RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/AHG/W/90
25 April 2000
(00-1642)
Committee on Anti-Dumping Practices
Ad Hoc Group on ImplementationOriginal:  English
PRACTICAL ISSUES AND EXPERIENCE IN APPLYING
ARTICLE 2.4.2
PRACTICAL ISSUES AND EXPERIENCE WITH RESPECT TO
QUESTIONNAIRES AND REQUESTS FOR INFORMATION
UNDER ARTICLES 6.1 AND 6.1.1
PRACTICAL ISSUES AND EXPERIENCE IN PROVIDING
OPPORTUNITIES FOR INDUSTRIAL USERS AND
CONSUMER ORGANIZATIONS TO PROVIDE
INFORMATION UNDER ARTICLE 6.12
PRACTICAL ISSUES AND EXPERIENCE IN CONDUCTING
"NEW SHIPPER" REVIEWS UNDER ARTICLE 9.5
Paper by Brazil
The following communication, dated 19 April 2000, has been received from the Permanent
Mission of Brazil.
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PRACTICAL ISSUES AND EXPERIE NCE IN APPLYING ARTICLE 2.4.2
1. Background
Article 2.4.2 of the AD Agreement establishes that:
“Subject to the provisions governing fair comparison in paragraph 4, the existence of
margins of dumping during the investigation phase shall normally be established on
the basis of a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions or by a comparison of
normal value and export prices on a transaction-to-transaction basis.  A normal
value established on a weighted average basis may be compared to prices ofindividual export transactions if the authorities find a pattern of export prices which
differ significantly among different purchasers, regions or time periods, and if an
explanation is provided as to why such differences cannot be taken into account
appropriately by the use of a weighted average-to-weighted average or transaction-
to-transaction comparison”
The Brazilian legislation that implemented the AD Agreement of the Uruguay Round (Decree
Nº 1602 of 23 August 1995; G/ADP/N/1/BRA/2) follows essentially the same language of theG/ADP/AHG/W/90
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Agreement, as established by Article 12 of the Decree. It says that the existence of a margin of
dumping shall be determined  based on a comparison between:
(i) the weighted average normal value and the weighted average of the prices of all
comparable export transactions; or
(ii) the normal values and the export prices on a transaction-to transaction basis.
This is the general rule, emphasized in Brazilian regulation, by the omission of the word
“normally”. The comparison of a normal value determ ined by means of a weighted average, with the
prices of specific export transactions, as provided by Article 2.4.2, is allowed under Article 12.1 of the
Decree.
2. The Brazilian practice
In Brazil the margin of dumping is, as a general rule, calculated for each investigated
enterprise, as long as they provide the required information for the period of investigation (normallyone year), on the basis of a comparison of a weighted average normal value with the average export
price.
In Brazilian practice the transaction-to-transaction methodology as a basis for dumping
margins determinations has never been used.
In the same way, to date, the provision that allows for a comparison of a weighted average
normal value with individual export prices has never been invoked in an investigation.
In the case normal value is determined taking into account sales of the like product in the
domestic market of the exporting country, the inve stigating authority will examine all the commercial
transactions which occurred within the investigation period, that could be compared with export
prices.  The weighted average normal value is then calculated.
The weighted average export price is calculated taking into account the prices effectively
practiced on the sales to the Brazilian domestic market.
If it is the case, price adjustments are made before the calculation of the weighted average.
If the product which is being investigated falls under more than one Common External Tariff
Code or is sold in the domestic or export markets according to various types or models, a weighted
average of the dumping margins found for the different categories of the product is calculated.
3. Topics for Discussion: Different results according to the methods of calculation
The AD Agreement establishes no guidelines nor any criteria or hierarchy for choosing any
one of the two alternative methodologies for the dumping margin determination.  Although thedumping margin may be established on the basis of a comparison of a weighted average-to-weighted
average or on a  transaction-to-transaction basis, as alternatives methodologies, the calculation of the
dumping margin could present different results according to each of the two methodologies. This is
related to the dispersion and to the distribution of  the prices practiced in the domestic and in the
export markets by the foreign producer/exporter, as we can see through the following examples:G/ADP/AHG/W/90
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Example 1: The weighted average - to - weighted average methodology leads to a lower
dumping margin
Domestic sales Exports No.
Transaction Price Quantity Price QuantityMargin of
dumping
01 5.00 90 4.00 70 1.00
02 10.00 80 8.00 80 2.00
03 12.00 100 11.00 100 1.00
Weighted
average9.07 8.08
(a) Average x Average: Absolute Dumping Margin = $0.99
(b) Transaction to Transaction (dumping margins for each transaction weighted by the quantities
exported): Absolute Dumping Margin  = $1.32
Example 2 : The weighted average - to - weighted average methodology leads to a higher
dumping margin
Domestic sales Exports No.
Transaction Price Quantity Price QuantityMargin of
dumping
01 10.00 100 8.00 80 2.00
02 10.00 80 9.00 100 1.00
03 12.00 90 10.00 50 2.00
Weighted
average10.67 8.87
(a) Average x Average: Absolute Dumping Margin = $1.80
(b) Transaction to Transaction (dumping margins for each transaction weighted by the quantities
exported): Absolute Dumping Margin = $1.57
Example 3 : The weighted average - to – weighted average methodology leads to no dumping
margin
Domestic sales Exports No.
Transaction Price Quantity Price QuantityMargin of
dumping
01 5.00 100 4.50 50 0.50
02 10.00 80 9.00 80 1.00
03 12.00 90 11.00 100 1.00
Weighted
average8.81 8.89
(a) Average x Average: Absolute Dumping Margin = - $0.08
(b) Transaction to Transaction (dumping margins for each transaction weighted by the quantities
exported): Dumping Margin = $0.89
In this sense, it could be useful to proceed, in a more detailed way, to an evaluation of these
methods. In particular it would be convenient to examine under which circumstances the use of one of
these methods would be more appropriated than the other. Brazil would like to propose this issue for
discussion.G/ADP/AHG/W/90
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4. Requests for Clarification
4.1 Brazil would like to ask Australia to clarify some of the issues raised in the document
G/ADP/AHG/W/71.
(a) What are the methodologies for dumping margin  calculations utilized in the investigations?
(b) In case the methodologies used vary from case to case, what are the criteria chosen?(c) According to Australia, “ the weighted average dumping margin can be calculated for shorter
periods within the investigation periods.  A si ngle weighted average dumping margin will be
calculated.  One reason for doing so is to determine whether the 2 per cent “de minimis”threshold applies ”.  In what situations would Australia believe it is adequate to calculate the
dumping margin for shorter periods within the investigation period?
(d) For the calculation of the weighted average normal value, the Australian investigating
authority uses the comparable exported quantities for each transaction to weight exports?  Ifthis is the case, could Australia explain why they consider that the export quantities are more
adequate, as a weight factor, than the quantities that are sold in each specific transaction in the
domestic market?
(e) As the document states, “ Australian legislation provides that all margins worked out under
the relevant section must be below 2 per cent before the investigation can be terminated (...)
However, the CEO may terminate an investigation where some of the transaction-to-
transaction margins are above 2 per cent but the weighted average margin is less than 2 per
cent” .
• In the case of the utilization of the transaction-to-transaction methodology, in a hypothetical
situation in which the authority finds dumping margins on a transaction-to-transaction basis aboveand below 2 per cent, how is the weighted average dumping margin determined?
• In the case the weighted average dumping margin is below 2 per cent, but there are transactions in
which the dumping margin is above 2 per cent and the investigation is then not terminated, how
will the dumping margin be calculated and what is the highest antidumping duty that could beimposed in this case? In this situation, will th e transactions in which a dumping margin below
2 per cent was determined be excluded from the injury analysis?
PRACTICAL ISSUES AND EXPERIENCE WITH RESPECT TO QUESTIONNAIRES AND
REQUESTS FOR INFORMATION UNDER ARTICLES 6.1 AND 6.1.1
When conducting an anti-dumping investigation, Brazilian authority uses different kinds of
questionnaires intended for the different interested parties. In order to obtain better information, the
questionnaires are improved and modified as necessary.
Standard questionnaires are used in the anti-dumping investigations as follows:
(a) Application form:
In Brazil the application form that is used as a reference for petitioners that intend to present a
petition for initiation of an anti-dumping investigation was made public at the Official Gazette
(Circular SECEX nº 21/96).  The aim of this form is  to fulfill the requirements of Article 5.2 of the
Agreement.  Domestic producers who complain of an alleged dumping and resulting injury areG/ADP/AHG/W/90
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requested to fill in this questionnaire and to supply documents requested so that their application can
be taken into consideration.  The information mentioned in Article 5.2, as well as other additional
relevant data deemed necessary are requested. Additional information may be requested by the
investigating authority, if considered necessary.
(b) Investigation Questionnaires:
These questionnaires are intended for foreign producers/exporters under investigation and for
domestic producers and importers.  They have different formats and contents. These are the main
questionnaires for an investigation and they are se nt right after the initiation of an investigation.
- Questionnaire for foreign producers/exporters under investigation: it is a detailed
questionnaire designed to obtain information mainly with respect to company identity and
structure; normal value; description and charac teristics of the product under investigation and
of the similar product sold in the domestic market; all relevant data related to its exports to
Brazil, domestic sales and exports to third countries, production costs , allowances and
adjustments.
- Questionnaire for importers of the product under investigation:  it is designed to obtain
information about export prices of the product under investigation and about the volume of
imports, as well as details of import costs, and if it were the case, data related to the
construction of the export price ( for instance, the price of the first sale to an independentbuyer). It also gives opportunity for  importers to comment on injury and the market situation
of the product.
- Questionnaire for domestic producers: aims at obtaining detailed information, in addition to
that provided in the application, about the situation of the domestic industry and injury. The
information requested includes general information about the producers, characteristics of the
like product, domestic market information, production, sales (domestic and export), costs,
profits, inventories, utilization of production capacity, output, employment, return on
investment, financial data).
In addition to the questionnaires, parties may be requested to supply further information at
any time during the investigation.  Also, when applicable, parties are welcome to submit anyadditional information they deem necessary for investigation purposes.
With respect to the time limits for replying to the questionnaires, 40 days are granted,
counting from the date the questionnaire is issued to the party.  Due consideration is given to any
request for extension of deadlines and, upon cause shown, such an extension is granted, wheneverpracticable, for a period up to thirty days, taking into account the time periods of the investigation.
Examples of situations in which extensions are granted are: translation and communication problems,
complexity of the case, etc.
Additional or complementary information may be requested or accepted in writing throughout
the investigation. The time period for providing reque sted information shall be stipulated based on the
nature of the information and may be extended, taking into account the time period of the
investigation.G/ADP/AHG/W/90
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PRACTICAL ISSUES AND EXPERIENCE IN PROVIDING OPPORTUNITIES FOR
INDUSTRIAL USERS AND CONSUMER ORGANIZATIONS TO PROVIDE
INFORMATION UNDER ARTICLE 6.12
In Brazilian practice the opportunity for industrial users and consumer organization to
participate in the investigation is granted throughout the whole investigation. Brazilian Decree Nº1
602/95 establishes in Article  21.3 ( e ) that any other party, either Brazilian or foreign, besides the
domestic producers, importers, foreign producers or exporters, and the associations that represent
them, may be considered by SECEX as interested parties
To comply with Article 6.12 of the Agreement, Brazilian Decree establishes, in
Subsection III, final procedures concerning the conduction of the investigation.  Before completing
the findings regarding the final determination, a meeting shall be called by SECEX, wherein the
interested parties are notified regarding the essential facts under examination that constitute the basis
of the findings, as is required by Article 6.9 of the AD Agreement. In this opportunity, all Brazilian
associations or entities, which are related to the production and commerce of the product under
investigation, including the National Trade Confederation, are invited to present their views and
comment on the case. Interested parties have a period of 15 days from the meeting to present their
comments in writing.
PRACTICAL ISSUES AND EXPERIENCE IN CONDUCTING “NEW SHIPPER” REVIEWS
UNDER ARTICLE 9.5
Although Brazil does not have any experience in this kind of review, since we have never
received any new exporter review request, we consider the discussion of this subject very relevant.
Article 9.5 raises many questions related to the criteria and procedures the investigating authorities
could apply. We envisage the possibility of existence of different scenarios.
First Scenario
 A new exporter that did not export during the period of data collection of the dumping
investigation (let’s say, 1998), starts to export significant amounts during the course of the
investigation (let’s say, 1999). By the end of the investigation, the enterprise would have already
exported during a reasonable period of time (along the year 1999), with no AD duty.
After the imposition of th e AD duty, if the enterprise requires a ”new shipper” review, enough
data to examine an individual margin of dumping would be available. During the course of the review
no AD duty would be levied, although the authority would adopt the necessary procedures to ensure
that, should such a review result in a determination of dumping in respect of such exporter, AD dutymay be levied.
This is the simplest scenario, since the new shipper's exports were made before the imposition
of the AD duty.
Second Scenario
In a second scenario the new shipper has only exported a small quantity, in the period during
the course of the investigation (let’s say, 1999). In that case, if the enterprise requests a new shipperreview, the investigating authority would have a very limited data basis available to determine an
individual margin of dumping.G/ADP/AHG/W/90
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We would like to raise the discussion on how investigating authorities should proceed in this
situation, considering that Article 9.5 states that “the authorities shall promptly carry out a [new
exporter] review” which must be carried out “on an accelerated basis , compared to normal duty
assessment and review proceedings in the importing Member”?
The European Communities, in do cument G/ADP/AHG/ W/74, propose to  establish criteria to
determine a “significant quantity of exports". Apparently, the Communities proposal would result in a
procedure by which a review would be initiated only if such a threshold is reached, that is, a
“significant quantity of exports" exists. However, we believe that there are difficulties in the
utilization of those criteria. Article 9.5 of the Agreement states that the investigation shall be
“promptly carr[ied] out ”. This wording gives Members a precise guidance, that is, the authorities
would not be able to deny the request for the init iation of the review, due to reasons related to the
small quantities exported, nor to postpone its examination, waiting for a “significant quantity” to be
reached.
Third Scenario
A third situation would be one in which the new shipper initiates its exports after the
imposition of the AD duty. In the absence of the AD duty, that enterprise could have practiced an
export price equivalent to its normal value, and still be competitive with domestic industry prices
within the importing country market. However,  since an AD duty was imposed, the new shipper
exports only if its prices are below normal value, that is, practising dumping.
In that situation, how should investigating auth orities proceed in an dumping determination:
should the new shipper review be initiated, and then th e authority would verify if in the absence of the
duty, dumping would continue to exist? Or the Authority should calculate the individual dumping
margin taking into account the prices effectively practiced?
If the Authority proceeds in accordance with the last option, there is a strong possibility that a
positive dumping determination would be reached. The higher import cost related to the imposition of
the duty results in a situation that tends to force the new shipper to initiate its exports with prices
below normal value.
Fourth Scenario
In this scenario, the new shipper has never exported, neither before nor after the imposition of
the AD duty. Nevertheless, after the imposition of the duty, the new shipper wishes to initiate its
exports and requests a new shipper review, as well as the suspension of the duty imposed. How should
the investigating authorities proceed?
One possibility would be to suspend the collection of the AD duty, monitor the flow of
exports and, after a reasonable period of time, proceed to determine the individual (new shipper)
dumping margin. However, we believe this procedure brings several problems:
- before suspending the collection of the AD duty, it is necessary to initiate a review, which
shall be carried out on an accelerated basis;
- that procedure being adopted, the authorities would have at their disposal a very limited data
basis to examine, since a short period of time would have elapsed;
- that fact would enable exports from the new shipper at prices which could be set in such a
way as to obviate dumping.
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