteria ondetermination ofindustry support, Sec.732(c)(4)(A)
(p.228) refers to"thedomestic producers orworkers".
Comment :Inthedetermination ofindustry support, theviews ofworkers willalsobetaken into
account. Itispreferable tofurther clarify thesituation withtheUS.Thepossibility
ofdouble counting isaconcern.
Questions :1.Does theterm "workers" refer tounions only orbothunions andindividual
employees?
2.Ifbothunions andindividuals mayexpress support fororobjection toapetition,
what would theadministration dotoavoid double counting incases where an
employee andtheunion representing himbothmake submissions?
3.Specifically, what would happen ifproducers opposed butunions orindividual
employees supported apetition?
4.Whatwouldhappenwhenthereareconflictingviewsbetweentheproducer,individual
employee(s) and/or union(s) from thesame entity?
5.Ifaproducer andhisworkers bothmake submission insupport ofapetition, would
theproduction ofthecorresponding entity becounted twice inconsidering the25per
cent-total-production threshold inSec.732(c)(4)(A)(i)? [Ifyes,itmeans double
counting. Inextreme cases, apetition maypassevenifitonlygetssupports from
entities actually account forlessthan13percentoftotalproduction ofdomestic
likeproduct.]
3. Sec.732(c)(4)(B)(i) -Producers related toforeign producers
Article 4.1oftheWTO ADAgreement defines theterm"domestic industry" andprovides
foranexceptionthatwhenproducersarerelatedtotheexportersorimportersorarethemselvesimporters
oftheallegedly dumped product, the"domestic industry" maybeinterpreted asreferring totherest
oftheproducers. There isnospecification onwhether the"related" producers should beonthe
supporting sideoropposing sideconcerning thecomplaint.
Sec.732(c)(4)(B)(i) (p.228), however, provides thatindetermining industry support, theUS
shalldisregard theposition ofsuchdomestic producers whooppose thepetition .
Comment :Thisisinconsistent withtheWTO A-DAgreement. Moreover, itisalsounfair that
onlythose "related" domestic producers whooppose thepetition areexcluded. ThisG/ADP/W/30
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would artificially boost uptheproportion constituted bythedomestic producers inthe
petition.
Question :Why doestheUSdisregard onlytheposition ofthose domestic producers having
relationship withforeign producers whooppose thepetition? Howabout theoneswho
support thepetition? Willtheyalsobeexcluded indetermining theindustry support?
Ifnot,whynot?
4. Sec.732(c)(4)(D)(i) -Determination ofindustry support :Polling
Sec.732(c)(4)(D)(i) (p.229) stipulates thatifthepetition doesnotmeetthe50percentstanding
requirement, theUSshallpolltheindustry orrelyonother information inorder todetermine ifthere
issufficient support forthepetition.
Comment :Itisnotclear whattheprovision "orrelyonother information" means.
Question :Would theUSelaborate ondetails ofconditions ofinvocation? What "other
information" hastheadministration inmind?
5. Sec.732(c)(4)(D)(ii) -Sampling fordomestic producers
Footnote 13totheArticle 5.4oftheWTO A-DAgreement provides forthecasethatwhen
therearefragmented industries involving anexceptionally large number ofproducers ,theimporting
authorities maydetermine support andopposition byusing statistically valid sampling techniques.
Sec.732(c)(4)(D)(ii) (p.229) however allows theuseofstatistically valid sampling method
topolltheindustry ifthere isalarge number ofproducers intheindustry .
Comment :Thisisawaterdown version oftherequirement stipulated infootnote 13toArticle 5.4
oftheWTO A-DAgreement, which onlyallows theuseofsampling when thedomestic
industries satisfy twoconditions i.e.fragmented andinvolving anexceptionally large
number ofproducers. Theauthorities maythenbeeasier tousesampling techniques,
which aredeemed tobeusedonlyinexceptions, indetermining theindustry support.
Question :WhydoestheUSenact alessstringent criterion foradoption oftheuseofsampling
technique?
6. Sec.732(c)(4)(E) -Comments byinterested parties
TheWTO A-DAgreement doesnotprovide thatthedetermination regarding industry support
shallnotbereconsidered afterthedetermination ofwhether toinitiate aninvestigation hasbeenmade.
However, Sec.732(c)(4)(E) (p.229) hassuchaprovision.
Comment :More flexibility isneeded here. There maybecases where theadministration isproved
tohavewrongly accepted thepetition andinitiated investigation, especially when the
determination ofindustry support isrelied on"other information".
Question :What explanations canbeprovided inprecluding reconsideration oftheindustry
support?G/ADP/W/30
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Section 733Preliminary Determinations
7. Sec.733(a) (andSec.735(b) similarly) -Determination ofinjury
Article 3.5oftheWTO A-DAgreement requires thedemonstration thatthedumped imports,
through theeffect ofdumping, arecausing injury todomestic industry.
Secs. 733(a)(1) and735(b)(1) requires adetermination ofinjury etc.byreason ofimports .
Comment :Anydetermination ofinjury byreason ofundumped imports isaviolation oftheWTO
A-DAgreement.
Question :OnwhatbasisdoestheUSdecline torequire adetermination whether injury (orthreat)
iscaused bydumped imports specifically through theeffects ofdumping? Doesn 't
USlawfailtostress margins analysis, astheWTO rules require?
8. Sec.733(b)(3) -Deminimis dumping margins
Article 5.8oftheWTO A-DAgreement defines thatadumping margin isdeminimis ifitis
lessthan2percent, expressed asapercentage oftheexport price.
However,asdefinedinSec.733(b)(3)(p.232),aweightedaveragedumpingmarginisdeminimis
ifitislessthan2percentadvalorem ortheequivalent specific rateforthesubject merchandise.
Comment :Thisisdifferent from, andmayormaynotbeconsistent with(depending onthe
magnitude ofthe"specific rate"), thedefinition inArticle 5.8oftheWTO A-D
Agreement.
Question :Isthe2percentadvalorem equivalent tothe2percentoftheexport priceasstipulated
bytheWTO A-DAgreement? Why doestheUSprescribe analternative criterion
notspecified intheWTO A-DAgreement indetermining deminimis margins? Would
theUSelaborate under whatcircumstances would theadministration assign aspecific
ratetoamerchandise andwhatisthemechanism todecide onthemagnitude ofthe
rate? Would theUSconfirm thatadumping margin would bedetermined asdeminimis
onceitislessthan2percentoftheexport price, regardless whatthespecific rateis?
Section 735Final Determinations
9. Sec.735(c)(5)(A) -Method fordetermining estimated all-others rate
Article 9.4oftheWTO ADAgreement setsoutthatindetermining theA-Ddutyratefor
exportersorproducersnotinitiallyselectedinthesamplingfortheinvestigation,theimportingauthorities
shalldisregard anyzeroanddeminimis margins andmargins established onthebasis ofthefacts
available .
Sec.735(c)(5)(A) (p.244), however, states thatthedetermination oftheall-others rateisbased
ontheweightedaverageoftheestimateddumpingmarginsestablished,excludinganyzeroanddeminimis
margins and"anymargins determined entirely under Section 776" (i.e.determinations onthebasis
ofthefactavailable).G/ADP/W/30
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Comment :Theword "entirely" inthiscontext seems toimply thatthere maybeother occasions
where margins aredetermined "partly" onthebasis ofBIAandmaybetaken into
account indetermining theall-others rate. Article 9.4oftheWTO A-DAgreement
excludes useofanymargins based onbestinformation available, notjustmargins
entirely based onbestinformation available.
Question :Would theUSelaborate ontheimplication of"entirely"? What explanations canbe
provided fordetermining anall-others rateinamanner notprovided forintheWTO
A-DAgreement?
10. Sec.735(c)(5)(B) -Determination ofestimated all-others rate
Sec.735(c)(5)(B) (p.244) provides thatiftheestimated weighted average dumping margins
established forallexporters andproducers individually investigated arezeroordeminimis margins,
oraredetermined entirely under Sec.776,theUSmayuseanyreasonable method toestablish the
estimatedall-othersrateforexportersandproducersnotindividuallyinvestigated.WTOA-DAgreement
doesnotprovide forsuchprovisions.
Comment :Itisnotclearwhether Sec.735(c)(5)(B) isapplicable inthecircumstances where the
margins established forallexporters andproducers individually investigated arezero
ordeminimis .Insuchacase, thelogical conclusion isthatthere isnoproof of
dumping andnoneedtodetermine anall-others ratei.e.casedismissed. Inother
cases where therearezero/de minimis margins andmargins based onbestinformation
(ormargins based onbestinformation available only), theWTO A-DAgreement
contains noprovisions determining adumping margin by"anyreasonable method"
asprescribed under inSec.735(c)(5)(B).
Question :Would theUSconfirm thatSec. 735(c)(5)(B) would notbeapplicable inthe
circumstanceswherethemarginsestablishedforallexportersandproducersindividually
investigated arezeroordeminimis? Inother cases where there arezero/deminimis
margins andmargins based onbestinformation (ormargins based onbestinformation
available only), whatexplanations canbeprovided fordetermining anall-others rate
insuchamanner notprovided forintheWTO A-DAgreement? Howwould theUS
ensure thatsuchadetermination would beconsistent withitsobligations under the
WTO A-DAgreement?
Section 751Administrative Review ofDeterminations
11. Sec.751(a) -Periodic review
Article 18.3oftheWTO A-DAgreement states theprovisions oftheWTO A-DAgreement
shallapply toinvestigations, andreviews ofexisting measures. Thisincludes theuseof2percent
deminimis dumping margin asanindicator forthetermination ofanA-Dcase.
Unlike other provisions onpreliminary andfinaldeterminations (Sections 733and735), there
isnomention inSec.751(a) (p.252) thatthedeminimis dumping margin of2percentwillapply or
otherwise intheperiodic review ofA-Dduties.
Comment :It'sveryimportant toclarify thiswiththeUStopreclude thepossible abuse ofreview
investigations bytheUS.G/ADP/W/30
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Question :Would theUSclarify whether provisions onpreliminary andfinaldeterminations as
specified inSecs. 733and735,suchasthe2percentdeminimis dumping margin,
apply intheperiodic review ofA-Dduties? Ifnot,whynot?
12. Sec.751(b)(3) -Reviews forchanged circumstances :burden ofpersuasion
Article 11.2 requires areview upon request byanyinterested party submitting positive
information substantiating theneedforareview.
Sec.751(b)(3) (p.255) requires aninterested partytobeartheburden ofpersuasion withrespect
towhether there arechanged circumstances sufficient towarrant suchrevocation.
Comment :TheWTO A-DAgreement doesnotrequire theinterested party tobeartheburden
ofpersuasion, which isonerous andunreasonable.
Question :What explanations canbeprovided forsuchanonerous requirement ontheinterested
party?
13. Sec.751(c)(2) -Fiveyearreview
Sec.751(c)(2)(B) (p.256) requires submission byinterested parties ofastatement regarding
thelikely effects ofrevocation oftheA-Dduties.
Comment :Such asubmission should notbenecessary unless anduntilthedomestic industry
requests areview andtheimporting authorities determine toinitiate areview.
Question :WhydoestheUSrequire suchasubmission without regard toanyrequest forareview
orotherwise?
Section 752Special Rules forSection 751(b) and751(c) Reviews
14. Sec.752(a)(1) - Determination oflikelihood orcontinuation orrecurrence of
material injury
Article 3.5oftheWTO A-DAgreement requires thatinjury becaused bydumped imports.
Sec.752(a)(1) requires theCommission toconsider the"impact ofimports", among others,
inreviews. Consideration ofvolume (Sec. 752(a)(2), p.261), price (Sec. 752(a)(3), p.261), industry
(Sec. 752(a)(4), p.261) andcumulation (Sec. 752(a)(7), p.262) similarly refers to"imports" only.
Comment :TheCommission should notconsider theimpact ofundumped imports inreviews.
Question :Would theCommission beallowed toconsider theimpact ofundumped imports in
reviews?
15. Sec.752(c)(3) - Determination oflikelihood ofcontinuation orrecurrence of
dumping
Inproviding totheCommission themagnitude ofthedumping margin forthedetermination
oflikelihood ofcontinuation orrecurrence ofdumping, Commerce isallowed tochoose themargin
determined intheoriginal investigation (Sec. 752(c)(3), p.264).G/ADP/W/30
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Comment :Itisonlyreasonable tousethemargin determined inthemost recently completed
review.
Question :WhyisCommerce allowed tochoose thedumping margin oftheoriginal investigation
andinwhatcircumstances willitdoso?
16. Sec.752(c)(4)(A) --Treatment ofzeroordeminimis margins inthereviews
Article 18.3oftheWTO A-DAgreement provides thattheprovisions oftheAgreement shall
apply toinvestigations andreviews .Sec.752(c)(4)(A) (p.264) literally means thatthedeminimis
dumping margin levelof2percentdoesnotapply inchanged-circumstances andfive-year reviews.
Comment :Thisisaviolation oftheprovisions setoutinArticle 18.3oftheWTO A-DAgreement.
Question :What explanations canbeprovided forsuchaviolation?
17. Sec.752(c)(4)(B) -Application ofdeminimis standards inthereviews
TheWTO ADAgreement doesnotspecifically provide ademinimis standard forreviews.
According toitsArticle 18.3, thedeminimis margin defined inArticle 5.8should alsoapply toreviews.
InSec.752(c)(4)(B)(p.264),itisputdownthat"forthepurposeofthisparagraph[determination
oflikelihood ofcontinuation orrecurrence ofdumping], theadministering authority shallapply the
deminimis standards applicable toreviews ....".
Comment :Itisnecessary toclarify withtheUSwhat"standards" areapplicable toreviews so
astoensure thatsuchdeminimis standards arenotgreater thanthe2percentdefined.
Question :What arethedeminimis standards which areapplicable toreviews? How arethey
formulated andapplied?
Section 771Definitions, Special Rules
18. Sec.771(7) -Material injury
Article 3.5oftheWTO A-DAgreement specifies thatitmustbedemonstrated thatthedumped
imports are,through theeffects ofdumping, causing injury todomestic industry. Article 3.7ofthe
WTO A-DAgreement, ontheother hand, alsorequires thatathreat ofmaterial injury could onlybe
concluded onthebasis thatfurther dumped exports areimminent andthat,unless protective action
istaken, material injury would occur.
However, inSec.771(7) (p.278-284), allconsiderations ofmaterial injury in(B)[volume and
consequent impact], (C)[evaluation ofrelevant factors] and(F)[threat ofmaterial injury] refer to
"imports", instead of"dumped" imports.
Comment :Consideration ofmaterial injury must notbebased on"undumped" imports, given
thecausation requirement inArticle 3.5,and3.7asappropriate.
Question :Would theUSauthorities beallowed toconsider "undumped" imports inthe
determination ofinjury?G/ADP/W/30
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19. Sec.771(7)(B)(ii) -Injury caused byother factors
Article 3.5oftheWTO A-DAgreement requires thedemonstration thatthedumped imports
are,through theeffects ofdumping, causing injury tothedomestic industry. Itprovides thattheinjuries
caused byother factors must notbeattributed tothedumped imports.
TheUSstatute onlyprovides inSec.771(7)(B)(ii) (p.279) thattheITCmayconsider such
other economic factors asarerelevant tothedetermination regarding whether there ismaterial injury
byreason ofimports. TheUSstatute issilent about prohibition oftheattribution ofinjury caused
byfactors other thandumped imports. Sec.701(a) (p.202), 705(b) (p.219), 733(a) (p.230), 735(b)
(p.241) require theITCtodetermine whether anindustry intheUS"ismaterially injured ...byreason
ofimports".
Comment :TheURAA hasmade nochange totheUSstatute inthisrespect. Theabsence ofan
explicit statutory provision toexclude attribution ofinjury caused byother factors to
dumped imports maynotbesatisfactory inthefaithful implementation oftheWTO
A-DAgreement.
Question :Why does theUSfailtoimplement bystatutory provisions therequirement of
Article 3.5thatinjuries caused byfactors other thandumped imports must notbe
attributed todumped imports? Intheabsence ofanyexplicit statutory provisions, how
would theUSensure thatitsauthorities would refrain fromattributing injury caused
byotherfactorstodumpinginestablishingthecausationlink,asrequiredbyArticle3.5?
20. Sec.771(7)(C)(iv) -Captive production
Article 4oftheWTO ADAgreement defines thedomestic industry as"thedomestic producers
asawhole ofthelikeproducts" (emphasis added). TheArticle doesnotpermit differentiation between
producers ofthelikeproduct concerned forcaptive consumption andproducers ofthelikeproduct
forthemerchant market.
Sec.771(7)(C)(iv) (p.280), however, provides forsuchdifferentiation andsubject tocertain
circumstances, theCommission shallfocus primarily onthemerchant market forthedomestic like
product forthedetermination ofmarket share andthefactors affecting financial performance.
Comment :Todefine production inamanner thatexcludes captive production would notbein
conformity withthedefinitions of"domestic industry", andwould unjustifiably inflate
prospects ofanaffirmative injury determination.
Question :What explanations canbeprovided forsuchaviolation?
21. Sec.771(7)(F) -Threat ofmaterial injury
Article 3.7(iii) oftheWTO A-DAgreement requires aconsideration ofwhether imports are
entering atprices that"willhave"asignificant depressing orsuppressing effect. Sec.771(F)(i)(IV)
(p.281) usesthephrase "likely tohave".
Comment :Thissubstitution provides foralessstringent consideration.
Question :Would theUSexplain whytheyusethephrase "likely tohave" notprovided forin
theWTO A-DAgreement?G/ADP/W/30
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22. Sec.771(7)(G) and(H)-Cumulative assessment ofconcurrent dumping andsubsidy
Article 3.3oftheWTO A-DAgreement permits, subject tocertain conditions, cumulation
ofimports inassessing injury onlywhen these imports aresimultaneously subject toanti-dumping
investigations .
Theprovisions inSec.771(7)(G) and(H)(p.282-284), however, authorize thecumulative
assessment ofvolume andeffect ofimports inanti-dumping andcountervailing investigations ifpetitions
and/or investigations ofthem arefiled/initiated onthesame day. Nosuchprovision isstipulated in
either theWTO A-DAgreement ortheWTO Subsidies Agreement.
Comment :Thisisaviolation oftheWTO A-DAgreement. Although A-Dandcountervailing
investigations aresimilar innature, itisstillunfair toexporters andproducers ifinjuries
caused bythem respectively arecumulatively assessed.
Question :WhydoestheUSauthorize thecumulative injury assessment ofvolume andeffect of
imports inA-Dandcountervailing investigations, which isaviolation ofArticle 3.3
oftheWTO A-DAgreement?
23. Sec.771(24)(A) -Negligible imports
Article 5.8oftheWTO A-DAgreement provides that"thevolume ofdumped imports shall
normally beregarded asnegligible ifthevolume ofdumped imports ...found toaccount forlessthan
3percent..."(emphasis added).
Sec.771(24)(A) (p.288-289) provides that"imports ...are'negligible 'ifsuchimports account
forlessthan3percentofthevolume ..."(emphasis added).
Comment :Thewording oftheWTO A-DAgreement doesnotpreclude authorities fromfinding
theimports negligible eveniftheyarenotlessthan3percent.
Question :Would theUSclarify thatwhether imports notlessthan3percentcanberegarded
asnegligible asallowed intheWTO A-DAgreement?
24. Sec.771(24)(A)(i) -Negligible imports
Article 18.3oftheWTO A-DAgreement stipulates that"theprovisions ofthisAgreement
shallapply toinvestigations, andreviews ofexisting measures". Therefore, thenegligible imports
provisions asstated inArticle 5.8oftheWTO A-DAgreement shallalsoapply toreviews.
However, Sec.771(24)(A)(i) (p.288-289), limits theapplicability ofthe3percentnegligible
import volume tooriginal A-Dinvestigations onlybutnotthesubsequent reviews.
Comment :Thisviolates theWTO A-DAgreement. "Negligible imports" isoneoftheindicators
forimmediate termination ofanA-Dinvestigation. Itistherefore necessary toensure
ittobeapplied alsotoreviews.
Question :What explanations canbeprovided forsuchaviolation?G/ADP/W/30
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Section 772Export Price andConstructed Export Price
25. Sec.772(d)(3) -Additional adjustments toconstructed export price
Article 2.4oftheWTO A-DAgreement requires afaircomparison between theexport price
andnormal value. Toensure that,thecomparison shallbemade atthesame leveloftrade anddue
allowance shallbemade onitsmerits fordifferences which affect price comparability.
Sec.772(d)(3) (p.294) provides forthededuction ofprofits, arising fromfurther manufacturing,
selling anddistribution activities performed byanaffiliated partyintheUS,fromtheconstructed export
price. Butnocomparable adjustment ismade intheestablishment ofthenormal value.
Comment :Such amechanism, inourviews, violates Article 2.4oftheWTO A-DAgreement.
Question :What explanations canbeprovided forsuchaviolation?
Section 773Normal Value
26. Sec.773(a)(6)(C)(iii) -Adjustments toestablish thenormal value
Article 2.4oftheWTO A-DAgreement requires afaircomparison between theexport price
andthenormal value.
Inthecaseofaconstructed export price, Sec.772(d)(D) (p.294) provides fordownward
adjustments bytheamount ofallUSexpenses incurred, including indirect selling expenses. To
compensate forthis,19CFRS353.56(b)(2) of1994provides fora"circumstances-of-sale" adjustment
byareduction ofindirect selling expenses intheestablishment ofthenormal value, byonlyuptothe
amount deducted fromtheUSprice, regardless oftheactual amount ofindirect expenses incurred on
thesaleintheexporting country. Sec.773(a)(6)(C)(iii) (p.298) provides foradjustments dueto"other
differences inthecircumstances ofsale".
Comment :Toensure afaircomparison required byArticle 2.4,theindirect selling expenses in
theexporting member should bededucted intheestablishment ofthenormal value,
aslongasthenature oftheexpenses isthesame ofthenature ofthatdeducted inthe
establishment oftheconstructed export price. There arenojustifications forthecurrent
CFR tocaptheamount ofthededuction inthenormal value adjustment. Itisnot
clearwhether therelevant CFRwould beamended tobring itintoconformity ofthe
WTO A-Dagreement. Itisalsonotclearabout theapplication ofSec.773(a)(6)(C)(iii)
andwhether thisprovision willhelp. Inanycase, theabsence ofanyUSstatutory
provisions ensuring acircumstances-of-sale adjustment made tothenormal value
reflecting thecomparable deductions from theUSprice could amount toaviolation
ofthefaircomparison requirement inArticle 2.4.
Question :WhydoestheUSstatute notprovide foranadjustment made tothenormal value to
compensate forthecomparable deductions from theUSprices toensure afair
comparison required byArticle 2.4? Howwould Sec.773(a)(6)(C)(iii) beapplied?
Isthecaponthesubject adjustment made tothenormal value provided forin19CFR
S353.56(b)(2) stillinforce? Would thisprovision beamended tobring itinto
conformity withtheWTO A-DAgreement?G/ADP/W/30
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27. Sec.773(a)(7)(A) -Adjustments toestablish thenormal value :Level oftrade
Article 2.4oftheWTO A-DAgreement provides thata"faircomparison shallbemade between
theexport price andthenormal value" andthatdueallowance shallbemade fordifferences which
affect price comparability including, interalia,differences inleveloftrade.
Sec.773(a)(7)(A) (p.298) provides forlevel-of-trade adjustment "ifthedifference inlevelof
trade -
(i)involves theperformance ofdifferent selling activities; and
(ii)isdemonstrated toaffect price comparability, based onapattern ofconsistent price
differences between salesatdifferent levels oftradeinthecountry inwhich normal value
isdetermined (emphasis added)".
Comment :Sec.773(a)(7)(A) unjustifiably limits thescope forlevel-of-trade adjustment which
onlyapplies when thedifferent levels under consideration areintheforeign market,
notwhen theyareintheUSmarket. Thisviolates theobligations under Article 2.4
oftheWTO A-DAgreement requiring afaircomparison.
Question :What explanation canbeprovided fortherestrictions onthescope forlevel-of-trade
adjustments inviolation ofArticle 2.4? Forinstance, when allsalesintheexporting
country aremade toendusers, therequirement ofSec.773(a)(7)(A)(ii) cannever be
metandtherewillnotbeanyleveloftradeadjustment intheestablishment ofthenormal
value. IfUSsalesaremade bothtodistributors andtoendusers (with aconsistent
price difference), howwould afaircomparison bemade between distributor salesin
theUSandend-user salesintheexporting country, without alevel-of-trade adjustment
inestablishing thenormal value?
28. Sec.773(a)(7)(B) -Constructed export price offset
When export price isconstructed asprovided forinArticle 2.3oftheWTO A-DAgreement,
Article 2.4provides thatallowances forcosts andforprofits accruing should alsobemade andthat
theauthorities shallestablish thenormal value atalevel oftrade equivalent tothelevel oftrade of
theconstructed export price, orshallmake dueallowance.
Sec.773(a)(7)(B) (p.298), therefore, provides forreduction inthenormal value bytheamount
ofindirect selling expenses incurred intheexporting country butcapsuchareduction bytheamount
deducted from theUSprice made under Sec.772(d)(1)(D) (p.294).
Comment :Inthecaseofaconstructed export price, thelevel-of-trade adjustment toestablish a
normal value istomeet theoverriding requirement ofafaircomparison under
Article 2.4. Capping theamount tobededucted hasnopolicy orlegal basis under
theWTO A-DAgreement andisaviolation ofthefaircomparison requirement.
Question :Whyistheamount ofdeduction pursuant toalevel-of-trade adjustment capped? How
could afaircomparison beachieved when thecapped amount isnotsufficient forthe
necessary deduction tobemade toestablish anormal value atthesame leveloftrade
oftheconstructed export price?G/ADP/W/30
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29. Sec.773(c) -Non-market economy countries
Article18.1oftheWTOA-DAgreementprohibitscountriesfromtakingactionagainstdumping
ofexports byaMember except inaccordance withtheprovisions oftheAgreement. TheWTO
A-DAgreement doesnotdraw adistinction between market andnon-market economies and
contains noseparate provisions applicable tonon-market economies only.
Sec.773(c) (p.300) provides forspecial rules fortheestablishment ofthenormal value ofa
product exported fromanon-market economy. Suchrulesarenotfound intheWTO A-DAgreement.
Comment :Sec.773(c) allows theUStotakeanti-dumping action inrespect ofanon-market
economy Member notinaccordance withtheprovisions oftheWTO A-DAgreement.
Itistherefore aviolation ofArticle 18.1.
Question :What explanations canbeprovided forallowing theUStotakeanti-dumping action
inrespect ofanon-market economy Member notinaccordance withtheprovisions
oftheWTO A-DAgreement, incontravention ofArticle 18.1?
30. Sec.773(d) -Multinational corporations
Sec.773(d)(p.301)providesguidelinesforthedeterminationofthenormalvaluefortheproducts
producedbymultinationalcorporationswhichsimultaneouslyhavesimilarproductionfacilitiesinanother
country orcountries. Thisisamodified version ofanexisting clause inUSA-Dlawandhasnothing
todowiththeWTO A-DAgreement.
Question :Would thisSpecial RuleforCertain Multinational Cooperation incuradditional burden
onrespondents? Besides reporting itsowntransaction data,isarespondent required
toprovide information onthetransactions performed byother facilities inthesame
group producing theforeign likeproduct inathird country? When theUS
administration getsalltheinformation, howisthenormal value ofthesubject
merchandiseadjusted"byreferencetothenormalvalueatwhichtheforeignlikeproduct
issoldinsubstantial quantities from oneormore facilities outside theexporting
country"?
31. Sec.773(e)(2)(A) -Constructed value
Article 2.2.2 oftheWTO A-DAgreement provides that"theamounts foradministrative, selling
andgeneral costs andforprofits shallbebased onactual datapertaining toproduction andsalesin
theordinary course oftrade ofthelikeproduct bytheexporter orproducer under investigation".
Sec.773(e) (p.302) provides thattheconstructed value ofimported merchandise shallbethe
sumoftheproduction costand"theactual amounts incurred andrealized bythespecific exporter or
producer being examined intheinvestigation orreview forselling, general andadministrative expenses
andforprofits, inconnection withtheproduction andsaleofaforeign likeproduct, intheordinary
course oftrade, forconsumption intheforeign country "(emphasis added).
Comment :Thephase "forconsumption intheforeign country" hasnoplace intheWTO A-D
Agreement andunnecessarily restricts thebasis ofcalculating theamounts forSGA
costs andforprofits. Thisviolates Article 2.2.2.G/ADP/W/30
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Question :WhydoestheUSunjustifiably restrict thescope ofcalculating theamounts forSGA
costs andforprofits tothatpertaining tothe"consumption intheforeign country" in
violation ofArticle 2.2.2? What explanations canbeprovided?
32. Sec.773(e)(2)(B)(ii) -Constructed value
Article 2.2.2(ii) oftheWTO A-DAgreement doesnotrestrict, forthebasis oftheweighted
average, theactual amounts tothose incurred andrealized intheordinary course oftrade.
Sec.773(e)(2)(B)(ii) (p.302) injects therequirement of"inordinary course oftrade".
Comment :TherestrictionhasnolegalbasisintheWTOA-DAgreementandamountstoaviolation
ofArticle 2.2.2(ii).
Question :Why doestheUSintroduce sucharequirement notprovided forintheWTO A-D
Agreement?
33. Sec.773(f)(1)(C) -Start-up costs
Article 2.2.1.1 oftheWTO A-DAgreement provides that,forthepurposes ofdetermination
ofdumping, costs shallbeadjusted when theyareaffected bystart-up operations.
Sec.773(f)(1)(C)(ii) (p.303) however allows Commerce tomake anadjustment forstart-up
costs onlyif-
(i)theinvestigated company isusing newproduction facilities orisproducing anewproduct
thatrequires substantial additional investment; and
(ii)production levels arelimited bytechnical factors associated withtheinitial phase of
commercial production.
Comment :There isnolegalbasisintheWTO A-DAgreement tolimittheadjustment forstart-up
costs under certain circumstances only. Theexhaustion ofsuchcircumstances inthe
laws unjustifiably excludes other reasonable circumstances thatcanqualify for
adjustments forstart-up costs. Forinstance, thedevelopment ofanewsoftware product
maybebased onexisting resources notrequiring substantial additional investment.
Alsostart-up operations arenotnecessarily limited bytechnical factors.
Question :Onwhatlegalauthority doestheUSlimittheadjustment forstart-up costs required
bytheWTO A-DAgreement tocertain circumstances only? What explanations can
beprovided toexclude other circumstances, notprovided intheUSlaws, thatcan
qualify foradjustments forstart-up costs?
34. Sec.773A(a) and(b)-Exchange Rate
Article2.4.1oftheWTOA-DAgreementprovidesforexchangeraterequirements.Article18.3
oftheWTO A-DAgreement provides thattheprovisions oftheWTO A-DAgreement "shall apply
toinvestigations andreviews ofexisting measures".
Regarding theA-DAgreement 'sdaily rateandhedging requirements, Sec.773A(a) (p.304)
applies in"ananti-dumping proceeding", aterm encompassing bothinvestigations andreviews.G/ADP/W/30
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However, regarding the60-day period forexporters toadjust prices, Sec.773A(b) (p.304) applies
onlyin"aninvestigation".
Comment :Itisdoubtful about whether Sec.773A(b) applies toreviews aswell.
Question :Would theUSclarify whether Sec.773A(b) applies toreviews aswell, asrequired
byArticle 18.3? Ifnot,what explanations canbeprovided forsuchaviolation of
theWTO A-DAgreement?
Section 777A Sampling andAveraging
35. Sec.777A (d)-Determination oflessthanfairvalue
Article 2oftheWTO A-DAgreement requires that"afaircomparison shallbemade between
theexport priceandnormal value". Article 2.4.2 requires thedumping margins during theinvestigation
phase beestablished onthecomparison ofnormal values andprices normally onalike-with-like basis,
i.e.either weighted average-to-weighted average ortransaction-to-transaction comparison. Article 18.3
provides thattheprovisions oftheWTO A-DAgreement "shall apply toinvestigations andreviews
ofexisting measures". Theterm"investigation phase" inArticle 2.4.2 therefore refers bothtothe
"original" investigation phase andthe"review" investigation phase. Article 9.3provides that"the
amount oftheanti-dumping dutyshallnotexceed themargin ofdumping asestablished under Article 2".
Sec.777A(d)(2) (p.316) provides that,forreviews, "when comparing export prices ...of
individual transactions totheweighted-average priceofsalesoftheforeign likeproduct, [Commerce]
shalllimititsaveraging ofprices toaperiod notexceeding thecalender month thatcorresponds most
closely tothecalender month oftheindividual export sale."
Comment :TheUSlawunjustifiably limits such weighted average-to-weighted average or
transaction-to-transaction comparisons tooriginal A-Dinvestigations anddoesnotmake
itcover thesubsequent reviews. Thisviolates theobligations under Articles 2.4.2
and18.3. Theimposition ofA-Dduties notbased onsuchcomparisons violates
Article 9.3aswell. TheUS'logicisinherently flawed astheUSallows cumulation,
permitted byArticle 3.3oftheWTO A-DAgreement in"investigations", inreviews
asprovided forinSec.752(a)(7) (p.262). Suchdiscriminatory application oftheWTO
A-DAgreement provisions between original investigations andreviews isunreasonable
andunjustified.
Question :Whyistheapplication ofaweighted average-to-weighted average ortransaction-to-
transaction comparison limited tooriginal A-Dinvestigations only? Whydoesitnot
cover subsequent reviews, asrequired byArticle 18.3oftheWTO A-DAgreement?
What explanation canbeprovided forsuchviolations ofArticles 2.4.2, 9.3and18.3?
36. Sec.781-Prevention ofcircumvention
GATT Article VIstates thatanti-dumping duties maynotbeimposed without afinding of
bothdumping andinjury with respect tothelikeproduct from thespecific country subject to
investigation. Article 1oftheWTO A-DAgreement provides thatananti-dumping measure shallbe
applied onlyunder thecircumstances provided forinGATT Article VIandpursuant toinvestigations
initiated andconducted inaccordance withtheprovisions oftheWTO A-DAgreement. Article 18.1
prohibits countries fromtaking action against dumping ofexports byaMember except inaccordance
with theprovisions oftheAgreement. TheWTO A-D Agreement does notcontain anyanti-G/ADP/W/30
G/SCM/W/37
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circumvention provisions. TheMinisterial Conference atMarrakesh adopted adecision toreferthe
problem ofcircumvention ofA-Dmeasures totheCommittee onAnti-Dumping Practices established
under theWTO A-DAgreement forresolution.
Sec.781(p.319-324), however, empowers theUSauthorities toextend anti-dumping measures
imposed onasubject product tocover, under specified circumstances, (i)theparts orcomponents,
ofthesubject product, imported intotheUSforassembly and(ii)thesubject product assembled or
completed inother foreign countries fromproducts subject tosuchanti-dumping measures orproduced
intheforeign country onwhich suchanti-dumping measures apply. Themain criteria isonwhether
(i)theUSorthird-country operation isaminor assembly operation and(ii)whether thevalue ofthe
partsoriginating inthecountry subject totheorder isa"significant" portion ofthetotalvalue ofthe
merchandise.
Comment :Given GATT Article VIandArticles 1and18.1oftheWTO ADAgreement, the
legality ofthese anti-circumvention measures isinserious doubt. Thedecision ofthe
Ministerial Conference atMarrakesh torefertheproblem ofcircumvention ofA-D
measures totheCommittee onAnti-Dumping Practices forresolution canhardly be
interpreted toconstitute arecognition ofthelegitimacy ofanti-circumvention measures
which areinblatant contravention ofGATT Article VIandArticle 18.1oftheWTO
A-DAgreement. Attheveryleast, theUSanti-circumvention measures maypre-empt
andprejudice thefuture work oftheWTO CAP.
Question :What explanations cantheUSprovide fortheadoption ofanti-circumvention measures
incontravention ofGATT Article VIandArticles 1and18.1oftheWTO A-D
Agreement?
Section 782Conduct ofInvestigations andAdministrative Reviews
37. Sec.782(2)(g) -Public comment oninformation
Article 6.12oftheWTO A-DAgreement requires theauthorities toprovide opportunities for
relevant industrial usersofthesubject product andforrepresentative consumer organizations toprovide
information relevant totheinvestigation regarding dumping, injury andcausality. Itisnotapparent
thattheUSstature hasprovided suchopportunities.
Sec.782(2)(g) (p.325) mayberelevant. Ithowever refers onlyto"other parties tothe
proceeding"andconfinescommentstothoseoninformationsubmitted.Moreoveritdisregardscomments
containing newfactual information.
Comment :Thescope of"other parties totheproceeding" isunclear. Comments oninformation
submitted arenotthesame asinformation relevant totheinvestigation regarding
dumping, injury andcausality. Disregarding comments containing newfactual
information frustrates theintent ofArticle 6.12.
Question :What does"other parties totheproceeding" mean? Would theUSconsider comments
notoninformation submitted andcomments containing newfactual information ifsuch
comments arerelevant totheinvestigation? How would theUSensure thatits
authorities would provide opportunities forindustrial usersandrepresentative consumer
organizations toprovide information relevant totheinvestigation asrequired by
Article 6.12?