RESTRICTED
WORLD TRADE G/ADP/IG/W/3
23October 1997
ORGANIZATION(97-4649)
Original: English Committee onAnti-Dumping Practices
Informal Group onAnti-Circumvention
TOPIC 1-ANAPPROACH TOTHE DEFINITION OFCIRCUMVENTION
Paper byCanada
Thefollowing communication, dated 22October 1997, hasbeenreceived fromthePermanent
Mission ofCanada.
_______________
Atitsregular meeting heldon28-29 April 1997, theAnti-Dumping Practices Committee
established theInformal Group onAnti-Circumvention. Theobjective oftheInformal Group isto
examine theissue ofanti-circumvention inaccordance withtheframework assetoutindocument
G/ADP/W/404 dated 20March 1997.
TheMinisterial Decision onAnti-Circumvention wasadopted byGovernments atMarrakesh
andforms anintegral partoftheFinal ActEmbodying theResults oftheUruguay Round ofMultilateral
Trade Negotiations.1
With aviewtoaiding inthediscussion respecting paragraph 2(1)oftheChairman 'sproposal
regarding thequestion "What constitutes circumvention?", Canada submits thefollowing:
Anti-dumping measures aredesigned toremedy injury caused toadomestic industry inone
country bythedumping oflikegoods from oneormore specifically named other countries.
1TheDecision reads:
Ministers,
Noting thatwhile theproblem ofcircumvention ofanti-dumping measures formed partofthenegotiations which
preceded theAgreement onImplement ationofArticleVIofGATT 1994, negotiatorswereunabletoagreeonspecific
text,
Mindful ofthedesirability oftheapplicability ofuniform rules inthisareaassoon aspossible,
Decide torefer thismatter totheCommittee onAnti-Dumping Practices established under theAgreement for
resolution.G/ADP/IG/W/3
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Implicit intheconcept of"circumvention" istheideaofsomehow "getting around" something
toachieve anobjective. Inthisregard, adictionary defines theverb"circumvent", inpart,astomake
acircuit around ortomanage togetaround especially byingenuity orstratagem.2Accordingly,
circumvention ofanti-dumping measures maybedefined broadly asanactivity byanexporter that
affects directly thenature ofthesubject goods ortheplace ofproduction orassembly. Suchactivity
isdesigned tosomehow "getaround" anti-dumping measures thereby avoiding thepayment ofanti-
dumping duties.3
Inestablishing theexistence ofcircumvention ofananti-dumping order, investigating authorities
mustbeabletoinfer, based onthefactsavailable inthespecific case, thatthespecific exporter in
question intended tocircumvent theanti-dumping duties. Accordingly, factors relevant tothe
identification ofinstances ofcircumvention include:
Timing
Circumvention ofananti-dumping order maycommence asearly astheinitiation ofananti-
dumpinginvestigationinanticipationoffinalanti-dumpingmeasures.4Activities,whichmightotherwise
constitute circumvention ofananti-dumping duty, occurring before theinitiation ofananti-dumping
investigation should notbedefined ascircumvention.
Trade Patterns
Various changes intradepatterns maysuggest thatcircumvention istaking place. Forexample:
(i) Altering theNature oftheGoods
Anexporter maymodify thegoods exported totheimporting country following the
implementation ofanti-dumping measures. Where suchmodified goods properly fall
under thedescription ofthesubject goods found intheoriginal injury finding, the
original finding would apply tosuchgoods. However, certain modifications mayresult
ingoods thatdonotfallwithin theoriginal definition oflikegoods and,therefore,
further analysis ofthefacts involved may berequired todetermine whether
circumvention istaking place.
(ii) Exportation ofParts andComponents
Anexporter mayelecttocease exporting subject goods andcommence exporting parts
andcomponents andassemble thegoods inathirdcountry forexport. Similarly, the
exporter mayexport partsandcomponents tothecountry applying theanti-dumping
2Stratagem maybedefined asascheme forgaining anend.
3Circumvention must bedefined separately from fraudulent practices designed toevade thelegitimate application of
anti-dumping duties. Forexample, suchactivities could include incorrect customs declarations concerning theorigin, tariff
classification orvalue ofgoods. Ineachofthese examples, thegoods themselves would beidentical tothegoods covered
byafinalanti-dumping measure andoriginate from thesame place: theonlydifference being the"declared" information
atthetimeofimportation. Such fraudulent activities canbeappropriately dealt withinaccordance withtheprovision for
theprevention ofdeceptive practices inArticle XX(d)oftheGATT 1994.
4Theinitiation ofananti-dumping investigation does notnecessarily indicate thattheimporting country willimpose
finalanti-dumping measures. However, thepotential imposition ofsuchmeasures maybesufficient toinduce anexporter
toundertake steps tocircumvent such measures, should theybeimposed.G/ADP/IG/W/3
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measure forassembly. Simple assembly or"screwdriver" operations inathirdcountry
ortheimporting country maybeindicative ofcircumvention.5
(iii) Changing theLocation ofProduction
Goods subject toafinding aredefined, inpart,asoriginating in(orexported from)
aparticular country. Asaresult ofanti-dumping measures, anexporter mayelect
tomove production orassembly toathirdcountry notcovered bytheoriginal finding
ortotheimporting country itself. Should "like" goods produced inthethirdcountry
ortheimporting country qualify, forrules oforigin purposes, asgoods originating
inthatthirdcountry ortheimporting country, circumvention maynotbetaking place.6
However, production inathirdcountry ortheimporting country, which isnotsufficient
toconfer origin, would require further examination ofallrelevant factors todetermine
ifcircumvention istaking place.
(iv) Nature ofInvestment inaThird Country ortheImporting Country
Substantive investment, production, manufacture orassembly inanother country or
intheimporting country onthepartoftheexporter would suggest thatcircumvention
ofananti-dumping dutyorder isnottaking place.
(v) Related Parties
Thenature oftherelationship between theexporter subject totheoriginal anti-dumping
order andanyother involved party mayberelevant totheissue ofcircumvention.
However,thedeterminationofwhatconstitutes"related"partiesrequiresfurtheranalysis
(e.g.ownership, control, contractual relationships etc.)
(vi) Consistency ofCustomers
Afurther indication ofcircumvention could bethesaleofthemodified products and/or
products produced orassembled inthirdcountries ortheimporting country tothesame
baseofcustomers, directly orindirectly, bytheexporter oftheoriginal subject goods.
Inexaminingcircumvention,theissueofinjuryisrelevant.Forexample,shouldtheimportation
ofmodified goods subsequent totheinitiation ofananti-dumping investigation result ininjury toa
different industry, anti-circumvention measures would notbeanappropriate response onthepartof
theimporting authorities.
Noonefactor noted above should beregarded asdefinitive inestablishing theexistence of
thecircumvention ofananti-dumping order. Rather, examination ofallrelevant factsineachcase
should berequired todetermine whether circumvention hastaken place.
5Standard rules oftariff nomenclature viewkitsandknocked-down forms ofaproduct being thesame astheassembled
product.
6Itshould benoted thatthisissue might beinfluenced bytheoutcome bytheoutcome ofcurrent discussion inthe
Commi tteeonRulesofOriginregardingtheharmonizationofrulesoforiginfornon-pr eferentialcommer cialpolicyinstrument s.