WORLD TRADE  
ORGANIZATION  TN/RL/W/189 
13 October 2005 
 
 (05-4671) 
Negotiating Group on Rules Original:   English 
  
 
COMMENTS ON THE LESSER DUTY RULE 
 
Communication from Brazil
 
  
 The following communication, dated 11 October 2005, is being circulated at the request of 
the Delegation of Brazil.  
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1. Several proposals related to the “lesser duty rule” have been already submitted to the 
Negotiating Group on Rules (NGR).  The most rece nt and detailed ones, in which the proponents 
suggest amending the Anti-Dumping Agreement (ADA) so as to require the mandatory application of 
the "lesser duty rule" (LDR) in anti-dumping inves tigations, were submitted by the Friends of 
Antidumping Negotiations (FANs)
1 and India.2  In reaction, the United States3 submitted a document 
focusing on some perceived methodological and practi cal difficulties with the mandatory application 
of the lesser duty rule. 
2. In this paper, Brazil would like to address some aspects raised in the US submission and 
discussed as well in the plurilateral consultations held by the Chair.  This contribution is not meant to 
be a proposal as such.  The purpose is to provide an  assessment of the state of the play regarding the 
nature and objective of the LDR. 
I. GENERAL ISSUES 
 The mandatory nature of the LDR and its com patibility with the theory and the principles 
embodied in GATT Article VI and in the ADA 
3. The ADA is construed based on two basic assumptions:  
• Dumping is to be condemned if  it causes or threatens to cause material injury to an 
established industry in the territory of a Memb er or materially retards the establishment 
of a domestic industry.  That is to say, dumping in itself is not to be unconditionally condemned; 
                                                     
 
 1 Proposal on Lesser Duty , TN/RL/W/119 (16 June 2003) ; Lesser Duty Rule, TN/RL/GEN/1 
(14 July 2004);  Further Submission of Proposals on the Mandatory Application of the Lesser Duty Rule , 
TN/RL/GEN/43 (13 May 2005). 
 2 Proposal on Mandatory Application of Lesser Duty Rule, TN/RL/W/170 (9 February 2005) ; Proposal 
on Mandatory Application of Lesser Duty Rule, TN/RL/GEN/32 (22 March 2005). 
 3 Further Comments on Lesser Duty Proposals , TN/RL/GEN/58 (13 July 2005)  
 TN/RL/W/189 
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 • Injury caused to domestic industry by dum ped imports can be removed through the 
application of a duty on the “price” of the dumped imports.  That is to say, if the “price” of the dumped imports is “corrected” ─ so as to eliminate its unfairness ─ the domestic 
industry would no longer be injured by reason of dumped imports.  Flawed or not, it seems undisputable that this is the main underlying assumption of the ADA. 
4. The discussion has shown no reason why this very same reasoning should not prevail 
regarding the mandatory LDR.  
5. Regardless of the level of the duty (full dumpi ng margin or lesser duty level), one of the 
conditions to be fulfilled before an authority can apply any duty is to have a positive injury 
determination, based on the items of Article 3.4 of  the ADA.  It is worth recalling that the list 
provided for in Article 3.4 “is not exhaustive, nor can one or several of these factors necessarily give 
decisive guidance”. No suggestion has been made so far re garding the need to quantify the injury 
caused by dumped imports
4. 
6. Once there is a positive injury determination,  the underlying assumption of the ADA enables 
investigating authorities to intervene in one  of the channels of transmission of the effects of the 
dumped imports to the domestic industry ─ “prices” ─ through the means of an anti-dumping duty.  In 
so doing, it is assumed that authorities will succeed  in removing injury caused by dumped imports.  
The presumption remains the same regardless of the duty to be applied is e qual to the full dumping 
margin or equivalent to the lesser duty level. 
7. It should be pointed out that this reasoning does not undermine the role of “volume” as a 
mean of transmission of the injurious effects th at dumped imports may have on the state of the 
domestic industry, as established in Articles 3.1 and 3.2 of the ADA.  Nevertheless, the volume aspect 
of the dumped imports are not currently considered in the application of an anti-dumping duty even 
where authorities do not apply the lesser duty, and ther e is no certainty that the application of the full 
dumping margin tackles the injurious effects of the volume of the dumped imports. 
8. Therefore, there seems to be no contradiction between the mandatory nature of the LDR and 
the theory and the principles embodied in GATT Articl e VI and in the ADA.  The logic regarding the 
LDR is exactly the same as the one underpinning the application of a duty at a level equal to the full 
dumping margin. 
Objectives of a LDR  
9. Although the second sentence of Article 9.1 of the ADA does not impose an obligation upon 
Members, it clearly embodies the principle that it is “desirable  [...] that the duty be less than the 
margin if such lesser duty would be adequate to  remove the injury to the domestic industry” 
(emphasis added). 
10. Regardless of the reasons why negotiators agreed that it is desirable that the application of a 
duty “be less than the margin if such lesser duty would be adequate to remove the injury to the 
domestic industry” and despite the fact that this alternative is not mandatory, there seems to be no 
reason to depict the LDR as not in accordance to the principles and objectives embodied in GATT 
Article VI and in the ADA. 
                                                      
 4 In its proposal on “causation” (TN/RL/GEN/59), the United States stated that “ when authorities 
assess the effects of known factors other than dumped or subsidized imports, they are not required to quantify 
the effects of these factors”.   The US delegation also recognized that authorities are not supposed to quantify the 
effects of dumped imports.  There is no suggestion so  far that authorities would be required to quantify the 
effects of dumped imports and/or known factors other than dumped imports for the reason of applying the LDR.   TN/RL/W/189 
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 11. In making the LDR mandatory, the level of the duty will not depend exclusively on exporters’ 
behaviour, but will also reflect the situation of the domestic industry.5  Since what is condemned in 
the ADA is injurious dumping, a mandatory LDR will require the authorities to apply the least trade-
restrictive remedy for removing injury. 
12. From the exporters’ perspective, a lower dut y will always be better than a higher duty and 
trade flows will benefit from lower duties. 
13. From the view point of the authorities, the mandatory application of the LDR will avoid 
excessive and unnecessarily high level of protection to the domestic industry flowing from an application of a duty based on the full dumping marg in.  In applying the duty at a lower level, 
authorities manage to eliminate the injurious effects of dumping, at the same time that they ensure a 
certain degree of healthy competition in the domestic markets. 
14. From the standpoint of the domestic industry, a duty applied at a lesser duty level will ensure 
that the injurious effects of dumped imports will be  removed.  Since what triggers an application 
under Article 5.1 of the ADA is an injurious state that the domestic industry may be experiencing 
because of the effects of dumped imports, it seems logical to apply a duty precisely at the level 
necessary to remove the injurious effects caused by dumped imports. 
15. Finally, a mandatory LDR has to be analysed fro m the perspective of the society as a whole.  
Its application will minimize/mitigate the impacts of an antidumping duty, without giving up the role of any antidumping duty of removing the injurious effects of dumped imports. 
 
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5 In a very simplistic manner, one could say that the difference between the export price and the normal value in 
the exporting country is one of the conditions that trigger the application of a duty. But the amount of the duty to 
be applied so as to remove the injurious effect of dumping should be equivalent to the difference between the export price and the non-injurious price to the domestic industry