RESTRICTED
WORLD TRADE G/ADP/W/312
G/SCM/W/320
ORGANIZATION 1April 1996
(96-1149)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
REPLIES TOQUESTIONS POSED BYKOREA1
CONCERNING THE NOTIFICATION OFLAWS AND
REGULATIONS OFICELAND2
Thefollowing communication dated 21March 1996, hasbeenreceived from thePermanent
Mission ofIceland.
_______________
1. General Questions
(a) Incases where there arenorelevant provisions inthedomestic legislation, doesthe
WTO Agreement apply?
(b) Iftheprovisions oftheexisting domestic legislation donotconform totheWTO
Agreement, dotheprovisions oftheWTO Agreement apply?
2. SinceIceland´sLegislationomitssomeimportantpointsofdetailintheAnti-DumpingAgreement,
howwillIceland ensure compliance withtheseprovisions? Willgreater details beprovided inthedraft
lawreferred toonthefirstpageofthenotification, andhowwillIceland ensure compliance before
thatlegislation isinplace? Inparticular, willcompliance beensured administratively, orwillitalso
bethrough judicial review asprovided forunder Article 13oftheAgreement?
Also, whatistheschedule forrevision oftheexisting LawandRegulation?
Reply
IcelandadherestothedualisticsystemintheapplicationofinternationallawtoIcelandicdomestic
law.Inprinciple, Actsarerequired togiveinternational law,including treaty obligations, direct legal
effect within theIcelandic legalsystem. Itisawellestablished principle incourt cases, however, that
domesticlegislationmustbeinterpretedinaccordancewithinternationallawandinternationalobligations
which Iceland hasundertaken. Therelevant authorities should therefore abide bytheAgreements to
theextent possible andtakethem fullyintoaccount when interpreting thedomestic legislation. This
principle isfurther strengthened inRegulation No.351/1994 onA-DandCVD measures, Article 1
paragraph 2,which specifically states thatintheimplementation oftheRegulation consideration must
begiven toprovisions ofinternational agreements towhich Iceland isaparty.
1G/ADP/W/167-G/SCM/W/174.
2G/ADP/N/1/ISL/1-G/SCM/N/1/ISL/1G/ADP/W/312
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Thetraditional methodology ofdrafting legislation issimilar tothatoftheEuropean continental
method. Theprinciples provided bythelegislation arenormally stated inbroad terms, namely general
principles andwiththeexceptions stipulated. Inthisfashion Iceland normally transforms theprinciples
ofInternationalAgreementsintoitslegislation.Consequentlyeveryprovisionofinternationalagreements
neednotbestated inourdomestic legislation.
TheWTOAgreementshavenotintheirentiretybeenregardedasrequiringdirecttransformation
intoIcelandic law. TheAgreements have, however, beenthebasis foramendments toanddrafting
ofrelevant domestic legislation.
Itisforeseen thatthereview oftheA-DandSCM legislation willbefinalized bythemiddle
ofthisyear. TheRegulation No.351predates theentry intoforce oftheA-DandSCM Agreements,
anddoesnotfullyreflect theirprovisions asaresult. Since itismore limited thantheAgreements
itleaves significant scope forinterpretation andadministrative proceedings inawaywhich should avoid
conflict withtherelevant disciplines oftheAgreements. Thenewlegislation willbemore elaborate
andtaketheAgreements fullyintoaccount.
Alladministrative Actscanbesubmitted tonational courts forjudicial review according to
Article 60oftheIcelandic Constitution.
3. What isthemeaning ofthebracket inCustoms LawNo.55?
Reply
Thebracket inCustoms LawNo.55hasnosignificance other thantoindicate amendments
totheoriginal legislation, asclearly stipulated intheheading ofthelegislation (seepage2oftheIcelandic
notification).
4. TheGenerally Accepted Accounting Principles
Article 16ofRegulation No.351stipulates, "Allcostscalculations shallbebased onavailable
accounting data...".
Doesthishavesamemeaningasgenerallyacceptedaccountingprinciplesoftheexportingcountry
oftheAgreement Article 2.2.1.1?
Reply
InviewofArticle 1oftheRegulation andinaccordance withgeneral principles ofinterpretation
ofIcelandic law,asexplained inthereply toquestion 1and2,thiswould beinterpreted inthesame
way.
5. Provisional Measures
Article 118oftheCustoms Lawstipulates, "Such temporary duties ...maynotbeimposed for
alonger duration than12months." Thisisnotinconformity withtheAgreement, Article 7.4,which
provides that"theapplication ofprovisional measures shallbelimited ...,notexceeding fourmonths
...".G/ADP/W/312
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Reply
The12-month period represents amaximum duration, butthere isnoobligation tomake full
useofit.TheRegulation, Article 34,states thattheCommittee canrecommend suchanaction. In
applying thisArticle andinviewofArticle 1oftheRegulation, theuseofprovisional measures would
notexceed fourmonths.
6. Application toTrade inServices
According toArticle 1,theRegulation isequally applicable totrade inservices. Which Article
oftheAgreement authorizes this?
Reply
TheArticle referred tointhequestion isobviously notbased onanyprovisions inthe
Agreements. Apparently there aretwoschools ofthoughts astowhether A-DorCVD measures can
beresorted toornotintheabsence ofsuchdisciplines intheservices framework. They areneither
permitted norprohibited. Uncertainties likethese need toberesolved infuture multilateral trade
negotiations, which would serve toincrease predictability ininternational trade andstrengthen the
multilateral trading system. When thiswilleventually beclarified, Iceland willabide bywhatever
conclusions arereached.
7. Normal Value
When there arenosalesofthelikeproduct intheordinary course oftrade andsothedumping
margin isdetermined bycomparison withaprice ofthelikeproducts exported toathirdcountry, the
Agreement requires theuseofacomparable price, whereas therelevant article ofRegulation No.351
states thatthecommission mayusethehighest price.
Using thehighest priceindetermining dumping margin isnotinconformity withtheAgreement.
Reply
According totherelevant Article intheRegulation, thehighest price maybeused. Inother
words itisnotobligatory. Inaddition theArticle states thatthecomparable price should normally
bethatwhich isprevalent innormal trade. ThisArticle would therefore beinterpreted inaccordance
withtheA-DAgreement andacomparable price would beusedindetermining thedumping margin
when there arenosalesofthelikeproduct intheordinary course oftrade. Thiswillbeamended in
thenewlegislation.
8. Adjustment
Article 11ofRegulation No.351stipulates, "Aclaim foradjustment which isinsignificant in
relationtotheprice...oftheaffectedtransactionshallbedisregarded.Ordinary,individualadjustments
...having aneffect oflessthan0.5percentofthepriceoffaproduct shallbeconsidered insignificant."
Which Article oftheAgreement authorizes this?G/ADP/W/312
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Reply
Article 11,paragraph 2,oftheRegulation isapparently notreflected intheAgreement. Itwas
theviewoftheIcelandic authorities thatthisprovision would addtolegalcertainty andtransparency.
9. Determination ofInjury
Article 3.7oftheAgreement stipulates, "Inmaking adetermination regarding theexistence
ofathreat ofmaterial injury, theauthorities should consider ...(I)asignificant rateofincrease of
dumped imports ...(ii)...capacity oftheexporter ...(iii)whether imports areentering atprices that
...would likely increase demand forfurther import, and(iv)inventories."
TheAgreement stipulates fourconditions which should beconsidered, whereas Iceland ´s
Regulation specifies onlytherateofincrease andexport capacity intheexporting country.
TheRegulation doesnotrequire thatthetwoother conditions provided bytheAgreement be
considered:
(a) whether imports areentering atprices that...would likely increase demand forfurther
imports, and
(b) inventories.
TheRegulation needs toaccept therelevant provisions oftheAgreement.
Reply
Thewording ofArticle 21oftheRegulation isthatindetermining athreat ofinjury “...account
maybetaken offactors suchas..”increase indumped imports andexport capacity intheexporting
country. Inother words, theauthorities arenotlimited tothese factors intheirdeliberations since
theyarenotexhaustive. Itislefttotheirdiscretion toconsider other relevant factors suchasthose
stipulated inArticle 3.7oftheA-DAgreement.
10. Investigation Period
There isnoprovision stating thataninvestigation maynotbeapplied forlonger than18months.
TheRegulation needs toaccept therelevant provisions oftheAgreement.
Reply
Itistruethatthere isnoprovision explicitly stating thataninvestigation maynotbeapplied
forlonger than18months. Itishowever stated inArticle 29thataninvestigation should normally
beconcluded within oneyearofitsinitiation. Onthebasis ofthisArticle andArticle 1ofthe
Regulation, aninvestigation would therefore notbeextended beyond the18months asforeseen in
Article 5.10oftheA-DAgreement.
11. Understanding
Article 8.2oftheAgreement requires theinvestigating authority tomake anaffirmative
preliminary determination before entering intoanundertaking. HowdoesIceland ensure conformity
ofitspractice withtheAgreement?G/ADP/W/312
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Reply
Article 24oftheRegulation foresees apreliminary examination which should establish the
existence ofdumping orasubsidy andacausal linktoinjury before theinitiation ofaformal
investigation. According toArticle 31oftheRegulation, undertakings canbeentered intoduring an
investigation. Therequirement ofanaffirmative preliminary determination istherefore fulfilled since
theundertaking canonlytakeplace afterthepreliminary examination which serves thesame purpose
asanaffirmative preliminary determination.
12. Anti-circumvention
Onwhich Article intheAgreement isIceland ´santi-circumvention provision, Article 39ofthe
Regulation, based?
Reply
ItseemsclearthatthereisnothingintheWTOAgreementsthatexplicitlycontradictsorprohibits
theterms ofArticle 39oftheRegulation. Thiswould therefore seemtobeanopenandpending question
intheWTO. Once asolution isfound Iceland would ofcourse abide byit.