15 三月 2017

AD investigations – Rate of duty for non-cooperating exporters

The recent Panel Report in Canada – Welded Pipe has reinforced the disciplines for applying “facts available” standard under the WTO Anti-dumping Agreement (AD Agreement) and has clarified the extent of analysis expected from investigating authorities while applying the standard. Article 6.8 read with paragraph 7 of Annex II of the AD Agreement provides the legal basis for determining anti-dumping duty rate for non-cooperative exporter. The third sentence of paragraph 7 of Annex II arguably supports the practice of assigning higher anti-dumping duty rate to such exporters. It states that if an interested party does not cooperate and thus relevant information is being withheld from the authorities, this situation could lead to a result which is less favourable to the party than if the party did cooperate”.

In the underlying investigation against Welded Pipe, Canada established dumping margin and anti-dumping duty rate of 54.2% for “all other exporters” [i.e. exporters which were considered as non-cooperating] on the basis of facts available [see end note 1]. Specifically, Canada adopted the highest transaction-specific dumping margin from a cooperating exporter as appropriate for establishing dumping margins and duty rates for such non-cooperating exporters. 

The Canadian investigating authority – CBSA, adopted this methodology pursuant to sub-section 29(1) of SIMA based on which normal values will be established by a ministerial specification in case of non-cooperating exporters. The ministerial specification in the relevant part provides as follows:

Normal values of the goods will be based on the export price determined under section 24 or 25 of SIMA plus an amount equal to the highest margin of dumping (expressed as a percentage of the export price), found for the final determination from exporters who were required to provide information and who fully complied with the Agency’s request for information.” [see end note 2]

Taiwan challenged this decision of CBSA before the WTO DSB and argued that Article 6.8, and Annex II, paragraph 7, required the CBSA to undertake a comparative evaluation and assessment of all the available evidence when selecting facts available. The Panel agreed with Taiwan and observed that the Statement of reasons contains no comparative evaluation of the facts available, nor any explanation of why the CBSA relied on the highest amount by which the normal value exceeded the export price on an individual transaction for a cooperative exporter [see end note 3]. The Panel concluded that the CBSA failed to provide any indication as to how it determined the highest transaction specific dumping margin from a cooperating exporter as appropriate and even the best fitting information. The Panel observed that the CBSA went beyond what was appropriate when it singled out the highest transaction-specific amount of dumping from a cooperative exporter without any comparative evaluation and assessment, and without any form of explanation. Therefore, the Panel concluded that the CBSA acted in a manner inconsistent with Article 6.8 of the Anti-dumping Agreement, and its Annex II, paragraph 7, when establishing the dumping margin and duty rate for “all other exporters”.

The Panel has primarily expressed its concern on (i) assigning the highest rate from a cooperative exporter to non-cooperative exporters without any comparative evaluation or assessment and (ii) not providing any form of explanation in the determination.

It may be observed that the practice of determining “all others duty” rate by the Designated Authority in India is no different and thus may not be consistent with the obligations under Article 6.8 of the Anti-dumping Agreement. For example, in a recent case in Normal Butanol originating in or exported from, among others, European Union, the Designated Authority while determining dumping margin of non-cooperative exporters stated that:

the highest domestic selling price of cooperative exporters without any adjustment is taken into consideration for the computation of NV. For the determination of ex- factory export price, the lowest export price of cooperative exporters with adjustments as noted in case of cooperative exporters is taken into consideration.” [see end note 4]

In other words, like CBSA, the final findings of the Designated Authority calculated highest dumping margin for non-cooperative exporter based on the price information from cooperating exporter [see end note 5]. Also, it offered no explanation as to how it determined that the highest domestic selling price as the normal value and the lowest selling price to India as the export price from a cooperating exporter was appropriate and even the best fitting information.

In the United States, the methodology of assigning duty rate to non-cooperating exporter slightly varies. There is some element of comparative evaluation of data while determining rates for such non-cooperative exporters. Recently in Certain Polyethylene Terephthalate (PET) Resin from India, the USDOC adopted the rate assigned in the petition as the applicable rate (AFA rate) for Dhunseri who was considered as non-cooperative. The petitioners argued that as an alternative to the petition rate, the USDOC should base Dhunseri’s margin based on constructed normal value calculated upon petitioner’s own consumption quantities valued variously at Dhunseri, Indian, or U.S. values for each input and partly from Dhunseri’s audited 2015 financial statement, and based on calculation [of export price] drawn from US sales document that Dhunseri submitted [as part of its partial response to questionnaire]. The USDOC, in response, disagreed with the submission of the petitioner and explained that it is its practice of assignment of the highest rate from the petition as the AFA rate for non-cooperating respondents in the investigation and that it may choose to use the highest transaction-specific margin calculated for any cooperative respondent as the AFA rate (as petitioners suggest) if a petition margin cannot be corroborated with the information on record which was not the case in that investigation [see end note 6].  However, it is difficult to assume that the explanation provided by the USDOC would be considered as adequate or that the practice would be considered as consistent with the obligations under Article 6.8 of the Anti-dumping Agreement if it were to be challenged before the WTO DSB.

Nevertheless, it seems that the current practice of the Designated Authority is susceptible to challenge. At the very least, the Panel Report in Canada – Welded Pipe makes it clear that explanation stating the reason for preference for one set of information over the other is necessary even if assigning the highest possible rate in all cases is not inconsistent per se with the obligations under Article 6.8 of the Anti-dumping Agreement.

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

End notes:

  1. Statement of Reasons concerning Final Determination, November 26, 2012, para. 110.
  2. CBSA, SIMA Handbook, sections 5.12-5.14.
  3. Panel Report, Canada-Welded Pipe, para. 7.135.
  4. Anti-dumping investigation concerning imports of Normal Butanol or “N-Butyl Alcohol” originating in or exported from European Union (EU), Malaysia, Singapore, South Africa and United States of America (USA), 19th February, 2016.
  5. In fact, the practice of Designated Authority is perhaps more onerous for non-cooperating exporter as it selects highest normal value of a transaction and the lowest export price in other transaction instead of limiting itself to one individual transaction that reflects the highest dumping margin.
  6. Issues and Decision Memorandum for the Final Determination of the Less-Than-Fair-Value Investigation of Certain Polyethylene Terephthalate (PET) Resin from India, 4 March 2016, Comment 14. 


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