WORLD TRADE
ORGANIZATIONTN/RL/W/130
20 June 2003
(03-3303)
Negotiating Group on Rules Original:  English
FURTHER ISSUES IDENTIFIED UNDER THE ANTI-DUMPING
AND SUBSIDIES AGREEMENTS FOR DISCUSSION BY
THE NEGOTIATING GROUP ON RULES
Communication from the United States
The following communication, dated 17 June 2003, has been received from the Permanent
Mission of the United States.
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Trade remedies form an integral part of the current rules-based international trading system.1
In Doha, the Ministers stressed the importance of the trade remedy rules by mandating that Members
should improve and clarify the rules while “preserving the basic concepts, principles and effectivenessof the Agreements and their instruments and objectives, and taking into account the needs of
developing and least developed participants".
2  The United States is using  these principles to guide its
participation in the Rules negotiating process.
The United States believes that the Rules Negotiating Group may usefully explore
improvement and clarification of the rules with respect to the following issues under the Agreement
on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the “ADA”)and the Agreement on Subsidies and Countervailing Measures (the “ASCM”).  We reserve the right to
identify additional areas for clarification and improvement in the future.
1. Affiliated Parties
Article 4.1 of the ADA defines related parties within the domestic industry for purposes of
standing and injury, but does not define affiliation for purposes of analyzing issues arising from
relationships among foreign producers and resellers.  Because of the lack of clarity in the Agreement
with respect to such relationships, exporting compan ies  may use controlled affiliates to establish
artificially low-priced home market sales in order to avoid an anti-dumping measure.  The ADAshould be clarified to address situations in where one party is in a position to exercise  de facto  control
over another, even when there is no equity ownership or other “legal” control, or where two parties
are in such a position that they may be expected to act in concert.
While Article 4.1 of the ADA includes control in the definition of related parties within the
domestic industry, there is no such definition with respect to affiliations among foreign producers and
resellers.  The traditional definition of control through stock ownership fails to address adequately
                                                     
1 See Communication from the United States, “Basic Concepts and Principles of the Trade Remedy
Rules”, 22 October 2002 (TN/RL/W/27).
2 WT/MIN(01)/DEC/W/1 (paragraph 28).TN/RL/W/130
Page 2
modern business arrangements, which often find one firm operationally in a position to exercise
restraint or direction over another in the absence of an equity relationship.  The idea of  de facto
control, or the ability of one party to legally or operationally exercise restraint or direction over
another party, even where there is no equity ownership or other “legal” control, should be addressed
by this Group for purposes of analyzing issues arising from relationships among foreign producersand resellers.
2. Exchange Rates
Given that the dumping comparison almost always  requires converting the currency of the
normal value sales into the currency of the sales of the product under consideration, the exchange rate
used under Article 2.4.1 of the ADA is one of the most fundamental aspects of the dumpingcalculation.  Yet Article 2.4.1 provides Members with very little guidance, and could benefit from
clarification and improvement.  For example, the guidance for addressing currency movements is
vague, and is particularly ill-suited for addressing sharp currency fluctuations.  Further, the
Agreement should be clarified to require that Members use exchange rates from sources of recognized
authority, and require that such sources be disclosed to interested parties.  Clarification in this areawould help provide greater predictability and prevent misuse of exchange rates leading to
inappropriate determinations of dumping.
3. High Inflation Economies
An issue closely related to exchange rates is the special methodologies which may be
necessary when an exporting country is experiencing very high levels of inflation.  For example, in
calculating the cost of production pursuant to Article 2.2.1 of the ADA, authorities should take into
account the fact that input prices have increased rapidly throughout the period of investigation.
Comparing a home market price at the beginning of the period with costs at the end, or vice versa,may be highly distortive.  Similarly, although the la pse of a few months between the date of an export
sale and the date of a home market sale with which it is to be compared may make little difference in
most cases, in high inflation circumstances, unless an appropriate methodology is used, the resulting
dumping margin calculated could be more a reflection of inflation than of pricing practices.  Relevant
provisions should be clarified to give better guidance in this regard.
4. Consistent Use of Terminology
In its recent paper, TN/RL/W/91, Australia provided a thoughtful discussion of the use of the
term “like product” in the ADA.  As reflected in that discussion, although the term has been defined
in Article 2.6 of the ADA for use “[t]hroughout this Agreement”, the application of the same
definition may provide different results depending upon the term’s context (for example, Article 2 ascompared with Article 3, as Australia notes).  While we agree with Australia that the text of the ADA
could be clarified and improved through a review of the use of the term “like product”, we note that
the ADA and ASCM would benefit from a review of the use of other terms within each Agreement as
well as across the two agreements.  Such a review would reveal the inconsistent use of certain terms,
which may have unintended consequences for the interpretation of the Agreements.  For example,Article 6.7 of the ADA provides for notifying “the representatives of the government of the Member”
with respect to an in-country verification.  By contrast, in elaborating on the same requirement,
Annex I, paragraph 1 refers to notifying “the authorities of the exporting Member”.  Similarly, in what
are otherwise equivalent provisions, Article 19.3 of the ASCM uses the term “levied” where
Article 9.2 of the ADA uses the term “collected”.TN/RL/W/130
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5. Disclosure of Calculations
The ADA and ASCM contain various provisions requiring administrators to provide public
notice and explain determinations so that interested parties have the ability to prepare and adequately
defend their interests.  In particular, Article 12 of the ADA and Article 22 of the ASCM addressaccess to non-confidential information used by national authorities in an investigation.  Additionally,
Article 6 of the ADA and Article 12 of the ASCM address the evidence national authorities will
consider and disclose in an investigation.  The United States referred to these provisions in an earlier
paper and asked Members to consider ways to promote greater disclosure of decisions and
calculations performed.
3  To ensure that investigating authorities provide adequate explanations of
decisions made, the United States suggests that Members consider whether a requirement might be
warranted for a disclosure meeting for the authorit ies to review with the interested parties, upon
request, how the dumping margins and countervailing duty rates were calculated.  Such a disclosure
meeting would provide an opportunity for an interested  party to meet with the administrators and get a
complete and detailed explanation of the calculation methodology applied.
6. Preliminary Determinations in Anti-Dumpi ng and Countervailing Duty Investigations
In a prior submission, the United States has stated that investigatory procedures in anti-
dumping and countervailing duty investigations s hould promote openness, opportunity for effective
participation, consistency, accuracy, predictability, and accountability.4  In the view of the
United States, a preliminary determination is one of the best tools to help promote these goals.Although such determinations may be imperfect because not all information has been gathered, they
give the parties a very good idea of the view the authorities take of the facts before them.  They also
can provide both authorities and the parties the means to identify issues that warrant further
development or argument before issuance of a final determination.  Where Members choose to issue
preliminary determinations, Article 12.2 of the ADA and Article 22.3 of the ASCM require a public
notice providing an explanation of the findings in sufficient detail, setting forth all relevant facts and
analysis, which allows for informed comment by interested parties.  However, Members are not
required to issue preliminary determinations.
Members should consider whether the Agreements could be improved by requiring that
Members issue a preliminary determination at a point in time prior to a final determination that would
give parties sufficient time to defend their interests.
7.  Standard of Review
Article 17.6 of the ADA provides a special standard of review applicable to dispute settlement
proceedings concerning anti-dumping measures.5  It is critical to understand the significance of this
provision in the ADA.  The ADA negotiators explicitly recognized that there were a number of issues
                                                     
3 See “Investigatory Procedures under the Anti-Dumping and Subsidies Agreements”, Submission by
the United States, 3 December 2002 (TN/RL/W/35).
4 See Submission by the United States, “Investigatory Procedures under the Anti-Dumping and
Subsidies Agreements”, TN/RL/W/35 (3 Dec. 2002).
5 Specifically, Article 17.6 of the ADA provides that: (i) “[I]n its assessment of the facts of the matter,
the panel shall determine whether the authorities’ establishment of the facts was proper and whether their
evaluations of those facts was unbiased and objective.  If the establishment of the facts was proper and the
evaluation was unbiased and objective, even though the panel might have reached a different conclusion, the
evaluation shall not be overturned; and (ii) [T]he panel shall interpret the relevant provisions of the Agreementin accordance with customary rules of interpretation of pu blic international law.  Where the panel finds that a
relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find theauthorities’ measure to be in conformity with the Agreement if it rests upon one of those permissible
interpretations.”TN/RL/W/130
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and details that were not included in the ADA.  For example, the ADA contains a number of general
obligations but leaves Members flexibility on the precise means by which to implement those
obligations in practice.  One value of Article 17.6 is to help ensure that panels not mandate one
particular method of implementation where an authority’s alternative method is based on a
permissible interpretation of the ADA.  Thus, Articl e 17.6(ii) expressly contemplates that provisions
of the ADA may be susceptible to more than one permissible interpretation, and provides that
authorities’ determinations that rest on any one of those permissible interpretations should not be
overturned.
If Article 17.6 is observed and applied properly, in concert with Articles 3.2 and 19.2 of the
Dispute Settlement Understanding, then that will help the WTO dispute settlement system to respect
the balance of commitments inherent in the ADA and not operate so as to impose upon Members
obligations to which they did not agree.  However, in connection with aspects of several recent cases,
the United States believes that panels and the Appellate Body have not accepted reasonable,
permissible interpretations of the ADA.6  In some cases, these bodies have used general terms in the
Agreement to extrapolate what the Agreement would have said about a particular issue if Members
had explicitly considered it and agreed upon specific provisions to address the issue.
In addition, panels and the Appellate Body have reached the unwarranted conclusion that
applying customary rules of interpretation of international law results in a single permissible
interpretation of most provisions of the ADA.  This approach is at odds with the underlying premise
of Article 17.6.  Article 17.6(ii) explicitly contemplates that it is to be expected that applyingcustomary rules of interpretation will admit of more than one permissible interpretation.
7  T o  t h e
extent that the approach of panels or the Appell ate Body renders Article 17.6(ii) a nullity, then that
approach is itself inconsistent with the customary rules of interpretation.
Regardless of their position on the substantive issues, all Members should be concerned by
dispute settlement findings that disregard provisions agreed to by Members during negotiations.
Members should consider whether Article 17.6 should be addressed to ensure that panels and the
Appellate Body properly apply it.  Members should  also consider whether a provision similar to
Article 17.6 of the ADA should be included in the ASCM.
8. Market Segmentation
Article 3.1 of the ADA and Article 15.1 of the ASCM state that an injury determination shall
be based on “an objective examination” of the volume of dumped or subsidized imports, the effect of
these imports on prices in the domestic market for like products, and the impact of these imports on
domestic producers of such products.  Article 3.4 of the ADA and Article 15.4 of the ASCM
emphasize that the analysis of impact should be of the impact “on the domestic industry.”
                                                     
6 For example, in United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan  (Japan Hot-Rolled ), the Appellate Body imported into the ADA an affirmative obligation it had
developed in certain safeguard cases to analyze the exte nt to which other known factors contributed to injury.
Relying on the ADA’s negative obligation not to attribute injury caused by other factors to the dumped imports,the Appellate Body fashioned an affirmative requirement to “separate and distinguish” the effect of the dumped
imports from that of other factors, even though there is no mention of “separating” or “distinguishing” the
effects of such factors in the ADA (or in the Safeguards Agreement, for that matter).  In doing so, the AppellateBody acknowledged, but declined to consider, the detailed language in the ADA governing how to conduct acausation analysis.
7 Indeed, in marked contrast to the conclusion of Mi nisters that the ADA is in need of clarification and
improvement, and notwithstanding the often excellent arguments on all sides among the Members before it, the
Appellate Body has rarely found a provision of the ADA to admit of more than one interpretation.TN/RL/W/130
Page 5
The manner in which an authority can best undertake “an objective examination” of the
impact of dumped or subsidized imports “on the domestic industry”  will vary depending on the
nature of the product and industry at issue.  In certain circumstances, the product at issue may be sold
in several different forms, may be sold or transferred for different uses, or may be sold or transferred
to distinct types of entities.  (For example, sugar is sold to food processors for use in producing other
types of processed food products, and is also sold for end use by consumers as table sugar.)
Therefore, a sectoral analysis of such an industry may be particularly useful to an investigating
authority in its examination of impact.  The utility of sectoral analysis, as long as it encompasses an
examination of all industry sectors, was recognized by the Panel in Mexico – High Fructose Corn
Syrup from the United States , WT/DS132/R, paras. 7.154-.155 (adopted 24 Feb. 2000), and by the
Appellate Body in Japan Hot-Rolled , para. 195.  Members should consider whether Article 3 of the
ADA and Article 15 of the ASCM should be clarified to state expressly that investigating authoritieshave the discretion to engage in sectoral analysis of the impact of dumped or subsidized imports on
the domestic industry in appropriate circumstances, as long as their analysis of impact encompasses
the entire domestic industry.
9. Definition of “dumped imports”
Under Article 3.1 of the ADA, an authority is to engage in an “objective examination” of “the
volume of dumped imports”, “the effect of dumped imports on prices in the domestic market for like
products”, and the consequent impact of dumped imports.  Articles 3.2 and 3.4 of  the ADA elaborate
on these obligations, as does Article 3.7 of the ADA with respect to threat determinations.
In its recent report in European Communities – Anti-Dumping Duties on Imports of
Cotton-Type Bed Linens from India , WT/DS141/AB/R/W (adopted 24  April 2003), the Appellate
Body observed that Articles 3.1 and 3.2 of the ADA “do not set out a specific methodology that
investigating authorities are required to follow wh en calculating the volume of dumped imports,” and
additionally acknowledged that, in light of ADA Article 6.10 (and under the circumstances described
in the second sentence therein), these provisions must be interpreted in a way that does not require
investigating authorities to investigate each producer or importer individually for purposes of
assigning a dumping margin.  While the Appellate Body concluded that the EC’s particular method
before it of calculating the volume of  “dumped imports” did not satisfy the requirements of
Articles 3.1 and 3.2, it stated that there may be several possible ways of making such calculations that
did satisfy these provisions.  Members should consider whether the ADA should be clarified tospecify methods that investigating authorities can readily implement in the injury investigation to
calculate the volume of dumped imports for purposes of Articles 3.1 and 3.2 which do not, in
accordance with Article 6.10, require examination in the dumping investigation of each individual
producer or importer.
10. Examination of Impact
Article 3.4 of the ADA and Article 15.4 of the ASCM state that the examination of the impact
of dumped or subsidized imports should encompass “all relevant economic factors and indices having
a bearing on the state of the industry”.  Each Agreement then provides a listing of particular factorsthat an authority shall examine, but indi cates that the listing “is not exhaustive”.
It is clear that an authority must examine each of the factors listed in Article 3.4 of the ADA.
The scope of the authority’s obligation to examine “relevant factors and indices” other than the ones
explicitly listed in Article 3.4 of the ADA and Arti cle 15.4 of the ASCM is less clear.  Members
should consider whether these provisions should be clarified to provide greater certainty both to
investigating authorities and to the parties that appe ar before them concerning this matter.  Any such
clarification should take into account that, due to time and resource constraints, an authority’s
obligation to examine other relevant factors should not be open-ended.  Such a clarification could alsoTN/RL/W/130
Page 6
address whether there should be an express limitation on the authority’s obligation with respect to
such factors that were never brought to the authority’s attention during the course of its investigation.
11. Condition of the domestic industry in any threat of material injury analysis
Article 3.7 of the ADA specifies four factors and Article 15.7 of the ASCM specifies five
factors that investigating authorities are to consider  in making a determination regarding the existence
of a threat of material injury.  As the Agreements explain, “no one of these factors by itself can
necessarily give decisive guidance but the totality of the factors considered must lead to the
conclusion that further dumped exports are imminent and that, unless protective action is taken,
material injury would occur”.  The Agreements do not specify how the condition of the domestic
industry is relevant to this inquiry.  Members should consider whether the Agreements should beclarified to address investigating authorities’ consideration of the current condition of the domestic
industry in an analysis of the threat of material injury.
12. Nature and Composition of Investigating Authorities
Neither the ADA nor the ASCM contains any requirement concerning the national authorities
that conduct anti-dumping and countervailing duty investigations.8  Consequently, Members, under
their national laws, have organized their authorities differently.  Some Members have a single
authority conduct investigations of both injury and dumping; other Members have one authority
conduct the dumping investigation and a distinct authority conduct the injury investigation.  SomeMembers have authorities with a single decision maker, and others authorities with multiple decision
makers.
Individual Members should continue to have the flexibility to organize their authorities as
they deem appropriate.  Consequently, Memb ers should consider whether the ADA and ASCM
should be clarified to expressly incorporate this concept, particularly for Members that use separate
authorities to conduct injury and dumping investigations or for Members that use authorities with
multiple decision makers.  Matters that may be addressed in such a clarification could include, for
example, a Member’s ability:  (a) to determine what constitutes the determination of the appropriate
authority; and (b) to permit separate au thorities to maintain distinct records.
13. Privatization
Most, if not all, Members with established countervailing duty methodologies recognize that
some types of subsidies can benefit a recipient over a number of years, usually related to the useful
life of assets employed in the relevant industry.  When a subsidy recipient is privatized during the
subsidy allocation period, an issue arises as to the impact the privatization should have on theremaining unallocated portion of the subsidy benefit.  A related question is how such an impact may
differ under different economic conditions and other circumstances.
The only provision in the ASCM regarding the privatization issue specifically agreed to by
Members during the Uruguay Round was Article 27.13.  Pursuant to this provision, Members agreedthat – as part of the special and differential treatment provisions of the ASCM granted to address the
needs of developing countries – certain pre-privatization subsidies should not be actionable under
Part III of the ASCM provided that the privatization program and the subsidies involved are granted
for a limited period and notified to the Subsidies Committee, and the program results in the
privatization of the company concerned.  However, the ASCM contains  no explicit provisionregarding the impact of privatization on the benefit from prior subsidies in those circumstances in
                                                     
8 Except, of course, the requirements in Article 16.5 of the ADA and Article 25.12 of the ASCM that
Members notify their competent authorities to the Anti-Dumping and Subsidies Committees.TN/RL/W/130
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which Article 27.13 does not apply.  As Members are aware, this issue has been subject to dispute
settlement proceedings, but findings in these proceedings have raised additional questions.  We
believe that Members should examine whether the ASCM should be clarified in this area.
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