RESTRICTED
WORLD TRADE G/ADP/W/88
G/SCM/W/97
ORGANIZATION 18October 1995
(95-3150)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
QUESTIONS CONCERNING THE NOTIFICATIONS PROVIDED
BYTHE EUROPEAN COMMUNITIES1OFLAWS AND REGULATIONS
UNDER ARTICLES 18.5AND 32.6OFTHE AGREEMENTS
Thefollowing communication, dated 2October 1995, hasbeenreceived fromthePermanent
Mission ofJapan.
_______________
Questions onConsistencies oftheEuropean Communities (EC)
LawwiththeAnti-Dumping Agreement (AA)
FAIR COMPARISON
Article 2.4.2 oftheAApermits comparisons ofweighted average normal values toindividual
export prices onlyifthereisacertain pattern ofexport prices andanexplanation isgiven fordeviating
fromthepreference forweighted average comparisons. Article 2.11oftheECRegulation authorizes
comparisons toindividual export prices ifweighted average comparisons would not"reflect thefull
degree ofdumping". Thereference toa"full" degree ofdumping seems toimply thatanycomparison
method which results inlower margins thanthemethod ofindividual comparison willbedeemed as
notreflecting the"full" degree ofdumping.
Q1. How willtheECdetermine whether weighted average comparison doesnotreflect the"full
degree ofdumping"?
Q2. Does theECenvision suchadetermination inother circumstances thanthose articulated by
theAA(i.e.thepattern ofexport price criteria)? WilltheECusetheexceptional method,
i.e.thecomparison between aweighted average normal value withindividual export price,
whenever suchacomparison results inhigher margins thantheaverage comparison method?
Q3. Although noexplanation isrequired under Article 2.11oftheRegulation, cantheECguarantee
thatitwillgiveanexplanation forcomparing aweighted average normal value withindividual
export price inaccordance withArticle 2.4.2 oftheAA?
2. SYMMETRICAL COMPARISONS -INDIRECT SELLING EXPENSES
Articles 2.3and2.4oftheAAaddress theAA'srequirement thatparallel adjustments bemade
tobothconstructed export price andnormal value toensure symmetrical comparisons. Article 2.9(b)
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oftheECRegulation contemplates avariety ofdownward adjustments toconstructed export pricewith
regard tospecific types ofcosts, including indirect selling expenses. There are,however, noexplicit
provisions under Article 2oftheRegulation which require downward adjustments tonormal value
forthesame types ofcosts toensure symmetrical comparisons. Inits"Comparison" provisions
(Article 2.10, preamble), theECRegulation simply provides general authority totakedueaccount
ofdifferences which affect price comparability. Thereport ofJapan-EC audio cassette panel, which
istobeadopted bytheAnti-Dumping Committee, concluded thattheEChadfailed tomake due
allowances forindirect selling expenses andprofit initsprice comparison andrecommended theEC
tobring relevant provisions oftheRegulation intoconformity withtheAA. Inthisregard, the
asymmetry inthecalculation ofthedumping isinconsistent withtheprovisions ofAA.
Q. Does theECguarantee thatitwillnotcompare export prices withnormal value inan
asymmetrical wayaswascondemned bythepanel?
3. SYMMETRICAL COMPARISONS -SG&A PROFIT
Articles 2.3and2.4oftheAAprovide forthatparallel adjustment should bemade tonormal
value andexport price toensure symmetrical comparisons. TheECRegulation focuses ontheuse
ofactual datawhen adjusting normal value forselling, general andadministrative costs (SG&A) and
profit (Article 2.6),butonlyrefers toa"reasonable" adjustment toexport price forSG&A andprofit
(Article 2.9(b)).
Q. Does theECintend touseactual dataalsoinestablishing constructed export price under
Article 2.9(b), when theyareavailable?
4. CONDITIONS FOR START-UP COST ADJUSTMENTS
TheAArequires anadjustment forstart-up costs ifcosts during theperiod ofinvestigation
(POI) areaffected bystart-up costs(Article 2.2.1.1). TheECRegulation contemplates astart-up cost
adjustment onlyifthefollowing conditions aremet:
- thestart-up costsareassociated withnewfacilities (excluding thecaseof"new products
inexisting facilities"):
- thestart-up costs aretheresult ofa"substantial additional investment";
- thestart-up costs areassociated withlowcapacity utilization rates; and
- thestart-up operations takeplace within orduring thePOI.
Q. What istherationale behind eachoftheconditions? Howisthatrationale consistent withor
supported bytheAA?
5. INJURY -EFFECTS OFPAST DUMPING
TheAArequiresananalysisofthecurremtinjuriouseffectsofdumpingonthedomesticindustry
(Article 3.5). TheECRegulation, however, permits theECtoconsider theeffects ofpastdumping
initsinjury analysis under Article 3.5oftheECRegulation.
Q1. Where intheAAdoestheECfindsupport fortheproposition thatpastdumping maybe
considered inacurrent injury analysis?G/ADP/W/88
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Q2. Theconsideration oftheeffects ofpastdumping could improperly leadtoafinding ofinjury
evenwhere theinjury isnotcaused bythecurrent dumped imports. Howwillitbepossible
fortheECtojustify theuseofeffects ofpastdumping?
6. ANTI-CIRCUMVENTION
Although thenegotiating parties considered theinclusion ofrulesandnorms fortheapplication
ofanti-circumvention measures during theUruguay Round, thenegotiated AAdoesnotinclude any
authorization foranti-circumvention measures. TheEC,however, hasauthorized theapplication of
anti-circumvention measures inseveral circumstances (Article 13).Inparticular, theECRegulation
allows theECtoexpand thescope ofanti-dumping duties onimports from third countries without
specific criteria, which could becalled "catch-all" clause (Article 13.1).
Q1. Where intheAAdoestheECfindsupport foritsanti-circumvention provisions?
Q2. Inparticular, Article 13.1seems topermit theapplication ofdumping duties toimports from
acountry without aninjury finding withrespect tothatcountry. Does theECrecognize that
theanti-circumvention measures provided forinArticle 13oftheRegulation permit ittoimpose
anti-dumping duties toproducts without complying withtherequisite conditions setoutinthe
AA? HowcantheECjustify aprocedure which contemplates theimposition ofanti-dumping
duties without complying withitsobligations under theAA?
7. REGISTRATION OFIMPORTS
Article 7oftheAAdefines theconditions which must bemetprior totheapplication of
provisional measures. Article 14.5oftheECRegulation authorizes aform ofprovisional measure
i.e.theregistration ofimports. Asaform ofprovisional measure, theRegistration mechanism may
beinvoked onlyincircumstances authorized bytheAA.
Q. CantheECgivethedetails about theimplementation oftheregistration ofimports.
8. DEMINIMIS VOLUMES
With respect todeminimis volumes, Article 5.8oftheAAindicates thatauthorities should
terminate theinvestigation ifitfindsthatthevolume ofimports fromacountry isnegligible, i.e.less
than3percentoftotalimports, unless suchnegligible imports collectively account formore than7per
centoftotalimports. Articles 5.7and9.3oftheECRegulation indicate thattheECwillterminate
aninvestigation onlyifacountry 'smarket share islessthan1percent, andifthecollective market
share ofsuchcountries accounts forlessthan3percent.
Q1. Where doestheECfindsupport forthese conditions initslegislation intheAA?
Q2. HowdotheECauthorities dealwithcountries which account forlessthan3percentofthe
imports butwhose imports represent amarket share ofabove 1percent?
9. DEMINIMIS MARGINS
Article 5.8oftheAArequires "immediate termination" incases where anexporter 'smargins
arefound tobelessthan2percentoftheexport price. Article 9.3oftheECRegulation indicates
onlytheinvestigation shallbetemporarily terminated andtheexporter concerned willcontinue tobe
subject toinvestigation insubsequent reviews.G/ADP/W/88
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Q1. What doesitmean thatananti-dumping caseremains subject totheproceeding afterthe
investigation hasbeenterminated? What kindofa"subsequent review" willtheECundertake?
Which provision oftheAAmaysupport suchareview?
Q2. Since the"termination" contemplated bytheECisonlytemporary, isnottheECaction more
likea"suspension" rather thanatermination? Thephrase "termination" isalmost always
associatedwithpermanentaction.However,theECinterprets"termination"asonlyatemporary
measure. Please explain howtheECcanjustify thisdeparture.