. /.  WORLD TRADE  
ORGANIZATION  TN/RL/GEN/67 
12 October 2005 
 (05-4636) 
Negotiating Group on Rules Original:   English 
  
 
PROPOSAL ON AFFILIATED PARTIES 
 
Paper from Brazil  
 
 
 The following communication, dated 10 October 2005, is being circulated at the request of 
the Delegation of Brazil.   The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/ 228), also be circulated as a formal document. 
 
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I. DESCRIPTION OF THE PROBLEM 
 
1. In previous submissions to the NGR
1, the “Friends of Anti-Dumping Negotiations” (FANs) 
raised the issue of “affiliation” for the purposes of  the calculation of normal value and the use of 
constructed export price (CEP) under Articles 2. 2 and 2.3 of the Antidumping Agreement (ADA). 
 2. The discussion during the Negotiating Group’s  meeting in March and September 2004 
showed no disagreement regarding the desirability of  a clarification of the concept of “affiliated 
parties” for the purposes of the determination of du mping margins.  The proposed definition is based 
upon the International Accounting Standard 24 (IA S 24 – reformatted 1994) as regards control and 
IAS 28 (revised 2000) as relates to significant influence.  
3. We believe that clarifying the concept would gather more transparency and security to 
antidumping procedures by improving the calculati on of both normal value and export price. 
 
II. ELEMENTS OF SOLUTION 
 4.  Amend Article 2 to make it clear that for the purposes of that Article: 
 “An affiliated party shall be any party which is considered to, directly or indirectly, have 
significant influence or be significantly influenced  by another party, or which is under the common 
significant influence of a third party. For the purpo ses of this definition, significant influence is: 
 
 (i)  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 th e voting rights by virtue of an agreement 
with other investors; 
                                                     
 
1 TN/RL/W/146 and TN/RL/GEN/19 TN/RL/GEN/67 
Page 2  
 
   (c)  such power under a statute or an agreement;    (d)  power to appoint or remove the major ity of the members of the board of directors 
or equivalent governing body; 
 
  (e)  power to cast the majority of votes as meetings of the board of directors or 
equivalent governing body; or  
  (ii)  the power granted through share owne rship, statute or agreement to a person or 
enterprise to participate in the financial a nd operating policy decisions of the another 
enterprise by having: 
   (a) representation on the board of directors of such other enterprise;  
  (b) common directors and/or officers with such other enterprise; 
   (c) a contractual relationship (or any ot her biding obligation) enabling such person 
or enterprise to unilaterally impose pric ing conditions on such other enterprise 
and resulting on an economic, financial and technological dependence of such 
other enterprise from such person or enterprise.” 
 
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