WORLD TRADE  
ORGANIZATION  TN/RL/GEN/72 
14 October 2005 
 (05-4703) 
Negotiating Group on Rules Original:   English 
  
 
FURTHER PROPOSAL ON THE SUBMISSION OF DATA  
CONCERNING AFFILIATED PARTIES 
 
Paper from Japan  
  
 The following communication, dated 13 October 2005, is being circulated at the request of 
the Delegation of Japan.   The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/ 244), also be circulated as a formal document. 
 
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Introduction
 
  This paper is intended to lead to a deeper discussion of the severe burdens that respondents 
experience when compelled to provide data of their “affiliates”, and how these burdens can be 
reduced while retaining the integrity of AD disciplines.   In an AD investigation, the authorities often 
require the respondents to collect and submit data concerning their affiliated parties.  Such data 
include a variety of information such as the producti on costs of parts that the affiliate sells to the 
respondent and financial data.  Respondents also must provide de tailed sale-by-sale information on 
affiliates’ resales of the subject products to i ndependent third parties, and relevant selling and 
movement expenses.  
 Respondents often face severe burdens in obtaini ng information from their affiliated parties.  
In particular, Members’ investigating authorities currently apply a very low standard in deeming 
parties “affiliated” (often the standard is five per cent ownership by one party in the other, or even 
less).  In such cases affiliated parties tend to be reluctant to provide important confidential business 
information unless they are convinced that it is in th eir economic interest to do so.  Respondents often 
must struggle through difficult negotiations with thei r affiliated parties to obtain such data, especially 
when they are remotely related to each other.  Preparing large amounts of data concerning affiliated 
parties in the early stage of an investigation may place an unreasonable burden on the respondents. 
  On the other hand, it is understandable that investigating authorities may need to collect 
information from affiliates.  Sometimes affiliates’ operations are pertinent to the calculation of the 
dumping margin.  For example, close affiliation coul d affect the prices at which an affiliate sells 
inputs to a respondent, and such prices might not reflect the actual production and sales activities that 
the affiliate performs.  Authorities thus would like to collect information on those operations, in order 
to ensure that the margin of dumping in the i nvestigation is based on performed on the basis of 
positive, accurate, and reliable information that is not distorted by non arms’ length dealing.   
 TN/RL/GEN/72 
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./.  Thus, it is important that the AD Agreemen t set out a rule which properly balances the 
investigating authorities’ interest in obtaining info rmation concerning responde nts’ affiliated parties 
with respondents’ interest in avoiding undue difficulties when submitting such information. 
  In balancing these two interests, it would be fair to assume that respondents are capable of 
collecting affiliates parties’ data where a “control” relationship exists .  Where the respondent controls 
the affiliate, the respondent should have less difficulty  in obtaining the coopera tion of its subordinate 
affiliated party.  Similarly, where the affiliate d party controls the respondent, the entities’ close 
relationship suggests a substantial identity of in terest between the parties, and therefore the 
respondent should be able to collect information from its “affiliated” party.  On the other hand, it is 
unreasonable to require a respondent to submit informa tion regarding affiliated parties that are not in a 
“control” relationship with the respondent.  In such  cases, the respondent lacks either the ability to 
compel its subordinate affiliate to cooperate or th e necessary mutuality of interest that would provide 
a superior affiliate with the incentive to cooperate.   
 Thus, it is unreasonable and unjust to punish th e respondent with adverse facts available, as 
collection of the requested data was beyond the respondent’s means.     The “control” standard for affilia tion, which the FANs have proposed
1, would address the 
concerns of authorities and respondents, as discussed above.  It would enhance the predictability and 
objectivity of anti-dumping investigations to the be nefit of the authorities as well as the interested 
parties.2  Moreover, the “control” standard, which is c onsistent with the widely accepted International 
Accounting Standard 27, is intuitive and easy to in corporate into the laws and regulations of the 
Members.  
                                                     
 
1 TN/RL/W 146 and TN/RL/GEN/19. 
2 We are open to further discussion on other issues relating to affiliated parties, including the definition 
of affiliated parties in the context of Article 2, the arm’s length test, and other aspects of affiliation.  TN/RL/GEN/72 
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 Proposal  
 
 Add a new subparagraph to Article 6.1 clarifyi ng the criteria when the authorities can require 
the respondents to submit data concerning “affiliate d parties”.  The proposed text is as follows: 
 
6.1.4  The authorities may require exporters or fore ign producers to submit information of other 
parties only if such other parties directly or indir ectly control, or are controlled by, the exporter or 
foreign producer; or if the exporter or foreign pr oducer and the other parties are under the common 
control of a third party.  For the purposes of this  agreement, “control” is the power to govern the 
financial and operating policies of an enterprise by having:  
(a) more than one half of the voting power of an enterprise;  
(b) power over more than one half of the voting rights by virtue of an agreement with other 
investors;  
(c) such power under a statute or an agreement;  
(d) power to appoint or remove the majority of the members of the board of directors or 
equivalent governing body; or  
(e) power to cast the majority of votes at meetings of the board of directors or equivalent 
governing body.  
 
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