WORLD TRADE
ORGANIZATIONTN/RL/W/72
19 March 2003
(03-1595)
Negotiating Group on Rules Original:  English
IDENTIFICATION OF CERTAIN MAJOR ISSUES
UNDER THE ANTI-DUMPING AND SUBSIDIES AGREEMENTS
Submission by the United States
In light of the Ministers’ mandate to clarify and improve, while preserving the basic concepts,
principles and effectiveness of, the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 (the “Anti-Dumping Agreement” or “ADA”) and the
Agreement on Subsidies and Countervailing Measures (the “Subsidies Agreement” or “ASCM”), the
United States submits this paper to the Rules Negotiating Group (“the Group”) for furtherconsideration.  This paper builds on the United States’ previous submissions to the Group and
identifies an additional range of issues to advance the dialogue in the Group.
The United States reserves its rights to identify additional areas for clarification and
improvement in the future.
Perishable/Seasonal/Cyclical Products
The United States believes that the Group should clarify and improve the rules pertaining to
issues particular to anti-dumping and countervailing duty investigations of perishable, seasonal, and
cyclical products.  These issues are of particular importance with regard to agricultural products.
Producers (both exporters and those facing import competition) of perishable, seasonal, and cyclicalproducts face unique challenges in the marketplace and are accustomed to operating on shorter
business cycles.  Such producers typically can sell their products only during certain months of the
year due to the perishable nature of the products, the limitations on the growing and harvesting
season, and consumer demands.  As a result, such producers may be more vulnerable to dumped or
subsidized imports that enter the domestic market during the limited portions of the year when theirproduction is sold.
Given the special characteristics of these products, the United States believes that the current
trade remedies could be improved in addressing th e problems facing this area.  For example, the
provisions in ADA Article 4 and ASCM Article 16 c oncerning the definition of the domestic industry
could be clarified to address the special circumstances raised when domestic and foreign producers
have limited selling seasons.  The lack of clarity in  the Agreements may lead to delayed or ineffective
relief for all such domestic producers that are directly affected by the injuriously dumped or
subsidized imports.
Consistent with the mandate to preserve the effectiveness of the trade remedy rules, this
Group should ensure that the special characteristics of perishable, seasonal, and cyclical products are
properly addressed in the Rules negotiations.TN/RL/W/72
Page 2
Establishment of Overall Weighted-Average Dumping Margins
Prior to the Uruguay Round, some Members, including the United States, had the practice in
anti-dumping investigations of comparing individual export transaction prices to average normal
values.  When combining the transaction-specific  amounts calculated pursuant to this methodology,
these Members cumulated the amount of dumping found (those situations in which Export Price (EP),
or, when appropriate, Constructed Export Price (CEP ), was less than Normal Value (NV)) and divided
it by the aggregate value of all export transactions.
In the ADA, Members agreed on a different approach.  Article 2.4.2 provides that, in the
absence of targeted dumping, comparisons of EP a nd/or CEP with NV should be done based on either
the weighted-averages of comparable products, or on a transaction-to-transaction basis.  However, nofurther agreement was reached as to how these product or transaction-specific dumping margins
should be used to calculate an overall weighted-average dumping margin for the exporter/producer.
Thus, some Members continued to follow their pre-Uruguay Round practice in this area in all other
respects.
In European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed-Linen from
India , a case involving the EC’ s application of its anti-dumping laws, the Appellate Body found that
the language in Article 2.4.2 of the ADA prevented an authority from conducting its analysis on a
model-by-model basis in situations where the authority determined that there was only one like
product under investigation.  The effect of this finding was to require investigating authorities tooffset dumping margins on dumped models with “negative margins” for models that were not
dumped.
The United States believes the Agreement is not clear as to the manner in which the overall
weighted average margins are to be calculated.  If there are to be any WTO obligations regarding suchcalculations, they should be the result of an agreement by the Members.  Thus, in the process of
clarifying the ADA, this Group should consider clarifying both the obligations already agreed to by
the Members in this respect, as well as any areas where agreement could not previously be reached.
All-Others Rate
Under Article 9.4, authorities are required to calculate a dumping duty applicable to
companies which do not have their own individual rate of duty.  Such a rate, often referred to as the
“all-others” rate, may also apply to new entrants to the market who do not request an individual rate
under Article 9.5, or to companies that the authorities were unaware of at the time of the investigation.
The “all-others” rate is essentially an average of the dumping margins of the companies which do
have individual margins, excluding margins which are zero, de minimis , or were established on the
basis of facts available under Article 6.8.  The Appellate Body has found, in United States -
Hot-Rolled Carbon Steel Flat Products , that this exclusion of facts available margins is not limited to
margins based entirely on facts available.  Nor is it limited to margins established, in part, on facts
available that are based on an adverse assumption due to a company’s lack of cooperation in the
investigation.
This Group needs to examine this issue closely and seek to clarify Article 9.4 to ensure that
the “all-others” rate can be calculated using appropriate and reasonable methods.  This Group should
consider whether under some circumstances it would be appropriate for calculated margins that
incorporate minimal facts available or minor adjustments to be used when calculating the “all-others”rate.  For example, a cooperative company in an anti-dumping investigation may provide all requested
information about thousands of its export sales, but discover that it has simply misplaced information
about the cost of packing materials on a select few sales.  To fill in for this missing information when
calculating the dumping margin, an authority may make the reasonable assumption that the cost ofTN/RL/W/72
Page 3
packing materials on the select few sales was the average of the cost of packing materials from the
other thousands of properly reported and verified sales.  Nevertheless, when the authority makes such
an assumption pursuant to Article 6.8, the calculated rate for the company must be excluded from the
“all-others” calculation under Article 9.4.  Thus, the automatic exclusion of margins incorporating a
minimal amount of facts available can render the “all-others ” rate less accurate than would otherwisebe the case.  Depending on the case and the facts, the exclusion of margins that incorporate a minimal
amount of facts available may serve either to increase or decrease the “all-others” rate.
Based on the experience of the United States, in many investigations, there will not be any
margins which are completely free of the use of facts available and, thus, Article 9.4 will not be
applicable.  In such situations, Article 9.4 provides no guidance as to how the “all-others” rate should
be calculated.  This Group should consider whether Article 9.4 should be clarified to permitappropriate use of dumping margins which may include limited amounts of facts available
information in calculating the “all-others” rate.  Likewise, consideration should also be given to what
clarification could be appropriately made in the ASCM in this regard.
New Shipper Reviews
Article 9.5 was added to the ADA during the Uruguay Round to address concerns that, in the
face of a high “all-others” anti-dumping rate under Article 8.4, new entrants effectively would be
precluded from making sales which they could use to establish their individual anti-dumping rates.
Article 9.5 established procedures referred to as “new shipper” or “newcomer” reviews under which
new entrants are only required to post a bond or other security in lieu of a cash deposit while a review
is carried out to establish such an individual rate.  While the United States supports the purpose of this
provision, clarifications may be necessary to prevent misuse of this procedure in anti-dumping and
countervailing duty proceedings.
The United States believes that companies can abuse the new shipper review process to
undermine relief available under the trade remedy laws.  Under Article 9.5, a company that is already
found to be dumping during the investigation can simply establish a new corporate identity that makes
one small and simple, yet abnormally high-priced, export sale to a collusive customer.  The new
company may then request a new shipper review, but fail to disclose its affiliation with the
already-investigated company.  While the review is  being conducted, the new entity is free to export
its merchandise while only posting a bond or other security.  This creates an opportunity for theoriginal company to then ship through its newly created conduit and enter the market with very
low-priced merchandise.  If this arrangement is not discovered during the new shipper review, the
conduit will receive no, or a very low, margin and can continue to serve the market with the original
company’s merchandise.  However, even if the arrangement is uncovered during the review, the
original company will have succeeded in delaying imposition of anti-dumping duties by many monthsor even years on its shipments through its conduit.  In the meantime, the circumstances that caused
material injury to the domestic industry, which had already established its entitlement to protection
under the ADA, will continue unabated.
This Group should examine these and other concerns to determine whether the ADA and the
ASCM require clarification to prevent such misuse.  Our work in this area will help to address the
difficulties in Members’ ability to enforce the trade remedy laws.
Critical Circumstances
Article 10.6 of the ADA and Article 20.6 of the ASCM provide for the retroactive levying of
anti-dumping duties, and assessment of countervailing duties, where massive imports over a short
period of time cause injury that is difficult to remedy.  However, the retroactive imposition of duties is
limited to 90 days prior to the application of provisional measures.  In practice, these provisions haveTN/RL/W/72
Page 4
sometimes proven to be ineffective in preventing massive imports of injurious dumped and subsidized
merchandise prior to the application of provisional measures.
It is the United States’ experience that, in some cases, where importers anticipate that an
impending preliminary determination is likely to result in the imposition of provisional measures,imports surge prior to that determination.  Although the Agreements contain critical circumstances
provisions allowing for the retroactive imposition of duties 90 days prior to the date of the application
of provisional measures, these provisions are of limited effectiveness.  Frequently, importers have
knowledge of an impending investigation even before the application is filed and imports begin to
surge at that time, well before the 90 days prior to a preliminary determination.  Therefore, the finding
of critical circumstances and resultant retroactive application of duties may not provide a sufficient
remedy.  The Group should consider clarifying what  provisional steps are appropriate to preserve the
right to impose duties retroactively.
The purpose of Article 10.6 and Article 20.6 is to ensure that any surge in imports prior to the
imposition of a provisional measures does not undermine the remedial effect of the measure.  This
Group should consider clarifications and improvements to these provisions in order to make themmore effective.
Persistent Dumping/Subsidization
In its recent submission1, Canada raised the issue of persistent dumping, which it termed
“repeated dumping”.  We agree with Canada that this an important issue that needs to be addressed.
We believe that this issue is of equal concern with respect to injurious subsidization.
The ADA and the ASCM do not address adequately the serious issue of persistent dumping or
subsidization.  There are two aspects to this issue, both of which should be discussed within thecontext of the Group.  The first aspect for consideration is the issue of persistent dumping of the same
product imported from different countries.  In the United States’ experience, there have been cases
where imports of a particular product surge from countries that are not covered by an anti-dumping
measure immediately or soon after such a measure ha s been applied to another country.  Import surges
of products from other countries not subject to the anti-dumping measure can quickly undercut the
remedial effects of the measure if those products are sold at dumped prices, thereby undermining the
effectiveness of the Agreement.  In such situ ations, expedited procedures may be necessary to
determine whether the newly surging imports are being dumped and causing material injury.  This is a
problem that warrants further consideration by this Group.
The second aspect for consideration is the issue of persistent dumping and/or subsidization of
the same product, by the same producer/country, being exported to numerous countries around theworld.  It is not uncommon for Members to witness the imposition of numerous measures around the
world against the same product being dumped/subsidized by the same producer/country.  This
indicates that, rather than responding appropriately to legitimate trade remedies imposed by one
Member, the exporter chooses to shift export markets for its dumped/subsidized products to another
Member.  The harmful effects of this behaviour may be particularly acute when an exporter shifts itsdumped/subsidized products into a developing countr y’s market.  It would be useful for this Group to
consider whether the Agreement could be improved to address the issue of persistent
dumping/subsidization.
                                                     
1 Submission from Canada Respecting the Agreement on Implementation of Article VI of the GATT
1994 (The Anti-Dumping Agreement) ,” (TN/RL/W/47, 28 January 2003).TN/RL/W/72
Page 5
Small Economies: Regional Authority
The Mandate calls for Members to take into account the needs of developing and
least-developed participants.  On behalf of a number of Members2, a proposal was raised, within the
Work Programme on Small Economies of the Committee on Trade and Development, describingresource problems of certain Members in attempting to exercise their rights and obligations under the
ADA and ASCM.  To address this concern, with specific regard to the ADA and ASCM, the proposal
called for the recognition that small economies th at do not have the resources to maintain a
“competent authority” can designate a regional body as their competent authority.  The ability of
developing and least-developed countries to adopt and administer appropriate trade remedy laws is
extremely important.  This Group should consider how such a regional authority might function, and
any changes to the ADA and ASCM which may be necessary.
Conclusion
The above items represent some of the current issues that would benefit from clarification and
improvement.  The issues presented herein are precisely the kind of work Ministers have called for –to clarify and improve, while preserving the basic concepts, principles, and effectiveness of, the
Agreements.  We intend to provide additional detail on these points and other possible areas of
discussion in future submissions.
__________
                                                     
2 See, Concrete proposals to address certain specific  concerns and problems affecting the Trade of
Small Economies , Communication from Barbados, Belize, Bolivia, Dominican Republic, Guatemala, Honduras,
Mauritius and Sri Lanka, WT/COMTD/SE/W/3 (June 28, 2002).  At the formal sessions of the Dedicated WorkProgramme on Small Economies, Cuba, El Salvador, Fi ji, Nicaragua and Paraguay added their delegations to
the list of Members co-sponsoring the paper.  WT/COMTD/44 (December 9, 2002).  We note that at the time,the United States suggested that this would be an important issue to be addressed by the Negotiating Group on
Rules.  WT/COMTD/SE/W/7 (November 4, 2002).