RESTRICTED
WORLD TRADE G/ADP/W/57
G/SCM/W/66
22September 1995
ORGANIZATION(95-2744)
Original: Spanish Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
REPLIES FROM VENEZUELA CONCERNING QUESTIONS POSED
BYAUSTRALIA1CONCERNING THE NOTIFICATION OF
VENEZUELAN LAWS AND REGULATIONS2
Thefollowingcommunication,dated18July1995,hasbeenreceivedfromthePermanentMission
ofVenezuela.
_______________
1. Theordinary course oftrade
What isthepurpose andjustification ofparagraph 2ofArticle 8oftheRegulations?
Article 8ofVenezuela 'sAnti-Dumping Regulations setsouttherequirements fortransactions
inthemarket ofexport (oroforigin, where appropriate) iftheyaretocome under thecategory of
"ordinary course oftrade" (andtobeusedtodetermine normal value).
TheWTO Anti-Dumping Agreement usesasimilar criterion inArticle 2.1,which states that
forthedomestic pricetoberelevant asanormal value itmusthavebeenapplied inthe"ordinary course
oftrade".
Article 8ofVenezuela 'sAnti-Dumping Regulations setsforththerequirements fortransactions
tobedeemed compatible withthe"ordinary course oftrade". Thethreeconditions areintheparagraphs
oftheArticle.
(a) Thefirstrequirement iscategorical: thebuyer mustnotbeassociated withtheseller.
(b) Thesecond condition isthatthevolumes ofsalesonthemarket ofthecountry ofexport
(oroforigin) should correspond tothevolumes ofsalesofthegoodallegedly dumped.
(c) Thethirdcondition isclosely linked tothatabove anditisthattheexporter sellsat
least20percentofthetotalvolume ofglobal sales (including those toVenezuela)
inhisowncountry.
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Itisdifficult todistinguish between thepurpose andjustification ofparagraph 2ofArticle 8
oftheRegulations andthose ofparagraph 3.Wewould beunable tosayexactly what purpose the
legislature hadinmind when drawing upthisprovision. Inanycase, inamending theRegulations,
itwould bepossible tomaintain that,when thecondition inparagraph 3ismet(when theexporter
sellsatleast20percentofthetotalvolume ofglobal sales inhisowncountry), thecondition in
paragraph 2(i.e.thevolumes ofsalesonthemarket ofthecountry ofexport oroforigin correspond
tothevolumes ofsalesofthegood allegedly dumped) canalsoberegarded asfulfilled.
2. Theordinary course oftrade
How canthefigure of20percentinparagraph 3ofArticle 8oftheRegulations be
reconciled withthe5percentfigure infootnote 2toArticle 2.2oftheAnti-Dumping Agreement?
Thecondition inparagraph 3ofArticle 8oftheRegulations doesnotnecessarily contradict
footnote 2oftheWTO Anti-Dumping Agreement (despite thefacttheformer speaks of20percent
ofsalesandthelatter 5percent). TheRegulations, referto20percentofthetotalvolume of"global
sales, including those toVenezuela", while theAgreement speaks of5percentofsales"totheimporting
Member", which isadifferent criterion. TheCommission would thusbeabletoconsider thatsome
saleshavebeeneffected inthecontext of"theordinary course oftrade", evenwhen theyaccount for
lessthan5percentofsalestoVenezuela.
Inthefuture amendment ofVenezuela 'sAnti-Dumping Regulations, thetwoparagraphs could
bemerged intoonesingle requirement. The20percentrequirement intheRegulations could also
bedeleted andsetatthe5percentstipulated intheAnti-Dumping Agreement.
3. Non-actionable subsidies
How willVenezuela make provision forsubsidies thatarenon-actionable because they
comply withArticle 8.2oftheSubsidies Agreement orAnnex 2oftheAgriculture Agreement?
Even before theendoftheUruguay Round, under Venezuela 'santi-dumping legislation,
non-specific subsidies wereconsidered non-actionable. Thisisnowoneofthepremises ofArticle 8
oftheWTO Subsidies Agreement.
Withregardtothetwospecificassumptionsunderlyingthequestion(theprovisionsofArticle8.2
oftheSubsidies Agreement andAnnex 2oftheAgriculture Agreement), since bothAgreements, the
oneonsubsidies andtheoneonagriculture, form partoftheAnnexes totheMarrakesh Agreement,
botharecovered bytheLawapproving theMarrakesh Agreement adopted bytheCongress ofthe
Republic. Inthisway,theCommission willnotapply countervailing measures against subsidies which,
inaccordance withsuchprovisions, aredeemed non-actionable. TheCommission willactwith
"duerestraint"withregardtotheothersubsidiesprovidedforinArticle13oftheAgricultureAgreement.
InthefutureamendmentoftheAnti-DumpingRegulations,thesituationregardingnon-actionable
subsidies willbeclarified inaccordance withtheinternational commitments entered intobyVenezuela.G/ADP/W/57
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4. Injury
Article 50oftheRegulations would appear toallow theCommission tocome toaconclusion
thatthere ismaterial injury without theconditions ofparagraph 3being met. Ifthisisthecase,
howwillVenezuela ensure thatitsobligations todemonstrate injury duetothedomestic industry
under theAnti-Dumping andSubsidies Agreements areobserved?
Article 50ofVenezuela 'santi-dumping legislation provides thattheCommission onlyhasto
establish thatatleasttwoofthethree conditions havebeenmetforadetermination ofmaterial injury,
namely: thatthevolume ofimports issignificant andincreasing; price undercutting; and,there is
anadverseimpactontheindicatorsofthedomesticindustry.Intheory,beforetheMarrakeshAgreement
wasapproved, theCommission could conclude thattherewasmaterial injury evenwhen theconditions
ofparagraph 3ofthisArticle were notmet,i.e.evenwhen anadverse impact ontheindicators of
thedomestic industry forthelikegoods could notbeperceived.
Now, inaccordance withtheprovisions ofArticle 3oftheAnti-Dumping Agreement and
Article 15oftheSubsidies Agreement, theCommission willhavetodecide whether imports areinjuring
domestic industry asaresult ofdumping andsubsidies. Thespecific elements ofArticle 50ofthe
Regulations arestillrelevant inthisanalysis. However, these factors willbestudied together, and
oneorseveral ofthem willnotnecessarily make foradecisive determination.
Thiscriterion would beincluded inthefuture amendment ofVenezuela 'sAnti-Dumping
Regulations inthefuture.
5. Quantitative undertakings
Does thereference inArticle 58oftheRegulations regarding "areduction inexports of
such goods" envisage aquantitative restriction rather than aprice undertaking? How isthis
consistent withArticle 8.1oftheAnti-Dumping Agreement?
Article 58ofVenezuela 'sAnti-Dumping Regulations would appear torefer topotential
quantitative restrictions asaresult oftheundertakings made between national producers andimporters.
Following theapproval oftheWTO agreements, theundertakings could bedesigned tomodify prices,
abolish orlimittheuseofsubsidies oreliminate thedumped orsubsidized exports inquestion. However,
itisinteresting todecide whether theoption tocompletely terminate exports atdumped prices, as
provided forinArticle 8.1oftheAnti-Dumping Agreement isnotamore extreme solution andmore
restrictive interms oftrade thanthesolution currently contained inArticle 58oftheRegulations (and
disputed byAustralia) toreduce exports ofdumped orsubsidized goods toVenezuela.
Inanycase, inthefuture amendment ofVenezuela 'sAnti-Dumping Regulations, thekinds
ofundertakings could belimited tothose provided forintheWTO Agreement.
6. Conversion ofcurrencies
What provision willbemade under Article 7oftheLaw, orelsewhere, fortheconversion
ofcurrencies when making afaircomparison between theexport price andnormal value, asset
outinArticle 2.4.1 oftheAnti-Dumping Agreement?
Article 7ofVenezuela 'sAnti-Dumping Lawestablishes thegeneral principle thatcomparisons
between normal value andtheexport price should befair. Inthesame spirit, Article 2.4.1 ofthe
WTOAnti-DumpingAgreementcontainsguidelinesforcaseswherethecomparisonrequiresaconversionG/ADP/W/57
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ofcurrencies. With theapproval oftheagreements, theCommission willapply those guidelines to
proceedings.
Inthefuture amendment ofVenezuela 'sAnti-Dumping Regulations, these guidelines for
calculating theconversion ofcurrencies would beincluded.
7. Comparison ofaverage prices withindividual prices
Whatcircumstancesareenvisagedunderparagraph2ofArticle8oftheLawby"materially
affects thefindings"?
DespitetheprovisionsofArticle8ofVenezuela'sAnti-DumpingLaw,theCommission'spractice
hastended tobetocompare weighted averages ofthenormal value withweighted averages ofexport
transaction prices. TheCommission 'spractice willbeguided bythiscriterion withweighted averages
orindividual prices withindividual price (weighted averages), inkeeping withtheprovisions of
Article 2.4.2 oftheWTO Anti-Dumping Agreement, other thaninthecaseoftheexceptions therein
(i.e.when there isapattern ofexport prices which differ significantly among different purchasers,
regions ortimeperiods anditisfound thatsuchdifferences cannot betaken intoaccount appropriately
bytheuseofaweighted average-to-weighted average ortransaction-to-transaction comparison). The
Commission willconsider thattheuseofweighted averages maymaterially affect thefindings ofan
investigation onlywhen itcanseethatthere isapattern ofsignificantly different export prices, in
accordance withthisstandard.
Inthefuture amendment ofVenezuela 'sAnti-Dumping Regulations, thisprice comparison
methodology would beclarified.
8. Requirements forthecumulation ofimports
Howcanthesingle paragraph under Article 12oftheLawbereconciled withArticle 3.3
oftheAnti-Dumping Agreement andArticle 15.3oftheSubsidies Agreement, forcumulation
ofexports?
ThesingleparagraphunderArticle12ofVenezuela'sLawprovidesforthecumulationofimports
fromvarious countries inanalysing injury todomestic industry. Article 3.3oftheWTO Anti-Dumping
Agreement andArticle 15.3oftheSubsidies Agreement contain thenecessary conditions forthe
cumulation ofimports tobereasonable, namely:
(a) Theimports tobecumulated aresimultaneously subject toinvestigation;
(b) Themargin ofdumping orthevolume ofsubsidies ofeachcountry ismore than
deminimis;
(c) Thevolume ofimports foreachcountry issignificant; and
(d) Thecumulative assessment isreasonable inthelightoftheconditions ofcompetition
between theimported products andthelikedomestic product.
With theapproval oftheWTO Agreements, theCommission willestablish thatallthese
conditions aremetbefore itcanproceed tomake acumulative assessment oftheimports fromvarious
countries.G/ADP/W/57
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Inthefuture amendment ofVenezuela 'sAnti-Dumping Regulations, theconditions forthe
cumulation ofimports would beincluded.
9. Self-initiation
Howwillitbeensured thatself-initiation bytheCommission under Article 38oftheLaw
meets thestandards required under Article 5.6oftheAnti-Dumping Agreement andArticle 11.6
oftheSubsidies Agreement?
Despite theprovisions ofArticle 38ofVenezuela 'sAnti-Dumping Law, theCommission 's
practice tends tobetoinitiate investigations onlyonapplication bynational producers ofthelikegood
whofeelthattheyhavebeenaffected bytheactions reported. Todate,therehasbeennoself-initiation.
Inaccordance withtheprovisions ofArticle 5.6oftheWTO Anti-Dumping Agreement and
Article 11.6oftheSubsidies Agreement, iftheCommission should decide toinitiate aninvestigation
inthefuture, itwillonlydosoinspecial circumstances andwhen there issufficient evidence ofthe
alleged unfair practices, injury tonational production andthecausal link.
Inthefuture amendment ofVenezuela 'sAnti-Dumping Regulations, therequirements for
self-initiation would beincluded.
10. Termination ofinvestigations
How willitbeensured thattheCommission willterminate investigations inaccordance
withtheprovisions ondeminimis margins/subsidies andnegligible volumes ofdumping/subsidized
goods?
TheCommission willimmediately terminate theinvestigation atanystage oftheprocedure
onceithasbeenestablished thatthemargin ofdumping ortheamount ofthesubsidy aredeminimis
orthatthevolume ofdumped orsubsidized imports isnegligible, inaccordance withtheterms of
Article 5.8oftheWTO Anti-Dumping Agreement andArticle 11.9oftheSubsidies Agreement. This
isalsofullywithintheCommission'sremit,underArticle33,paragraph1,ofVenezuela'sAnti-Dumping
Law.
InthefutureamendmentofVenezuela'sAnti-DumpingRegulations,theCommission'sobligation
toterminate theinvestigations inaccordance withthese provisions would beincluded.
11. Procedures forimposing provisional measures
Please explain theprocedures forimposing provisional measures. Willthere beaformal
investigation ineach caseandareport (Article 53oftheLaw appears toonlyapply tofinal
determinations)? Aretheobligations under theAnti-Dumping andSubsidies Agreements we
observed, including aminimum period of60days from initiation toallow foranadequate
investigation? What process ofinvestigation would befollowed under thesingle paragraph under
Article 60oftheAnti-Dumping Law?
Article 53ofVenezuela 'sAnti-Dumping Lawrefers specifically tofinalmeasures. However,
inaccordance withtheprovisions ofArticle 7oftheWTO Anti-Dumping Agreement andArticle 17
oftheSubsidies Agreement, theCommission mayonlyapply provisional measures oncetheconditions
inthese rules havebeenobserved, i.e.that:G/ADP/W/57
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(a) Atleast60daysaftertheinitiation oftheinvestigation, public notice isgiven tothat
effect andinterested parties arenotified andgiven opportunities tosubmit allegations
andevidence;
(b) Apreliminary investigation hasbeenheldandarrived atapreliminary determination
oftheexistence ofdumping orsubsidies andofinjury todomestic industry; and
(c) Theimposition ofmeasures isdeemed necessary toprevent causing orcontinuing to
cause injury todomestic industry during theinvestigation.
Once theWTO Agreements wereapproved, automatic countervailing measures weretheonly
course available, asprovided forinthesingle paragraph ofArticle 60oftheAnti-Dumping Lawwith
regard toimported products from non-Members ofWTO.
InthefutureamendmentofVenezuela'sAnti-DumpingRegulations,theimpositionofprovisional
measures could beclarified anditcould beestablished thattheywould apply onlyasindicated.
12. Decision 283
Theprovisions ofDecision 283aredifferent from those intheLawandRegulations. Please
explain what would happen under Decision 283.
Asnotified atthetime, Decision 283oftheCommission oftheCartagena Agreement ispart
ofVenezuelan legislation withregard toanti-dumping orcountervailing measures, insofarasVenezuela
isaMember oftheAndean Pact.
TheCartagena Agreement isanintegration agreement andiscovered bytheexemption provided
forinArticle XXIV ofGATT 1994 forcustoms unions andfree-trade areas. Decision 283applies,
basically,totradebetweenMembercountriesoftheAndeanPact.ExceptionsareincludedinArticle2(c)
and(d)oftheDecision. However, theprovisions targeting imports from thirdcountries would not
begenerally applicable, interaliabecause theprocess ofconsolidating thecustoms union fortheAndean
subregion hasbeenslow, sothatinpractice, onlythose relating tointra-Andean trade, would remain.
Inanycase, theGovernment ofVenezuela isexpediting thenecessary measures inorder to
propose, attheleveloftheAndean Group, arevision ofDecision 283withaviewtobringing itfully
intolinewiththecommitments thatMember countries oftheCartagena Agreement haveentered into
inthecontext oftheWTO Agreements.
Inthemeantime, theGovernment oftheRepublic ofVenezuela isfully willing tohold
consultations withWTO Member countries which mayfeeltheyareaffected bytheapplication of
anti-dumping orcountervailing measures based ontheAndean regulations contained inDecision 283.