WORLD TRADE  
ORGANIZATION  TN/RL/W/204 
6 March 2006 
 
 (06-0980) 
Negotiating Group on Rules 
 Original:   English 
 
 
ARTICLE 11.3 (SUNSET) 
 
Communication from the Separate Customs Territory  
of Taiwan, Penghu, Kinmen and Matsu  
 
 
 The following communication, dated 2 March 2006, is being circulated at the request of the 
Delegation of the Separate Customs Territo ry of Taiwan, Penghu, Kinmen and Matsu. 
 
_______________ 
 
 
I. INTRODUCTION 
 The sunset provision, i.e. Article 11.3 of the ADA, has been the subject of several rounds of 
discussion in the Negotiating Group on Rules (NGR).  Two different approaches regarding how to 
improve this provision have been proposed.  One is the proposal from the Friends of Anti-dumping Negotiations (FANs) in their paper TN/RL/GEN/74, suggests the automatic sunset of anti-dumping 
measures after five years.  The other, from Canada, in its paper TN/RL/GEN/61, suggests 
supplementing Article 11.3 of the ADA with an i ndicative, non-exhaustive list of factors that 
authorities would need to consider in determining wh ether the expiry of a duty would be likely to lead 
to a continuation or recurrence of dumping or subsidisation
1.  
  As our target is to complete the Doha Round by the end of 2006, it is important that we 
somehow speed up our work in the NGR.  While so me discussion of the technical details on each 
approach is essential for making final decisions, negotia ting efficiency is also a key factor.  It may be 
more sensible, therefore, at this stage, to carry out  a substantial review of the merits and drawbacks of 
each approach, then, once the basi c approach has been decided upon, Members may be better placed 
to focus on improving the details.   As revealed in a recent research study
2, at the end of 2004, WTO Members had a total of 
1,784 anti-dumping or countervailing measures in for ce, of which more than 1,000 had been in force 
since before 2002.  Thus, there will shortly be a su rge in the number of sunset reviews that the 
authorities will have to carry out.  In light of th is, it would appear that achieving a real improvement 
in the sunset provision is going to be crucial.   
                                                     
 
 1 The second part of Canada’s Proposal is to modify Article 11.3 of the ADA to ensure that sunset 
reviews can only be initiated on the basis of duly substa ntiated request made by or on behalf of the domestic 
industry (which would eliminate the possibility of an ex officio  initiation of reviews by the authorities) and that 
sunset reviews be completed before the expiry of five years.  
2 Alexander Keck, ‘A ‘Probabilistic’ Approach to th e Use of Econometric Models in Sunset Review’, 
WTO Staff Working Paper ERSD-2006-01, page 2, February 2006 TN/RL/W/204 
Page 2  
 
  II. DESCRIPTION OF THE ISSUE 
 The principle enshrined in Article 11.3 of the ADA is that anti-dumping measures are in place 
for five years and that only in exceptional cases, such measures might be extended beyond five years.  
However, in practice, a large number of cases resu lt in sunset reviews being initiated and in anti-
dumping measures being repeatedly extended following su ch reviews.  A brief survey shows that, in 
the practice of major WTO Members, around 50% and sometimes even 85% of anti-dumping 
measures are extended following sunset reviews.
3 
  Anti-dumping measures in that they respond to  unfair foreign competition are legitimate 
exceptions to the general principle of international fre e trade.  However, it is important to maintain an 
appropriate balance between the principle of free trade and the necessity to grant protection to a 
domestic industry against unfair trade practices. In that  respect, it is important to take into account the 
fact that the costs of investigations and review s can act as trade barriers in addition to the anti-
dumping measures themselves.  By nature, anti-dumping investigations and reviews are costly for all 
parties.  However, these costs have a specific impa ct for small and medium sized companies (SMEs) 
which have less financial and technical resources to pa rticipate in such investigations and reviews.  
Indeed, it is more difficult for SMEs to collect the information which is necessary to defend their 
interests, to prepare completely and on time the replies to the questionnaires.  SMEs find it 
particularly difficult and burdensome to participate in  investigations and reviews and, therefore, often 
decide not to participate.  As a result, they may have to face high anti-dumping duties.  In some cases, 
they may simply be forced to give up exporting. 
 
 And, from our own experiences, we have found the effects to be even more extreme in the 
case of sunset reviews.  Indeed, while, after five  years, the anti-dumping measures should in principle 
be terminated, in fact, sunset reviews are often initiated.  Because of their limited resources, SMEs are less willing to participate in the review  proceedings and, in practice, face a de-facto  automatic 
extension of anti-dumping measures, rather than a termination of the measures, as provided for in 
Article 11.3 of the ADA.  We have come across several cases, where anti-dumping duties have been levied for more than twenty years, sometimes ev en while the industry al ready ceased to exist. 
  While it is necessary to protect the domestic  industry against unfair foreign competition by 
imposing anti-dumping measures, it is however import ant to maintain an appropriate balance between 
the interests of the domestic industry and of the exporting producers. 
  Since, in most cases, SMEs lack the necessary financial and technical resources to fully and 
appropriately participate in anti-dumping reviews,  the automatic sunset of anti-dumping measures 
appear to be necessary to maintain  the right balance of interests. 
 
 The automatic sunset of anti-dumping measures after five years will not deprive the domestic 
industry of protection.  Indeed, if domestic produ cers, despite the five-year protection of anti-dumping 
measures, again face dumping which is causing to th em injury, they would be entitled to lodge an 
application for a new investigation.  This applica tion should however not be lodged before a period of 
one year following the expiry of the measures  unless there are exceptional circumstances which 
justify otherwise, and in such case, the period shall not be less than six months. 
 There are several problems relating to the practice of sunset reviews.  The first relates to the ease for 
investigating authorities to initiate  sunset reviews.  Actually, in vestigating authorities are entitled, 
under the current wording of Article 11.3 , to initiate a sunset review either ex officio , without any 
substantiated evidence, or at the request of the domestic  industry.  In fact, this results in a very large 
                                                     
 
 3 ‘Evaluation of EC Trade Defence Measures’, Ma yer, Brown, Rowe & Maw LLP, December 2005  TN/RL/W/204 
 Page 3 
 
 
  number of sunset reviews being initiated without  any substantiated evidence regarding dumping 
and/or injury.  Indeed, in certain countries, sunset reviews are even initiated automatically. 
  The second problem, and probably the most important, is the fact that the decision as to whether or not to extend the measures in a sunset review is based on a dete rmination made regarding 
the future.  Indeed, according to Article 11.3 of th e ADA, in order to extend the measures, authorities 
must determine that the expiry of the duty would be likely  to lead to continuation or recurrence of 
dumping and injury.  The likelihood determinati on of continuation or recurrence of dumping and 
injury is inherently prospective and speculative.  As a result, investigating authorities have an 
extensive and excessive margin of discretion. 
 
 Thirdly, the practice of sunset reviews raises a series of concerns in which it is not clear, with 
respect to a number of rules, whether they apply in the context of a sunset review. 
 
III. EVALUATION OF THE TWO APPROACHES TO IMPROVE THE SUNSET 
PROVISION 
(a) The “list” approach
 
  The first approach, which is the one proposed by  Canada, is to substantiate Article 11.3 of the 
ADA by adding a provision listing a series of factors that investigating authorities would need to examine in carrying out the likeli hood determination pursuant to Ar ticle 11.3 of the ADA. Actually, 
this “list of factors” mechanism is not new to the ADA since a si milar approach is followed in 
Article 3.4.   This proposal has merits.  Firstly, by listing the factors required to be examined, the consistency of the minimal factors to be considered by investigating authorities in sunset reviews will 
be enhanced.  Secondly, the fact that investigating authorities will have to examine all factors will 
certainly help to create limits to the discretion of the investigating authorities.   However, this approach al so has several drawbacks.  
  Firstly, the factors would only act as artificial limits to the discretion of investigating 
authorities, since this list will not give guidance as to th e weight to be attributed to each of the factors. 
In other words, the investigating authorities, while required to examine a serie s of factors, will remain 
free to reach the conclusion they want as to  whether the expiry of the duty would be likely  to lead to a 
continuation or recurrence of dumping and injury.  
 Secondly, this approach does not address the problem relating to the fact that the likelihood 
determination in sunset reviews is i nherently subjective and prospective. 
  And, thirdly, there are many other issues relati ng to the practice of sunset reviews which raise 
concerns, and which would need to be expressl y addressed: the initiation standard of “sunset 
reviews”, the applicability of other provisions of th e ADA (e.g. Article 3 “injury”) to sunset reviews, 
etc. 
 (b) The “automatic sunset” approach
 
  The second approach, i.e. the automatic sunset  of anti-dumping measures, has been proposed 
by the FANs.  This is a simple and straightforwar d approach, which presents a broad range of merits. 
  Firstly, with the “automatic sunset” approach, it is possible to avoid the inherently prospective 
and speculative analysis of the “lik elihood” determination.  This is thus a straightforward way to put TN/RL/W/204 
Page 4  
 
  an end to the excessive discretion of investigati ng authorities.  Anti-dumping measures will only be 
re-imposed after the initiation of a new inves tigation, based on a retrospective analysis. 
  Secondly, this approach, by being simple and straightforward, enables all corollary problems 
relating to sunset reviews proceedings in practice (initiation standards, applicability of the provisions 
of the ADA to sunset reviews, etc.) to be avoided. 
 
IV. BALANCE OF RIGHTS AND DISPUTE SETTLEMENT 
(a) Balance of rights
 
 
 Anti-dumping measures are allowed in the gl obal WTO system to respond to market 
distortions created by unfair competition.  To the extent that anti-dumping measures are justified on 
the ground that they offset unfair competition caused by artificial price distortions, by nature, anti-dumping measures are supposed to be temporary.  Th e fact that a major anti-dumping user maintains 
some measures for nearly 20 years puts into question whether this balance of rights can be maintained 
by using such unreliable prospective analysis. 
  Automatic sunset maintains the appropriate  balance of rights by permitting anti-dumping 
measures to be imposed to protect the domestic industry, while requiring the measures to be 
terminated after a fixed period to protect the international trade flow.  
(b) Dispute Settlement
 
 The sunset provision has been subject to numer ous WTO disputes since the ADA does not contain 
clear guidance as to how investigating authorities s hould conduct prospective sunset reviews.  The 
illustrative list of factors which is proposed to  be included in the ADA will not provide any 
substantive criteria for panels a nd the Appellate Body to determin e the consistency of measures, 
except as a check-list as to whether the authorities have  examined all the factors.  Automatic sunset 
avoids this problem in a simple and clear way.  
V. THE CONCLUSION 
 Considering the apparent merits and drawb acks of the two approaches proposed by Canada 
and the FANs in the light of actual experiences and analysis of the trade effects of the existing Article 
11.3 provision, as discuss above, our conclusion is th at automatic sunset represents the preferable 
approach to making the necessary improvement to Article 11.3 of the ADA.   
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