WORLD TRADE  
ORGANIZATION  TN/RL/W/199 
1 March 2006 
 
 (06-0875) 
Negotiating Group on Rules Original:   English 
  
 
FURTHER EXPLANATION ON THE PROPOSALS ON ARTICLE 5.8 OF THE ADA 
(NEGLIGIBLE IMPORTS) 
 
Communication from the Separate Customs Territory
 
of Taiwan, Penghu, Kinmen and Matsu  
 
  The following communication, dated 1 March 2006, is being circulated at the request of the 
delegation of the Separate Customs Territo ry of Taiwan, Penghu, Kinmen and Matsu. 
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Introduction
 
 
During the informal plenary session of the meeting of the Rules Negotiating Group held 
during 25-26 November 2005, several Members provided valuable comments on the "Proposals on Article 5.8 of the ADA"(TN/RL/GEN/68), submitted by the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu.  In particular, we we re asked to clarify the proposed added footnote 
regarding cumulation rule of the said provision
1.  In this paper, we are pleased to provide additional 
explanation of the rationale of the ame nded footnote and how it would function. 
 In addition to clarifying the issue on cumulating imports from countries that are deemed as 
negligible, the proponent would like to urge Members to consider favourably another proposal in the 
submission, in which we suggest replacing the criteria of negligibility test from "import share" to "domestic market share".  As explained by the propo nent in the relevant di scussions, domestic market 
share is a better indicator for ass essing the impact of dumped imports to the domestic industry, 
compared with "import share".  A more logical and liberal threshold would contribute positively to alleviating the excessive burden of anti-dumping inv estigation to exporting countries, in particularly 
those developing countries whose export volume is  less significant and their exporters are less 
experienced in effectively defending their right dur ing the course of the sophisticated and sometimes 
costly anti-dumping investigation. 
 
Clarification on cumulation rule:
 
 
According to Article 5.8 of the ADA, if an anti-dumping investigation were launched against 
several countries, if the dumped imports a particular country individually account for is less  than 3% 
of imports of the like product in the importing c ountry, and where the dumped imports those small 
sources collectively accounts for are less  than 7% of the imports of the like product in the importing 
country, the investigation against those exporting co untries shall be terminated, as illustrated below: 
  
                                                     
 
1 Jamaica raised the relevant question in its submission, TN/RL/W/198. TN/RL/W/199 
Page 2  
 
  Subject Country Domestic Market 
Share
2 Excluded 
A 2.8% Yes 
B 2.0% Yes 
C 1.7% Yes 
Total 6.5%  
 
However, the rule is not so clear when th e total volume of cumulated imports deemed as 
negligible is more  than 7%.  Here, at least two alterna tives are available to the authorities, as 
illustrated below: 
 
Alternative 1 If the cumulative dumped import share of countries A, B, C and D in the importing 
country X is more  than 7%, the investigation shall be terminated immediately for 
countries B, C and D whose cumulative impor t share (4.3%), adding their volume of 
dumped imports in ascending order , is less  than 7%, while country A (the largest 
source of negligible imports) will continue  to be subject to the investigation. 
 
 
Subject Country Domestic Market 
Share Excluded 
A 2.8% No 
B 2.0% Yes 
C 1.7% Yes 
D 0.6% Yes 
Total (A-D) 7.1%  
 
Alternative 2 As long as the cumulative import shar e of A, B, C and D is greater than 7%, the 
investigation for all of them will be continued. 
 
 
Subject Country Domestic Market 
Share Excluded 
A 2.8% No 
B 2.0% No 
C 1.7% No 
D 0.6% No 
Total (A-D) 7.1%  
 
 
The text of our proposed new footnote, which intends to apply to Alternative 1 above, is as 
follows:  " In the event that countries which individua lly account for less than 3 per cent of the 
domestic consumption of the like product in the impo rting Member collectively account for more than 
7 per cent of domestic consumption of the like product in the importing Member, the volume of 
dumped imports regarded as negligib le shall refer only to those from the countries which collectively, 
by adding their volume of dumped imports in ascen ding order, account for less than 7 per cent of 
domestic consumption of the like product in the importing Member.".  
 
                                                      
2 Notwithstanding that import share is used in the curre nt provision of the ADA for the purpose of negligibility 
test, we replace it with "domestic market share" in the three illustrative examples, in order to be consistent with 
the proposed amendment in our proposal, TN/RL/GEN/68.  TN/RL/W/199 
 Page 3 
 
 
  Our proposal is designed to avoid the situation un der Alternative 2 above where, in practice, it 
is possible for domestic petitioners to add another in significant exporting country (D) to their petition, 
taking the collective total to be more  than 7% and thus making all f our countries subject to continued 
investigation.  Under our proposal, based on Altern ative 1, at least the smallest sources of the 
negligible imports (B, C and D) would not be subject to the investigation. 
 
The main advantage of the proposed clarification is therefore to prevent the absurd situation 
resulting from Alternative 2, where even the smallest of the impor ting countries are subject to the 
investigation.  The proposal also preserves the b asic principle of the ADA that anti-dumping measures 
should not be used against exporting countries account for negligible imports. 
 
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