RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/Q1/ECU/6
G/SCM/Q1/ECU/6
11 November 1998
(98-4456)
Committee on Anti-Dumping Practices
Committee on Subsidies and Countervailing MeasuresOriginal:  English
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS
Questions Posed by the UNITED STATES
Regarding the Notification of ECUADOR1
The following communication, dated 2 November 1998, has been received from the
Permanent Mission of the United States.
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The Ecuadorian Foreign Trade and Investment Law (LEXI), published in Official Journal
No. 82 of 9 June 1997, under the terms of Law No. 12 of 22 May 1997, has entered into force in
Ecuadorian territory and authorizes Ecuador’s Foreign Trade and Investment Council (COMEXI) to
impose anti-dumping duties, countervailing duties and safeguards measures.  While COMEXI
imposes definitive measures, the Trade Practices and Safeguards Division of the Ministry of Foreign
Trade, Industrialization and Fisheries (MICIP) is the investigating authority responsible for initiating
and conducting dumping, subsidies and safeguards investigations.
1. The preamble to the Rules refers to the LEXI  as providing the statutory authority for the
Foreign Trade and Investment Council to impose anti-dumping and countervailing duties.
Has Ecuador notified this law to the A-D and SCM Committees?  If not, does it intend to do
so?
2. Do the Rules have the force of law?  In the event of a conflict between the Rules and the
LEXI or the A-D or SCM Agreements, which prevails?
Anti-dumping Methodology
Normal Value.  Art. 3 of the Rules indicates the normal value of a product exported to
Ecuador is the price actually paid or payable for a like product when sold for consumption or use in
the domestic market of the country of origin or of export in the ordinary course of trade.  The law also
indicates that in the absence of such ordinary course of trade, as in the case of centrally-planned(“non-market” economies), the point of reference shall be the normal value of a market economycountry with characteristics similar to the economy of the non-market economy under investigation.
3. How will the Ecuadorian authorities calculate dumping margins (specifically normal value)
for merchandise exported from non-market economy countries?   Which characteristics will
                                                     
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be examined to determine which market econom y shall be chosen for comparison with the
non-market economy?
Export Price. Art. 7 of the Rules indicates that, where there is no export price, or the export
price is unreliable because of association or a compensatory arrangement between the exporter and
the importer, the export price may be constructed on the basis of the price at which the imported
products are first resold to an independent buyer, or if the products are not resold to an independent
buyer, or not resold in the condition as imported, on such reasonable basis as the authority may
determine.
4. Under which provision will the cost of import duties be deducted from export price (i.e., costs
incurred by the exporter, taxation, etc.)?
5. Why are wages paid to full-time sales personnel deducted from the export price?  ( See
Art. 8(d) of the Rules.)  Are such wages deducted from both the constructed export price and
the export price?
6. There are no apparent distinctions in adjustments made from the export price and the
constructed export price.  Does this reflect the fact that all adjustments will be made from
both?
Determination of Injury.   Under Art. 12 of the Rules, the determination of injury shall be
based on sufficient evidence and involve an objective examination of factors, including (1) the
volume of imports at dumped or subsidized prices, particularly to determine whether there has been a
significant increase; and (2) the impact which imports have on the prices of like products in Ecuador.
With respect to price impact, consideration will be given to whether the imported product is sold inthe domestic market at a price significantly lower than that of like products or whether the effect of
such imports is to depress prices to a significant extent or to prevent a reasonable price rise which
would otherwise have taken place.
7. How does the Rules’ reference to prevention of a “reasonable” price rise compare  to
language contained in Arts. 3.2 of the A- D Agreement and 15.2 of the SCM Agreement,
which describes the standard as being whether the effect of such imports is to “prevent priceincreases . . . to a significant degree?”
Initiation Procedures.  Proceedings may, inter alia , be initiated under Art. 19 of the Rules at
the request of an association of producers which represents a “major proportion” of domestic
production.
8. How is this standard for such an application (i.e., by an association) consistent  with the
standard in Arts. 5.4 of the A-D Agreement and 11.4 of the SCM Agreement that an
application must be made “by or on behalf of” the domestic industry?
Art. 18 of the Rules allows the investigatin g authority to initiate an investigation ex officio
“when there is sufficient evidence to assume that injury has been caused by dumped or subsidized
imports.”  The A-D and SCM Agreements limit ex officio  initiations to “special circumstances” and
require “sufficient evidence of dumping/the existence of a subsidy, injury and a causal link . . . to
justify the initiation of an investigation.”  ( See Art. 5.6 of the Anti-Dumping Agreement and  Art. 11.6
of the SCM Agreement.)
9. Is there a difference between the standard of Art.18 and that of the Agreements?G/ADP/Q1/ECU/6
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Art. 19 of the Rules allows a regional market analysis when the producers in the region sell
“most of their production of the product in question in that market.”  ( See Art 4.1(ii) of the Anti-
Dumping Agreement and Art.16.2 of the SCM Agreement.)
10. Is this standard different from that in the WTO Agreements, which permits a regional analysis
only when the producers in the region sell “all or almost all” of their production within the
region?
Art. 4 of the Rules includes a consultation provision for anti-dumping and countervailing duty
proceedings.
11. In countervailing duty proceedings, must an invitation for such consultations be extended as
soon as possible after an application has been accepted in accordance with Art. 13 of the SCM
Agreement?
12. Are these consultations required in every dumping or countervailing duty investigation?  Is
there any limit on the scope of these consultations?  Does a “mutually agreed solution”
include price undertakings?
Provisional Measures.  Art. 29 of the Rules states that, within 60 days of initiation, MICIP,
through the investigating authority, shall prepare a technical report determining, where appropriate,
the level of any provisional anti-dumping or countervailing measures and shall submit it to COMEXI
for approval.  Provisional measures may be applied if there has been proper initiation, a preliminary
affirmative injury and dumping or subsidies determination, and such measures are necessary to
prevent injury being caused during the investigation.
13. Does this provision allow for the possibi lity that COMEXI could impose  provisional
measures prior to the 60th day after initiation?  If so, how is this consistent with Art. 7.3 of
the A-D Agreement and Art. 17.3 of the SCM Agreement?
14. Will a technical report be issued by the MICIP in every case where provisional measures are
applied?
Investigation Period and Evidentiary Aspects.  Art. 30 of the Rules indicates the Ecuadorian
authority has a maximum of twelve months from the submission of the application to carry out its
investigation and submit a report containing its conclusions and recommendations to COMEXI.  The
article indicates the time period can be extended by six months in exceptional cases.
15. What would constitute such an  “exceptional” case?
16. Is COMEXI subject to time constraints in its consideration of the report?
Access to Information.  Art. 31 of the Rules indicates that any interested party or anyone who
establishes an interest in the investigation shall have access to the public documents making up the
file.  However, it will not be until sixty days after the investigation that the non-confidential file shall
become public.
17.  Does the sixty day delay in disclosing the file to the public cover reports (if relevant)
containing information and explanations which are required to be made  readily available to
the public under Art. 12.1.1, footnote 23 of the A-D Agreement?G/ADP/Q1/ECU/6
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Disclosure and Hearings.  Art. 34 of the Rules indicates disclosure meetings may be requested
within five days of the day following publication of the preliminary and final resolutions in the
Official Journal.  Art. 35 indicates that public hearings may be requested at any point during the
investigation for the purpose of clarifying doubtful, obscure or controversial points.  Hearings shall
not interrupt or suspend the course of the investigat ion.  The investigating authority shall state at the
opening of the hearing those items considered necessary.
18. May interested parties argue or discuss issues which the investigating authority has not
introduced at the start of the meeting?
Price Undertakings.  Art. 39 of the Rules relating to price undertakings indicates that the
investigating authority may propose to interested partie s that they submit statements of intent to enter
into such undertakings.
19.  Are exporters to submit, periodically, any information relevant to the fulfilment of the
undertaking?
Conclusion of the Investigation and Imposition of Definitive Duties.  Art. 43 of the Rules
indicates that parties may submit written arguments up to ten working days prior to expiration of the
investigation period.  Nothing may be submitted once this period has expired.  Under Art. 44, once the
period for concluding arguments has expired and prior to the end of the investigation period, theinvestigating authority shall draw up conclusions of the investigation and submit them to COMEXI
for a decision. COMEXI’s decision shall consist of either imposing anti-dumping or countervailing
duty measures and the determination of their am ount, withdrawal of prov isional measures, and/or
termination of the investigation without imposin g A-D or CVD measures.  COMEXI has 15 working
days from the receipt of the report to adopt a defin itive decision.  Art. 45 requires that a resolution
containing the factual and legal basis of the decision be published in the Official Journal and notified
to interested parties within five working days of publication.
20. Why is there a five day delay in notifying interested parties of the final determination?
Art. 43 of the Rules allows parties to submit written arguments up to ten working days before
the scheduled termination of an investigation, and does not authorize the submission of any furthercomments.  Therefore, the parties would have no chance to comment on information submitted on the
tenth day before termination.
21. How is this consistent with the requirement that parties have an opportunity to see “all
information that is relevant to the presentation of their cases . . . and to prepare presentationson the basis of this information?” ( See Art. 6.4 of the Anti-Dumping Agreement and Art. 12.3
of the SCM Agreement.)
Definitive duties.  Art. 46 of the Rules states that duties shall be assessed in monetary units or
ad valorem  percentages.  Art. 47 provides for the retroactive application of duties in accordance with
Art. 10.6 of the A-D Agreement.  Art. 48 indicates that duties shall be terminated automatically five
years after their imposition, unless the reasons for their imposition still exist.
22. Does the Ecuadorian authority have experience conducting reviews pursuant to Art(s). 48
and/or Art. 49?  If so, can Ecuador describe how its authority determines whether the expiryof the duty would be likely to lead to contin uation or recurrence of dumping and/or injury.
23. As the rules do not provide for the conduct of new shipper reviews required by Art. 9.5 of the
Anti-Dumping Agreement, will Ecuador simply follow the provisions of Art. 9.5?G/ADP/Q1/ECU/6
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Anti-circumvention.  Parts or components of a product like that on which definitive duties are
imposed, intended for assembly or finishing operations in Ecuador, may be subjected to the payment
of provisional or definitive duties.
24. What standards or factors are considered by the Ecuadorian authorities in determining
whether duties will be imposed on such parts or components?
Injury
Art. 3 of the Rules includes “the deprivation of any lawful, normal gain” within the definition
of injury.
25. Is there a law, regulation, or other authority that defines a lawful or normal level for market
share or other measurement of financial or pr oduction performance for domestic industries?
26. If so, how is this consistent with the requirement that determinations of injury be based on
“positive evidence” and an “objective examination” of the effect of imported merchandise on
the domestic market?  ( See Art. 3.1 of the A-D Agreement and Art. 15.1 of the SCM
Agreement.)
27.  How does the “deprivation of any lawful, normal gain” relate to the factors listed in Art. 3.4
of the A-D Agreement and Art. 15.4 of the SCM Agreement?
28. Does the inclusion of  “the deprivation of any lawful, normal gain” within the definition of
injury mean that the deprivation of a non-material, but otherwise “lawful,” gain wouldconstitute injury sufficient to impose anti-dumping or countervailing duties under Ecuadorian
law?  If so, how would this interpretation be consistent with the Agreements’ requirement that
injury be “material”?  ( See Art. 3, note 9, of the A-D Agreement and Art. 15, note 45 of the
SCM Agreement.)
Art. 12 of the Rules does not require consideration of the magnitude of the margin of
dumping, as required by Art. 3.4 of the A-D Agreement.
29. Do Ecuadorian authorities consider the magnitude of the dumping margin in determining
injury?
Art.12 of the Rules requires that the determination of injury be based on “sufficient
evidence.”
30. Is this standard different from the requirement in Arts. 3.1 of the A-D Agreement and 15.1 of
the SCM Agreement that the determination be based on “positive evidence?”
Art. 12 of the Rules also states that the investigating authority shall consider whether imports
“prevent a reasonable  price rise which otherwise would have taken place.”
31. How is this consistent with the Agreements’ requirement to consider whether the imports
under investigation “prevent price increases, which otherwise would have occurred, to a
significant degree ?”  (See Art. 3.2 of the Anti-Dumping Agreement and Art. 15.2 of the SCM
Agreement.)G/ADP/Q1/ECU/6
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Arts. 12-16 of the Rules do not appear to require the finding of a causal link between
dumping or subsidization and the injury observed in  the domestic industry as a prerequisite for the
imposition of provisional or definitive relief.  Item 18 of Art. 20 requires the applicant to present
evidence that dumping or subsidization caused injury, but there is no further requirement that theinvestigating authority evaluate that evidence or issue a finding as to its validity.
32. How do Ecuadorian authorities plan to implement the requirement that a causal link be
established consistent with the requirements of the A-D and SCM Agreements?
Art. 15 of the Rules states that the review of injury or threat of injury shall cover the most
recent 12-month period before the investigation for which information is available.
33. Is this inconsistent with the requirement in Art. 20 of the Rules that the application for relief
contain data on the four years preceding the date of filing?
The Rules do not authorize cumulative assessment of imports that are simultaneously subject
to investigation.  ( See Art. 3.3 of the Anti-Dumping Agreement and Art. 15.3 of the SCM
Agreement.)
34. Does this mean that the investigating authority will not cumulate imports of the same
merchandise from multiple countries?
Additional Clarifications
Certain omissions from the Rules appear as described below.
35. Do these omissions signify an intent to adopt rules different from those in the relevant
Agreements, or is it intended that the Agreements govern in all situations where the Rules are
silent?
• Art. 33 of the Rules only provides for confidential treatment for information that might, if
released, harm the competitive position of an enterprise.  It does not grant confidential
status when the release of information migh t have a significant adverse impact on the
person who supplied the information or when the submitter provides the information on a
confidential basis.  ( See Art. 6.5 of the Anti-Dumping Agreement, Art. 12.4 of the SCM
Agreement.)
• Art. 12 of the Rules does not require an “evaluation of all relevant economic factors and
indices,” or caution that “no one factor can give decisive guidance.”  ( See Art. 3.4 of the
Anti-Dumping Agreement, Art. 15.4 of the SCM Agreement.)
• Art. 13 of the Rules apparently does not authorize the consideration of excess capacity or
an increase in capacity in evaluating the threat of injury posed by dumped merchandise.
(See Art. 13 of the Anti-Dumping Agreement.)
• Art. 33 of the Rules does not require that the public summary of confidential information
“be in sufficient detail to permit a reasonable understanding of the substance of the
information submitted in confidence.”  ( See Art. 6.5.1 of the Anti-Dumping Agreement,
Art. 12.4.1 of the SCM Agreement.)G/ADP/Q1/ECU/6
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• Art. 35 of the Rules regulates hearings, but does not assure parties that they need not
attend, and that non-attendance will not prejudice their case.  ( See Art. 6.2 of the Anti-
Dumping Agreement.)
• Art. 36 of the Rules does not require notificati on or consent of the host government prior
to an on-the-spot investigation.  ( See Art. 6.7 of the Anti-Dumping Agreement, Art. 12.6
of the SCM Agreement.)
• Art. 39 of the Rules regulates mutually agreed solutions, but does not (1) require that
price increases under an undertaking be no higher than the dumping margin, (2) allowcontinuation of the investigation at the exporter’s request, or (3) protect exporters from
being forced to enter into an undertaking.  ( See Arts. 8.4 and 8.5 of the Anti-Dumping
Agreement; Arts. 18.4 and 18.5 of the SCM Agreement.)
• Although the Rules adopt the Agreements’ rules on regional injury analysis, they do not
require the investigating authority to take th e step prescribed in the Agreements to limit
the imposition of dumping duties, where possible, to merchandise consigned for final
consumption in the region covered by the investigation.  ( See Art. 4.3 of the A-D
Agreement, Art. 16.3 of the SCM Agreement.)
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