WORLD TRADE  
ORGANIZATION  TN/RL/GEN/62 
16 September 2005 
 (05-4070) 
Negotiating Group on Rules Original:   English 
  
PROPOSAL OF THE DEFINITION OF DOMESTIC INDUSTRY: 
EXCLUSION STANDARDS 
 
Communication from the Separate Customs Territory of
 
Taiwan, Penghu, Kinmen and Matsu  
 
 The following communication, dated 15 September 2005, is being circulated at the request of 
the Delegation of the Separate Customs Terr itory of Taiwan, Penghu, Kinmen and Matsu. 
  The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/ 185), also be circulated as a formal document. 
 
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  This proposal refers to the definition of “dom estic industry” contained in Article 4.1 of the 
Anti-Dumping Agreement (ADA) and, in particular , to its first item, which excludes producers who 
are related to exporters or impor ters or are themselves importers of the allegedly dumped imports 
from the definition of “domestic industry”.
1 
 
 Issue: Definition of Domestic Industry 
 
 Relevant Provision: Article 4.1(i) of the ADA. 
 
 Description of Problems: 
 
 The suggestions and proposals of Members on Article 4.1 of the ADA so far have revolved 
around the specific parameters as to what the mini mum percentage of the domestic production can be 
considered to be a “major proportion” of domestic i ndustry. However, little attention has been paid to 
the standards which allow the investigating authorit y to exclude some producers from the definition of 
“domestic industry”.   Article 4.1(i) of the ADA allows investiga ting authorities to exclude domestic producers who 
are related to the exporters or importers or ar e themselves importers of the alleged dumped product 
when defining the domestic industry.  However, there are no criteria for such exclusions.  The only guidance is provided in relation to the meaning of  producer related to exporters/importers.  The 
proponents believe that Members shall be benefite d by further clarification on the conditions for 
excluding some domestic producers from the scope of domestic industry.  
 
                                                     
 
1 The scope of the paper is limited to setting forth guidance on the exclusion of domestic importing 
producers from the scope of domestic industry.  This paper does not address the other important issues in 
Article 4.1, such as “related party” and the definitio n of “major proportion”.  Therefore, it should not be 
interpreted in a way to prejudice the position of the proponent on the other relevant issues.  Some relevant proposals by the FANs on those other issues can be found in TN/RL/GEN/19, TN/RL/GEN/23 and 
TN/RL/GEN/27. TN/RL/GEN/62 
Page 2  
 
  Without appropriate assessment, the definiti on of “domestic industry” can be narrowed to 
cover a smaller number of producers so as to meet the “standing” requirement provided in Article 5.4 
of the ADA.  Further, the exclusion of some produ cers may facilitate a finding of material injury.  
Consequently, it is proposed that the requireme nts to exclude producers from the definition of 
“domestic industry” must be clearly established in the ADA in order to ensure the representativeness 
of the petitioners and ensure a uniform application of the rules.  
 
 Elements of a Solution: 
 
 Improve the ADA by ensuring that the exclusi on of certain producers from the definition of 
“domestic industry” is carried out under the basi s of common, transparent and uniform criteria. 
 
 Proposal: 
 
 Amend Article 4.1(i) of the ADA to provide fo r clear factors that investigating authorities 
must take into account in order to exclude some producers from the definition of “domestic industry”.  
In particular, subject to further discussions, such  a provision could be amended as follows (see the 
new wording underlined):   “For the purposes of this Agreement, the term  "domestic industry" shall be interpreted as 
referring to the domestic producers as a whole of th e like products or to those of them whose 
collective output of the products constitutes a
 the major proportion of the total domestic production of 
those products, except that:  
(i) when producers are related
11 to the exporters or importers or are themselves importers 
of the allegedly dumped product, the term "d omestic industry" may be interpreted as 
referring to the rest of the producers;12  
 
 (…) 
 _________________________________ 
11 For the purpose of this paragraph, producers sh all be deemed to be re lated to exporters or 
importers only if (a) one of them directly or indirectly controls the other; or (b) both of them 
are directly or indirectly controlled by a third pers on; or (c) together they directly or indirectly 
control a third person, provided there are grounds  for believing or suspecting that the effect of 
the relationship is such as to cause the produ cer concerned to behave differently from non-
related producers. For the purpose of this paragr aph, one shall be deemed to control another 
when the former is legally or operationally in a position to exercise restraint or direction over 
the latter. 
 
12A producer shall not be excluded from the de finition of domestic industry where, e.g.:  
(i) the total import value of the product under consideration made by such 
producer during the period of investigation is relatively low (less than [X]% of 
its total sales of the like produc t into the domestic market); or  
(ii) the imports of the product under consideration made by the producer only 
relate to a few models of the like product or were made to fill gaps in its range of 
products.  
A producer may provide other justifications on why it should not be excluded.  Such 
justifications shall be taken into account by the investigating authority.  
  TN/RL/GEN/62 
 Page 3 
 
 
  Explanation: 
 
 The amendments in Article 4.1(i) of the ADA relate to the exclusion of producers importing 
product under investigation.   
Producers importing product under investigation
 
  There are no criteria to determine when producers importing product under investigation should be excluded from the definition of “domestic industry”.  The factors enumerated in the new 
Footnote 12 of the ADA would help distinguish th e cases where the imports made by the producer in 
question are of a nature which justifies its exclusion.  
 
 (i) Importance of imports in the producer’s sales 
 
 The mere fact that imports have taken place should not be sufficient to exclude a producer. 
Such imports should also have been significant in the producer’s sales..  The relevance of the imports 
for the producer’s activities could be measured in terms of the relative proportion of imported goods 
and domestic products which are so ld on the domestic market by the producer. Exclusion would only 
be possible where the share of the dumped  imports exceeds a certain threshold.  
 
 (ii) Imports as a comple ment of the product range 
 
 Imports made by producers to complete thei r product range to satisfy the need of their 
customers should be considered as a normal commercial practice.  In some cases, producers import goods to be able to offer the full product range or  even to protect market niches which would have 
disappeared without sales of the imported products. In  those cases, the fact that the producer imported 
goods to complement its own-produced product range  should not lead to its exclusion from the 
definition of “domestic industry”.  
 (iii) Additional factors for consideration 
 
It should be noted that the above-mentioned tw o factors are illustrative only.  The authorities 
shall also consider other relevant factors provi ded by domestic importing producers when making 
such assessment.  For example, the domestic produ cer may provide evidence that its imports are non-
dumped ones, and it has no intention to import th e product under consideration for the purpose of 
gaining unfair competitive advantages in the domestic market.  In this case, the authorities shall take 
into account the evidence provided by the producer  before making a determination on exclusion. 
 
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