G/ADP/Q1/EU/6  
G/SCM/Q1/EU/6  
 
4 April 2018  
(18-2042) Page: 1/4 
Committee on Anti -Dumping Practices  
Committee on Subsidies and Countervailing Measures  Original: English  
 
NOTIFICATION OF LAWS  AND REGULATIONS UNDE R 
ARTICLE S 18.5 AND 32.6 OF THE AGREEMENT S 
QUEST IONS POSED BY THE KINGDOM OF SAUDI ARABIA  REGARDING  
THE NOTIFICATION OF THE EUROPEAN UNION1 
The following communication, dated 3 April 2018 , is being circulated at the request of the 
Delegation of the Kingdom of Saudi Arabia . 
 
_______________  
 
 
The Kingdom of Saudi Arabia would like to thank the European Union ( "EU") for its notification of 
Regulati on (EU) 2017/2321 of the European Parliament and the Council of 12 December 2017 
amending Regulation (EU) 2016/1036 on protection against du mped imports from countries 
not members of the European Union (the "EU Basic Anti -Dumping Regulation ") and 
Regulatio n (EU) 2016/1037 on protection against subsidised imports from countr ies not members 
of the European  Union (the "EU Basic Anti -Subsidy Regulation "), which was addressed to the World 
Trade Organization ( "WTO") Committee on Anti -Dumping Practices and Committee on Subsidies 
and Countervailing Measures, dated 15 January 2018.  
 
Regulation 2017/2321 introduced a number of amendments to, in particular, Article 2(6) of the EU 
Basic Anti -Dumping Regulation and Article  10(7) of the EU Basic Anti -Subsidy Regulation . Some of 
these amendments raise a number of questions in terms of the obligations of the EU under the 
Agreement on the Implementation of Article VI of the General  Agreement on Tariffs and 
Trade  1994 (the "Anti-Dumping Agreement ") and the Agreement on Subsidies and Countervailing 
Measures (the "SCM Agreement "). 
 
In this respect, Saudi Arabia invites the EU to respond to the following questions relating to the 
new Article 2(6a) of the EU Basic Anti -Dumping Regula tion and the amended Article 10(7) of 
the EU Basic Anti -Subsidy Regulation, as set out in the notified Regulation 2017/2321:  
 
Question 1  
 
The new Article 2(6a)(a) of the EU Basic Anti -Dumping Regulation provides that "the normal value 
shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted 
prices or benchmarks " whenever "significant distortions " are found to exist . Saudi Arabia notes 
that Article 2.2 of the Anti -Dumping Agreement does not refer to the possibility  of constructing 
normal value in the event of "significant distortions ". Given this apparent lack of legal basis, please 
explain the EU 's rationale and justification for nevertheless permitting the construction of normal 
value also in cases of "significant  distortions ". 
 
Question 2  
 
In EC – Tube or Pipe Fittings (DS219), the Appellate Body found that Article 2.2 of the Anti -
Dumping Agreement allows for a departure from the general rule for the establishment of the 
normal value where one of three conditions exists: (a) there are no sales in the exporting country 
of the like product in the ordinary course of trade; (b) sales in the exporting country 's market do 
not "permit a proper comparison " because of "the particular market situation "; or (c) sales in the 
                                                
1 G/ADP/N/1/EU/3/Suppl.2 -G/SCM/N/1/EU/2/Suppl.2.  G/ADP/Q1/EU/6 • G/SCM/Q1/EU/6  
 
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  exporting country 's market do not "permit a proper comparison " because of their low volume.2 
Since "significant distortions " is not listed as one of these three conditions, please clarify which of 
the above three conditions identified by the Appellate Body, if any, would nevertheless permit a 
construction of the normal value in case of significant distortions.  
 
Question 3  
 
The new Article 2(6a)(a) of the EU Basic Anti -Dumping Regulation provides that the normal value 
shall be constructed on the basis of costs of production and sale reflecting "undistorted prices or 
benchmarks " and indicates that the "sources " the European Commis sion "may use " include 
(a) cost of production and sale in an "appropriate representative country " provided the data are 
readily available; (b) "undistorted international prices, costs or benchmarks "; or (c) domestic 
costs, but only to the extent that they are "positively established not to be distorted ". As 
"significant distortions " may be found to result from a number of factors, please explain the 
criteria that will be used to determine which of these "sources " will be used and whether there is 
any hierar chy between these sources . Also, please clarify if the European Commission intends to 
justify the appropriateness of the sources used to calculate the normal value in each case.  
 
Question 4  
 
In the context of new Article 2(6a)(a) of the EU Basic Anti -Dumpi ng Regulation, please clarify how 
the European Commission determines what are "undistorted prices or benchmarks ". Specifically, 
please explain the thresholds and metrics that will be used for distinguishing an "undistorted " price 
or benchmark from one that  is allegedly distorted . 
 
Question 5  
 
In EU – Biodiesel (DS473) , the Appellate Body found that the information used for constructing the 
normal value must concern the "cost of production in the country of origin ", and that this means 
that any "out-of-country " information needs to be adapted to the country in question . The 
Appellate Body clarified that an investigating authority may not simply substitute the costs from 
outside the country of origin for the cost of production in the country of ori gin.3 Given that the text 
of the new Article 2(6a)(a) does not provide for such adaptation and instead appears to provide for 
a direct substitution of costs, please explain how the EU will ensure consistency with its 
WTO obligations.  
 
Question 6  
 
The new A rticle 2(6a)(a) of the EU Basic Anti -Dumping Regulation provides that "where there is 
more than one such [appropriate representative] country, preference shall be given, where 
appropriate, to countries with an adequate level of social and environmental pro tection ". Given 
that the Anti -Dumping Agreement does not concern "social and environmental protection ", please 
explain when this consideration will be "appropriate " and why the level of social and environmental 
protection would be relevant for determining "undistorted " costs. Also, please describe in detail the 
methodology for determining the "adequate level of social and environmental protection " of a 
country.  
 
Question  7 
 
Please explain how the EU 's new methodology, providing that recorded costs and price s of 
investigated exporters/producers must be rejected whenever "significant distortions " are found to 
exist, is consistent with the Appellate Body Report in EU – Biodiesel (DS473) where it was 
explained that the records of investigated exporters/producers  are the preferred source of 
information and must be used as long as the records "suitably and sufficiently correspond to or 
reproduce those costs incurred by the investigated exporter or producer that have a genuine 
relationship with the production and sa le of the specific product under consideration ".4 
 
 
                                                
2 Appellate Body Report, EC – Tube or Pipe Fittings , para. 94. 
3 Appellate Body Report, EU – Biodiesel , paras . 6.73, 6.81.  
4 Appellate Body Report, EU – Biodiesel , para .6.56.  G/ADP/Q1/EU/6 • G/SCM/Q1/EU/6  
 
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  Question  8 
 
The new Article 2(6a)(b) of the EU Basic Anti -Dumping Regulation provides that "significant 
distortions are those distortions which occur when reported prices or costs, including the costs of 
raw materials and energy, are not the result of free market forces because they are affected by 
substantial government intervention ". Please define the term "free market forces " and describe the 
EU's approach for determining that there is "substantial gove rnment intervention ". 
 
Question  9 
 
In the context of the new Article 2(6a)(b) of the EU Basic Anti -Dumping Regulation, please clarify 
how the EU assesses the "significance " of a distortion found to exist . Specifically, please identify 
the thresholds and metrics that will be used for distinguishing a "distortion " from a "significant 
distortion ". 
 
Question  10 
 
Please define the terms "raw materials and energy " as used in the new Article 2(6a)(b) of the 
EU Basic Anti -Dumping Regulation.  
 
Question  11 
 
The new Article 2(6a)(b) of the EU Basic Anti -Dumping Regulation provides that in assessing the 
existence of "significant distortions " regard shall be had to a number of elements such as whether 
"the market in ques tion [is] being served to a significant extent by enterprises which operate 
under the ownership, control or policy supervision or guidance of the authorities of the exporting 
country ". Please clarify how the EU determines that the export market in question  is being served 
"to a significant extent " by enterprises operating under state ownership, control or policy 
supervision or guidance . Specifically, please clarify the thresholds and metrics that will be used in 
this respect.  
 
Question  12 
 
Please explain wh y the EU 's new anti -dumping methodology focusing on "significant distortions " 
due to state interference is necessary when the SCM Agreement already provides for a remedy to 
address injurious effects of distortions resulting from financial contributions by governments or 
public bodies that confer a benefit.  
 
Question  13 
 
Please expl ain how the EU 's new anti -dumping methodology focusing on "significant distortions " 
due to state interference is consistent with the legal nature of the Anti -Dumping Agreement that 
focuses on private -pricing behavior of investigated exporters/producers, an d is not concerned with 
the behavior or policies of Governments.  
 
Question  14 
 
The new Article 2(6a)(c) of the EU Basic Anti -Dumping Regulation provides that "[w]here the 
Commission has well -founded indications of the possible existence of significant dist ortions as 
referred to in point (b) in a certain country or a certain sector in that country, and where 
appropriate for the effective application of this Regulation, the Commission shall produce, make 
public and regularly update a report describing the mar ket circumstances referred to in point (b) in 
that country or sector ". Given the active role that the European Commission is required to play in 
preparing reports on distortions that may favor the position of certain interested parties, please 
explain how this provision would be consist with the requirement of Article 17.6 (i) of the Anti -
Dumping Agreement that the investigating authority evaluate the facts in an "unbiased and 
objective " manner.  
 
Question  15 
 
In the context of the new Article 2(6a)(c) of th e EU Basic Anti -Dumping Regulation, please explain 
how the EU will ensure that its new methodology on "significant distortions " is not applied in a G/ADP/Q1/EU/6 • G/SCM/Q1/EU/6  
 
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  discriminatory manner when the European Commission is instructed to publish reports on alleged 
distortions i n specific countries and industry sectors only, based on its own determination of the 
"well-founded " nature of certain indications to this effect.  
 
Question  16 
 
The new Article 2(6a)(e) provides that where the European Commission finds that there is 
sufficient evidence of significant distortions, the notice of initiation shall specify that fact and 
provides that the parties to the investigation shall be informed promptly after initiation about the 
relevant sources that the European Commission intends to use for the purpose of determining 
normal value . It also states that interested parties "shall be given 10 days to comment ". Given 
that the Anti -Dumping Agreement requires that interested parties be given "ample opportunity to 
present in writing all evi dence which they consider relevant " and a "full opportunity for the defence 
of their interests ", please explain the basis for the EU 's apparent view that 10 days suffices for 
commenting on a key aspect of the investigation.  
 
Question  17 
 
The amended Articl e 10(7) of the EU Basic Anti -Subsidy Regulation relates to the ability of the EU 
to countervail "additional " subsidy programs that were only "identified " during the course of an 
investigation . It provides that "[i]f the additional subsidies are not covered  by the notice of 
initiation, the notice of initiation shall be amended " and that "[a]ll interested parties shall be given 
additional and sufficient time to comment ". Please clarify the deadline for "identifying " new subsidy 
programs and amending the notic e of initiation given the requirement in Article 11.11 of the SCM 
Agreement that investigations shall be concluded within one year and in no case more than 18 
months after their initiation.  
 
Question  18 
 
In the context of amended Article 10(7) of the EU Ba sic Anti -Subsidy Regulation, please clarify 
whether the EU intends to send out new questionnaires with respect to the amended notice of 
initiation and what the EU considers to be "sufficient time to comment " on this amended notice of 
initiation . In particu lar, please clarify the deadlines that will apply for commenting taking into 
consideration the requirement of Article 12.1 of the SCM Agreement to give interested parties 
"ample opportunity " to present evidence and the related requirement in Article 12.1.1  of the 
SCM Agreement to give at least 30 days to reply to questionnaires.  
 
 
__________