RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/Q1/USA/7
G/SCM/Q1/USA/7
29 June 1998
(98-2576)
Committee on Anti-Dumping Practices
Committee on Subsidies and Countervailing MeasuresOriginal:  Spanish
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS
Questions from MEXICO to the UNITED STATES1
The following communication, dated 2 June 1998, has been received from the Permanent
Mission of Mexico.
1. § 351.401 of the United States Regulations states that the Secretary will consider warehousing
expenses that are incurred after the subject merchandise leaves the original place of shipment as
movement expenses, and therefore adjustable.  Article 2.4 of the Anti-Dumping Code stipulates thatin constructing the export price, allowance should be made for costs incurred between importation and
resale.  Do these costs incurred between importation and resale include warehousing expenses?
2. Article 2.4 of the Anti-Dumping Code stipulates that in constructing the export price,
allowance should be made for costs incurred between importation and resale.  However, § 351.402 of
the United States Regulations states that the Secretary will not make an adjustment for any expense
that is related solely to the sale to an affiliated  importer in the exporting country.  What are these
expenses for which no adjustment is made on the grounds that they are related solely to the sale to an
affiliated purchaser?  And why are these expenses not adjusted when Article 2.4 of the Anti-Dumping
Code stipulates that "… allowances for costs … incurred between importation and resale … should
also be made"?
3. § 351.402 of the United States Regulations states that in calculating total expenses and total
actual profit for determining the constructed export price, the Secretary normally will use the
aggregate of expenses and profit for all subject merchandise sold in the United States and all like
products sold in the exporting country.  Why is information on sales in the United States and sales of
all like products in the exporting country taken into consideration when according to Article 2.4 of theAnti-Dumping Code, the object is to determine the expenses incurred and the profits obtained through
importation and resale?
4. § 351.402 of the United States Regulations states that for determining profit to be deducted
from the constructed export price, the Secretary may use information on costs of production if suchcosts are reported voluntarily.  Why would information on costs of production be used to determine
profits when according to Article 2.4 of the Anti-Dumping Code, the object is to determine the profits
obtained through importation and resale?
                                                     
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5. What is the justification for using offers for sale in determining normal value when this is not
one of the methods mentioned in Articles 2.1 and 2.2 of the Anti-Dumping Code?
6. According to § 351.403 of the United States Regulations, if an exporter or producer sells the
foreign product through an affiliated party, the Secretary may calculate normal value based on the sale
by such affiliated party.  How is it possible to ensure a fair comparison in the terms of Article 2.4 of
the Anti-Dumping Code when normal value is calculated on the basis of sales by an affiliated party?
7. Article 2.2 of the Anti-Dumping Code states that domestic market transactions may be
disregarded in calculating the normal value for the following reasons:  (i) because they are not
conducted in the ordinary course of trade (which includes those conducted at prices below cost ofproduction, provided they fulfil the conditions set forth in Article 2.2.1);  (ii) because of a particular
market situation;  and (iii) because of the low volume of sales (representativeness).  § 351.405 of the
United States Regulations, however, contains no reference to "particular market situation", and
separates the terms "ordinary course of trade" and "sales below cost of production".
(a) In practice, what types of transactions are included under the definition "ordinary
course of trade"?  What treatment do you give such sales?
(b) How do you interpret the term "particular market situation"?
8. § 351.405 of the United States Regulations states that when neither the home market nor the
export market to a third country is representative, the constructed value in the country of origin may
be used.  The said Regulations do not mention, however, whether the evidence of representativeness
either for the home market or the export market to a third country varies when sales are excluded as
having been made at a loss under Article 2.2 of the Anti-Dumping Code.  In the case of investigationsinvolving exclusions under Article 2.2.1 of the Anti-Dumping Code, at what point is
representativeness to be established?  Before or after the exclusion?
9. According to Section 773(B)(ii)(II) of the United States Tariff Act of 1930, where the
quantity is not sufficient, the representativeness mentioned in Article 2.2, paragraph 1 of the
Anti-Dumping Code may be established using the transaction value.  When is the volume considered
not to be viable for establishing representativeness?
10 § 351.406 of the United States Regulations refers to "extended period of time" as a first
condition for disregarding sales of the product under investigation if they are made at less than the
cost of production.  According to both Section 7 73(b)(1)(A) of the United States Tariff Act and
Article 2.2, paragraph 3 of the Anti-Dumping Code, this period should normally be one year, but in nocase less than six months.  How do you interpret the "extended period of time" mentioned in the Anti-
Dumping Code: (i) as a period of consecutive mont hs, or (ii) as a period of months "scattered"
throughout the investigation?
11. § 351.405 of the United States Regulations mentions that the constructed value may be used
as the basis for normal value where, inter alia , sales below the cost of production are disregarded.
This could be interpreted to mean that for a given type of merchandise (product code) both domestic
prices and constructed value may be used as a basis for determining normal value.  In practice, do you
substitute domestic prices that have been disregarded in the determination of normal value with
constructed values?  If you do not replace the disregarded domestic prices, is it possible, in yourexperience, to make a transaction-to-transaction comparison between the normal value and the export
price in accordance with Article 2.4 of the Anti-Dumping Code even when all domestic sales for a
given month or months within the period of investigation have been disregarded?G/ADP/Q1/USA/7
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12. The United States Regulations have laid down the following conditions for meeting the
requirement under Article 2.4 to make allowance for differences in quantity: (i) during the period
examined, or during a more representative period, the producer must have granted discounts, and
(ii) the exporter or producer must demonstrate that the discounts reflect savings attributable to theproduction of different quantities.  In practice, do you produce additional evidence to demonstrate that
the discounts were given throughout the period, or in other words, that they were usual?
13. Article 2.4 of the Anti-Dumping Code establishes that the comparison between the export
price and the normal value must be fair.  In particular, it stipulates that allowance should be made for
differences in the conditions of sale.  § 351.411 of the United States Regulations takes up this
provision of the Anti-Dumping Code and defines the concept of "reasonable allowance".  It states, in
particular, that "the Secretary will consider only differences in variable costs associated with the
physical differences".  How does the Secretary determine the percentage of variable costs associated
with physical differences in the product?  Is there a maximum percentage of variation in variable costs
for deciding whether or not the product is a like product?
14. Article 2.4 states that the normal value and the export price must be comparable, while
§ 351.414 of the United States Regulations sets forth the way in which the United States compares
normal value and export prices when the export price is constructed, specifically describing various
methods of comparison.  What circumstances determine the application of each one of these
measures?
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