. /.  WORLD TRADE  
ORGANIZATION  TN/RL/GEN/1 
14 July 2004 
 
 (04-3016) 
Negotiating Group on Rules Original:   English 
 
  
LESSER DUTY RULE
1 
 
Communication from Brazil;  Chile;  Colombia ; Costa Rica;  Hong Kong, China;  Israel ;   
Japan;  Korea, Republic of;  Mexico;  Norway;  Singapore;  Switzerland;  Separate  
Customs Territory of Taiwan, Penghu, Kinmen and Matsu;  Thailand and Turkey  
 
 The following communication, dated 7 April 2004 , is being circulated at the request of the 
Delegations of Brazil;  Chile;  Colombia;  Costa Rica;   Hong Kong, China;  Israel;  Japan;  Korea, 
Republic of;  Mexico;  Norway;  Singapore;  Switzerland;  Separa te Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu;  Thailand and Turkey.   The submitting delegations have requested that  this paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(04)/40 and Rev.1*), also be circulated as a formal 
document. 
 
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Basic Principle: 
 
• Anti-dumping measures are intended to be us ed for the limited purpose of protecting the 
domestic industry from the injurious effects of dumping . 
• There must be a mechanism that ensures that the amount of the anti-dumping duty does not 
exceed the amount necessary to offset the injurious effect by dumped imports . 
  
Problem of the current AD Agreement: 
 
• Current Article 9.1 provides ONLY a simple non- mandatory statement of this principle without 
any guidelines on how to establish the level of lesser duty. 
 
 
Amendment: 
 
1. Improve the AD Agreement by ensuring that anti-dumping duties are not imposed in excess 
of what is required to remove the injury caused by dumping: 
 
• Amend Articles 9.1, 9.3 and 9.4 to provide for the mandatory application of the lesser duty rule. 
 
                                                     
 
1This issue has been referred to by Members in documents TN/RL/W/4, 6, 7, 13, 22, 25, 26, 28, 29, 34, 
45, 47, 54, 55, 56, 62, 65, 66, 73, 74, 79, 86, 94, 99, 101, 103, 106,  110, 118, 119, 121, and 134. 
*In English only. TN/RL/GEN/1 
Page 2  
 
 2. In order to properly implement a mandato ry lesser duty rule, specify the methods for 
determining the duty level which will be adequate to  remove the injury caused by dumping (referred 
to in this paper as “lesser duty level”).  
 
• Add a new sub-article after the cu rrent Article 9.1 to e xplain that :  (i) the calculation of the 
lesser duty level must be based on a methodolog y which will be provided in Annex III; and 
(ii) the lesser duty level shall only apply if it is lower than the margin of dumping; and 
 
• Add a new Annex III which provides that the lesser duty level shall be ca lculated in accordance 
with the following methods and that the calculation of the lesser duty level shall take full account 
of the obligation set out in Article  3.5 to separate the injurious effects of other factors than the 
dumped imports, so as not to attribute these effects to the lesser duty level: 
 
(a)   Price Undercutting Method
:  the lesser duty level is calcul ated as the difference between the 
price, normally at the ex-factory level, of the domestic like product and the CIF landed price 
of the dumped imports; with appropriate adjustment based on differences affecting the price 
comparability between the domestic like product and the imported product including market characteristics affecting customers’ purchase decision between them in the market of the 
importing Member; 
 
 (b) Representative Cost Plus Profit Method
:  the lesser duty level is calculated as the difference 
between the representative per unit cost of production, selling, general and administrative 
costs (“SG&A”), and profit of the domestic like product; and the CIF landed price of the 
dumped imports; with appropriate adjustme nt based on differences affecting the price 
comparability between the domestic like produc t and the imported product including market 
characteristics affecting custom ers’ purchase decision between them in the market of the 
importing Member;  
  (c) Non-dumped Import Price Method
:  the lesser duty level is calculated as the difference 
between the CIF landed price of the non-dumped imports of the like products and the CIF 
landed price of the dumped imports. 
 
• Ensure in Annex III that Ar ticle 2.4, including the pr ohibition of zeroing, applies mutatis 
mutandis  to the calculation of the lesser duty level.  
 
 
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