WORLD TRADE  
ORGANIZATION  G/ADP/Q1/JPN/13 
G/SCM/Q1/JPN/13 2 February 2005 
 
(05-0434) 
Committee on Anti-Dumping Practices 
Committee on Subsidies and Countervailing Measures Original:   English 
 
 
 
NOTIFICATION OF LAWS AND REGULATIONS UNDER  
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS 
 
Replies to Questions Posed by the EUROPEAN COMMUNITIES1 
and the UNITED STATES2 Regarding the Notification of JAPAN3 
  
 The following communication, dated 25 January 2 005, is being circulated at the request of the 
Delegation of Japan. 
 
_______________ 
 
 
QUESTIONS FROM THE EUROPEAN COMMUNITIES  
Guidelines for procedures relating to countervailing and anti-dumping duties 
 1. Domestic industry 5.(4)(i)B and (ii)B
 
Could Japan please clarify how the "stance of support of an application" is interpreted 
and applied as a criterion for determining wh ether related producers behaved differently from 
non-related producers and what a producer's majo r business consist of?  What is the rationale 
for this criterion? 
Reply  
 The phrase “the stance on support of an applica tion” means  whether domestic producers take 
the stance of support of  an application of  “ Anti-dumping duty ” or “Countervailing duty” or not, 
when they are at the same time importers of the product in the Anti-dumping duty cases (including 
importers of the like products in the co untervailing duty cases) or related producers. 
 “The stance on support of an application” is one of the bases to make a judgement whether 
related-producers behave differently from non-re lated producers, or whether the major business 
concerning the products and the like products for producers who have impor ted those products is 
domestic production of the like products. 
 When related-producers support an application, it could be judged that their interests are not 
inconsistent with those of domestic producers, even though they have controlling or controlled 
relationship with suppliers or  importers of the products. 
 
                                                      
1 G/ADP/Q1/JPN/11-G/SCM/Q1/JPN/11. 
2 G/ADP/Q1/JPN/12-G/SCM/Q1/JPN/12. 
3 G/ADP/N/1/JPN/2/Suppl.4-G /SCM/N/1/JPN/2/Suppl.4. G/ADP/Q1/JPN/13 
G/SCM/Q1/JPN/13 Page 2 
 
 
  On the other hand, in the case where produ cers who have imported the products show the 
support of an application, it could also be judged th at their interests go along with those of domestic 
producers regardless of their stance as importers  
2. Sampling for investigation 12.(2)(iii)
 
This provision provides that even producers  which did not submit a reply, may be 
selected for sampling if they are recognised as representative producers in the exporting 
country.  Assuming that these pr oducers do not wish to cooperate, could Japan please explain 
how the investigating authority would establish its findings with respect to these producers?  
Would Japan use facts available for these producers,  rather than select a smaller sample of 
cooperating producers? 
Reply  
 When the selected suppliers for sampling have not submitted their responses or have provided 
insufficient replies, the investigating authorities w ould send a notification that urges the submission or 
request submission of additional information, etc. in  order to implement the investigation carefully.  
  If the selected suppliers have not submitted thei r responses or sufficient information in spite 
of the authorities’ efforts as stated above, the aut horities would determine a margin of dumping on the 
basis of the facts available.  3. Treatment after preliminary determination 14.(i)
 
Should this provision be interpreted as meaning that a preliminary affirmative 
determination has been made of dumping and consequent injury? 
Reply  
 Yes.  This provision should be interprete d as meaning that a preliminary affirmative 
determination has been made of  dumping and consequent injury. 
 
QUESTIONS FROM THE UNITED STATES 
1. Article 4.1 of the Agreement on the Impl ementation of Article VI of the General 
Agreement on Tariffs and Trade 1994 (the "AD Ag reement") and Article 16.1 of the Agreement 
on Subsidies and Countervailing Measures (the "SCM  Agreement") define the term "domestic 
industry," subject to certain exceptions,  as "ref erring to the domestic producers as a whole of 
the like products or to those of them whose colle ctive output of the products constitute a major 
proportion of the total domestic production of those products."  The new Article 4.1, of the 
Cabinet Order Relating to Anti-Dumping Duty  and the new Article 2.1 of the Cabinet Order 
Relating to Countervailing Duty  do not contain the language from Article 4.1 of the AD 
Agreement and Article 16.1 of the SCM Agreement italicized above.  What is the reason for this 
omission? 
 
Reply  
 
 To be precise, Article 4.1  of the Cabinet Order Relating to Antidumping Duty and Article 2.1  
of the Cabinet Order Relating to Countervailing Du ty provide “not less than the majority portion,”  G/ADP/Q1/JPN/13 
 G/SCM/Q1/JPN/13 
 Page 3 
 
 
 which includes the meaning of “the whole”.  The meanings of these Articles are not different from 
those of Article 4.1 of the “AD Agreement”  and Article 16.1 of the “SCM Agreement”. 
 
2. What is the meaning of the phrase "except in the case where the import was in a small 
amount" used in the final clause of the first sente nce of the new Article 2.2 of the Cabinet Order 
Relating to Countervailing Duty  and the new Article 4.2 of the Cabinet Order Relating to Anti-
Dumping Duty ?  How "small" must imports be to qualify under this exception?   
 
Reply  
 
 Producers who have imported the product recen tly are not counted as “domestic producers” in 
principle because they can have obtained direct bene fits through the import of the product.  However, 
in the case where the import was in a small amount , the benefits these producers have obtained 
directly can be considered so “small” that it is not reasonable to deprive them of their stance as 
“domestic producers”. 
  There are no fixed criteria to determine th e “small amount,” Whether the amount of the 
import was small or not will be determined on the case-by-case b asis under the consideration of 
various factors such as the amount of their product outputs, the number of the producers, etc.     3. Article 2.2 of the Cabinet Order Relating to Countervailing Duty
 and the new 
Article 4.2 of the Cabinet Order Relating to Anti-Dumping Duty  also provide for a 
"relationship" exception.  They state that, "thi s paragraph is not applied if the producers have 
... submitted the evidence to show that their major business concerning those products and the 
like products is the domestic production of th e like products, or the producers who have one or 
more of the relationships referred to in the fo llowing subparagraphs and submitted the evidence 
to show that  the effect of such relationship does not cause the producer to behave differently from other producers who have no relations refer red to in the following subparagraphs, and if 
such evidence in each cases is recognized as a ppropriate."  Is this exception distinct from the 
"small amount" exception above? 
 Reply
 
  This exception is distinct from the “small amount” exception.   
4. Article 2.2 of the Cabinet Order Relating to Countervailing Duty
, states that, "... this 
paragraph is not applied if the producers have im ported those products or the like products and 
submitted...."  Why is the term "or [the] like products" not contained in Article 4.2 of the 
Cabinet Order Relating to Anti-Dumping Duty ?  What difference does the omission make? 
 
Reply  
 
 These articles are stipulated in line with Artic le 4.1 of the Agreement on the Implementation 
of Article VI of the General Agreement on Ta riffs and Trade 1994 (the “AD Agreement”) and 
Article 16.1 of the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”). 
The difference in question just reflects the differen ce between the terms in the AD Agreement and the 
terms in the SCM Agreement. 
 
5. Paragraph 5,  part (3)(ii)A of the Guide lines for Procedures Relating to Countervailing 
and Anti-Dumping Duties  (the "Guidelines for Procedures") refers to "voting rights held by 
those who are expected to exercise the voting rights  in the same way as the company...".  Please G/ADP/Q1/JPN/13 
G/SCM/Q1/JPN/13 Page 4 
 
 
 explain which entities would be expected to vote in this manner and the circumstances under 
which they might do so. 
 
Reply
 
 
 Paragraph 5, part (3) of the Guidelines for Procedures provides what is meant by the term 
“control” when the Cabinet Order relating to Coun tervailing Duty and the Cabinet Order relating to 
Anti-Dumping Duty stipulate that domestic producer s in principle shall not include the producers, 
which have certain type(s) of relati onships of “control”.  One relations hip, for example, is stipulated 
as “a relation in which the producer controls directly or indirectly the supplier or importer of that 
product.” The article in question provides a defin ition of “control” in case where a company holds 
from 40 per cent to half of the voting rights.  The rele vant part states that if there is/are entity (ies) 
who are expected to exercise the voting rights in the same way as th e company, and then their voting 
rights are combined; and if the total voting rights exceed the majority of voting rights of the other 
company, then the “control” shall be found. 
6. With regard to New Paragraph 10 of the Guidelines for Procedures, what steps will the 
administering authority take to protect confid ential data reviewed and retained as exhibits 
during the course of an on-the-spot investigation? 
 
Reply  
 
 The treatment of confidential data reviewed and retained as exhibits during the course of an on-the-spot investigation is subject to Clauses 6 th rough 10 of Article 7 and Article 10 of the Cabinet 
Order relating Anti-Dumping Duty with respect to AD proceedings and Clauses 6 through 10 of 
Article 4 and Article 7 of the Cabinet Order rela ting to Countervailing Duty in CVD proceedings. 
 
 Upon request, the Minister of Finance decides whether or not confidentiality should be warranted.  If a confidentiality treatment request is accepted, the requesting part y is required to submit 
a non-confidential summary.  If a confidentiality requ est is not accepted, the requesting party is 
notified with the reason for the decision.  Shou ld the requesting party insist on confidentiality 
treatment in spite of rejection of the request by  the authorities, the authorities may disregard the 
information in the investigation.  The authorities will handle information warranted to be treated as 
confidential information at utmost case, and will not disclose the information to third parties.  
 
7. New Paragraph 10, part (1)(ii)C of the Guidelines for Procedures indicates that reports 
of the results of on-the-spot verifications will be provided to interested parties upon request 
prior to the disclosure of essential facts.  How soon after the completion of an on-the-spot 
investigation will such a report be made available by the administering authority? 
 
Reply
 
 
A verification report is disclosed, upon request, to the interested party prior to the disclosure 
of the essential facts.  Otherwise, the verification re port will be disclosed at the time of the disclosure 
of the essential facts.  The maximum time period the authorities are allowed to spend between the 
time of the request and the time of disclosure is not  defined.  Disclosure is done as soon as reasonably 
possible, taking into account the aut horities’ obligation to complete an  investigation within the period 
stipulated by Article 5.10 of the AD Agreemen t and Article 11.11 of the SCM Agreement.   
 
8. With respect to New Paragraph 11, part (1)( iii) of the Guidelines for Procedures, please 
explain what is meant by the term "clarified" with respect to the "accuracy" of submitted information.    G/ADP/Q1/JPN/13 
 G/SCM/Q1/JPN/13 
 Page 5 
 
 
  
Reply  
  Paragraph 11, part (1)(iii) provides for making a preliminary or final determination based on 
the facts available.  It applies when the accuracy of the submitted information cannot be clarified.  
The question is what is meant by the term “clar ified” with respect to the “accuracy” of submitted 
information.   
9. With respect to New Paragraph 11, part (1)(i v) of the Guidelines for Procedures, please 
define how much time would be considered a "s ignificant delay" and a "reasonable period". 
 
Reply
 
  Paragraph 11, part (1)(iv) is another case wher e preliminary or final determinations may be 
made based on the facts available.  It applies wh en the submission of the necessary information within 
a reasonable period is significantly delayed without good cause.    
10. Under New Paragraph 11, part (2)(iii) of the Guidelines for Procedures, where the 
administering authority requests further informat ion, how much time will be provided for the 
responding party(ies) to provide the requested information?   
 Reply
 
  Time provided for the responding party or par ties to provide the requested information could 
vary, depending, for example, on the amount and kind of information additionally requested.  The 
authorities set time limits on a case-by-case basis, with a view to conducting investigations in a 
reasonable, smooth manner.     
11. Under New Paragraph 11, part (2)(vi) thro ugh (viii) of the Guidelines for Procedures, 
where a preliminary or final determination is based on facts available, what steps does the 
administering authority take to corroborate such information? 
 Reply
 
  The investigating authorities choose informati on from relevant information obtained in the 
course of an investigation as “facts available” when making a preliminary or final determination 
based on the facts available.  When application of the facts available leads the administrating 
authorities to base their findings on informati on from a secondary source, steps are taken in 
accordance with Article 7 of Annex II of the AD Agreement.  
 
12. New Paragraph 11, part (2)(viii) of the Guidelines for Procedures indicates that 
amendments made after a preliminary determinatio n will be notified to the interested parties.  
How soon after the preliminary determination will such amendments be notified?  What 
provisions are available for interested parties to  comment on such amendments prior to the 
administering authority making its final determination?  
 
Reply
 
 
 The time to notify interested parties of amendm ents made after a preliminary determination is 
not defined.  The notification will be made as soon  as reasonably possible.  Interested parties are 
provided with opportunities to defend their interests upon a disclosure of the essential facts for the 
final determination.  G/ADP/Q1/JPN/13 
G/SCM/Q1/JPN/13 Page 6 
 
 
  
13. With respect to New Paragraph 12 of the Guidelines for Procedures, what 
consideration, if any, will be given to responding  parties not selected as part of a sample who 
desire to be investigated?  Please explain how the margin of dumping, if any, is determined for 
responding parties that are not selected as part of a sample.  
Reply
 
  Paragraph 12(2)(v) of the Guidelines for Pro cedures provides that if non-selected suppliers 
request investigations, in principle, the authorities will investigate these supp liers in the same manners 
as for those initially selected.   The margin of dumping, if any, for responding  parties, which are not selected, is based on the 
weighted average margin of dumping established with  respect to the selected  exporters or producers 
in accordance with Article 9.4 (i) of the AD Agreement.  
 
14. The guidelines described in New Paragr aph 13, part (1)(i)(A) of Guidelines for 
Procedures state that grants include  those provided by the government and
 by private bodies, 
including those entrusted or directed by the gov ernment.  Please explain whether the concept of 
indirect subsidies provided by private bodies also applies to other subsidies described in your 
guidelines, such as debt forgiveness, equity and loans.  
Reply
 
 
Paragraph 13, part (1)(i)(A) of Guidelines for Pr ocedures defines the term “the government of 
the export country” to include a private body carryi ng out funding that is normally vested in the 
government, or the one that is entrusted or directed by the government to carry out funding that does not differ substantially from practices normally follo wed by the government.  This definition applies 
not only to grant but also other subsidies describe d in the Guidelines for Procedures, such as debt 
forgiveness, equity and loans.  15. Please explain how, under New Paragraph 13, part (1)(iii)(A)(a) & (b) of the Guidelines 
for Procedures, the administering authority would determine that an investment decision is inconsistent with the usual investment practice of  private investors.  On what basis would the 
administering authority conclude that "private in vestors would not be able to invest under such 
investment conditions"?  If it is determined th at private investors would not be able to make 
such an investment, would the entire amount of th e equity infusion be treated as the subsidy?  
Are there instances where the existence of private investors would not be dispositive evidence that the investment decisions is inconsistent with the usual investment practice of private 
investors? 
 
Reply
 
 
The inconsistency of the government investment with the usual investment practice of private 
investors will carefully be examined in accordance  with Article 14(a) of the “SCM Agreement”.  
Factors to be considered include the existence of purchase of the company’s stock by a private 
investor at the same price at the time of the gove rnment’s investment, the financial situation of the 
company, market watchers’ views and so on. 
       
In case the inconsistency of the government invest ment with the usual investment practice of 
private investors is determined to exist, the amount  of subsidy is the differe nce between the amount of 
the government’s investment and that of private i nvestors under the similar i nvestment conditions.  If  G/ADP/Q1/JPN/13 
 G/SCM/Q1/JPN/13 
 Page 7 
 
 
 actual investment by private investors which is comp arable to government invest ment is not available, 
an adequate subsidy amount will be  determined after examining circumstances where the government 
make a reasonable return on the invest ment within a reasonable period, etc. 
 
There are no provisions setting forth that the exis tence of private investors is dispositive that 
the government investment decision is consistent with the usual investment practice of private 
investors.  
16. Under New Paragraph 13), part (1)(iii)(A)(b ) of the Guidelines for Procedures, please 
clarify what is meant by "comparable to governme nt investment"?  Is this with reference to the 
size of the investment?  Please also specify ho w the administering authority will determine what 
constitutes "an adequate amount of subsidy".  Are there instances where, in the absence of private investors, the entire amount of the equity infusion would be treated as the subsidy?  
 Reply
 
 
The term "comparable to government investment " is not further defined in the Guidelines. 
The comparability of investment by private inv estors versus government  investment will be 
determined based on the totality of both investments including terms and timing.     
The size of the investment could be a factor to consider. 
 
The authorities will determine what constitutes "a n adequate amount of subsidy” considering 
the totality of circumstances including whether or not the government may expect a reasonable return 
on the investment within a reasonable period.  
 
We will determine the existence and amount of th e subsidy based on the totality of facts of a 
specific case.  There could be in stances where, in the absence of pr ivate investors, the entire amount 
of the equity infusion is treated as the subsidy.  
 
17. Under New Paragraph 13, part (1)(iv) of the Guidelines for Procedures, please explain 
how the administering authority would treat an uncreditworthy company, i.e., a company that 
could not have obtained loans from conventional  commercial sources.  Please also explain how 
loans received by the company from commercial so urces that were found to have been entrusted 
or directed by the government would be treated.   
 Reply
 
 
If there are no actual commercial loans to the company comparable to a government-provided 
loan, an adequate amount of s ubsidy will be determined after examining reasonably comparable 
commercial loans available in the domestic market, etc. 
 
Loans received by the company from commercia l sources that were found to have been 
entrusted or directed by the government are treated as government-provided loans.  
18. Please explain what is considered "an appropriate period of time" to allocate a subsidy 
under New Paragraph 13, part (2)(ii) of the Guide lines for Procedures.  How is this time period 
determined?  What factors are considered in determining that "a company continuously 
receives benefit over a number of years" from the subsidy? 
 G/ADP/Q1/JPN/13 
G/SCM/Q1/JPN/13 Page 8 
 
 
 Reply
 
 
"An appropriate period of time" to allocate a s ubsidy will be determined in reference to the 
normal effective period in the industry, and so on,  the depreciation period of assets used to produce 
the subject product could be an example. 
 
Factors to be considered to decide whether or  not "a company continuously receives benefit 
over a number of years" from the subsidy include the na ture and terms of the subs idy.  For example, if 
the subsidy is considered as a grant, it would be  treated as non-recurring benefits.  Import duty 
exemptions on machinery would be cons idered as generating recurring benefits. 
 
19. With respect to New Paragraph 14 of the Gu idelines for Procedures, please explain how 
it can be "presumed" that importation of the subsidized or dumped products has occurred.  
Please also explain how the continuation of an investigation can be considered where it cannot 
be "presumed" that imports are subsidized or  dumped but where material injury has been 
"presumed" to have been caused  by such imports nonetheless. 
 
Reply  
 
When it is reasonable for authorities to find that  imports are subsidized or dumped based on 
information that the authorities have obtained by the time of the preliminary determination, the 
authorities determine preliminarily (or “presumed” in  the English translation) that importation of the 
subsidized or dumped products has occurre d in the preliminary determination.   
 
When it cannot be reasonably determined that im ports were subsidized or dumped but when it 
has preliminarily been determined that imports cau sed the material injury, the continuation of an 
investigation is considered taking in to account various factors in a specific case.  For example, if the 
preliminary determination is made before an on-the-spot investigati on, we will take into account the 
possibility that we may reach in the final determin ation that imports are subsidized or dumped.   
 
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