RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/AHG/W/97
2 October 2000
(00-4002)
Committee on Anti-Dumping Practices
Ad Hoc Group on ImplementationOriginal:  English
PRACTICAL ISSUES AND EXPERIENCE IN
APPLYING ARTICLE 2.4.2
Communication from Australia
The following communication, dated 2 October 2000, has been received from the Permanent
Mission of Australia.
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Australia initially proposed this item for discussion because it believed that delegations would
find it useful to know how other anti-dumping administrations apply Article 2.4.2.  Following the
discussion to date, Australia considers that a draft recommendation on best practice should be able tobe agreed.
Australia's earlier paper (G/ADP/AHG/W/71) outlined the various ways in which margins are
established, and this has led to some interesting observations and additional questions from
delegations.  This paper provides a response (though not necessarily an answer) to many of those
questions.  In particular we shall discuss some of the circumstances in which the transaction to
transaction or weighted average to weighted average methods should be preferred.
ISSUES OF FAIRNESS AND OBJECTIVITY IN USING THE TRANSACTION TO
TRANSACTION METHOD
Since the transaction to transaction method requires that a single domestic transaction price be
compared to a single export transaction price, it imposes a considerable administrative burden where
there are many export transactions. In order to minimize the administrative burden a sample of sales
may be used.  For example, the sample may use export sales on particular days of each month, to be
matched with a sample of domestic sales.  Herein lies a major criticism of this method.  Investigators
must make an essentially subjective decision as to which individual transactions (which often occur atdifferent times) to select for comparison.
Selection is nearly always necessary, even where all export sales can be used, since the
domestic sales listing is usually more extensive.
Domestic sales may be selected on the basis that they occurred on the same date as, or on a
date nearest to, the date of export sale. However,
• such domestic sales would usually show a range of prices; and
• where there are no domestic sales on the same date as the export sale, the domestic sales that
approximate the date of export sale may also show a range of prices.G/ADP/AHG/W/97
Page 2
In both cases the question arises as to how should the single domestic sale be selected for
comparison to the export price in order to permit the transaction to transaction comparison?  Some
may produce a higher margin. Some may produce a lower margin.
To ease the administrative burden, rather than selecting from the total population of domestic
sales of like products, selection may be limited to the sales to a particular customer. In this case
subjectivity is introduced as to customer selection.
The selection process may assume that a customer with a similar sales volume to the export
sales volume is to be preferred.  However, volume may not determine price.  Moreover, the question
arises about which customer to select when none has a similar sales volume and there is no directprice/volume relationship.
If the selection process is to choose a sale at a price nearest to an average of domestic sales
prices the question arises about how the average was determined.  The domestic sale selection may be
made from a listing of all domestic sales transactions or from a limited listing using, for example,selected date of sale or customer.  The latter would typically be expected to be associated with the
transaction to transaction method where many domestic sales are known to exist.
Where the limited sales listing approach results in a request for only limited data from
exporters, this would appear to preclude proper application of the ordinary course of trade tests asthey are set out in the Agreement.  (This is because the substantial quantities, and the recovery tests,
of Article 2.2.1 suggest the population at large is examined in order to determine whether all, or only
some, of the sales meet the ordinary course of trade requirements.)  It follows that an average of all
domestic sales, in the ordinary course of trade, ma y result in a different selection compared to the
selection based upon the average of the limited sales listing.
The decisions concerning dates of selected sales or selected customers may disadvantage
exporters.  Australia agrees with other delegations that have indicated a similar concern.  Moreover,
an exporter wishing to know whether it is unwittingly dumping (and thereby avoid the risk of a
finding of dumping) would be unable to predict which sale, or customer, might be selected. By
contrast, an exporter would be able to more readily determine a dumping margin using weighted
averages.
There could be certain circumstances where the transaction to transaction method enables a
more just result to be obtained. This will principally be the case where:
• the normal value can be expected to vary significantly from shipment to shipment;
• there is a very small number of  transactions of the goods; or
• where the goods vary according to order (for example capital equipment like power
transformers, where there are significant technical variations between each sale).
Issues for further discussion
• Issues where further discussion would be useful include:
• the rationale for selecting customers because of similar sales volume to the export sales
volume; andG/ADP/AHG/W/97
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• the basis for the implicit assumption that the sa les to selected customer or customers are at
prices near to the average for all sales.
DETERMINATION OF DE MINIMIS  DUMPING MARGINS UNDER THE TRANSACTION TO
TRANSACTION METHOD
One of the questions posed by Australia in G/ADP/AHG/W/71 concerned the 2 per cent
de minimis  threshold of Article 5.8.
The transaction to transaction method produces a series of dumping margins because each
individual export transaction being compared to an individual normal value.  Some margins may be
positive and some may be negative.
Article 5.8 does not clearly prescribe how the series of margins should be treated when
considering the 2 per cent threshold requirement.
For a finding that the margin of dumping is de minimis , Australia considers that a single
margin of dumping should be calculated on the basis of the export transactions used for thetransaction to transaction method.  This single weighted average margin over the period would be
used to determine whether the margin is above or below the 2 per cent threshold.  It should not be
necessary for every individual margin to be less than 2 per cent.
Table 1
Transaction Export
quantity
units
1Transaction normal
value
2Transaction export
price
3Total
Normal
 Value
1*2
4Total
Export
 price
1*3
5Margin
5-4
6Margin
%
6/5
7Weighted
average by
export volume
of margins in 7
8
1 10 10 11 100 110 -10 - 9.09
2 20 10 12 200 240 -40 - 16.673 10 10 9 100 90 10 11.114 20 10 8 200 160 40 25.00
Total 600 600 0 0 3.11
This is analogous to the situation where margins of differing magnitude, by model/type, have
been determined using the weighted average method.  Some models could have margins above 2 per
cent, while other models have negative margins.  To decide whether the margin of dumping of the
product is de minimis  requires the determination of a single weight average margin based on the
margins for each model.  Again the export sales quantity should be used for this purpose.
Table 2
Type Export
volume
(units)
1Unit
weighted
average
normal
value
2Unit
weighted
average
export
price
3Unit margin
(2-3)
4Total
Margin
(1*4)
5Total
export
price
(1*3)
6%
margin
(5/6)
7
A 30 9 9.5 -0.5 -15 285 -5.26
B 70 11 10.5 0.5 35 735 4.76
100 20 1020 1.96G/ADP/AHG/W/97
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It is not Australia’s intent to focus upon the practice of “zeroing” negative margins – the
above examples allow negative margins to offset positive margins for illustration purposes only.  If
zeroing is applied, the question remains as to how Members determine whether the margin for the
product is de minimis  where there are many types or models.  Also if there is a range of margins for a
model or type, and some of those margins are positive and some negative, are measures applied toeach model/type, or to the product?  If to the product, how is the measure determined?
Issues for further discussion
One issue where further discussion would be useful is how to determine whether the margin
of dumping is de minimis  where:
• a series of dumping margins for a product has been determined by the transaction to
transaction method; or
• a series of dumping margins for different models/types has been determined over the
investigation period by the weighted average method for each models/types.
In these situations do Members have regard to the export volumes or values for weighting?
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