RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/AHG/W/74
12 October 1999
(99-4324)
Committee on Anti-Dumping Practices
Ad-Hoc Group on ImplementationOriginal:  English
PRACTICAL ISSUES AND EXPERIENCE IN CONDUCTING
"NEW SHIPPER" REVIEWS UNDER ARTICLE 9.5
Paper from the European Communities
The following communication, dated 12 October 1999, has been received from the Permanent
Delegation of the European Commission.
_______________
BACKGROUND
The provisions relating to newcomer reviews in the WTO Anti-dumping Agreement are laid
out in Article 9.5, and these are reflected in the EC's own Basic Anti-dumping Regulation.  Insummary, a review may be carried out for new exporters in the exporting country subject to measures
where they can show that:
- they have not exported the product concerned to the importing Member during the
investigation period; and
-  they are not related to any exporter or producer subject to the anti-dumping measures
in question.
Following the initiation of a newcomer review  in the EC, and throughout the investigation,
A-D duties do not apply to the new exporter.  Instead, the exporter's sales to the EC become subject to
registration, which would allow duties to be collected retroactively should dumping be found.  Such
reviews are carried out on an accelerated basis, with in a maximum of nine months.  If dumping is not
found, then no duty would apply to that exporter.  Ot herwise, the review is ordinarily concluded with
the introduction of an individual measure applicable to that new exporter.
QUANTITY OF EXPORTS
Clearly, in order to carry out a meaningful newcomer investigation, there must be a
meaningful amount of export data to analyse.  The WTO A-D Agreement offers little guidance here,
so one key issue is defining what constitutes a significant quantity of exports (be they actually
exported, or in the form of an irrevocable contractual obligation).
Furthermore, the question must be addressed whether exporting small quantities could simply
be a device on the part of an exporter to exploit a loophole in the WTO A-D Agreement and thereby
obtain treatment as a new exporter.  This also raises issues of discrimination, because exporters
involved in the original investigation may well have invested large amounts of time, money and effortG/ADP/AHG/W/74
Page 2
to cooperate in the case, only to see a 'newcome r' awarded an individual dumping margin within an
accelerated time period, thanks to one, perhaps carefully planned, shipment.
OTHER PROBLEMS
The EC also encountered various other problems with regard to newcomer reviews.  One such
problem is the continuous flow of newcomer requests concerning one and the same case, with theconsequence that the number of companies claiming newcomer status becomes many times higher
than the number of companies known to be concer ned in the original investigation.  The question
which arises here is whether we should resort to sampling with regard to the newcomers or whether
we should re-open the original investigation in order to arrive at a representative finding (assuming no
sampling was used in the original investigation).
Another problem not resolved so far is the application of the provisions of Article 2.2.2 of the
Agreement.  Obviously, if a newcomer review is carried out only with regard to one single companywhich has no domestic sales at all, SG&A and profit are difficult to determine.  One possibility is to
use data from the original investigation, but this appr oach is not ideal if the original investigation took
place already some time ago.  Similar problems arise in the context of the application of the lesser-
duty rule, i.e. when the export prices are compared with a non-injurious price of the Community
industry (injury data are not collected in a newcomer review).
Finally, the question arises of when exporters should be allowed to lodge newcomer review
requests.  In the EC's experience, such requests can be lodged even when the original investigation
has still not finished.  Sometimes, because of the importance of meeting the statutory deadlines, the
claimant has to be told that the request cannot be dealt with during the ongoing investigation -
particularly if it would involve a second on-spot visit.  Again, the WTO A-D Agreement offers littleguidance on these situations.
EXAMPLES FROM SPECIFIC CASES
Significant quantities
The question of what constitutes significant quantities arose in an EC case involving leather
handbags originating in the People's Republic of China, where a company requested newcomer status.This company originally claimed that it fulfilled the newcomer criteria by having exported 6,400 units
of the product concerned to the Community after the original investigation period.  However, upon
verification, this figure was found to be incorrect an d the exporter then claimed that 86 units of the
product concerned had been exported.
The 86 units in question were document bags or briefcases, and the EC's Anti-dumping
Service considered that these did not fall under th e definition of the product concerned (which would
have brought exports of the product concerned down to zero).  Even were the 86 units to be acceptedas the product concerned, the question would arise whether the company, by exporting 86 document
bags in a period of 33 months, could qualify as an "exporter" of leather handbags.
As an exercise to answer this question, an approach was conceived to determine a threshold
under which the actual sales cannot be considered as being in the normal pattern of trade.  The Anti-
dumping Service used a random sample of data collected during an interim review of the existinganti-dumping measures on imports of leather handbags originating in China.  The transactions
considered predated the imposition of anti-dumping duties and were consequently free from any
distorting influence.G/ADP/AHG/W/74
Page 3
The analysis of data of four exporting producers established that a sale of not less than
1,000 units of leather handbags per year constituted the quantity necessary to make a meaningful
determination.  Analysis of the export data showed that sales volumes below that threshold
corresponded to one-off sales, and that 99.48 per cent of these exporting producers' total exports were
sold in quantities which exceeded this threshold.  Therefore it was deemed that exports whichamounted to a quantity inferior to this level should not warrant a newcomer review.
Exports to the EC of the product concerned by the company in question represented 8.6 per
cent of the threshold quantities defined above.  Consequently, even if the document bags had been
considered as handbags, the company could not be considered as an exporter who had established a
meaningful commercial relationship with EC cust omers, and the newcomer application was judged
non-admissible.
Continuous flow of newcomer requests
The EC's case involving leather handbags originating in the People's Republic of China also
provides a good example of the 'stream of newcom er requests' problem.  More than a dozen such
requests have been received since definitive measures were imposed in 1997.  In comparison, just two
producers and one trader from China co-operated in the original investigation.
In order to process the requests efficiently, with the staff resources available, a decision was
taken to deal with them in batches.  A newcomer review was initiated for the first five applicants by a
Commission Regulation in January 1999.
Of the five applicants, one withdrew its application and two were found to be related to each
other.  The case is ongoing, and will be conclude d soon.  Meanwhile, preparation work has started on
a second batch of newcomer review requests.
Newcomers with no domestic sales
In the EC's experience, requests for newcomer status from claimants with no domestic sales
of the product concerned are very rare.  The only example in recent years has been the investigation
concerning imports into the EC of cotton-type bed linen originating inter alia  in India.
In this case, more than 100 newcomer requests were received.  About one-fifth of these met
the criteria for newcomer status, and almost all of those had no domestic sales.  This was because they
were 'merchant exporters' (as they are described in India), i.e. they had no production facilities of their
own, preferring to sub-contract out all aspects of production in order to focus on exporting the final
product.  Nevertheless, for the purposes of an A-D investigation, the EC considered them as
producer/exporters.
However, sampling was used in the original in vestigation, meaning that, in accordance with
the EC's Basic Anti-dumping Regulation, it was not po ssible to calculate individual dumping margins
for each newcomer. Instead, the weighted average dumping margin of producer/exporters involved in
the original investigation was used, in line with Article 9(6) of the Basic Regulation.
Should a situation arise where there are newcomers with no domestic sales, and sampling was
not used in the original investigation, one could imagine constructing normal value, based on the
newcomer's costs of production and taking SG&A and profit from companies involved in the originalinvestigation.G/ADP/AHG/W/74
Page 4
Whichever approach is used, weighted average dumping margins or individual margins based
on constructed normal value, any duty which the EC  applies to newcomers would only last as long as
the measures applied in the original investigation.
Newcomer review requests during the original investigation
In the EC proceeding concerning sacks and bags of polyethylene or polypropylene originating
in India, Indonesia and Thailand, 16 Indian exporters requested newcomer treatment before the
imposition of definitive measures, but a fter all the original on-spot visits had been carried out.  This is
in contrast to just seven exporters who made themselves known and co-operated from the beginning
of the original investigation.
It would have been unduly burdensome to fully investigate all 16 requests while the original
investigation was also still ongoing. However, newcomer questionnaires were sent to all the
claimants, and it was determined that just three met the newcomer criteria in full.  The Anti-DumpingService therefore proposed that the weighted average dumping margin found for the cooperating
Indian companies be used for the three Indian newcomers, and this was accepted.  Thus the three
exporters became subject to a duty of 10.5 per cent, as opposed to the residual duty for Indian exports
of the product concerned of 36 per cent.
__________