WORLD TRADE  
ORGANIZATION  G/ADP/AHG/W/173 
8 February 2006 
 
 (06-0533) 
Committee on Anti-Dumping Practices 
Working Group on Implementation Original:   English 
 
 
 
CONDUCT OF VERIFICATIONS 
 
Paper from South Africa  
 
 
 With regard to document G/ADP/W/433 and the discussions of Article 6.7 of the Anti-Dumping Agreement (ADA), South Africa is pleased  to submit the following paper on the conduct of 
verifications of the information submitted by inte rested parties in an anti-dumping investigation. 
 Requirements of Article 6.7 and Annex 1 
 
 Article 6.7 of the ADA provides that Members may carry out investigations in the territory of 
other Members as required, provided they obtain th e agreement of the firms concerned and notify the 
representatives of the government of the Member in question, and unless that Member objects to the 
investigation.  
 
 Annex I to the ADA sets forth the procedures governing the on-the spot-verifications.  
Legislative Framework 
  The International Trade Administration Co mmission of South Africa (the Commission) 
carries out anti-dumping investigations in the Sout h African Customs Union (SACU) in accordance 
with the International Trade Administration Act, 71  of 2002, (ITA Act) and the International Trade 
Administration Anti-Dumping Regulations (ADR).   Section 18.2 of the ADR states that: 
 
“The Commission may conduct such verifications at the SACU producers and at 
cooperating importers, exporters and foreign producers as it may deem necessary.” 
Purpose of verification visits 
  The purpose of the Commission’s verification visit is to verify the accuracy of the 
information submitted to the Commission in respon se to the exporters questionnaire.  Information 
relating to normal values and export prices are verified  to ensure that a fair comparison is made in 
order to establish whether or not the goods under investigation are being dumped.  Procedure in conducting verifications 
 
1. The Commission will assess all information s ubmitted by exporters and request the exporters 
to address all deficiencies noted in its respon se within the time frames as specified in the 
ADR. 
 G/ADP/AHG/W/173 
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  2. Based on the information submitted by the expor ter, the Commission will decide whether to 
verify the information submitted in the foreign country. 
 3. The exporter will be notified of the Commis sion’s intention to verify the information 
submitted and the consent of the exporter will be obtained. 
 
4. The Commission will propose dates on wh ich the verification can be conducted. 
 5. Once the Commission and the exporter agreed on mutual suitable dates on which the 
verification can be conducted, the Government of the exporter’s country is notified of the 
Commission’s intend to verify the information submitted by the specific exporter and provide 
it with the proposed dates of the verification visit. 
 6. The Commission will send a pre-verification lette r to the exporter, indicating the information 
that will be verified and the information requi red by the Commission during the verification.  
In the verification letter it is submitted to the exporter that the information will be verified 
against the company records from which it was obtaine d.  It is further indicated that in order 
to verify the required information within a s hort and restricted time period, the requested 
information and logistical support should be pr ovided.  The exporter is requested to have 
legible photocopies of all worksheets submitted at verification, pertinent pages of the company records which will be examined during th e verification, and translations of all major 
headings and key portions of documen ts available at arrival of the investigating officials.  It is 
further requested that all documents presented dur ing the verification be translated on the first 
occasion on which they are presented.  The de tailed information requested will be covered 
below in the discussion of the information to be examined during the verification. 
 
7. Section 11.2 of the ADR states that adjustment s should be requested in interested parties’ 
original response to the exporters questionna ire and additional adjustments could not be 
claimed during the verification visit.  It is indicat ed to the exporter that the verification visit is 
not an opportunity to submit additional new inform ation to the Commission, but to verify the 
accuracy of the information submitted to th e Commission in response to the exporters 
questionnaire.  
 
8. Following an exporter or foreign producer verification the Commission makes a verification 
report available to the company in question indicating all information verified.  The 
verification report shall normally be made av ailable before the Commission’s preliminary 
finding.  The Commission will place a copy of the non-confidential verification report on the 
public file prior to its preliminary determinati on.  Parties will receive 7 days to comment on 
the verification report. The Commission may grant an extension upon good cause shown. 
 
Information requested during a verification visit and the elements to be verified 
 
 The following information, as indicated in th e verification letter, is verified during a 
verification visit: 
 
1. Factory visit 
 
 A factory visit is undertaken to confirm that  the subject product is manufactured in the 
country of export and to familiarize the Commission’s officials with the method of manufacturing. 
  G/ADP/AHG/W/173 
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  2.  Accounting practices  
 
• The exporter is requested to provide a writte n summary of the basi c books used in its 
accounting system. 
 
• The investigators will review the manner in wh ich source documents fo r sales and expenses 
flow into the financial statements via accounti ng vouchers, journals, subsidiary ledgers, and 
general ledger accounts.  The exporter is requ ested to provide a diagram showing how these 
documents flow into the financial statements. 
 
3. Normal Value 
 
Sales on the domestic market of the exporting country 
 
• The investigation team will confirm the compan y's domestic selling and distribution system 
and also the levels of trade involved, in respect of the subject goods.  If the sales are to a related company, sales to the first independent  buyer should have been  provided and will be 
verified. 
 
• The selling price of the domestic sales needs to be determined.  The currency of the foreign 
country is used for this purpose.  This inform ation will be verified on the basis of the price 
that the exporter charges for its sales to its customers on the domestic market as provided for 
in the schedule of domestic sales in its respon se to the exporters questionnaire.  This will 
involve the verification of, amongst other: 
 
 ○ Sales (volumes and values) on the domestic mark et.  The exporter is requested to provide a 
complete listing of all sales in this regard.  A list with all the domestic sales is needed, not 
only the product under investigation.   
  ○ Sales must be reconciled to income statemen ts.  The unit costs that were provided in the 
questionnaire must also be reconciled to the fi nancial statements.   A paper trail should be 
provided from the invoices to the database (if a database is used) and then to the financial 
statements. 
  ○ Invoices will be selected by the Commission prior to the verification visit and will be 
examined, as evidence of actual sales during th e verification visit.  Additional sales to be 
examined will be identified during the verifi cation.  Evidence of the terms and conditions 
of sales including discounts and rebates to customers should be provided.   
  ○ For each of the selected sales invoices the following general procedure is followed: 
 
 The sales are “traced” from initial inquiry/ord er through the records to payment by the 
customer.  The exporter is requested to provide the following documents (where applicable) for each 
selected sale:  
 ▪ Sale negotiation correspondence; 
 ▪ Customer contracts; 
 ▪ Customer purchase orders; 
 ▪ Order confirmations; 
 ▪
 Invoices to the customer, price lists; G/ADP/AHG/W/173 
Page 4  
 
   ▪ Sales journal pages showing the selected sale; 
 ▪ Accounts receivable page showing the corresponding sales journal information (or 
summary information) pertaining to the selected sale; 
 ▪ Shipping documents; 
 ▪ Records of payment such as letters of credit,  debit/credit memos, bank deposit slips and/or 
bank statements; 
 ▪ Accounts receivable ledger pages; 
 ▪ Cash receipts journals  and/or general ledger; 
 ▪ Invoices and records of payment for actual char ges and/or adjustments to calculate the ex-
works price; 
 ▪ Invoice number sequence check to ensure that  the selected invoices are included in system; 
 ▪ Other 
  Documents for each selected sale should be gr ouped together in chronological order. 
 
Adjustments claimed to the domestic sales 
 
• All adjustments claimed to the invoice valu e to determine the ex-factory prices will be 
verified.  
 
• All adjustments claimed should be substantiated by accounting records. 
 
• All adjustment items must be reconciled to  detailed income statements and detailed 
manufacturing accounts and apportionment met hodologies applied should be described in 
detail. 
 
Export Price to Third Countries 
 
 The information provided with regard to the ex porter’s exports to other foreign countries will 
be verified in respect of: 
 
• Actual export sales by the exporter.  If the expor ts are to a related company, sales to the first 
independent buyer should have been  provided and will be verified. 
 
• Terms and conditions of these export sales, such as any taxes, discounts or rebates actually 
granted and directly relating to the sales under consideration. 
 
• Invoices will be selected from the exporter to its customers, as evidence of actual sales.  A list 
of pre-selected invoices, which should be ready for verification at arrival of the verification team, will be provided to the exporter.   Add itional sales to be examined will be identified 
during the verification.  For each of the selected sales invoices the general procedure as indicated above will be followed. 
 
• Costs of production, administrative, selling and ge neral costs relating to the export sales will 
be verified through reconciliation to the a udited financial statements or management 
accounts. 
 
• Profit levels relating to the export sales will be examined. 
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  Adjustments claimed to the exports to third countries 
 
• All adjustments to the invoice value (sales to th e first independent buyer) to determine the ex-
factory price will be verified.   
 
• Any adjustments claimed should be substantiated by accounting records. 
 
• All adjustment items must be reconciled to detailed income statements, detailed 
manufacturing accounts and apportionment met hodologies applied should be described in 
detail.   
 
• Any other costs and expenses incurred in prep aring the goods for shipment, and the actual 
shipping that are additional to those co sts and expenses incurred on domestic sales.  
 Cost build-ups and any adjustments of the goods under investigation 
 
• The cost build-ups as submitted will be verifi ed.  The following items will be verified: 
  ○ Costs of production elements for the goods under investigation. 
 
 ○ Various cost elements should be substantia ted and precise details provided in respect of 
the cost build-up.  Costs that will need to be verified are raw material costs, labour costs, 
manufacturing overheads and packaging costs etc. 
  ○ Administrative, selling and general costs the company incurs on its sales to the domestic  
market. 
  ○ Profits relating to sales of the goods on the domestic market. 
 
• The exporter is requested to provide details of th e average return (return on investment, return 
on equity, return on sales) in respect of other related type industries operating in its country 
that is available to the public. 
 
• The cost and price build-ups provided should be reconciled to a financial set of accounts, full 
details/copies should be provided at  the time of the verification.  
 
• Included in these costs and price build-ups ar e cost elements such as raw materials, 
components and packaging which would also re quire a detailed sub-cost build-up. The 
Commission requests the exporter to submit copies of the relevant manufacturing, income and 
expenditure accounts and a balance sheet during the verification.   
 
• The relevant product information should be in a divisionalised format and be reconcilable to 
the subject products.  The Commission indicates that standard costs of the products will not be adequate. 
 
• The investigating officers have to verify all the possible scenarios for purposes of determining 
normal values that need to be submitted to the Commission for its consideration.  
 
4. Export Price  
 
 The selling price of the exporter to SACU (S outh Africa, Botswana, Lesotho, Swaziland and 
Namibia) needs to be determined.  This informati on is verified on the basis of the price that the G/ADP/AHG/W/173 
Page 6  
 
  company charges for its sales to its customers on the export market as provided for in the schedule of 
export sales in the questionnaire response.    The verification team will verify information in respect of:  
• Actual export sales by the exporter to the SACU area;  
 
• Terms and conditions of these export sales, such as any taxes, discounts or rebates actually 
granted and directly relating to the sales under consideration.  
 
• Any other costs and expenses incurred in prep aring the goods for shipment, and the actual 
shipping to the SACU that are additional to those costs and expenses incurred on domestic 
sales.  
 
• Costs of production, administrative, selling and ge neral costs relating to the export sales to the 
SACU. 
 
• Profit levels relating to the export sales to the SACU. 
 
• A list of pre-selected invoices, which should be ready for verification at arrival of the 
verification team, is made available to the exporte r.   Additional sales to be examined will be 
identified during the verification.  The same procedure as describe above under normal value 
will be followed. 
 
5. General 
  The exporter is requested to ha ve all the listed information read y for verification at the arrival 
of the investigating official.     It is indicated to the exporter that the investigating officials do not have any decision making authority and therefore the broadest possible inform ation gathering exercise must take place to enable 
the Commission to make an objective finding in th is regard, considering all the alternatives.  
 
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