RESTRICTED
WORLD TRADE G/ADP/IG/W/6
22April 1998
ORGANIZATION(98-1611)
Original: English Committee onAnti-Dumping Practices
Informal Group onAnti-Circumvention
TOPIC 1-TOWARD ACOMMON UNDERSTANDING
ONWHAT CONSTITUTES CIRCUMVENTION?
Paper bytheEuropean Community
Thefollowing communication, dated 20April 1998, hasbeenreceived from thePermanent
Delegation oftheEuropean Commission.
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1. Introduction
Anti-dumpingdutiesaredesignedtoremedyinjurycausedtoadomesticindustryinoneimporting
country bythedumping oflikegoods from oneorseveral individually named exporting countries.
Circumvention ofanti-dumping duties mayoccur where, inreaction totheexistence ofananti-dumping
proceeding, duties areeither evaded orarenotpaid,infullorinpart,inamanner which undermines
thepurpose andeffectiveness ofremedies provided forbytheWTO Anti-Dumping Agreement.
2. Actions resulting innon-payment ofduties
Investigating authorities maybeconfronted withvarious types ofreactions which result inthe
non-payment ofduties. These reactions canbedivided intotwobroad groups:
(a) Simple forms ofcircumvention
Thefirstbroad category covers anumber ofreactions which arearguably already recognized
asconstituting forms ofcircumvention. Thisrecognition isreflected inthefactthatmostWTO Members
haveconsequently established legalprovisions todealwithtransshipment andother practices, which
leadtonon-payment oftheapplicable import duties. Familiar examples ofsuchbehaviour include
shipping viathirdcountries, andincorrect customs declarations concerning origin, tariffclassification
orthevalue ofgoods.
Theexistence ofnational rulesintheseareasindicates adegree ofconsensus thatsuchbehaviour
isundesirable. Weshould identify thevarious methods already usedbycountries totackle suchforms
ofsimple circumvention, andexamine towhatextent theyaresimilar.
(b) Other forms ofcircumvention
There isawiderange ofother kinds ofbehaviour, which leadtonon-payment ofanti-dumping
duties. These could varyfromtheexport ofslightly modified products, through theexport ofseparate
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parts ofasubject good forsimple (re)assembly inother exporting countries orwithin theimporting
market, toasubstantial andcomplete relocation ofmanufacturing facilities toanother country. While
thefirstreaction should clearly belabelled ascircumvention, thelatter represents thekindofforeign
direct investment which fewwould wishtoseecondemned. While anyattempt todefine thedividing
linebetween whatisandisnotdesirable isbound tobecontentious, thetransparency andpredictability
created byagreed rules willfacilitate decision-making forbothexporting anddomestic production
interests alike. Furthermore, inaccordance withtheministerial instruction issued atMarrakesh, the
elaboration of"uniform rules" inthisproblem areashould becompleted "assoonaspossible".
3. Identifying thedividing line
Theabove outlines thevariety ofreactions toananti-dumping proceeding which result innon-
payment ofduties. Inorder toreach acommon understanding ofhowtoclassify areaction aseither
legitimate orundesirable, itisnecessary todevise criteria fortheidentification ofthose types of
circumvention against which corrective action isjustified. Thefollowing suggestions ofcriteria for
assessment areintended asthebasis fordiscussion:
(i) thetiming ofthepractice identified -thecoincidence intimewiththeanti-dumping
caseconcerned must betreated asanoverall indicator ofwhether thereaction can
reasonably belinked tothenon-payment ofduties;
(ii) theextent ofnewinvestment -fordelocalized facilities, thenature anddepth of
investment, theeffort involved inthemanufacturing orassembly operation, levelof
financial commitment, sourcing ofcomponents andinputs;
(iii) theincidence ofother practices ,including minor product modifications, forwhich
thereisnoapparent justification otherthantheexistence ofananti-dumping proceeding,
andwhich undermine theeffectiveness ofthedutyconcerned.
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