WORLD TRADE  
ORGANIZATION  G/ADP/AHG/W/177 
25 March 2008 
 (08-1274) 
Committee on Anti-Dumping Practices 
Working Group on Implementation Original:   English 
 
 
 
ARTICLE 2.4.1 – FOREIGN EXCHANGE FLUCTUATIONS 
  
Paper by New Zealand
 
 
  The following communication, dated 18 March 2008, is being circulated at the request of the Delegation of New Zealand.  
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Article 2.4.1 – Foreign Exchange Rates 
 
 Under Article 2.4.1 of the AD Agreement, if  a fair comparison between export price and 
normal value requires a conversion of currencies, that  conversion should be made at the exchange rate 
existing on the date of sale except when a sale of  foreign currency on forward markets is directly 
linked to the export sale involved.  Article 2.4.1 al so requires the investigating authority to ignore 
currency fluctuations, and allow at least 60 days in  an investigation to have adjusted their export 
prices to reflect sustained movements in exchange rates.   
 
New Zealand Practice 
 
 In an antidumping investigation where amounts ha ve to be converted into foreign currencies, 
New Zealand uses the interbank exchange rate obtai ned from the oanda internet currency conversion 
site at:  http://www.oanda.com/convert/classic
 on the date of sale (unless there is a forward exchange 
contract involved).  New Zealand uses the transaction-to-transaction methodology and the 
investigators establish the date of sale for each trans action either at the time of verification or if a 
verification visit has not been possible, on the basis of the facts available (which is normally the date 
of the invoice to which the sale relates which has been supplied by the importer or Customs).  The 
results are reported in the verification report to each company and in the essential facts and 
conclusions report in accordance with Article 6.9.  An extract from a Non-Confidential Verification 
Report is reproduced here for the information of Me mbers.  It should be noted that the company is 
given full access to the confidential information hi ghlighted and has the opportunity to comment on 
the report before it is finalised.    Date of Sale and Exchange Rates 
1. NM Paper's export sales to New Zealand are not made in Malaysian Rinngit (MYR), but in 
United States of America Dollars (USD) therefore the date of sale is important in converting 
currencies for comparison of the export prices a nd normal values.  The Agreement specifies that 
unless a forward contract exists for a particular sale the exchange rate as at the date of sale should be 
used for any currency conversion.   
 G/ADP/AHG/W/177 
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  2. MED asked whether NM Paper's exports to New Zealand were covered by forward contracts.  
NM Paper advised that as its sales to New Zeala nd are small, relative to its other exports, it, 
therefore, has not entered into any forward exch ange contracts meaning funds are subject to the 
prevailing market spot rates at the time of receipt.    
3. MED asked NM Paper what it considered was th e date of sale for exports to New Zealand.  
The Agreement states that the date of sale is that  which establishes the material terms of sale, for 
example the date of the invoice or purchase order.    4. NM Paper advised its standard practice is, once approached by a customer, to enter into 
negotiations regarding the various aspects of the sale.  When these negotiations are finalised a pro-
forma invoice is drawn up which specifies the CB S volumes, payment terms and an approximate 
delivery time.  All pro-forma invoices contain a quan tity tolerance of plus or minus ... percent.  The 
pro-forma invoice is sent to the customer for acceptance and once NM Paper has received a signed 
pro-forma it factors the consignment into its production schedule.   
 
5. It is this point, when a signed pro-forma ha s been returned, that NM Paper considers is the 
date of sale as the pro-forma invoice establishes th e material terms of sale.  NM Paper provided a 
copy of all pro-forma invoices for exports to New Zealand over the POI ( uplifted document #10 ).   
 6. MED have considered the sale process and alte rnative dates of sale and agree with NM Paper 
that the date on which the material terms of sale occur is when a pro-forma invoice is issued.   
 7. MED stated that it normally uses the interbank exchange rates from 
http://www.oanda.com/convert/fxhistory and that it  intended to use these rates in the current 
investigation unless NM Paper had any concerns.  NM Paper advised that it was happy with MED's 
suggestion.  The specific exchange rate s used are shown in Table 2.1.   
 
Table 2.1:  Exchange Rates 
 
Date of Sale Exchange rate 
(USD1=MYR) 
... MYR ... 
... MYR ... 
... MYR ... 
... MYR ... 
... MYR ... 
 
 
Fluctuations and Sustained Movements of Exchange Rates 
 
 When using the transaction-to-transaction me thodology, a dumping margin is established for 
each shipment at the exchange rate on the date of sale as explained above.  New Zealand understands 
that the requirement to ignore fluctuations in excha nge rates means, consistent with the first sentence 
of Article 2.4.1, that the actual exchange rate on th e date of sale be applied (unless there is a forward 
exchange contract involved).  New Zealand does not therefore attempt to smooth out fluctuations by  G/ADP/AHG/W/177 
 Page 3 
 
 
  the use of some form of average exchange rate, which would amount to taking account of exchange 
rate fluctuations rather than ignoring them.     It is also New Zealand's understanding that the requirement to allow exporters at least 60 days 
to have adjusted their export prices to reflect a sustained movement in exchange rates during the 
investigation period does not remove the requirement  to convert currencies at the date of sale but 
rather provides exporters with the opportunity to ad just their export prices in the currency in which 
such sales are made.     Similar to the AD Agreement, New Zealand does not have a definition of "fluctuation" and 
"sustained movement in exchange  rates" and would benefit from th e experience and views of other 
Member's in this regard.  One question New Zealan d would pose to other Members is that given the 
differences in data used between the weighted-ave rage to weighted-average and transaction-to-
transaction methodologies are sustained movements in  exchange rates as important in transaction-to-
transaction dumping margins as they are when compar ing on a weighted-average to weighted-average 
basis?   
  A discussion on these aspects of the use of exchange rates in an anti-dumping investigation would seem to be a good starting point for devel oping a recommendation to the Committee of Anti-
Dumping Practice as to what is "best practice" in this area.    
 
 
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