WORLD TRADE
ORGANIZATIONG/ADP/AHG/W/149
25 September 2003
(03-5095)
Committee on Anti-Dumping Practices
Working Group on ImplementationOriginal:  English
ARTICLE 2.2 – EXPORT PRICES TO THIRD COUNTRIES
OR CONSTRUCTED NORMAL VALUE
Paper by Australia
In response to agreement reached at the regular meeting of the Working Group on
Implementation on 2 May 2003 on consideration of new topics for discussion, as noted in document
G/ADP/W/433, Australia submits the following paper as a contribution to discussions on ADA
Article 2.2 (proposal 1 contained in G/ADP/W/431).
Proposal 1 of G/ADP/W/431 in relation to ADA Article 2.2 (export prices to third countries
or constructed normal value) is as follows:  How do Members decide when to use export prices to
third countries and when to use constructed normal value?
Article 2.2 of the WTO Anti-Dumping Agreement (ADA) provides as follows:
“When there are no sales of the like product in the ordinary course of trade in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting
country*, such sales do not permit a proper comparison, the margin of dumping shall
be determined by comparison with a comparable price of the like product whenexported to an appropriate third country, provided that this price is representative, or
with the cost of production in the country of origin plus a reasonable amount for
administrative, selling and general costs and for profits.”
(* Footnote omitted)
Australia’s approach in relation to ADA Article 2.2 is as follows:
• Where the exporter cooperates (i.e. provides sufficient and adequate data); has sufficient domestic
sales of the like product made in the ordinary course of trade; and no particular market situationsexist, normal value is determined using the pri ce paid for the goods in the exporter’s domestic
market.
• Where the exporter does not cooperate (i.e. does not provide sufficient or adequate information),
normal value is determined using facts available (e.g. it could be based on another seller’s sales).
• Where the exporter makes no domestic sales; or sales are not in the ordinary course of trade, or
the volume of sales is low, or there is a particular market situation that would render domestic
sales unsuitable, normal value may be either:
- based on prices to a third country,  orG/ADP/AHG/W/149
Page 2
- constructed using cost to make and sell the goods, plus a profit as if the goods
were destined for home consumption.
• Where none of the above options is available, normal value may be based on facts available.
Under the WTO Anti-Dumping Agreement and as reflected in Australian legislation, there is
no priority or hierarchy accorded on whether to use sales to third countries or to use constructed
normal value.  For the reasons given below, Australian practice has been to rarely rely on third
country sales, but instead to use constructed normal value if that information is available.
In 1989 Australia was compelled to use third country sales because the exporter could not
provide suitable cost of production data. In 2001 the method was again employed when it was found
that there were no domestic sales and the data for determining a cost to make and sell, plus profitmethod, was unsuitable.  The appropriate third country was selected on the basis of sufficient volume
and similarity of product.
Three issues arise in determining whether to use the third country method to determine a
normal value.
The first is to identify the like product, secondly an appropriate third country must be found
and, thirdly, the goods must be found to have been sold in the ordinary course of trade and that these
sales must be representative.
Normally, Australia’s experience is that the question of what is the like product does not
present a particular difficulty.
In deciding whether a third country is an ap propriate third country, section 269TAC(5C) of
the Customs Act 1901, the Minister may have regard to whether
(a) the volume of trade from the country of export is similar to the volume of trade from the
country of export to Australia; and
(b) the nature of the trade between the country of export and third country is similar to the nature
of trade between the country of export and Australia.
Australian Customs has regard to the volume sold to individual customers and the level of
trade with these customers in order to arrive at an assessment of the nature of the trade.
One practical problem that arises is when there are several countries that still qualify to be
considered to be an appropriate third country but the price of the like goods varies between eachcountry.  In these cases the selection could be considered to be subjective depending on whether the
highest or lowest price was selected.
The next difficulty is that there is no definition of what is meant by the term “representative”
although clearly it would not be representative to use sales that did not reflect normal marketconditions or where there is not a sufficiently large quantity.
Finally, the sales that have been selected as representative must be made in the ordinary
course of trade .  On one occasion when consideration was given to third country sales, Australian
Customs was unable to determine if the goods were sold in the ordinary course of trade.
Australia’s export questionnaire does ask for information on third country sales but, because
it is rarely used, what is initially requested is not a complete record of all sales made to each thirdG/ADP/AHG/W/149
Page 3
country throughout the investigation period.  Only a summary of data is requested which forms the
basis for a request for additional information if there is a likelihood that there may be a need to rely on
third country sales to determine a normal value.
In practice it is simply more convenient to use a constructed cost method for determining a
normal value and thus avoid some of the practical difficulties that arise in considering third country
sales.
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