WORLD TRADE
ORGANIZATIONTN/RL/W/4
25 April 2002
(02-2386)
Negotiating Group on Rules Original:  English
PROPOSALS ON IMPLEMENTATION RELATED
ISSUES AND CONCERNS
Agreement on Subsidies and Countervailing Measures/
Anti-Dumping Agreement
Submission by India
Paragraph 12 of the Ministerial Declaration of the fourth Ministerial Conference of the WTO
provides for implementation issues being addressed under the specific negotiating mandate providedin paragraph 28 of the Declaration.  The proposals being made by India are not intended to be taken as
exhaustive and India reserves its rights to make any additional proposal, including those in respect of
implementation concerns being examined by the Committee on Anti-Dumping Agreement and the
Committee on Subsidies and Countervailing Measures , as it may consider necessary.
A. A
GREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES (ASCM)
Tirets 66, 70, 71, 75, 76 and 79  of document JOB (01)/152/Rev.1 dated 27 October 2001
The Marrakesh Agreement Establishing the WTO has recognized the need for positive efforts
designed to ensure that developing countries and the least developed countries secure a share in the
growth in international trade commensurate with the needs of their economic development.
Furthermore, the WTO Members have, in provisions of Article 27, recognized that subsidies may playan important role in economic development of developing countries.
There are several disadvantages faced by industries in developing countries as compared to
their counterparts in developed countries.  Many of the export products in developing countries are
produced by labour intensive, small and medium enterprises.  Imposition of countervailing duties oreven the threat of imposition of such duties has a serious adverse impact on the functioning of such
units including fall in production, large unemployment, decline in incomes and increase in poverty
levels.  The high cost of capital, low level of infr astructure development, inadequate integration and
organization of the economy, poorly developed information networks are characteristics of industry in
developing and least developed countries.  It has been recognized that the state has to assume a moreactive and positive role in assisting its industry.
In order to offset the many disadvantages that developing and least developed countries suffer
from, the ASCM has provided for certain special and differential treatment for such countries.  The
experience since the establishment of the WTO has shown that these S&D provisions have beeninadequate to meet the concerns of developing countries.  To illustrate, although provisions of
Article 27.10 and Article 27.11 provide for certain de minimis  levels of subsidization and negligible
level of volume of subsidized imports below which the countervailing duty investigation is required to
be terminated in respect of a product originating in a developing country, these have been inadequate
in ensuring that developing countries secure a share in the growth in international trade.  This is in
part due to the imposition of countervailing duties against products originating in developingTN/RL/W/4
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countries in a large number of cases.  Out of the 67 cases in which countervailing duty action was
taken by various countries during the period 1 January 1995 to 30 June 2001, more than 65 per cent
was against developing countries.  This is disproportionate in relation to the share of such countries in
international trade.
Provisions of Article 27.3 provide exemption from the prohibition of paragraph 1(b) of
Article 3.  This exemption from the prohibition is now available only for least developed country
Members.  It needs to be recognized that subsidies contingent upon use of domestic over imported
goods is crucial to the process of industrialization and development of developing countries and any
prohibition on such use would further disadvantage these countries.  It is of considerable importance
that such subsidies continue to be given notwithsta nding the provisions of any other agreement in the
WTO acquis.
It is therefore essential that the provisions of Article 27 be re-evaluated so as to address the
needs of developing countries regarding subsidies. Some proposals in this regard are below.
Proposal:-
A new provision to be added in Article 27.10 to provide for countervailing duties on
imports from developing countries being restricted only to that amount by which the subsidy
exceeds the de minimis  level;
Article 27.10 (b) shall be amended to provide for countervailing duty not being imposed
in the case of imports from developing countries where the total volume of imports is negligible,
i.e. 7 per cent of total imports ;
Article 27.2 shall be amended so that the prohibition in Article 3.1 (a) does not apply to
export subsidies granted by developing countries  where they account for less than 5 per cent of
the f.o.b. value of the product;
Article 27.11 shall be amended to provide for the de minimis  level of subsidization below
which countervailing duty shall not be imposed in case of imports from developing countries
being raised above 3 per cent;
Article 27.3 shall be amended so that the prohibition of paragraph 1(b) of Article 3 shall
not apply to developing country Members. The ref erence to expiry of this flexibility after
five/eight years from the date of entry into force of the WTO Agreement shall be deleted.  It
should also be clarified that the provisions of the amended Article 27.3 shall be applicable
notwithstanding the provisions of any other agreement in the WTO acquis.
B. ANTI-DUMPING AGREEMENT
Recent years have seen increasing resort to anti-dumping actions.  In a number of cases
investigations are started even in cases where the industry claiming injury has not been able to
produce, before the investigating authorities, satisfactory evidence of dumping or injury.  Newinvestigations have often been started on the same products immediately after the termination of an
investigation.  This is particularly true of exports of developing countries which are being subject to
more and more anti-dumping and countervailing measures.  The frequent use of anti-dumping actions
against exports from developing countries by major trading countries has become a matter of serious
concern.  The uncertainty and restrictiveness of these measures have created trade disruption affectingnot only particular consignments but also longer-term trade in the targeted product.  Benefits from
trade liberalization have been considerably neutralized by the unfair use of anti-dumping measures,TN/RL/W/4
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including back-to-back anti-dumping investigations on the same products which have frustrated the
expectations created during the Uruguay Round.
The lack of clarity in certain provisions has compounded the problem, including the fact that
Article 15 of the Agreement is practically inoperative.  Moreover, certain provisions, particularlythose relating to de minimis  dumping margin and the threshold volume of imports below which no
anti-dumping duty shall be levied, need to be revised in view of the changed global trade and
economic scenario, especially for exports from developing countries.
The proposal being made by India also needs to be viewed in the context of the Marrakesh
Agreement Establishing the WTO which has recognized the need for positive efforts designed to
ensure that developing countries and the least developed countries secure a share in the growth ininternational trade commensurate with the needs of  their economic development.  However, it cannot
be denied that the share of developing countries in international trade has not shown any appreciable
increase over the past years.  This has, in part, been due to the imposition of anti dumping measures
against imports originating in  developing countries.  During the period 1 January 1995 to
30 June 2001, more than 60 per cent of the definitive measures imposed were against developingcountry imports. Increasing the de mininmis  dumping margins, enhancing the negligible volume level,
removing the requirement of cumulation, mandatory application of the lesser duty rule while taking
anti dumping action against developing country im ports could be some of the ways in which the
objective of the WTO for  “positive efforts designed to ensure that developing countries and the least
developed countries secure a share in the growth in international trade” could be achieved.  The on-going negotiations have been considered by many including important functionaries in the developed
world and the WTO Secretariat to be a “Doha Development Agenda”.  If this is to acquire meaning
and not remain mere rhetoric Member countries need  to favourably consider the following proposals
which had been submitted by many developing countries even earlier.
Proposal
The existing de minimis  dumping margin of 2 per cent of export price below which no
anti-dumping duty can be imposed (Article 5.8), needs to be raised to 5 per cent for imports
from developing countries.
The major users have so far applied this prescribed de minimis  only in newly initiated
cases, not in review and refund cases.  It is imperative that the proposed de minimis  dumping
margin of 5 per cent is applied not only in new cases but also in refund and  review cases.
The threshold volume of dumped imports which shall normally be regarded as
negligible (Article 5.8) should be increased from the existing 3 per cent to 5 per cent for importsfrom developing countries.  Moreover, the stip ulation that anti-dumping action can still be
taken even if the volume of imports is below this threshold level, provided countries which
individually account for less than the threshold vo lume, collectively account for more than 7 per
cent of the imports, should be deleted.
The lesser duty rule shall be made mandatory while imposing an anti-dumping duty
against imports from developing-country Member by any developed-country Member.
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