WORLD TRADE
ORGANIZATIONTN/RL/W/94
5 May 2003
(03-2369)
Negotiating Group on Rules Original:  English
REPLIES TO THE QUESTIONS AND COMMENTS OF WTO MEMBERS
CONCERNING THE PROPOSAL OF CHINA (TN/RL/W/66)
Submission from the People's Republic of China
The following communication, dated 1 May 2003, has been received from the Permanent
Mission of the People's Republic of China.
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China would like to express its appreciation to Australia, Switzerland, Canada and the
European Communities for their questions and comments on China's anti-dumping proposal.  China
hereby would like to provide the following reply.
AUSTRALIA
1. Causality between dumping and injury
Q. China states that Article 3.5 should be clarif ied to ensure that a causal link could only be
established when the dumped import is the “subs tantial reason” for the injury of the domestic
industry.  Does China consider that this would undermine the causation principle which is at
the heart of Article VI of GATT 1994 and the WTO Anti-Dumping Agreement?  What doesChina mean by “substantial reason” and how does this relate to findings of a causal link to
injurious dumping?
Reply
Article 3.5 of the AD Agreement provides that in addition to the causal relationship between
the dumped imports and the injury, the investigating authorities shall also examine any known factors
other than the dumped imports which at the same time are injuring the domestic industry, and the
injuries caused by these other factors must not be attributed to the dumped imports.  However, this
Article fails to provide the methodology of defining the causal relationship between dumping andinjury, which leads to the fact that the investigating authorities in practice always take measures when
other factors other than the dumped imports ar e the main reason for the injuries suffered.
China hopes that Members could distinguish the injury caused by dumped imports from the
injury caused by other factors so as to ensure that anti-dumping measures could be taken only whenthe dumped imports are the major cause of the injury.  China does not believe that this will impair the
principle of causal relationship which is the co re of Article 6 of GATT 1994 and the AD Agreement.
2. "All others" rate
Q. China seeks an improvement to ADA Article 9.4 through the consideration of de minimis
margins when determining the “all others” rate.  Australia would be interested in China’s viewsTN/RL/W/94
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on how de minimis  margins would be considered for the determination of the “all others” rate
for exporters/producers which are not sampled under ADA Article 9.4.
Reply
China believes that Article 9.4 of the AD Agreement should be improved so that the dumping
margins of all involved companies, including those with zero and de minimis  margins, should be taken
into consideration on an equal basis in determining "all  others" rate by sampling.  That is, "all others"
rate shall be calculated based on the weighted average of the dumping margins of all companies
involved.
3. "Non market economy" clauses
Q. China refers to Article 2.7 and the second Supplementary Provision to Paragraph 1 of
Article VI of GATT 1994.  Does China consider ADA Article 2.2 to be relevant?
Reply
When a proper comparison is impossible because of the "particular market situation" in the
domestic market of the exporting country, Article 2.2 of the AD Agreement allows the investigating
authorities to turn to two other methods of comparison.  However, the AD Agreement fails to provide
what constitutes a "particular market situation" and thus leaves the investigating authorities with wide
discretion to treat many situations as "particular market situation" and refuse to use domestic market
price as the basis of determining the normal value.  China's viewpoint has been reflected in
Section 1.4 of its proposal in TN/RL/W/66.
4. Lesser duty rule
Q. China states that the lesser duty rule shou ld be mandatory in the application of anti-
dumping measures by developed country Members on the imports from developing country
Members.  Does China consider that ADA Article 9.1 should be mandatory for anti-dumping
measures applied by developing countries on imports from developing country Members?
Reply
The Doha Ministerial Declaration clearly states that Members should take into account the
needs of developing and least-developed participants in anti-dumping negotiations.  China believes
that the Negotiating Group should conscientiously implement such mandate and consider the ways to
reflect S&D treatment in the negotiations process as well as in the final results.
For such purpose, China proposes that the Group should improve the existing Agreement
through negotiations so that lesser duty rule shall be applied in a mandatory manner regards measures
against developing country Members.
As for whether this proposal applies to measures taken by a developing country Member
against another developing country Member, China would like to listen to the views of other
Members.
5. Increase of negligible import volume and de minimis  dumping margin
Q. Does China consider that the deletion of the collective negligible volume of 7 per cent
should apply to imports from both developed and developing countries, or only developing
countries?TN/RL/W/94
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Reply
The Doha Ministerial Declaration clearly states that Members should take into account the
needs of developing and least-developed participants in anti-dumping negotiations.  China believesthat the Negotiating Group should conscientiously implement such mandate and consider the ways to
reflect S&D treatment in the negotiations process as well as in the final results.
For such purpose, China proposes that higher level of negligible volume of dumped imports
and de minimis  margin should be applied and the provision of 7 per cent collective negligible volume
should be deleted as for investigations against developing country Members.
6. Automatic sunset of anti-dumping measures
Q. China proposes that measures cease again st developing country members after five
years. Does China consider that even if injury is caused after the five year period, that the
measure should still be sunsetted?  If there is no certainty of the fundamental principle of causallink in the application of anti-dumping measures, including for reviews of anti-dumping
measures, on what basis does China consider anti-dumping measures should be imposed?
Reply
Article 11.1 of the AD Agreement provides that an anti-dumping duty shall remain in force
only as long as and to the extent necessary to counteract injurious dumping.  However, past
experiences show that many measures against developing country Members remained in force for
several decades and have exceeded the period and extent necessary to counteract injurious dumping.
China believes that the Negotiating Group should take effective measures to correct this
practice of making use of reviews to repeatedly extend anti-dumping measures against developing
country Members and thus provide excessive protection for domestic industries.  Therefore, the Group
is invited to pay attention and consider China's proposal of automatic sunset of measures against
developing country Members after 5 years.
As for the causality between dumping and injury, please refer to China's reply to the first
question of Australia.
SWITZERLAND
S&D Treatment
Q. Is it a real difference if Chinese exporters are prevented from entering developed
country market, or they are prevented from entering similarly large developing country
market.  What is the difference if the Chinese products can not enter New Zealand due toprohibitive anti-dumping measures, or it can not enter, for instance, Brazilian or Indian
market.  China seems to allude that damage from unjustified anti-dumping measures is greater
with regard to developed country market than the same unjustified measures is taken by
developing countries.  What is the rational of this proposal?
Reply
When discussing S&D treatment to developing country Members, the Negotiating Group
should seriously consider the tremendous obstacle that anti-dumping measures pose to the exports ofTN/RL/W/94
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developing country Members.  According to the statistics of the WTO Secretariat, 65 per cent of the
1,979 investigations and 67 per cent of the 1,161 measures are against developing country Members
from January 1995 to June 2002.
Meanwhile, developing country Members have limited human and material resources
comparing with developed country Members.  Therefor e, their ability to respond to investigations and
measures of other Members is relatively weak. Such disadvantageous situation should be taken into
consideration by the Group.
CANADA
Back-to-back investigation
Q. Is China proposing to go beyond the provision of Paragraph 7.1 of Declaration on
Implementation Related Issues which recognizes that where circumstances have changed, a new
investigation may be warranted within one year period.
Reply
Many Members have pointed out that simply the initiation itself could cause "chilling effect"
to the importation of products in question.  Past experiences show that negative finding ofinvestigating authorities is sometimes followed by another application for investigation against the
same product of the same Members.  This practice not only impedes the exports of the targeted
Member, but also forces the exporters to devote a great amount of human and material resources to
respond to the investigation which has already been terminated as a result of negative finding.
For such purpose, Paragraph 7.1 of the Decision of Implementation-related Issues and
Concerns provides that investigating authorities sh all examine with special care any application for
the initiation of an anti-dumping investigation where an investigation of the same product from the
same Member resulted in a negative finding within th e 365 days prior to the filing of the application
and that, unless this pre-initiation examination indicates that circumstances have changed, the
investigation shall not proceed.  However, th e definition of "special care" and "changed
circumstances" are not clear and thus difficult to put into practice.  Therefore, the possibility of settingbarriers to normal trade through back to back investigations by domestic industry seeking trade
protectionism still remain.
Therefore, the Negotiating Group should seriously consider how to solve this problem so as to
reflect the essence Paragraph 7.1 in the negotiations.  It is on this basis that China puts forward itsproposal on back to back investigation.
THE EUROPEAN COMMUNITIES
1. Causal link
Q. How does China envisage that these criteria of substantial reason can be made
operational?  Quantitative or qualitative assess ment or should be even both examining causal
link, and what should be done in practicable terms?TN/RL/W/94
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Reply
As a common practice now, the causal relationship may be established if the investigating
authorities determine that the dumped imports constitute one cause to the injury of the domestic
industry in an antidumping investigation.  Such loose provision leaves room for investigating
authorities to discretionarily take measures to a great extent.
The purpose of the AD Agreement is to punish unfair trade practices, i.e. those measures
which cause injury to the domestic industries of other Members through dumping.  Article 3.5 of the
AD Agreement provides that the investigating author ities shall also examine any known factors other
than the dumped imports which at the same time are injuring the domestic industry, and the injuries
caused by those other factors must not be attributed to the dumped imports.  However, this Articlefails to provide the methodology of defining the causal relationship between dumping and injury,
which leads to the fact that, the investigating authorities in practice always neglect those other factors
and take it for granted that the injuries are attribut ed to the dumping.  China holds that in order to
determine the causal relationship in a correct manner, the Agreement should provide that the
investigating authorities shall separate and distinguish the injuries caused by other factors notattributed to the dumped imports from all the injuries, and should specify the method to separate and
distinguish such injuries.
As for the standard of assessment as well as the way of operation in practice, China is willing
to discuss with other Members in a bid to establish an objective and operative standard.
2. Lesser duty rule
Q. The rational of lesser duty rule is to remove the injury for the domestic industry.  Is this
only applicable in the investigation conducted by investigating authorities in developed countryconcerning imports also from developing country.
Reply
Please refer to China's reply to the fourth question of Australia.
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