ANTI-DUMPING: MEMBERS LOOK AT NEW PROPOSALS, STILL UNSURE ABOUT HK OUTCOME

During the 24-25 October 2005 session of the WTO Negotiating Group on Rules, Members discussed several new proposals related to anti-dumping. Most time was spent on two proposals dealing with the impacts of anti-dumping investigations entail on exporters. Delegates also discussed a US submission seeking to discipline practices that amount to the circumvention of anti-dumping measures. Sources report that there is still no clarity on the likely content of a text on anti-dumping for the upcoming Hong Kong Ministerial Conference in December.

Concerns regarding initiation of investigations

WTO rules generally define 'dumping' as exporting a product at below the home market price (referred to as 'normal value'). A country that is prompted by its domestic industry to accuse another of dumping must carry out an investigation to determine whether this is indeed the case before it can impose anti-dumping duties on the offending imports. During the course of this process, exporters have to provide investigating authorities from the importing country with a wide range of information regarding their cost structures and pricing strategies.

Members' positions in these negotiations tend to depend on whether they approach the issue as users of anti-dumping measures or as exporters targeted by them, even though many are both. Several countries, including a group known as the Friends of Anti-Dumping Negotiations (FAN), want the Doha Round to result in tighter disciplines on the use of such measures.

Hong Kong's proposal (TN/RL/GEN/69) argues that simply initiating an investigation places significant costs on the exporting companies targeted, and thus ought to be disciplined more strongly. It also seeks to give exporting companies and governments more opportunities to comment on the application for an investigation beforehand, thereby enabling them to identify inaccurate information early in the process. Members expressed a wide range of opinions on the paper. Countries including New Zealand, Australia, Argentina and Canada supported the general objective of disciplining rules regarding the initiation of anti-dumping investigations, but objected to some specific aspects of Hong Kong's submission, such as the proposal to provide for a compulsory 12-month period between the termination of an investigation and the initiation of a new one for the same product. On the other hand, they welcomed its proposal to raise the 'standing requirement,' or the percentage of domestic production of the targeted product accounted for by producers seeking anti-dumping measures, from 25 to 50 percent. Speaking on anti-dumping issues for the first time, Sri Lanka expressed support for Hong Kong's proposal on behalf of least-developed countries (LDCs). Thailand also supported the submission, referring to the burden placed by data requirements on exporters' already limited resources. Some Members said that the proposal would add little value to the current agreement.

A Chilean paper (TN/RL/GEN/75) on the same issue was only briefly discussed due to time constraints; it will be taken up in the next session.

Brazil also looks at obstacles to exporters

Members also paid significant attention to a new Brazilian paper (TN/RL/GEN/67) that sought to narrow the definition of 'affiliate parties' of exporting companies facing anti-dumping investigations. Targeted exporters are required to provide detailed financial data from their "affiliates" to the investigating authorities in the importing country. Brazil argued that the current broad definition forces exporters to provide information from a high number of companies, at considerable cost. Its submission seeks to strike a balance between the FAN's proposed ownership-based definition, which would define affiliates as entities holding at least 50 percent of voting power in the enterprise, and a looser definition preferred by the US. It does so by expanding the definition of affiliated parties to include the criterion of "significant influence" in addition to the one of voting power. Members remained divided on the issue. The US opposed the position taken by Brazil.

US seeks to prevent circumvention of anti-dumping duties

Most Members were cool to a new US proposal (TN/RL/GEN/71) to strengthen WTO anti-dumping and subsidy rules to prevent Members from circumventing anti-dumping and countervailing duty measures imposed on them by marginally altering the physical characteristics, production or shipment of the targeted product.

In the past, exporters have tried to circumvent anti-dumping actions by establishing assembly plants either in the importing country or in third countries. Though it received some support from the EU, several other Members expressed conceptual problems with the proposal, which they described as lacking legal detail, but nonetheless signalled that they were open to discussing the issue further. According to one delegate, this could be because Members are aware that this issue is one of the few within the anti-dumping discussions where the US has a proactive interest: as a frequent user of antidumping measures, it is more concerned with preventing Members from getting around anti-dumping duties than with restricting the circumstances under which such measures can be imposed. Some delegations may be contemplating concessions on circumvention in order to win US consent for their goals in the anti-dumping talks.

EU declares HK position on anti-dumping

The EU's 28 October proposal on agricultural market access sets out a series of "explicit aims" on anti-dumping as part of the demands on which it is conditional (see related article, this issue). It advocates stricter rules on the substance, process, review, predictability, and transparency of anti-dumping proceedings to "avoid or terminate measures which are proven to be unnecessary," and to allow parties such as consumers and industrial users of purportedly dumped products to have some say in the process that determines whether or not additional duties should be imposed. The paper also calls for measures to be limited to the extent needed to offset the injury that the dumped products are causing to domestic industry, also known as a 'lesser duty rule.'

Chair Ambassador Guillermo Valles Galmes of Uruguay held several plurilateral consultations last week and is continuing to do so. Valles Galmes announced that he would soon submit a paper based on the group's discussions to WTO Director-General Pascal Lamy for the November General Council meeting in preparation for Hong Kong. The Negotiating Group on Rules will meet once more before Hong Kong, the week of November 28.

ICTSD reporting; "THE POLITICAL ECONOMY OF THE WORLD TRADING SYSTEM: THE WTO AND BEYOND," B. Hoekman and M.M. Kostecki, Oxford University Press, 2001.