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De-minimis dumping margin – Consequences

By Atul Gupta    

Article 5.8 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, commonly known as Anti-Dumping Agreement (ADA), provides for the immediate termination of investigation in an anti-dumping duty case if the margin of dumping is determined as de minimis by the authorities. Article 5.8 further defines the meaning of de minimis dumping margin as a margin of dumping less than 2%, expressed as a percentage of the export price. These provisions are also enshrined in Rule 14(c) of the Indian Anti-dumping Duty Rules, i.e. in the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995.      

The dispute in respect of de minimis dumping margin came before the WTO’s DSB in Mexico - Definitive Anti-Dumping measure on Beef and Rice (DS295). The Unites States challenged Mexico’s anti-dumping measure “as applied” as Mexican Authorities had included those exporters whose dumping margin was de minimis, though imposed zero duty in respect of these exporters. The US also challenged the Mexican law “as such” which provided inclusion of such exporters in the review investigations. The DSB’s Appellate Body in this case concluded that (i) de minimis dumping margin referred to in Article 5.8 is in respect of each exporter and not for country as a whole; (ii) investigation in respect of those exporters for whom dumping margin has been established as de minimis shall be terminated immediately; and (iii) when such exporter has been excluded from the original anti-dumping measure, then they cannot be again investigated in any review [including changed circumstances, sun-set review, mid-term review]. It was concluded that even fixing of zero anti-dumping duty in respect of such exporters is inconsistent with the ADA. According to  the Appellate Body, one way to terminate the investigation is to exclude such exporters from the Order establishing anti-dumping duty.          

A consequential  problem that arises subsequently is that when such exporter begins to dump goods after original anti-dumping duty investigation is over, the domestic industry cannot file an application for initiation of changed circumstances/mid-term review investigation against such exporters.        

To overcome such problems, the EU initiated (see end note 1) a fresh anti-dumping duty investigation limited to such exporter and finally imposed anti-dumping duty on such exporter on conclusion of investigation finding dumping by such exporter (see end note 2). The EU had first excluded such exporter from the order establishing earlier anti-dumping duty (see end note 3). This determination of EU was challenged in the domestic courts on the ground that a fresh investigation cannot be initiated against such exporter. The Court of First instance as well as Court of Justice (see end note 4), however, upheld the action of imposition of anti-dumping duty by the European Council.        

The US also excludes such exporters from the original investigations (see end note 5) and then does not include them in review investigations. However, in case such an exporter claims the change of name, it conducts an investigation to determine that there is no other change in the constitution of such entity.          

Earlier, India used to exclude the exporters with less than de minimis dumping margins from the levy of anti-dumping duty (see end note 6). Presently India applies ‘nil’ rate of anti-dumping duty on such exporters by indicating their name in the duty table with ‘nil’ rate of duty (see end note 7). The investigation is not terminated against them. Such exporters would be covered in the subsequent reviews (see end note 8). It is apparent that such practice of India is inconsistent with the ADA as interpreted by the DSB. The Indian AD rules are also silent about it. Other than Rule 14 of the said rules, there is no provision specifying how the termination of the investigation has to be given effect to. An amendment to the rules would certainly go a long way in resolving such issues.          

A question also arises as to the treatment of imports from such exporters in the injury analysis.  The panel in DS 294 has held: “Several panels have expressed the view that the term "dumped imports" in Article 3 refers to all imports attributable to producers or exporters for which a margin of dumping greater than de minimis has been calculated and excludes imports from producers and exporters found in the course of the investigation not to have dumped. …..We consider that an interpretation of 'dumped imports' in Article 3 which would allow an investigating authority to include in the volume of dumped imports for purposes of injury analysis imports attributable to a producer/exporter for which a de minimis margin has been calculated is impermissible”.  Therefore, volume of imports from exporters found to have not dumped or having a dumping a dumping margin less than de minimis levels shall not be included for the purposes of injury analysis. However, India includes the volume of such imports also in injury analysis. DGAD shall think of aligning its current practices with that of the global practices in line with the interpretations given by WTO DSB.

End notes:
1.      Notice of initiation of an anti-dumping proceeding concerning imports of ironing boards originating in the People’s Republic of China, limited to one Chinese exporting producer, Hardware (Guangzhou) Co. Ltd, and of initiation of a review of the anti-dumping measures on imports of ironing boards originating in the People’s Republic of China (2009/C 237/05).
2.      Council Implementing Regulation (EU) No. 1243/2010 of 20 December 2010.
3.      Council Implementing Regulation (EU) No. 1241/2010 of 20 December 2010.
4.      Judgment dated 18 September 2012 of the General Court — Hardware (Guangzhou) v. Council (Case T-156/11).
5.      19 CFR § 351.204 (e)
6.      Sodium Cyanide exported from, the United States of America, CzechRepublic, the European Union and Korea RP - Final Finding No.  8/1/99-DGAD dated 6-3-2000.
7.      Poly Vinyl Chloride (PVC) suspension grade from Taiwan, China PR, Indonesia, Japan, Korea RP, Malaysia, Thailand and USA – Final Finding No. 14/8/2006 dated 26-12-2007; Poly Vinyl Chloride Paste Resin (PVC Paste Resin) from Taiwan, China PR, Indonesia, Japan, Korea RP, Malaysia, Thailand and Russia – Final Finding No. 14/36/2009 dated 2-5-2011; and Plain Medium Density Fibre Board from China, Malaysia, New Zealand, Thailand and Sri Lanka - Final Finding No. 14/12/2007 dated 26-8-2009.
8.      Sodium Cyanide exported from, the United States of America, Czech Republic, the European Union and Korea RP - Final Finding (Sun-Set Review) No. 15/9/2003-DGAD dated 27-9-2005.      

[The author is a Principal Associate, International Trade Practice, Lakshmikumaran & Sridharan, New Delhi]
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