WORLD TRADE
ORGANIZATIONG/ADP/IG/W/50
17 October 2003
(03-5510)
Committee on Anti-Dumping Practices
Informal Group on Anti-CircumventionOriginal:  English
AN EXAMINATION OF TWO RECENT CIRCUMVENTION INQUIRIES
UNDERTAKEN BY THE UNITED STATES
The following communication, dated 16 October 2003, has been received from the Permanent
Mission of the United States.
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Introduction
The United States has frequently pointed out to the Informal Group on Circumvention that
determinations of circumvention can present extremely complex factual issues.  It is for this very
reason that the United States has advocated development of guidelines to assist Members in
distinguishing between legitimate business practices and circumvention.
To illustrate the problems faced by administra tors, the United States wishes to bring the
attention of the group to two recent circumvention inquiries.  These cases involved very similar
allegations of circumvention and, upon first examination, appeared to warrant similar outcomes.
However, a careful analysis of the facts revealed important distinctions.  In the view of the
United States, a contrast of these cases illustrates the need for Members to take great care in analyzing
allegations of circumvention, as well as the need for WTO members to develop standards foranalyzing such difficult issues.
The Circumvention Inquiries
As the United States has pointed out in previous submissions to the group, the circumvention
provisions of US law recognize several distinct fact-patterns which may constitute circumvention.
Among these is the so-called “minor alterations” provision, which provides that the United States may
include within the definition of the imported product subject to the proceeding in question a product
which has been altered in form or appearance in minor respects such that it is not encompassed by the
technical description of the product.
1  The effect of this provision is to prevent exporters from making
insignificant changes to their product which would allow them to avoid coverage of their product.
Thus this provision frees the administrators to define their product with great care and precision so as
to cover only that which is intended, by reducing concerns that such careful product descriptions will
create loopholes which could undermine the effectiveness of the remedy.2  Needless to say, whether
an alteration to a product is “minor”  is often a significant issue in such an inquiry.
                                                     
1 Circumvention by minor alterations is described in US law at section 781(c) of the Tariff Act of 1930,
as amended.  The United States described the varying types of circumvention allegations in its submissionG/ADP/IG/W/22.
2 As an example, the product description (“Scope of the Order”) contained in one of the published
notices discussed below takes up three pages of fine print to describe all of the products included and excludedfrom coverage.  See, Preliminary Results of Anti-Circumvention Review of Antidumping Order: Corrosion-
Resistant Carbon Steel Flat Products from Japan , 68 FR 19499, 19500-02 (21 April 2003).G/ADP/IG/W/50
Page 2
In 1993, the United States issued antidumping duty orders against certain carbon steel
products from Canada and Japan.3  In describing “carbon steel” in their application, the domestic
industry used the HTS standard for this product which states, inter alia , that it contains no more than
0.0008 per cent of the element boron.4  In1998, the United States authorities received allegations from
domestic producers that certain producers in Canada and Japan had slightly raised the boron content
of their carbon steel products, which had allowed them to escape payment of duties, by claiming that
their product was not “carbon-steel” but rather “boron-steel”.5  In support of this allegation they
pointed to a sharp increase in imports of boron steel, not covered by the antidumping measure, shortly
after the measure was put in place. The domestic producers further alleged that such a minute increase
in the amount of boron would have no effect on the characteristics or uses of the product, that the cost
of the additional boron was minuscule, and that the procedure for adding it was simple.  Thus, theyconcluded that the addition of trace amounts of boron was a “minor alteration” which allowed the
merchandise in question to avoid the effect of the antidumping measure.
During the ensuing inquiries, Commerce confirmed the allegation that raising the boron
content of the steel above the 0.0008 per cent threshold was extremely easy and inexpensive, and thatproducers in both Canada and Japan had done so.
6  Commerce’s inquiry, however, into whether the
alteration was “ minor” and thus could be considered  circumvention under US law did not end with its
conclusion that the process  of altering the merchandise was minor.  Rather, recognizing that a simple
change to the manufacturing process can lead to a significantly different outcome, Commerce
compared the carbon steel covered by the measure with the allegedly circumventing boron-added steelin terms of their physical characteristics, expectations of users, actual uses and channels of marketing.
Commerce also examined the circumstances surrounding the production and sale of boron-added
steel.  Although the process of altering the carbon steel was similar in the two cases, and both cases
showed an increase in production of boron-added steel after the measure was issued, Commerce’s
deeper inquiry revealed important differences between the two cases.
In the Canadian case, the record evidence showed no significant difference in the physical
characteristics or expectations of the users.  Although the Canadian producers argued that adding
boron increased “toughness” and “hardenability” of the steel, the investigation showed that they had
conducted no metallurgical tests to support this argument, and had never made this claim to their
customers.  The critical facts, leading to the finding of circumvention, however, related to the timing
                                                     
3  See, Antidumping Duty Orders: Certain Corrosion-Resistant Carbon Steel Flat Products and
Certain Cut-to-Length Carbon Steel Plate From Canada , 58 FR 44162 (19 August 1993); and Antidumping
Duty Orders: Certain Corrosion-Resistant Carbon Steel Flat Products From Japan , 58 FR 44163
(19 August 1993).  Note that, although the relevant order with respect to Canada applied to cut-to-length carbonsteel plate, while the relevant order against Japan applie d to corrosion-resistant carbon steel, this distinction is
irrelevant for purposes of this discussion.  Both products are essentially carbon-steel; one is carbon-steel cut intoplates, which the other is carbon-steel coated with a co rrosion-resistant substance.  The inquiry at issue grew
from identical allegations that producers had added trace amounts of boron to carbon steel.
4  Based on the petitioners’ citation of the HTS standard for boron content, Commerce had previously
determined that steel products with boron content above this level were not within the scope of the productunder investigation.
5  See,  Cut-to-Length Carbon Steel Plate From Canada; Initiation of Anticircumvention Inquiry on
Antidumping Duty Order  , 63 FR 29179 (28 May 1998), and Corrosion-Resistant Carbon Steel Flat Products
from Japan; Initiation of Anticircumventi on Inquiry on Antidumping Duty Order , 63 FR 58364
(30 October 1998).
6  Commerce noted in the Canadian case that changing carbon steel into boron-added steel required the
addition of less than 100 pounds of boron to every 100 tons of molten steel, and that the cost of this addition
was approximately one third of one per cent of the sales price of the final product.  Preliminary Determination
of Circumvention of Antidumping Order:  Cut-to-Length Carbon Steel Plate From Canada , 65 FR 64926, 64929
(31 October 2000).G/ADP/IG/W/50
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and pattern of sales of boron-added steel.  Commerce found that the Canadian producers had not sold
any boron-added steel prior to the anti-dumping investigation.  After the preliminary finding of
dumping and imposition of duties, however, boron-added steel was sold to US customers almost
exclusively.  By contrast, customers in Canada c ontinued to receive carbon steel.  Based on these
facts, Commerce made an affirmative finding of circumvention.7
In the Japanese case, the inquiry focused on a claim by the Japanese producers that, when a
certain production process was used, the addition of minute amounts of boron had a significant effect
on the characteristics of the end-product.8  They also argued that the circumstances of imports of
boron-added steel did not indicate that boron was added as a reaction to the anti-dumping measure,
but rather had a commercially valid purpose independent of that measure.  After an exacting review,
Commerce essentially agreed with these positions:
During the course of the review, the Department found that there are commercially
and metallurgically viable reasons for the addition of boron in the context of the
Continuous Annealing Process ("CAP").  In the production of [corrosion-resistant
carbon steel (“CRS”)], there are essentially two types of annealing processes - batchannealing and the CAP.  For the CRS pr oducers which use the CAP, the addition of
boron is not “immaterial” to the performance characteristics of the final product.
This contrasts with our findings in Canadian Plate, in which the parties did not use
the CAP or claim any benefit from the addition of boron with respect to the annealingprocess.  Moreover, at verification the Department found nothing on the recordinconsistent with a respondent’s statement that the addition of boron helps the
product be “more consistent” throughout the length and width of the coil, and also
results in a more formable product, when us ed specifically in the CAP.  See NSC’s
Verification Report at page 4.9
Moreover, not only did Commerce conclude that there was a metallurgically valid reason for
the addition of boron, it also found that there had been imports of the boron-added product prior to the
investigation, that the boron-added product was sold in both the US and Japanese markets, and that
the spread of the practice of adding boron after the order was, in essence, a coincidence.  Specifically,
it was a result of increased awareness in the industry of the benefits of boron in the CAP production
process, rather than of circumvention:
In addition, the Department found that, while other respondents determined that the
addition of boron was beneficial following the publication of the order, such
determinations were based upon scientific research and development.  All of the
respondents’ research and development in formation which we reviewed showed that
the addition of boron assisted the CAP, and therefore may have led to a more efficient
production process.  See, e.g. , Exhibit 9 of NSC’s Verification Report dated
7 June 2001.10
                                                     
7 Id.
8 Preliminary Results of Anti-Circumvention Review of Antidumping Order: Corrosion-Resistant
Carbon Steel Flat Products from Japan , 68 FR 19499 (21 April 2003).
9 Id.  At 19502-19503.  Commerce noted that one of the producers it reviewed did not produce
merchandise using the CAP method.  However, that producer was able to show a history of shippingboron-added steel, and was able to show that its sales of that product did not surge as a result of the measure.Accordingly, Commerce did not find circumvention with respect to that company, either.  Id. at 19503.
10  Id.G/ADP/IG/W/50
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In contrast to the Canadian case, based on these facts, Commerce made a negative circumvention
determination in the case involving Japan.
Conclusion
As the contrast of these cases demonstrate, the determination of circumvention can be an
extremely difficult and fact-intensive undertaking.  The producers in Canada, and those in Japan
altered their product in exactly the same way: they each added a few bags of boron to a large vat of
molten steel.  Further, these activities had the same outcome for each with respect to the measure:  the
resulting product was slightly outside the technical specifications of the measure and thus escaped
duties.  However, the Japanese producers were able to produce facts to demonstrate that the use of
boron improved their product and had preceded the order, and thus should not be consideredcircumvention.  Further, they were able to produ ce factual evidence to show that even the spread of
the practice of adding boron after the order was related to the commercial interest in improving the
product.  If Commerce’s analysis had stopped with the fact of a simple alteration and an increase of
such imports after the order, and had not examined  the circumstances of the alterations in greater
detail, it would have found circumvention in both cases.  However, such a result would have stifledthe legitimate manufacturing activities of the Japanese producers.  It is important to develop
guidelines to avoid such results.
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