WORLD TRADE  
ORGANIZATION  TN/RL/GEN/29 
8 February 2005 
 (05-0520) 
Negotiating Group on Rules Original:   English 
  
 
CIRCUMVENTION 
 
Communication from the United States
 
  
 The following communication, dated 7 February 2005, is being circulated at the request of the 
Delegation of the United States.   The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/9 ), also be circulated as a formal document. 
 
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 Introduction
 
 
The Ministerial Decision on Anti-Circumventi on was adopted by Members at Marrakesh and 
forms an integral part of the Final Act Em bodying the Results of the Uruguay Round Multilateral 
Trade Negotiations.  This Decisi on acknowledged the problem of ci rcumvention and recognized the 
desirability of applying "uniform rules in this  area as soon as possible" to prevent the evasion of 
anti-dumping and countervailing measures through circumvention.1  The Decision confirms that the 
topic of circumvention formed part of the negotiations which preceded the Agreement on 
Implementation of Article VI of GATT 1994 (Anti- Dumping Agreement) and referred this matter to 
the Committee on Anti-Dumping Practices for resoluti on.  To fulfil this mandate, the Committee on 
Anti-Dumping Practices established the Informal Group on Anti-Circumvention (Anti-Circumvention 
Group) to examine and resolve which rules should apply uniformly to address the problem of circumvention.
2 
 
Notwithstanding the clearly expressed desire of Mi nisters for "uniform rules in this area as 
soon as possible", after ten years of discussion in the Anti-Circumvention Group, Members still have 
been unable to reach consensus on what constitutes circumvention.  However, this discussion has had 
the limited benefit of revealing that most users of  trade remedy instruments have some practice for 
addressing what they perceive to be circumvention3  That is to say, most Members recognize the need 
to address marginal modifications or alterations of the physical characteristics, production or shipment 
of merchandise otherwise subject to an anti-dumpi ng or countervailing duty measure, where such 
modifications or alterations are done in a manne r which undermines the purpose and effectiveness of 
                                                      
1 Decisions and Declarations relating to the Ag reement on Implementation of Article VI of 
the Agreement on Tariffs and Trade 1994.  
2 Although the Ministerial Decision relates specifically to anti-dumping, there is no reason to 
distinguish between circumvention of measures ta ken under either the Anti-Dumping Agreement or 
the Agreement on Subsidies and Countervailing Measures.  
3  The United States has observed that, because th ere is no clear definition of "circumvention," 
some Members act against what they perceive to be  circumvention without labelling or reporting their 
actions as such.   TN/RL/GEN/29 
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 remedies provided for under the WTO Agreements.  Nevertheless, a few Members have insisted on an 
irrebuttable presumption that any modification of the production or shipment which avoids the effects of a measure is legitimate, and can only be addressed , if at all, through an entirely new investigation 
and measure.  The United States disagrees.  
The United States believes the AD and SCM Agre ements should be clar ified and improved in 
two regards:  (1) through explicit recognition of  the two forms of circumvention traditionally 
recognized by Members using trade remedies;  and (2) through adoption of uniform and transparent procedures for conducting anti-circumvention enquiries.  
The Forms of Circumvention
 
 
Members have traditionally recognized two pattern s of trade which they have considered to 
be circumvention.  The first involves marginal alterations to the product itself, and the second involves marginal alterations in the patterns of shipment and assembly. 
 
The first form of circumvention addresses minor alterations and later-developed forms of the 
product covered by the measure.  The key is that th e alteration of the original product be relatively 
minor, such that the altered product has essentially the same characteristics and uses as the original 
product covered by the measure.  For example, if an  exporter adds an additional low-value ingredient 
to a chemical product which changes its classifica tion, but does not change its essential nature from 
the point of view of customers, authorities may conc lude that the altered product has circumvented the 
measure on the original product.  While it is true that some small changes in a product may have a 
commercially significant effect on its characteristics and uses, there is no reason to apply an irrebuttable presumption that any small change has such an effect.   The Agreements should make 
explicit the right of authorities to examine the facts and make a determination based upon those facts.  
 
 The second form of circumvention involves replaceme nt of trade in a product with trade in its 
subcomponents, which are then assembled or finished either in a third country or in the country of 
import.  So long as the assembly or finishing operation is relatively minor, there is no reason to consider that moving the locus of this operation should have any effect upon the anti-dumping or 
countervailing duty measure.  For example, if an ex porter, rather than shipping a completed product, 
ships several subcomponents not subject to the measure which can be easily and inexpensively 
reassembled after importation, there is no reason this change in the location of the assembly step 
should have any legal effect upon the measure.  Again, as with the first form of circumvention, some 
assembly or finishing steps may be complex and their location of great commercial significance.  However, there is no reason to apply an irrebutta ble presumption that any change in the assembly or 
finishing location has such significance.   The Agreements should make explicit the right of 
authorities to examine the facts and make a determination based upon those facts. 
 Procedures for Circumvention Enquiries
 
  Further, although many Members today conduc t anti-circumvention enquiries, the Agreement 
does not provide any guidance to those Members in the conduct of such enquiries, nor does it provide 
any procedural protections for parties involved in such enquiries.  For example, it has been observed 
that the Agreement does not even clearly require th at parties be notified of the initiation of an anti-
circumvention enquiry involving their exports.  Memb ers should consider provisions to ensure that 
parties have full notice of such an enquiry, and a full opportunity for a defence of their interests. 
 
Conclusion
 
  In the past, some Members have expressed con cern that explicitly recognizing the right of 
Members to address circumvention could lead to an abusive expansion of anti-dumping and  TN/RL/GEN/29 
 Page 3 
 
 
 countervailing duty measures.  In the view of the Un ited States there is little evidence that such abuses 
have taken place, and properly drafted provisions  could address the potential for such abuses.  
Moreover, it is the very absence of rules on ci rcumvention which could lead Members to craft 
measures more broadly than necessary.  If a Member is unsure of its right to act against circumvention in the future, it may feel obligated to craft measur es proactively to cover products and countries of 
export which, although of relatively less concern at the time of the measure, could provide a future 
means of circumvention.  Finally, the lack of any procedural guidelines for circumvention enquiries 
means that parties which are subject to circ umvention enquiries do not necessarily have an 
opportunity to defend their interests.  
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