WORLD TRADE  
ORGANIZATION  G/ADP/AHG/W/178 
8 April 2008 
 (08-1562) 
Committee on Anti-Dumping Practices 
Working Group on Implementation Original:   English 
 
 
 
EXPORT PRICES TO THIRD COUNTRIES OR CONSTRUCTED  
NORMAL VALUE – ARTICLE 2.2 
 
Communication from the European Communities  
 
  The following communication, dated 7 April 2008, is being circulated at the request of the Delegation of the European Communities.  
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  At its autumn meeting, the Working Group on Implementation agreed upon several topics for further discussion.  Among the topics agreed upon was the following related to the implementation of 
Article 2.2 of the Anti-Dumping Agreement: 
 
How do Members decide when to use export prices to third countries and when to 
use constructed normal value under Article 2. 2?  The EC is pleased to take this 
opportunity to discuss its experience with regard to this issue.   
 
Art. 2.2. ADA 
 
 When there are no sales of the like product in the ordinary course of trade in the domestic 
market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the e xporting country, such sales do not permit a proper 
comparison, the margin of dumping shall be determined by comparison with a comparable price of 
the like product when exported to an appropriate third country, provided that this price is 
representative, or with the cost of production in the country of origin plus a reasonable amount for 
administrative, selling and general costs and for profits.     The EC has implemented this Article in its  Basic Regulation (BR) Council Regulation (EC) 
No 384/96 as follows:   
 
Article 2 (3) BR 
 
 When there are no or insufficient sales of the like product in the ordinary course of trade, or 
where because of the particular market situati on such sales do not permit a proper comparison, the 
normal value of the like product shall be calculated:    
• on the basis of the cost of production in the country of origin plus a reasonable amount of 
selling general and administrative costs and for profits, or  
• on the basis of the export prices, in the ordina ry course of trade, to an appropriate third 
country provided that those prices are representative.   
 G/ADP/AHG/W/178 
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   A particular market situation for the product concerned within the meaning of the preceding 
sentence may be deemed to exist, inter alia , when prices are artificially low, when there is significant 
barter trade, or when there are non-commercial processing arrangements.    Before reverting to Article 2(3) BR the EC first determines whether the sales are at less than 
the normal value.  In doing so the EC examines whether an exporter sells merchandise in the EC 
market at a price lower than the price he charg es for his product on his domestic market provided that 
the sales of the like product on the domestic market are considered to be sufficient.  Domestic sales of 
the like product are considered to be sufficient if such sales constitute 5 per cent or more of the sales 
volume of the product under consideration to Communit y.  However, a lower volume of sales may be 
used when, for example, the prices charged are consid ered representative for the market concerned.  If 
the sales volume constitutes less than 5 per cent and th e prices are not representative the EC reverts to 
the cost of production method or export price method.     The legal basis, Article 2(3) (BR), gi ves no guidelines which method should be given 
preference and therefore the decision lies with th e discretion of the investigating authorities which 
method should be used however it pr ovides preconditions for both methods in order to be used.   
 
a) If the normal value is calculated on the basis of the cost of production in the country of origin the like product must be produced but not necessarily sold in the exporting country.   
 
b) If the normal value is based on the export price to an appropriate third country the 
like product must be exported to third countries and the prices of the like product must be 
representative.   
  If either the product is not produced in the expor ting country or not exported to third countries 
with representative prices the normal value must be  based on the respective remaining method.   
  If the like product is produced in the exporting country as well as exported to third countries 
both methods could be used in order to establish normal value.     When sending out the questionnaire the European Commission usually avails itself to both 
methods by requiring exporters to provide cost of production which have to be provided in any event 
in order to determine whether domestic sales are pr ofitable and by requesting information on the total 
value of export sales of the producer or exporter in question for the like product to the export market 
outside the community.    
 The EC then decides the appropriate method to be  used and regularly reverts first to the cost 
of production method even if Article 2(3) (BR) does not give any preference.  When applying the cost of production method the EC does not determine whether the sales of the like product on the home market are representative.     In the EC, there are no other conditions in order to use the cost of production method and 
therefore the export price method has never been used  in the past in cases where the product has been 
produced at all in the exporting country.     The EC basically sees the export price method as an appropriate method for establishing normal value.  However it would involve an investiga tion into another export market in order to make 
sure that export prices to the third country are estab lished on real market conditions which would also 
involve a consideration concerning the size of the export market which must also be appropriate and the price of the product which must be representative.  In addition there may be a risk that the product destined for the third country which must be lik e to the product under investigation is equally 
dumped.    G/ADP/AHG/W/178 
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   The EC therefore does only revert to the expor t price method if the cost of production method 
fails to provide the normal value which will in mo st cases only be the case if the product is not 
produced in the exporting country.     
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