. /.   WORLD TRADE  
ORGANIZATION  G/ADP/AHG/W/178/Rev.1 
29 April 2008 
 (08-2064) 
Committee on Anti-Dumping Practices 
Working Group on Implementation Original:   English 
 
 
 
EXPORT PRICES TO THIRD COUNTRIES OR CONSTRUCTED  
NORMAL VALUE – ARTICLE 2.2 
 
Communication from the European Communities  
 
Revision  
  The following communication, dated 25 April 2008,  is being circulated at the request of the 
Delegation of the European Communities. 
 
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  At its autumn meeting, the Working Group on Implementation agreed upon several topics for further discussion.  Among the topics agreed upon was the following related to the implementation of 
Article 2.2 of the Anti-Dumping Agreement: 
 
How do Members decide when to use export prices to third countries and when to 
use constructed normal value under Article 2.2?   
 The EC is pleased to take this opportunity to di scuss its experience with regard to this issue. 
 
Art. 2.2 ADA 
 
 When there are no sales of the like product in the ordinary course of trade in the domestic 
market of the exporting country or when, because of the particular market situation or the low volume 
of the sales in the domestic market of the e xporting country, such sales do not permit a proper 
comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is 
representative, or with the cost of production in the country of origin plus a reasonable amount for 
administrative, selling and general costs and for profits.   
 
 The EC has implemented this Article in its  Basic Regulation (BR) Council Regulation (EC) 
No 384/96 as follows:    
Article 2 (3) BR 
 
 When there are no or insufficient sales of the like product in the ordinary course of trade, or where because of the particular market situati on such sales do not permit a proper comparison, the 
normal value of the like product shall be calculated:    
• on the basis of the cost of production in the country of origin plus a reasonable amount of 
selling general and administrative costs and for profits, or  G/ADP/AHG/W/178/Rev.1 
Page 2  
 
  • on the basis of the export prices, in the ordina ry course of trade, to an appropriate third 
country provided that those prices are representative.   
 
 A particular market situation for the product concerned within the meaning of the preceding 
sentence may be deemed to exist, inter alia , when prices are artificially low, when there is significant 
barter trade, or when there are non-commercial processing arrangements.  
  The legal basis, Article 2(3) (BR), gives no guidelines as to which method should be given preference and therefore the decision lies within th e discretion of the investigating authorities which 
method should be used however it pr ovides preconditions for both methods in order to be used.   
 
(a) If the normal value is calculated on the basis of the cost of production in the country 
of origin the like product must be produced  but not necessarily sold in the exporting 
country.   
 (b) If the normal value is based on the export price to an appropriate third country the 
like product must be exported to third c ountries and the prices of the like product 
must be representative.   
  When sending out the questionnaire the European Commission usually avails itself of both methods by requiring exporters to provide cost of production which have to be provided in any event 
in order to determine whether domestic sales are pr ofitable and by requesting information on the total 
value of export sales of the producer or exporter in question for the like product to the export market 
outside the Community.     The EC then decides the appropriate method to be used and regularly uses the cost of 
production method. In the EC, there are no other c onditions in order to use the cost of production 
method and therefore the export price method has ne ver been used in the past in cases where the 
product has been produced at all in the exporting country.     The EC basically sees the export price method as an appropriate method for establishing normal value. However it would involve an investiga tion into another export market in order to make 
sure that export prices to the third country are estab lished on real market conditions which would also 
involve a consideration concerning the size of the export market which must also be appropriate and 
the price of the product which must be representative. In addition there may be a risk that the sales to 
third countries are equally dumped.     
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