WORLD TRADE  
ORGANIZATION  TN/RL/GEN/122 
24 April 2006 
 (06-1874) 
Negotiating Group on Rules Original:   English 
  
MATERIAL RETARDATION 
 
Communication from Egypt
 
  
 The following communication, dated 20 April 2006,  is being circulated at the request of the 
Delegation of Egypt. 
  The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(06)/ 105), also be circulated as a formal document. 
 
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The present proposal is based on the need of defining the concept of "material retardation"  
and develops earlier submissions by Egypt on the same subject.
11  Egypt deplores the fact that the 
current definition of material retardation remains im practical and vague althoug h it could constitute an 
important tool for developing country Members to  protect their domestic industries against unfair 
trade practices that do have not resulted in material injury or threat thereof, within the meaning of 
Article 3 of the Anti-Dumping Agreement.  
 It is reiterated that, while  determinations of both “ material injury ” and “ threat of material 
injury ” are specifically addressed in the Anti-Dumping Agreement, no provision defines the concept 
of material retardation.  In addition, the An ti-Dumping Agreement does not establish any criteria 
similar to those laid down in Article 3.4 and 3.7 for investigating authorities to assess material 
retardation.    
In order to ensure the effectiveness of the An ti-Dumping Agreement, Egypt considers that it 
is essential that the concept of material retardation be  clarified.  First of all, a clear definition of the 
“establishment of a domestic industry ” should be introduced.  This de finition should cover situations 
that are not considered as constitutive of material inju ry or threat thereof.  Secondly, factors for the 
assessment of material retardation should be defined  
 
Introduction of a definition of “ establishment of a domestic industry ”  
  
 At present, the terms “ material retardation ” and “ establishment of a domestic industry ” are 
only briefly referred to under footnote 9 to Article 3:  “ Under this Agreement the term ‘injury’ shall, 
unless otherwise specified, be taken to mean (…) ma terial retardation of the establishment of (a 
domestic) industry (…). ”  
  The concept of material retardation is closel y connected to the definition of the establishment 
of an industry.  Egypt considers th at the concept of material retardation should not only apply to new 
industries but should also concern domestic industr ies that are facing a “new start” after being 
reorganised or have never been developed on a co mmercial scale. In view of the foregoing, Egypt 
                                                     
 
11  See TN/RL/W/105 and TN/RL/GEN/40. TN/RL/GEN/122 
Page 2  
 
  proposes to define a domestic industry in the process of establishment as 
undertaking efforts to 
achieve reasonable commercial production.  The period during which an industry is undertaking 
efforts to achieve a reasonable commercial producti on would, for example, include the period during 
which it is unable to cover its start-up costs.  Introduction of factors for the determination of “ material retardation ”  
 
 As already mentioned above, Egypt regrets the fact that, while Article 3 establishes 
requirements on the determination of material injury or  threat of material injury, it does not do so with 
respect to the determination of mate rial retardation.  Egypt considers that it is important to set forth 
factors to assist investigating authorities in dete rmining whether there is material retardation. 
  Egypt believes that the proposed list of factor s that investigating authorities may consider 
should include:  (i) capacity utilisation;  (ii) dela ys in the start of reasonable commercial production; 
and (iii) the amount of domestic production as compared to the size of the domestic market substantial 
delays in the start of mass production.  Egypt is convinced that the examination of the above-
mentioned factors provide useful signal to investigating authorities in determining whether the establishment of a domestic industry is materially retarded.   
Standing requirement in “material retardation” cases 
  Under Article 5.4, “an application shall be considered to have been made ‘by or on behalf of 
the domestic industry’ if it is supported by those domestic producers whose collective output 
constitutes more than 50 per cent of the total produc tion of the like product produced by that portion 
of the domestic industry expressing support for or opposition to the application.  However, no investigation shall be initiated wh en domestic producers expressly supporting the application account 
for less than 25 per cent of total production of th e like product produced by the domestic industry”.  
The determining factor to assess whether or not domestic producers are sufficiently representative is, 
thus, their actual volume of production.   For producers in the process of establishment, th e volume of production is often meaningless.  
Indeed, there may have been no production or the ex isting volume of production may be very small in 
relation to the planned volume of commercial production or the installed production capacity.  
Consequently, Egypt proposes to insert a footnote in Article 5.4 to indicate that where the existence of 
material retardation is alleged, the representativity  of the domestic industry shall be assessed using 
production capacity instead of production as a reference.
12 
 Proposed Changes in footnote 9 
 
 In view of the foregoing, it is proposed to  amend footnote 9 of the Anti-Dumping Agreement 
as follows:  
Under this Agreement the term "injury" shall,  unless otherwise specified, be taken to mean 
material injury to a domestic industry, threat  of material injury to a domestic industry or 
material retardation of the est ablishment of such an industry and shall be interpreted in 
accordance with the provisions of this Article.  A domestic industry shall be considered in 
establishment when it is undertaking effort s to achieve reasonable commercial production.  
 
                                                      
 12 Since the issue identified in relation to Article 5.4 is  also pertinent to the application of Article 4.1, 
Egypt considers that the latter will have to be amended in similar terms.  TN/RL/GEN/122 
 Page 3 
 
 
  Proposed Changes in Article 3  
 
 It is proposed to add the following Article 3.9:  
 
In making a determination regarding the existe nce of material retardation, the authorities 
should consider, inter alia , such factors as:  
 
(i) capacity utilisation;   
 
(ii) delays in the start of reasonable commercial production; and  
 
 (iii) the amount of domestic production as compared to the size of the domestic market.  
 
Proposed Changes in Article 5.4  
 
 For the reasons mentioned above, it is proposed to amend Article 5.4 as follows: 
 
An investigation shall not be initiated pursu ant to paragraph 1 unless the authorities have 
determined, on the basis of an examination of the degree of support for, or opposition to, the 
application expressed13 by domestic producers of the like product, that the application has 
been made by or on behalf of the domestic industry.14  The application shall be considered to 
have been made "by or on behalf of the dom estic industry" if it is supported by those 
domestic producers whose collective output consti tutes more than 50 per cent of the total 
production of the like product produced by that portion of the domestic industry expressing 
either support for or opposition to the application.15  However, no investigation shall be 
initiated when domestic producers expressly supporting the application account for less than 
25 per cent of total production of the like pr oduct produced by the domestic industry. 
 
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13 In the case of fragmented industries involving  an exceptionally large number of producers, 
authorities may determine support and opposition by using statistically valid sampling techniques. 
14 Members are aware that in the te rritory of certain Members employees  of domestic producers of the 
like product or representatives of those employees may make or support an application for an investigation 
under paragraph 1. 
15 If the existence of threat of material retardation is  alleged, the level of support of domestic producers 
shall be determined on the basis of production capacity.