. /.   WORLD TRADE  
ORGANIZATION  TN/RL/GEN/106 
6 March 2006 
 (06-0950) 
Negotiating Group on Rules Original:   English 
  
CIRCUMVENTION 
 
Paper from the United States
 
   The following communication, dated 2 March 2006, is being circulated at the request of the 
Delegation of the United States 
  The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiation Group as an informal document (JOB(06)/46), also be circulated as a formal document.  
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Introduction:
 
  In October, 2005, the United States presente d a proposal on Circumvention reflecting its 
concerns about enforcement of measures taken under the Anti-Dumping Agreement (ADA) and the 
Agreement on Subsidies and Countervailing Measures (ASCM).
1  During the plenary session of the 
WTO Negotiating Group on Rules, which took place on October 24, 2005, Members shared with the United States many constructive suggestions for improvement of the proposal.  While the United States does not agree with every comment made , it has attempted, in this paper, to revise its 
proposal to reflect many of the views expressed by Members.  In summary, the United States has 
made the following three improvements to its proposal. 
 
• First, many Members asked for clarification re garding the terms “supplanted”, “same general 
characteristics and uses”, and “minor or insigni ficant process of finishing or assembly”.  
These Members were concerned that, without fu rther guidance, these terms could lead to 
uncertainty among administrators and interested parties.  In the revised proposal below, the 
United States has set forth non-exhaustive crite ria which it envisions authorities taking into 
account in applying each of these three terms to the facts before them in a particular proceeding in which circumvention has been alleged. 
 
• Second, a number of Members expressed confusion about the fact that the provision was 
expressed in terms of its applicability to exports , rather than imports.  In the view of these 
Members, the provision could have been misinterpreted to allow Members to take trade 
remedy action against merchandise which it never imported.  In light of these concerns, we 
have redrafted the proposal to make clear that it only applies to merchandise which is 
ultimately imported by the Member taking the trade remedy measure. 
 
• Third, some Members expressed confusion about the fact that the United States had grouped, 
under a single provision, circumvention through importation of parts destined for completion 
or reassembly, and circumvention through completion or reassembly of parts in a third 
country prior to importation.  In light of this confusion, the United States has redrafted its proposal to distinguish between these two forms of circumvention.  
                                                     
 
1 Submission on Circumvention, TN/RL/GEN/71 (14 October 2005). TN/RL/GEN/106 
Page 2  
 
  Proposed Text:
 
 [9.6 - ADA] [19.5 - ASCM]   Notwithstanding any othe r provision of this Agreement or of Article VI 
of the GATT 1994, the authorities may impose [an anti-dumping duty] [a countervailing duty] with respect to a product that was not within the prod uct under consideration in an investigation that 
resulted in imposition of a duty, if the authorities determine, pursuant to a review carried out in 
accordance with this paragraph, that  subsequent to the initiation of th e investigation, imports of the 
product under consideration have been s upplanted, in whole or in part,  
 
(a) by imports from the country subject to the duty of another product that has the same 
general characteristics and uses as the product under consideration, 
 (b) by imports of parts or unfinished forms of  the product under consideration produced in the 
country subject to the duty, where only a minor or insignificant process of completion or assembly is necessary to convert the parts or unfinished forms into the product under 
consideration, and the cost of the parts or unfinished forms makes up a significant portion of 
the total cost of production of the completed product, or   (c) by imports of the product under considera tion from a third country that have been 
completed or assembled from parts or unfinished forms produced in the country subject to the 
duty if only a minor or insignificant process of completion or assembly is necessary to 
convert the parts or unfinished forms into the product under consideration, and the cost of the 
parts or unfinished forms makes up a significant por tion of the total cost of production of the 
completed product.    
The provisions of [Article 6 of the ADA][Article 12 of the ASCM] regarding evidence and procedure 
shall apply to any review carri ed out under this paragraph. 
 [9.6.1 - ADA] [19.5.1 - ASCM]  Factors pertinen t to a consideration of whether imports of the 
product under consideration have been  supplanted by imports of anothe r product, by imports of parts 
or unfinished forms, or by imports of the produc t completed or assembled in a third country for 
purposes of this paragraph may include the pattern of trade, the timing of any changes in such 
patterns, and any association or compensatory arrang ement between the exporter and the importer or a 
third party.  No one or several of these fact ors can necessarily give decisive guidance.  
 [9.6.2 - ADA] [19.5.2 - ASCM]  F actors pertinent to a consideration of whether a product has the 
same general characteristics and uses as the product under consideration for purposes of this 
paragraph may include general physical characteristic s, purchaser expectations, end uses, channels of 
trade, the interchangeability of the products, the processes, facilities and employees used in 
production of the products, and the manner in which the products are advertised and displayed.  No 
one or several of these factors can necessarily give decisive guidance.  [9.6.3 - ADA] [19.5.3 - ASCM]  Factors pertinen t to a consideration of whether a process of 
completion or assembly is minor or insignificant fo r purposes of this paragraph may include the level 
of investment, research and development related to the completion or assembly, the nature and cost of 
the production process and the extent of the facilities used for completion or assembly.  No one or 
several of these factors can necessarily give decisive guidance.  
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