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Rule 22 and jurisprudence: Duty margins for new shippers in case of sampling in original investigation


By Greetika Francis

Rule 22 of the Indian Anti-Dumping Rules provides that the Authority shall carry out a new shipper review to determine individual margin of dumping for a new producer or exporter if (i) the producer or exporter has not exported the product to India during the period of original investigation and (ii) the exporter or producer is not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties on the product. Thus, the legal requirements for a new shipper to obtain an individual dumping margin are limited and clear. The Designated Authority in India has consistently carried out new shipper reviews in alignment with Rule 22 of the Indian Anti-Dumping Rules, and in pursuance of its commitment in terms of Article 9.5 of the WTO AD Agreement.

An emergent issue with respect to the conduct of new shipper reviews and the assignment of individual dumping margins arose in the case of “Jute products viz- Jute Yarn/Twine (multiple folded/cabled and single), Hessian fabric, and Jute sacking bags” (“Jute Products”) from Bangladesh and Nepal. In Jute Products, the Original Investigation was conducted using the sampling methodology provided under Rule 17(3) of the Indian Anti-Dumping Rules. Thereafter, the Designated Authority received various applications for the conduct of new shipper reviews. These were initiated over the course of this year, starting in January upto July of 2018, as below:

Name of Applicant Date of Initiation of NSR Date of Conclusion
M/s Janata Jute Mills Limited 01-01-2018 22-11-2018
M/s Natural Jute Mill 18-01-2018 Ongoing; expected to conclude by 22-01-2019
M/s Aman Jute Fibrous Ltd. 23-01-2018 22-11-2018
M/s Roman Jute Mills Ltd. 27-03-2018 Ongoing; expected to conclude by 26-03-2019
M/s Natore Jute Mills 02-07-2018 Ongoing; expected to conclude by 01-07-2019
M/s Aziz Fibres Limited 02-07-2018 Ongoing; expected to conclude by 01-07-2019

As can be seen above, only two new shipper reviews, arising out of an original investigation concluded using the sampling methodology, have been concluded to-date.  Of these, the investigation qua M/s. Aman Jute Fibrous Ltd. was terminated owing to withdrawal of their application and a complete lack of exports during the period of investigation, resulting in an inability on the part of the Designated Authority to determine any individual dumping margin with respect to them.

Thus, at present, there is only one final finding issued by the Designated Authority with respect to a new shipper review in a case where the original investigation was concluded using the sampling methodology, i.e., the final findings with respect to M/s. Janata Jute Mills Ltd.

In the final findings qua M/s. Janata Jute Mills Ltd. dated 22 November, 2018, the Designated Authority established the satisfaction of the two conditions precedent in terms of Rule 22 of the Indian Anti-Dumping Rules. The Applicant, M/s. Janata Jute Mills Ltd., had not exported the products concerned to India during the period of investigation of the original investigation and were unrelated to any of the other producers and exporters that were subject to the anti-dumping duty in force. Yet, the Designated Authority did not determine an individual dumping margin for the Applicant citing that M/s. Janata Jute Mills Ltd. had transacted only once during the entire POI and therefore, the credibility of the export price presented was not sufficiently established. Accordingly, it was considered appropriate to recommend an anti-dumping measure as recommended for the non-sampled category of exporters in the original investigation.

Thus, Indian practice is completely uniform and with no precedent on whether in case of sampling, the Authority would assign an individual dumping margin or whether it would resort to the dumping margin at the rates assigned to the non-sampled, cooperative category of exporters in the original investigation, akin to the law and practice of the EU. This question remains open to interpretation and will find more certainty as the remaining Jute Products new shipper reviews are determined. The Designated Authority’s stance in this regard would also impact the pending new shipper review with respect to “New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having nominal rim dia code above 16” used in buses and lorries/trucks”.

At this juncture, it is essential to take another look at the clear language and intent of Article 9.5 of the WTO AD Agreement from where Rule 22 of the Indian Anti-Dumping Rules flows. Article 9.5 of the WTO AD Agreement provides that:

If a product is subject to anti-dumping duties in an importing Member, the authorities shall promptly carry out a review for the purpose of determining individual margins of dumping for any exporters or producers in the exporting country in question who have not exported the product to the importing Member during the period of investigation, provided that these exporters or producers can show that they are not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties on the product. Such a review shall be initiated and carried out on an accelerated basis, compared to normal duty assessment and review proceedings in the importing Member.

Evidently, Article 9.5 requires that an investigating authority shall carry out a review for determining individual margin of dumping for any exporters or producers in the exporting country in question upon fulfilment of two express conditions: (i) it did not export the subject merchandise to the importing member during the period of investigation, and (ii) it demonstrates that it is not related to a foreign producer or exporter already subject to anti-dumping duties. As such, Article 9.5 is mandatory in nature. The use of the word “shall” indicates that there is no room for any discretion for the investigation authority. Thus, if the conditions under Article 9.5 of the WTO AD Agreement are satisfied, it is mandatory for the authority to not only carry out a review but also determine individual margin of dumping for such exporter.
Moreover, it is relevant to examine the provisions of Article 6.10 of the WTO AD Agreement, which lay down the provisions for sampling, in exceptional cases. It states:

“The authorities shall, as a rule, determine an individual margin of dumping for each known exporter or producer concerned of the product under investigation.  In cases where the number of exporters, producers, importers or types of products involved is so large as to make such a determination impracticable, the authorities may limit their examination either to a reasonable number of interested parties or products by using samples which are statistically valid on the basis of information available to the authorities at the time of the selection, or to the largest percentage of the volume of the exports from the country in question which can reasonably be investigated.”

The primary “rule” under Article 6.10 of the WTO AD Agreement is that an Authority shall determine an individual margin of dumping for each known exporter or producer concerned of the product under investigation. Thereafter, by way of exception, it provides that “in cases where the number of exporters, producers, importers or types of products involved is so large as to make such a determination impracticable, the authorities may limit their examination either to a reasonable number of interested parties or products by using samples...”. By itself, Article 6.10 of the WTO AD Agreement is completely silent regarding its applicability to cases of new shipper review.  However, as a matter of simple deduction, it appears that the condition precedent for resorting to sampling (i.e., a case where the number of exporters, producers, importers or types of products involved is so large as to make the determination of individual dumping margins impracticable) would not be made out in the case of a new shipper review, where only one applicant is present before the Authority.

Interestingly, even Rule 17 of the Indian AD Rules which lays down the sampling provisions, provides in its second proviso, that the Designated Authority shall determine individual margin of dumping for even non-sampled producers who submit necessary information. Thus, when the Designated Authority is obliged to consider request for individual margin of dumping for producer or exporter in the original investigation in which methodology for sampling is adopted, there can be no rationale for denying such right to a new exporter in a new shipper review. 

Thus, the Designated Authority is at a critical point in determining the future course of Indian AD investigations. With increasing participation in anti-dumping investigations, and the resultant increased reliance on the use of sampling methodologies in the past three years, the Designated Authority may find itself facing such situations more frequently. Clarity and guidance regarding the handling of such situations would emerge with the conclusion of the remaining new shipper reviews or through the issuance of a guidance note or trade notice regarding the question.

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

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