./.  WORLD TRADE  
ORGANIZATION  TN/RL/GEN/30 
8 February 2005 
 
 (05-0523) 
Negotiating Group on Rules Original:   English 
  
 
PROPOSAL ON DE MINIMIS  MARGINS OF DUMPING 
 
Paper from Chile;  Colombia;  Costa Rica;  Hong Kong, China;  Israel;  Japan;
 
Korea, Rep. of;  Norway;  Singapore;  Switzerla nd;  the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu;  Thailand;  and Turkey  
 
  The following communication, dated 2 February 20 05, is being circulated at the request of the 
Delegations of Chile;  Colombia;  Costa Rica;  Hong K ong, China;  Israel;  Japan;  Korea, Rep. of;  
Norway;  Singapore;  Switzerland;  the Separate  Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu;  Thailand;  and Turkey 
  The submitting delegations have requested that this paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/10), also be circulated as a formal document.  
_______________ 
 
 
Description of the Problem: 
 
 Article 5.8 provides that the margins of dumpi ng in an investigation shall be considered 
de minimis  if such margins are less than 2 percent of the export price.  De minimis  margins result in a 
negative determination of dumping and no application of anti-dumpi ng measures.  We believe that 
this threshold is too low.   It is normal business practice that companies set different prices for different sales transactions depending on various factors, such as  their relationship with their customers, sales 
volume, market conditions, etc.  Thus, small differences in the price are common in a competitive 
market.  In a case where the calculated dumping marg in, i.e. the difference between the export price 
and the normal value, is small, such small margin s are more likely to be the result of normal price 
variation, rather than a pattern of dumping.  The imposition of AD duties on companies with such small margins has the risk of hindering normal and healthy competition among companies. 
 
 This risk is further amplified by the margin of  error which is inherent in any dumping margin 
calculation.  Authorities collect detailed data on pr ice, volume, cost from the respondents, and the 
calculation of the normal value, the export pri ce and the dumping margin involves very complex 
treatment of such data.  Thus, even if authoriti es try to undertake the dumping margin calculation as 
accurate as possible, it is inevita ble that the authorities and the respondents have to face the problem 
of a certain level of margin of error in the calculati on.  If the calculated margin is small and there is a 
possibility that such margin is within the margin  of error, the risk of punishing normal business 
behaviour for the reason of small calcul ated margins should not be overlooked.  
  The concept of de minimis  margins of dumping also assumes that dumping at or below a 
certain level is unlikely to seriously affect a dom estic industry in an importing country.  Companies 
with margins of dumping which have little or no  effect on competition in the importing country TN/RL/GEN/30 
Page 2  
 
 should not be subject to the burdens of antidumping i nvestigations.  An investigation itself can inhibit 
trade.  The cost to a producer/exporter, especially to SMEs, of cooperating in an investigation is 
substantial and adds to the costs of trading.  By raising the threshold for the imposition of 
antidumping measures, cases that have little or  no competitive effects would be eliminated. 
 
 In addition, companies that seek to avoid dumping should not be forced to carry out 
extremely precise calculations on an ongoing basis, only for anti-dumping purposes, to ensure that their sales are above normal value.  Currently, exporte rs often cannot know whether they are likely to 
be found dumping.  This is because authorities in  anti-dumping investigati ons often change the 
methodologies that companies use in the ordinary course of business to calculate their costs and set 
their domestic and export prices.
1  These changes can affect the dumping margin. 
  Considering the above, it should be ques tioned whether or not the current 2% de minimis  
threshold is appropriate in order that a calculated sm all margin, which inherently contains a  margin of 
error, would not hinder normal and healthy business ac tivities and in order to identify the margin that 
cannot cause material injury to a domestic industry.  Raising the de minimis  level would have little 
effect on the legitimate protection of industries in importing countries from dumping.  It would, however, reduce the application of anti-dumping measu res in situations where they would provide 
little, if any, real protection.
2   
 
Proposal: 
 
 Amend Article 5.8 to provide that a margin of dumping of less than [X] % is to be considered de minimis  and should result in a negative determination of dumping. 
  Note: We will further elaborate on the appropriate level of “X” % to which the de minimis  
threshold should be raised, giving particular cons ideration to the developmental needs of developing 
countries, particularly LDCs, whose exports are particularly vulnerable to the imposition of AD 
measures by other Members.  
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 1 For example, in one case investigating authoritie s changed the costs that a respondent had reported 
using its normal books and records.  The authorities changed the company’s normal cost allocation methods, 
which substantially increased the production costs that we re used for the dumping calculation.  Authorities often 
make such changes, even when the respondents’ no rmal accounting methodologies are reasonable and not 
inconsistent with the GAAP of the ex porting country.  Such changes can dir ectly affect the dumping margin.  As 
a result, it is impossible for respondents to estimate the dumping margin that the authorities will calculate.  They 
therefore cannot organize their oper ations in order to avoid dumping.  A modest increase in the de minimis  
threshold would improve this situation. 
 2 For example, a study in a major user of AD meas ures showed that nearly 80 percent of all AD 
investigations in that country result in margins of dump ing of over 10%, with the mean duty being nearly 50%.  
This same study showed that the measur es of that country are not aberrational.  Numerous countries have higher 
mean rates and, between 1995 and 1999, no country had a mean rate below 5%.  Another major user of AD 
measures, which applies the lesser duty rule, had mean duty rates between 1995 and 1999 of 27.7%.  This indicates that it is large margins of dumping which are the problem, not small margins which reflect legitimate 
competition.