WORLD TRADE  
ORGANIZATION  TN/RL/GEN/38 
23 March 2005 
 (05-1243) 
Negotiating Group on Rules Original:   English 
  
 
SECOND SUBMISSION OF 
PROPOSALS ON THE DETERMINATION OF INJURY 
 
Paper from Brazil;  Chile;  Colombia;  Costa Rica;  Hong Kong, China;  Israel;  Japan; 
  
Korea, Rep. of;  Norway;  Singapore;  Switzerla nd;  the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu;  and Thailand  
   The following communication, dated 22 March 2005, is being circulated at the request of the 
Delegations of Brazil;  Chile;  Colombia;  Costa Rica;  Hong Kong, China;  Israel;  Japan;   
Korea, Rep. of;  Norway;  Singapore;  Switzerla nd;  the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu;  and Thailand.   The submitting delegations have requested that this paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/46), also be circulated as a formal document.  
_______________ 
 
  This paper is intended to elaborate on some of  our proposals on injury, reflecting the useful 
and constructive discussion we had on our previo us paper (TN/RL/GEN/28, JOB(04)/183) at the 
informal meeting of the Negotiating Group on Rul es in December 2004, and incorporating some 
elements of the discussions into our paper to share our observations with the whole group.  Thus, this 
paper should be seen as a complement to our  previous paper and not as a substitute.  
  This paper does not address all of our propo sals that were contained in TN/RL/GEN/28, 
JOB(04)/183.  We left some of our proposals unadd ressed in this paper, not because they are less 
important or we have withdrawn them, but rather  because we felt that the Negotiating Group could 
benefit from a focused discussion on some particular issues that drew many interesting questions and 
comments by other Members in the informal meeting of the Negotiating Group in December.
1  
  We hope this paper will serve as a basis fo r deepening our discussion on this issue.  
                                                     
 
1 At least one of our proposals in TN/RL/GEN/28, JOB(04)/183, that is Proposal 6 on Adequate and 
Reasoned Explanation in Determination, can also be discussed in a context of issues relating to transparency. TN/RL/GEN/38 
Page 2  
 
  
Proposal  
 
1:  Overarching framework of determination of  material injury caused by dumped imports  
 
Amend Article 3 in order to clarify that, when the authorities examine whether dumped imports cause 
material injury,2  
 
• A determination of material injury shall be based upon determinations of (1) whether the domestic 
industry in the importing country is experiencing material injury, and (2) if the domestic industry is 
experiencing material injury, whether the dumped imports under investigation are causing material 
injury. 
 
2:  Definition of material injury  
 
Amend footnote 9 in order to clarify the definition of material injury, 
 
• The term ‘material injury to a domestic industry’ means the state of the domestic industry as 
demonstrated by an important  and measurable  deterioration  in the operating performance  of the 
domestic industry, based on an overall assessment  of all relevant economic factors and indices 
having a bearing on the state of the domestic indu stry including those enumerated in Article 3.4.  
 
3. Causation  
 
Amend the first sentence of Article 3.5 as follows:  
• It must be demonstrated that the dumped imports in and of themselves
 are, through the effects of 
dumping, as set forth in paragraph 2 and 4, causing injury within the meaning of this agreement.  
 
 
 
Explanation:  
 
1. Overarching framework of determination of  material injury caused by dumped imports  
 
  GATT Article VI stipulates that “dumping … is  to be condemned if it causes … material 
injury to an established industry in the territory of  a contracting party …”  For a situation to meet 
these criteria, two conditions have to be met: (1) the domestic industry in the importing country must 
be materially injured, and (2) the dumped imports must be causing material injury.  Dumped imports 
cannot be the cause of material injury, when material  injury to the domestic industry does not exist at 
all.   This concept is already implicit in GATT Artic le VI and ADA Article 3. However, Article 3 
is still confusing with regard to th e relationship of the two concepts in injury determinations, since it 
does not contain an explicit statement anywhere of the overarching framework of an injury 
determination.  We believe that it is essential to make explicit what is implicit in the existing 
Article 3.  
 
                                                     
 
 2 Since this proposal focuses only on one of the three types of injury, the determination of threat of 
material injury and material retardation of the establis hment of a domestic industry is not addressed in this 
proposal.   TN/RL/GEN/38 
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  The FANs do not seek to prescribe any specifi c methodology with regard to how authorities 
should make their determinations of the existence of  material injury and of causation.  Rather; the 
FANs’ proposal simply clarifies the basic principl e that the existence of material injury to the 
domestic industry in the importing count ry is an essential element of an y determination.  Therefore, in 
the absence of material injury to a domestic indus try, the strength of the causal relationship between 
dumped imports and any injury to the domestic indus try that falls short of being material is not 
relevant. Conversely, in the absence of a causal re lationship between the dumped imports and injury, 
the magnitude of the injury is not relevant.    
2. Definition of the material injury
 
 
 While Article 3.4 articulates the factors to be  considered in determining the state of the 
domestic industry, it does not provide a framework for analysing those factors.  Similarly, while the 
current footnote 9 attempts  to define the scope of the term “inj ury”, it does not do so either by specific 
reference to the factors in Article 3.4 or by est ablishing a framework for the analysis.  Thus, our 
proposal intends to clarify the concept of “material injury to the domestic industry” and clarify that 
the burden of proof for injury determination is on the authorities through the words “as 
demonstrated.”   
 Also, our proposal simply seeks to clarify that  not just any deterioration in the operating 
performance of the domestic industry is sufficient to  warrant a determination that the industry is 
experiencing material injury.  Rather, the industry mu st be experiencing injury that is important and 
measurable in terms of its impact on th e operating performance of the industry. 
  It is well recognized that the situation in each case is not the same, and, thus, a certain amount 
of discretion has to be left to the authorities to a rrive at an appropriate finding of injury which reflects 
the particular situation of each case. Our intention is to clarify the rules, which will help reduce the 
risks associated with injury dete rmination for the authorities as well. This may particularly benefit 
those authorities who have limited resources.   
(1) Operating performance
 
  We believe that it is necessary to clarify what should be the focus of the analysis of the state 
of the domestic industry in an injury determination. Th is proposal intends to clarify that injury has to 
be assessed by analyzing production/sale-related aspects of an industry’s condition. Import competition affects the production, sales volume, and prices of the domestic industry. As such, an evaluation of the state of the domestic industry for purposes of an antidumping investigation should 
focus on these same factors, namely those factors which reflect the operating results of the domestic 
industry.
3,4 As a matter of fact, virtually all of factor s mentioned in Article 3.4 concern the operating 
performance of the industry alleged to be injured. 
                                                      
3 There are certainly other factors that are relevant to an evaluation of the performance of a company or 
an industry. One example would be  “financial performance” (e.g., shar e prices). However, financial 
performance is not necessarily a result of the productio n and sales of products alone, or in a multi-product 
company, of the operating performan ce related to the like product itself. When a company is performing badly 
in its production and sales of products, this might of course also lead the company to suffer from poor share 
prices or an inability to raise capital for necessary inve stments. However, bad financial performance could also 
be a result of unwise financial management or a poor financial structure. It also could result from the poor performance in other lines of production unrelated to th e like product. Hence, while poor operating performance 
will adversely affect financial performa nce, poor financial performance is not necessarily reflected in or the 
result of poor operating performance. Therefore, financial performance should not be seen as an indicator in 
determining the existence of injury. 
 TN/RL/GEN/38 
Page 4  
 
 (2) Deterioration
 
 
 “Deterioration” means that the state of the domestic industry (i.e. its operating performance) 
in the most recent year, which overlaps with the peri od of the dumping investigation, should be worse 
when compared with the previous years in the period  of the injury investigation. “Deterioration” does 
not require continuous change for the worse, nor does it require that all economic indicators change 
for the worse (see discussion in (3) below).  It  is, however, necessary that, based on an overall 
assessment of all relevant economic indicators and indices, there is a worsening of the state of the domestic industry. The term “deterioration” is co nsistent with the use of the term “decline” in 
Article 3.4 
 
 There could be two sorts of situations wher e, at first glance, the domestic industry might 
appear to be “injured”, but where we doubt prot ection by AD measures generally would be warranted: 
 Case 1
:  When the performance of the domestic industry has been chronically poor but stable over the 
period of the injury investigation 
  There may be circumstances where the domestic industry was already performing poorly at the beginning of the period of investigation and its performance h as not deteriorated but essentially 
stabilized over the period of investigation. In such  a situation, the domestic industry would gain a 
certain level of sympathy for its poor operating performance.   
 
 However, we doubt that such a situation shoul d in general be considered “material injury” 
which warrants protection by the imposition of AD m easures on dumped imports.  It is not impossible 
that, where there are different trends in different Article 3.4 factors, authorities are able to find 
“deterioration” of the state of the domestic industry,  even if one or more factors remained stable 
throughout the period of investigation.
5 On the other hand, we believe that authorities should not find 
“material injury” if the overall assessment of the state of the domestic industry, based on an evaluation of all relevant factors, has shown nothing more than a bad but stable situation. 
   
                                                                                                                                                                    
 
4 Some authorities might look at the “managemen t performance” of a co mpany in the injury 
investigation. Whatever the concept of management performance would be, it is not an indicator of the 
performance of a company in the production and sales of products. Management performance certainly does 
have an impact on the operating performance of a company and could well affect production, capacity 
utilization, sales volume and prices. However, poor management is not in itself an indicator of injury. Rather, it 
is a possible cause of poor operating performance, and thus might be analyzed as a factor other than the dumped imports that caused material injury to the domestic industry. 
5 The FANs are not insisting, for example, that an industry whose profit level has been stably poor can 
never be considered to be injured.  Authorities have the discretion to give to the different factors of Article 3.4 
the weight that the authorities deem appropriate in th e given circumstances. Often, those factors may have 
different trends.  For example, an industry might have experienced losses in each year of the period of 
investigation (POI) but the amount of these losses has reduced over time thereby showing an improvement in 
the industry’s ‘profitability’. However, if the industry is indeed in need of protection, it is highly likely that 
other factors, such as its market share, would show a deterioration. 
 Also, we do not intend to confine the scope of the evaluation of relevant economic factors and indices to flow-based analysis; stock-based analysis could certain ly be used whenever appropriate. For example, the fact 
that the company continues to lose money, even if it is losing less each year, means that its accumulated losses 
would continue to grow, indicating a “deterioration” from a stock-based point of view.    It is possible that a careful overa ll assessment of all these factors then lead to the conclusion that the 
state of the domestic industry is “deteriorating”. 
  TN/RL/GEN/38 
 Page 5 
 
 
 Case 2 :  When the state of the domestic industry is good but would be better absent dumped imports 
  There may be circumstances where the domestic  industry is performing well or even growing 
but one argues that the domestic industry would be in  an even better situation if it were not for the 
dumped imports and that the domestic industry is “injured” in that sense. 
 
 We recognize that some authorities use a so-c alled “but for” analysis, which makes an 
assessment of whether the domestic industry could ha ve gained more profit, sold greater volumes, 
operated at higher capacity or realized other better outcomes if it had not been for dumped imports to 
determine whether there is a causal relationship be tween dumped imports and injury to the domestic 
industry.  However, whether the same analysis is al so relevant in determining whether material injury 
exists is another question.   Given that the domestic industry’s operati ng performance is strong, one must question 
whether there is a real need for a “protection” by  the imposition of AD measures. It is not impossible 
that, where there are different trends in diffe rent Article 3.4 factors, authorities could find 
“deterioration” of the state of the domestic industry, even if one or more factors relating to the state of 
the domestic industry show an increasing trend.
6  However, if an overall assessment of all the factors 
falls short of showing “deterioration” and simply shows that the domestic industry would have been 
better off absent dumped imports, we doubt that the dom estic industry is in need of protection by the 
imposition of AD measures. 
  
 Furthermore, if the existence of material inju ry is determined solely based on a “but for” 
analysis, an injury investigation will result in an a ffirmative injury determination in almost all cases, 
since an analysis would almost always show that th e domestic industry would be better off if it did not 
have to face competition from dumped imports. Thus, an application of a “but for” analysis in the 
determination of the existence of material injury wo uld in effect render the injury requirement of the 
AD Agreement meaningless.  
(3) Overall assessment / Measurable / Important
 
 
 As clarified in our proposal, the term “overall”  does not intend to require deterioration in each 
of the factors related to operating pe rformance. It merely clarifies that  the authorities must evaluate all 
relevant economic factors and indices in cluding those listed in Article 3.47, and through an “overall 
assessment” of these factors construct an overall ass essment of the state of the domestic industry.8 As 
a result, the operating performance of the domest ic industry as a whole should show a general 
deterioration in industry operations as opposed to a de terioration in only a limited range of factors.  It 
is not sufficient for the authorities to only gather  and analyze data on a limited number of factors 
listed in Article 3.4. Rather, the authorities must  analyse all aspects of operating performance and 
base their conclusions on what these factors as a whole indicate about the operating performance of 
                                                      
6 The FANs are not insisting that an industry can never be injured if, for example, the industry has 
increased its profit level over  time. As mentioned in Case 1, authorities have the discretion to give to the 
different factors of Article 3.4 the weight that the auth orities deem appropriate in the given circumstances.  For 
example, it could happen that, even if the industry’s profit level is growing, an objective analysis shows that the 
current profit level is still not sufficient to ensure the industry’s viability in the market competition, taking into 
consideration the necessity for further investments such as developing improved models in a fast-growing 
market. Such a situation may bring about decline in the industry’s ability to raise capital or make further 
investment. By also taking into consideration other factor s, such as a drop in mark et share, a careful overall 
assessment of all these factors could then lead to the conclusion that the state of the domestic industry is 
deteriorating.   
7 The Panel in EC-Bed linen and Mexico-Corn Syrup ruled that all the 15 factors have to be evaluated. 
(WT/DS141/RW, WT/DS132/R). 
8 The Panel in  EC-Pipe fittings  (WT/DS219/R). TN/RL/GEN/38 
Page 6  
 
 the domestic industry.
9  The authorities should make an objective evaluation based on all relevant 
indicators of whether those indicators demonstrate overall that there is a deterioration in the operating performance of the domestic industry and wh ether that deterioration is important. 
  The use of the term “measurable” is also intended to ensure that the authorities do not 
determine injury without an objective analysis of a ll relevant indicators. In that sense, the authorities 
should not find material injury only because injury is  simply “feelable.” While we believe each of the 
economic factors and indices shoul d be quantified or measured in some way which would indicate 
whether or not there is a decline, it might be in some cases that some of the factors might not be 
quantifiable or even relevant; for example, some i ndustries simply do not have “inventories” as such.    
Our proposal does not intend to require that the overall assessment should be quantified with any 
single formula or any mechanical application of a pa rticular form of analysis. For example, if some 
factors improve and others deteriorate, it is necessar y for the authorities to look at the totality of the 
factors relevant to the operating performance and reach conclusion based on objective evaluation and 
reasoned finding.
10  
 
 Finally, the domestic industry should not be in  need of “protection” by the imposition of AD 
measures if the injury is not “material”. This is c onsistent with the accepted meaning of the terms. For 
example, the dictionary defines “material” by reference to “importance”.11 Thus, the term “important” 
is not intended to raise or diminish the extent of in jury implied by the term “material”, but rather to 
clarify the term. The presence of this term in the de finition is intended only to reinforce the idea that a 
particular extent of injury is required. The use of the term “important” is intended to clarify the injury 
standard and to ensure greater uniformity in its application.  
(4) Illustrative list of benchmarks
 
    
 The FANs will present an illustrative list descr ibing certain typical cases in which there is a 
presumption of no injury, and authorities may not find  injury in the absence of facts that are sufficient 
to overcome such presumption.  Proposal 4 of our previous paper (TN/RL/GEN/28, JOB(04)/183) will be addressed in this context.  3. Causation
 
 
 When the domestic industry is found to be expe riencing “material injury”, the state of the 
domestic industry may have been affected by a comb ination of several factors, one of which may be 
dumped imports. Where injury is caused by factors in addition to dumped imports, all of these factors, 
in conjunction with each other, have “contributed” to  the material injury of the domestic industry to 
some extent. However, in order to justify the imposition of AD measures, it is not sufficient that 
dumped imports merely have “contributed” to the ma terial injury to some extent.  If the dumped 
imports only played a minor role in contributing to the material injury to the domestic industry while 
other factors, such as contraction of the market, we re the primary cause of material injury, then the 
imposition of AD measures will not eliminate the material  injury.  Therefore, in  such circumstances, 
the imposition of AD measures will only have the effect  of hindering trade without effectively curing 
the injured state of the domestic industry. 
 
                                                      
9 The Panel in Egypt-Rebar from Turkey  (WT/DS211/R). 
10 The Panel in EC- Pipe fitting emphasized that evaluation is a process of analysing and assessment 
requiring the exercise of judgement on the part of an investigating authority relating to the role, relevance and 
relative weight of each factor in an investigation. (WT/DS219/R). 
11 According to Merriam-Webster Dictionary, “material” is defined in relevant part as follows:   
“2 : having real importance or great consequences” .   TN/RL/GEN/38 
 Page 7 
 
 
  This is precisely why Article 3.5 requires th e authorities to demonstrate “that the dumped 
imports are, through the effects of dumping, as set forth in paragraph 2 and 4, causing injury within 
the meaning of this Agreement.” It is also why Article 3.5 further imposes the so-called non-
attribution requirements whereby authorities must not  attribute injury from other factors to injury 
from dumped imports.  This requires that the imp act of dumped imports on the state of the domestic 
industry must be analysed separately from the impact  of other factors. In order to fulfil this non-
attribution requirement, it follows that the authoriti es must analyse the causal relationship focusing on 
the injurious effects that the dumped imports alone  have on the domestic industry.  
  As explained above, the state of the domestic industry may have been adversely affected by 
several factors, namely the dumped imports and othe r factors.  Thus, it is not necessary that dumped 
imports be the sole factor causing material injury to the domestic industry. On the other hand, it is 
essential for the authorities to determine whether mate rial injury would have existed even in the 
absence of the factors other than the dumped imports . In other words, the effects of dumped imports 
alone should be a sufficient to cause material injury to the domestic industry.  
 
 It might be difficult, in most cases, to quantify precisely the degree to which dumped imports have contributed to the injury being experienced by  the domestic industry relative to the effects of 
other factors. Thus, our proposal is not intended to  require authorities to precisely and scientifically 
quantify the impact of the dumped imports alone on the domestic industry. Such an analysis might have to rely on qualitative information or less than  perfect quantitative information or estimates based 
on such information.  Nevertheless, they must give  a reasoned and adequate explanation of how they 
determine whether the dumped imports in and of themselves are causing material injury and what 
evidence was analyzed in reaching the conclusion.   
__________