Rohan Shah Anti Dumping Issues

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Information about Rohan Shah Anti Dumping Issues

Published on January 4, 2008

Author: Samuel


ANTI-DUMPING ISSUES – AN OVERVIEW :  ANTI-DUMPING ISSUES – AN OVERVIEW By Rohan Shah Managing Partner Economic Laws Practice WTO - TRADE DEFENCE MEASURES:  WTO - TRADE DEFENCE MEASURES Anti-dumping Duties Countervailing Duties Safeguard Measures ANTI-DUMPING MEASURES:  ANTI-DUMPING MEASURES Redresses price discrimination caused by dumping A remedial measure to remove unfair trade distortions Not a protectionist measure AD Duty – Origin & Use:  AD Duty – Origin & Use 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 LEGAL FRAMEWORK:  LEGAL FRAMEWORK Anti-Dumping Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Commonly known as WTO-Anti-dumping Agreement) Customs Tariff Act, 1975 - Section 9A, 9AA, 9B & 9C (as amended in 1995 and thereafter) Anti-dumping Duty Rules [Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995] (as amended). KEY CONCEPTS:  KEY CONCEPTS (a) Domestic Industry (h) De-minimis Dumping (b) Locus-standi (i) Injury (c) Like Products (j) Causal Link (d) Dumping (k) Injury Margin (e) Normal Value (l) Period of Investigation (f) Export Price (m) Price Undertaking (g) Dumping Margin Explanation follows: DOMESTIC INDUSTRY:  DOMESTIC INDUSTRY PRODUCERS AS A WHOLE OF THE LIKE PRODUCT; OR THOSE WHOSE OUTPUT CONSTIUTES A MAJOR PROPORTION EXCLUDE RELATED TO EXPORTERS RELATED TO IMPORTERS IMPORTERS THEMSELVES LOCUS-STANDI:  LOCUS-STANDI Application made by domestic industry needs to be supported by those domestic producers whose collective output constitutes more than 50% of the total production of the like product produced by that portion of the domestic industry expressing either support or opposition to the application No investigation to be initiated if such support is less than 25% of the total domestic production LIKE PRODUCTS:  LIKE PRODUCTS Identical - alike in all respects In the absence of such article Although not alike in all respects, has characteristics closely resembling those of the product under consideration Article 2.6 Of WTO Agreement “2.6 Throughout this Agreement the term "like product" ("produit similaire") shall be interpreted to mean a product which is identical, i.e. alike in all respects to the product under consideration, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration.” WHAT IS DUMPING ?:  WHAT IS DUMPING ? Difference between Normal Value and Export Price is known as ‘Margin of dumping’ Mere dumping per se is not actionable Injury & Causal link are required to be proved AD - MECHANICS OF DUMPING:  AD - MECHANICS OF DUMPING Dumping A Television which costs US$100 to make is sold in the Country for $200. The same television is exported for $150 The Television is being dumped The Domestic Selling Price in the Ordinary Course of Trade is the Normal Value The dumping margin is the difference between the export price and the normal value. NORMAL VALUE:  NORMAL VALUE Is the comparable price at which the goods under complaint are sold in the ordinary course of trade in the domestic market of the exporting country or territory. Ordinary course of trade refers to such sales which are profitable and are made to unrelated customers. The Supreme Court in the judgment of Haldor Topsoe held that if acceptable material is available in regard to the comparable price in the ordinary course of trade in the exporting country or territory itself then the normal value will have to be determined on that basis. If the same is not available, then the said choice is between the comparable representative export price and cost of production in the country of origin of the goods. NORMAL VALUE ALTERNATIVE METHODS:  NORMAL VALUE ALTERNATIVE METHODS (a) EXPORT PRICE Appropriate third country representative (b) COST OF PRODUCTION Plus Administration, Selling & General costs Profits In the country of origin CRITICAL ISSUES ON NORMAL VALUE:  CRITICAL ISSUES ON NORMAL VALUE Normal Value can be disregarded if: In an Non-Market Economy Country such as China Sales are below the Cost of Production (Fixed and Variable) Domestic Sales are below 5% of Total Sales Domestic Sales to a Related Party If No Cooperation from Exporter, Normal Value can be fixed under Best Information Available Rule PRICE IN THE COUNTRY OF ORIGIN:  PRICE IN THE COUNTRY OF ORIGIN Normal Value can be determined with reference to the country of origin when goods are exported from countries other than country of origin AND Goods are merely transshipped through the country of export; OR goods not produced in the country of export; OR comparable price not available in the country of export NORMAL VALUE IN NON- MARKET ECONOMY:  NORMAL VALUE IN NON- MARKET ECONOMY Ministry of Finance vide Customs Notification dated 31.5.2001 had notified certain countries including China, Russia, Ukraine etc. as Non-market Economy. This has been modified vide Notification dated 4.1.2002. There shall be a presumption that any country that has been determined to be, or has been treated as, a non-market economy country for purposes of an anti-dumping investigation by the designated authority or by the competent authority of any WTO member country during the three year period preceding the investigation is a non-market economy country. (modification to this condition is under consideration in the Department of Commerce). However, this presumption may be rebutted by the member / exporter concerned on the basis of the following criteria: contd... NON MARKET ECONOMY Test Under Para 8:  NON MARKET ECONOMY Test Under Para 8 I. The decisions of concerned firms in such country regarding prices, costs and inputs, including raw materials, cost of technology and labour, output, sales and investment, are made in response to market signals reflecting supply and demand and without significant State interference in this regard, and whether costs of major inputs substantially reflect market values; II. The production costs and financial situation of such firms are subject to significant distortions carried over from the former non-market economy system, in particular in relation to depreciation of assets, other write-offs, barter trade and payment via compensation of debts; III.Such firms are subject to bankruptcy and property laws which guarantee legal certainty and stability for the operation of the firms, and IV.The exchange rate conversions are carried out at the market rate. NON MARKET ECONOMY (Amendment Not.101/2003 Customs dated 10th November 2003):  NON MARKET ECONOMY (Amendment Not.101/2003 Customs dated 10th November 2003) Sub para (4) added after (3) in paragraph 8: “(4) Notwithstanding anything contained in sub-paragraph (2), the designated authority may treat such country as market economy country which, on the basis of the latest detailed evaluation of relevant criteria, which includes the criteria specified in sub paragraph (3),has been, by publication of such evaluation in a public document, treated or determined to be treated as a market economy country for the purposes of anti-dumping investigations, by a country which is a Member of the World Trade Organisation.” EXPORT PRICE:  EXPORT PRICE Export price is the price of the article exported from the country/territory - usually the c.i.f. price However, the export price needs to be at an Arm’s Length Transaction In case it is not reliable, export price is worked out on the basis of Resale price to an independent buyer or On a reasonable basis DE MINIMIS DUMPING:  DE MINIMIS DUMPING MARGIN OF DUMPING LESS THAN 2% OF EXPORT PRICE EXPORTER SPECIFIC VOLUME OF DUMPED IMPORTS LESS THAN 3% OF THE TOTAL IMPORTS CUMULATION - NOT MORE THAN 7% COUNTRY SPECIFIC INJURY:  INJURY ACTUAL - MATERIAL INJURY THREAT OF INJURY MATERIAL RETARDATION TO THE SETTING UP OF AN INDUSTRY INJURY - EVALUATION OF ECONOMIC INDICATORS:  INJURY - EVALUATION OF ECONOMIC INDICATORS The Authority examines and evaluates various injury parameters as laid down under the Anti-dumping provisions. -- SALES -- INVENTORIES -- PROFITS -- ACTUAL AND POTENTIAL NEGATIVE -- OUTPUT EFFECTS ON CASH FLOW -- MARKET SHARE -- EMPLOYMENT -- PRODUCTIVITY -- WAGES -- RETURN ON INVESTMENT (ROI) -- GROWTH -- UTILISATION OF CAPACITY -- ABILITY TO RAISE CAPITAL -- FACTORS AFFECTING DOMESTIC PRICES INVESTMENT -- MAGNITUDE OF THE MARGIN OF DUMPING CAUSAL LINK:  CAUSAL LINK Article 3.5 of the Agreement 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 imports 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. Causal relationship to be demonstrated The Agreement leaves a great deal of discretion to the investigating authorities as to how a causal link is to be established. Other factors which cause injury to be considered Volume and price of other imports Demand contraction Productivity Technology, exports etc. If such other factors are also found to be causing injury, this injury is not to be attributed to the dumped imports INJURY MARGIN:  INJURY MARGIN Difference between the Fair Selling Price or Non Injurious Price (Cost to make and sell + % of Return on Capital Employed) and the landed value Landed Value is c.i.f. price plus basic customs duties (excluding SAD & CVD etc. applicable, if any) LESSER DUTY PRINCIPLE:  LESSER DUTY PRINCIPLE India follows the lesser duty (dumping margin or injury margin whichever is less) Illustration The Dumping margin is 100, The Injury margin is 50 Duty will be imposed to the extent of the injury margin PERIOD OF INVESTIGATION:  PERIOD OF INVESTIGATION All the critical parameters viz. dumping, consequent injury, standing of the domestic industry etc. is analyzed with reference to a definite period, called the ‘period of investigation (POI)’. Normally, the POI is of 12 months; but in any case it cannot be less than 6 months and more than 18 months. The most desirable POI is a financial year subject to availability of the data. PRICE UNDERTAKING:  PRICE UNDERTAKING An exporter may choose to give a price undertaking that he shall cease to export the goods at dumped prices that causes injury to the domestic industry. No price undertaking is to be accepted unless preliminary determination of dumping and injury has been made. The Designated Authority has a discretion to accept the price undertaking - considering its practicability etc. In case of violation of the price undertaking, the anti-dumping duty is reimposed. INVESTIGATION PROCEDURE:  INVESTIGATION PROCEDURE • Filing of petition - (a) by the domestic industry (b) suo moto initiation • Scrutiny of petition – prima-facie evidence • Initiation - Gazette Notification • Informing all interested parties - Inquiry • Allowing 40 days to respond • Assimilating information received • Conducting domestic verification Provisional duties shall not be imposed earlier than 60 days from the date of initiation Imposition of provisional duty by Department of Revenue which normally takes about a month from the date of issue of preliminary findings by DGAD contd... INVESTIGATION PROCEDURE :  INVESTIGATION PROCEDURE Notification by Department of Revenue imposing provisional duties (to be in force for 6 months) Interested parties to offer comments on preliminary findings (Parallel action) Hold public hearing Verification of Exporting companies by visiting exporter’s Office / Plant Disclosure - inviting responses from interested parties Final findings by DGAD Notification by Department of Revenue imposing definitive duties (to be normally in force for 5 years from the date of imposition of provisional duties) CONFIDENTIALITY :  CONFIDENTIALITY Article 6.5 of the Agreement lays down the norms of keeping the information filed by interested parties as confidential (Rule 7 of the Anti-Dumping Rules) This issue is well settled by the judgment of the Hon’ble CESTAT in Birla Ericsson Opticals held that confidentiality applies only to specific factual, commercial data of a party. Since normal value is an average price/cost for the period of investigation, it does not relate to any particular transaction. Therefore, normal value cannot be treated as confidential. Similarly the basis and method applied in arriving at the normal value and various components thereof are not treatable as confidential. In an appeal at the Hon’ble Supreme Court before the appeal is still pending in the Hon’ble Court, the Hon’ble Bench refused to stay the operation of CESTAT Order and thus the CESTAT Order holds as the prevalent law in India. Slide31:  APPEAL (Section 9 C) Customs, Excise & Service Tax Appellate Tribunal (CESTAT) - formerly CEGAT Supreme Court WRIT JURISDICTION High Court DISPUTE SETTLEMENT BODY-WTO - Panel - Appellate Body ADMINISTRATIVE REVIEW:  ADMINISTRATIVE REVIEW Mid Term Review Sunset Review New Shipper Review Anti-Dumping Actions Against SAARC Countries:  Anti-Dumping Actions Against SAARC Countries US ANTI-DUMPING DUTY ORDERS CURRENTLY IN EFFECT (As of 31 December 2004) EU ANTI-DUMPING DUTY ORDERS CURRENTLY IN EFFECT (As of 31 December 2004) INDIA- Scorecard (Since 1992-93 till 31.3.04):  INDIA- Scorecard (Since 1992-93 till 31.3.04) Cases where final findings have been issued 142 Cases where preliminary findings have been issued 06 Cases under investigation for preliminary findings 10 Cases initiated but closed 9 Total number of Anti-dumping Cases initiated by India 167 Slide35:  YEAR-WISE BREAK-UP OF CASES INITIATION OF CASES :  INITIATION OF CASES Note: The number of cases appear more as the DGAD counts cases by the number of products investigated and not by the number of countries involved which may be more than one in a particular case. 140 Others (aggregating 40 countries) 14 Russia 19 Singapore 20 USA 20 Japan 27 Korea 30 EU 27 Taiwan 70 China No. of cases initiated Name of the Country COUNTRY-WISE DATA CATEGORY-WISE BREAK-UP OF CASES :  CATEGORY-WISE BREAK-UP OF CASES BROAD CATEGORY OF PRODUCTS:  BROAD CATEGORY OF PRODUCTS Chemicals & Petrochemicals BROAD CATEGORY OF PRODUCTS (Contd.):  BROAD CATEGORY OF PRODUCTS (Contd.) Pharmaceuticals BROAD CATEGORY OF PRODUCTS (Contd.):  BROAD CATEGORY OF PRODUCTS (Contd.) BROAD CATEGORY OF PRODUCTS :  BROAD CATEGORY OF PRODUCTS Appeals at the CESTAT :  Appeals at the CESTAT CESTAT (Customs, Excise and Service Tax Appellate Tribunal) Appeals filed in the CESTAT -63 Appeals decided by CESTAT -46 DGAD’s Findings upheld -31 DGAD’s Findings slightly modified -11 DGAD’s Findings quashed - 4 Appeals pending -17 Appeals at the Supreme Court :  Appeals at the Supreme Court Appeals filed – 18 DGAD’s Findings upheld – 4 Remitted back to CESTAT – 1 Pending cases – 8 ANTI-DUMPING CASES AGAINST INDIA (These cases are co-ordinated by DGFT/EPCs/concerned Administrative Ministries):  ANTI-DUMPING CASES AGAINST INDIA (These cases are co-ordinated by DGFT/EPCs/concerned Administrative Ministries) ANTI-DUMPING CASES AGAINST INDIA:  ANTI-DUMPING CASES AGAINST INDIA ANTI-DUMPING CASES AGAINST INDIA:  ANTI-DUMPING CASES AGAINST INDIA ANTI-DUMPING CASES AGAINST INDIA:  ANTI-DUMPING CASES AGAINST INDIA ANTI-DUMPING CASES AGAINST INDIA:  ANTI-DUMPING CASES AGAINST INDIA ANTI-DUMPING CASES AGAINST INDIA:  ANTI-DUMPING CASES AGAINST INDIA COUNTRY-WISE ANTI-DUMPING CASES AGAINST INDIA:  COUNTRY-WISE ANTI-DUMPING CASES AGAINST INDIA CATEGORY-WISE BREAK-UP OF ANTI-DUMPING CASES AGAINST INDIA :  CATEGORY-WISE BREAK-UP OF ANTI-DUMPING CASES AGAINST INDIA Slide53:  Thank you

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