WORLD TRADE  
ORGANIZATION  TN/RL/GEN/123/Rev.1 
27 April 2006 
 (06-1987) 
Negotiating Group on Rules Original:   English 
  
 
FURTHER SUBMISSION ON ISSUES RELATING TO THE INITIATION  
AND COMPLETION OF INVESTIGATIONS1 
 
Paper from Chile and  Hong Kong, China  
 
Revision  
 
 
 The following communication, dated 20 April 2006,  is being circulated at the request of the 
Delegations of Chile and Hong Kong, China. 
 
 The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(06) /106/Rev.1), also be circulated as a formal 
document. 
 
_______________ 
 
 In TN/RL/GEN/69, Hong Kong, China proposed several textual changes to Article 5 of the 
Anti-dumping Agreement.     In view of the discussions in the Negotiating Group on Rules, Hong Kong, China would like 
to make revisions/additions to two aspects of its earlier proposal: 
 (1) Article 5.3
  
 
Given that Article 5.3 sets the standard of in itiation of an investigation, there should be a 
common understanding among members of what “su fficient evidence” means.  Hong Kong, China 
notes however that authorities often simply refer to the existence of “sufficient evidence” in notices of 
initiation.  For this reason, in TN/RL/GEN/69, Hong Kong, China proposes that the requirement of 
“sufficient evidence” should be clarified to refer to sufficient evidence of dumping, injury and a 
causal link – in other words, the same standa rd as for self-initiation under Article 5.6.   
 
In addition to the proposal in TN/RL/GEN/69,  Hong Kong, China notes that the margin of 
dumping in the petition is often estimated based on constructed normal value using the petitioner’s 
own cost of production.  Since dumping refers to pri ce discrimination by the exporter in the exporter’s 
domestic and export market sales, the petitioner’s ow n cost of production may cast serious doubt on 
the fairness and reliability of the allegation of dumping .  Moreover, such cost data is usually withheld 
to protect confidentiality, and this makes it even mo re difficult for exporters to challenge the basis of 
the allegation of dumping.  Hong Kong, China belie ves therefore that constructed normal value (or 
third country export price) should only be used to estimate dumping as a last resort, if home market 
                                                      
1 The proposal contained in this document does not represent a final position and may be subject to 
further addition and/or modification in the course of the negotiations.  Other provisions of the Anti-Dumping 
Agreement that may be affected by the proposal may be examined in the later stages of the negotiations when 
Members have a more comprehensive picture of the amended Agreement. TN/RL/GEN/123/Rev.1 
Page 2  
 
  sales prices are not available, and if authorities consid er that the constructed or third country price is 
prima facie a fair substitute for home market nor mal value, having regard to the assumptions and 
methodologies used in deriving the c onstructed or third country price. 
 
Moreover, we support the proposal from Chile, in TN/RL/GEN/75, that authorities should not 
take the allegations in the petition at face value,  but should check the evidence against information 
from independent public sources.  This is also incorpor ated in the draft text in the Annex to this paper. 
  (2) Articles 5.5 and 5.8:
  
        
 In view of the lack of quick and effective recourse to dispute settlement over initiation, in 
TN/RL/GEN/69, Hong Kong, China proposes that prio r to initiation, exporters and the exporter 
government be given a copy of the non-confidenti al version of the petition, and a 15-day period to 
comment on it.  Authorities should address those comments before initiation, or within 60 days 
thereafter. 
  Hong Kong, China continues to believe that gi ving exporters opportunity to comment on the 
petition is a preferable solution as it offers a more effective means to identify early, and to avoid, 
investigations that are initiated based on insufficient information.  However, in view of the concerns 
raised by a number of Members, Hong Kong, China is  prepared to propose an alternative to this 
aspect of our proposal.  Under this alternative,  while the exporters and the exporter governments 
should be given a copy of the non-confidential versi on of the petition prior to initiation, there will be 
no mandatory period for comment prior to initiati on.  However, should authorities subsequently 
receive comments from exporters or the exporting g overnment concerning the accuracy or sufficiency 
of the petition, backed by public data, the authorities must provide a full reply to the exporters within 
90 days of receipt of those comments.  To en sure transparency, the comments received and the 
authorities’ response should also be included in the relevant notice under Article 12.          
  These further amendments are shown in bold  in the Annex to this paper.   
  This paper supplements, and should be read t ogether with, the proposals in TN/RL/GEN/69.  
Hong Kong, China continues to stand by the othe r proposals in that paper, namely Articles 5.4 
(modified as suggested by Norway in its TN/RL/GEN/103); Article 5.5.1; Article 5.10; Article 5.11 and consequential amendments to Articles 5.6 and 6.1.3.  Hong Kong, China reserves the right to 
make further additions or revisions to the proposals in that paper. 
 
  TN/RL/GEN/123/Rev.1 
 Page 3 
 
 
  ANNEX  
 
Revisions to Article 5.3  
 
5.3 The authorities shall examine the accuracy and adequacy of the evidence provided in the 
application to determine whether there is sufficient evidence2 of dumping, injury and a causal link  to 
justify the initiation of an investigation.   
…... 
 
Revisions to Articles 5.5 and 5.8  
 
5.5 The authorities shall avoid, unless a decision has been made to initiate an investigation, any 
publicizing of the application for the initiation of an investigation.  However, promptly  after receipt of 
a properly documented application and before procee ding to initiate an investigation, the authorities 
shall notify and provide the full text (due regard to be paid to the requirement for the protection 
of confidential information, as provided for in paragraph 5 of Article 6)  of the application to the 
government of the exporting Member and, where pr acticable, to the exporters and foreign producers 
identified in the application3.     
…... 
 5.8 “An application under paragra ph 1 shall be rejected and an i nvestigation shall be terminated 
promptly as soon as the authorities concerned are satisfied that the standing requirement under 
paragraph 4 has not been met at the time of the initiation (in case of investigation initiated on 
the basis of an application) or that there is not sufficient evidence of either  dumping, or of injury or 
causal link  to justify proceeding with the case…4”  
 
…... 
 
6.1.3 [Consequential amendments to Artic le 6.1.3 as per TN/RL/GEN/69]  
 
__________ 
  
                                                     
 
2 New footnote : Authorities shall, inter alia,  check the evidence in the application against 
information from other in dependent public sources.  Normal value shall not be based on third country 
export price or constructed normal value, unles s home market sales pri ces are unavailable, and 
authorities are satisfied that the third country export  price or constructed normal value is a prima facie 
fair substitute for home market sales prices, havi ng regard to the assumpti ons and methodologies used .  
3 New footnote : It being understood that, where the number of exporters involved is particularly high, 
the full text of the written application may instead be provided to the relevant trade association.  
4 New footnote : Where an interested party alleges that there is insufficient standing or evidence 
justifying initiation, and supports its allegations with public data such as official statistics, or otherwise 
alerts the authorities as to the incons istencies in the application, the au thorities shall promptly look into 
the complaint and provide a full reply to the party and other interested parties within [90] days thereof, 
or, if the investigation is expected to conclude within [s ix] months of initiation, no later than at the time of 
the final determination.   [Editorial note: Article 12 should be amended to provide for the notice of initiation, 
preliminary determination or final de termination (whichever is the relev ant earliest notice) to state the 
comments received and the authorities’ response to those comments.]