WORLD TRADE  
ORGANIZATION  TN/RL/GEN/125 
24 April 2006 
 (06-1900) 
Negotiating Group on Rules Original:   English 
  
 
REVISED PROPOSAL ON THE SUBMISSION OF DATA 
HELD BY AFFILIATED PARTIES 
 
Communication from Japan
 
 
 
 The following communication, dated 20 April 2006, 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(06)/ 108), also be circulated as a formal document. 
 
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Explanation
 
 
 This proposal is a further reflection on our earlier proposal (TN/RL/GEN/72) regarding the 
severe burdens that respondents experience when compe lled to provide data held by their “affiliates” 
and how to define situations in which authorities may require respondents to provide information that 
is held by other parties.   
 
 In many cases, authorities ask respondents to pr ovide information that is held by other 
companies.  This often imposes a heavy burden on  the respondents and the respondents often find it 
very difficult or sometimes impossible to have those other parties provide such information.  In case 
where such information is not provided, the respondents often face the use of “adverse” facts 
available.   
  On the other hand, authorities sometimes need information held by th e respondent’s affiliates 
– in particular, to examine whether transactions be tween the affiliated parties are in the ordinary 
course of trade, and/or reasonably reflect the affiliate’s costs.   
 
 The AD Agreement should provide a rule that pr operly balances the interests of authorities to 
obtain information and the interests of responde nts in avoiding undue difficulties when submitting 
such information.  In TN/RL/GEN/72, we proposed  that a “control” standard best achieves this 
balance.  Specifically, we proposed that authoriti es could require respondents to provide information 
held by another company only if the respondent “c ontrols” that company or vice versa.  Where the 
respondent controls the affiliate , the respondent should have le ss difficulty in obtaining the 
cooperation of its subordinate affiliated party.  Si milarly, where the affiliated party controls the 
respondent, the entities’ close relationship suggests a substantial identity of interest between the 
parties, and therefore the respondent should be able to collect information from its “affiliated” party.  
On the other hand, it would be unreasonable and unjus t to punish the respondent with adverse facts 
available when there is no “control” relationshi p between those parties and the collection of the 
requested data is beyond the respondent’s means.  TN/RL/GEN/125 
Page 2  
 
   We would like to emphasize that the proposal ONLY relates to the scope of “affiliated 
parties” for which respondents may be required to  provide information.  The criteria does NOT 
necessarily relate to the scope of “affiliated pa rties” for other purposes in the conduct of an 
investigation, including in which situations sales to a ffiliated parties could be considered to be outside 
of the ordinary course of trade.  The scope of  “affiliated parties” for which respondents may be 
required to provide information does not necessarily ha ve to be the same as the scope of “affiliated 
parties” for other purposes.   In the discussions in the Negotiating Group on TN/RL/GEN/72, some Members argued that authorities should be allowed to seek information of pa rties even if strict “control” does not exist.  
Our present proposal attempts to address these argum ents.  We believe that the situation where 
respondents own more than 50% of the shares of the other party should still be the primary case where 
the authorities may require respondents to provide da ta concerning other parties.  However, as some 
Members have argued, there could be other cases wh ere the relationship of respondents with other 
parties could allow the respondents to make reasonabl e efforts to provide information from such other 
parties.  While we agree that there could be some limited situations where such relationship exist, we 
believe that there shall never be situations wher e the respondents are required to provide information 
held by other parties when the importance or necessity  by the authorities to obt ain such information is 
relatively low and, in comparison, the difficulty of respondents to provide such information is 
relatively large, so that the efforts required to provide such information is disproportionate to the necessity of such information to the conduct of info rmation.  Furthermore, we believe that there 
should be a clear line in the AD Agreement below wh ich the relationship with other parties shall be 
regarded as simply too weak so that the res pondents should be relieve d from such unreasonable 
efforts.  Nevertheless, this does not mean that the authorities cannot “request” such information from 
respondents in which case the respondents are free to  provide such information, if they can, on a 
voluntary basis. 
 
 Specifically, our proposal contemplates three scenarios or “cases:”    
Case (1):  The respondent owns more than 50% of the shares of the other party (or vice 
versa).  
 
o Control exists between the respondent and the other party.  There is likely to be a 
substantial identity of inter est between the two parties. 
o Authorities may ask the respondent to provide  any necessary information that is held 
by the other party.  
o If the respondent fails to provide the request ed information, and fails to demonstrate 
that it acted to the best of its ability, th e authorities may regard the respondent not 
being cooperative. 
 
Case (2):  (a) one party owns 20% or more but  not more than 50% of the voting power 
of the other; and (b) such party is the largest shareholder of the other.  
 
o Neither party strictly “controls” the other.  However, a party that owns 20% or more 
of the voting power of another may have significant power to participate in the 
financial and operating policy decisions of the other, if the former party is the largest 
shareholder of the latter.  
o In these situations, the authorities may require  respondents to make reasonable efforts 
to provide the other party’s information.   The authorities may do so, however, only 
where they demonstrate that the efforts required to provide the information is 
proportionate to the need for the information.1   
                                                      
 1 For example, assume that the respondent sells a small quantity of products to a home market 
distributor, of which the respondent holds only 20% of the outstanding shares.  If the respondent makes many  TN/RL/GEN/125 
 Page 3 
 
 
  o The authorities may not deem the respondent “uncooperative” so long as the 
respondent made reasonable efforts to pr ovide the requested information.   
 Case (3):  Neither party owns 20% or more of the voting power of the other, or is the largest shareholder of the other.  
o In this situation, the degree of owners hip is insufficient to confer control or 
meaningful influence.  The authorities therefore may not require the respondent to 
provide information held by the other party. 
o The authorities may not deem the respo ndent “uncooperative” even when the 
respondent failed to provide or  make reasonable efforts to provide such information.  
 
We are ready to discuss any suggestions from ot her Members on the criteria proposed in our 
proposals, including any additional criteria that they feel may confer control or have significant power 
to participate in the financial and operati ng policy decisions of other parties.   
                                                                                                                                                                    
 
sales to other home market customers (in which it has no shareholding), then these sales should provide the 
authorities with a sufficient basis for normal value.  Th e authority’s need for the distributor’s resale data 
therefore is small.  In such  a case, it should be difficult for the author ities to demonstrate that  their need for the 
distributor’s resales data is proportionate to the efforts that (a) the respondent would have to expend in order to 
persuade the distributor to provide the information, and (b) the distributor would have to expend in order to 
prepare its resale price and expense information (and to  undergo an on-site verification by the authorities).   
 TN/RL/GEN/125 
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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 provide data concerning “affilia ted parties”.  The proposed text is as follows:  
 
6.1.4  The authorities may require exporters or foreign producers to provide necessary information 
held by other parties if such other parties directly  or indirectly control, or are controlled by, the 
exporter or foreign producer; or if the exporter or fo reign producer and the other parties are under the 
common control of a third party.    
 Even when such other parties do not control, or  are not controlled by, the exporter or foreign 
producer; or if the exporter or foreign producer and the other parties are not under the common control of a third party, the authorities may nevert heless require the exporters or foreign producers to 
make reasonable efforts to provid e necessary information held by ot her parties, provided that the 
authorities demonstrate that  requiring such efforts is  not disproportionate in the light of the balance 
between the importance of such information to the conduct of the investigation and the difficulty of 
the exporters or foreign producers to provide such information.       In any case, the authorities may not require the exporters or foreign producers to make such efforts if the following conditions are met:  
(i) neither of them holds, directly or indirectly , 20 per cent or more of the voting power of the 
other or is the largest shareholder of the other; and 
(ii) no third party holds, directly or indirectly, 20 per cent or more of the voting power of both of 
them or is the largest shareholder of both of them.  
 
 6.1.4.1  For the purposes of sub-paragraph 1.4, “cont rol” 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 vo ting 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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