WORLD TRADE
ORGANIZATIONRESTRICTED
G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
26 October 999
(99-3857)
Committee on Anti-Dumping Practices
Committee on Subsidies and Countervailing MeasuresOriginal: Spanish
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS
Replies to Questions Posed by the United States1
Regarding the Notification of Ecuador2
The following communication, dated 24 August 1999, has been received from the Permanent
Mission of Ecuador.
_______________
QUESTIONS POSED BY THE UNITED STATES REGARDING THE
NOTIFICATION OF LAWS AND REGULATIONS BY THE
GOVERNMENT OF ECUADOR UNDER ARTICLES 18.5
AND 32.6 OF THE AGREEMENTS
The Ecuadorian Foreign Trade and Investment Law (LEXI), published in Official Journal
No. 82 of 9 June 1997, under the terms of Law No. 12 of 22 May 1997, has entered into force in
Ecuadorian territory and authorizes Ecuador's Foreign Trade and Investment Council (COMEXI) to
impose anti-dumping duties, countervailing duties and safeguard measures.
While COMEXI imposes definitive measures, the Trade Practices and Safeguards Division of
the Ministry of Foreign Trade, Industrialization and Fisheries (MICIP) is the investigating authority
responsible for initiating and conducting dumping, subsidy and safeguard investigations.
Question
1. The preamble to the Rules refers to the LEXI as providing the statutory authority for
the Foreign Trade and Investment Council to impose anti-dumping and countervailing duties.
Has Ecuador notified this law to the A-D and SCM Committees? If not, does it intend to do so?
Reply
Ecuador has not notified the Foreign Trade and Investment Law (LEXI) to the WTO
Committees on Anti-Dumping Practices and Subsidies and Countervailing Measures.
1G/ADP/Q1/ECU/6-G/SCM/Q1/ECU/6.
2G/ADP/N/1/ECU/1-G/SCM/N/1/ECU/1 & G/ADP/N/1/ECU/1/Suppl.1-G/SCM/N/1/ECU/1/Suppl.1-
G/SG/N/1/ECU/2/Suppl.1.G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 2
Question
2. Do the Rules have the force of law? In the event of a conflict between the Rules and the
LEXI or the A-D or SCM Agreements, which prevails?
Reply
COMEXI resolutions are issued with a view to being applied, and compliance with them is
monitored by the State.
In the event of a conflict between Resolution 003 and the Foreign Trade and Investment Law
(LEXI) or the A-D and SCM Agreements, the latter shall prevail.
Anti-dumping methodology
Normal value. Article 3 of the Rules indicates the normal value of a product exported to
Ecuador is the price actually paid or payable for a like product when sold for consumption or use in
the domestic market of the country of origin or of export in the ordinary course of trade. The law also
indicates that in the absence of such ordinary course of trade, as in the case of centrally-planned
("non-market") economies, the point of reference shall be the normal value of a market-economy
country with characteristics similar to the economy of the non-market economy under investigation.
Question
3. How will the Ecuadorian authorities calculate dumping margins (specifically normal
value) for merchandise exported from non-market economy countries? Which characteristics
will be examined to determine which market economy shall be chosen for comparison with the
non-market economy?
Reply
The calculation will be made on the basis of the rules contained in Articles 2, 3 and 4 of the
Anti-Dumping Agreement.
A market-economy country will be selected, preferably one in the same geographical region
as the centrally-planned economy under investigation, which produces a product alike to the product
under investigation and which has incorporated the relevant WTO rules in its legal system.
Export price. Article 7 of the Rules indicates that, where there is no export price, or the
export price is unreliable because of association or a compensatory arrangement between the exporter
and the importer, the export price may be constructed on the basis of the price at which the imported
products are first resold to an independent buyer, or if the products are not resold to an independent
buyer, or not resold in the condition as imported, on such reasonable basis as the authority may
determine.
Question
4. Under which provision will the cost of import duties be deducted from export price (i.e.
costs incurred by the exporter, taxation, etc.)?G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 3
Reply
The action taken shall be in accordance with the provisions of Article 2.4 of the WTO
Anti-dumping Agreement.
Question
5. Why are wages paid to full-time sales personnel deducted from the export price? (See
Article 8(d) of the Rules.) Are such wages deducted from both the constructed export price and
the export price?
Reply
Wages paid to full-time sales personnel are deducted because they correspond to the wages of
resellers mentioned in Article 7 of Resolution 003.
Such wages are deducted only in the case of the constructed export price.
Question
6. There are no apparent distinctions in adjustments made from the export price and the
constructed export price. Does this reflect the fact that all adjustments will be made from both?
Reply
Although this is not expressly stated in Resolution 003, adjustments like those under Article 8
must be made only to the export price, as was pointed out in the reply to the previous question.
Determination of injury. Under Article 12 of the Rules, the determination of injury shall be
based on sufficient evidence and involve an objective examination of factors, including (1) the
volume of imports at dumped or subsidized prices, particularly to determine whether there has been a
significant increase; and (2) the impact which imports have on the prices on like products in Ecuador.
With respect to price impact, consideration will be given to whether the imported product is sold in
the domestic market at a price significantly lower than that of like products or whether the effect of
such imports is to depress prices to a significant extent or to prevent a reasonable price rise which
would otherwise have taken place.
Question
7. How does the Rules' reference to prevention of a "reasonable" price rise compare to
language contained in Articles 3.2 of the A-D Agreement and 15.2 of the SCM Agreement,
which describes the standard as being whether the effect of such imports is to "prevent price
increases… to a significant degree"?
Reply
The "reasonable" price rise refered to in Resolution 003 corresponds to the expression "price
increases … to a significant degree" used in the Anti-Dumping Agreement and the Agreement on
Subsidies and Countervailing Measures.G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 4
Initiation procedures. Proceedings may, inter alia , be initiated under Article 19 of the Rules
at the request of an association of producers which represents a "major proportion" of domestic
production.
Question
8. How is this standard for such an application (i.e. by an association) consistent with the
standard in Articles 5.4 of the A-D Agreement and 11.4 of the SCM Agreement that an
application must be made "by or on behalf of" the domestic industry?
Reply
Article 19 of Resolution 003 states that the investigation of an unfair trade practice shall be
initiated upon application by or on behalf of the domestic industry, and that such application may also
be made by an association of producers which represents a major proportion of domestic production.
Such representativeness shall be determined in accordance with the relevant WTO Agreements, so as
to ensure consistency with the WTO.
Article 18 of the Rules allows the investigating authority to initiate an investigation ex officio
"when there is sufficient evidence to assume that injury has been caused by dumped or subsidized
imports". The A-D and SCM Agreements limit ex officio initiations to "special circumstances" and
require "sufficient evidence of dumping/the existence of a subsidy, injury and a causal link … to
justify the initiation of an investigation." (See Article 5.6 of the Anti-Dumping Agreement and
Article 11.6 of the SCM Agreement).
Question
9. Is there a difference between the standard of Article 18 and that of the Agreements?
Reply
Although the Anti-Dumping Agreement and the Agreement on Subsidies and Countervailing
Measures are more specific in determining the circumstances in which an investigation will be
initiated without a written application by or on behalf of the domestic industry, Article 18 of
Resolution 003 has the same objective and is therefore consistent with those provisions.
Article 19 of the Rules allows a regional market analysis when the producers in the region sell
"most of their production of the product in question in that market". (See Article 4.1 (ii) of the
Anti-Dumping Agreement and Article 16.2 of the SCM Agreement).
Question
10. Is this standard different from that in the WTO Agreements, which permits a regional
analysis only when the producers in the region sell "all or almost all" of their production within
the region?
Reply
The standard of Article 19 of the Ecuadorian regulations does not differ from and is therefore
fully consistent with the WTO rules.G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 5
Article 24 of the Rules includes a consultation provision for anti-dumping and countervailing
duty proceedings.
Question
11. In countervailing duty proceedings, must an invitation for such consultations be
extended as soon as possible after an application has been accepted in accordance with
Article 13 of the SCM Agreement?
Reply
Provision is made for consultations to be held once the application has been accepted.
Question
12. Are these consultations required in every dumping or countervailing duty investigation?
Is there any limit on the scope of these consultations? Does a "mutually agreed solution"
include price undertakings?
Reply
Invitations for consultations are extended, but the parties concerned cannot be compelled to
take part; the holding of consultations will therefore depend on whether or not the parties accept the
invitations extended.
The scope of the consultations will be limited to the revision of prices, the suspension of
exports and the elimination or limitation of dumping or subsidization, in accordance with the
provisions of Article 39 of Resolution 003.
Consequently, the mutually agreed solution includes price undertakings.
Provisional measures. Article 29 of the Rules states that, within 60 days of initiation, MICIP,
through the investigating authority, shall prepare a technical report determining, where appropriate,
the level of any provisional anti-dumping or countervailing measures and shall submit it to COMEXI
for approval. Provisional measures may be applied if there has been proper initiation, a preliminary
affirmative injury and dumping or subsidies determination, and such measures are necessary to
prevent injury being caused during the investigation.
Question
13. Does this provision allow for the possibility that COMEXI could impose provisional
measures prior to the 60thday after initiation? If so, how is this consistent with Article 7.3 of
the A-D Agreement and Article 17.3 of the SCM?
Reply
The 60 days referred to in Article 29 of the national rules are intended exclusively for
preparation of the report. Subsequently, the application of provisional measures will be subject to the
provisions of Article 7.3 of the Anti-Dumping Agreement and Article 17.3 of the Agreement on
Subsidies and Countervailing Measures.G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 6
Question
14. Will a technical report be issued by the MICIP in every case where provisional
measures are applied?
Reply
Yes, it will issue a report in every case.
Investigation period and evidentiary aspects. Article 30 of the Rules indicates the Ecuadorian
authority has a maximum of 12 months from the submission of the application to carry out its
investigation and submit a report containing its conclusions and recommendation to COMEXI. The
article indicates the time period can be extended by six months in exceptional cases.
Question
15. What would constitute such an "exceptional" case?
Reply
In view of the fact that Articles 5.10 and 11.11 of the Anti-Dumping Agreement and the
Agreement on Subsidies and Countervailing Measures, respectively, do not define the scope of
"special circumstances", the national rules do not do so either.
It is worth pointing out that this topic, among others, is currently the subject of discussion in
the negotiations concerning the Free Trade Agreement of the Americas.
Question
16. Is COMEXI subject to time constraints in its consideration of the report?
Reply
COMEXI is required to adopt a final decision within 15 working days from the date of receipt
of the report, pursuant to Article 44 of Resolution 003.
Access to information. Article 31 of the Rules indicates that any interested party or anyone
who establishes an interest in the investigation shall have access to the public documents making up
the file. However, it will not be until 60 days after the investigation that the non-confidential file shall
become public.
Question
17. Does the sixty day delay in disclosing the file to the public cover reports (if relevant)
containing information and explanations which are required to be made readily available to the
public under Article 12.1.1, footnote 23 of the A-D Agreement?
Reply
The reference at the end of Article 31 to the fact that the public notice mentioned in Article 12
of the Anti-Dumping Agreement shall be given guarantees compliance with the latter and withG/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 7
footnote 23; in other words, the information provided for will be disseminated and public access
thereto will be ensured.
Disclosure and hearings. Article 34 of the Rules indicates disclosure meetings may be
requested within five days of the day following publication of the preliminary and final resolutions in
the Official Journal. Article 35 indicates that public hearings may be requested at any point during
the investigation for the purpose of clarifying doubtful, obscure or controversial points. Hearings
shall not interrupt or suspend the course of the investigation. The investigating authority shall state at
the opening of the hearing those items considered necessary.
Question
18. May interested parties argue or discuss issues which the investigating authority has not
introduced at the start of the meeting?
Reply
The investigating authority shall determine the items it considers necessary for discussion
concerning the methodology used, the determination of margins of dumping and calculation of
subsidies, injury or threat of injury and consultative bodies, but this does not imply that the interested
parties are prevented from raising for discussion other issues related to the above-mentioned points.
Price undertakings. Article 39 of the Rules relating to price undertakings indicates that the
investigating authority may propose to interested parties that they submit statements of intent to enter
into such undertakings.
Question
19. Are exporters to submit, periodically, any information relevant to the fulfilment of the
undertaking?
Reply
Although this is not specified in the national rules, they not only can but must present
periodical information demonstrating that the undertaking is being fulfilled.
Conclusion of the investigation and imposition of definitive duties. Article 43 of the Rules
indicates that parties may submit written arguments up to ten working days prior to expiration of the
investigation period. Nothing may be submitted once this period has expired. Under Article 44, once
the period for concluding arguments has expired and prior to the end of the investigation period, the
investigating authority shall draw up conclusions of the investigation and submit them to COMEXI
for a decision. COMEXI's decision shall consist of either imposing anti-dumping or countervailing
duty measures and the determination of their amount, withdrawal of provisional measures, and/or
termination of the investigation without imposing A-D or CVD measures. COMEXI has 15 working
days from the receipt of the report to adopt a definitive decision. Article 45 requires that a resolution
containing the factual and legal basis of the decision be published in the Official Journal and notified
to interested parties within five working days of publication.
Question
20. Why is there a five-day delay in notifying interested parties of the final determination?G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 8
Reply
The period of 5 days from the publication of the COMEXI resolution constitutes a time-limit
for notification, but this is no obstacle to notification being made at any time.
Article 43 of the Rules allows parties to submit written arguments up to ten working days
before the scheduled termination of an investigation, and does not authorize the submission of any
further comments. Therefore, the parties would have no chance to comment on information submitted
on the tenth day before termination.
Question
21. How is this consistent with the requirement that parties have an opportunity to see "all
information that is relevant to the presentation of their cases … and to prepare presentations on
the basis of this information"? (See Article 6.4 of the Anti-Dumping Agreement and
Article 12.3 of the SCM Agreement.)
Reply
The provision referred to in the question would not be inconsistent with Article 6.4 of the
Anti-Dumping Agreement and Article 12.3 of the Agreement on Subsidies and Countervailing
Measures, since the latter refer to the information needed to prepare presentations and not to the
presentations themselves, which is what is referred to in Article 43 of Resolution 003.
Definitive duties. Article 46 of the Rules states that duties shall be assessed in monetary units
orad valorem percentages. Article 47 provides for the retroactive application of duties in accordance
with Article 10.6 of the A-D Agreement. Article 48 indicates that duties shall be terminated
automatically five years after their impostion, unless the reasons for their imposition still exist.
Question
22. Does the Ecuadorian authority have experience conducting reviews pursuant to
Article 48 and/or Article 49? If so, can Ecuador describe how its authority determines whether
the expiry of the duty would be likely to lead to continuation or recurrence of dumping and/or
injury?
Reply
Irrespective of the Ecuadorian authority's past experience in reviewing anti-dumping duties, it
will not attempt to predict whether there will be a recurrence of dumping upon expiry of any duties
imposed. It will act only when it has sufficient evidence of continuation of the unfair practice.
Question
23. As the rules do not provide for the conduct of new shipper reviews required by
Article 9.5 of the Anti-Dumping Agreement, will Ecuador simply follow the provisions of Article
9.5?
Reply
If the circumstances provided for in Article 9.5 of the Anti-Dumping Agreement were to
arise, Ecuador would apply that Article.G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 9
Anti-circumvention. Parts or components of a product like that on which definitive duties are
imposed, intended for assembly or finishing operations in Ecuador, may be subjected to the payment
of provisional or definitive duties.
Question
24. What standards or factors are considered by the Ecuadorian authorities in determining
whether duties will be imposed on such parts or components?
Reply
Article 53 of Resolution 003 provides for the possibility of applying provisional or definitive
duties to parts or components of a product alike to that on which definitive duties are imposed. This
possibility would only arise in practice where it is shown that the importation of such parts or
components constitutes a way of avoiding the duties on the product.
Injury. Article 3 of the Rules includes "the deprivation of any lawful, normal gain" within the
definition of injury.
Question
25. Is there a law, regulation, or other authority that defines a lawful or normal level for
market share or other measurement of financial or production performance for domestic
industries?
Reply
The Consumer Protection Law and the regulations thereto lay down rules for establishing and
reviewing prices of the various products.
Question
26. If so, how is this consistent with the requirement that determinations of injuries be
based on "positive evidence" and an "objective examination" of the effect of imported
merchandise on the domestic market? (See Article 3.1 of the A-D Agreement and Article 15.1 of
the SCM Agreement.)
Reply
It is not officially established prices, but existing prices in the domestic market at a given
point in time, that are the basis for obtaining positive evidence and carrying out an objective
examination to show that they have been affected by imports.
Question
27. How does the "deprivation of any lawful, normal gain" relate to the factors listed in
Article 3.4 of the A-D Agreement and Article 15.4 of the SCM Agreement?G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 10
Reply
The deprivation of lawful, normal gain refers to the decline in officially established prices that
could be caused by dumped or subsidized imports.
Question
28. Does the inclusion of "the deprivation of any lawful, normal gain" within the definition
of injury mean that the deprivation of a non-material, but otherwise "lawful", gain would
constitute injury sufficient to impose anti-dumping or countervailing duties under Ecuadorian
law? If so, how would this interpretation be consistent with the Agreements' requirement that
injury be "material"? (See Article 3, note 9, of the A-D Agreement and Article 15, note 45 of
the SCM Agreement.)
Reply
The determination of injury shall be based on the quantitative determination, on the basis of
real values, of the reduction of lawful, normal gain.
There is no inconsistency between this procedure and the provisions of Article 9 of the
Anti Dumping Agreement.
Article 12 of the Rules does not require consideration of the magnitude of the margin of
dumping, as required by Article 3.4 of the A-D Agreement.
Question
29. Do Ecuadorian authorities consider the magnitude of the dumping margin in
determining injury?
Reply
The Ecuadorian authorities do consider the dumping margin for the determination of injury.
Article 12 of the Rules requires that the determination of injury be based on "sufficient
evidence".
Question
30. Is this standard different from the requirement in Articles 3.1 of the A-D Agreement
and 15.1 of the SCM Agreement that the determination be based on "positive evidence"?
Reply
The purpose of Article 12 of Resolution 003 is equivalent to that of Articles 3.1 of the A-D
Agreement and 15.1 of the SCM Agreement.
Article 12 of the Rules also states that the investigating authority shall consider whether
imports "prevent a reasonable price rise which otherwise would have taken place".G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 11
Question
31. How is this consistent with the Agreements' requirement to consider whether the
imports under investigation "prevent price increases, which otherwise would have occurred, to
a significant degree"? (See Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the
SCM Agreement.)
Reply
The provisions of Article 12 of Resolution 003 are equivalent to, and therefore consistent
with, the provisions of Articles 3.2 and 15.2 of the corresponding WTO Agreements.
Articles 12-16 of the Rules do not appear to require the finding of a causal link between
dumping or subsidization and the injury observed in the domestic industry as a prerequisite for the
imposition of provisional or definitive relief. Item 18 of Article 20 requires the applicant to present
evidence that dumping or subsidization caused injury, but there is no further requirement that the
investigating authority evaluate that evidence or issue a finding as to its validity.
Question
32. How do Ecuadorian authorities plan to implement the requirement that a causal link be
established consistent with the requirements of the A-D and SCM Agreements?
Reply
Article 20.14 of Resolution 003 requires the presentation of elements to determine the causal
relationship between the practice and the injury.
Article 15 of the Rules states that the review of injury or threat of injury shall cover the most
recent 12-month period before the investigation for which information is available.
Question
33. Is this inconsistent with the requirement in Article 20 of the Rules that the application
for relief contain data on the four years preceding the date of filing?
Reply
The period of four years referred to in Article 20 corresponds to the historical period of
analysis of the different variables, which makes it possible to obtain comparative data on the period
during which the unfair practice occurred, in relation to the previous situation.
The Rules do not authorize cumulative assessment of imports that are simultaneously subject
to investigation. (See Article 3.3 of the Anti-Dumping Agreement and Article 15.3 of the
SCM Agreement.)
Question
34. Does this mean that the investigating authority will not cumulate imports of the same
merchandise from multiple countries?G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 12
Reply
If this situation occurs, the Ecuadorian investigating authority will proceed in accordance with
the provisions of Article 3.3 of the Anti-Dumping Agreement and Article 15.3 of the SCM
Agreement.
Additional Clarifications
Certain omissions from the Rules appear as described below.
Question
35. Do these omissions signify an intent to adopt rules different from those in the relevant
Agreements, or is it intended that the Agreements govern in all situations where the Rules are
silent?
- Article 33 of the Rules only provides for confidential treatment for information that
might, if released, harm the competitive position of an enterprise. It does not grant
confidential status when the release of information might have a significant adverse
impact on the person who supplied the information or when the submitter provides
the information on a confidential basis. ( See Article 6.5 of the Anti-Dumping
Agreement, Article 12.4 of the SCM Agreement.)
- Article 12 of the Rules does not require an “evaluation of all relevant economic
factors and indices,” or caution that “no one factor can give decisive guidance.” (See
Article 3.4 of the Anti-Dumping Agreement, Article 15.4 of the SCM Agreement.)
- Article 13 of the Rules apparently does not authorize the consideration of excess
capacity or an increase in capacity in evaluating the threat of injury posed by dumped
merchandise. ( SeeArticle 13 of the Anti-Dumping Agreement.)
- Article 33 of the Rules does not require that the public summary of confidential
information “be in sufficient detail to permit a reasonable understanding of the
substance of the information submitted in confidence.” ( SeeArticle 6.5.1 of the
Anti Dumping Agreement, Article 12.4.1 of the SCM Agreement.)
- Article 35 of the Rules regulates hearings, but does not assure parties that they need
not attend, and that non-attendance will not prejudice their case. ( SeeArticle 6.2 of
the Anti-Dumping Agreement.)
- Article 36 of the Rules does not require notification or consent of the host
government prior to an on-the-spot investigation. ( See Article 6.7 of the
Anti Dumping Agreement, Article 12.6 of the SCM Agreement.)
- Article 39 of the Rules regulates mutually agreed solutions, but does not (1) require
that price increases under an undertaking be no higher than the dumping margin, (2)
allow continuation of the investigation at the exporter’s request, or (3) protect
exporters from being forced to enter into an undertaking. ( SeeArts. 8.4 and 8.5 of the
Anti-Dumping Agreement; Arts. 18.4 and 18.5 of the SCM Agreement.)G/ADP/Q1/ECU/9
G/SCM/Q1/ECU/9
Page 13
- Although the Rules adopt the Agreements’ rules on regional injury analysis, they do
not require the investigating authority to take the step prescribed in the Agreements to
limit the imposition of dumping duties, where possible, to merchandise consigned for
final consumption in the region covered by the investigation. ( SeeArticle 4.3 of the
A-D Agreement, Article 16.3 of the SCM Agreement.)
Reply
Article 163 of the Political Constitution of the Republic of Ecuador provides as follows: "The
rules contained in international treaties and conventions, once promulgated in the Official Journal,
shall form part of the legal order of the Republic and shall prevail over laws and other rules of lower
status".
There is no intent to adopt rules different from those in the WTO Agreements; on the
contrary, in cases not specifically covered by Resolution 003, the provisions of the Anti-Dumping
Agreement and the Agreement on Subsidies and Countervailing Measure shall apply.
The Ecuadorian rules were drawn up on the basis of the relevant WTO Agreements;
consequently, in all matters not covered by the rules, the investigating authority shall proceed in
accordance with WTO rules and procedures.
__________