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Ministry of Finance. Overview of Trade Remedy Laws Under GATT/WTO: Antidumping, Countervailing Duty and Safeguards. Workshop by Lisa M. Yarmoshuk U.S.-Vietnam Forum, Educational Affiliate of U.S.-Vietnam Trade Council. - PowerPoint PPT Presentation
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Overview of Trade Remedy Laws Under GATT/WTO: Antidumping, Countervailing Duty and Safeguards
Workshop by Lisa M. YarmoshukU.S.-Vietnam Forum, Educational Affiliate of U.S.-Vietnam Trade Council
Ministry of Finance
Technical Assistance Program sponsored by U.S. Agency for International Development -- Hanoi, Vietnam August 14, 2001
Ministry of Finance
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Trade Remedy Laws
Antidumping Duty (AD) Laws - Pricing
Countervailing Duty (CVD) Laws - Subsidies
Safeguards Laws - Import Relief
Ministry of Finance
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Antidumping and Countervailing Duty Laws
History, Procedures and Elements
Ministry of Finance
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Origin and Use of Antidumping Laws
Antidumping Laws• Historical Origins
– Canada - 1904 Statute
– United States - 1916 Act and U.S. Tariff Act of 1921
• Modern Developments
– GATT 1947 - Article VI
– Kennedy Round Antidumping Code
– Tokyo Round Antidumping Code
– Uruguay Round Antidumping Agreement
– Development of Domestic AD Laws
Ministry of Finance
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Rank CountryNumber of
CasesShare of
Total Rank CountryNumber of
CasesShare of
Total
1 South Africa 41 22.7% 1 EC 65 23.5%2 US 34 18.8% 2 India 60 21.7%3 India 30 16.6% 3 US 45 16.2%4 EC 22 12.2% 4 Australia 24 8.7%5 Brazil 16 8.8% 5 Argentina 21 7.6%6 Australia 13 7.2% 6 Canada 18 6.5%7 Mexico 10 5.5% 7 South Africa 16 5.8%8 Canada 8 4.4% 8 Brazil 14 5.1%9 Israel 7 3.9% 8 Mexico 14 5.1%
Grand Total 181 277
-------------------------1998---------------------------------------------------1999--------------------------
Source: Global Trade Protection Report 1999, Rowe & Maw
Antidumping Cases Initiated by the United States and Other Countries
Ministry of Finance
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U.S. Antidumping Duty Orders in Effect on January 1, 2000
Source: http://ia.ita.doc.gov/stats/inefecta.htm
COUNTRY Total
China PRC 36Japan 34Taiwan 21Korea, Republic Of 17Brazil 13Italy 12France 10Canada 9Mexico 7Argentina 6Germany United 6Germany West 6India 6All Others 67
Grand Total 250
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U.S. Antidumping Investigations Case Activity (1/1/1980-12/31/1999): Initiations
Source: http://ia.ita.doc.gov/stats/ad8099.htm
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U.S. Antidumping Investigations Case Activity (1/1/1980-12/31/1999): Duty Orders Revoked
Source: http://ia.ita.doc.gov/stats/ad8099.htm
Ministry of Finance
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Origin and Use of Countervailing Duty Laws
Countervailing Duty Laws• Historical Origins
• Modern Developments
– GATT 1947 - Article VI
– United States - 1974 Trade Act
– Tokyo Round Subsidies Code
– Uruguay Round Agreement on Subsidies and Countervailing Measures
– Development of Domestic CVD Laws
Ministry of Finance
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Source: http://ia.ita.doc.gov/stats/inefectc.htm
U.S. Countervailing Duty Orders in Effect on January 1, 2000
Country Total
Italy 7Argentina 4Brazil 3France 3Korea, Republic Of 3Belgium 2Canada 2Iran 2Mexico 2Spain 2Sweden 2All Others 11
Grand Total 43
Ministry of Finance
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70
Source: http://ia.ita.doc.gov/stats/cv8099.htm
U.S. CVD Investigations Case Activity (1/1/1980-12/31/1999): Initiations
Ministry of Finance
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Administrative Procedures Applicable to AD/CVD Cases
Basic procedural framework for conducting antidumping and countervailing duty investigations and imposing duties is set forth in WTO Antidumping and SCM Agreements
Authorizes or requires agencies to issue regulations designed to achieve consistency and predictability in decision making in administrative proceedings and to provide basic components of procedural fairness:• notice
• hearing
• right to administrative record
• right to statement of reasons for decision
• right to judicial review
Ministry of Finance
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U.S. -Timing of Events in Antidumping Proceedings
ITCPreliminary
Decision
DOCPreliminary
Decision
DOCFinal
Decision
ITCFinal
Decision
Questionnaire Issued
Questionnaire Responses Due
Supplemental Questionnaire Issued
Supplemental Response Due
Publication of F.R. Notice Disclosure Ministerial Error Correction Suspension of Liquidation
(if affirmative) Verification/Verification
Reports Issued Case Briefs/Rebuttal Briefs Hearings
Publication of F.R. Notice
Disclosure Ministerial Error
Corrections Suspension of
Liquidation (continues or lifted)
Antidumping Duty Order
Suspension of Liquidation (continues or lifted)
Timing of DOC Events in LTFV Investigations
Ministry of Finance
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Administrative Procedures Applicable to AD/CVD Cases
Organization of Government Agency Responsibilities for Administering AD/CVD Laws:• single entity - European Union
• bifurcated system - United States and Canada
Factors to Consider:• expertise required
• number of cases expected
• complexity of cases
• AD and CVD cases?
Ministry of Finance
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Requirements for Initiating an AD/CVD Investigation
Evidence and Information
Standing
Period and Scope of Investigation
Interested Parties and Notice
Investigative Process
Dumping/Subsidization
Injury
Ministry of Finance
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Other Issues Common to AD/CVD Proceedings
Protection of Confidential Information
Best Information Available
Suspension or Termination of an Investigation
Public Notice and Explanation of Determinations
Imposition of AD/CVD Duties
Provisional Measures
Ministry of Finance
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Imposition and Collection of Definitive AD/CVD Duties
General Rules
Prospective or Retrospective Systems
Critical Circumstances (Retroactive Duties)
Judicial Review
WTO Panel Review
Duration and Review of Duties and Undertakings (“Sunset”)
Ministry of Finance
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Basic Elements of Antidumping Duty Law
What is Dumping?
Bases for Comparison
Requirements to Ensure a Fair Comparison
Calculation Issues
Sunset Provisions
Ministry of Finance
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What is Dumping?
Selling in Export Market at Prices Below “Fair Value” or “Normal Value” Determined by
• Home market price of exporter, or, if not representative
• Price in third country market, or, if not representative
• cost of production plus selling, general and administrative expenses and reasonable profit
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Requirements to Ensure a Fair Comparison
Same Level of Trade
Contemporaneous Sales
Disregarding Sales Below Cost
Adjustments for for Differences in Price Comparability• conditions and terms of sale• taxation• levels of trade• quantities• physical characteristics• currency fluctuations, etc
Ministry of Finance
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Overview of the Dumping Margin Calculation
Determine NetU.S. Price
Compare NetU.S. Price toNormal Value
DetermineNormal Value
Calculate The Dumping Margin
•Universe of U.S. Sales•Period of Investigation•Date of Sale•Types of U.S. Sales Transactions (EP/CEP)•Affiliated Persons•Adjustments to Price
•Deductions•Additions
•Market Viability•Disregarded Sales
•Arm’s length test•Below cost test•Samples•Not Appropriate Match
•Adjustments to Price•Deductions•Additions
•Matching•Price Averaging•Level of Trade/CEPOffset•Currency Conversions
Ministry of Finance
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Basic Elements of Countervailing Duty Law
Definition of a Subsidy:
• Financial Contribution - transfer of funds, foregone revenue, provision of goods or services or purchase of goods or indirect financial contribution
• Benefit
Specificity
Subsidies not Countervailable Under the SCM Agreement:
• Research & Development Subsidies
• Subsidies to Disadvantaged Regions
• Environmental Subsidies
Ministry of Finance
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Basic Elements of Countervailing Duty Law
Calculation Issues
• SCM Agreement authorizes a country to levy a countervailing duty “calculated in terms of subsidization per unit of the subsidized and exported product” of up to, but no more than, the total amount of the subsidy
• Two standards of measurement:
– Cost to the Government (European Union)
– Benefit to the Recipient (United States)
Applicability of Injury Test Requirement
Ministry of Finance
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Basic Elements of Injury Law
WTO AD and SCM Agreements require evidence that dumped or subsidized imports are causing injury
• Article 3 AD Agreement
• Article 11 SCM Agreement
Evidence of:
• Material injury to a domestic industry
• Threat of material injury to a domestic industry or
• Material retardation of the establishment of such an industry
Ministry of Finance
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Basic Elements of Injury Law
Like Product
• Product line analysis
• Semi-finished products
Domestic Industry
• Related parties
• Regional industry
Captive Production
Cumulation
Ministry of Finance
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Basic Elements of Injury Law
Causation
Threat of Material Injury
Material Retardation
Sunset Provisions
Ministry of Finance
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Safeguards Law
History, Procedures and Elements
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What are Safeguard Actions?
“Escape Clause” or “Safeguard” Mechanism for Import Relief
Restriction of imports of a product temporarily if domestic industry is injured or threatened with injury caused by a surge in imports
Ministry of Finance
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Origin and Use of Safeguards Law
Historical Origins • United States Trade Agreements Program 1934
Modern Developments• GATT 1947
– Article XIX
– “Grey Area” Measures
• Uruguay Round Agreement on Safeguards
• Development of Domestic Laws
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WTO Agreement on Safeguards
Key Provisions:• Requires a transparent, public process for making injury
determinations
• Sets out clearer definitions of the criteria for injury determinations
• Requires safeguard measures to be steadily liberalized over their duration
• Establishes an eight year maximum duration for safeguard actions (“sunset clause”)
• Allows safeguard actions to be taken for three years without the requirement of compensation or the possibility of retaliation
• prohibits “grey area” measures
Ministry of Finance
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Administrative Procedures -- Safeguard Actions
Basic procedural framework for conducting safeguard action investigation and imposing safeguards measures is set forth in WTO Agreement on Safeguards
Authorizes or requires agencies to issue regulations designed to achieve consistency and predictability in decision making in administrative proceedings and to provide basic components of procedural fairness:• notice
• hearing
• right to administrative record
• right to statement of reasons for decision
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Determination of Serious Injury or Threat Thereof
WTO Agreement on Safeguards:• “serious” injury” - significant overall impairment in the
position of a domestic industry
• “threat of serious injury” - serious injury that is clearly imminent evidenced by facts
• evaluation must be objective and quantifiable - rate and amount of increase in imports in absolute and relative terms, share of domestic market taken by increased imports, changes in level of sales, production, productivity, capacity utilization, profits and losses, and employment
• causal link between increased imports and serious injury or threat thereof
United States Safeguards Law:• “substantial cause of serious injury, or threat thereof”
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Application of Safeguard Measures
Only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment
Measure chosen should be most suitable for achievement of objective• quantitative restrictions (quotas)
• increase or imposition of a duty
Applied to imported product irrespective of source• allocation of quotas among supplying countries
Normally 4 year duration, maximum of 8 years
In some cases safeguard actions can be taken for 3 years without compensation or retaliation
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Developing Countries
To some extent developing countries are shielded from safeguard actions:• Can only apply a safeguard measure to a product from a
developing country if the developing country is supplying more than 3% of the imports of the product, or
• if developing country members with less than 3% import share collectively account for more than 9% of total imports of the product concerned.
Right to extend the period of application of a safeguard measure for a period of up to two years beyond the maximum period.
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Safeguard Actions in United States Law - Elements
United States - Section 201 of the Trade Act of 1974:• Petition filed by representative of an industry or President,
USTR, House Committee on Ways and Means or Senate Finance Committee requests investigation
• Investigation conducted by International Trade Commission - substantial cause or threat of “serious” injury
• Adjustment plans and commitments
• Provisional relief - critical circumstances
• Presidential action: factors to consider include adjustment plan, individual commitments, probable effectiveness, etc
• International Trade Commission monitoring
• Modification/termination of action
