RESTRICTED
WORLD TRADE G/ADP/AHG/W/15
23September 1997
ORGANIZATION(97-3838)
Original: Spanish Committee onAnti-Dumping Practices
AdHoc Group onImplementation
TIMELINE, CONFIDENTIAL INFORMATION, AND LESSER
DUTY RULE (PARAGRAPH 3OFWTO/AIR/643)
Information Provided byMexico
Thefollowing communication, dated 8September 1997, hasbeen received from thePermanent
Mission ofMexico.
_______________
Comments byMexico ontheIssues Left Pending attheMeeting
oftheAdHoc Group of29and30April
Inaccordance with thecommitments made bytheparties atthemeeting oftheAdHocGroup
onImplementation oftheCommittee onAnti-Dumping Practices heldon29and30April 1997, Mexico
issubmitting herewith itscomments onitsexperience andpractice with respect tovarious topics which
remained pending atthemeeting (information believed tobeconfidential bynature, experience inthe
meetings with theparties, determination ofduties lessthan themargin ofdumping andatimetable
ofanti-dumping investigations).
Thus, thisreport contains comments onconfidential information, meetings oftheinvestigating
authority with theparties, andthedetermination ofduties lessthan themargin ofdumping aswell
asatimeline ofanti-dumping investigations inMexico.
I. INFORMA TIONWHICHISCONSIDERED BYNATURE TOBECONFIDENTI ALUNDER
MEXICAN LAW
TheForeign Trade Acttakes uptheconcept ofconfidential information asdefined inArticle 6.5
oftheAnti-Dumping Agreement andcarries iteven further byestablishing amuch broader classification
andintroducing asystem ofaccess tovarious levels ofthatclassification.1Thus, Articles 149, 150,
151and154oftheRegulations under theForeign Trade Actestablish thattheinformation below is
considered confidential bynature forthepurposes ofArticle 6.5oftheAnti-Dumping Agreement:
1Inview oftheproblem encountered byparticipants inananti-dumping investigation inwhich other parties
contribute information considered asconfidential towhich theformer have noaccess forthepurpose ofdefending
theirinterests,Mexico,likeothercountriesapplyingthesystem,hascreatedamech anismbywhichcertainpersons
(particularly thelegal representatives oftheenterprises ortheir economic advisors) may have access tocertain
confidential information. Thus, theclassification setforth below contains aclear indication astowhether or
nottheinformation may bemade available totherepresentatives oftheenterprises.G/ADP/AHG/W/15
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Article 149oftheRegulations under theForeign Trade Act:
(i) Production processes fortheproduct concerned (product under investigation);
(ii) production costs andspecification ofcomponents;
(iii) distribution costs;
(iv) terms andconditions ofsale, except those offered tothepublic;
(v) selling prices bytransaction andbyproduct, except components ofprices such
asdates ofsales anddistribution oftheproduct, andtransport ifbypublic
routes;
(vi) description ofthetype ofindividual customers, distributors orsuppliers;
(vii) ifapplicable, theexact amount ofthemargin ofprice discrimination in
individual sales;
(viii) theamounts ofadjustments forterms andconditions ofsale, volume or
quantities, variable costs andtaxcharges proposed bytheinterested party, and
(ix) anyother specific information about theenterprise concerned whose disclosure
ordissemination tothepublic may cause injury toitscompetitive position.
This information isavailable tothelegal representatives oftheparticipating enterprises ortheir
advisors, provided they meet certain requirements.2
Ontheother hand, theinformation referred tobelow, owing toitsnature, canonly bemade
available totheinvestigating authority; inother words, noparty may have access toit.
Article 150stipulates thatrestricted commercial information shall bedeemed tobeinformation
whose disclosure may result insubstantial andirreversible andfinancial damage orharm tothenet
worth oftheowner ofthatinformation andwhich may include, among other things, secret formulas
orprocesses which have acommercial value, arenotpatented andknown exclusively toasmall group
ofpeople who usethem intheproduction ofacommercial product.
Article 151, initsturn, states thatthename ofthenatural orlegal persons from whom the
interested party obtained relevant information shall beknown only totheMinistry.
And finally, Article 154stipulates thatconfidential government information shall include
information contained ingovernment-to-government communications ofaconfidential nature (data,
statistics anddocuments concerning national security andstrategic activities forthescientific and
technological development ofthecountry), aswell asinformation whose disclosure isprohibited by
laws andother public legislation, andbyinternational treaties oragreements towhich Mexico isaparty.
2Inorder togain access tothisinformation, they must meet therequirements setforth inArticle 159ofthe
Regulations under theForeign Trade Act, including theobligation toundertake andsubmit thecommitment to
confidentiality under theterms laiddown bytheMinistry.G/ADP/AHG/W/15
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II. COMMENTS ONTHE APPLICATION OFTHE LESSER DUTY RULE
While theexplanation thatfollows does notinanywayrepresent Mexico 'spractice with respect
tothismatter, itdoes provide general guidelines which Mexico considers tobeofinterest intrying
toarrive atacommon stance.
There arevarious ways ofapplying aduty which islessthan themargin ofdumping (lesser
duty rule), including:
- Theunitary international price approach ortheexogenous price method;
- theendogenous production costorprice approach.
A. Unitary international price approach orexogenous price method
This approach entails establishing arelation between thedumped export price andtheprice
ofthedomestic product, andbetween these prices andanundistorted international price, i.e.theprice
thatwould betaken asareference forsituating prices onthedomestic market ifitwere notdistorted
bydumping. There areafewparameters andbasic rules thatcanbeapplied inthisrespect.
Thekeytothisapproach istoestablish anundistorted international price, which istheprice
thatshould theoretically apply toalldomestic products andimports competing onthesame market
intheabsence ofdistortions caused bydumping. Infact, thisprice may beconsidered asthe"target
price" fordomestic producers, andtheexogenous price method isoneofthetwoways ofestablishing
it,theother being thedomestic-industry-based method.
Provided sufficient information isavailable, thetarget price forthedomestic industry should
preferably betheprice obtained bytheexogenous method, i.e.onthebasis ofanundistorted international
price. Theoretically, aslong asthere isnodumping, thedomestic industry prices inanopen economy
would betheundistorted prices oftheclosest realorpotential international competitor, which arenot
necessarily thesame asthenormal value intheexporting country under investigation.
Under thisapproach, when itisdetermined thattheundistorted international price isthesame
asthenormal value, theduty should beequal tothemargin ofdumping. If,onthecontrary, the
undistorted international price isidentical totheexport price, then thedumping does notcause injury
andananti-dumping duty isunnecessary.
Thus, aduty lower than themargin ofdumping determined may only beapplied when the
undistorted international price isbetween thenormal value andtheexport price, inwhich caseaduty
must beimposed thatisenough tosetthedumped export price attheinternational price. This was
thecase forsodium tripolyphosphate imports from Spain, where theMexican investigating authority
applied thelesser duty ruleonthebasis ofaninternational reference price.
Asregards manufactured goods forwhich there arenoreliable international references, the
international price canbeestimated onthebasis oftheaverage export price oflikegoods from companies
orcountries thatdonotengage indumping orarenotinvolved intheinvestigation. Thus, forexample,
intheinvestigation onhydrogen peroxide imports from theUnited States, theMexican investigating
authority applied thelesser duty ruleonthebasis oftheprice ofimports from aUnited States company
thatdidnotengage indumping.G/ADP/AHG/W/15
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B. Endogenous production costorprice approach
When there isnoinformation, ortheinformation available isinsufficient toconsider an
undistorted international price asthetarget price forthedomestic industry, theendogenous approach
may beadopted. This approach consists insetting atarget price onthebasis oftheactual information
obtainedfromthedomesticindustry,inparticularwithrespecttocostsandprofitsofdomesticproducers,
oronthebasis ofdomestic prices prior totheunfair competition. Thesaidinformation would beused
totrytodetermine aprice level thatwould ensure thatdomestic producers earned reasonable profits.
Aswith thefirstapproach, thedifferent prices obtained through theinvestigation arecompared
with atarget price. Ifthetarget price isthesame asthenormal value, theduty willbeequal tothe
dumping margin determined. Ontheother hand, ifthetarget price isthesame astheexport price
oftheexporter under investigation, thesaidexport price isnotthecause oftheinjury, andnoduty
isapplied. Finally, ifthetarget price isfound tobebetween thenormal value andtheexport price,
aduty must beimposed thatisenough tosetthedumped export price atthetarget price.
This approach wasapplied bytheinvestigating authority inMexico inthecases ofimports
ofconnectors fortelephone-wire joints from theUnited States andimports ofsulphuric acidfrom Japan.
Inthefirstcase, thelesser duty rulewasapplied onthebasis oftheexisting domestic production prices
prior tothemarket distortion caused bythedumping. Inthesecond case, thelesser duty rulewas
applied onthebasis oftheaverage weighted production cost oftwo non-complainant domestic
manufacturers.G/ADP/AHG/W/15
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