RESTRICTED
WORLD TRADE G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
ORGANIZATION 12August 1996
(96-3177)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
NOTIFICATION OFLAWS AND REGULATIONS UNDER
ARTICLES 18.5AND 32.6OFTHE AGREEMENTS
Replies ofJAPAN1
toquestions posed bytheEUROPEAN COMMUNITY2
Thefollowingcommunication,dated29July1996,hasbeenreceivedfromthePermanentMission
ofJapan.
_______________
NecessarynotificationsoflawsandregulationsandtheGuidelineareinthecourseofpreparation,
andwillbesubmitted bythenextmeeting oflegislation review.
Countervailing dutylegislation ofJapan
General
1. CanJapan explain thelegalrelationship between thecustoms Tariff LawandtheCabinet Order
Relating toCountervailing Duty? What willhappen incaseadecision taken under theCabinet
Order appears toconflict withtheLaw? Willother legislation beadopted totakeaccount in
greater detail oftheprovisions oftheWTO Agreements?
TheCustoms Tariff Law("theLaw") stipulates fundamental ruleswhich affect therights and
obligations oftheGovernment ofJapan andtheinterested parties, andtherelated Cabinet Orders provide
fortheprocedures toexecute theLaw. Therefore, thereisnoconflict between theLawandtheCabinet
Orders. However, ifthereshould beanyconflict, theLawprevails overtheCabinet Orders. Inaddition
totheLawandtheCabinet Orders, the"Guidelines" stipulate detailed procedural matters tofacilitate
theoperation oftheSCM system.
2. CanJapan alsoexplain whether inthose instances inwhich itrefers directly toprovisions of
theSCM, thisimplies thatthose provisions havedirect effect within theJapanese legalsystem?
Does thisalsoimply thatother, non-referred toSCM provisions, donothavedirect effect?
1G/ADP/N/1/JPN/2+Corr.1-G/SCM/N/1/JPN/2+Corr.1.
2G/ADP/W/157+Suppl.1-G/SCM/W/164+Suppl.1,G/ADP/W/261-G/SCM/W/271,G/ADP/W/285-
G/SCM/W/292.G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page2
Necessary changes tothedomestic legislation havebeenmade inorder toimplement theWTO
Agreement. TheCustoms Lawconfirms thattheprovisions oftheWTO Agreement canbedirectly
applied. Ifthere should beanyconflict, theWTO Agreement prevails overthedomestic legislation.
Customs Tariff Law
3. Article 6
TheCommunity doesnotunderstand whatwillhappen incaseofafinding ofadverse effects
under Article 5SCM. WillinsuchcaseJapan under Article 6Customs Tariff Lawimpose
aduty? Ifso,howwillthissquare withother, verydetailed provisions oftheSCMinrespect
ofimposition ofacountervailing duty? Also, istheCommunity right inunderstanding that
insuchacasesubsidies ofthegreen list(Article 8SCM) willbeexempted? Please explain
indetail howthesystem willwork.
Ifasubsidy which isspecific inaccordance withtheprovisions ofArticle 2causes injury as
provided inArticle 15oftheSCM Agreement, thissubsidy canbesubject toeither countervailing
measures pursuant toArticle 7oftheLawortheremedies setoutinArticle 7oftheSCM Agreement.
Ifaspecific subsidy isfound tocause other categories ofadverse effects (nullification or
impairment ofbenefits under theGATT 1994orserious prejudice inaccordance withArticle 6ofthe
SCM Agreement), thissubsidy canbesubject totheremedies including countermeasures assetout
inArticle 7oftheSCM Agreement (Article 6.1.1 oftheLaw).
Non-actionable subsidies under Article 8.2oftheSCM Agreement canonlybesubject tothe
remedies authorized bytheSCM Committee (Article 9.4oftheSCM Agreement) iftheycause serious
adverse effects (Article 6.1.2 oftheLaw).
Non-specific subsidies areexempted from bothCVD andcountermeasures.
4. Article 7(2)
Thedefinition ofasubsidy refers toArticle 1SCM butitdoesnotseem torefertoArticle 2
SCM (specificity). Please explain whether andhowthespecificity criteria willbeapplied.
Article 7.2oftheLawrefers toArticles 8.1and8.2oftheSCM Agreement, which inturn
refertothespecificity criteria inArticle 2oftheSCM Agreement.
5. Article 7(6)
"Arequest should contain sufficient evidence concerning thefactoftheimportation ofthe
subsidized product andthefactofmaterial injury etc." What ismeant by"etceteras"? How
willJapan ensure thatallconditions under theWTO regarding material injury andcausality
arerespected?
Theword "etc." means thesituation which threatens tocause material injury toadomestic
industry ormaterially retards theestablishment ofdomestic industry.
AstohowJapan willensure thatallconditions under theWTO Agreement regarding injury
andcausality arerespected, investigating authorities investigate subsidized imports, injury todomestic
industry andcausality between thesubsidized importation andinjury inaccordance withbothArticle 7
oftheLawandArticle 15oftheSCM Agreements.G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page3
6. Please explain howwillJapan, once ithasfound thatasubsidy exists, calculate its
countervailable amount. HowwillJapan ensure fullapplication oftheguidelines laiddown
inArticle 14SCM?
Withregard tothecriteria forCVD amount, theprovisions ofArticle 14oftheSCM Agreement
aredirectly applied.
7. Once acomplaint hasbeenlodged withtheJapanese authorities, howwillJapan supplement
therightofother Members topre-initiation consultations aslaiddown inArticle 13(1) SCM?
Therelevant provisions oftheAgreement aredirectly applied (i.e.Article 13.1oftheSCM
Agreement).
8. Article 7(2)
Itisunclear howwillsubsidies thatareclaimed tofulfilthecriteria ofthegreen list(Article 8
SCM), bedealt withintheadministrative proceeding. Forinstance, isaseparate andrapid
decision onthestatus ofsuchsubsidies foreseen?
Before deciding whether toinitiate aninvestigation, investigating authorities consider whether
thesubsidy concerned isactionable ornon-actionable inlightofArticle 8oftheSCM Agreement.
Inaddition, evenafterinitiation ofinvestigation, interested Members andinterested parties maypresent
theirviews thatthesubsidies concerned should beexempted fromtheproceedings andtheauthorities
willterminate theinvestigation iftheconditions aremet.
9. Could Japan please listwhataretherights ofthedefence ithasforeseen during aninvestigation:
forinstance, caninterested parties inspect non-confidential files? Cantheyaskforahearing?
etc.
Interested parties have, among others, therightto:
- offer undertakings (theLaw, Article 7.8.2)
- present theevidence ortestimony onthefacts, referred toinArticle 7.1oftheCabinet
Order relating toCountervailing Duty.
- seethepresented evidence, documents andrecord oftestimony (Cabinet Order, Article
8.1).
- present thedocument which contains theviews withregard totheinvestigation (Cabinet
Order, Article 9.1).
Cabinet Order No.416
10. Article 2
Please explain howwillJapan determine what isamajor proportion ofitstotaldomestic
production.
Major proportion isinterpreted as50percentin"theGuidelines".G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page4
11. WillJapan impose thefullamount ofcountervailing dutyorlessthanthetotalamount ofsubsidy
ifsuchlesserdutywouldbeadequatetoremovetheinjurytothedomesticindustry?(Article19.2
SCM). Ifso,canJapan explain howthissystem willbeapplied inpractice andindicate which
method itwillapply tocalculate aninjury threshold?
Article 7oftheLawprovides thattheGovernment mayimpose CVD inanamount equal to
orlessthantheamount ofthesubsidies concerned ifitissufficient toprotect domestic industry.
Supplementary questions
I. General
1. Attheoutset itshould bestated thattheexact meaning ofsome oftheprovisions canbyno
means beestablished withcertainty because thetextcontains brackets andcross-references
toother provisions which arefrequently drafted insuchawaythatitisdifficult todetermine
theirexact effect (Cf.e.g.subparagraph (2)ofArticle 8(2)). Itmight therefore beagoodidea
ifJapan submitted arevised translation oftherelevant legal texts.
Itshould alsobenoted thatthetextofArticle 8oftheCabinet Order relating toAnti-Dumping
Dutywasomitted inthedocuments received.
Thetextsofthelawandregulations were translated intoEnglish withaview toconveying
theiroriginal meaning. (Intheoriginal text,there areasmany cross references asthetranslation.)
Thus, wedonotseeanyneedtorevise thesubmitted textasawhole. Article 8oftheCabinet Order
relating toAnti-Dumping Duties ("COAD") hasbeen submitted (G/ADP/N/1/JPN/2/Corr.1-
G/SCM/N/1/JPN/2/Corr.1).
2. Legal relationship between theCustoms Tariff LawandtheCabinet Order relating toAnti-
Dumping Duty
Could Japan explain thelegal relationship between theCustoms Tariff LawandtheCabinet
Order relating toAnti-Dumping Duty? What willhappen ifadecision taken under theCabinet
Order appears tobeinconflict withtheCustoms Tariff Law?
TheCustoms Tariff law("the Law") stipulates fundamental ruleswhich affect therights and
obligations oftheGovernment ofJapan andtheinterested parties, andtherelated Cabinet Orders provide
fortheprocedures toexecute theLaw. Therefore, there isnoconflict between theLawandCabinet
Orders. However, ifthere should beanyconflict, theLawprevails overtheCabinet Orders.
II. Specific provisions oftheJapanese Anti-Dumping Law
3. Subparagraphs (1)and(2)ofArticle 8(2)oftheCustoms Tariff Law
Could themeaning ofsubparagraphs (1)and(2)ofArticle 8(2)oftheCustoms Tariff Lawbe
explained?
Itwould appear thattheEnglish version ofthese twoprovisions maynotbeentirely clear.G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page5
Article 8.2ofthelawstipulates thatanti-dumping duties maybelevied retroactively inthe
following three cases:
(i) [Thefirstparagraph] Retroactive imposition fortheperiod ofprovisional measures
corresponding toArticle 10.2oftheADAgreement ("the Agreement").
(ii) [Thesecond paragraph] violation ofundertakings corresponding toArticle 8.6ofthe
ADAgreement.
(iii) [Thethirdparagraph]ThecaseofmassivedumpedimportscorrespondingtoArticle10.6
oftheADAgreement.
Article 8(9)oftheCustoms Tariff Law
4. Towhatcircumstances doestheword "etc." ascontained inArticle 8(9)oftheCustoms Tariff
Lawrefer? Howwillitbeensured thattheprovisions contained inArticle 10.4oftheGATT
Anti-Dumping Code arecomplied with?
Theword "etc." inArticle 8.9oftheLawmeans thesituation which threatens tocause material
injury toadomestic industry ormaterially retards theestablishment ofdomestic industry asstipulated
inArticle 8.1oftheLaw.
Inthecases above (i.e.threat andretardation cases), when thefinaldetermination wasmade,
theGovernment cannot retroactively impose theADdutyasstipulated inArticle 8.2oftheCustoms
Tariff Lawandwould promptly release thesecurity deposit collected during theperiod ofprovisional
measures asstipulated inArticle 8.11oftheCustoms Tariff Law. Thisisconsistent withArticle 10.4
oftheAgreement.
Article 8(14) oftheCustoms Tariff Law
5. WillJapan notonlycarry outnewcomer reviews onanaccelerated basis, butalsoinitiate them
onthisbasis? Howisitintended tointerpret thewording "within oneyearonanaccelerated
basis"? Doesthismean thatnewcomer reviews willalso,likenormal investigations, becarried
within oneyear?
Authorities would initiate andcarry outthereview fornewsuppliers within oneyearonan
accelerated basis inaccordance withArticle 9.5oftheAgreement.
Theterms of"within oneyearonanaccelerated basis" means thatreview willbeconduced
onanaccelerated basis andbecompleted within oneyearaftertheinitiation.
Article 8(25), (26), (27)oftheCustoms Tariff Law
6. Towhatcircumstances doestheword "etc." ascontained inArticle 8(25), (26)(27)ofthe
Customs Tariff Law, refer? Could Japan describe precisely under what circumstances itis
envisaged toextend thefive-year period?
Theanswer isthesame asthatforQuestion 4.
TheGovernment mayextend thefive-year period inthecasewhere itisfound thatthe
importation ofthespecified dumped product andthefactofthematerial injury etc.tothedomesticG/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page6
industry caused bysuchimports threatens tocontinue orrecur aftertheexpiry oftheperiod asstipulated
inArticle 8.25oftheCustoms Tariff Law.
Article 8(32) to(36)oftheCustoms Tariff Lawinconjunction withArticle 19oftheCabinet Order
relating toAnti-Dumping Duty
7. Howisitintended tocalculate thereimbursable amount inarefund proceeding incases where
export prices havetobeconstructed? Willanti-dumping duties already paidbeconsidered
asacostbetween importation andresale?
Whatismeant bytheterm"other necessary matters" ascontained inArticle 8(33) oftheCustoms
Tariff Law?
CouldJapansubmittheprovisionsoftheCustomsLawreferredtoinArticle8(35)oftheCustoms
Tariff Lawinorder toevaluate iftherelevant provisions areincompliance withthelasttwo
sentences ofArticle 9.3.1 oftheGATT Anti-Dumping Code?
(i) Treatment ofanti-dumping duty
Japan'sdomestic lawsandregulations donothavespecific provisions concerning the
method ofcalculation ofreimbursable amount. Therefore, regarding thecalculation
ofthereimbursableamount,theprovisionsofArticle9.3.3oftheAgreementaredirectly
applied.
(ii) Themeaning of"other necessary matters" asstipulated inArticle 8.33oftheLaw.
Thistermincludes concrete reimbursable amount.
(iii) Timing ofrefund
Article 8.33 oftheLaw stipulates thattheauthority shall, onthebasis ofthe
investigation andwithout delay, reimburse theanti-dumping dutywithin thelimitof
theamount requested. Weinterpret that"without delay" ismore prompt than"within
90days" stipulated inArticle 9.3.2 oftheAgreement.
Article 2(2)oftheCabinet Order relating toAnti-Dumping Duty
8. Could itbeexplained howitisintended tointerpret theprovision "lowvolume ofthesales
ofthelikeproducts inthesaidsupplying country"? Would itnothavebeenmore appropriate
toreproduce thetextoffootnote 2oftheGATT Anti-Dumping Code?
Japan'slawsandregulations donotdefine "lowvolume ofthesales". Therefore, therelevant
provisions oftheAgreement (Footnote toArticle 2.2)aredirectly applied withregard to"lowvolume
ofthesales".
Article 2(2)oftheCabinet Order relating toAnti-Dumping Duty
9. Could itbeexplained howitisintended tointerpret theconcept of"ordinary course oftrade"
asreferred toinArticle 2(2)oftheCabinet Order relating toAnti-Dumping Duty? Isitintended
toenactprovisionssimilartothoseofArticle2.2.1and2.2.1.1(includingtherelevantfootnotes)
oftheGATT Anti-Dumping Code?G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page7
Japan'slawsandregulations donotdefine theconcept of"ordinary course oftrade". Therefore,
theprovisions ofArticle 2.2oftheADAgreement aredirectly applied withregard to"ordinary course
oftrade".
Subparagraph 3ofArticle 2(1)oftheCabinet Order relating toAnti-Dumping Duty
10. Could itbeexplained howitisintended tocalculate theconstructed normal value? Isitintended
toenact more detailed provisions onthissubject which reflect Article 2.2.2 oftheGATT Anti-
Dumping Code?
Japan'slawsandregulations donothaveprovisions concerning theconcrete calculation method
fortheconstructed normal value. Therefore, theprovisions ofArticle 2.2.2 oftheADAgreement
aredirectly applied.
Subparagraph (1)ofArticle 5(1)oftheCabinet Order relating toAnti-Dumping Duty
11. Neither theCustoms Tariff LawnortheCabinet Order contain anyprovisions corresponding
toArticle 5.4oftheGATT Anti-Dumping Code. Howexactly willstanding bedetermined?
Article 5oftheCOAD stipulates 25percentoftotalproduction asastanding requirement
forinitiating aninvestigation.
Further, astothe50percentsupport rule,theprovisions ofArticle 5.4oftheAgreement
aredirectly applied andthemanner tofindthedegree ofsupport isprovided forinArticle 5(2)of
theGuidelines.
Article 7oftheCabinet Order relating toAnti-Dumping Duty
12. Subparagraph (5)ofArticle 7(1)oftheCabinet Order relating toAnti-Dumping Dutylaysdown
onlythataperson requesting theinitiation ofanewanti-dumping proceeding hastoprovide
a"(...) summary astothefactofimportation ofthedumped products andthefactofthematerial
injury, etc.totheindustry caused bysuchimportation (...)".
HowwillJapan ensure thatthestandards applying tothecontents ofacomplaint setoutin
Article 5.2(iii)(iv) oftheGATT Anti-Dumping Code willbecomplied with?
"The factofimportation ofthedumped products andthefactofthematerial injury, etc.to
theindustry inJapan" (7.1(5) oftheCabinet Order) isinterpreted inAnnex 2of"theGuidelines" in
accordance withArticle 5.2oftheAgreement. Thus, standards forthecontent ofcomplaints such
asinformation onprices, volume ofthedumped imports, itseffect onprices inthedomestic market
anditsconsequent impact onthedomestic industry arebuiltinJapan'sADsystem.
Information tobeincluded inanapplication isthefollowing:
- themargin ofdumping
- thenormal value ofthedumped product
- theexport price ofthedumped product destined toJapan
- theamount ofimportation ofthedumped productG/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page8
- theeffect onprices ofalikeproduct inJapan caused bytheimportation ofthedumped
product
- theeffect ontheindustry inJapan caused bytheimportation ofthedumped product
Article 7(6)oftheCabinet Order relating toAnti-Dumping Duty
13. Article 7(6)oftheCabinet Order, which addresses thequestion ofnon-confidential summaries,
doesnot,contrary tothefirstsentence ofArticle 6.5.1 oftheGATT Anti-Dumping Code, lay
down anystandards astothequality ofsuchnon-confidential summaries.
HowwillJapan ensure thatthestandards setoutinArticle 6.5.1 oftheGATT Anti-Dumping
Code willbecomplied with?
Articles 7.6and7.7oftheCabinet Order relating toADareconsistent withArticle 6.5.1 of
theAgreement.
Articles 11,15and16oftheCabinet Order relating toAnti-Dumping Duty
14. Howaretheterms "interested parties" and"directly interested parties", ascontained inthe
aforementionedprovisions,tobeinterpreted?Dotheyalsocoverthegovernmentoftheexporting
country? (Cf.Article 6.11oftheGATT Anti-Dumping Code)
"Directly interested parties" comprise, asstipulated inArticle 8.1oftheCOAD, supplier or
theassociation thereof, importer ortheassociation thereof andapplicant.
"Interested parties" comprise, asstipulated inArticle 10.1oftheCOAD, theabove-mentioned
directly interested parties, interested producers, etc.andinterested labour union excluding directly
interested parties.
Concerning government oftheexporting countries, Japan'slawsandregulations donothave
nayspecific provisions inthisregard. Therefore, theprovisions ofArticle 6.11oftheAgreement
aredirectly applied.
Article 12oftheCabinet Order relating toAnti-Dumping Duty
15. HowwillJapan make surethataparty'srefusal toparticipate inahearing withparties having
adverse interests willnotbeprejudicial tothatparty'scase? How willproblems of
confidentiality beaddressed insuchmeetings? (Cf.Article 6.2oftheGATT Anti-Dumping
Code).
Asdomestic lawsandregulations donothaveanyspecific provision onthese points, the
provisions ofArticle 6.2oftheAgreement aredirectly applied.G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page9
III. Other questions
Confidential treatment ofacomplaint prior totheinitiation oftheproceeding
16. HowhasJapan implemented theprovisions ofArticle 5.5.oftheGATT Anti-Dumping Code?
Noprovisions arelaidinJapan'slawsandregulations concerning theconfidential treatment
ofacomplaintpriortoinitiationoftheproceedingandtheadvancenotificationtotheMemberconcerned.
Therefore, theprovisions ofArticle 5.5oftheAgreement aredirectly applied.
Simultaneous consideration ofbothdumping andinjury
17. HowhasJapan implemented theprovisions ofArticle 5.7oftheGATT Anti-Dumping Code?
InJapan, theevidence ofbothdumping andinjury isconsidered simultaneously inthedecision
oninitiation ofaninvestigation andthereafter during thewhole investigation.
Termination ofproceedings without theimposition ofmeasures incases where there isnodumping,
noinjury, deminimis dumping ornegligible imports
18. HowhasJapan implemented theprovisions ofArticle 5.8oftheGATT Anti-Dumping Code?
Japans 'lawsandregulations donothaveprovisions concerning "deminimis "margin and
negligible volume ofimport. Therefore, theprovisions ofArticle 5.8oftheAgreement aredirectly
applied.
Aninvestigation isimmediately terminated inthecases where theinvestigating authorities find
thatthemargin ofdumping islessthanthedeminimis levelorthatthevolume ofdumped imports
isnegligible.
Provisions contained inArticles 6.10, 6.13, 12.1aswellasinAnnexes IandIIoftheGATT Anti-
Dumping Code
19. HowdoesJapan intend todealwithquestions covered byArticles 6.10, 6.13and12.1aswell
asthose covered byAnnexes IandIIoftheGATT Anti-Dumping Code?
Article 8.1oftheCOAD stipulates thattheMinister ofFinance shallpromptly provide the
information inwriting tothedirectly interested parties andshallgiveapublic notice intheOfficial
Gazette inaccordance withArticle 12.1oftheAgreement.
Atthesame time, theprovisions ofArticles 6.10, 6.13and12.1(concerning thenotification
totheGovernment oftheexporting country), andAnnexes IandIIoftheAgreement aredirectly applied.
Replies tooralquestions
1. Japan hasindicated thatincasesampling isusedtheprovisions ofArticle 6.10oftheA-D
Agreement would beapplied.
Would Japan usesampling forpurposes ofdetermining theexistence ofinjury tothedomestic
industry?G/ADP/Q1/JPN/3
G/SCM/Q1/JPN/3
Page10
Article 6.10oftheAgreement onImplementation ofArticle VIoftheGeneral Agreement on
Tariffs andTrade 1994 ("the Agreement") refers solely tothedetermination ofdumping margin and
nospecific provision oftheAgreement provides fortheuseofsampling forthepurpose ofdetermining
theexistence ofinjury tothedomestic industry. From thisfact,itwould belogically inferred that
sampling maynotbeacceptable forthepurpose ofinjury determination.
Accordingly, utmost effort should bemade toensure thattheinjury determination isbased
oncomplete andaccurate information about thecondition ofdomestic industry. From thispoint of
view, Japan doesnotcurrently usesampling forinjury determination andcannot presently envisage
circumstances where itwould dosointhefuture.
2. TheJapanese delegation stated thattheadjustments inrespect ofprice comparability were
normally made onexport price andnormal value sothatcomparison could bemade atthe
ex-factory level.
Inthisrespect, howdoesJapan intend todealwithindirect expenses? Does thenewJapanese
legislation entail anychange ofpostpractice inthisregard?
Thecomparison between export price andnormal value shallbemade atthesame level of
trade, andinrespect ofsalesmade atasnearly aspossible thesame time. Anddueallowance shall
bemade ineachcase, onitsmerits, fordifferences which affect price comparability inaccordance
withtheprovisions ofArticle 2.4oftheAgreement.
Inlinewiththeabove-mentioned provisions, indirect expenses will,when itisrelevant to
comparison atthesame leveloftrade, beappropriately adjusted inthecomparison. Adjustment of
indirect expenses isparticularly relevant when theexport price hastobeconstructed because ofan
association between exporter andimporter.
Inconstructing anexport price, dueallowance willbemade, where appropriate, fordifferences
which affect price comparability, including those inindirect selling expenses when supported bythe
evidence.
Japan'sdomestic lawsandregulations contain noruleselaborating theprinciples foradjusting
indirect expenses, andinthisrespect theprovisions ofArticle 2.4oftheAgreement aredirectly applied.