. /.WORLD TRADE
ORGANIZATIONG/ADP/IG/W/47
19 September 2002
(02-5001)
Committee on Anti-Dumping Practices
Informal Group on Anti-CircumventionOriginal:  English
TOPIC 2 – WHAT IS BEING DONE BY MEMBERS CONFRONTED
BY WHAT THEY CONSIDER TO BE CIRCUMVENTION?
Paper by New Zealand
The following communication, dated 18 September 2002, has been received from the
Permanent Mission of New Zealand.
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In the EC paper G/ADP/IG/W/30 several circumvention scenarios were presented and other
Members invited to list how their practice would deal with the given situations.
Example 2 covered motor cycles and motor cycle parts where motor cycles imported into
Country A from Country B are subject to anti-dumpi ng duties.  After the imposition of the duties,
there is a marked substitution of imports in country A of motorcycle parts shipped from country B.
As these parts are spread over various containers and shipments they cannot be classified as complete
motorcycles and are therefore not covered by the anti-dumping duty.
In New Zealand's paper G/ADP/IG/W/35 we st ated that any action would depend on the
classification of the parts shipments.  If they could not be classified as a complete motorcycle using
the Rules of Interpretation of the Tariff of New Zealand, the parts themselves would not be coveredby the dumping determination and a new case would need to be taken by the industry making those
imported parts.
A recent example of the imports of separate parts into New Zealand has since complicated
this issue.  A shipment of unassembled paintbrushes - bristles secured in a ferrule and paintbrushhandles has been imported.  Paintbrushes are currently subject to an anti-dumping duty.  Normal
practice would have been to establish if the components were in the same shipment and use Rule 2 (a)
of the General Rules for Interpretation of the Tariff
1 to confirm the classification of the paint brush
parts as a paintbrush and to apply the appropriate anti-dumping duty.
If the parts were in a separate shipment then they would be classified according to each item
on a stand-alone basis.  The handle would be cons idered an article of wood or plastic and would
clearly not attract anti-dumping duty as it would not fit the description of goods subject to anti-
dumping duty in the notice of final determination.  The bristles secured in a ferrule may be considered
                                                     
1 Rule 2.(a) states: "Any reference in a heading to an article shall be taken to include a reference to that
article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has theessential character of the complete or finished article.  It  shall also be taken to include a reference to that article
complete or finished (or falling to be classified as comp lete or finished by virtue of this Rule), presented
unassembled or disassembled.G/ADP/IG/W/47
Page 2
to have the essential character of the paintbrush and be classified accordingly, although it is doubtful
they would fit the description of the goods subject to anti-dumping duty in the Final Determination.
The parts came in the same shipment and Customs duly classified the goods using Rule 2 (a)
as paintbrushes and charged the normal duty.  The importer questioned the legality of charging
dumping duty on parts of paintbrushes.   The Ministry sought a legal opinion on the matter and thisopinion stated that unless the goods fit the description in the Final Determination (paintbrushes) no
anti-dumping duty can apply.  It also noted that the Rules of Interpretation are for establishing a
Customs Tariff Classification - not establishing  whether a good is subject to a dumping duty.
In reviewing its options, the Ministry explored the use of other existing legislation.  Under the
Customs Act, for example, it is an offence to evade any duties.  As an anti-dumping duty is defined as
a "special duty" under the Customs Act the possibility of action under that Act was considered.  It wasthought that such an action was unlikely to succeed given that the importer had been open about its
practice and its intent to "avoid" the anti-dumping duty by importing parts and assembling them in
New Zealand, rather than importing complete paintbrushes.
There are no other rules or legislation available under which action could be taken in the
situation described above.  This is a clear case of circumvention and "avoidance" of an anti-dumping
duty, although it appears to be legal under current laws.  New Zealand is now faced with advising the
manufacturers of paintbrush heads and paintbrush handles that their only option to maintain the
effectiveness of the current measure is to lodge applications on behalf of their industries and the
investigating authority to consider a possible two new cases on their merits.
What would other Members do in this situation?  Is this a clear example where existing rules
do not cover the action and some circumvention rules may be appropriate?
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