WORLD TRADE
ORGANIZATIONTN/RL/W/34
2 December 2002
(02-6617)
Negotiating Group on Rules Original:  English
SECOND SET OF QUESTIONS FROM THE UNITED STATES ON
PAPERS SUBMITTED TO THE RULES NEGOTIATING GROUP
Communication from the United States
The following communication, dated 25 November 2002, has been received from the
Permanent Mission of the United States.
_______________
Introduction
As mandated by the Ministers in Doha, negotiations on WTO Rules are 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 the
needs of developing and least developed participants.  Consistent with this mandate, we believe it is
essential that these negotiations be designed to ma intain the strength and effectiveness of the trade
remedy laws.
The United States submits the following questions, which we hope will help to ensure that the
Ministers’ mandate will be fulfilled.  The United States reserves the right to submit additional
questions at a later date on these papers and on additional papers submitted to the Group.
Questions relating to TN/RL/W/10
1.  Product Under Investigation:  The submission asse rts that the lack of a definition of a product
under investigation has allowed authorities to define a group of products destined for different market
segments to be a single “product under investigation.”
(a) The second paragraph of the discussion states that “the scope of the product under
investigation/consideration defines the scope of ‘like product.’”  Does this mean that
proponents contend that the definition of the domestically produced “like product”
must correspond exactly to the definition of the scope of those imported articles
subject to investigation?  If so, what is the basis for this contention?
(b) To what extent could the proponents’ concerns be addressed by ensuring that the
antidumping authorities determine the definition of the like product separately from
the definition of the scope of the product under investigation?
(c)  The proponents express concern that “radically different” later developed products
could be included in the coverage of an anti-dumping measure.  How do the
proponents define “radically different” in this context?  Do the proponents contendTN/RL/W/34
Page 2
that slight updates of or minor alterations to existing products should not be included
in the coverage of an anti-dumping measure?
(d) Some Members have developed a practice, in certain cases, of defining the “product
under investigation” in terms of specific producers, as well as physical characteristics.In such cases the “product” may be defined as “widgets produced by Company A”
even though companies B and C, located in the same country as A, also produce and
export identical widgets to the investigating Member.  The investigation is then
conducted solely with reference to imports from Company A, and any eventual
measures are applied in a discriminatory manner solely against Company A.  In the
view of proponents, should such a definition of product under investigation be
permissible?
2.  Standing Rules:  The submission suggests that the proportion of domestic producers required
to expressly support the petition be raised to 50 per cent (from the current 25 per cent) in order to
permit the initiation of an investigation.
(a) How would the proponents address situations of large and highly fragmented
industries?
(b) In the illustrative example, the proponents question whether the authorities can
“determine injury by data from the minority of the total domestic production,” in acase where only the supporters of the petition respond to the authorities’
questionnaire, and the majority of the domestic industry does not.  In doing so, the
proponents seem to relate the level of domestic support necessary for the initiation of
an investigation with the level of domestic industry participation throughout the
course of an investigation.  Do the proponents suggest that there should be such arelationship?  If so, why?
3.  Initiation Standards:  The submission proposes a clarification of the current requirement to
examine the “accuracy and adequacy” of a pe tition before initiatin g an investigation.
(a) Most of the relevant information to establish dumping is in the hands of exporting
companies (e.g. their home market and export prices, customers, etc.).  Are theproponents suggesting a procedure for the investigating authority to gather such
information before the initiation decision?  If so, how would such a procedure differ
from the investigation itself?
(b)  To what extent would a more extensive analysis before initiation require a longer
time period between filing of the application and initiation?
4.  Affiliated Parties:  The submission proposes clarification of the circumstances under which
parties are found to be affiliated and adjustments are made to their prices to account for differences
between affiliated prices, and prices between non-affiliated parties.  The submission gives an exampleof a transaction between two parties, one of which ow ns 6 per cent of the stock of the other, in which
the price set for the transaction, although 10 per cent lower than commodity market prices, is still
profitable.
Knowing nothing else about the transaction or parties, where Company B is selling to
Company A at a price 10 per cent lower than the commodity market price, should the authority
investigate further the relationship between the two companies, and its possible effect on the price
charged?TN/RL/W/34
Page 3
5.  Price Undertakings:  The submission gives an example of a price undertaking proposed by an
exporter which accounts for 40 per cent of exports from the exporting country, and which would
completely eliminate the “margin of underselling,” and the injurious effects of dumping.  In the
example, the authority rejects the proposal because it has a policy against accepting undertakings from
a single exporter which does not represent a majority of imports from that country.
In the example given, what is a “margin of underselling?”  What is the basis for the assertion
that elimination of this would remove all injury?
6.  Use of Cost Data:  The submission notes that the Agreement requires that costs normally be
calculated on the basis of a producer’s own records.  The submission suggests that if the books are
audited by a duly qualified person or agency those records should be used.
Although records may be certified by a duly qualified person or agency to be in accordance
with the generally accepted accounting principles (GAAP) of the exporting country, there may be
unusual situations where the use of a particular local GAAP rule for the product in question distorts
the true costs.  Under such circumstances, should the investigating authorities be permitted todisregard such distortive cost allocations, so long as they provide a full explanation?
Questions relating to TN/RL/W/13
1.   Section 2 of the EC’s paper states that “[i]n the experience of the EC, a mandatory lesser
duty rule leads to stronger disciplines.  It significantly limits the level of the measures to what is
strictly necessary for removing injury to the domestic industry.”
(a) Would the EC please provide a full description of the methodology it uses to
calculate such a “lesser duty”?  Has any “lesser duty” determination by the EC beensubject to judicial review, and if so, what were the results of such review?
(b) Does the EC believe that its lesser duty rule should succeed  in effectively limiting the
level of the measures available to industries to that “necessary for removing injury,”
or does it maintain that its rule actually has succeeded in that objective?  If its
position is the latter, could the EC state the basis for this position, and any empirical
evidence to support it?
2. Is there any reason why the definition of “injury” in the context of Article 9.1 of the AD
Agreement should not be the same as that for “injury” in the context of Article 3?  If the definitions
are the same, can the EC describe how the numerous injury criteria articulated in Article 3 are
susceptible of quantification into a single measure of injury for purposes of Article 9.1?
3.  The EC proposes a “swift dispute settlement mechanism” to review initiations of
investigations.  Is the EC suggesting special procedures be followed by Panels in these cases in order
to provide a swifter resolution?  Is the EC proposing that the issues that Members would be permitted
to raise in such cases be limited?  Under the EC’s proposal, would the anti-dumping investigation besuspended pending outcome of the challenge to the initiation?  Would such a proposal require an
amendment to the Dispute Settlement Understanding?  If so, does the EC plan to make such a
proposal in the context of the DSU negotiations?
4. The EC suggests that a public interest test, where the impact of a measure on economic
operators is examined, would be “useful” prior to the imposition of a measure.  Under such a test,
would a Member country be free to determine what criteria it will consider in determining the public
interest and where its public interest lies in a particular matter?  Does the EC currently conduct a
public interest test before it imposes a measure?  If so, would the EC please provide a full descriptionTN/RL/W/34
Page 4
of the methodology it uses in applying its public interest test?  Has the EC’s application of a public
interest test been subject to judicial review in any case, and, if so, what were the results of such
review?
Questions relating to TN/RL/W/26
1.  India proposes that the options for identifying profit under Article 2.2.2 should be considered
a hierarchy.  What order of those options does India propose, and what is the rationale for that order?
2.  India proposes deliberation on certain questions relating to the calculation of “injury
margins.”  What is an “injury margin” ?  India states that Article 3.4 lists 15 “injury parameters.”
Would India please clarify its view of the connect ion between such “parameters” and the  “injury
margin”?
3.  India proposes more specific provisions on price undertakings, including establishing rules
for identifying an appropriate price for an undertaking, defining “ satisfactory” undertakings, and
clarifying conditions as to when non-acceptance of price undertakings is permissible.  Would suchprovisions change the essential nature of price undertakings as mutually agreeable settlements
between exporters and the investigating Member?  Is India proposing that there should be conditions
under which exporters would be required to accept undertakings proposed by the Member?  Should
there be conditions under which exporters would be required to provide reasons when rejecting
undertakings offered by a Member?
__________