WORLD TRADE
ORGANIZATIONTN/RL/W/26
17 October 2002
(02-5653)
Negotiating Group on Rules Original:  English
SECOND SUBMISSION OF INDIA
(ANTI-DUMPING AGREEMENT)
The following communication, dated 16 October 2002, from the Permanent Mission of India.
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A. INTRODUCTION
1. The Doha Ministerial mandate provides for negotiations aimed at clarifying and improving
the disciplines under the Anti-Dumping Agreement.  India had submitted a paper TN/RL/W/4, on
certain implementation related issues in respect of the Anti-Dumping Agreement.  This paper
highlights some issues for seeking clarification and improvement so as to ensure that the Anti-
Dumping Agreement is not misused for protectionist purposes.  In indicating the issues, in certain
instances some questions have been raised for focu ssing the discussion in order to obtain greater
clarity on the issue concerned.  This paper is without prejudice to further submissions that may be put
forth by India in the course of the negotiations.
B. ISSUES RELATING TO INITIATION OF ANTI-DUMPING INVESTIGATION
Back to back anti-dumping investigation
Paragraph 7.1 of the Decision On Implementation Related Issues and Concerns
(WT/MIN(01)/W/10) requires special care to be taken prior to initiation of a back to back anti-dumping investigation.  It is, however, essential to have a specific provision in the Anti-Dumping
Agreement whereby such investigations shall not be conducted within 365 days of a negative finding
in a prior investigation on the same product or a broader category of product.
Proposal
A new paragraph Article 5.4 bis may be inserted requiring that an investigating
authority shall not initiate an anti-dumping in vestigation where an investigation on the same
product or a broader category of another product which included the product now under
consideration from the same memb er resulted in negative findin g within 365 days prior to the
filing of the petition seeking initiation of a new investigation.
Domestic industry consisting of small- scale or “unorganized” sector producers .
Domestic industries that are fragmented and have a very large number  of producers face an
enormous problem in initiating anti-dumping investigations because they find it difficult to meet the
standing requirements contained in Article 5.4.  This is particularly true in the  case of goods
produced in industries in the unorganized sector that consists mainly of small, unincorporated entities
run by individuals or families.TN/RL/W/26
Page 2
While it may be possible to meet the 50 per cent support requirement by resorting to the
statistical sampling techniques referred to in footnote 13, this may not solve the problem of the
application being expressly supported by 25 per cent of total domestic production.  Footnote 13, onthe face of it, does not appear to apply to the last sentence of Article 5.4, which deals with the 25 percent express support requirement.
Proposal
The Anti-Dumping Agreement must be amended to clarify that footnote 13 also applies to
the 25 per cent requirement in the last sentence of Article 5.4.
C. ISSUES RELATING TO DUMPING MARGINS
Article 2.2.2 – Hierarchy of options
Article 2.2.2 (i) – (iii) sets forth 3 separate basis for deriving the amount for SGA expenses
and profits to be used in a constructed normal value calculation. Option (i) focuses on the producers
being investigated and allows construction of normal value based on a broader range of products;
option (ii)  retains the focus on the like product but allows consideration of data of other producers or
exporters and option (iii) allows any other reasonable method subject to a cap on the results.
Experience in various anti-dumping investigatio ns suggests that the investigating authorities
appear to be constructing the normal value on the basis of that option which results in the highest
dumping margins.  This picking and choosing of options is a cause for concern as it does not permit
an objective assessment of the facts before the in vestigating authority leading to arbitrariness and
unfairness in the implementation of Anti-Dumping Agreement.
Proposal
It is therefore proposed that  an amendmen t  be carried out in the chapeau of Article
2.2.2 specifying that the three options thereunder have a hierarchical significance and a
subsequent option may be resorted to only in the absence of relevant data under the preceding
option(s).
Application of a Reasonability Test under Article 2.2
It is India’s experience that certain investigating authorities have, while constructing the
normal value under various options under Article 2.2.2(i)-(ii) applied the profit margins which did notreflect the profits actually realized by the producers/exporters inside and outside India.  The profit
rates used for purposes of calculating the constructed normal value were found to be unreasonable.
Proposal
In order to ensure the reasonableness of amount of profit under options 2.2.2(i) and
2.2.2(ii) the limitation enshrined in option 2.2.2(iii)  i.e. the profit to be reasonable and should
not exceed profit normally realized by other exporters or producers on sales of same product  or
the same general category of products, as appropriate could be imposed.
Prohibition on zeroing of dumping margins
The practice of zeroing arises when investigating authorities make multiple comparisons of
export price and normal value and then aggregate the results of these individual comparisons toTN/RL/W/26
Page 3
calculate a dumping margin for the product as a whole while counting as zero the dumping amount for
those margins where it was negative.   This practice has been found to be violative of obligations
under Article 2.4.2 as it does not fully take into account the prices of all comparable export
transactions.
Proposal
There should be an explicit clarification in  Article 2.4.2 prohibiting those comparisons
between export price and normal value that do not fully take into account the prices of all
comparable export transactions such as the prac tice of zeroing while establishing the margins of
dumping on the basis of comparison of a we ighted average normal value with a weighted
average prices of all export transactions.
D. ISSUES RELATING TO INJURY
Rules for determination of injury margin shall be introduced
Evaluation of the 15 injury parameters in the course of injury analysis as required in
Article 3.4 of the Anti-Dumping Agreement is an exercise separate from injury margin determination.
While the injury parameters have to be mandatorily  evaluated to arrive at an objective assessment of
the impact of dumped imports on the state of the domestic industry as a whole, there is no mandatory
obligation on investigating authorities for making injury margin determination.  However, Article 9.1
of the Anti-Dumping Agreement which provides that the anti-dumping duty be less than the margin of
dumping if such lesser duty would be adequate to remove the injury to the domestic industry, could be
taken as requiring determination of an injury margin.  There is a need to give effect to the lesser duty
rule. This necessitates disciplines for the calculation of injury margins.
Some of the Member countries have developed detailed methodologies for calculating injury
margins. These could serve as a possible basis for developing disciplines with a view to incorporating
a suitable provision in this regard in the Anti-Dumping Agreement.
Members may like to deliberate upon the following questions relevant to possible
disciplines on calculation of injury margins:
• How will objectivity and transparency in calcul ation of injury margins be ensured, given the
fact that cost and pricing data of the domestic producers would normally be considered tobe confidential and therefore not available to all the interested parties?
• Which domestic producers should be considered for purposes of calculating the domestic
producers’ price for price under-cutting?  It may not be possible to have a coverage of allthe domestic producers of the like product.  On e option could be to take the information in
respect of the most efficient domestic producers while calculating price under-cutting andprice under-selling.  The data relating to the cost of production of various domestic
producers could be extremely relevant for purposes of arriving at the most efficient
domestic producers.
• What should be the time period over which in jury margin determination should be made?
One option could be that injury margin determ ination should be made with reference to the
period of investigation.
• When should price under-cutting/price under-selling appropriately be used?  A possible
option could be that price under-cutting margin is relevant when the selling price of the likedomestic product has been depressed but the domestic sales volume has not contracted or
reduced in quantities.  If however, the dome stic sales price appears to remain relatively
stable over the period of investigation then the under-selling margin could be moreTN/RL/W/26
Page 4
appropriate.  The investigating authorities could determine both price under-selling as well
as price under-cutting and take the higher of the two as the injury margin.
• What factors should determine a reasonable  profit for the domestic industry while
calculating target price for under-selling margin?
• What adjustments should be made between the landed price and the domestic sales price?
One option could be that the various adjust ments permissible while making the dumping
margin calculation as provided for in Arti cle 2.4 of the Anti-Dumping Agreement  could
also be applicable for injury margin calculations.
• To what extent would the various methodologies which are specified in Article 2.4.2 of the
Anti-Dumping Agreement while determining dumping margins also be applicable for injury
margins?
• Should zeroing be prohibited while calculating injury margins?
Elaboration of  injury factors referred to in Article 3.4
Article 3.4 of the Anti-Dumping Agreement mandates evaluation of 15 parameters for making
an objective examination of the impact of dumped imports on the domestic producers of such
products.  However,  some of these injury factors have been defined very loosely.  For instance it is
not clear whether data relating to productivity is to be evaluated in terms of production per unit
employee or per unit investment or  against some othe r basis.  Further it is not clear in what terms the
parameter “growth” is to be evaluated.  Should it be in terms of increase in profitability of thedomestic producers or growth of sales or growth of production?  Another injury parameter which
requires elaboration is “ability to raise capital or investments”.  It is not clear whose ability to raise
capital is being referred to.  In case of producers producing multiple products its ability to raise capital
may not depend entirely on the state of the domestic industry of the dumped product.
Proposal
Some of the mandatory injury parameters  require further elaboration for ensuring
consistency and predictability among investigating authorities while making an assessment of
the consequent impact of dumped imports on the domestic products of the like product.
‘Non-attribution clause’ i.e. for segregating in jury  caused by factors other than dumped
imports referred to in Article 3.5 shall be elaborated
Article 3.5 of the ADA requires the establishment of a causal relationship between dumped
imports and injury to the domestic industry.  The investigating authorities  are also required to
examine any known factors other than the dumped im ports which at the same time are injuring the
domestic industry and the injuries caused by these other factors must not be attributed to dumped
imports.
The Appellate Body has held that in order that  investigating authorities applying Article 3.5
are able to ensure that the injurious effects of the other known factors are not attributed to dumped
imports, they must appropriately assess the injuri ous effects of those other factors.  Such an
assessment must involve separating and distinguishing the injurious effects of the other factors from
the injurious effects of the dumped imports.  In the absence of such separation and distinction of
different injurious effects, the investigating authorities would have no rational basis to conclude that
the dumped imports are indeed causing the injury justifying the imposition of anti-dumping duties.
The Anti-Dumping Agreement does not give guidance or prescribe methodologies for
separating and distinguishing the injurious effects of other factors from the injurious effects of the
dumped exports.TN/RL/W/26
Page 5
Furthermore, it may not be enough to separate and distinguish the injurious effects of other
factors from the injurious effects of the dumped imports, in order to make an objective assessment of
the impact of such imports on the domestic industry of the like product.  Would imposition of anti-
dumping measure be justified in situations wherein dumping is merely “a cause” of injury while othercausal factors exist which have substantially contributed to the injury to the domestic industry?  There
is a need to specify a standard for establishing causality between dumped imports and material injury
to invoke anti-dumping measures.
Proposal
It is essential to elaborate Article 3.5 so that appropriate guidance is provided to
investigating authorities while separating and distinguishing the injurious effects of other
factors from the injurious effects caused by the dumped imports.
Furthermore, to invoke anti-dumping measures, there is a need to specify an
appropriate standard for establishing causality between dumped imports and material injury.
‘Special care’ requirement in respect of determinat ion of threat of material injury referred to in
Article 3.8 shall be elaborated.
Article 3.8 of the Anti-Dumping Agreement dealin g with cases where injury is threatened by
dumped imports merely provides for the application of anti-dumping measures to be considered and
decided with special care.  What would constitute “special care” has not been elaborated leaving the
obligation on the investigating authority loosely defined.
Proposal
It is proposed  that “special care” needs an  elaboration so that a clear, specific and
unambiguous bench-mark is specified.
E. OTHER ISSUES
Price Undertakings
Article 8.1 of the Anti-Dumping Agreement provides for proceedings being terminated
without the imposition of the provisional measures and anti-dumping duties upon receipt of
satisfactory voluntary undertakings from any exporter to revise its prices or cease exports to the area
in question at dumped prices.  However there have been very few cases in which an undertaking hasbeen accepted. This in part could be due to the fact that some of the terms in Article 8 are not precise.
Proposal
More Specific provisions relating to price undertakings need to be agreed.  This would
involve seeking answers to some questions including the following:-
• How to determine the undertaking ‘price’ to be given in a price undertaking? [Article 8.1.]
• What shall be treated as ‘satisfactory’ and what shall be ‘unsatisfactory’ price
undertakings?  [Article 8.1]
• Relevant conditions for non-acceptance of price undertakings shall be more specifically
clarified. [Article 8.3]TN/RL/W/26
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Rules relating to reviews shall be modified
Article 13 of the Anti-Dumping Agreement provides for a judicial review of final
determination and reviews of determination within the meaning of Article 11.  However, the national
legislation of some of the member countries specifie s that the findings of a judicial review would be
applicable only in respect of those exporters who had sought recourse of such a review.  It is India’s
experience that in certain cases the judicial review concluded that the underlying anti-dumping
investigation had pervasive flaws going beyond that in  respect of the specific exporters seeking such a
review.  Consequently, the anti-dumping duty against such exporters may have been removed, while
those against other exporters who had not sought the judicial review remained in place in spite of the
flawed underlying investigation.
There is no provision in Article 11.2 for an interested party to seek a review based on findings
of a judicial review applicable to those who soug ht such a remedy.  According to Article 11.2 of the
Anti-Dumping Agreement  a review of continued imposition of anti-dumping duty can be undertaken
upon request by an interested party which submits positive information on the following:
(a) the continued imposition of anti-dumping duty is no longer necessary to offset dumping;  or
(b) the injury would be unlikely to continue or  recur if the duty were removed or varied;
There is no provision whereby exporters can seek a review based on the findings of a judicial review
conducted at the instance of other exporters.  In such a situation there may be no alternative for
redressal other than the recourse to a dispute panel, which is a time consuming option.  In the
meantime, the anti-dumping duty imposed following a flawed investigation, would continue to remain
in effect for certain exporters.
Proposal
A new provision needs to be added to Article 11 whereby a review can be undertaken on
the basis of positive evidence submitted by an y interested party based on the findings of the
judicial review establishing that the underlying investigation was flawed.
Concurrent application of anti-dumping and safeguard measures
It has been India’s experience that anti-dumping measures and safeguard measures are in
certain cases made concurrently applicable on the same product.  Any safeguard measure made
applicable on a product for preventing or remedying serious injury may well also address, at least in
part, the injury resulting from dumping/subsidization that may have occurred earlier.  The extent towhich protection that gets accorded to the domestic industry by a definitive safeguard measure
becomes enhanced if such a measure is applied over and above the anti-dumping measure also needs
to be considered.  It is therefore important that the anti-dumping duty be adjusted or suspended to take
into consideration the additional protection accorded to the domestic industry by the safeguard
measure.
Proposal
In situations which result in concurrent imposition of anti-dumping and safeguard
measures on the same product the imposition of anti-dumping measure shall be suspended orthe level of duty adjusted as long as  the safeguard measure is enforced.TN/RL/W/26
Page 7
Clarification in respect of resort to facts av ailable under Article 6.8 and Annex II of the Anti-
Dumping Agreement.
It is India’s experience that certain investigating authorities reject verifiable, timely and
appropriately submitted information on the plea that certain other information sought during theinvestigation was either not submitted by the exporters or such information did not satisfy the criteria
laid down in Annex II:3 of the Anti-Dumping  Agreement.  Such a practice amounts to the
investigating authority ignoring the  information made available to it which otherwise meets the
criteria  specified in Annex II:3 and does not result in an objective assessment of facts.
Proposal
There should be clear guidance specifying th e circumstances in which an investigating
authority may resort to total facts available. In ot her situations the invest igating authority shall
be required to take into consideration all info rmation which meets the criteria of Annex II:3,
although some other information may not meet this criteria.
Elaboration of the Article 15 of the Anti-Dumping Agreement
In pursuance of paragraph 7.2 of Decision on Implementation Related Issues and Concerns
(WT/MIN(01)/W/10) India has submitted a proposal to the Committee on Anti-Dumping Practices for
operationalsing Article 15 of the Anti-Dumping Agreement.  Depending on the progress made inconsideration of this implementation issue India may submit a proposal on Article 15 to the
Negotiating Group on Rules in future.
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