. /.  WORLD TRADE  
ORGANIZATION  G/ADP/AHG/W/166 
26 November 2004 
 (04-5149) 
Committee on Anti-Dumping Practices 
Working Group on Implementation Original:   English 
 
 
 
ARTICLE 2.2 - USE OF EXPORT PRICES TO THIRD COUNTRIES OR 
CONSTRUCTED NORMAL VALUE TO CALCULATE NORMAL VALUE 
 
Paper by the United States  
 
 
 The following communication, dated 24 November 2004, is being circulated at the request of the Delegation of the United States.  
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  At its Spring 2003 meeting, the Working Group on Implementation agreed upon several topics for further consideration.  Among the topi cs agreed upon was the following, related to the 
implementation of Article 2.2 of the Anti-Dumpi ng Agreement:  How do Members decide when to 
use export prices to third countries and when to u se constructed normal value?  The United States is 
pleased to take this opportunity to discuss its  experience with regard to this issue. 
  Article 2.2 of the AD Agreement provides that authorities may establish normal value on a basis other than exporting country prices, when ce rtain conditions have been met.  Specifically, 
Article 2.2 states: 
 
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
2, 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 when 
exported to an appropriate third country, pr ovided 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. 
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2 Sales of the like product destined for consumption in the domestic market of the exporting 
country shall normally be considered a sufficient quantity for the determination of the normal 
value if such sales constitute 5 per cent or more of the sales of the product under consideration to the importing Member, provided that a lower ratio should be acceptable where the evidence 
demonstrates that domestic sales at such lower ratio are nonetheless of sufficient magnitude to 
provide for a proper comparison. 
 The United States has a preference for making price-to-price comparisons in determining 
whether there were sales at less than fair value.  In particular, whenever possible, the United States 
examines whether a respondent sells merchandise in th e US market at a price lower than the price it 
charges for foreign like product sold in its domestic market.  As recognized in Article 2.2, however, it 
is sometimes necessary to do the dumping analysis by comparing the respondent's US sales prices to G/ADP/AHG/W/166 
Page 2  
 
the prices charged in third-country markets or to the firm's cost of producing the merchandise, taking 
into account the selling, general, and administrative expenses, and profit, i.e.
, constructed value. 
  United States law provides that home market prices will be the first choice for normal value if the home market is viable.  Therefore, in Sec tion A of the anti-dumping questionnaire, respondents 
are asked to report the quantity and value of sales in  the US and home markets in addition to each of 
the three largest third-country markets.  Further,  respondents are asked to indicate whether there are 
reasons the home market and third countries may not serve as an appropriate basis for comparison.  A market normally is not considered viable if the volum e of sales in the market is less than five per cent 
of the volume of sales in the US market. 
 
 Whether the home market is viable is dete rmined soon after receipt of the response to 
Section A.  This determination is made early in  the proceeding in order to minimize the burdens on 
the respondent in providing information to be used to determine normal value.  If the home market is 
not viable, home market sales are not made in the or dinary course of trade, or a particular market 
situation exists in the home market, then the Un ited States normally will seek to base normal value on 
third-country prices.     The third-country market must be viable, sales in the third-country market must be 
representative, and a particular market situation in the third country must not prevent a proper 
comparison to sales in the United States market .  The United States will only use sales to one 
third-country market.  Thus, where there is mo re than one viable third-country market, the 
United States generally will select the third country based on the following criteria:  
• The foreign like product exported to the particular  third country is more similar to the subject 
merchandise exported to the United States than is  the foreign like product exported to other 
countries; 
• The volume of sales to the third country is larg er than the volume to other third countries; 
• Such other factors as are considered appropriate. 
 It is not necessary that all three factors be present in  order to justify selection of a particular market, 
and no single factor is dispositive.  Furthermore, this list of factors is not intended to represent a 
hierarchy in the selection of a third-country market.  
 Once a market is selected, only sales to that mark et will be used to determine normal value;  
in other words, all price-based normal values for a respondent will be determin ed in one market.  If a 
price-based normal value is not available for a pa rticular comparison with a US price, then the 
United States will determine normal value based on constructed value. 
 
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