WORLD TRADE
ORGANIZATIONTN/RL/W/66
6 March 2003
(03-1297)
Negotiating Group on Rules Original:  English
PROPOSAL OF THE PEOPLE’S REPUBLIC OF CHINA
ON THE NEGOTIATION ON ANTI-DUMPING
The following communication, dated 5 March 2003, has been received from the Permanent
Mission of the People's Republic of China.
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I. INTRODUCTION
According to Article 1 of the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 (the AD Agreement), “an anti-dumping measure shall be
applied only under the circumstances provided for in Article VI of GATT 1994…”, i.e., where
products of one Member are exported to another by dumping and cause or threaten to cause material
injury to an established industry in the latter or materially retard the establishment of a domesticindustry.  However, the ambiguity of the AD Agreem ent itself leaves room for enormous discretion to
the investigating authorities of importing Member s.  And for a long time, anti-dumping measures
have been used to minimize competition of imports to domestic industries instead of counteracting the
injurious effects of dumped imports.  The abuse of anti-dumping measures has significantly
diminished the value of the commitments made by these importing Members on trade liberalization,
particularly on tariff reduction, in the previous rounds of trade negotiations and therefore has
undermined the market access opportunities for targeted Members.
Under such circumstances, Members agreed in Doha “to negotiations aimed at clarifying and
improving disciplines under the Agreements on Implementation of Article VI of the GATT 1994 and
on Subsidies and Countervailing Measures, while preserving the basic concepts, principles and
effectiveness of these Agreements and their instruments and objectives, and taking into account theneeds of developing and least-developed participants”.  The clarification and improvement of the
disciplines as set in the AD Agreement, as instructed  by the Ministers, will help to prevent the abuse
of anti-dumping measures and guarantee the value of trade liberalization commitments that Members
have made and will make.
II. PROPOSAL
1. Clarification and improvement of the disciplines under the AD Agreement
1.1 Product under investigation
A clear and strict criterion should be established in the AD Agreement for the determination
of “product under investigation”.TN/RL/W/66
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1.2 “Major proportion”
“Major proportion” under Article 4.1 should be further elaborated for the determination of
domestic industry.
1.3 Back to back investigations
Paragraph 7.1 of the Decision on Implementation Related Issues and Concerns
(WT/MIN(01)/W/10) requires “special care to be taken” in examining the application of back to back
investigations.  To that end, a new paragraph should be added to Article 5 of the AD Agreement:
Investigating authorities shall not in itiate an anti-dumping investigation where an investigation of the
same product from the same Member resulted in a negative finding within the 365 days prior to thefiling of the application.
1.4 “Particular market situation”
“Particular market situation” under Article 2.2 should be further defined to limit the discretion
of the investigating authorities to refuse to use the normal price of the product sold domestically when
comparing with the export price.
1.5 Constructed normal value
Article 2.2.2 should be further elaborated to provide clear guidance for the use of information
in the calculation of the constructed normal value.
1.6 Constructed export price
Articles 2.3 and 2.4 should be clarified to provide clearer guidelines for a symmetric
comparison between constructed export price and normal value.
1.7 Cumulative assessment of injury
Article 3.3 should be clarified to identify the factors to be considered to evaluate whether the
conditions of competition between the imported products from different Members and between theimported products and the domestic products are the same.
1.8 Determination of injury
Article 3.4 should be clarified to limit the discretion of the investigating authorities in the
evaluation of injury.
1.9 Causality between dumping and injury
Article 3.5 should be clarified in order to ensure that a causal link could only be established
when the dumped import is the substantial reason for the injury of the domestic industry.
1.10 Threat of material injury
Article 3.7 should be clarified and improved to specify in a more detailed manner the factors
to be considered in the determination of the threat of material injury.TN/RL/W/66
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1.11 Prohibition of zeroing
Article 2.4.2 should be clarified to explicitly prohibit the practice of zeroing.
1.12 Treatment to affiliated parties and their transactions
Clear guidance should be established under the AD Agreement on the approach to treat
transactions between affiliated companies in the context of normal value.
1.13 “All others” rate
Article 9.4 should be improved that  de minimis  margins shall be considered for the
determination of “all others” rate for exporters/producers which are not sampled.
1.14 Price undertakings
Articles 8.1 and 8.3 should be further elaborated to limit the discretion of investigating
authorities in rejecting proposals for price undertakings, such as the expressions of “satisfactory
voluntary undertakings” and “reasons of general policy”.
1.15 Reviews
Clear provision should be formulated in the AD Agreement to require that the procedures and
methodologies used in the initial investigation sh all be applied in the reviews under Articles 9.3, 9.5,
11.2 and 11.3.  And the duration of reviews under Article 11.4 should be limited to 12 months.
1.16 “Non market economy” clause
Article 2.7 and the second Supplementary Provision to Paragraph 1 of Article VI in Annex I
to GATT 1994 provide that, in the case of imports from a Member  which has a complete or
substantially complete monopoly of its trade and where all domestic prices are fixed by the State,
special difficulties may exist in determining price comparability for the purposes of Paragraph 1, and
in such cases importing contracting parties may find it necessary to take into account the possibility
that a strict comparison with domestic prices in such a country may not always be appropriate.
Under the above-mentioned “non market economy” clauses, some Members use domestic
prices of third countries instead of domestic prices of targeted Members in the comparison with the
export price.  Past experiences show that these Members, in most cases suggested by complaining
industries, tend to choose those third countries at more advanced development levels, with higherlabour costs and therefore with much higher domestic prices.  Using this methodology, an artificial
“dumping” is easily created and an anti-dumping measure is therefore “justified”.  With wide
discretion in choosing the third country, an importing member is free to choose any other country as
the third country as long as the latter produces the  same or like products.  Under such circumstances,
exporters of “non market economies” are accused of exercising “unfair trade practices” to which theyhave no idea at all since they never know what third country might be chosen in the determination of
normal value.
As we are all aware, one of the basic principles of this Organization is free trade which
requires Members to establish market economic system.  Therefore, no economy could ever accede tothe WTO with a complete or substantially complete monopoly of its trade and with all domestic prices
fixed by the State.  Such clauses was established several decades ago when market economy was not
prevailing.  After 50 years of development, the circumstances for invoking such a clause do not exist
anymore.  And it is abused by some Members to provide unjustified protection to their  domesticTN/RL/W/66
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industries.  Therefore,  the “non market economy” clause contradicts with the real situation of WTO
Members and should be revoked.
2. S&D Treatment to developing and least-developed participants
The Doha Ministerial Declaration clearly specifies that the needs of developing and least-
developed country Members should be taken into consideration in the negotiation on anti-dumping.
This also echoes one of the objectives of the WTO that positive efforts should be made “to ensure that
developing countries and the least developed countries  secure a share in the growth in international
trade commensurate with the needs of their economic development.”
Recognizing that some positive efforts have been made by the WTO, we must admit that it is
far from being enough to fulfill the objectives as set out in the WTO Agreement.  Realizing that
developing countries are mostly targeted by anti-dumping measures which prevent them from
developing their foreign trade and from securing their shares in international trade, we should
recognize S&D treatment as an important aspect of the negotiation on anti-dumping.  The following
proposals should be seriously considered by the Negotiating Group in order to fulfill its tasksembodied in the Doha Ministerial Declaration.
2.1 Lesser duty rule
Lesser duty rule should be mandatory in the application of anti-dumping measures by
developed country Members on the impor ts from developing country Members.
2.2 Increase of negligible import volume and de minimis  dumping margin
The negligible volume of dumped imports under Article 5.8 should be increased from 3 per
cent to 5 per cent for imports from developing Members.  And the provision that measures can still be
taken if the imports from the countries under the negligible volume collectively account for more than
7 per cent should be deleted.
The existing de minimis  dumping margin under Article 5.8 should be increased from 2 per
cent to 5 per cent of export price for imports from developing country Members.
2.3 Price undertakings
In the application of anti-dumping measures  by developed country Members on the imports
from developing country Members, the investigating authorities of the former shall accept the
proposal of price undertakings from the exporters concerned as long as the proposal of theundertaking offsets the dumping margin determined.  Even in cases where the actual or potential
exporters are great, the investigating authorities shall accept such proposals from those cooperating
exporters whose share individually in the total exports from the targeted country where the exporters
are located to the importing developed country Member is more than 10%.
2.4 Automatic sunset of anti-dumping measures
In cases of anti-dumping measures taken by developed country Members against exports from
developing country Members, such measures shall automatically cease after five years.  And no
application to initiate new investigations against the same products from the same developing countryMembers shall be accepted 365 days after ceasing of the sunset of previous measures.TN/RL/W/66
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This is the first anti-dumping proposal of China for the deliberation by the Negotiating Group
on Rules.  It is not supposed to be the final position of China on this important issue.  China reserve
the right to make further contributions to this process with the development of the negotiation.
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