WORLD TRADE
ORGANIZATIONTN/RL/W/22
15 October 2002
(02-5569)
Negotiating Group on Rules Original:  English
COMMENTS ON DOCUMENT TN/RL/W/6 ON
ANTI-DUMPING MEASURES
Paper from Australia
The following communication, dated 14 October 2002, has been received from the Permanent
Mission of Australia.
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Australia thanks the group of countries for th e two papers submitted (Documents TN/RL/W/6
and TN/RL/W/10).  Australia’s comments and questions on Document TN/RL/W/10 were circulated
as a room document on 8 July 2002 and have been submitted separately for circulation formally.
Following provides some general comments and preliminary reactions to the paper circulated by thegroup of countries contained in document TN/RL/W/6 of 26 April 2002.  These comments and
questions are without prejudice to any position Australia may take following the initial phase of the
negotiations.
1. Sales in the Ordinary Course of Trade
The proponents suggest strengthening Article 2.2.1 of the WTO Agreement on Anti-Dumping
(ADA) to include a definition of “reasonable period of time” and to allow investigating authorities to
disregard sales below cost when prices provide for the recovery of all costs in the period for dumping
investigation.
“A reasonable period of time” is not defined in the ADA.  However, the last sentence in
Article 2.2.1 illuminates the meaning of  “a reasonable period of time” by treating costs as being
recoverable within a reasonable period of time should the criterion set out therein be satisfied.  The
rationale underlying this is probably to give effect to commercial reality that businesses do make
losses from time to time, whether deliberately as a loss leader or merely due to global downturn in
demands.  Costs should however be regarded as recoverable if they can be recouped through salesover a longer period of time which in this case would be the investigation period.
Even though the meaning of “a reasonable period of time” is not defined in the ADA, that
phrase, when read in light of the last sentence, can be taken to mean “period of investigation” as the
test provided in Article 2.2.1 is whether the price of the goods is above the weighted average per unitcosts for the period of investigation.  This allows the exporter to assess the weighted average costs of
the goods for the investigation period for the purpose of determining whether such product is
profitable in the long run.
Based on the foregoing, Australia considers that the term “a reasonable period of time” is
implicitly clear in light of the test set out in Article 2.2.1.  Australia agrees that there would be someTN/RL/W/22
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merit in examining the definition of “reasonable period of time” provided that definition is consistent
with the present understanding of the phrase as set out in Article 2.2.1.
2. Constructed Value
Document TN/RL/W/6 proposes that Article 2.2.2 of the ADA be elaborated to provide clear,
comprehensive and representative criteria for calculating a constructed normal value.
• Do the proponents consider that Article 2.2.2 should provide a hierarchy of options?
Article 2.2.2 gives authorities discretion in calculating the selling, general and administrative
costs and profit where actual data, pertaining to ordinary course of trade sales of like goods by the
producer/exporter, is not available.  Currently the discretion is limited to three non-hierarchicaloptions.
Australia considers that while it may be possible to negotiate a hierarchy for the existing
options, it is difficult to envisage useful criteria for the basis of the hierarchy.  As pointed out in the
EC- Bed Linen  case “[g]iven … that each of the three options is in some sense ‘imperfect’ in
comparison with the chapeau methodology, there is, in our opinion, no meaningful way to judge
which option is less imperfect – or of greater authority - than another …”, ( EC-Bed Linen
WT/DS141/R, para 6.61).
The example provided in Document TN/RL/W/6 does illustrate the discretion available in
article 2.2.2 but Australia considers that this is desirable, given the myriad of circumstances
investigating authorities are faced with and the inherently imperfect nature of constructing a normal
value.
3. Cyclical Markets
The proponents suggest that Article 2.4 does not provide for the performance of cyclical
markets, especially in the cases of perishable goods, to be taken into consideration when comparing
normal value with export price.
• Can the current provisions be made to “fit” cyclical market situations?
4. Prohibition of Zeroing
The proponents suggest that Article 2.4.2 should be clarified to explicitly rule out zeroing.
Article 2.4.2 sets out the different methodologies for establishing dumping margin of the product
during the investigation period.  The methodologies set out therein are as follows:
• A comparison of a weighted average normal value with a weighted average of prices of all
comparable export transactions; or
• A comparison of normal value and export prices on a transaction-to-transaction basis; or
• A comparison of a normal value established on a weighted average basis to prices of
individual export transactions if certain conditions are satisfied.
The methodologies set out in Article 2.4.2 do not allow negative margins to be converted into
zero value.  Article 2.4.2 in fact requires comparison to be made between weighted average normalvalue with a weighted average of all comparable export prices or on a transaction-to-transaction basis
which impliedly requires all transactions to be captured in the comparison exercise.  By artificially
inflating negative margins to zero value, the inves tigation authorities are in fact ignoring the negativeTN/RL/W/22
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margins by neutralising them into zero value.  Th is seems to be at odds with the requirements of
Article 2.4.2 which never allow this form of manipulation by the investigating authorities.
As the words used in Article 2.4.2 do not impliedly or expressly admit a construction which
permits “zeroing” of negative margins, Australia considers that Article 2.4.2 does not require anyclarification to expressly rule out zeroing.
5. Cumulative Assessment of Injury
The proponents propose strengthening Article 3.3 to include the factors that should be taken
into account when assessing the conditions of competition between the imported goods and the
conditions of competition between the imported goods and the like domestic goods.
The question of developing criteria is currently being considered by the Working Group on
Implementation.  Australia considers that there would be merit in examining this issue in the light of
the Working Group’s consideration of proposed criteria.
6. Causal Relationship between Dumping and Injury
The proponents suggest that the provisions of Article 3.5 merit further elaboration by
developing procedures and criteria to analyse the causal relationship.
Australia does not consider that there is a lack of clarity in Article 3.5.  Article 3.5 requires
that adequate regard be given to other factors.
The question of causal link has been the subject of several recent WTO dispute settlement
cases relating to anti dumping and safeguards measures.  The Thailand Steel  case emphasised that
although Article 3.5 requires that regard must be given by authorities to known factors other than
dumped imports which are causing injury, this did not mean that there was an express requirement for
an authority to examine these factors on their own initiative.  However, they could choose to do so.
7. Threat of Material Injury
The proponents suggest that Article 3.7 should be strengthened to clearly define the factors to
be considered when assessing threat of injury.
• What further factors should be considered?
• Could the factors that lead to a determination that threat exists be more clearly set out in
Article 3.7?
8. Threshold under Article 5.8
The proponents suggest an increase of the de minimis  margin of dumping and negligible
volume of dumped imports to unspecified levels and the role of de minimis  in the duty collection
process.
• Do the proponents consider that the de minimis  and negligible volume levels should be
increased for both developed and developing countries?
• How do the proponents relate this to cumulatively assessing injury?
• Could the proponents explain when (that is, in what circumstances) would de minimis  play a
role in the duty collection?TN/RL/W/22
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9. Facts Available
The proponents raise the issue of more stringent rules to provide more clarity to discipline the
excessive use of “facts available”.
Australia considers that there may be merit in examining criteria that could be used to
determine whether or not to grant an extension of time for information.  The Working Group on
Implementation has adopted a recommendation on the elements that are relevant in determining
whether or not to grant an extension.  This recommendation could also form the basis for setting out
criteria in the ADA for granting an extension of time.
Australia notes the relevance of the Appellate Body (AB) findings in the US – Hot Rolled
Steel case.  The AB found that there was no failure by the exporter to cooperate and get information
from an associated company and that the degree of cooperation was not an absolute standard and
unreasonable burdens could not be imposed on exporters.
Reliance was placed on the wording of Article 6.8 that regard should be given to supply
information in a “reasonable period” which was determined by having regard to (WT/DS184/AB/R,
para 85)
(i) the nature and quality of the information submitted
(ii) the difficulties encountered by an invest igating exporter obtaining the information
(iii) the verifiability of the information and ease with which it can be used
(iv) whether other interested parties would be prejudiced if the information is used
(v) whether the acceptance of the information would compromise the ability of the
investigating authorities to conduct the investigation expeditiously and
(vi) the number of days by which the investigated exporter missed the applicable time limit.
10. Lesser Duty Rule
Australia considers that this is an issue which merits examination.
• Do the proponents consider that the lesser duty rule, in some circumstances, should be a
mandatory consideration or should be mandatory in application?
• The illustrative example also raises issues of the calculation of the lesser duty.  Is this issue of
concern to the proponents?
11. Sunset of Anti-Dumping Orders
The proponents suggest that the exception rule in Article 11.3 is over-applied and invariably
leads to a continuation of measures.
In the illustrative example provided, the exporter no longer exports to country A, but is still
subject to anti-dumping action after the measures have been continued (following a sunset review).
• Do the proponents consider that measures should expire after the 5 year period, without the
“likelihood” question being put?TN/RL/W/22
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12. Public Interest
The proponents suggest the ADA be strengthened to ensure that relevant information
pertaining to public interest be taken into account in a more substantive manner.
The ADA contains no provisions dealing with public interest.  Australia does not consider
that a public interest test should be included in the Negotiating Group on Rules consideration of issues
as it is ultimately a matter for each country to determine under its own law.
The discussion in the Working Group on Implementation on the question of public interest
has highlighted various approaches to consideration of the question of public interest.  One view is to
approach the question of public interest in the co ntext of the application of the lesser duty rule.
However, this does not address the question of whether measures should not be imposed at all.  For
example, regard can be given to whether the industry will benefit from the imposition of measures or
if the negative effect of the imposition of measures on interested parties would be disproportionate
when compared to its positive effect.
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