RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/IG/W/23
9 May 2000
(00-1888)
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 Japan
The following communication, dated 1 May 2000, has been received from the Permanent
Mission of Japan.
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Japan would like to contribute to the discussion of Topic 2 by providing a checklist of
questions that Members may wish to address when the Informal Group examines what Members do
when they are confronted with what they consider to be circumvention.  Japan hopes that thischecklist will assist the Group in conducting a structured and constructive discussion of the factual
information provided by Members under this topic.  Japan believes that only the evasion of anti-
dumping duties by fraudulent behaviour should be regarded as a "circumvention" of such duties.
1  For
the purposes of this checklist Japan will however use the term circumvention to encompass also those
economic activities that are considered to constitute circumvention by the Members of the Group that
support the introduction of new rules on circumvention.
I. THE PRACTICAL IMPORTANCE OF ANTI-CIRCUMVENTION MEASURES
AGAINST MEMBERS OF THE WTO
1. How often have measures been adopted by the Members of the Informal Group that they
consider to be anti-circumvention measures?
2. What is the proportion of anti-dumping measures adopted by the Members that have been
followed by anti-circumvention measures?
3. How many Members of the WTO have adopted special procedures for dealing with cases of
circumvention?
4. How often have the Members that have adopted special procedures for dealing with
circumvention resorted to such procedures?
5. What is the proportion of cases in which anti-circumvention proceedings led to a finding of
circumvention under such procedures?
Comment: Japan has pointed out in an earlier submission to the Group that the United States,
which maintained over 300 anti-dumping orders between 1995 and 1998, did not make any findings
                                                     
1 See G/ADP/IG/W/4G/ADP/IG/W/23
Page 2
of circumvention during that period while five anti- circumvention proceedings had been initiated.
The experience in the EC is similar:  during the 1995-1998 period, the EC maintained around over
150 anti-dumping orders and initiated 16 anti-circumvention proceedings.  However, only three such
proceedings led to a finding of circumvention duri ng that period.  Japan pointed out that this
experience demonstrated that there was no practi cal need for special rules on anti-circumvention.2
Japan believes that it would be useful to examine whether the experience of other Members is
comparable to that of the United States and the EC .  This would help the Group arrive at a conclusion
on the question of whether the circumvention of anti-dumping measures is in practice a serious
problem.
II. DEALING WITH CIRCUMVENTION WITHIN THE FRAMEWORK OF NORMAL
ANTI-DUMPING PROCEDURES OR CUSTOMS REGULATIONS
6. To what extent did Members deal, or could have dealt with, the cases of circumvention by
initiating a new anti-dumping proceeding?
7. To what extent could Members have avoided the application with anti-circumvention
measures by describing a different definition of the product subject to the original anti-
dumping proceeding?
8. To what extent did Members deal, or could ha ve dealt with, the cases with circumvention (in
particular those involving fraudulent behaviour) within the framework of domestic rules andprocedures designed to secure compliance with customs regulations?
9. To what extent did Members deal, or could ha ve dealt with, the cases with circumvention (in
particular those involving transshipments via third countries) by applying Article 2.5 of the
Anti-Dumping Agreement.
10. To what extent did Members deal, or could ha ve dealt with, the cases with circumvention (in
particular the cases involving the shipment of incomplete or unfinished articles) by applying
customs classification rules set out in their customs regulations?
Comment: When the Informal Group discussed Topic 1, several Members reported that they
dealt with circumvention within the framework of their ordinary anti-dumping procedures and
customs regulations.  One Member stated that some cases of circumvention had led to the initiation of
new anti-dumping proceedings by the domestic industry.3  Another Member informed the Group that
in some cases of circumvention where the domestic industry had previously supplied the authorities
with appropriate evidence new investigations had been initiated ex officio pursuant to Article 5.6 of
the Anti-Dumping Agreement.4  One Member pointed out that, if the anti-dumping authorities were to
pay greater attention to a precise identification of the product coverage in anti-dumping proceedings,
special anti-circumvention measures to respond to minor product modifications could be avoided.5
One Member reported that, under its domestic law, circumvention involving fraudulent behaviourcould be dealt with under its Customs and Excise Act.
6  Another Member pointed out that rules of
origin that are based on the principle of substantial transformation could be used to address minorassembly operations in third countries or cases of transshipment.  Furthermore, HS customs
classification rules, according to which unfinished or incomplete articles were classified as finished
                                                     
2 G/ADP/IG/W/15, page 3.
3 G/ADP/IG/W/11, pages 1-3.  See also G/ADP/IG/W/10
4 G/ADP/IG/W/12
5 G/ADP/IG/W/8
6 G/ADP/IG/W/11, page 1G/ADP/IG/W/23
Page 3
or completed articles, could forestall attempts to evade anti-dumping duties by importing the goods
subject to anti-dumping measures in the form of parts or components.7
Against this background, Japan suggests that the Group examine to what extent Members that
were confronted with what they consider to be circumvention acted, or would have been able to act,within the framework of their domestic law im plementing the existing WTO rules governing anti-
dumping procedures and the enforcemen t of customs law.  This examination would help prepare the
later discussions of the Group on the question of whether new WTO rules are required to permit
Members to deal effectively with any actual or potential problem of circumvention.
III. CRITERIA USED FOR DISTINGUISHING BETWEEN LEGITIMATE
COMMERCIAL ACTIVITIES AND CIRCUMVENTION
11. Which criteria have Members used in order to determine whether the commercial activity
examined constitutes circumvention or a legitimate  response to the rise in costs resulting from
the imposition of the anti-dumping duty?
12. Where the criteria that Members used such as to ensure that the anti-circumvention measure
did not extend to legitimate commercial activities?
13. Where the exporters or domestic producers given the opportunity to supply information
demonstrating that the economic activities presumed to circumvent anti-dumping measures
were legitimate and/or normal business activities?
Comment: The Anti-Dumping Agreement contains a pr ecise definition of what constitutes
injurious dumping.  The proponents of new anti-circumvention rules have not offered in the
discussions of the Group a similarly precise definition of what constitutes a circumvention of anti-
dumping measures.  They have merely provided the Group with hypothetical cases that they considerto be "obvious" examples of circumvention.  Japan and other Members of the Group pointed out that
the economic activities considered to constitute circumvention in all these hypothetical cases could
very well reflect legitimate and/or normal business reasons (lower labour costs, shifting exchange
rates, economic forces created by regional trade agreements, availability of raw materials).  The
question of whether a change in economic activity a ssociated with anti-dumping measures constitutes
injurious dumping in another form could therefor e be answered only by examining all the relevant
circumstances, that is by conducting a normal anti-dumping investigation.
8
Against this background Japan suggests that the Group examine whether the economic
activities that have in practice been considered to constitute circumvention necessarily constitute in
all circumstances circumvention and, if  not, what the Members have done to ensure that their anti-
circumvention measures do not extend to legitimate acti vities.  In this context, Japan wishes to  point
out that the whole notion of new WTO rules on circumvention hinges on the question of whether
certain economic activities can be clearly defined as circumvention.  In the absence of a generally
applicable definition, circumvention would be what Members unilaterally determine to be
circumvention and the rule of law in the area of anti-dumping would be lost.
IV. CRITERIA USED FOR VERIFYING THE PROBABILITY OF CONTINUOUS
DUMPING AND INJURY
14. Which criteria have Members used to determine whether circumvented imports (such as
slightly modified products, incomplete or unfinished articles, and imports from third
                                                     
7 G/ADP/IG/W/8, pages 2-3
8 See G/ADP/IG/W/15, page 3G/ADP/IG/W/23
Page 4
countries) were continuously dumped and causing injury after imposition of original anti-
dumping duties?
15. Were the criteria that Members used such as to ensure that the anti-circumvention measure
did not extend to cases where no dumping or injury exists?
Comment: The objectives of anti-dumping measures are to stop dumping that cause injury to
domestic industry.  Fundamental condition to reso rt to anti-dumping measures is therefore the
existence of dumping and injury.  The same is tr ue when applying anti-circumvention measures.
Relevant question is not whether there is circumvention or not, but rather whether an injurious
dumping continues in a different form.
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