RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/IG/W/32
10 April 2001
(01-1822)
Committee on Anti-Dumping Practices
Informal Group on Anti-CircumventionOriginal:  English
REPLIES TO CIRCUMVENTION SCENARIOS PRESENTED IN THE
LAST MEETING OF THE INFORMAL GROUP ON CIRCUMVENTION
Response of the UNITED STATES to the Paper presented
by the EUROPEAN COMMUNITIES1
The following communication, dated 9 April 2001 has been received from the Permanent
Mission of the United States.
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At the meeting of the Informal Group on  Anti-Circumvention, on 1 November 2000, the
European Communities submitted a list of six factual scenarios and asked other Members to respondas to whether the facts presented would constitute circumvention under the anti-dumping law of the
responding Member.
The United States is pleased to respond to that request, but must first note that, in general, the
hypothetical scenarios do not provide sufficient explanation or facts to permit us to offer a definitive
response as to whether the situation described would be deemed to constitute circumvention under US
law.  United States law sets forth a number of criteria and factors which must be considered indetermining whether merchandise which has been assembled or completed in the United States or a
third country is circumventing an existing anti-dumping duty order:
First, the merchandise sold in the United States must be completed or assembled in the
United States (or a third country) from parts or components produced in the foreign country towhich the order applies.
Second, the process of assembly or completion in the United States (or a third country) must
be minor or insignificant.
Third, the value of the parts or components from the country to which the order applies must
be a significant portion of the total value of the merchandise.
In determining whether the process of assembly or completion is minor or insignificant there
must be taken into account:
(1) the level of investment in the United States (or a third country);(2) the level of research and development in the United States (or a third
country);
                                                     
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Page 2
(3) the nature of the production process in the United States (or a third country);
(4) the extent of production facilities in the United States (or a third country);
and
(5) whether the value of the processing performed in the United States (or a third
country) represents a small proportion of the value of the merchandise sold in
the United States.
Additionally, there must be taken into account:
(1) the pattern of trade, including sourcing patterns;
(2) whether the manufacturer or exporter of the parts or components is affiliated
with the person who assembles or completes the merchandise sold in the
United States from the parts or components produced in the foreign countryto which the order applies;  and
(3) whether imports into the United States (or a third country) of the parts or
components produced in the foreign country have increased after the
initiation of the investigation which resulted in issuance of the order.
Also, under United States law and practice, while the tariff classification of products subject
to an anti-dumping duty order is set forth in every order, the classification is provided for the
convenience of Customs authorities and exporters and importers only.  The product description set
forth in the order is controlling, not the tariff classification.  Thus, if a product which falls clearlywithin the description in an order is imported under a tariff classification not specified in the order it
will be deemed subject to the order.  Such a circumstance is not one which raises a question of
circumvention, but only one of scope.
Finally, it should be noted that even when it is determined that imports of a particular product
are circumventing an anti-dumping duty order, that does not, by itself, mandate the assessment of
anti-dumping duties on that product.   When circumvention is found to exist, the circumventing
product is determined to be within the scope of the anti-dumping duty order and estimated anti-
dumping duties are required to be deposited on im ports of the product.  Annual reviews of the order
are conducted upon request, and, when a product found to be circumventing is the subject of such a
review, anti-dumping duties will be assessed only to the extent dumping margins are found to exist.
Example 1
Fibre imported by country A from country B is subject to an anti-dumping duty.  After the
imposition of the anti-dumping duty, a marked substitution of imports of fibre by imports of "tow" -
i.e., fibre in uncut form - originating in country B takes place.  As tow is classified under anothercustoms heading, it was not covered by the investigation and is therefore not subject to the anti-
dumping duty.  Imports of tow clearly coincide  with the imposition of the anti-dumping measure.
After importation, tow is cut into fibre, a relatively simple process, involving no particular
know-how and only very minor material investme nt.  The cutting operation, which is part of a
continuous process, generates extra costs in terms of packaging.  The hourly labour cost on country A
is higher than in country B.  The fibre is then so ld for the same application and to the same customers
as the fibre previously exported in cut form.G/ADP/IG/W/32
Page 3
United States' Response
As noted generally above, insufficient information is presented in the example on which to
base a judgment as to whether the United States would find circumvention to exist.  Some of the facts
tend to suggest that circumvention could be occurring.  The facts that the processing operation is asimple one, with minor material investment required, that, very likely, the imported tow is a
significant portion of the total value of the finished product, that once processed, the tow is sold to the
same customers and for the same applications as was the fibre, and that imports of tow appear to
substitute for imports of fibre and coincide with the imposition of the anti-dumping measure indicate,
taken together, that there is a significant possib ility that circumvention would be found to exist.
However, it is not clear what the total level of investment in processing facilities in the
importing country is, or what amount of research and development went into such facilities or how
widespread they are in the importing country.  Further, although the processing operation appears
simple, there is no information about the value added to the final product by that processing.  Also
unclear is whether imports of tow existed before the anti-dumping measure was imposed and, if so, at
what level, and whether there is any affiliation between the producers/exporters of tow and theimporters/processors.  Until the additional information noted is collected and analyzed it would not be
possible, on the information presented, to reach a firm conclusion about whether circumvention is
occurring.
Example 2
Motorcycles into country A from country B are subject to an anti-dumping duty.  After
imposition of this duty, a marked substitution of imports in country A of motorcycles by imports of
motorcycle parts  shipped from country B takes place.  Imports of the component motorcycle parts
clearly coincide with the imposition of the anti-dumping measure.
The shipments of motorcycle parts are spread over various containers and shipments and they
are routed to several customs entry points.  Therefore they cannot be classified as complete
motorcycles and are not covered by the anti-dumping duty.
Once imported into country A the motorcycle parts can be easily assembled.  This process
does not require any particular training, know-how, equipment or installations.  Hence the extent ofinvestment in the importing country is minimal.  The assembled motorcycles are sold to the same
customers and for identical uses as the completed motorcycles that were produced and exported by
country B.
The value of the parts coming from country B represents a significant percentage of the value
of all the parts used, and the value added in country A to the parts assembled is relatively limited (as a
percentage of the total manufacturing cost).
United States' Response
Again, there is not sufficient information presented to determine, with certainty, whether the
United States would conclude that circumvention exists.  Indicating the strong possibility of
circumvention are the facts that the importation of parts, rather than finished motorcycles, coincided
with the imposition of the anti-dumping measure, the assembly process is simple and the investment
in assembly facilities minimal, the assembled moto rcycles are sold to the same customers for the same
uses as the previously imported motorcycles, the value of the imported parts is a significant
percentage of the value of all parts, and the value added by assembly in Country A is relatively
limited.G/ADP/IG/W/32
Page 4
Before any conclusion could be drawn the United States would need information on the
extent of the assembly facilities in the impor ting country and the degree of any research and
development that preceded such facilities.  Although it appears that there was an increase in the
importation of parts coincident with the anti-dumping measure, also relevant would be the level of
importation of parts prior to the measure, and information as to any affiliation between the exportersof parts in Country B and the assemblers in Country A, as well as the exact value added in the
assembly process in Country A.  Although the information presented makes a finding of
circumvention appear likely, the additional information indicated would be necessary to draw a firm
conclusion.
Example 3
Mobile phones imported by country A from country B are subject to anti-dumping duties.
Since the imposition of these anti-dumping duties the imports of mobile phones from country B have
been largely replaced by imports from country C (to which the anti-dumping duties are not
applicable).
Country B exports parts of mobile phones to country C.  These parts are then assembled in
country C and imported as mobile phones into country A.
The assembly of parts is not particularly difficult (no specific training or know-how is
required, not a considerable investment).  A substantial percentage of the parts used by country C toassemble the mobile phones comes from country B and the value added to the parts in country C is
relatively insignificant.
The finished products - the assembled mobile phones - are exported to country A and sold to
the same categories of customers and for the same uses as the complete mobile phones previouslyexported by country B.
United States' Response
Once again, further information would be needed to determine whether, under these facts, the
United States would be likely to determine that circumvention exists.  It should be noted that under
United States law it makes no difference whether the allegedly circumventing process of assembly orcompletion occurs in the United States or in a third country; the standards for judging whether
circumvention exists are the same in each situation.  Indicating the possibility of circumvention are
the facts that imports of mobile phones from country C made from parts from country B began or
substantially increased after anti-dumping duties were applied, the assembly process in country C is
simple, with no significant investment required, a significant portion of the total parts required comefrom country B, the value added in country C is relatively insignificant, and the mobile phones
imported by country A from country C are sold to the same customers, for the same uses, as those
previously imported from country B.
The United States authorities would need additional information on the overall level of
investment in the assembly facilities in country C, as well as on any research and development
required and the extent of the assembly facilities there.  Further, information would be needed on the
overall pattern of trade in mobile phones and parts thereof both before and after imposition of the anti-
dumping measure, including the extent of ship ment of mobile phone parts from country B for
assembly in country C into mobile phones prior to initiation of the anti-dumping investigation, as wellas information on any affiliation between the parts producers in country B and the assembly operators
in country C.  While there appears to be a substantial likelihood that circumvention would be found to
exist, the additional information indicated would be needed to reach a conclusion.G/ADP/IG/W/32
Page 5
Example 4
Steel pipes imported from country B to country A are subject to anti-dumping duties.  Since
the imposition of these duties, the imports of steel pipes from country B have been largely replaced by
imports of the same product from country C (not subject to the anti-dumping duties).
As a consequence of the anti-dumping measures, country B exports its steel pipe to country C.
Subsequently, the pipes are exported by country C to country A and no anti-dumping duties are
payable.
There is only limited production of this product in country C.
United States' Response
Under United States law, the facts set forth in this example do not raise a question of
circumvention.  If the pipe exported from country C to country A is produced in country C such pipe
would not be subject to the anti-dumping duty orde r on pipe from country B and circumvention would
not be an issue.  If the pipe exported from country  C was, in fact, produced in country B, that pipe
would be subject to the anti-dumping duty order on pipe from country B.  The only question which
would remain would concern the appropriate basi s for determining normal value under Article 2.5 of
the Agreement.
Example 5
Laptop computers imported by country A from c ountry B are subject to anti-dumping duties.
Since the imposition of these anti-dumping duties the imports of laptops from country B have been
largely replaced by imports from country C (to which the anti-dumping measures are not applicable).
Country C assembles parts of laptops.  The assembly of the parts is not particularly difficult
(no specific training or know-how is required, nor a considerable investment).  The parts used by
country C to assemble the laptops come from a variety of countries, including country B and the value
added to the parts in country C is reasonably significant.
The finished products - the assembled laptops - are exported to country A and sold to the
same categories of customers and for the same uses as the complete laptops previously exported by
country B.
United States' Response
As with most of the previous examples, additional information would be essential in
determining whether circumvention would be found to exist under these circumstances.  The facts that
exports to country A from country B were replaced by exports from country C after the imposition of
anti-dumping duties, that the assembly process is simple, apparently requiring minimal investment,
and that the finished laptops exported from country C to country A are sold to the same customers forthe same uses in country A as the laptops previously exported directly from country B all suggest the
possibility of circumvention.
However, the fact that the assembly operation in country C sources the parts from a variety of
countries, and that the value added in country C is reasonably significant cast doubt on whethercircumvention exists.  Since, under United States  law, circumvention can be found only when the
parts originating in country B constitute a significant portion of the total value of the finished product,
it would be important to ascertain exactly what portion of the final value the parts originating in
country B represent.  In this connection, it also would be instructive to learn the extent to which theG/ADP/IG/W/32
Page 6
producers in country B procured parts from other countries prior to the anti-dumping measures when
laptops were assembled in country B and shipped directly to country A.  Additionally, information
would be needed on the level of research and deve lopment for the assembly process in country C and
the extent of assembly facilities there.  Further, information would be needed on the nature of any
affiliation between the producers in country B and the assemblers in country C.  Finally, moreinformation would be needed on the pattern of trade, both before and after imposition of the anti-
dumping measure, including whether parts shipment from country B for assembly in country C
occurred before the anti-dumping duties were imposed and, if so, at what level.  Without this
additional information it is impossible to judge whether circumvention would be judged to exist in the
circumstances described.
Example 6
A chemical used in the agriculture industry im ported by country A from country B is subject
to an anti-dumping duty.  After imposition of th is duty, producers in country B mixed a tiny amount
of additive into the chemical concerned which does not make it a compound, or give it other qualities
and uses, but alters its customs classification.  As a result, it is no longer subject to the anti-dumpingduty.
The newly classified chemical is exported to country A and sold to the same categories of
customers and for the same uses as it was when previously exported by country B under a different
customs classification.
United States' Response
Under United States law and practice, the first inquiry in the situation presented would be
whether the "new" product was, in fact, covered by  the product description in the anti-dumping duty
order.  The fact that the addition of a tiny amount of additive resulted in a change in the tariff
classification of the product would not, under United States practice, require a conclusion that the
"new" product was not covered by the existing order.  Only if the change was of such a nature that the
product no longer was encompassed within the description in the order would the question of possible
circumvention arise.
Assuming that the "new" product would not be covered by the plain language of the existing
order, there is a strong possibility that circumvention would be found.  Arguing in favor of finding
circumvention are the facts that the change in the product was made after the anti-dumping duty was
imposed, the change itself was extremely minor and insignificant and does not give the "new" product
additional qualities or uses, and the "new" product is sold to the same customers for the same uses as
was the "old" product.  Some additional information would be required, such as whether the "new"product existed at all before the anti-dumping duties were imposed, and if so, the volumes in which it
was produced and sold and the uses to which it was put.  Nonetheless, it is likely that the "new"
product would be included within the scope of the order and subject to the possible assessment of
anti-dumping duties pursuant to annual administrative reviews.
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