Evaluation of EC Trade Defence Instruments

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					Evaluation of EC Trade Defence Instruments


                      Prepared by:

            Mayer, Brown, Rowe & Maw LLP




          Project Manager and Principal Author
             Cliff Stevenson (Brussels/London)




                    FINAL REPORT

                     December 2005
                                                    CONTENTS



SECTION 1                     INTRODUCTION

SECTION 2                     EVALUATION OF IDENTIFIED ISSUES AND POSSIBLE AREAS
                              OF IMPROVEMENT



ANNEX 1                       BASIC DESCRIPTION OF EC TRADE DEFENCE INSTRUMENTS

ANNEX 2                       SURVEY OF INTERESTED PARTIES ON EC TDI

ANNEX 3                       LIST OF SURVEY RESPONDENTS

ANNEX 4                       DISCUSSION ISSUES LISTS FOR EC SURVEY

ANNEX 5                       BASIC DESCRIPTION OF US TRADE DEFENCE INSTRUMENTS

ANNEX 6                       TECHNICAL ANALYSIS OF DIFFERENCES BETWEEN EC AND US TDI

ANNEX 7                       STATISTICS ON USE OF TDI BY EC & US

ANNEX 8                       TERMS OF REFERENCE

ANNEX 9                       RESEARCH METHODOLOGY

ANNEX 10                      ACRONYMS USED IN THE REPORT




Evaluation of EC TDI; Contents (Final Report December 2005)
                                                                               Section 1, Page 1

SECTION 1 - INTRODUCTION

1.        RANGE OF VIEWS ON TRADE DEFENCE INSTRUMENTS (TDI)

TDI is an EC policy area that provokes strong passions and where people have strong views.

A wide range of views exist on anti-dumping. At one end of the spectrum, some people see
TDI as a critical defence against unfair trade practices and distortions to trade. Alternatively,
others think that TDI can only be justified on rare occasions and, to this extent, propose that
TDI should be abolished. In this way, it is perhaps unique of all EC policy areas.

Given this, an evaluation study is timely. There are many entrenched positions and much
perceived wisdom. Therefore, an objective evaluation of this policy area may be helpful in
highlighting policy issues and identifying possible improvements.

2.        TERMS OF REFERENCE & SCOPE OF EVALUATION

An extract from the terms of reference setting out the scope of the work is reproduced in
annex 4.

The ultimate aim of the project is "to identify possible areas for the improvement of the EC's
trade defence laws and practice, with a view to increase their efficiency (e.g. in terms of
transparency, enforceability of measures and streamlining of procedures)".

Thus, the study is very clear in its objectives. It is not an evaluation of whether the EC
should have TDI or a re-assessment of fundamental concepts. The starting point, therefore, is
to basically accept EC TDI law as it is. This is not a fundamental evaluation of whether the
EC laws are good or bad.

Rather, the project concerns the implementation of TDI, with the focus on the efficiency and
operation of the instruments. This is an evaluation of practices and procedures in light of
improving the efficiency of the instrument.

While a study which evaluated whether the EC should keep TDI in its current form or not
would be interesting, the wide range of views on TDI would ensure that the project would
become weighed down by controversy.

The fact that the evaluation is limited to points relating to the efficiency of the instruments
means that the project can proceed free of such controversy. Whilst views on the efficiency
of the instrument will, of course, be coloured by the perspective of the individual
contributing, everyone has an interest in TDI operating efficiently. Indeed, in the work done
so far, in which many people have been interviewed, all with different views towards TDI,
the focus has consistently remained on the key objectives of this evaluation and therefore
every single contribution has been constructive.

3.        METHODOLOGY

Annex 9 contains information on the methodology used for the evaluation.

In short, there are two principle lines of research. First, a survey of EC interested parties and,
second, a technical comparison of EC and US TDI.



Evaluation of EC TDI; Section 1 – Introduction (Final Report December 2005)
                                                                              Section 1, Page 2

Issues to be covered in the evaluation were identified by:

     •    Respondents in the survey

     •    Identified differences from the EC/US comparison

4.        STRUCTURE OF REPORT

The report is intended for a wide audience with differing levels of knowledge and expertise
on the issue of TDI.

The report has been structured in a way that makes it of use to both the expert and the
laymen.

For those with no background on these complex issues, the report provides separate
descriptions of EC and US TDI (annexes 2 and 5 respectively). These descriptions are
aimed at the lay reader to give them sufficient background to be able to read and understand
the main elements of the evaluation.

The evaluation of EC TDI is in section 2.

The back-up information for the evaluation is contained in annex 1 (survey of interested
parties on EC TDI) and annex 6 (technical analysis of the difference between EC and US
TDI).

Statistics on trends in use of EC and US TDI can be found in annex 7.

5.        COMMENT ON EU/EC TERMINOLOGY

We use the terms EC and Community throughout the report, rather than EU or Union.

There is a need to choose one in order to be consistent. Given that TDI are governed by EC
regulations with all references relating to the Community, we decided to use EC and
European Community. This is also consistent with the Commission's approach in the terms
of reference (TOR).




Evaluation of EC TDI; Section 1 – Introduction (Final Report December 2005)
SECTION 2                EVALUATION OF IDENTIFIED ISSUES AND POSSIBLE AREAS OF
                         IMPROVEMENT

1.      INTRODUCTION....................................................................................................................................... 3

2.      PROCEDURE ............................................................................................................................................. 3
     2.1        COMPLAINT THRESHOLD ...................................................................................................................... 3
     2.2        TYPE OF EVIDENCE REQUIRED ON PRICES ............................................................................................. 4
     2.3        WHO CAN BRING A COMPLAINT? .......................................................................................................... 5
     2.4        LENGTH OF COMPLAINT PROCESS ......................................................................................................... 5
     2.5        CHANGING REQUIREMENTS FOR COMPLAINANTS ................................................................................. 5
     2.6        COMPARISON WITH STATE AID COMPLAINTS ........................................................................................ 6
     2.7        BURDEN ON INDUSTRY WISHING TO MAKE A COMPLAINT ..................................................................... 6
     2.8        DIFFICULTIES IN GETTING NECESSARY INFORMATION FOR COMPLAINT ................................................ 7
     2.9        SENSITIVITY OF CONFIDENTIAL INFORMATION ..................................................................................... 8
     2.10       INSUFFICIENT INFORMATION IN THE NON-CONFIDENTIAL COMPLAINT.................................................. 8
     2.11       IDENTIFICATION OF USERS/IMPORTERS AT THE START OF THE INVESTIGATION ..................................... 9
     2.12       INFORMATION ON HOW MANY INDUSTRIES PREPARE COMPLAINTS ....................................................... 9
     2.13       REPRESENTATIVENESS OF COMPLAINT ............................................................................................... 10
     2.14       NON-DISCRIMINATION IN COMPLAINT ................................................................................................ 10
     2.15       TRANSPARENCY OF THE INVESTIGATION PROCESS.............................................................................. 11
        (a)     General comments ............................................................................................................................. 11
        (b)     Access to confidential information under an APO-type system......................................................... 11
        (c)     Members of the advisory committee .................................................................................................. 12
        (d)     Agenda of meetings............................................................................................................................ 12
        (e)     Position of the Advisory Committee .................................................................................................. 13
        (f)     Contact numbers of case handlers for each investigation ................................................................. 13
        (g)     Availability of the non-confidential complaint .................................................................................. 13
     2.16       ACCESS TO NON-CONFIDENTIAL FILES BY INTERESTED PARTIES ......................................................... 14
     2.17       MEMBER STATES ACCESS TO INFORMATION ....................................................................................... 14
     2.18       INFORMATION MADE AVAILABLE ON THE WEBSITE AND THROUGH SEMINARS.................................... 14
     2.19       PROTECTION OF CONFIDENTIAL INFORMATION ................................................................................... 14
     2.20       HEARINGS & SUBMISSIONS................................................................................................................. 14
     2.21       ADDRESSING ALL ARGUMENTS SUBMITTED ........................................................................................ 15
     2.22       QUESTIONNAIRES ............................................................................................................................... 16
     2.23       DEADLINES FOR USERS COMPLETING QUESTIONNAIRES ..................................................................... 16
     2.24       TREATMENT OF NON-COOPERATING EXPORTERS ................................................................................ 17
     2.25       CONSULTATION WITH MEMBER STATES ............................................................................................. 18
     2.26       PROVISIONAL MEASURES.................................................................................................................... 18
     2.27       LEVEL OF MEASURES .......................................................................................................................... 20
     2.28       RETROACTIVITY ................................................................................................................................. 20
     2.29       NON-DISCRIMINATION IN THE APPLICATION OF MEASURES ................................................................ 21
     2.30       DEFINITIVE MEASURES AND OVERALL LENGTH OF INVESTIGATION .................................................... 21
     2.31       INTERIM REVIEWS............................................................................................................................... 22
     2.32       EXPIRY REVIEWS ................................................................................................................................ 23
3.      SUBSTANCE............................................................................................................................................. 23
     3.1        OVERALL VIEWS ON DUMPING CALCULATION .................................................................................... 23
     3.2        DUMPING CALCULATION METHODS .................................................................................................... 24
     3.3        NON-MARKET ECONOMY (NME) METHODOLOGY .............................................................................. 24
     3.4        MARKET ECONOMY TREATMENT ........................................................................................................ 25
     3.5        CALCULATION OF SGA AND PROFIT IN CONSTRUCTED NORMAL VALUE CALCULATIONS.................... 25
     3.6        AUDITING OF COST FOR NORMAL VALUE PURPOSES ........................................................................... 26
     3.7        IDENTIFYING THE CAUSE OF DUMPING ................................................................................................ 26
     3.8        ZEROING ............................................................................................................................................ 26
     3.9        SPECIFICITY AND SUBSIDIES ............................................................................................................... 27
     3.10       USE OF ANTI-SUBSIDY INSTRUMENT AGAINST NMES OR ECONOMIES IN TRANSITION ........................ 27
     3.11       INJURY & CAUSAL LINK...................................................................................................................... 27
     3.12       A GENERAL COMMENT ON COMMUNITY INTEREST ............................................................................. 28

Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                                                                                     Section 2, Page 2

     3.13      INTERPRETATION OF A LACK OF RESPONSE FROM USERS, IMPORTERS AND CONSUMERS ..................... 28
     3.14      COMMUNITY INTEREST IN AN ENLARGED EC ..................................................................................... 29
     3.15      REPRESENTATION OF CONSUMERS IN AD OR AS PROCEEDINGS ......................................................... 29
     3.16      CONCERNS RAISED BY COMPLAINANTS ABOUT COMMUNITY INTEREST.............................................. 30
     3.17      ANALYSIS OF MARKET SITUATION PRIOR TO MEASURES ..................................................................... 30
4.     INSTITUTIONS........................................................................................................................................ 30
     4.1       POLITICAL ELEMENT TO DECISION-MAKING ....................................................................................... 30
     4.2       IMPACT OF CHANGE IN VOTING AND THE EUROCOTON DECISION........................................................ 31
     4.3       MEMBER STATES................................................................................................................................ 32
     4.4       HOW MEMBER STATES MAKE THEIR DECISIONS ................................................................................. 32
     4.5       REPRESENTATIVES ON THE ADVISORY COMMITTEE ........................................................................... 33
     4.6       LOBBYING .......................................................................................................................................... 33
     4.7       INTERNAL ORGANISATION .................................................................................................................. 33
     4.8       CASE HANDLERS................................................................................................................................. 34
     4.9       INSUFFICIENT SPECIALISTS (INDUSTRY, ACCOUNTANTS ETC.) ............................................................ 34
5.     EFFECTIVENESS OF MEASURES ...................................................................................................... 35
     5.1       OVERALL EFFECTIVENESS .................................................................................................................. 35
     5.2       CIRCUMVENTION & ENFORCEMENT.................................................................................................... 35
     5.3       PRICE UNDERTAKINGS ........................................................................................................................ 36
     5.4       RETALIATION AGAINST EC COMPANIES FOR BEING INVOLVED IN TDI ACTIONS ................................. 36
6.     SAFEGUARDS.......................................................................................................................................... 36




Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                             Section 2, Page 3




1.        INTRODUCTION

This section is an evaluation of identified issues and identification of possible areas of
improvement. The issues considered are those identified in the survey (see annex 2) and/or in
the EC/US technical comparison (see annex 6).

Identified issues are catalogued below with the main points summarised and evaluated.

2.        PROCEDURE

2.1       Complaint threshold

With regard to the level of evidence required by the Commission to initiate anti-dumping and
anti-subsidy investigations, the following points were raised in the survey:

•     The threshold for accepting complaints in the EC is high i.e. the Commission expects a
      high level of evidence.
•     Some felt that the threshold is too high, while others feel that it is too low
•     The EC is tougher in assessing complaints than the US

The comparison with the US revealed the following:

•     The threshold for accepting complaints in the US may be lower, particularly with regard
      to injury.
•     However, complainants certainly have to work hard and complaints are much more
      expensive in the US (lawyers fees are typically $500,000 to $1,000,000 to prepare a
      petition).

There are a number of reasons why a high standard is desirable:

•     A high standard guarantees WTO consistency.
•     It sets an example and ensures that only strong cases are pursued because initiation of a
      case itself has an impact on the market.
•     A high complaint standard is an important part of the balance between differing interests
      in the EC.
•     If it is true that the US opens weaker injury cases than the EC (only to close them again
      without measures) this creates unnecessary harassment for exporters and importers.

The views of survey participants on the complaint threshold are, of course, influenced by
their general attitude towards anti-dumping (AD). The Commission has to strike a balance
between the differing interests within the Community (which vary considerably between
protectionist and liberal extremes). On the one hand, the Commission tries to apply a high
threshold to ensure WTO consistency and to set a good example to other countries using TDI.
On the other hand, the Commission has to ensure that this legitimate instrument remains
usable by its intended beneficiaries.

It can be concluded that the Commission is applying more than a prima facie test and is
making industry work harder than in many other TDI regimes. At the same time, the level of


Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                             Section 2, Page 4

analysis of an EC investigation at the pre-initiation stage should not be overstated. Although
complainants have to work hard, there is no detailed transaction by transaction analysis and
no information is verified on-site at the complaint stage. This would duplicate the work of
the subsequent investigation.

Is the threshold applied by the Commission at the right level? The answer to this question is
probably yes. Those on both sides of the spectrum (i.e. for and against anti-dumping)
criticise the level applied, which in itself perhaps suggests that the balance is about right.
Further, the fact that a significant number of cases are terminated by the EC (roughly 40%)
would certainly suggest that the threshold is not too high i.e. some cases where there appears
to be sufficient evidence of a problem turn out to not to meet all of the conditions to impose
provisional or definitive measures.

The fact that around 40% of cases are terminated without measures raises a question as to
whether too many 'weak' cases are opened. However, the inherent differences between the
pre-initiation and investigation stages (different periods analysed, individualised
dumping/subsidy margins in investigations as opposed to single general ones at the complaint
stage, different make-up of the Community industry, Community interest consideration etc)
and the fact that many terminations are driven by Community industry which may decide to
drop the case for various reasons may explain such termination rates.

Benchmarked against the US, it would appear that the EC is applying a higher standard at
least with regard to injury. The Commission has a good track record on initiations.

The fact that the standard is high is also supported by the fact that an initiation has never
successfully been challenged in the European courts nor at the WTO.

The precise threshold level for a complaint to be accepted as providing sufficient evidence
can never be precisely defined. Each case is different and complaints can only be judged on a
case by case basis. However, the evidence suggests that overall the Commission gets the
threshold level about right given all of the constraints and conditions under which TDI
operate.

2.2       Type of evidence required on prices

In the survey, the point was made that the proof required by the Commission on prices for the
purposes of making an anti-dumping complaint is unreasonable. It was suggested, for
example, that salesmen's reports should sometimes be acceptable as evidence.

Given that the evaluation of the threshold for complaints has concluded that it is at about the
right level, changing the type of evidence required for prices would not be desirable.

The Commission should recognise on a case by case basis that it may be difficult in certain
circumstances to get documentary evidence, such as invoices. However, it appears that the
Commission already does this and takes into account specific situations in order to determine
what constitutes sufficient evidence.

Caution should certainly be exercised about salesmen's reports due to the fact that they could
easily be created by dishonest complainants. The fact that verification cannot take place at
the pre-initiation stage makes such reports unreliable as a source of sufficient evidence that
dumping is taking place.


Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                            Section 2, Page 5


2.3       Who can bring a complaint?

The EC/US comparison revealed that trade unions and groups of worker can make
complaints in the US, whereas this is not possible in the EC.
The WTO AD agreement requires authorities to determine—on the basis of an examination
of the degree of support for, or opposition to, the application expressed by domestic
producers of the like product—that the application has been made by or on behalf of the
domestic industry.
Footnote 14 of the WTO anti-dumping agreement states that Members are aware that in the
territory of certain Members, employees of domestic producers of the like product or
representatives of those employees may make or support an application for an investigation.
Note that, even in the US, the implicit support of the management of companies concerned by
the complaint is required. If the management of a firm expresses a position in direct
opposition to the views of the workers in that firm, the production of that firm is treated as
representing neither support for nor opposition to the petition.

We have had no indication from the survey that this is an issue of significance within the EC.
Further, requiring complaints to have the explicit support and cooperation of EC industry is
actually a desirable feature of EC AD and AS rules. Finally, the fact that this is possible in
the US is made possible by footnote 14 of the WTO anti-dumping agreement. However, it
would probably be inconsistent with WTO rules for the EC to introduce such a possibility,
even if it wanted to do so.

2.4       Length of complaint process

The survey revealed that many EC complainants are concerned that a typical complaint can
take around six months from noticing a problem to getting it accepted by the Commission.
Further, in some cases, the process can take 9 months.

The fact that a relatively high complaint threshold is applied by the Commission inevitably
means that it takes time for EC industry to collect the necessary evidence and prepare a
satisfactory complaint. The threshold should not be lowered just because it takes a long time
to prepare a complaint.

However, this is a real problem and is related to the burden on complainants and the time
before provisional duties are adopted (both of which are dealt with below).

2.5       Changing requirements for complainants

In the survey, EC industry complained that what is acceptable in one complaint may not be
considered acceptable in another complaint. They accused the Commission of changing the
requirements for complainants making it inevitable that a complaint is deficient and needs
further work.

Some of those who complained did concede that such changes are often related to WTO
rulings or cases in the European Courts. It should be noted that, although there have only
been two EC anti-dumping measures (Bed Linen and Pipe Fittings) and one anti-subsidy
(AS) measure (DRAMs) subject to review by the WTO, such rulings against other TDI-



Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
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authorities' measures must for practical purposes also be taken into account by the
Commission. Sometimes this may require changes.

It is perfectly reasonable that the Commission updates and modifies the complaint
requirements. The Commission puts considerable effort into briefing EC industry when such
changes occur (which is considered below).

However, this does serve to remind the Commission that it should remain constantly vigilant
in ensuring that the complaint requirements are as consistent as possible between different
cases.

2.6       Comparison with state aid complaints

In the survey, a comparison was made with the state aid complaints process (dealt with by
DG Competition) which can be as short as a few days.

However, state aid is a much clearer cut issue than that faced in AD or AS investigations.
Although there are always grey areas, the state aid rules are relatively black and white about
what constitutes illegal state aid and what does not. Thus, once the basic facts have been
presented, the Commission can fairly easily assess if there appears to be a problem. It is
relatively straightforward for the Commission to initiate proceedings in order to start
collecting more information on the alleged state aid. AD and AS rules are not as
unambiguous.       Given the need to establish that there is sufficient evidence of
dumping/subsidy, injury and causality, the issues will never be as black and white as state aid
complaints. It is inevitable, therefore that the AD and AS complaint process will be
significantly longer than that which follows a complaint about state aid.

Further, complaints in State aid matters are only a "source of information" to the
Commission. No formalities are required to make a State aid complaint (basically anybody
can write a letter to the Commission and complain about an alleged unlawful aid). There are
thus no standing requirements as there are with AD or AS complaints. Moreover, the
Commission does not even need a complaint; it does not make a difference whether the
Commission starts an investigation on the basis of information it found in a newspaper or in a
detailed complaint. Finally, it should be noted that complainants have very limited rights in
the proceeding (no access to the file, no disclosure, etc.) as they are not a party. Proceedings
are strictly between the Commission and the Member State concerned.

2.7       Burden on industry wishing to make a complaint

Many participants in the survey highlighted how burdensome the complaint process is,
particularly for SMEs.

It can be noted that the Commission has made considerable efforts to assist complainants in
full objectivity and to ease the burden without compromising the high threshold. The
following initiatives suggest that the Commission has been extremely proactive in this task:

          •    SME helpdesk facility
          •    Dissemination of information in SME fora, including meetings with main industry
               associations.
          •    Chart of previously countervailed subsidy schemes on website.
          •    Guide for complainants in all languages.


Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                               Section 2, Page 7


          •    Mini-questionnaire to assist industries in putting together initial information.
          •    Offer to visit companies in small industries, to assist them in understanding what
               has to be done and how to collect information.
          •    Wide language coverage in the complaints office.
          •    Availability to discuss technical problems encountered in the process of drafting
               complaints. The same facility is also available to exporters and importers who
               may be wishing to request reviews.


Clearly this issue is particularly a problem for SMEs. However, the Commission is already
making considerable efforts in this regard, with many of the above-mentioned initiatives
particularly targeted at easing the burden on SMEs.

Whilst there seems to be general agreement that the Commission is doing a good job at the
moment, it should remain vigilant in maintaining an innovative approach to easing this
burden, particularly with regard to SMEs.

Whilst those who oppose TDI will be sceptical of the burden on EC industry due to a belief
that the current threshold is too low, it is important to dispel a common misconception. There
is a perception amongst some that the threshold applied by the Commission is too low and
that the Commission works closely with complainants to get complaints through. This is
certainly not the case. Those who oppose current anti-dumping rules will inevitably feel that
the threshold is too low. However, the fact is that the threshold is set at about the right level
given the requirements of law (i.e. sufficient evidence). Whilst the Commission inevitably
tries to assist EC industry as outlined above, it is not the "friend" of EC industry and is often
very tough in its requirements as evidenced by the many comments made in the survey by EC
industry complainants.

The burden is high and EC industries have to work hard to get a complaint accepted. This is
how it should be and the Commission should be commended for its considerable efforts in
trying to reduce this burden without compromising the standards it has set for a high
complaint threshold.

With regard to SMEs, efforts should continue to ease the problems faced. However, it should
be acknowledged that this is not only a problem related to TDI. When it comes to regulatory
matters, SMEs are often disadvantaged in relation to their larger counterparts such as
multinational companies. This is important because the fact that this is not a problem unique
to TDI means that it cannot be completely solved within TDI practices and procedures.
Despite the best efforts of the Commission, seeking protection from dumped or subsidised
imports is often going to be difficult for small companies.

2.8       Difficulties in getting necessary information for complaint

In the survey, many EC industry participants raised the problem of getting hold of
information for AD and AS complaints. The burdensome nature of the process, and the high
standards, have been discussed above.

A particular problem not dealt with in the points discussed above is the difficulty of obtaining
information on subsidy schemes for AS complaints. The question was raised whether the
Commission can do more to assist potential AS complainants?



Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                            Section 2, Page 8



The Commission is already providing information on the schemes that have already been
countervailed by EC AS measures. This information is available on DG Trade’s website and
may be a useful resource if the problem stems from countries that have already been
investigated.

A particular problem was raised in the context of China. In this regard, it can be observed
that the Commission has been pursuing China on its notification of subsidies to the WTO.
This provides a source of information that may guide potential complainants in understanding
where they might need to dig a bit further, if they feel that they are facing problems from
subsidised imports.

The Commission should assess whether there are additional ways in which potential AS
complainants can be assisted in getting information on subsidy schemes. Could the EC
commission surveys of key markets (e.g. China) to catalogue schemes and programmes that
may be subsidies? Further, could EC delegations – considered unsupportive by EC industry
– be provided with more resources to assist with gathering information for AS complaints?
Both of these would involve more resources, which are outside the direct remit of this study.
However, the Commission may reflect on whether such schemes could assist EC industry in
making more use of the AS instrument.

2.9       Sensitivity of confidential information

The survey suggested that some complainants may be put off by the need to submit sensitive
and confidential information to the European Commission.

The Commission goes to a considerable amount of trouble in order to ensure that confidential
information supplied by interested parties is protected.

Further, most of the key injury indicators (e.g. market share, price, profitability) involve
highly sensitive information. Yet it would be impossible for the Commission to conduct the
injury analysis without such confidential information being provided.

Finally, the Commission has received high praise for the way in which it protects confidential
information (see point on protection of confidential information below). To this extent, this
cannot be considered as a significant issue.

It can also be noted that in the US, the APO system allows lawyers and consultants to see all
confidential information submitted during the investigation. It is even possible in certain
circumstances that in-house lawyers from companies involved in anti-dumping proceedings
can be allowed access to the confidential information under the APO system. Whilst the US
survey suggested that companies had a high level of confidence in the integrity of the US
system and the protection of confidential information, it is clear that business submitting
confidential information in the context of an EC TDI investigation has a higher level of
comfort in the EC since fewer people will see and use any confidential information.

2.10      Insufficient information in the non-confidential complaint

Concerns were raised in the survey about insufficient information being provided in the non-
confidential version of the complaint.



Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                                Section 2, Page 9

As a general rule, the Commission is strict in ensuring that the complainant provides a
comprehensive and meaningful summary of confidential information that has been excluded
from the non-confidential version of the complaint.

A problem can arise where there is only a small number of domestic producers making a
complaint. The smaller the number of producers making the complaint, the more difficulties
there may be in summarising certain pieces of confidential information. Thus, where a non-
confidential version of a complaint is absent, it may be for a reason.

Besides, problems can exist with retaliation (see paragraph 5.4 below), which may even
justify the non-identification of complainant companies. Although historically, the incidence
of this kind of problem is relatively low at first sight, this issue is inherently elusive and,
while existing, may not always come to the surface. Complainants may be faced with such a
situation, for example, in cases regarding certain specific exporting countries (e.g. China) or
where the contractual power of distributors is large.

The Commission should devote considerable attention to ensuring that complainants provide
the maximum amount of information that they can in the non-confidential version of the
complaint. Exceptions to this for uniquely difficult circumstances should be kept to a
minimum.

2.11      Identification of users/importers at the start of the investigation

The point was raised in the survey that complaints do not always accurately identify all users
and importers. It was claimed that it is often the case that large users or importers are omitted
from the complaint. The result of this is that they may not get sent questionnaires at the start
of the investigation.

There is no legal requirement for complainants to identify such operators. There is also a
rationale for not doing so, since such identification implies the disclosure of client lists,
which is a very sensitive issue.

Nonetheless, within these constraints, the Commission should encourage complainants to
provide details of all major known users and importers in order to maximise user coverage.

2.12      Information on how many industries prepare complaints

In the survey, a point was made that the EC should be more transparent on how many
complaints are submitted and how many are accepted and rejected.

Whereas the number of accepted or rejected complaints is publicly available, this is only part
of the picture. Two points come to mind in this context.

Firstly, if the Commission’s analysis shows that a complaint does not meet the necessary
requirements, the complainant is notified. EC industries have then the choice of withdrawing
the application or receiving a formal rejection. They overwhelmingly tend to withdraw the
complaints—rather than having them formally rejected. In such cases, the law considers
complaints as not having been lodged.

Secondly, most industries tend to have informal exchanges with the Commission services
before complaints are formally presented. These exchanges typically address specific issues


Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                              Section 2, Page 10

where the industry is uncertain as to which general standards apply for acceptability. If such
exchanges underline deficiencies of an eventual application, potential applicants typically
prefer not to submit the complaint. So even at such a preliminary stage, weak potential
complaints go away rather than being formally rejected.

2.13      Representativeness of complaint

Some survey respondents thought that the minimum 25% production threshold could be
higher.

It can be noted that industries that traditionally have a lot of SMEs (e.g. textiles, clothing and
footwear) are often at a disadvantage in making complaints because there are many small
companies spread throughout the EC. This can make meeting the 25% threshold difficult on
a practical level.

Further, globalized companies, which may be doing business in various markets, may not
want to be seen to participate openly in an AD proceeding which is hitting their competitors
(and perhaps their subsidiary) in a third country.

Finally, not all producers may be able to participate in a complaint because of the cost of
cooperation.

Therefore, the 25% level should not be changed but complaints with relatively low
production levels (e.g. between 25% and 33%) should only be accepted when this kind of
circumstance is adequately explained.

2.14      Non-discrimination in complaint

Concerns were raised in the survey that countries are sometimes 'unnecessarily' included in
complaints on the grounds that there is a need for complaints to be non-discriminatory.

It is also important to note that individual companies, who only want to target certain
competitors in certain countries, do not always have the full picture.

Though there is no explicit requirement to be non-discriminatory at the complaint stage, there
is a general legal principle in EC law not to discriminate. Further, it is arguable that, under
WTO rules, the content of the complaint is informed by the WTO agreements (both the anti-
dumping agreement and the broader WTO agreements) which emphasise non-discrimination.
The Commission therefore tends towards including more sources (where there is sufficient
evidence of dumping and injury) to guard against such allegations.

As a final comment on this issue, non-inclusion of countries that may be contributing to
injury through dumping or subsidies may complicate the analysis of the causal link. If
countries have been cherry picked for particular commercial or political reasons, the
Commission is obliged to examine whether other countries are significant causes of injury in
the analysis of causal link.




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                                                                              Section 2, Page 11


2.15      Transparency of the investigation process

(a)       General comments

In general, the survey found that all interested parties find the level of transparency sufficient
overall.

However, some concerns were raised about an unnecessary degree of confidentiality on
internal matters which have an impact on the ability of parties to defend their interests. These
included:

      •   Members of the Advisory Committee
      •   Agenda of Advisory Committee
      •   The opinion of the Advisory Committee on specific cases
      •   Names and contact details of case handlers on a particular case.


Concerns were also raised about the lack of transparency on the dumping and injury
calculations (which remain confidential except to the specific parties who have provided
confidential information). Note, however, that the people who made this point did not want
their own confidential information to be revealed to other parties.

At the same time, there was praise for the Commission on some aspects of transparency. All
notices/decisions are well written, and are easy to obtain through the website. Further, the
timeline for each case, available in spreadsheet form on the DG Trade website, is seen as an
excellent innovation.

The Commission should be vigilant in improving transparency wherever possible. More
transparency is always desirable, subject to the need to protect confidential information. In
this regard, a number of potential ideas for improving transparency can be considered in the
following subsections.

(b)       Access to confidential information under an APO-type system

An obvious question is whether the EC should introduce an APO system as in the US (i.e.
allow legal representatives and consultants to have access to all information on the files
including confidential information).          This 'ultimate' transparency, while protecting
confidentiality, is at first sight very appealing. Many people complain that certain aspects of
the Commission's work take place in a black box; and it is certainly true that the Commission
has considerable discretion in the economic aspects of AD and AS investigations. Allowing
counsel and other experts to check all aspects of the Commission's work would be good from
the perspective that it would permit every aspect of the analysis to be checked and, if
necessary, challenged. From the point of view of legal process and certainty, this would be
highly desirable.

However, a number of other points should be taken into account when assessing whether an
APO type system should be introduced in the EC:

      •   Full transparency greatly increases the cost of being involved in an AD or AS
          proceeding. In the US, because interested parties themselves cannot be granted APO




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          access, it is almost necessary to engage counsel in order to be able to fully defend
          your rights.

      •   It can be expected that there would be much more litigation against EC TDI decisions.

      •   Some people make the point that setting up an APO system (with the necessary
          sanctions that need to exist to ensure that confidential information remains protected)
          would be difficult in a union of 25 Member States. In this regard, it has been pointed
          out that there is generally a different culture in the EC compared to the US, both in
          terms of the law (less litigious) and administrative culture (more discretion given to
          authorities).

This is certainly a complex issue. However, an APO type system comes with such clear
advantages, in terms of legal process and certainty, that it is certainly worth a debate on the
issue. Nevertheless, it has to be acknowledged that no one in the survey suggested that the
EC should have such a system. If there were greater calls from EC interested parties for full
transparency under an APO type system in the future, this might push the issue up the
agenda, and allow consideration of some of the problems that would be faced in introducing
such a system.

(c)       Members of the advisory committee

Lobbying 1 has become an important part of the process in adopting measures, and sometimes
it will be unavoidable for interested parties to engage in it. However, it can be extremely
difficult, particularly for SMEs.

In this regard it would be desirable for Member States to make relevant website links and/or
contact telephone numbers readily available. A possible proposal is that links to such
websites could be provided on the DG Trade website for TDI offices in each Member State to
facilitate contact.

(d)       Agenda of meetings

Those wishing to engage in lobbying need to know when is the best time to contact Member
States. Member States generally do not like to be contacted too far in advance of the relevant
advisory committee meeting.

One proposal would be to publish the agenda of the advisory committee meetings on the web.
Several comments can be made in this regard:-

      •   Many other meeting agendas are now published (e.g., the “133” Committee agenda).
          The agenda need only list topics; it does not have to give anything away about what
          the Commission is proposing.

      •   Information about the agenda already leaks out, so some already have access to the
          information while others do not. This is likely to be another source of difficulty for
          SMEs. Perhaps it would be better to ensure an even distribution of such information.



1
      For a further comment on lobbying see section 4.6, p. 33.


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(e)       Position of the Advisory Committee

On cases where the vote is close, it is important for interested parties that want to lobby to
know the position of each Member State in order to identify allies/targets etc.

One idea would be to publish the opinion of each Member State after advisory committee
meetings. This is perhaps a controversial proposal as there is a possible problem of
retaliation, particularly for small Member States. However, this is to a certain extent already
a problem, as information on who supported and opposed a measure sometimes leaks out.

An alternative proposal, which might not have the possible retaliation problem, would be to
publish the aggregate balance of opinions without citing individual Member States.

Given that this information may leak out, this is a less radical proposal than it may at first
seem. A company that employs certain law firms will know how Member States voted, but
an SME working alone may find it much more difficult to get the information. Again, such a
proposal would ensure the even distribution of information.

(f)       Contact numbers of case handlers for each investigation

Contact details are provided on the front of the questionnaires. However, not all interested
parties are sent the questionnaire (if the Commission is unaware of their existence, for
example). For companies that wish to request participation, or would like to speak to the case
handlers for other reasons, contact details for each case should be provided on the website.

The Commission could provide a list of case handlers for each case on its website.

(g)       Availability of the non-confidential complaint

Making the non-confidential complaint available after it has been submitted would have
many advantages (all of which are evident in the US where complaints are available to
general public through the reading room).

Making non-confidential complaints available prior to initiation would appear to have certain
advantages:

      •   allows parties to start considering whether they would cooperate and to put
          preparations in place to play a full role in the investigation.

      •   would allow more time for parties to analyse the selection of an analogue country.

Negative aspects of such a proposal are:

      •   There is significant uncertainty about its legality. Both EC law and WTO rules
          require that authorities avoid any publicising of the complaint before a decision has
          been taken to initiate.

      •   Such a system could possibly be abused through the formal submission of weak
          complaints just to disturb the market.

The matter is therefore complex and could probably be best tackled in the current rules
negotiations taking place within the DDA.


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2.16      Access to non-confidential files by interested parties

Survey respondents commented on how amenable the Commission is in organising access to
the non-confidential files and that the files are always well organised.

However, concerns were raised about the content of non-confidential submissions. Such
concerns were raised equally with regard to the non-confidential documentation of
complainants, exporters and users.

The Commission is already under great pressure during AD and AS investigations, given the
amount of work that has to be done within the deadlines. It is understandable that checking
non-confidential versions of documents is not as important as many of their other tasks, such
as verifications or calculations. However, meaningful information in non-confidential form
is critical for all interested parties to be able to defend their interests. Thus, it is important
for the Commission to make every effort to check that non-confidential submissions are as
meaningful as possible.

2.17      Member States access to information

Several Member States raised concerns about the amount of information that they receive.

The Member States are familiar with the facility by which they can consult the confidential
files of the Commission, or discuss the case with the Commission at any time. However,
most Member States had never actually used this facility.

This is really a question of Member States' resources rather than the Commission doing
things differently.

2.18      Information made available on the website and through seminars

The Commission can be praised for its efforts to make information available through the
website and seminars.

2.19      Protection of confidential information

The Commission was universally praised for its care in handling confidential information.

2.20      Hearings & submissions

All survey respondents felt that there is sufficient opportunity to be heard during
investigations, both through formal hearings and submissions and through informal contact
and discussions with the case handlers.

One person raised the possibility of having a hearing officer for hearings, as in the case of
DG Competition hearings. This possibility already exists though it is rarely used. Perhaps
the Commission should consider making it clearer that this facility exists. For interested
parties that feel that they are not getting their case across during the investigation, having a
hearing officer can ensure that their rights are fully protected by having someone present who
can consider the case more objectively due to their independence from the everyday workings
of the investigation.




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At the same time, if all interested parties request a hearing officer, there may be a resource
issue.

This was only raised by one EC industry participant in the survey. In addition, most survey
respondents said that they were satisfied with the extent to which they have opportunities to
present their views and arguments during a case. Thus, it does not appear that there is a
major issue to be addressed here.

However, the lack of awareness of the possibility to have a hearing officer may be the reason
why few people have strong feelings about it. The Commission might, therefore, consider
being explicit about the possibility of requesting a hearing officer either in the notice of
initiation or in the original correspondence with interested parties.



2.21      Addressing all arguments submitted

Another issue raised in the survey was that the Commission does not always answer points
raised in submissions in the provisional and definitive regulations.

In general, the Commission is thorough in addressing points raised by interested parties in the
provisional and definitive regulations.

Sometimes the Commission responds to certain points made by interested parties by
responding individually to those parties, without the point being mentioned in the provisional
or definitive regulations.

Several comments can be made on this issue:

     •    The WTO anti-dumping agreement requires that public notices, inter alia, give
          reasons for the acceptance or rejection of relevant arguments or claims made by the
          exporters and importers. Clearly, the Commission has discretion here in that they can
          decide whether such arguments are relevant or not; the Commission is not required to
          give reasons for the acceptance or rejection of irrelevant arguments.
     •    In addition, it can be noted that many irrelevant arguments do get submitted to the
          Commission. Because there are always two (or more) sides to TDI investigations, the
          Commission's determinations will always be opposed by at least one side. Often,
          submissions made in such situations include every argument that could possibly be
          made to oppose the decision, and some of these may not be relevant. Thus, the
          Commission is right in selecting only relevant arguments, for which reasons for
          acceptance or rejection should be given.
     •    Sometimes there can be issues of confidentiality in mentioning certain points.
     •    Documents would be unreadable if every single argument was summarised. The
          Commission has to be selective and focus on the relevant arguments to keep the
          documentation readable.

Overall, it does not appear that this is a systematic problem. The provisional and definitive
regulations are typically very comprehensive and address the relevant arguments, both those
in support of, and those opposed to, the Commission’s decision.




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However, the Commission does need to ensure that every relevant argument is addressed in
the provisional and definitive regulations. It can be argued that relevant issues should not be
addressed only in private correspondence, or in disclosure documents that are not publicly
available.

2.22      Questionnaires

Most survey respondents commented on the complexity and burdensome nature of
questionnaires (both for complainants and exporters). As with other aspects of the
investigation, this is a particular problem for SMEs.

However, overall, survey respondents found questionnaires to be complex and heavy but, at
the same time, reasonable and logical.

Several EC industry participants with experience of other AD regimes made the point that EC
questionnaires are reasonable compared to others.

The comparison with the US suggested that US questionnaires are at least, and probably
more, burdensome then those in the EC.

The fact that the Commission undertakes an extremely detailed analysis of dumping, injury,
causal link, and Community interest, means that it requires a lot of information. The
questionnaires do not request more information than is absolutely necessary for undertaking
this task.

Given the significance of the issue raised in the survey, the burdensome nature of
questionnaires needs always to be borne in mind by the Commission. However, there has to
be a balance between getting enough information to make reliable and accurate conclusions
and minimising the burden on interested parties.

The Commission also received praise in the survey for its efforts in trying to simplify the
questionnaires used in investigations. Thus, it would seem that the Commission is making
great efforts to minimise the burden on interested parties.

There is no easy answer to this problem. The Commission must get detailed information in
order to undertake the necessary analysis as required by the law. Taking into account the fact
that EC questionnaires are not more burdensome than other TDI authorities, including the
US, it would appear that the Commission has the balance right on this issue.

2.23      Deadlines for users completing questionnaires

A concern was raised by EC industry about the fact that deadlines are not always respected
by users.

However, users are not directly involved in the investigation in the same way as complainants
and exporters. The latter parties have a direct involvement in the case, and they are sent
detailed questionnaires that are absolutely necessary for the determination of dumping and
injury. Complainants and exporters have to complete these questionnaires, as to be
considered "non-cooperating" has a direct impact on the outcome of the dumping and injury
findings.




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For users, the situation is somewhat different. Not all users need to participate in order for
the Commission to incorporate the user interest into the Community interest analysis. Thus,
there is a 'free-rider' problem that does not exist for complainants and exporters, who all
know that their individual cooperation is critical to the outcome of the case.

That said, the Commission does not allow a 'free for all' for users. The Commission can be
praised for its overall approach to deadlines for questionnaires. The Commission strikes the
right balance between strictly applying deadlines in order to get its work completed, and
showing some flexibility towards interested parties in recognition of the burden imposed on a
business. All parties, including complainants and exporters, benefit from flexibility and
extensions in questionnaire deadlines. The fact that users are shown a little more flexibility
seems reasonable given the free-rider problem mentioned above, while still maintaining a
strict approach.

Besides, the Commission attempts to obtain user information that is representative, and it
does not rely on full cooperation from all user industries. This is an implicit recognition that
the incentive to cooperate —and the disincentives attaching to non-cooperation – do not exist
for users to the same level as for other interested parties.

2.24      Treatment of non-cooperating exporters

A point was raised in the survey about the harsh treatment of non-cooperators.

The comparison with the US indicates that exporters that do not cooperate get treated much
worse than in the EC. This is evident from comparing residual duty levels applied in cases
where there is a high level of non-cooperation. Such duty levels in the US are usually set at
much higher levels than those in the EC.

Some may argue that the difference between a high residual duty and a very high residual
duty is insignificant. The level of such duties, when there has been non-cooperation, is often
sufficiently high as to be prohibitive.

However, there is no need for them to be prohibitive. The important point is that non-
cooperation must not in any way be rewarded. Reliable and rigorous analysis during TDI
investigations relies on good cooperation from exporters. Thus, there needs to be strong
incentives that encourage exporters to cooperate in anti-dumping investigations. By ensuring
that co-operators are treated better than non-cooperators, a desirable incentive to cooperate is
created.

The comparison with the US also revealed that being considered as non-cooperating happens
more easily in the US than in the EC. The US is much more rigid in its expectations of
cooperators. Information must be complete with a very high level of accuracy first time.
The Commission is much more flexible with exporters. As long as exporters have made a
significant effort to answer the majority of questions, incomplete submissions are treated with
some flexibility. Even at verification, exporters in EC investigations have the opportunity to
provide additional information and fill in small gaps left in the questionnaire. This is not
possible to the same extent at verifications under the US system.

It is crucial that cooperation is rewarded and that non-cooperators do not receive as good
treatment as cooperators. Thus, it is quite right that non-cooperators face higher duties.
However, the level of EC residual duties is lower than for the US, and the definition of non-


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cooperation is more flexible in the EC than in the US. Thus, it appears that the EC treatment
of non-cooperation is not over-harsh.

2.25      Consultation with Member States

Several Member States raised concerns about the short time in which they have to consider
working documents. The investigation leading up to provisional measures takes 9 months,
yet Member States get only 10 days to consider the Commission's findings. Such concerns
seem to be justified, if Member States are to play a meaningful role in the adoption of AD or
AS measures. Given all that Member States have to do in terms of analysis, consultations,
ministerial approvals etc., it is appreciated that 10 days is a very tight timetable.

Nevertheless, although 15 months seems like a long time for an investigation, it is clear that,
taking into account all procedural requirements, the Commission does not have any spare
time in AD or AS investigations. Thus, there is no time to give Member States more than 10
days in the final stages of the investigation.

If Member States would like to play more of a role in an investigation, they need to take the
initiative to increase their involvement at an earlier stage. If Member States identify that a
case has a particular importance for them (e.g. because of a strong EC producer and/or user
interest), it always has the option to go and speak to the Commission for a briefing on where
the case stands. Moreover, Member States have the ability to consult the confidential files, a
facility that allows them to play more of a role if they feel the need. Member States can get
involved in investigations at any stage. They do not have to wait until they receive the
working document before they start considering a case.

In the end, this may be a resource issue for Member States. The problem is really that
Member States do not have sufficient resources to get more involved in this way. This was
very clear in the survey from the fact that Member State survey respondents have made very
little use of the facility to consult the confidential information on the Commission files. If
they want to play more of a role in influencing the outcome of TDI decisions, they have to
have sufficient numbers of staff in order to get involved in the detail of particular cases of
importance.

2.26      Provisional measures

One of the main points raised by EC industry survey respondents was the difficulties arising
from having to wait 9 months before provisional measures. Added to the typical 6 months to
prepare a complaint, complainants have to wait on average more than a year (and sometimes
even 18 months) before any protection is forthcoming. The fact that a complaint is made is
already indicative of the fact that the industry is suffering. Once the investigation is initiated,
and exporters/importers know about it, there is a great incentive to import as much product as
possible, before provisional duties are adopted. Nine months is a long time in which to
organise such surges of imports prior to any measures coming into effect. Of course, this
exacerbates the injury that was already being suffered by the EC industry.

EC industry looks at the US, where provisional measures are adopted much more quickly
than in the EC. The question is legitimately raised as to why, given the problems highlighted
above, the EC cannot match the US timetable.




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The Commission is already very sympathetic to this point. However, it is difficult to speed
up the investigation without lowering standards. The survey revealed that high standards at
the provisional stage are considered by many to be important (this view was obviously
expressed by those who are usually sceptical of TDI, but interestingly, also by complainants).

It is our opinion that it would be impossible, with current resources, to maintain the current
standard of the provisional analysis if the provisional determination was made within 6
months rather than 9.

Also, there could be problem with the overall timescale for an investigation. Provisional
duties can only be in place for 9 months if exporters agree. There is a lack of incentive for
exporters to agree to additional time, and thus provisional duties would be restricted to 6
months. Thus, the whole investigation would have to be completed within 12 months if
provisional measures had been adopted six months after initiation, which may be difficult
with current resources and procedural requirements.

In US, provisional measures do come into effect much quicker but, inevitably, this means that
they are more provisional than EC provisional measures. This is clear from the fact that there
are a significant proportion of cases in the US where provisional measures are adopted but
where there are no final measures (see the data on this in annex 6, 2.1(s)).

This happens to a much lesser degree in the EC where, once provisional measures have been
adopted, they are very often made definitive. In fact, it is the case that EC provisional
measures are, in effect, draft definitive measures rather than being truly provisional.

Some survey respondents made the point that EC provisional measures could be made more
provisional and could be adopted earlier.

However, several comments can be made on this:

     •    As mentioned elsewhere, the current TDI system is a careful balance between all of
          the various different views and interests that exist within the 25 Member States.
          Weakening the requirements for provisional measures, although perfectly consistent
          with WTO rules, would not be acceptable to some groups of EC interests. Overall,
          tough requirements for provisional measures are necessary to maintain that balance.
     •    The US system is much less flexible than the EC system due to the need to meet the
          very tight timetables. It is not clear that a US timetable would be better in the EC.
          The current timetable allows some flexibility – which is to the advantage of all
          parties, including complainants.
     •    A number of complainants in the survey support the idea of high standards for
          provisional measures. This gives them greater certainty than that enjoyed by US
          complainants. Under the US system the market is unnecessarily disrupted when
          provisional duties are not made definitive.
     •    Complainants also appreciate the flexibility inherent in the current timetable,
          especially in terms of obtaining extensions which many find crucial.
     •    It must also be acknowledged that the US has no public interest test/lesser duty rule
          nor does it have a decision-making procedure involving 25 Member States. These
          features of the EC system inevitably make the process longer.
     •    Reducing the time between initiation and provisional duties would require additional
          resources for DG Trade, Directorate B.



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Given the above points, we would conclude that a shortening of the timetable before
provisional duties are imposed, is normally not desirable. The Commission is certainly open
to finding a solution to this problem although but certain fundamental facts (as outlined
above) cannot easily be avoided.

A special case arises where there are parallel investigations in other major markets, such as
the US. The Commission could consider moving faster in such exceptional cases, where there
is a high risk of trade diversion. One case which may provide such an example is TCCA .
As shown in Appendix 1 of Annex 4, significant duties were adopted on Chinese imports into
the US before the EC had reached its decision, which, it was claimed, raised a significant
trade diversion risk. Such a situation may justify an expedited procedure to reach the
provisional decision.

However, given the importance of maintaining the standard behind provisional measures, an
expedited procedure should not mean lowering the standards. What it would mean is that the
Commission would have to speed up its work, which would probably mean less flexibility for
interested parties and higher resource implications. Nevertheless, given the real problem, this
is certainly worthy of consideration.

2.27      Level of measures

EC survey respondents revealed overall satisfaction with the level of measures in terms of
their ability to protect industry against the injurious impact of dumped or subsidised imports.
At the same time, EC AD and AS duty levels appear to be generally lower than those of the
US (though it is difficult to be certain about this point because we have also found that US
administrative review can result in significant reductions in duties from the original rates).
The lesser duty rule is generally viewed extremely positively. Overall, it appears that the
level of EC AD and AS measures are getting the balance right between providing sufficient
protection for EC industry from dumped and subsidised imports, yet ensuring that duties are
set at the minimum level necessary to remove the problem.

However, concerns were raised about the lack of a lesser duty rule in other major markets
such as the US. The implication of this is that US measures are often set at higher levels than
in the EC and, in some cases, this raises the risk of trade diversion.

The mandatory lesser duty rule in the EC is almost universally perceived as a positive feature.
Thus, it would not be desirable to weaken this innovative provision of EC TDI law.
However, the lack of such features in other countries such as the US explains why the issue is
high on the agenda of the EC in the DDA negotiations.

2.28      Retroactivity

Several survey respondents asked why duties are not collected retroactively more often.
Retroactivity is permitted up to 90 days before the adoption of provisional measures. It could
provide a partial answer to the problem of the length of time that elapses before provisional
duties are imposed, in cases where there are clear surges in imports prior to the measures, or
during parallel investigations in other major markets resulting in trade diversion.

There is a practical problem in that retroactivity cannot be used without firm evidence of a
further surge in imports, and statistics are not available quickly enough.


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If it is a question of having sufficient information to know whether use of registration is
justified at month 6 (i.e. 3 months or 90 days before provisional measures), the Commission
should consider what sources of information, and what standard of evidence, would be
required in order to impose registration after 6 months.

Of course, registration itself has an impact on the market, in that importers have a potential
liability if the duty is to be backdated. If there is a real surge in imports and measures are
justified, this would be the purpose of creating the possibility to collect the duties
retroactively. However, if provisional measures ended up not being adopted, this would have
been an unnecessary disturbance to trade.

It can be noted that the US rarely makes use of its retroactivity provision (though, of course,
provisional duties come quicker in the US than the EC).

Where there are legitimate concerns about surges in imports, or parallel investigations,
perhaps the Commission could consider either trying to speed up the process by applying
more staff to the team – which raises a resource issue – or by requiring registration in certain
circumstances.

2.29      Non-discrimination in the application of measures

There have been a small number of cases where an issue has arisen because, for political
reasons, Member States do not want measures to be adopted against particular countries. The
Commission's policy is that there should be no discrimination in the application of measures,
and this has resulted in multiple country duties against the same product all being removed.
This was a concern raised by some survey respondents.

The Commission's approach is the correct one, as this is required by the WTO AD agreement
(article 9.2) which states that:

          When an anti-dumping duty is imposed in respect of any product, such anti-dumping duty shall be
          collected in the appropriate amounts in each case, on a non-discriminatory basis on imports of
          such product from all sources found to be dumped and causing injury,


The anti-dumping rules are also informed by the general WTO agreements which emphasise
non-discrimination throughout.

2.30      Definitive measures and overall length of investigation

The overall length of the investigation was also raised as a concern for EC industry. This
point is related to the point made above on provisional duties. The further 6 months between
provisional and definitive duties was not really highlighted as a problem in the survey.

One question that was raised was whether there is a reason for setting an overall time limit of
15 months for AD investigations, while AS investigations must be completed within 13
months. The difference comes about from the fact that provisional measures can be adopted
for a maximum of 6 months in anti-dumping investigations, but only for 4 months in anti-
subsidy investigations. However, there does not appear to be any other underlying rationale.




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Two points can be noted:

     •    There are far fewer anti-subsidy investigations, and therefore it is possible to make
          this commitment. It would not be possible to do this for all anti-dumping
          investigations on current resources.

     •    There is no market economy issue in anti-subsidy investigations, which is an
          extremely demanding part of anti-dumping investigations.

One survey respondent suggested that the definitive stage should be abolished and that
definitive duties should be applied at the provisional stage after 9 months.

Such a proposal does have certain advantages. It would considerably reduce the overall
institutional requirements of an anti-dumping investigation and thus free up some resources
(as a result of only one round of translation, consultation etc.)

On the other hand, there are often changes between the provisional and definitive findings.
The fact is that provisional measures are provisional, even if a high standard is applied before
adopting provisional measures.

Overall, it is possible that some relatively straightforward cases could be completed
definitively within 13 months, or even 9 months. However, some cases can get extremely
complicated in the later stages. Cases where there are a lot of users, and a significant
negative impact to the EC from adopting measures, have to be fully considered. In this
situation, the full 15 months is necessary to ensure that the Community interest is fully
assessed and explored. Further, it may not be possible to finish cases where undertakings
might be appropriate within a more restricted deadline.

In conclusion, there do not seem to be strong reasons to change the overall 15 month deadline
of an AD investigation.

In view of points mentioned at the beginning of this section, there is also no necessity to
adjust the overall 13 month deadline for AS investigations. Thus, the two overall
investigation deadlines should be kept at their current levels.

2.31      Interim reviews

The only point made on interim reviews was made in relation to the US. In the US, it is
relatively easy to obtain revised dumping duties on an annual basis through the administrative
review process, and it was observed that the same kind of facility does not exist within the
EC. However, the corresponding mechanisms in the EC are not interim reviews but refunds.
It is however true, that, unlike in the US, refunds do not lead to an adjustment of the duty for
the future. That type of review of the duty can in the EC principally be achieved by an
interim review. However, the EC/US comparison revealed that there are a lot less interim
reviews in the EC than there are administrative reviews in the US.

One reason for this is that for an exporter requesting an interim review, there is a large
element of uncertainty in making such a request. There have been cases where such a request
has resulted in higher duties, and this makes companies very cautious about going down this
route. Another reason could be simply that the exporter knows that dumping has increased
subsequent to the imposition of the duty. It should finally be noted that in the US, duty levels



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can also go up following an administrative review.It is also important to remember that the
EC operates a prospective duty system and it is explicitly not envisaged that the duty levels
will be regularly reviewed. Thus, it is not surprising that there are a lot less interim reviews.
The US system clearly envisages regular revisions to the duty levels through administrative
reviews.

This is not, therefore, a problem in itself as it results from the EC system of collecting duties.
The advantages and disadvantages of the prospective duty system are considered below.

2.32       Expiry reviews

Some EC industry survey respondents raised concerned about the difficulties that they
experience in trying to get AD and AS measures maintained beyond the initial 5 year period,
even when they feel that there are likely to be continuing problems.

The comparison between the EC and US suggests that the EC is applying a higher standard in
expiry reviews.

      •    For the period 2000 to October 2005, the EC has a much higher proportion of cases
           that expire without review (57.7% compared to 0%/15.6% for the US) 2 .

      •    Further, of those reviews initiated 3 , the EC maintains measures at a lower rate than
           the US (55.3% compared to 88.7%).

The evidence clearly suggests that the EC is applying a higher standard than the US for
expiry reviews. Moreover, the US has had problems of WTO consistency with its expiry
review standards..

The EC initiates expiry reviews for almost half of the cases about to expire, and half those
reviews result in the measure being maintained. This is not an insignificant level of expiry
review and of measure confirmation. It may be that in individual cases, EC industries are
frustrated in their attempts to get measures extended. However, overall, and especially when
considered against the US, there does not seem to be any systematic bias in favour of or
against the maintenance of AD measures beyond 5 years.

3.         SUBSTANCE

3.1        Overall views on dumping calculation

The Commission is generally praised for doing a good job on the dumping calculation.




2
    Note that US expiry reviews are automatically initiated and, to this extent, there is a 0% rate of cases that
      expire without review. However, not all such reviews have a DOC or ITC determination. If there is no
      domestic response to the notice of initiation, measures are allowed to expire. The 15.6% figure for the US
      relates to such cases (i.e. those where no determination was made are counted as expiry without review).
      See annex 6 2.1(z) for more detail on this point.
3
    US 'initiations' in this case are those where there was a domestic response to the notice of initiation and
      determinations were made.


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3.2       Dumping calculation methods

The EC/US comparison concluded that the dumping calculation methods of the US and EC
are similar but there are small methodological differences that can be significant.

Some of the differences between the US and EC make US dumping margins higher.
However, other differences (e.g., a different way of applying the 5% test; see annex 6, 2.2(a)
for more details) produce different results but can work in either direction: i.e., they may
make a US margin calculation higher in one case but lower than the EC in another case.

The following comments can be made about dumping margins:

•     In cases with multiple respondents, there is usually a range of dumping margins found.
      With regard to the lowest margins found, apart from zeroing, there are no major
      methodological differences that could explain higher US margins.

•     With regard to the highest margins found, the US is considerably higher. This is
      primarily as a result of the use of 'best information available' and adverse inference.

•     It should be noted that the US margins are not necessarily those used as the basis to
      collect final duties. When companies request an administrative review, dumping margins
      can be much lower – based on actual transactions on a retrospective basis.

•     Of course, it is also possible that exporters dump by a higher margin in the US. This
      could be possible for products where US prices are lower than those in Europe.

It would be desirable that small differences in method are narrowed down in order to create a
consistency of approach for exporters to the EC and US.

3.3       Non-market economy (NME) methodology

However, several concerns were raised in the survey about analogue countries:

      •   the choice of analogue countries in specific EC investigations (e.g. a number of
          survey respondents questioned the appropriateness of the US as an analogue)

      •   the short period in which to comment on the analogue country chosen, and the
          difficulty in finding alternatives due to the need to find cooperating companies.

The US has a different method for non-market economies. At first glance, the US approach
appears to have advantages in that it is actually based on the cost structure of the exporters in
the NME (but the cost values are not used).

However, the margins produced by the US on NMEs are typically higher than those applied
by the EC. Some argue that the factors approach has the effect of using western costs and
NME inefficiencies. In using the EC method, although costs and prices may be higher in the
analogue country, the productive process may be more efficient.

Thus, there do not seem to be any strong reasons to consider changing the EC approach. A
further point to bear in mind is that the NME method may not be so significant in the medium
term. It can only be used against China, for example, until 2016 at the latest.


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However, where the analogue country chosen is very different from the country subject to
investigation, the Commission should be vigilant in ensuring that all differences are
accounted for, particularly in the context of using the US as the analogue country.

3.4       Market economy treatment

There were some concerns about particular cases where companies had been granted market
economy treatment (MET), where EC industry did not believe such treatment was justified.

However, on the whole, the MET system seems to function well. A significant number of
companies have been granted MET, which establishes that the provision is a meaningful one.
While exporters in economies in transition will always feel aggrieved if they do not get MET
when they believe that they meet the criteria, the key factors that ensure success in an MET
claim have now become quite clear, making it somewhat more predicable for MET
applicants.

There is no evidence that companies are systematically getting MET when it is not justified.
Many applications for MET still get rejected.

However, it is important that case handlers verifying MET claim forms are experienced
enough to identify cases where claimants try to cheat by submitting false information – which
unfortunately has happened in certain cases.

As a general comment, it has to be stated that the market economy issue has been taken
somewhat out of perspective. It has been interpreted as formally classifying whether
countries such as China are market economies or not, which gives the decision a political
dimension that has nothing to with TDI. In the context of AD, the market economy issue is
merely about assessing whether the Commission has reliable information with which to
conduct its analysis. It is a decision about whether information is reliable or not for the
purpose of calculating normal value, rather than a political determination relating to a
particular country or to individual companies.

3.5       Calculation of SGA and profit in constructed normal value calculations

Concerns were raised by EC industry about the calculation of SGA and profit in constructed
normal value calculations. They sometimes feel that the amounts used are too low, and that
there is no way of checking the calculation due to confidentiality. They stated that they
would like greater transparency on this.

However, whichever method is used, it will usually involve the use of confidential data of
some form or another. Thus, it is not possible for there to be greater transparency on the
evidence gathered by the Commission. However, the issue of transparency is limited to the
actual figures used in the calculation and not to the method. Indeed, the Institutions choose
the four possible methods in a quasi-hierarchical manner in the order set out in the law. Only
the fourth method entails by definition some discretion (“any other reasonable method”) but
the exercise of this discretion in any given case has to be explained fully.. Moreover, and as
expressed elsewhere, the survey showed that the Commission is generally trusted to get the
calculations right.




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3.6       Auditing of cost for normal value purposes

A concern was raised by EC industry about the ability of inexperienced case handlers to
verify accurately the costs of exporters. Complainants sometime have doubts that cost
structures have been properly audited, and that as a result measures end up being much lower
than they should be.

Again this is an area where the Commission has to be trusted. However, given that trust, the
Commission must ensure that officials are sufficiently trained to undertake this task.

The Commission does make efforts in this regard by organising regular cost accounting
courses for case handlers.

There is a contrast in the way this aspect is handled by the EC and the US. Both the DOC
and ITC include professional accountants on every cost verification (both for exporters and
domestic industry). In the EC, there are less accountants employed. However, the team will
normally include investigators who have an accounting background (e.g. those coming
originally from national customs and tax administrations). The point about specialisation of
case handlers is discussed elsewhere.

3.7       Identifying the cause of dumping

The point was made in the survey that, if dumping is caused by a closed export market, a
complementary strategy of challenging the trade barriers should also be adopted.

This point really relates to other parts of the Commission than the TDI services, and to the
coherence of different EC instruments. However, there is a valid point that the EC should
have an offensive as well as a defensive strategy. Given that the EC has a proactive market
access initiative (the market access strategy, the trade barriers regulation, the exporters
helpdesk etc.), it would not be so difficult to identify situations examined in TDI
investigations where there may be trade barriers that the EC could investigate and challenge.

In this regard, perhaps the Commission could distinguish between cases where dumping is
caused by a high normal value (which could suggest that the market is closed), and those
where it is the result of a low export price (where, for example, the exporter decides to export
his product below cost). If dumping is caused by a very high normal value, suggesting a
closed market, perhaps the TDI service could inform the relevant parts of DG Trade that deal
with market access issues. The advantage of such a strategy is that successful removal of the
trade barrier could result in an end of the dumping problem and thus perhaps provide an
opportunity to remove the anti-dumping duty.

At the same time, not every case of dumping involves an illegitimate trade barrier. For
example, high Indian customs tariffs create conditions where dumping can easily occur.
Nonetheless, such tariffs are legitimate provided that they are within the bound levels
contained in India's WTO tariff schedules.

Overall though, the more that DG Trade can have an integrated approach across its trade
initiatives, both defensive and offensive, the better.

3.8       Zeroing

A difference exists between the EC and US with regard to zeroing.


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Following the Bed Linen WTO ruling, the EC has changed its approach to zeroing and is now
acting in a manner consistent with WTO rules. However, there is a good deal of confusion
about what kind of zeroing is permitted and what is outlawed. Some people believe that
zeroing is totally prohibited – which is not true.

The US continues to use zeroing practices that the EC has abandoned; namely inter-model
zeroing when there is multiple averaging of dumping margins for different models or types.

3.9       Specificity and subsidies

One issue raised in the survey was a claim that the specificity test is not applied correctly. It
was claimed that there only needs to be one small group that is de facto excluded from the
subsidy and the Commission concludes that there is specificity.

The Commission should ensure that it maintains a consistent approach with regard to
specificity. However, it is noted that Article 2.1(a) of the WTO agreement on subsidies and
countervailing measures provides: "Where the granting authority, or the legislation pursuant
to which the granting authority operates, explicitly limits access to a subsidy to certain
enterprises, such subsidy shall be specific". Article 2.1(c) goes on to mention the
circumstances in which a subsidy may be found to be de facto specific. Where the
Commission has found subsidies to be specific or de facto specific, it has done so with due
regard to these provisions.

3.10      Use of anti-subsidy instrument against NMEs or economies in transition

A second issue on subsidies was raised with regard to whether the AS instrument could be
used against NMEs or against countries with economies in transition.. There is no reason in
principle why the AS instrument cannot be used in these circumstances. However, certain
practical problems arise. Because of the nature of the economy, it is not straightforward to
calculate the benefit due to the distortions that exist or may have existed in the past. Thus, it
is necessary to find suitable benchmarks, which is always a difficult task. It is particularly
difficult for complainants who, even if they identify a possible subsidy, find it difficult to
establish an appropriate benchmark.

However, the fact that using the AS instrument in such circumstances may be difficult does
not mean that it should not be used. As countries such as China move towards market
economy status, EC industry feels that the AS instrument may increase in importance. Thus,
it may make sense for the Commission to start giving some thought now as to how the
instrument might be used in such cases, all the more so as an increasing number of companies
get individual ME status, thus leaving the issue of subsidies unaddressed.

3.11      Injury & causal link

No major issues were raised in the survey.

One point that was raised was the definition of domestic industry, and the exclusion of
companies producing in the EC that are related to exporters in an anti-dumping investigation.
The survey respondents making this point questioned whether they should be excluded.

Reasons why they might be excluded include:-


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     •    they may be gaining from dumping;

     •    they may have an incentive to oppose and block action on behalf of EC producers
          (which may undermine legitimate use of the instrument).

If such a related company producing in the EC is importing the product concerned from the
country subject to investigation, as well as producing it, then it certainly makes sense that
they are excluded. However, the performance of such companies could still be useful in
assessing whether injury is caused by imports, for instance when they are not actually
importing 'dumped' products. In such circumstances, they cannot be gaining in any way from
the dumping and might thus be relevant to the injury analysis. On the other hand, if they are
importing the dumped product or if they are linked to exporters engaged in dumping, it is
normally very difficult to distinguish the injurious effects of dumping by their competitors
from the benefits derived from their own dumping, or from their link with dumping exporters.

3.12      A general comment on Community interest

Overall, the process of assessing Community interest works well but a number of issues were
raised (see 3.13 to 3.17 below).

A general point was raised by some of those opposed to anti-dumping that there is a bias
towards finding that measures are in the Community interest.

However, despite the fairly small number of published terminations on the ground of a lack
of Community interest, it cannot automatically be concluded that Community interest is not a
meaningful test. Complainants often wish to withdraw their case if they learn that their case
is unlikely to go ahead because of a lack of Community interest. More importantly, it does
not make sense for any complainant to lodge a case if it is obvious that, at the end of the
investigation, measures will not be imposed because they would not be in the Community
interest. Thus, while Community interest is not a criterion for the admissibility of the
complaint, it has an effect already at this stage. Thus, the relatively small number of
published terminations on grounds of Community interest is not the whole picture.

3.13      Interpretation of a lack of response from users, importers and consumers

The point was made in the survey that the Commission can treat lack of response from
interested parties that might oppose a measure as an indication that there is no issue. This
was raised particularly in relation to consumers, which is discussed below.

The Commission can only base its evidence on reliable information submitted by interested
parties. Thus ultimately, if no users participate, it is very difficult for the Commission
adequately to analyse their point of view.

At the same time, there could be a significant negative impact on users, yet none of them
cooperate because they do not believe it will make any difference to the outcome. In these
circumstances, it would be wrong for the Commission to take a lack of response as evidence
supporting the argument that that they will not be significantly adversely affected by the
measure.




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Thus, the Commission should not automatically use non-cooperation by users as a reason to
conclude that measures are in the Community interest. They must use whatever information
they can to assess the situation.

In cases where there is little cooperation from users, the Commission still tries to get as much
information as it can from users, and applies a flexible approach with regard to users that
come forward late in the investigation. As long as the Commission makes such efforts, there
is little more that can practically be done if users or consumer organisations do not
participate.

In conclusion, the Commission needs information and, without it, its job becomes extremely
difficult. No user involvement may mean that the Commission concludes that measures are
in the Community interest; but the fact that no users participated should not, itself, be taken
as evidence that users would not be adversely affected.

3.14      Community interest in an enlarged EC

It was noted that the user interest is growing in an enlarged EC. A concern was raised that,
with 25 or more Member States, the balance may be altered: complaining industries may be
concentrated in a small number of Member States, while users may be dispersed throughout
all Member States. In this context, it was noted that lobbying is becoming more intense, and
making a case is becoming more difficult from the perspective of complainants. This is
related to the political nature of the instrument (see 4.1 below).

3.15      Representation of consumers in AD or AS proceedings

A particular problem was raised relating to consumers due to the fact that, for investigations
involving consumer products, individual consumers are not even aware of AD or AS
investigations taking place.

The responsibility of representing consumers falls to consumer organisations and, it was
claimed, here is the problem. There are only a very small number of anti-dumping experts in
the various EC consumer organisations. Even those that exist do not have the time and
resources to participate regularly in anti-dumping investigations.

The Commission should always try to ensure that, where relevant, the views of consumers are
represented in the study, whilst staying sensitive to the fact that consumer organisations do
not have sufficient resources to get heavily involved in AD or AS proceedings.

However, this problem is not one that affects only TDI. Consumers are often far removed
from regulatory issues that could have a negative impact on them, and consumer
organisations face the same problems with regard to resources limiting the extent to which
they can get involved. As long as the Commission makes real efforts to reflect the consumer
interest in anti-dumping proceedings, there is not really anything else that can be done within
the realm of TDI.

Finally, it can be argued that the majority of anti-dumping investigations involve raw
materials and intermediate products. Although there are some cases that have a direct impact
on consumers, such cases are in a minority.




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3.16      Concerns raised by complainants about Community interest

A number of small concerns were raised by EC industry in the survey on the issue of
Community interest.

However, subject to the comments in 3.12 above, the relatively small number of cases with
explicit or implicit determinations that measures are not in the Community interest suggests
that this provision is not an unreasonable obstacle to complainants obtaining protection where
the requirements of the basic regulation are met.

3.17      Analysis of market situation prior to measures

One survey respondent made the point that if a non-competitive situation had existed prior to
the measures (the extreme example would be a monopolist), some analysis should be
undertaken to ensure that the TDI are not merely restoring an anti-competitive position and
monopoly profits.

However, DG Trade should not be making competition determinations. Firstly it is not
required by the EC legislation (which thus makes it outside the scope of this study) and
secondly DG Trade is neither qualified nor has the resources to make such an assessment.

4.        INSTITUTIONS


4.1       Political element to decision-making

Many survey respondents complained about the political nature of the decision-making
process due to the role of the Commission and 25 different countries in adopting AD and AS
measures. This is contrasted with the US where politics has a less explicit role in the decision
on whether or not to adopt such measures..

How this is viewed partly depends on how one views the role of Member States (see below).
Some would argue that TDI should be purely technical and, to this extent, that the MS should
not be involved. However, if the Member States have a role, it has to be a meaningful one
yet this may involve a political element.

The fact that Member States play a crucial role in the adoption of measures raises the
question of whether there is an excessive political element to the decision-making process.
This is not necessarily so. Member States are in a good position to review the Commission's
activity on a technical basis but, of course, this implies some resources commitments from
their side. Moreover, the involvement of Member States makes sense because they serve as
an additional filter. They are often closer to their economic operators than Brussels. Thus,
Member States might get a better idea as to the effects of taking measures or not taking
measures. This additional ‘market knowledge’ is invaluable information in the decision
making process.

It can also be noted that a political decision by Member States would be illegal and would
almost certainly not be condoned by the Member States themselves.

To the extent that there is something of a political element to decision-making on AD and AS
measures, it is not feasible to change this. This political influence has no impact on actual
decision making as long as it is confined to a small minority of Member States. This means


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that the technical assessment of the majority of the Member States determines the decision
and not the political consideration of a few. As mentioned elsewhere in this report, EC TDI
policy is based on a careful balance between the many different and contradictory interests
throughout the 25 Member States. Therefore, it seems impossible to envisage this being
changed by transferring the decision-making to the Commmission.

It can be noted that there is not the same consensus between MS on TDI that there is on, say,
competition issues Member States vary in their attitude towards the general desirability of
TDI (particularly in relation to anti-dumping) while all Member States agree that cartels and
abuse of monopoly power are a bad thing. This means that it is unlikely to be realistic for
competence on this issue to be completely transferred to the Commission and that a certain
political dimension will remain.



4.2       Impact of change in voting and the Eurocoton decision

There is a general view that the voting change and the Eurocoton decision are reasonable
developments (see annex 2, 2.2(b) for more details), particularly since, taken together, they
would appear to reduce the influence of politics in AD investigations.

However, a number of concerns were raised:

      •   Will Member States ever be able to prevent a measure being adopted again?

      •   How will Member States motivate a "no" decision if they all have different reasons
          for opposing measures?

It can be noted that, if the voting change does have an impact on voting patterns, the Member
States are voting in an extremely superficial way. This stems from the fact that there is really
no such thing as an abstention. The concept of abstentions was created by Member States
that wanted to vote against measures as a way of making it look like they were not actually
voting against. Abstentions have always been a façade.

If the voting change results in different outcomes in any case, it means that Member States
that previously abstained (but who knew that their vote was counted as a no) would still
abstain (even though they now know that their vote is counted as a yes). This does not make
sense.

A concern has been expressed over whether smaller Member States will feel intimidated in
now having to explicitly oppose measures, where previously a no vote could be registered
through abstaining. Ultimately, the voting change is still a simple decision of whether you
are for or against. It is nowhere near as significant as the Eurocoton decision, which changes
the Member States' ability to reject TDI measures through the need to motivate their decision
in Council.

Finally, it can be noted that even before Eurocoton and the change in the decision making
procedure, the vast majority of Commission proposals were adopted by the Council (the
Council has only rejected 10 measures since 1995).

As to the question whether or not Member States will ever be able to reject a Commission
proposal, it would seem that this question is not pertinent. It somewhat implies that the final


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Commission proposal is by nature a political proposal and that Member States should
therefore have unfettered discretion. However, this is not the case, as the Eurocoton
judgement has made abundantly clear, also with regard to the concept of Community interest.

4.3       Member States

There is a general view that, despite the concerns about politics, Member States have an
important role. Member States provide an additional filter to check the Commission's
findings. They provide a final check and balance before the adoption of measures, though
not in the same sense as that provided by the Commission’s Legal Service or by the European
courts.

Despite the fact that Member States can get more involved during the investigation (e.g., by
meeting the Commission or viewing the confidential files), Member States cannot redo the
investigation nor carry out a parallel investigation.

If this is a correct characterisation of the role of Member States, the way in which the system
works at present is correctly and effectively implementing their important but limited role.
However, the Commission should always be vigilant in seeking improvement.. If in fact, the
Member States’ role should be more than this, the current level of their involvement is not
sufficient.

Ultimately, the actual role of Member States is also to a certain extent a choice made by each
Member State individually. In this context, this may be a resource problem for Member
States. However, this is a practical point and should not be the driving force behind
determining Member States' role in the adoption of measures. If Member States believe that
they should have a bigger role, there is the opportunity to view the confidential files, or to
discuss the case with the Commission; to do so would require resources that the Member
States do not seem willing to commit.

4.4       How Member States make their decisions

Some people interviewed in the survey claimed that Members States often vote in their
national interest. The concern was raised that this creates a problem in cases where users are
spread out throughout the EC and industry is concentrated in a very small number of
countries. The Commission role in assessing Community interest is crucial as this is a
different analysis than the mere cumulation of 25 national interests.

However, although Member States clearly look at the impact of measures on their national
operators, this does not mean that they are automatically voting on the basis of their national
interest. Indeed, there are many cases with industries only in few or even one Member State
while there is a broad majority for the case.

It can further be noted that Member States voting in their national interest is unlawful. Every
Member State must assess what is in the Community interest. The Council would lose in
court if it motivated a rejection of a measure on the grounds of 13 negative national interest
assessments.




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4.5       Representatives on the Advisory Committee

Concerns were raised about the low experience of certain members of the advisory
committee.

It is important that Member States ensure they have sufficient expertise if their role is going
to be a meaningful one.

At first sight, in a 25 Member State EC, the chance of one Member State influencing an
investigation seems now very small. Thus, many MS do not apply a high priority to their
respective TDI jobs. However, Member States also coordinate themselves. Thus, the position
of one Member State can indeed have a certain ‘domino effect’ on other Member States, in
particular if the question at issue raises systemic concerns.

The Commission does provide training courses and meets with MS regularly, both of which
assist MS representatives to develop their skills and understanding with respect to TDI..

At the same time, MS should devote sufficient resources to ensuring that dedicated, expert
people cover TDI.

As a final comment, it can be noted that survey respondents pointed out that some MS
representatives were excellent and did a good job.

4.6       Lobbying

Lobbying has become more important but this is an inevitable reflection of the political
aspects of the decision-making process.

Lobbying, if properly and transparently done, will provide the decision makers directly with
information which the party engaging in such lobbying thinks is the most pertinent for the
defence of their case. As such, it is certainly a useful and necessary tool in the decision
making process. However, lobbying also entails the risk that the decision makers receive
information which has not been properly introduced in the procedure which is of a quasi-
judicial nature. Thus, there is a particular responsibility of decision makers who have such ex
parte contacts to ensure that they do not take into account any information which is not fully
reflected in the file officially assembled for the purposes of the investigation. The
aforementioned advantages but also risks have always to be taken into account when
assessing any proposals in this field.

Given the importance of lobbying, it is essential that interested parties engage in it as
appropriate. However, as highlighted elsewhere, it is not easy for a company – particularly
an SME – to identify the appropriate officials in each Member State to whom they might
speak.

In this regard, see the proposal made in 2.15(b) above.

4.7       Internal organisation

One of the biggest differences with the US is the fact that the US has a bifurcated system
while the EC does not. Moreover, the ITC enjoys considerable independence.




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                                                                             Section 2, Page 34

Would it make sense for the EC anti-dumping service to be independent, either wholly or
partially? From a theoretical perspective, one would say yes, it is better to have objective,
technical institutions assessing such complex matters as free as possible from any constraints.

However, as noted elsewhere, the decision making power of Member States is an important
part of the overall balance of interests in the way TDI policy is implemented in the EC. It is
not practical for the additional checks and balances provided by the Member States to be
removed from the system altogether.

Moreover, if the EC was to introduce a bifurcated system, such as exists in the US, it has to
be appreciated that this comes at a certain financial cost. This is both in terms of the agencies
themselves with regard to offices, staffing, etc.; and in terms of interested parties having to
deal with two agencies rather than one. The 'experiment' of the past – in which dumping and
injury investigations were split into separate directorates within DG Trade – was generally
considered by survey respondents to be a disaster. EC interested parties appreciate an
integrated, consistent approach to the whole investigation.

While a bifurcated, or completely independent, TDI service would have certain advantages,
therefore, it does not appear to be a subject for further consideration.

4.8       Case handlers

Some survey respondents raised points relating to problems within case teams. However,
these incidents seem to be isolated and teams normally appear to function well.

Concerns were also raised about the high turnover of staff. A particular issue was highlighted
about instances where case handlers move on in the middle of an investigation.

Turnover of staff does create a problem for the TDI service. Know-how must be re-built
when people leave and, given the extremely technical nature of TDI, there is a very steep
learning curve. Training – especially of new entrants – and a learning culture, are therefore
key.

However, the European Commission encourages staff to move jobs for career development
and, looking at aspects other than TDI issues, this is desirable. Thus, turnover of staff is just
something that has to be tolerated and worked with. It is, however, a justification for having
some spare capacity in terms of staffing levels, such that continuity on cases can always be
ensured when people move on to other jobs in the middle of an investigation.


4.9       Insufficient specialists (industry, accountants etc.)

The TDI service does not encourage specialisation e.g. in dumping or injury, in professional
expertise in areas such as law or accountancy, in designating industry specialists etc.
Moreover, in view of the sensitivity of posts in the TDI area, mechanisms have been
introduced to make sure that staff members do not deal repeatedly with the same economic
operators. Therefore, the Commission policy is that TDI officials should be prepared to deal
with any case.




Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                            Section 2, Page 35

The advantage of this approach is that it allows an efficient utilisation of resources. The
Commission does not have enough people to specialise in distinct tasks. Although there is
more specialisation in the US, this is achieved with a much higher number of people.

It also ensures that case handlers remain independent and do not become unduly influenced
by having built close relationships with particular industries or countries.

The Commission has 163 people currently working on TDI. This compares with around 300
and 75 people working on TDI in the DOC and ITC respectively. To put this into
perspective, for the period 2000-2004, the US initiated 89% more anti-dumping cases than
the EC yet there are 130% more people working on TDI in the DOC/ITC than there are in the
European Commission.

It would be good to have some specialists such as accountants and perhaps a Chinese speaker
(which the TDI service currently does not have). However, this is unlikely to be feasible
within current resources. This is a broader Commission issue in terms of whether more
resources could be allocated to TDI.

5.        EFFECTIVENESS OF MEASURES

5.1       Overall effectiveness

There is overall satisfaction with the effectiveness of measures.

5.2       Circumvention & enforcement

This was the highest priority issue raised by many EC industry survey respondents.

Many of the problems with enforcing measures actually relate to issues outside the scope of
DG Trade's brief. For example, many issues relate to customs problems, and therefore are
more in the realm of national customs authorities, DG Taxation and Olaf (the EC fraud
service).

However, one reason why industry has identified this as a priority issue is that, in the past,
this has not been adequately addressed by the various institutions that may be involved. In
this regard, EC industry has looked to DG Trade to take up the role of following up problems
concerning the effectiveness of AD and AS measures, and of trying to improve coordination
between the various agencies involved..

DG Trade (the TDI service) has increasingly taken on this role and has made considerable
efforts to try and improve the effectiveness of EC AD and AS measures. However, it is not a
role that was ever explicitly given to the TDI service. Nevertheless, it is a role that the TDI
service has taken on and, in this regard, there are certain resource implications that perhaps
need to be considered if these efforts are to continue.

The Commission was praised by many in the survey for adopting a flexible approach to
finding solutions to enforcement problems and the Commission has been innovative in trying
to improve the overall situation. This includes:

      •   Ex officio initiation of absorption and circumvention investigations where the
          Commission finds problems;


Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
                                                                             Section 2, Page 36


      •   Stricter on the acceptance of undertakings;

      •   Tighter monitoring and control of undertakings;

      •   Introduction of the possibility to withdraw undertakings with retroactive effect (e.g.
          see recent definitive duty on certain magnesia bricks from China; Regulation
          1659/2005 Official Journal L267, 12. October 2005);

      •   Use of interim reviews to clarify how duties should applied when the product
          concerned is joined with other products but retains its distinct character. This has
          happened in relation to ammonium nitrate and zinc oxide.

The Commission has done an excellent job of trying to find ways that address problems in
enforcing anti-dumping and anti-subsidy measures. All survey respondents support the
policy of strict enforcement of measures, and the Commission has to be commended for the
efforts it has made in this regard. However, the TDI service needs both support and
cooperation from the other agencies that have a role in customs issues.

5.3       Price undertakings

Many EC industry survey respondents said that they do not like undertakings. However, the
concerns raised relate primarily to enforcement rather than to undertakings per se. In this
regard, the Commission has made significant efforts to improve the reliability of
undertakings (see 5.2 above).

5.4       Retaliation against EC companies for being involved in TDI actions

There have been some serious instances of retaliation, but such problems appear to remain
isolated. Most survey respondents had not experienced problems. However, it is possible
that other cases remain unreported. The Commission should therefore stay vigilant in
looking out for such issues, and in providing whatever assistance is possible when such
instances occur.

6.        SAFEGUARDS

Few views were expressed on safeguards, owing to a lack of experience with the instrument.

A number of survey respondents questioned why there is a conventional wisdom in the EC
that safeguards should not be used.

Safeguards do have some attractive advantages, particularly in terms of some of the problems
identified in this evaluation with other TDI (the burden on business, the speed of relief etc.).

It can be noted that safeguards are not relevant to all industries. However, they should not be
ruled out as a possible instrument, since safeguards are potentially an important tool in the
TDI armoury. Indeed, the EC has recently started to open some safeguard cases, which
suggests that the past attitude of ruling out their use is now starting to change. In view of the
advantages mentioned above, this may be desirable.




Evaluation of EC TDI; Section 2 – Evaluation (Final Report December 2005)
ANNEX 1 – BASIC DESCRIPTION OF EC TRADE DEFENCE INSTRUMENTS
1.      THE CONTEXT OF EC TDI .................................................................................................................... 3
     1.1       AN OVERVIEW OF EC TDI.................................................................................................................... 3
     1.2       GLOBAL CONTEXT OF EC TDI AND IMPACT OF NEW TDI USERS ON EC EXPORTS ................................ 3
     1.3       WHICH TRADING PARTNERS ARE SUBJECT TO TDI?.............................................................................. 4
     1.4       INSTITUTIONS ....................................................................................................................................... 4
     1.5       SUMMARY OF THE EC ANTI-DUMPING AND ANTI-SUBSIDY REGULATIONS ............................................ 5
2.      ANTI-DUMPING AND ANTI-SUBSIDY................................................................................................. 7
     2.1       SUMMARY OF SUBSTANTIVE REQUIREMENTS ....................................................................................... 7
     2.2       CONCEPT AND DEFINITION OF DUMPING ............................................................................................... 7
     2.3       THE IMPORTANCE OF COST OF PRODUCTION ......................................................................................... 9
     2.4       ELEMENTS OF THE DUMPING CALCULATION ......................................................................................... 9
     2.5       NORMAL VALUE ................................................................................................................................ 10
        (a)    Definition........................................................................................................................................... 10
        (b)    Situations where actual domestic prices might not be used............................................................... 10
        (c)    Related sales...................................................................................................................................... 10
        (d)    No domestic sales .............................................................................................................................. 10
        (e)    Insufficient domestic sales ................................................................................................................. 10
        (f)    Prices below the cost of production................................................................................................... 11
        (g)    Alternatives to use of domestic prices ............................................................................................... 12
        (h)    Non-market economies and economies in transition ......................................................................... 13
     2.6       EXPORT PRICE .................................................................................................................................... 14
        (a)    Definition........................................................................................................................................... 14
        (b)    Related sales companies in the EC.................................................................................................... 14
        (c)    Export price for non-market economies or economies in transition.................................................. 15
     2.7       EXPORT PRICE (CIF) .......................................................................................................................... 15
     2.8       COMPARISON AND ADJUSTMENTS ...................................................................................................... 16
        (a)    Fair Comparison ............................................................................................................................... 16
        (b)    Adjustments ....................................................................................................................................... 16
        (c)    Average export price or transaction by transaction? ........................................................................ 17
     2.9       HOW THE COMMISSION MAKES A DUMPING CALCULATION ................................................................ 18
     2.10      INSIGNIFICANT DUMPING MARGIN ...................................................................................................... 20
     2.11      A GLOBAL DUMPING MARGIN OR INDIVIDUAL DUMPING MARGINS? ................................................... 20
     2.12      SUBSIDY ............................................................................................................................................. 21
        (a)    Definition of subsidy.......................................................................................................................... 21
        (b)    Calculation of benefit ........................................................................................................................ 22
        (c)    Calculation of subsidy margin........................................................................................................... 23
        (d)    Insignificant subsidy margins ............................................................................................................ 23
        (e)    EC state aid rules .............................................................................................................................. 23
     2.13      INJURY AND CAUSAL LINK .................................................................................................................. 23
        (a)    Concepts of injury.............................................................................................................................. 23
        (b)    Determination of injury ..................................................................................................................... 24
        (c)    Cumulation ........................................................................................................................................ 24
        (d)    Volume of dumped imports ................................................................................................................ 24
        (e)    Effect on prices .................................................................................................................................. 24
        (f)    Impact on EC industry....................................................................................................................... 25
        (g)    Lesser-duty rule ................................................................................................................................. 25
        (h)    Threat of material injury and material retardation........................................................................... 26
        (i)    Insignificant injury ............................................................................................................................ 27
     2.14      CAUSAL LINK ..................................................................................................................................... 27
     2.15      COMMUNITY INTEREST ...................................................................................................................... 28
     2.16      PROCEDURE........................................................................................................................................ 29
        (a)    Overview............................................................................................................................................ 29
        (b)    Complaint and initiation.................................................................................................................... 30
        (c)    Community industry support ............................................................................................................. 30
        (d)    Time Limits ........................................................................................................................................ 31
        (e)    Consultation with EC member states on complaint........................................................................... 31



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                                                                                                                                          Annex 1, Page 2


        (f)    Information released by the Commission .......................................................................................... 31
        (g)    Target of investigation....................................................................................................................... 32
        (h)    Questionnaire and investigation period ............................................................................................ 32
        (i)    Description of exporters’ questionnaire ............................................................................................ 32
        (j)    Who should complete a questionnaire? ............................................................................................. 33
        (k)    Time Limits for collection of information .......................................................................................... 33
        (l)    Disclosing confidential information .................................................................................................. 34
        (m)       Verification visits .......................................................................................................................... 34
        (n)    Provisional duties .............................................................................................................................. 35
        (o)    Definitive duties................................................................................................................................. 35
        (p)    Undertakings ..................................................................................................................................... 36
        (q)    Types of duty...................................................................................................................................... 36
        (r)    No double counting of subsidies and dumping .................................................................................. 37
        (s)    Level of duty (lesser duty rule) .......................................................................................................... 37
     2.17      ISSUES THAT CAN ARISE DURING PERIOD OF ANTI-DUMPING MEASURES ............................................. 38
        (a)    Absorption ......................................................................................................................................... 38
        (b)    Circumvention ................................................................................................................................... 38
        (c)    Suspension of duties .......................................................................................................................... 38
        (d)    Refunds .............................................................................................................................................. 38
     2.18      REVIEWS ............................................................................................................................................ 39
     2.19      JUDICIAL REVIEW ............................................................................................................................... 40
3.     SAFEGUARDS.......................................................................................................................................... 40
     3.1       SUMMARY OF EC SAFEGUARD REGULATIONS ................................................................................... 40
     3.2       SUBSTANCE ........................................................................................................................................ 41
     3.3       PROCEDURE........................................................................................................................................ 42




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                                                                                                            Annex 1, Page 3




1.        THE CONTEXT OF EC TDI

1.1       An overview of EC TDI

The objective of the European Community's Trade Defence Instruments (TDI) is to either
remedy market distortions created from unfair trade practices by third countries, such as
dumping or subsidies, or to address the serious deterioration of the situation of European
Community producers arising from unforeseen sharp and sudden import surges (through
safeguard action).

The legal basis for these instruments is provided by the relevant WTO agreements, which
have been transposed into Community legislation by Council Regulation (EC) No 384/96 (the
basic anti-dumping Regulation), Council Regulation (EC) No 2026/97 (the basic anti-subsidy
Regulation) and Council Regulations (EC) No 517/94/ 519/94 and 3285/94 (the basic
safeguard Regulations).

Anti-dumping (AD) measures were created to counter dumping practices, the most frequently
encountered trade-distorting practices. Dumping occurs when manufacturers from a non-EU
country sell goods in the EC below the sales price in their domestic market, or below the cost
of production plus a reasonable rate of profit.

Anti-subsidy (AS) measures were designed to combat certain types of subsidies, which are
made available to manufacturers by public authorities and which can also distort trade when
they help to reduce production costs or cut the prices of exports to the EC unfairly.

Safeguard measures may be used by WTO members to restrict imports of a product
temporarily if its domestic industry is seriously injured, or threatened with serious injury,
caused by a surge in imports.

1.2       Global context of EC TDI and impact of new TDI users on EC exports

Although TDI have been around for more than 100 years, it was only in the 1970s that their
use became a global phenomenon. One reason for this is the extent of GATT liberalisation
that had been achieved up to and including the Tokyo Round of trade negotiations. As trade
barriers came down, and trade increased, domestic industries started to feel real competition
from imports. The demand for TDI measures grew in response to the increasing market share
of imports.

The EC has been one of the traditional global users of TDI over the past 30 years, the other
main ones being the US, Canada, Australia and New Zealand.

However, in the last decade, many other countries have started using TDI, and now EC
exports face more cases in overseas markets than TDI cases opened by the EC against
imports.




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                                                                                                            Annex 1, Page 4


                                 EC Investigations                 Investigations against % of defensive /
                                 (defensive cases)                 the EC or individual offensive cases
                                                                   Member States
                                                                   (offensive cases)
1995-2004                                     299                           394                   75%
Of which:
1995-1999                                     185                              219                               85%
2000-2004                                     114                              175                               65%


The table shows the number of AD investigations opened by the EC in proportion to those
initiated by other countries against the EC 1 . The last column of the table indicates the
relative shift in the extent to which EC exporters are hit in other countries' AD investigations
compared to EC actions.

This is an important point to realise in understanding the context of TDI. In former times, EC
industry would have wished for TDI to be as restrictive as possible. However, this isno
longer the case. Using TDI requires a careful balance between exercising the right to have
protection against imports in clearly defined circumstances and ensuring that EC exports are
not unduly hindered by other countries' use of TDI.

1.3        Which trading partners are subject to TDI?

EC TDI are applicable to all imports from outside of the EC except for EEA countries. Non-
EC members of the EEA are excluded from TDI, except for products that fall outside of the
EEA e.g. Norway has been subject to two AD/AS investigations in the fisheries area.

It can also be noted that TDI are not applied within the single market.

The EEA is the only customs union/free trade agreement to which the EC is a party where
TDI are not applied. TDI apply to all other countries despite any free trade agreements or
preferential arrangements that they may enjoy with the EC.

TDI continue to be applied against countries negotiating accession to the EC. Thus, TDI still
apply to Bulgaria, Croatia, Romania and Turkey, even though the latter has a customs union
with the EC.

1.4        Institutions

The institutions involved in TDI are as follows:

      •    DG Trade/European Commission - The Commission is the politically independent
           institution that represents and upholds the interests of the EC as a whole. It is the


1
    Note that the EC actions and the actions against the EC are counted on a different basis. The EC actions are
      counted on a per country basis (i.e. an investigation against one product from 5 countries counts as 5 cases.
      Actions against the EC are also counted on a per country basis. However, some of these cases have been
      initiated against the EC as a whole, in which case they only count as 1 case, while others have been initiated
      against several Member States (for the same product), in which case they count as several cases.


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                                                                                                            Annex 1, Page 5


          driving force within the EC’s institutional system: it proposes legislation, policies and
          programmes of action and it is responsible for implementing the decisions of
          Parliament and the Council. In this way, it can be considered as the executive branch
          of the EC. The Commission plays a leading role in the implementation and
          enforcement of TDI. The Commission has several powers that allow it to take certain
          decisions in the TDI field. In addition, the Commission must prepare proposals for
          the adoption of measures by the Council.

      •   Council of Ministers - The Council is the EC's main decision-making body. It
          represents the member states, and its meetings are attended by one minister from each
          of the EC's national governments. For definitive AD and AS measures, the Council
          has the responsibility of adopting proposals made by the Commission. For
          safeguards, the Commission usually adopts measures but the Council still plays a key
          role in that it has the power to block such measures.

      •   EC Member States – In addition to the formal meetings of Member States in the
          council of Ministers, Member States also meet in an Advisory Committee for all TDI.
          In the Committee, the Member States will discuss all aspects of TDI investigations
          (e.g. initiations, provisional measures, definitive measures etc.) and debate TDI
          policy.

      •   Court of First Instance (CFI) and Court of Justice (ECJ) – Since 1993, the CFI
          has had jurisdiction over AD and AS cases. The ECJ is the court of appeal for cases
          falling within the jurisdiction of the CFI. There are limited opportunities to challenge
          safeguard measures but, to the extent that safeguards can be challenged, it is the ECJ
          that would hear such cases.

      •   European Parliament (EP) - The EP plays almost no role in TDI. It does discuss
          use of TDI within the Committee on International Trade and sometimes issues reports
          on the subject. MEPs also put questions to the Commission on TDI in an attempt to
          open up discussion or influence policy. They also address problems raised by their
          constituents. However, currently, the EP has no formal role in any part of the TDI
          process. If the new constitution is ratified by all Member States, the Parliament may
          have more influence over the adoption of legislation in the area of TDI, though it will
          still not have any role in investigations or the adoption of measures.

1.5       Summary of the EC anti-dumping and anti-subsidy regulations

EC anti-dumping rules are contained in Council Regulation (EC) No 384/96 (the "basic AD
regulation") , the provisions of which came into effect on 1 January 1995.

This regulation reflects the provisions of the WTO agreement on anti-dumping agreed in the
last completed round of multilateral trade negotiations (The Uruguay Round).

This regulation has been amended several times.

      •   Regulation 2331/96- in order to amend the provisions on adjustments necessary to
          compare domestic and export prices.




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                                                                                                            Annex 1, Page 6


     •    Regulation 905/98 - revised non-market economy provisions to allow Russian &
          Chinese companies to get market economy treatment if certain conditions are met.

     •    Regulation 2238/2000 - Added Ukraine, Vietnam and Kazakhstan to list of countries
          where companies able to apply for market economy treatment.

     •    Regulation 1972/2002 - further amendments on adjustments between domestic &
          export price, the determination of costs in anti-dumping investigations and treatment
          of Russia as a market economy.

     •    Regulation 461/2004 - adopted amendments relating to voting procedures, price
          undertakings, time limits on reviews, anti-circumvention and anti-absorption
          investigations, and other procedural points.

Copies of the basic regulation and all of the above amendments can be obtained from the
following web link:

          http://europa.eu.int/comm/trade/issues/respectrules/anti_dumping/legis/index_en.htm

A consolidated version is available at:

          http://europa.eu.int/eur-lex/en/consleg/main/1996/en_1996R0384_index.html

EC anti-subsidy rules are contained in Regulation 2026/97 ("the basic AS regulation) and
has been amended as follows:

     •    Regulation 1973/2002 – Clarifies ability to use benchmarks where subsidies are given
          in the form of provision of cheap goods & services where there is no market for such
          goods/services in the country concerned. Also repeals provisions on non-actionable
          subsidies given expiry of corresponding WTO provisions.

     •    Regulation 461/2004 (similar amendments as for anti-dumping as set out above).

The EC anti-dumping and anti-subsidy regulations cover all products including coal and
steel. Previously, products covered by the European Coal and Steel Community Treaty
(ECSC) had separate AD and AS provisions, though substantively they were identical to the
EC regulations. The ECSC, and associated TDI legislation, expired in July 2002.




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                                                                                                            Annex 1, Page 7




2.        ANTI-DUMPING AND ANTI-SUBSIDY

2.1       Summary of substantive requirements

There are four key requirements contained in the EC's anti-dumping and anti-subsidy
regulations that must be met before any anti-dumping/subsidy measures can be adopted.

          REQUIREMENT 1 - Imports must be dumped or subsidised
          Dumping - The export price of a product sold in the EC is normally considered to be
          dumped if it is less than the comparable price for that product in the domestic market
          (nb the domestic price must at least cover costs). Whether dumping is occurring or
          not is determined by the calculation of a single margin of dumping.
          Subsidy – Subsidised imports are those that benefit from a financial contribution by
          government. However, such subsidies are only countervailable if they are specific
          (limited to certain enterprises or regions).

          REQUIREMENT 2 - The dumped or subsidised imports must cause injury
          The EC industry must be suffering material injury. That is, it must be experiencing
          significant and measurable problems in terms of indicators such as prices, profit,
          market share etc.

          REQUIREMENT 3 - Causal link
          It must be demonstrated that the dumped/subsidised imports are causing the injury
          identified. In this context, it must also be ensured that injury caused by other factors
          is not attributed to the dumping/subsidised imports.

          REQUIREMENT 4 - Community Interest
          Even if dumping and/or subsidy, injury and a causal link are established, measures are
          only imposed if they are not against the Community interest. Community interest
          refers to the interests of the EC as a whole, including EC domestic industry, users and
          consumers.

2.2       Concept and definition of dumping

Dumping is a form of price discrimination. It occurs where the export price of a product sold
in the EC is lower than the price for the same product when sold on the domestic market
(domestic price; usually called normal value).

Price discrimination occurs when a product can be sold at different prices in different
markets. In order to practice price discrimination, it is necessary to be able to differentiate
between different customers. This differentiation of groups of customers requires some form
of separation of the two markets, such that it is not possible to buy in the lower priced market
and sell in the higher priced one. Thus, the ability to dump may arise from some sort of trade
barrier that prevents arbitrage removing the price differential. However, for dumping to
occur, there is no requirement to prove the existence of such a trade barrier. The existence of
the price difference per se is sufficient to find dumping. It is such price discrimination




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between domestic and the foreign markets that WTO Members have agreed should be
condemned.

The following table clarifies what constitutes dumping:

                                                               1           2          3         4
                    Domestic price in home                    100         80         100        80
                    market or analogue country
                    Export price to EC                        100        80          80        100
                    EC producers' price                       100        100         100       100
                    Dumping?                                  NO         NO         YES        NO



•    In 1, the export price is equal to the domestic price and therefore there is no dumping.

•    In 2, despite undercutting the EC price, there is no dumping as the export price is equal to
     the domestic price. This illustrates that the EC price is not relevant in assessing whether
     dumping is occurring.

•    Dumping is occurring in situation 3, where the export price is lower than the domestic
     price.

•    In 4, there is no dumping as the export price exceeds the domestic price, although price
     discrimination is occurring.

The key issue is that, regardless of the destination of the product (i.e. domestic or overseas
markets), the ex factory price should be the same.

Although this is the basic principle behind the analysis of dumping, there is some flexibility.

     •    The European Commission usually uses weighted averages in calculating whether
          dumping is occurring. Therefore, individual consignments sold at different prices will
          usually not be of consequence, provided that on average the prices are not dumped
          and any dumped consignments are not targeted on any particular region, customer, or
          time period (i.e. there is a pattern of export prices that differ by region, customer or
          time period).

     •    Insignificant (de minimis) dumping margins are ignored. Insignificant is defined as
          less than 2%.

     •    If aggregate export volumes of the product concerned from any one country to the EC
          are small, they are unlikely to be the cause of any injury. EC rules confirm that no
          investigation will be initiated where the exports of the country concerned account for
          less than 1% of EC consumption, unless the exports of all such countries when
          grouped together account for more than 3% of EC consumption (or where imports
          from the country concerned account for less than 3% or 7% respectively of total
          imports).

     •    Export and domestic prices may diverge if there are differences in the product or
          terms of sale that account for this divergence.


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                                                                                                            Annex 1, Page 9


An important point to note here is that there is no such thing as an 'innocent' dumper. Even if
an exporter is forced to start dumping in order to stay in the market, anti-dumping rules
require that export price must be equal to or greater than the domestic price. No account is
taken of why dumping may have started.

2.3        The importance of cost of production

There is an important proviso to the above. In order to be used in assessing whether dumping
is occurring, the domestic price must at least cover costs. Thus, dumping occurs when export
price is below domestic price or when export price is below costs.

Thus, dumping may still be occurring if a company's export price is the same as the domestic
price, as illustrated in the following table.

                                                         Situation 1            Situation 2           Situation 3
           Normal Value (domestic price)                     100                    60                    100
           Cost of Production                                 80                    80                     80
           Export Price                                       60                    60                     90
           Dumping?                                            Yes                   Yes                    Yes


       •   In situation 1, export price is less than domestic price.

       •   In situation 2, export price and domestic price are equal so there would appear to be
           no dumping. However, domestic price is below cost of production and cannot be
           used. An export price below cost of production is always a dumped price.

       •   In situation 3, export price is profitable but less than domestic price i.e. an export
           price above cost of production can still be a dumped price.

2.4        Elements of the dumping calculation

The calculation of the dumping margin is based on a simple formula:


           Dumping margin = (Normal Value – Export Price) Export price (cif)                 /
The actual calculation, although based on this simple formula, is extremely complicated.
This section, therefore, breaks down this calculation into its three components; normal value,
export price (ex works or fob), export price (cif).

Normally, a dumping margin is calculated for each company that has exported during the
product from the country subject to investigation 2 .




2
    AD and AS investigations are initiated against countries and not individual companies.


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2.5       Normal Value

(a)       Definition

Normal value is the term used to describe the price of the product that is considered to be a
"fair" price. Normal value is usually calculated on the basis of the price actually paid by an
independent customer in the domestic market.

(b)       Situations where actual domestic prices might not be used

The domestic price might not be used in the following situations:

-         where there is a relationship between the producer and the domestic customer (if the
          product is re-sold, the price to the first independent customer would be used i.e.
          treating the related parties as one economic entity).

-         where there are no domestic sales or the sales are insufficient to be representative

-         where the domestic sales are sold at a price below cost of production

-         where there is a non-market economy or, normally, where there is an economy in
          transition

(c)       Related sales

Where the sale is made to an 'associated' party, or there is some form of compensatory
arrangement between the producer and the buyer, domestic prices might not be used. They
will only be used if it can be shown that the prices are unaffected by the relationship. In
practice this is difficult to achieve.

(d)       No domestic sales

It is clear that an alternative method of calculating normal value must be found where an
exporter made no domestic sales of the product during the period under investigation.
Another common occurrence is that the product type sold on the export market is different
from that sold on the domestic market. In this situation, there is no domestic sale of the type
that is exported. If the difference can be accounted for by a price adjustment, this will be
done. Otherwise, one of the alternative methods must be used.

(e)       Insufficient domestic sales

Even where there are domestic sales, the Commission may consider their volume is too low
for representative price data to be obtained. Under the 5% rule domestic prices cannot be
used where the volume of the domestic sales of the exporter is less than 5% of its sales
volume to the EU. However, the Commission can decide, notwithstanding a sales volume
below this 5% level, that the domestic prices are nevertheless still representative for the
market concerned. In practice this is rare.




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The test is conducted at two levels. Firstly, all domestic sales of the product concerned are
measured in relation to total exports of the product concerned. If this is passed, it is then
done at the level of each type of the product concerned.

(f)       Prices below the cost of production

Prices are considered to be below the cost of production where the price is below the per unit
fixed and variable cost of production plus selling, general and administrative costs. Thus, the
relevant cost of production is the total cost of production (see below for a brief summary of
key cost concepts).

          Average cost =                 Total cost of production / Number of units produced

          Marginal cost =                Increase in total cost for extra unit of production.

Average cost is based on the total cost of production, including both fixed and variable costs.
Marginal cost measures the variable cost associated with increasing production by one unit.

Some commentators believe that marginal cost should be used in assessing dumping. If there
is spare production capacity in a factory, and it is used to start producing a new product, it is
true that the actual cost of such marginal production is lower than the average cost. Thus,
commercially it can make sense to sell such additional products below full average cost.

However, anti-dumping rules generally require that the domestic price (and therefore the
export price) must cover all costs (including fixed costs). That is, export prices must be
based on at least full average costs. If the domestic price is higher than full average costs, the
export price must match the former.

These requirements can be illustrated with a simple example. If the total cost of producing
100 units is 1000 Euros, the average cost of producing each unit is 10 Euros. This 10 Euros
cost will be made up of fixed costs (factory, machinery etc) and variable costs (labour, raw
materials etc).

In the above example, say that the cost of producing an extra unit costs only 5 Euros (i.e. this
is the marginal cost). Therefore it may be rational economic behaviour to base the export
price on this cost.

In this example, however, anti-dumping rules require that a minimum 'fair price' reflects the
full average cost of 10 Euros. Of course if the domestic price is higher than 10 Euros, it must
be matched by the export price in order to avoid dumping. In assessing whether prices are
below the cost of production, the Commission will ensure that all costs have been included.
Particularly where an allocation has been made, the Commission will carefully check that the
amount allocated to the product concerned is accurate.

It can be noted that sales at a loss will not automatically mean that actual prices will not be
used. If less than 20% by volume of sales are at a loss, the Commission will use the actual
prices of all transactions. If sales at a loss are more than 20% but less than 90%, the
Commission will use the profitable sales. If sales at a loss exceed 90%, no actual prices will
be used.



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                                               Sales at a loss         Sales at a            Basis of
                                                                        profit            domestic price
                    Situation 1                      18%                 82%                 All sales
                    Situation 2                      35%                 65%              65% Profitable
                                                                                               sales
                    Situation 3                      92%                  8%                Alternative
                                                                                             methods


Normal value is often based partly on actual prices and partly using alternative methods

For products that have different grades/models, dumping will initially be assessed type by
type. It is a common situation in anti-dumping investigations that the domestic prices of
certain types of the product concerned can be used, while for other types it cannot. Given
this, the actual calculation of normal value can be quite complex.

(g)       Alternatives to use of domestic prices

In cases where the domestic prices of a particular company cannot be used, the Commission
uses the following alternatives:

          Alternative normal value 1: Prices of other producers

          For each type for which there are no domestic prices, the first alternative is to use
          prices of other producers that are also selling in the same country.

          Alternative normal value 2: Calculating a constructed normal value

          If there are no such prices, the Commission will most likely use constructed normal
          value. This is calculated by taking the cost of production of the company concerned,
          adding sales and general administrative (SGA) costs and a reasonable rate of profit.
          This will normally be calculated on the basis of the manufacturer's own production
          accounting data.

          When deciding on a reasonable rate of profit, the Basic Regulation gives the
          Institutions a certain discretion although the various methods provided for in the
          Basic Regulation are regularly applied in the order set out therein. There is no pick
          and choose. Often, the profit of other producers' domestic sales in the exporting
          country market will be used.

          Alternative normal value 3: export prices to third countries

          The Commission can use prices from the exporting country to a third country if such
          prices can be classified as "non-dumped". However, this method is rarely used due to
          the fact that the products may also be dumped and more information would have to be
          collected to have this option. Also, there can be problems in matching up different
          types if the products vary. In this way, constructing normal value has an advantage
          because it can be done for all product types exported and it is based on information
          that is already collected from exporters.




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It should be noted that most cases involve products with different types or grades. Each type
may be treated according to its particular situation and, therefore, it is possible that normal
value is based on a mix of actual prices and alternative normal values 1 and 2.

(h)       Non-market economies and economies in transition

For countries or companies operating in a non-market economy environment, the approach to
determine normal value has to reflect the particular circumstances in such countries..

The countries subject to such a different approach can be split into three groups:

          Group 1 - Non-market economies (non-WTO members) – Albania, Azerbaijan,
          Belarus, Georgia, North Korea, Tajikistan, Turkmenistan, Uzbekistan.

          Group 2 – Former non-market economies which became WTO members – Armenia,
          Kyrgyzstan, Moldova, Mongolia.

          Group 3 - Economies in transition & WTO Members – China, Ukraine, Vietnam,
          Kazakhstan.

For group 1, domestic prices and costs are never used. In order to produce a normal value
against which the export price(s) can be compared, the Commission will usually choose a
market economy third country (analogue country).

The third country must be "appropriate" and selected in a "not unreasonable manner". In
reality, the choice of this country depends on a number of factors including whether prices
and costs are excessive in comparison with a world average for the product concerned. Also,
the Commission will consider the conditions of competition in the third country and the
characteristics of its domestic industry such as the production process, scale of production,
quality, access to raw materials etc. as compared to the situation of producers in the non-
market economy.

For countries in group 2 and 3, the situation is slightly different. In these two groups,
individual companies that are operating in a market economy environment can apply to be
treated as such. It should be noted that market economy treatment (MET) is only granted
where it is claimed, and where sufficient evidence is provided that the market economy
environment exists.

The following criteria must be met for market economy treatment to be given:

      •   Decisions with regard to prices, costs and inputs are made in response to market
          signals without significant state interference

      •   Cost of major inputs reflect market values

      •   The companies involved maintain clear accounting records, independently audited
          and in line with international accounting standards

      •   Production costs and financial situation are not subject to significant distortions as a
          result of former non-market economy environment


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      •   Legal certainty and stability are provided by bankruptcy and property laws

      •   Exchange rate conversions are carried out at the market rate

Companies in groups 2 and 3 that do not apply for MET, or those who apply but are
unsuccessful, are treated in the same way as companies in group 1 (domestic prices and costs
are based on the analogue country).

2.6       Export Price

(a)       Definition

The export price is usually the price actually paid for the product when sold from the
exporting country to the EC. It is usually calculated on an ex factory level so that it can be
compared more easily to the domestic price.

The actual costs included in the export price shown on a particular invoice will depend on the
delivery terms agreed in the contract between seller and buyer. The following diagram
illustrates:-


      Export Country                                                                             Import Country


       Factory
                                                                                                    Customer




             Ex factory               FOB                              CIF
               price                  Price                           Price             Delivered price


Where necessary, transport, insurance and other costs incurred in bringing the product to the
point of delivery to the buyer will be subtracted to get back to the ex factory level.

(b)       Related sales companies in the EC

Export prices may be considered to be unreliable where there is an association between the
exporter and EC importer. In such cases the export price is calculated on the basis of the first
resale price to an independent purchaser in the EC. Adjustments are then made to this price
to remove all additional costs incurred after the goods arrived at the EC frontier.


                Exporter                              Related importer                            Independent
                                      P1                   in EC                     P2           customer in EC
               •    P1 is usually considered to be unreliable.




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               •    In such situations, export price is constructed;

               •    Constructed export price = P2 – costs and profits of importer

               •    Cost and profits are based on actual data from an unrelated importer.

The Commission will be vigilant to ensure that all appropriate deductions are made. This
will include deducting profit and SGA costs of the related importer. The profit will usually
be based on that earned by unrelated importers of the product concerned. SGA costs will
usually be based on actual costs incurred by the importing company concerned.

(c)       Export price for non-market economies or economies in transition

A weighted average export price is calculated for all exporters under non-market economy
treatment. The exception to this is where individual treatment has been granted.

Individual treatment means that an individual dumping calculation will be made for that
company. This means that their own export prices will be used as the basis to calculate an
individual dumping margin as opposed to the single one applying to all producers (based on
all exporters prices aggregated). It can be noted that when individual treatment is granted, the
normal value of the company will still be based on the analogue country data (unless MET
has been granted).

The criteria for individual treatment are as follows:

      •   profit and capital invested can be repatriated (in case of foreign investment)

      •   export prices, quantities, and conditions and terms of sale are freely determined

      •   majority of shares held by private persons. Any state officials on board should be in
          minority or company should nonetheless be sufficiently independent form state
          interference.

      •   Exchange rate conversions carried out at the market rate.

      •   State interference is not such as to permit circumvention of measures if individual
          exporters are given different rates of duty.

The fundamental test underlying all above criteria is meaningful independence of the exporter
from the influence of the state. A particular concern of the Institutions in this context is
circumvention, i.e., where exports all get re-routed through a company with the lowest duty
(see also below 2.11).

2.7       Export Price (CIF)

In the formula to calculate the dumping margin given at the start of this section, the
denominator used is the "CIF" export price. The reason why the Commission divides the
amount of dumping (the difference between ex factory export and domestic prices) by the
CIF export price is to create a readily usable figure for national customs authorities. They



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receive shipments of goods valued at the CIF level for customs purposes and it is at this level
of trade that an anti-dumping duty is applied.

If the actual CIF value is available (either from the invoice or a related importer), this will be
the basis of the Commission's calculation. If, however, the export prices are ex works, an
estimate of transport and insurance costs to the EC border must be made and added to the ex
works export price for the purposes of making the dumping calculation.

2.8       Comparison and Adjustments

(a)       Fair Comparison

Once the Commission has calculated normal values for each type exported, it can calculate
the dumping margin by comparing export prices against those normal values. In doing this, it
is obliged to ensure that the comparison is a fair one.

The Commission is required to make a comparison:

-         between comparable products: comparison must be between like with like.

-         at the same level of trade (that is, prices must be compared between equivalent types
          of sale). For example, the price to an end user will be different from the price to a
          distributor. If the levels of trade for export sales and domestic sales are different, an
          adjustment must be made. The comparison is usually done at an ex factory level.

-         sold as nearly as possible at the same time.

The comparison is done for each type identified during the investigation. That is, a normal
value and export price is calculated for each type.

Only products of identical specification can be directly compared with each other. Therefore,
the Commission will use strict product definitions (usually via a classification system of
product control numbers; "PCNs"). It is often the case that domestic sales cannot be used
because they do not exactly match the types that are exported and adjustments cannot be
made. All export prices are used and the job is to match up domestic transactions for each of
the exported types.

(b)       Adjustments

Where there are differences in the products under comparison and it is shown that the
differences affect the price comparability of the products, an adjustment must be made. The
Commission will make adjustments for factors of which it is aware. The regulation provides,
however, that adjustments can be claimed by the exporter if evidence is provided showing
that the difference affects the price comparability of the products.

Adjustments may be made to take account of the following differences :

•     Physical Characteristics - on the basis of a reasonable estimate of the market value of the
      difference.




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•     Import Charges and Direct Taxes - where domestic taxes are not imposed or are refunded
      for export sales.

•     Discounts, Rebates, and Quantities - for differences in the amounts of discounts and
      rebates applied to sales if it is shown that these amounts are directly linked to the sales
      covered by the investigation.

•     Level of Trade - where the domestic and export distribution chain have distinct
      differences. For example, if all domestic sales are made to end users, while export sales
      are to distributors, this is likely to result in a price difference between domestic and
      export prices.

•     Transport Insurance and Ancillary Costs - but only where costs are directly included in
      the price of the product.

•     Packing - for differences in the directly related costs of packing

•     Credit - where the cost of credit is included in the price (i.e. credit terms agreed at the
      time of invoicing)

•     After Sales Costs - where costs differ for providing warranties, guarantees and technical
      assistance whether required by law or not.

•     Commissions - where commission rates differ.

•     Currency Conversions - rates of exchange will be used for the date of the sale, except
      where a forward contract directly related to the sale has been used. Fluctuations in
      exchange rates are ignored and exporters are allowed 60 days to reflect sustained changes
      in exchange rates in their prices.

•     Other Factors - Any other factor that affects price comparability where customers
      consistently pay different prices on the domestic market because of differences in such
      factors

Two examples of adjustments that would work in the favour of the exporter are as follows:

      Credit terms: domestic customers have 60 days credit while export sales are cash on
      delivery. The cost of credit can be deducted from the domestic price in this case.

      Level of trade: export sales are made in large consignments to distributors while domestic
      sales are made to end-users in much smaller quantities. To the extent that there are
      different levels of trade, an adjustment can be made to ensure a fair comparison.

Although the Commission should be responsible for ensuring that a fair comparison is made,
exporters should nevertheless make a claim and back this up by evidence to show that
otherwise the price comparability would be affected.

(c)       Average export price or transaction by transaction?

There are a number of ways in which the price comparison can be done.


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The most common method in the past 3 was for the Commission to calculate one figure for
normal value (weighted average domestic price for each type) and for each export transaction
to be compared to this figure on a transaction by transaction basis. This effectively produced
a series of dumping margins (i.e. the value by which export price was below normal value)
which were aggregated and expressed as a proportion of all export transactions 4 to give a
percentage margin of dumping. Note that under this "transaction by transaction" approach,
negative dumping margins (export price greater than normal value) were counted as zero so
as not to cancel out the effect of dumped transactions.

After 1995, the normal method became an average to average comparison within the model
or type categories (i.e. if there are 10 models or types this calculation would be done for each
model). For each of the 10 models, a weighted average normal value would be compared
with a weighted average export price which by definition meant that negative dumping was
allowed to offset dumped transactions). However, zeroing continued to be used between the
models when aggregating the dumping found for each model. Zeroing could also be used
within the model if there was a pattern of export prices that differed significantly among
different purchasers, regions or time periods (so-called 'targeting').

Following the bed linen WTO dispute, the current method within the model continues to be,
where possible, to compare the weighted average export price with the weighted average
normal value for the period of the investigation. However, zeroing between models is now
never used due to the fact that it is explicitly outlawed by WTO jurisprudence. This means
that dumped imports can be cancelled out by imports sold at prices greater than normal value.
Only where it appears that such dumping is 'targeted' at particular regions, customers or
during particular time periods will the Commission revert to the old method of comparing
export prices on a transaction by transaction basis.

2.9       How the Commission makes a dumping calculation

Calculating a dumping margin is a time consuming and complex task. The following
simplified example shows how the Commission calculates the margin of dumping.

We will assume that the products under investigation are produced to only 1 specification. If
there is more than one type or model, it is necessary to perform an equivalent calculation for
each type.

During the period of investigation, five consignments are sold on the domestic market as
listed in the table below.

The domestic sales are made in representative quantities to unrelated purchasers and all
prices cover cost of production.

Normal value (domestic price) is calculated by taking a weighted average of these prices:




3
    Pre-1995 when the WTO was created and the WTO anti-dumping agreement came into effect
4
    CIF value of exports as explained above.


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             Units Sold                                    Price (€)                                Units * Price
               1200                                          140                                      168,000
                600                                          135                                       81,000
                800                                          145                                      116,000
                800                                          132                                      105,600
                500                                          151                                       75,500
                 3900                                                                                   546,100


          Weighted average domestic price = 546,100 / 3900 = €140 (Normal Value)

During the same period, export consignments are indicated below.                                          For each export
transaction, the amount and value of dumping is calculated as follows:

InvoiceValue            Quantity             Export             Normal             Dumping            Dumping*Quantity
 (ex works)                                   Price              Value
   144000                  1200              120.00               140                   20                        24000
    69000                   600              115.00               140                   25                        15000
   192000                  1200              160.00               140                   -20                      -24000
    94400                   800              118.00               140                   22                        17600
   232500                  1500              155.00               140                   -15                      -22500
   731900                  5300              138.09                                                               10100


The dumping margin is calculated as follows:

                       (Normal Value - Export Price) / CIF Price

If it is assumed that the cif price is 10% higher than the ex factory export price, the cif price
would be 151.89

Thus the dumping margin is 140-138.09/151.89 = 1.25%

In practice, the way in which the Commission calculates the dumping margin is to calculate
for each transaction the total value of the dumping (i.e. absolute dumping margin multiplied
by quantity sold). The reason for this is that there are often hundreds of transactions (or
more) involving more than one grade/model (i.e. there are a number of different normal
values). Rather than calculating a dumping margin for each transaction and taking a
weighted average, the value of the "total dumping " is divided by the total cif value of the
imports. The cif invoice value is estimated at 10% of total ex factory invoice value
(i.e.731900 * 1.10 = 805,090).

Thus, in the example above, the dumping margin would be calculated as follows:

                                10,100 / 805,090 = 1.25%

As mentioned previously, the Commission will usually calculate the dumping margin on a
weighted average to weighted average basis. This is the basis on which the above calculation
has been made. However, if the Commission decides that a weighted average normal value


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to individual export transaction comparison is necessary, the calculation will change
significantly (though these days this rarely happens). The reason why it changes is that in
this circumstance, positive dumping margins (i.e. where normal value is less than export
price) are counted as zero. That is, they are not allowed fully to offset the negative dumping
margins.

InvoiceValue Quantity                      Export             Normal             Dumping              Dumping*Quantity
                                           Price              Value
    144000                 1200              120.00              140                    20                       24000
     69000                  600              115.00              140                    25                       15000
    192000                 1200              160.00              140                    -20                        0
     94400                  800              118.00              140                    22                       17600
    232500                 1500              155.00              140                    -15                        0
    731900                 5300              138.09                                                              56600


In this case, the dumping margin is 56,600/805,090 = 7.03%.

The above calculations are all based on the assumption that there is only one type or model.
This is what we have labelled as the "within model" calculation in 2.8(c) above.

If there are five models, the dumping would be calculated for each model.

InvoiceValue Quantity                      Export             Normal             Dumping              Dumping*Quantity
                                           Price              Value
   Model 1                  200               100                120                    20                    4000
   Model 2                  300               150                140                    -10                 -3000 or 0
   Model 3                  150               150                160                    10                    1500
                                                                                                           2500 or 5500


It can be seen that the total value of dumping varies according to whether the negative
dumping of model 2 is allowed to offset the dumping of models 1 and 3. This is the
"between model" calculation referred to above.

2.10      Insignificant dumping margin

When the dumping margin for any exporter is insignificant (de minimis), the investigation
against that exporter is terminated. Insignificant is defined as less than 2%. Thus, in the
above example, the first calculation gives a de minimis dumping margin, while the second
calculation is clearly significant.

2.11      A global dumping margin or individual dumping margins?

Individual dumping margins are calculated for each company (except for non-market
economies and for companies in non-market economies or economies in transition where
neither MET or IT have been granted).




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For companies operating in a non-market economy environment or in an economy in
transition (where MET or IT has not been granted), the Commission will normally calculate a
single country-wide dumping margin. This is due to the fact that it is not considered possible
to distinguish between individual producers when there appear to be links to the state.
Imports from such companies are considered to be from "one producer" and therefore only
one dumping margin is calculated. This will result in the application of only one anti-
dumping measure to such imports which will apply regardless of which producer has actually
supplied the product. One duty is applied to prevent circumvention through the company
with the lowest duty.

However, individual exporters can still claim individual treatment even in a complete non-
market economy.

The table below provides a summary of the possible treatment of exporters in various
different situations with regard to normal value and export price.

          Status                              Normal Value                  Export Price             Duty Rate
          Market Economy Treatment            Actual prices/costs           Actual prices            Company by company
          (MET)
          Non-Market Economy                  Analogue          country     Actual prices            One for all exporters
          (NME) or economy in                 prices/costs
          transition for companies not
          receiving MET or IT
          Individual Treatment (IT) in        Analogue          country     Actual prices            Company by company
          NME or economy in                   prices/costs
          transition situation


2.12      Subsidy

(a)       Definition of subsidy

Certain types of subsidies can be countervailed (i.e. anti-subsidy measures applied) when the
benefit received is deemed to give an advantage to exporters. Note that such benefit does not
have to arise only from export subsidies.

The definition of subsidy is a broad one. A subsidy is defined as a "financial contribution by
government" which confers a benefit to the recipient.

This can include:

      •   direct transfer of funds e.g. grants.

      •   revenue foregone e.g. tax exemptions

      •   government provision of goods & services

However, subsidies are only countervailable if they are specific. To be specific, the subsidy
must be limited to certain enterprises or regions. Also subsidies contingent on export
performance or use of domestic over imported goods are deemed to be specific.




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Thus, general government intervention in the economy that benefits all enterprises is not
countervailable because it is not specific. Likewise, the setting or changing of generally
applicable tax rates by any level of government entitled to do so is not considered to be a
specific subsidy for the purposes of the AS Regulation.

Subsidies that are only received by certain enterprises are not automatically specific. Where
there are objective criteria and eligibility is automatic, the subsidy may be considered to be
non-specific. Objective criteria or conditions mean criteria or conditions which are neutral,
which do not favour certain enterprises over others, and which are economic in nature and
horizontal in application, such as number of employees or size of enterprise.
The criteria or conditions must be clearly set out by law, regulation, or other official
document, so as to be capable of verification;

However, such subsidies can be found to be specific if there are reasons to be believe they are
in fact ("de facto") specific. In such a situation, other factors will be considered;

      •   is the subsidy programme used by a limited number of certain enterprises? A subsidy
          which is limited to certain enterprises located within a designated geographical region
          within the jurisdiction of the granting authority shall be specific.

      •   is the programme predominantly used by certain enterprises?

      •   are disproportionately large amounts of subsidy granted to certain enterprises?

      •   how is discretion exercised by the granting authority in the decision to grant a
          subsidy? In this regard, information on the frequency with which applications for a
          subsidy are refused or approved and the reasons for such decisions shall, in particular,
          be considered.

(b)       Calculation of benefit

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the
recipient.

In calculating benefit, the following factors are taken into account:

      •   Government provision of equity capital does not confer benefit unless it is
          inconsistent with the usual investment practice of private investors.

      •   A government loan has no benefit unless the rate is below the rate payable for a
          comparable commercial loan (i.e., a loan at commercial rates is not a subsidy)

      •   A loan guarantee provided by government does not confer benefit unless the cost of
          the loan is less than what the firm would pay in the absence of a government
          guarantee.

      •   Purchase by government of goods and services is not a benefit unless consideration
          received is greater than "adequate", taking into account prevailing market conditions.




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      •   Provision by government of goods and services is not a benefit unless consideration
          given is less than “adequate”, taking into account prevailing market conditions.

In each case, a benchmark is established against which the benefit can be judged. If there is
no benefit in relation to the benchmark, there is no subsidy. However, if there is a subsidy,
the benchmark can be used to put a value on the benefit received.

(c)       Calculation of subsidy margin

The amount of subsidy is calculated per unit taking into account the following;

      •   Fees/costs and export taxes or duties specifically intended to offset the subsidy should
          be subtracted..

      •   For subsidies not related to quantity, the total value of the subsidy should be allocated
          over production, sales or exports of product concerned.

For more details see the Commission's "guidelines for the calculation of subsidy in
countervailing duty investigations" (published in Official Journal C394 17.12.98).

(d)       Insignificant subsidy margins

Subsidy margins are considered insignificant (de minimis) if they are below 1%.                                       For
developing countries the de minimis level is less than 2%.

(e)       EC state aid rules

EC state aid rules contain similar definitions of subsidy and benefit. The EC state aid regime
prohibits illegal subsidies under EC law. Breaching EC state aid rules requires repayment of
the subsidy, a much tougher sanction than anti-subsidy measures.

However, the rules are not identical. In this regard, for example, it is possible that a subsidy
may be prohibited within the EU under the state aid rules, yet not be countervailable.

2.13      Injury and causal link

Once the existence of an unfair trading practice has been established (dumping or a subsidy),
the second requirement before any measures can be adopted is that there must be injury. The
third requirement is that a causal link must exist between the unfair trading practice and the
injury (see paragraph 2.1 of a summary of the main requirements to impose AD or AS
measures).

(a)       Concepts of injury

Injury occurs when dumped or subsidised imports cause problems for the EC industry. The
injury determination is an extremely important part of AD and AS investigations. If there is
no injury, it is not possible to take measures, even against imports that are dumped at
significant dumping margins.

There are three concepts of injury used in anti-dumping or anti-subsidy investigations:



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      •   Material injury - significant problems suffered by EC industry

      •   Threat of material injury - though not currently being faced, problems are imminent

      •   Material retardation - there is no EC industry, but the establishment of such an
          industry is prevented by dumped imports

(b)       Determination of injury

The first point of note is that the AD or AS regulation requires that determination of injury is
based on positive evidence. That is, clear, objective facts must be established by the
Commission to show that the EC industry has been injured.

This requires an examination of two issues:

              Volume of dumped imports and the effect on prices in the EC market; and

              Consequent impact on the EC industry.

(c)       Cumulation

With regard to the volume of imports where there is more than one country subject to
investigation, the Commission will usually cumulate the imports of the various countries
involved in the investigation. In this way, the injury analysis is conducted in terms of the total
dumped imports, rather than at the level of the individual countries involved in the
investigation. This can only be done, however, if the dumping margin and volume of imports
from each country are not negligible and the conditions of competition are similar.

(d)       Volume of dumped imports

The Commission checks whether there has been a significant increase in dumped or
subsidised imports, either in absolute quantities or in terms of market share. The latter is
usually the more important indicator as there are situations in which the absolute level of
imports can be falling while market share increases.

This can occur where the fall in imports is less than the fall in EC sales. This results in an
increased market share for exports despite a reduction in the size of the overall market.

(e)       Effect on prices

In looking at the effect of imports on prices, the main consideration is the extent to which the
import price undercuts the EC price.
                       EC Producers Price


                                                    Price Undercutting

                       Import Price




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However, the effect on prices of such imports may also be that EC prices have already
decreased (price depression), or may have prevented a price increase (price suppression).

(f)       Impact on EC industry

In analysing the impact of the imports on EC industry, the regulation requires an economic
evaluation of the relevant economic indicators. The EC industry must clearly be suffering
significant problems in order for a positive injury determination to be made.

The regulation lists typical economic factors that must be analysed in this context.

                    effect of past dumping/subsidy                        capacity utilisation
                    magnitude of dumping/subsidy margin                   factors affecting Community prices
                    actual and potential decline in sales                 cash flow
                    Profits                                               Inventories
                    Output                                                employment and wages
                    market share                                          Growth
                    Productivity                                          ability to raise capital
                    return on investments                                 Investment


The regulation deliberately gives no guidance as to which indicators are the most important
and it states that the list is not exhaustive. It also makes clear that any one or several of the
listed factors do not necessarily give decisive guidance.

The reason for this is that injury is not always visible in the same way. The injury analysis is
often focused on market shares and profits in actual investigations. However, there are cases
where injury does not appear in the form of loss of market share. In certain cases, the share
of the EC industry actually increased in a situation where dumping and injury were found.

In practice, the most important indicator is profitability. If profitability is unaffected, it is
highly unlikely that there is injury. One reason for this is that it captures both price effects
(e.g. price undercutting & underselling) and volume effects (e.g. loss of sales, reduced market
share etc.) 5 .

(g)       Lesser-duty rule

The extent to which the import price is injurious is very important given that the EC applies
the lesser duty rule 6 .




5
  Profit = Revenue – Costs; Revenue = Volume sold * Price; thus, injury either in reduced volume or reduced
price will have the effect of reducing profit.
6
  The lesser duty rule requires that the anti-dumping or countervailing (anti-subsidy) duty is the lesser of the
     dumping margin or the injury margin.


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Therefore, a 'non-injurious price' is calculated based on the EC price that would be required
to remove the injury. This is calculated by reference to the cost of production of the EC
industry, with a reasonable profit added. The difference between the non-injurious price and
the price of dumped imports is called price underselling. The amount of price underselling is
used to calculate an injury margin for each company (or for the exporters as a whole in the
case of non-market economy treatment). That is, a single % is calculated that represents the
"amount" of injury being caused by dumped imports.

          Price underselling (Injury margin)

                                        Non-injurious price
               Profit in
              absence of
             dumping or                                                                                  Injury Margin
               subsidy



                                                                                    Import Price
             EC industry
               cost of
             production




The injury margin is often less than the dumping margin. It is therefore often the basis on
which the level of duty is calculated, given that the EC regulation requires the lesser of the
two to be used. As in the case of the calculation of dumping, adjustments are often necessary
in the calculation of price underselling.

(h)       Threat of material injury and material retardation

The Commission can make a positive injury determination on the basis of 'threat of injury'.
This is the case where injury does not yet exist but the change in circumstances that would
lead to injury is clearly foreseen and imminent.

Factors that are particularly relevant in this context include the available capacity of exporters
taking into account demand in other markets; and whether sufficient stocks exist to increase
exports dramatically.

This provision is very rarely used.

It is also possible that a positive injury determination can be made if there is no EC industry.
The only situation where this could happen is where an EC industry has been prevented from
developing (material retardation) due to dumped imports. However, this has never been used
as the basis on which to take anti-dumping or anti-subsidy measures.




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(i)       Insignificant injury

For dumping, injury is normally regarded as negligible (de minimis), and proceedings
terminated, where the imports from one country represent a market share of less than 1%.

An investigation should be terminated if the imports from the country concerned account for
1% or less of EC consumption. The exception to this occurs where there are a number of
countries with market shares of less than 1% and where such countries collectively achieve
more than 3% of EC consumption.

It can be noted that the EC has adopted rules different to those outlined in the WTO anti-
dumping agreement. The latter defines de minimis injury as the situation where imports from
the country accused of dumping are less than 3%/7% of total imports into the country in
which the dumping complaint has been made. In most situations the EC rule is more
generous.

However, where imports have a high overall market share, more than 1% of market share
may still be less than 3% of total imports. That is, if total imports from all countries
(including those not concerned) have a 70% market share, 1.5% market share is only a 2.1%
share of imports i.e. this would not be de minimis under the 1% test but would be under the
3% test.

For subsidy investigations, de minimis injury is also less than 1% market share. However, for
developing countries subsidised imports can be up to 4% of total imports before they are
considered to be causing significant injury.

2.14      Causal link

A crucial part of the injury analysis is to demonstrate that dumped/subsidised imports are the
cause of the injury as determined by the above criteria. The Commission must also ensure
that injury caused by other factors is not attributed to dumped imports.

A positive determination of injury may reflect a number of problems faced by the EC
industry, of which dumping is only one.

It may be that EC industry has been affected by a dramatic increase in the volume of non-
dumped/subsided imports from countries not accused of an unfair trading practice. On the
other hand, it might be the case that changes in demand in the EU, perhaps caused by
recession, have 'injured' the EC industry. Similarly, poor productivity or inadequate
application of technology may explain a worsening performance.

It should be stressed that dumped imports only have to be found to be a material cause of
injury. It may well be that other factors are in fact extremely significant causes of injury. As
long as the dumped imports are a cause of injury, and it is material, the Commission can find
causality. It is not necessary to find that the dumped imports are the sole cause of material
injury.




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2.15      Community Interest

The fourth and final requirement, before anti-dumping or anti-subsidy measures can be
adopted, is that such measures must be in the Community interest (see paragraph 2.1).

Community interest refers to the overall interests of the European Community. By nature,
the Community interest test is a forecast that examines whether the adoption of AD or AS
measures would disadvantage the economy overall. More specifically, anti-dumping or anti-
subsidy measures may not be applied where the Commission can clearly conclude that it is
not in the Community interest to apply measures.

The Community interest part of the investigation requires an "appreciation" of all the various
interests to be taken into account. These interests are generally interpreted to include: the
domestic industry that is making the complaint; importers; EC industries that use the
imported product and will ultimately pay a higher price (if it is used as an input in the
production process); and the ultimate consumers of the product.

This is not a public interest in the broad sense, taking into account broader policy issue such
as health, environment, security etc. Rather it is an economic balancing test to ensure that
measures will be to the benefit of the EC.

In terms of how much importance is attached to each interest, however, the regulation states
that "special attention" must be given to the need to eliminate the trade distorting effects of
injurious dumping. This gives a built in tilt towards adopting measures once the first three
requirements have been met (see paragraph 2.1). Thus, the negative impact of the measures
really must be disproportionate in relation to the benefits, in order to reach a conclusion that
such measures are not in the Community interest. Note that this additional test is not required
under the WTO ADA.




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2.16      Procedure

(a)       Overview

The procedure for anti-dumping and anti-subsidy investigations is very similar and is
summarised in the table below.

         STAGE                                      WHAT HAPPENS                                            TIMING

Complaint                          Industry submits evidence to the Commission                          45 days for
                                                                                                        Commission to decide
                                   requesting investigation                                             whether to initiate

Initiation                         The Commission opens an investigation against
                                   one or a number of countries if there is
                                   sufficient evidence

Questionnaire                      Information must be provided by each exporter                        40 days after initiation
                                                                                                        to
                                   - fill in questionnaire and make other                                respond to
                                   submissions. Apply for individual treatment, if                      questionnaire (subject
                                   relevant.                                                            to possible extension)


Verification                       The Commission visits the premises of each                           Around 1 -3 months
                                                                                                        after submission of
                                   exporter to verify the information.                                  questionnaire

Provisional duties                 Imposed when the Commission makes a                                  Minimum 60 days,
                                                                                                        maximum 9 months
                                   provisional determination of dumping and/or                          between initiation and
                                   subsidy and injury/causality/Community                               provisional decision.
                                   interest.                                                            Usually 9 months.


Price Undertakings                 Offered by exporter to the Commission not to                         Can be offered at any
                                                                                                        time but not before
                                   sell below a minimum price.                                          provisional duties or
                                                                                                        after definitive duties

Definitive duties                  Final measures adopted if provisional findings                       Provisional duties can
                                                                                                        be imposed for six or
                                   are confirmed.                                                       nine months
                                                                                                        depending on the
                                                                                                        circumstances. For
                                                                                                        CVD, provisional
                                                                                                        measures only 4
                                                                                                        months.
Application of                     Duties or undertakings are valid for 5 years,
measures                           unless this is changed in an interim review. If
                                   there is a review, it should normally be
                                   concluded within 12 months
Expiry or review                   Duties expire after 5 years unless an expiry
                                   review is requested and sufficiently
                                   documented.




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(b)       Complaint and initiation

Although the Commission has powers to initiate in exceptional circumstances an
investigation on its own initiative, almost all investigations result from the submission to the
Commission of a complaint by or on behalf of the Community industry.

          THE OBLIGATIONS OF THE EC INDUSTRY WHEN MAKING A COMPLAINT

          A complaint must contain evidence of dumping/subsidy, injury and a causal link. It must include the
          best information the complainant has available on :

          •    the identity of the complainant (either an individual company or more usually an association of EC
               producers) and the products produced by it which are affected by the allegedly dumped imports.

          •    a description of the allegedly dumped products or amount, nature & countervailibility of subsidy.

          •    the exporting countries concerned and the identity of all exporters who are known to be involved
               together with details of EC importers.

          •    the domestic and export prices of the third country producers.

          •    how these imports have affected the development of the EC market and led to injury to the EC
               industry particularly in terms of trends in key economic indicators such as market share,
               production and profitability.


Before the Commission can initiate an investigation, it must be satisfied that the complaint
includes sufficient evidence of the existence of both dumping and/or subsidy and injury to
justify proceeding with the case.

No investigation can be initiated where the complaint concerns a third country whose total
exports of the product to the EC account for less than 1% of Community consumption, except
where these exports are aggregated with exports from other third countries which collectively
account for 3% or more of Community consumption.

(c)       Community industry support

A complaint can only be accepted where the Commission verifies that it has been made by or
on behalf of the Community industry. To do this it must evaluate the extent to which the
Community industry has supported or opposed the complaint. Support or opposition is
measured by reference to the percentage volume of EC production accounted for by those in
support and those opposing the complaint:

-         a complaint must be supported by EC producers accounting for a minimum of 25% by
          volume of EC production;

-         where there is support from producers representing 25% or more but less than 50% of
          EC production, those supporting the complaint must account for a greater volume of
          production than those who oppose the complaint.


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(d)        Time Limits

The Commission has a maximum of 45 days from receipt of the complaint to decide whether
or not to initiate an investigation. The reality is, however, that complainants—in case of
doubt regarding the technicalities of a complaint—will hold discussions with the Commission
informally; if need be, on a number of occasions. The Commission will explain what would
be required for the complaint to be accepted. This means that, by the time it is formally
submitted, a complaint is likely to contain sufficient evidence. Although this means that very
few complaints are rejected once officially lodged, this process is useful in screening out
time-wasting or weak complaints.

Once initiated, an investigation must in all cases be concluded within 15 months of initiation
(13 months for AS investigations). All new investigations tend to take the full 15/13 months
for AD/AS investigations respectively. These very demanding time scales create significant
procedural pressures at all stages of the investigation.

(e)        Consultation with EC member states on complaint

Once the Commission is satisfied that an investigation is justified, it consults the "Advisory
Committee" about its intention to launch an investigation (or indeed to reject the complaint).
The Advisory Committee is made up of representatives of the governments of each of the 25
EC member states. At this stage, the Commission is only under a duty to consult with the
Advisory Committee. It is not obliged to take into account views expressed by the member
states. However, objections raised by the committee can be of considerable practical
significance in highlighting particular aspects of the complaint which the Member States
believe need careful scrutiny. The final decision to impose definitive duties must be taken by
the member states in the Council of Ministers . To this extent, the Commission does take
account of member state views throughout the process.

(f)        Information released by the Commission

No official publication is made by the Commission confirming the lodging of a complaint,
indeed the Commission is under a duty to avoid publicising the fact that a complaint has been
made.

The Commission will inform the government(s) concerned prior to initiating an investigation.

The first official publication is made when the Commission initiates an investigation. The
initiation is formally announced in the Official Journal of the EU 7 . The Commission will
also notify directly those exporters, importers and representative associations, of whom it is
aware, that an investigation has been commenced. The Commission will also send them a
questionnaire and a non-confidential version of the complaint. The Commission will also
send out market economy and individual treatment claim forms if the investigation involves a
non-market economy or an economy in transition.


7
    The Official Journal can be consulted at the EUR-Lex website (http://europa.eu.int/eur-lex/lex/en/index.htm).
      Also, the anti-dumping section of the DG Trade website contains a 'what's new' section that gives
      information on initiation of cases and adoption of measures.
      (http://europa.eu.int/comm/trade/issues/respectrules/anti_dumping/index_en.htm).


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(g)       Target of investigation

Anti-dumping investigations are opened on a country basis i.e. all exporters in the country (or
countries) investigated will be investigated.

In this respect, it differs from EC competition policy, where individual companies are
investigated.

However, measures are generally applied on a company by company basis. That is, dumping
and injury margins will be calculated for each cooperating exporter and individual duty levels
applied accordingly.

Given that the cases are on a country basis, a so-called 'residual duty' will also be applied to
all exports from the country being investigated. This will be set at the level of the highest
individual duty applied (or even higher if there is significant non-cooperation). Thus, exports
by any company not given an individual duty level will be subject to the residual duty rate.
Newcomers can however subsequently request to have an individual duty rate.

(h)       Questionnaire and investigation period

Having initiated an investigation, the Commission's first task is to obtain relevant information
from the producers concerned on their products and prices. This information is obtained in
two stages; requesting answers to a questionnaire, and verifying the accuracy of the
information provided.

In the questionnaire the Commission will state the period of time to which the requested
information should relate. The definition of the investigation period is of considerable
importance as information relating to activities outside this time frame will not normally be
taken into account. The investigation period must be of not less than 6 months, usually one
year, starting immediately prior to the initiation of the proceedings.

Questionnaires are sent to exporters, EC producers, EC importers and users of the product.

(i)       Description of exporters’ questionnaire

The Commission generally uses a fairly standard questionnaire, which is adapted to fit the
particular features of the industry in question. It will set out a description of the products
concerned, the time period of investigation and the time limits within which the replies must
be provided to the Commission. It also confirms the names and contact details of the
Commission officials responsible for the investigation.

For exporters, the questionnaire requires that detailed information is provided in the
following general areas :

      •   details of the exporter including ownership structure and details of shareholders;
          copies of published accounts with confirmation of the accounting practices used;
          numbers of employees and the relevant product distribution structure.

      •   details of the products - the nature of the products sold by the exporter with details of
          all products sold; copies of relevant catalogues, price lists or brochures; details of


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          recent year's annual turnover for the products broken down by reference to domestic
          and export sales; details of production capacity and levels of capacity utilisation; as
          well as details of the production costs, total production, domestic and export sales for
          all products concerned during the investigation period.

      •   details of sales during the period - provision of a list of all related customers of the
          exporter; list of export transactions to each of the 25 member states; the value of these
          sales and their cost of production, details of all domestic and export transactions made
          during the investigation period together with full documentation for selected
          transactions.

Similar information is requested from EC producers.

Companies situated in countries with economies in a state of transition must complete a claim
form for market economy treatment if they wish to apply for it.

(j)       Who should complete a questionnaire?

All EC industry producers that are making the complaint must complete a full questionnaire.

The most important players as regards exports in the investigation are the manufacturers. It is
the manufacturers who are held responsible for the pricing of products that they have
produced. Even if products are re-sold by trading companies, it is the producers that will
have anti-dumping measures applied against their products. The difference for the trader is
that he can supply from any source. Thus, products he sells may or may not be subject to
anti-dumping measures depending on the source.

Traders and importers are sent questionnaires but they are much less demanding than the
producers' questionnaire and it is optional to fill them in, though the information is
exceptionally useful for the Commission. There is not the same incentive to cooperate as for
a manufacturer. However, when the trading company or importer is related to the producer
subject to anti-dumping investigation, they must fully cooperate in completing a
questionnaire.

In AS investigations, a questionnaire will also be sent to the government concerned.

Note that it is the responsibility of exporters to make themselves known to the Commission
(if they are not already known) and to request a questionnaire if they have not been sent one.
Ignorance of the case is no defence. For this reason, governments and industry associations
in the exporting country will normally try and inform all producers in an industry that the
case is taking place.

(k)       Time Limits for collection of information

Strict time limits apply to the collection of this information. Parties receiving questionnaires
are given 30 days to reply. This time limit starts to run from the deemed date of receipt of the
questionnaire, which is one week after the day it was sent to the exporter or transmitted to the
appropriate diplomatic mission. Thus, 37 days from the date of initiation is the legal
requirement. In practice, the Commission actually allows 40 days.



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An exporter may request an extension of time to respond to the questionnaire. However, the
Commission is obliged to conclude all investigations within 15 months for anti-dumping and
13 months for anti-subsidy, which means that the Commission has little flexibility. The
Commission usually agrees to short extensions (for both complainants and exporters) and the
request should be made in writing stating the reasons why. .

(l)       Disclosing confidential information

Many companies are concerned about confidentiality. Sensitive and confidential business
information must be handed to the Commission during the investigation.

The interests of the party handing over this information (complainant or exporter) are
protected by stringent legal obligations imposed on the Commission. These rules provide
that:

-         the Commission is required to treat in the strictest confidence information which is
          confidential by its nature and for which confidential treatment is claimed

-         the Commission may not release such information to others, including the national
          administrations of the member states, except where the express approval of the
          supplier is given. The Commission would normally ask exporters and/or EC industry
          if they are in agreement.

-         all information received in the context of an anti-dumping or anti-subsidy
          investigation can only be used for the purposes of that investigation. The information
          cannot, for example, be transmitted to other parts of the Commission (such as DG
          Competition).

To ensure that the other parties involved in an investigation are aware of any accusations or
explanations that are being given to the Commission, wherever a confidential (formally
called "limited") submission is made, a non-confidential version must also be provided. This
non-confidential version is then available for inspection by the other parties and the member
states.

Non-confidential summaries must be sufficiently detailed so as to permit a reasonable
understanding of the information submitted in confidence. Typically, where schedules of
production costs are provided, the non-confidential version will be made up of the same
schedule with the financial data deleted or provided in index form.

Should the Commission consider that a request for confidential treatment is not warranted, it
cannot disregard the supplier's claim and disclose the information. In such circumstances,
however, the Commission can decide not to use the "confidential" information provided.

(m)       Verification visits

A verification visit is made by a small group of Commission officials (normally, two) to the
premises of the exporter, Community producers, importers and users. The visit typically lasts
two or three days and during this time the officials will wish to see the source information
used by the exporter to prepare its response to the questionnaire. The Commission is required
to confirm to the exporters in advance of the visit what type of information will be verified.


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In AS investigations, as well as making on-the-spot investigations of the exporting countries,
the Commission will also visit the government concerned to discuss the relevant subsidy
programme(s) in detail.

(n)       Provisional duties

Once all interested parties have been given an adequate opportunity to submit information
and make comments, the Commission will make its provisional findings. If the following
requirements are satisfied, the Commission can impose a provisional duty provided that:

•     it has made a provisional affirmative determination of dumping/subsidy and injury

•     the Commission is satisfied that the provisional duty is in the Community interest

Provisional duties are imposed by a Commission regulation. The regulation will specify the
products and countries covered, the relevant customs tariff headings and the value of the
additional duty levied. The duty is not directly payable but is given in the form of a security
for payment such as a bank guarantee. The extent to which this security is called up will be
determined at the time that definitive duties are imposed.

The Commission is obliged to consult the 25 Member States through the Advisory
Committee prior to adopting provisional measures. However, the decision to adopt
provisional measures rests with the Commission.

Provisional measures can be imposed for a maximum 9 months, subject to the overall time
limit of 15 months. Usually, however, the Commission takes 9 months to make a provisional
decision, leaving only a further 6 months before a definitive decision must be made.

The Commission will spend this time further analysing the information, perhaps asking
additional questions of any of the parties involved, as it moves towards a definitive decision.

Immediately following the imposition of provisional duties, there is an opportunity for further
submissions to be made, both orally and in writing. These are usually made in response to
the detailed documents received from the Commission disclosing their findings.

(o)       Definitive duties

Definitive duties are imposed by Council Regulation, adopted following a proposal made by
the Commission. The proposal is considered to be adopted unless there is a simple majority
of Member States that oppose it. To reject AD or AS measures, therefore, the proposal
would have to be rejected by at least 13 Member States 8 .

An investigation can be terminated by a Commission Decision where, following discussions
in the Advisory Committee, no member state objects and the Commission concludes that
protective measures are unnecessary (due to no dumping, injury, causal link or Community


8
    Previously, a Council Regulation imposing AD or AS measures had to be adopted by a simple majority of
      Member States. However, a new regulation adopted on 8 March 2004 (Official Journal J L77 13.3.2004)
      amended the voting system to its current form.


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interest). Where member states do object, the Commission is required to submit to the
Council a proposal that the investigation should be terminated. To prevent termination, the
Council must reject the proposal by a qualified majority vote within one month.

Definitive duties are imposed on all relevant products of the stated origin arriving in the EC
from all sources except from exporters from whom price undertakings have been accepted or
who have been found to have 0% dumping or injury margins. Definitive duties are usually
imposed for the maximum period of five years but are supposed only to remain in force for as
long as they are required to remove the injury caused by the dumping.

The regulation imposing definitive duties will also confirm whether and to what extent the
provisional duties are to be collected. Where the definitive duty is greater than the
provisional duty, the difference cannot be collected. Where the definitive duty is lower than
the provisional duty, the provisional duty can only be confirmed to the extent of the level of
the definitive duty.

Prior to the imposition of definitive duties, the Commission will provide a final disclosure
which provides a last opportunity to respond to the Commission's findings.

(p)       Undertakings

Once the Commission has assessed the information provided at verification, and if the
exporter is in a position where a provisional assessment of dumping and injury has been
made against it, the exporter can explore whether the Commission would accept a voluntary
price undertaking rather than anti-dumping duties.

Price undertakings are a form of anti-dumping or anti-subsidy measure equivalent in effect to
anti-dumping or countervailing duties. By offering an undertaking, an exporter commits
himself to increase his prices to levels which eliminates the injurious effect of the dumping or
subsidisation found. These price levels are the so-called ‘minimum price, i.e. the exporters
commits himself not to sell the specified products on the EC market below the minimum
price. The same rules are applicable as those used to establish rates for provisional and
definitive duties.

The Commission may refuse to accept an undertaking offer and will do so, notably if it is not
satisfied that the injurious effect of the dumping is thereby eliminated or if it considers it as
impractical. The latter may happen, for example, where the number of relevant exporters or
products is large. A past history of failing to observe undertakings is also likely to result in
the Commission rejecting an exporter's offer.

Undertakings may be offered at any time up to the final date at which representations may be
given before definitive duties are imposed. In practice this means up to the deadline given
for comments upon the definitive disclosure.

(q)       Types of duty

Duties are usually ad valorem, i.e. they impose a percentage duty payable on the CIF price of
imports on arrival in the EC (free of duties). The duty paid varies according to the actual
price of the product.



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In certain cases, the Commission can decide to use specific duties. This imposes a duty on
the basis of a measure of the quantity of goods imported. Such duties can be used where the
products are raw materials (for example, 100 Euro per metric ton). They can also be in the
form of a variable duty.

(r)       No double counting of subsidies and dumping

No product can be subject to both AD and AS measures for the purpose of dealing with one
and the same situation arising from dumping and export subsidisation.

The logic of this is that an export subsidy has the effect of reducing the export price. If the
export price is, as a result, reduced below the level of the normal value, this will create
dumping. Thus, applying AS and AD measures in such a situation would be dealing twice
with the same issue.

Thus, where there are parallel AS and AD investigations, and there is an element of export
subsidy in the subsidy margin, this would be subtracted from the dumping margin.

(s)       Level of duty (lesser duty rule)

Both provisional or definitive dumping duties can only be imposed to cover the extent of the
dumping margin found to exist. The actual dumping margin provides the absolute limit to the
duty rate that can be imposed. However, as dumping duties may only be imposed to the
extent required to remove injury, the Commission must adopt a lower duty rate than the
maximum rate where a lower rate would be sufficient to remove the injury to the EC
industry. To establish whether a lower duty rate is appropriate the Commission will compare
the EC price required to remove the injury (non-injurious price) with the price of the dumped
imports. This is taken as an indicator of the injury margin (see paragraph 2.13(g)).

The non-injurious price is based on a weighted average cost of production for EC industry
plus a reasonable rate of profit (based on what they could earn in the absence of injurious
dumping or subsidies).

          THE LESSER DUTY RULE

          EU producers' costs                                                                           100

          Profit margin in absence of dumping/subsidy, say, 6%                                            6

          Price required to remove injury (non-injurious price)                                         106

          Export price of company A (cif level)                                                           80

          Injury Margin [(106 – 80) / 80]                                                               32.5%

In the above example, the export price of company A has to be increased by 32.5% to be non-
injurious.

The above applies mutatis mutandis to antisubsidy proceedings.




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2.17      Issues that can arise during period of anti-dumping measures

There are a number of issues that can arise during the period that definitive anti-dumping
measures are in place of which the exporter should be aware.

(a)       Absorption

Anti-dumping duties are designed to increase the price of dumped products on the EC market
thereby removing injury.

Where it can be shown that anti-dumping duties have not led to an equivalent increase in
selling prices in the EU, or to a drop in export prices, the Commission can re-calculate the
dumping margin to investigate if the duty has been absorbed through lowering the selling
price.

(b)       Circumvention

Anti-dumping duties only apply to products of a specific origin. The place of shipment is of
limited importance. If anti-dumping duties are payable on imports of a certain product with a
certain origin these duties will still be payable if a consignment of the product is shipped to
the EC through another country .

Where there are customs offences in order to try and avoid anti-dumping measures, such
measures can be extended to cover sales of products from third countries where
circumvention is taking place. The circumvention rules can also be applied to assembly
operations taking place in the EC or in third countries.

Circumvention exists where it is shown that there has been a change in the pattern of trade
between third countries and the EC, resulting from an activity (processing or working) for
which there is insufficient due cause or economic justification other than the avoidance of the
duty.

Circumvention investigations are initiated where requested, and where sufficient evidence is
shown that such activities are taking place. Investigations are to be concluded within a period
of 9 months from initiation.

(c)       Suspension of duties

Where the Commission accepts that it would be in the Community interest to suspend the
imposition of anti-dumping duties, it may do so after consultation with the Advisory
Committee. A decision to suspend duties will apply for 9 months and may be extended for a
further period not exceeding one year by decision of the Council of Ministers.

A suspension of duties will only be in the Community interest where it can be shown that
market conditions have temporarily changed such that injury would be unlikely to
recommence as a result of the suspension. Before a suspension decision can be taken, the
Commission must consult with the Community industry concerned.

(d)       Refunds




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Where an importer of products into the EC can show that its products have been imported
into the EC at prices which eliminate the dumping margin, or reduce that margin to a level
below that of the duties in force, the importer may apply for a refund of the anti-dumping
duties it has had to pay.

Requests for refunds must be submitted to the member state in which the goods were
originally imported into the EC and within 6 months of the date on which the definitive duties
were levied or of the decision to collect payment of the provisional duties.

In practice, obtaining refunds requires a significant effort on the part of the exporting
producer, because a full dumping calculation must be performed. As a result, not many
applications are made (see annex 7, 1.1).

To assist in the process, the Commission has recently published a guide on obtaining refunds.
This can be obtained at the following website address:

http://europa.eu.int/comm/trade/issues/respectrules/anti_dumping/refund/index_en.htm

2.18       Reviews

The right to request reviews is available to exporters, importers and the EC industry alike.
There are four main reasons for applying for a review.

-          Exporters, importers, the EC industry and other interested parties (as well as the
           Commission acting at its own initiative and the member states) can request a review
           to determine whether the continued application of the measure concerned is justified
           or whether the level of the measure is still appropriate if there has been a change of
           circumstances (interim review). Such a review cannot be requested until a definitive
           measure has been in force for at least one year. The Commission can self-initiate a
           review at any time.

-          A review procedure is also used to offer individual treatment to exporters who did not
           export the products to the EC during the investigation period (newcomer review) 9 . If
           the Commission accepts an application for review by a new exporter, – which must
           inter alia show that it is not related to any exporters already covered by the relevant
           regulation – it will adopt an amending regulation excluding the producer from the
           scope of the anti-dumping duties, and making its imports subject to registration
           pending completion of its investigation. Following the review, the Commission will
           propose that the new exporter has its own anti-dumping duty. This will usually turn
           out to be lower than the residual duty which would otherwise have been payable.

-          EC industry is given the opportunity, at the latest three months before the expiry of
           the regulation imposing definitive anti-dumping duties, to request a review of the
           current EC market position with the intention of convincing the Commission and
           Council to renew the definitive duties for a further five year period (expiry review).
           The effect of initiating such a review enables the life of the original regulation to be
           extended past the initial 5 year limit pending the outcome of the review.


9
    Newcomers who did not participate in the original investigation otherwise pay the residual duty rate.


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2.19      Judicial review

During the course of an anti-dumping proceeding, the Commission carries out the tasks of the
administrative body responsible for the investigation. As has been stated, the EC rules
require that the procedures it uses and decisions it takes must be fair. To do this, the
Commission must observe a number of general procedural safeguards.

The EC Treaty (Article 190) provides that all EC Regulations, Directives and Decisions must
state the reasons and basis on which they were adopted. Article 173 of the EC Treaty enables
parties who are directly and individually concerned by a Regulation imposing an anti-
dumping duty to contest the validity of the Regulation by bringing proceedings before the
European Courts (in trade cases initially before the Court of First Instance and, on appeal, on
a point of law only, to the European Court of Justice). The Court of First Instance will carry
out a review, not a retrial of the issues raised in the case. It will look to see if the evidence
relied on and the procedures followed in the contested Regulation are accurate and justified.

On average, it will take the CFI 2 years and the ECJ 2-3 years to hand down judgements.

3.        SAFEGUARDS

3.1       Summary of EC Safeguard Regulations

The principal EC regulation that authorises the adoption of safeguard measures is Council
Regulation (EC) No 3285/94 on common rules for imports. Note that safeguard measures
can only be adopted against imports from all sources and not targeted against specific
countries (except as allowed for below).

Regulation 3285/94 applies to all products from all countries except as follows:

      •   Products originating in certain third countries listed in Regulation 519/94. This
          applies to imports of products originating in certain countries, excluding textiles
          products covered by 517/94. The countries are non-WTO members considered to be
          non-market economies for the purpose of EC safeguard rules: Armenia, Azerbaijan,
          Belarus, Kazakhstan, North Korea, Russia, Tajikstan, Turkmenistan, Ukraine,
          Uzbekistan, and Vietnam.

      •   Textile products subject to specific import rules under Regulation 517/94. It applies
          to certain non-WTO member third countries not covered by bilateral agreements,
          protocols or other arrangements, or by other specific Community import rules. It is
          used to apply quotas against non-WTO members such as North Korea, Serbia and
          Montenegro.

      •   Regulation 3030/93 allows safeguard measures to be adopted against textiles from
          non-WTO members that have bilateral agreements with the EC: Belarus, Russia,
          Ukraine, Uzbekistan, and Vietnam. It also allows China specific safeguards to be
          adopted on textile products.

      •   Regulation 427/2003 allows China specific safeguards to be adopted on all products..




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3.2       Substance

First, it must be established that there has been a significant increase in imports.

The increase in imports must be as a result of unforeseen circumstances. WTO
jurisprudence has confirmed that this is a requirement, and more particularly, that the
circumstances must not have been foreseen at the time of the last tariff negotiations (i.e.
Uruguay Round). In this sense, almost any event now would have been unforeseen in 1994 at
the finalisation of the Uruguay Round. Recent Commission practice places emphasis on the
suddenness of the increase in imports.

The investigation must then determine whether the increased imports are causing or
threatening to cause serious injury to Community producers concerned.

          Serious injury – significant overall impairment.

          Threat of serious injury – serious injury is clearly imminent.

There is no real definition of serious injury relative to material injury that allows a clear
understanding of the difference between the two. It is clear that serious injury is worse than
material injury and, to this extent, injury must be worse than the level required for AD or AS
investigation.

As a general rule, for serious injury, it must be found that the majority of producers are facing
a downward trend in profitability and making losses. Material injury does not require losses
but rather a negative trend.

In accordance with WTO jurisprudence, the increase in imports must have been sudden,
recent, sharp and significant.

In order to make the injury determination, the Commission will examine a series of economic
factors. For example it will examine the trend in imports (volume/price etc). and the
consequent impact on EC products.

Factors other than imports which are causing injury must be considered by the
Commission. WTO jurisprudence requires that other factors causing injury must be
separated and distinguished. Although some commentators disagree with the interpretations
made by the Appellate Body in recent years, this interpretation seems to require formal
measuring and separation of the factors of injury. The Commission does not do this.
Nevertheless, the Commission is thorough in looking at other factors and in trying to identify
the overall trend of the various injurious factors, and whether there is a consistent picture. It
is arguable that to do any more is not possible.

Any measures must be determined not to be against the Community interest. There is no
guidance on how this should be analysed by the Commission comparable to that given in the
AD and AS regulations. Nevertheless, Commission practice is to consider the various
interests mentioned under the AD and AS Community interest provisions, to ensure that the
EC is not seriously disadvantaging itself by adopting such measures.




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3.3       Procedure

Unlike AD and AS, industries cannot formally submit safeguard complaints. It is Member
States that have such a right. Member States must inform the Commission if trends in
imports appear to call for surveillance or safeguard measures.

In practice, therefore, an industry that believes safeguard action might be justified would
present the evidence to one or more Member States, in addition to the Commission.

An investigation, if justified, is initiated by the Commission within one month of receipt of
information from a Member State. A notice is published in the Official Journal.

At this point, the Commission seeks all information necessary. In recent cases, the
Commission has sent questionnaires to all countries exporting the product (though this is not
required either under WTO rules or by the EC safeguard regulation).

Views of interested parties will be taken into consideration and thus there is the opportunity
to submit written comments and request oral hearings..

Provisional safeguard measures can be adopted a) in critical circumstances and b) where
preliminary determination provides clear evidence that increased imports have caused or are
threatening to cause serious injury. The maximum duration of such provisional measures is
200 days. Such measures can only be duties (i.e. quotas cannot be used as provisional
measures).

Definitive safeguard measures can take any form including duties or quotas. In deciding on
measures, the regulation emphasises the desirability of maintaining traditional trade flows. In
this regard, if quotas are adopted, they should be set not lower than the average level of
imports over the last three years (unless a different level is necessary to prevent or remedy
serious injury). Further, the way in which the quota is allocated may be agreed with countries
having substantial interest in supplying the product.

For safeguards, there is a significant political dimension to the decision-making process. It
is not clear that the decision to adopt measures can be challenged in court, which at face
value gives the Commission and Member States considerable discretion in adopting
safeguard measures. However, in practice (in the few safeguard investigations opened by the
EC in recent times), the Commission treats the decision to adopt safeguards as a technical
matter. Safeguards will not be adopted purely on political grounds but only where a
substantive case exists.

Decision-making is complicated not least because there are two tracks to follow for a
safeguard to be adopted:

      •   proposal by the Commission and measures adopted by the Council by qualified
          majority

      •   complicated procedure whereby Commission decides to impose measures. If one
          Member State opposes, the decision is referred to the Council. Within 3 months, the
          Council can, on a qualified majority, take the decision to conform, amend or revoke



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          the measures. If the Council fails a decision within the 3 months, the Commission
          decision shall be revoked.

It is up to the Commission which route is followed.

Developing countries are excluded from any safeguard measures where they account for
less than 3% of imports.

The duration of measures is limited to the period of time necessary to prevent/remedy
serious injury and to facilitate adjustment on the part of Community producers. Safeguards
can be in place for a maximum of four years from the adoption of provisional measures.
Such measures can be extended where a) they are necessary to prevent or remedy serious
injury b) there is evidence that EC producers are adjusting. The absolute maximum duration
of a safeguard measure is 8 years.

For measures lasting more than 1 year, the measure must be progressively liberalised.

Note also that measures lasting more than 2 years would invoke the compensation clause of
the WTO safeguards agreement (i.e. equivalent concessions such as tariff reductions on other
products would have to be offered to the countries affected by the quota).

There are various restrictions on the re-application of safeguards. For example, where
imports have already been subject to safeguard measures, no new measure can be adopted
for at least two years and longer if the previous measure was in effect for longer period.

Investigations must be completed within a maximum of 10 months for terminations and 9
(or 11) months where measures are being adopted.

The extent to which safeguards can be subject to judicial review in the European Court of
Justice is uncertain. Measures can be challenged but the opportunity to do so may be limited.
Note that the CFI has no jurisdiction to review safeguard measures.




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ANNEX 2 – SURVEY OF INTERESTED PARTIES ON EC TDI


1.     TRENDS IN USE OF TDI.......................................................................................................................... 3
2.     ANTI-DUMPING/ANTI-SUBSIDY .......................................................................................................... 4
2.1            PROCEDURE ...............................................................................................................4
       (a)     Threshold for accepting complaints .................................................................................................... 4
       (b)     Type of evidence required on prices.................................................................................................... 4
       (c)     Length of complaint process................................................................................................................ 5
       (d)     Changing requirements for complainants ........................................................................................... 5
       (e)     Comparison with state aid complaints ................................................................................................ 5
       (f)     Burden on industry wishing to submit a complaint ............................................................................. 5
       (g)     Sensitivity of confidential information and complaints ....................................................................... 5
       (h)     Difficulties in getting necessary information for complaint ................................................................ 5
       (i)     Transparency on vetting of complaints................................................................................................ 6
       (j)     Representativeness of complaint.......................................................................................................... 6
       (k)     Non-discrimination in complaint......................................................................................................... 6
       (l)     Identification of users/importers at the start of the investigation........................................................ 6
       (m)        Transparency of investigation process ........................................................................................... 6
       (n)     Access to non-confidential files by interested parties.......................................................................... 7
       (o)     Member States access to information .................................................................................................. 7
       (p)     Information made available on the website and through seminars ..................................................... 7
       (q)     Protection of Confidential Information ............................................................................................... 8
       (r)     Hearings & submissions...................................................................................................................... 8
       (s)     Questionnaires..................................................................................................................................... 8
       (t)     Deadlines for completing questionnaires ............................................................................................ 9
       (u)     Treatment of non-cooperators ............................................................................................................. 9
       (v)     Consultation with Member States........................................................................................................ 9
       (w)        Provisional Measures ..................................................................................................................... 9
       (x)     Level of measures .............................................................................................................................. 10
       (y)     Retroactivity ...................................................................................................................................... 10
       (z)     Non-discrimination............................................................................................................................ 11
       (aa)       Definitive Measures & Overall Length of Investigation ............................................................... 11
       (bb)       Interim Reviews ............................................................................................................................ 11
       (cc)       Expiry reviews .............................................................................................................................. 12
2.2            SUBSTANCE ..............................................................................................................12
       (a)     Overall views on dumping calculation .............................................................................................. 12
       (b)     Non-market economy methodology ................................................................................................... 12
       (c)     Market economy treatment ................................................................................................................ 12
       (d)     Calculation of SGA and profit in constructed normal value calculations ......................................... 13
       (e)     Auditing of costs for normal value purposes ..................................................................................... 13
       (f)     Taking into account the cause of dumping? ...................................................................................... 13
       (g)     Subsidy calculation............................................................................................................................ 13
       (h)     Injury & Causal Link......................................................................................................................... 14
       (i)     Injury margin..................................................................................................................................... 14
       (j)     A general comment on Community interest....................................................................................... 14
       (k)     Interpretation of a lack of response from users, importers and consumers....................................... 15
       (l)     Community interest in an enlarged EC.............................................................................................. 15
       (m)        Representation of consumers in AD or AS proceedings ............................................................... 15
       (n)     Concerns raised by complainants about Community interest ........................................................... 16
       (o)     Analysis of market situation prior to measures ................................................................................. 16
2.3            INSTITUTIONS ..........................................................................................................17
       (a)     Political nature of decision making................................................................................................... 17
       (b)     Impact of change in voting and the Eurocoton decision.................................................................... 17
       (c)     Member States ................................................................................................................................... 17
       (d)     How Member States make their decisions ......................................................................................... 18
       (e)     Representatives on the Advisory Committee...................................................................................... 18
       (f)     Lobbying............................................................................................................................................ 18



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       (g)     Internal organisation......................................................................................................................... 18
       (h)     Role of Commission........................................................................................................................... 18
       (i)     Case handlers .................................................................................................................................... 19
2.4            EFFECTIVENESS OF MEASURES ...............................................................................19
       (a)     Overall effectiveness.......................................................................................................................... 19
       (b)     Circumvention & Enforcement .......................................................................................................... 19
       (c)     Price undertakings............................................................................................................................. 20
       (d)     Retaliation against EC companies for being involved in AD action ................................................. 20
3.     SAFEGUARDS.......................................................................................................................................... 21




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1.        TRENDS IN USE OF TDI 1

The survey was used to gather respondent's views on trends in use of TDI.

Annex 7, 1.1 shows that the number of anti-dumping investigations fluctuate from year to
year. The following reasons were raised by survey participants for fluctuations in anti-
dumping (AD) activity:

     •    business cycle (affects some industries more than others)

     •    general economic recession

     •    trends in distortions in overseas markets

The level of EC anti-dumping activity does appear to have been somewhat lower in the past
five years. Two reasons were suggested for this:

     •    The Commission is being very careful in order to avoid being challenged in the WTO.

     •    TDI use is informed by the impact of other countries' TDI actions against EC exports.
          The EC needs to set the rest of the world an example by working to high standards
          and it is arguable that the standards have been increasing in the EC.

However, some survey respondents made the point that, to a large extent, use of TDI is
driven by demand and need. Thus, it is possible that anti-dumping activity may increase to
higher levels in the future depending on circumstances.

The following reasons were given for the relatively low level of anti-subsidy (AS) activity:

     •    difficulty in making anti-subsidy complaints due to problems with getting
          data/information on subsidies in third markets.

     •    generally low margins mean that countervailing (anti-subsidy) duties are low and not
          worth the trouble of making the complaint and going through the investigation.

     •    politically sensitive within companies e.g. where they themselves are receiving
          subsidies.

     •    politically sensitive because 'accusation' is made against a government rather than a
          competitor as in AD.

Reasons for the very low level of safeguards activity were given as follows:

     •    perception that politically it is not possible to use this instrument



1
     This section is based on the statements and views expressed by survey respondents. All views expressed
     are summarised in this section, in order to catalogue all points raised by respondents. However, there is no
     comment or evaluation on such points in this section. This can be found in section 2.


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                                                                                                               Annex 2, Page 4


      •   perception that safeguard measures are taken against 'fair' trade

      •   too blunt and too disruptive to normal competition

2.        ANTI-DUMPING/ANTI-SUBSIDY

2.1       Procedure

(a)       Threshold for accepting complaints

Many comments were made on the threshold for getting a complaint accepted by the
European Commission ("Commission").

Most survey participants agreed that the threshold is high and that it has increased in recent
years.

At the same time, most survey participants (including complainants) felt that the current
threshold is at about the right level. In this regard, the following issues were stressed:

      •   The EC should be setting an example to other users that high standards should be
          adopted when using TDI.

      •   A high threshold for accepting complaints ensures WTO consistency.

      •   Complainants generally feel that they want their cases to be strong. According to
          survey participants making this point, a high complaint threshold ensures strong cases
          and, once initiated, there is a reasonable prospect of measures. People contrasted this
          with the US where there is uncertainty until the end due to the relatively high number
          of cases with negative final injury determinations by the ITC.

Some EC industries did complain that the initiation threshold was too high. They pointed out
that the level required to get an investigation initiated is higher than the 'sufficient evidence'
level in article 5.9 of the basic AD regulation.

Those who complained that it was too high pointed out that it is the highest in the world and
that, given this, no-one would challenge the EC in the WTO if standards were dropped a
little. The feeling was that it is too much of a challenge to get complaints accepted,
particularly for those without experience. In this regard, it was claimed that potential
complainants are put off. Too much work at pre-investigation stage, it was asserted, is off-
putting and reduces the incentive to go ahead as there is no guarantee that the hard work will
be rewarded.

At the same time, some other survey respondents (more liberal Member States, and
importers/consumer associations) complained that the threshold is too low.

(b)       Type of evidence required on prices

On the level of evidence required, it was claimed that the Commission always requires
invoices as evidence of prices and that this is unreasonable. Where there are general
difficulties, the Commission should be acceptable in accepting salesmen's reports.




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(c)       Length of complaint process

Most EC industries complained that it takes around 6 months from noticing a problem to
getting case initiated. Others suggested that it can take as long as 9-10 months.

It was pointed out that, given that provisional duties take 9 months from the date of initiation,
and definitive duties take 15 months, industry can have up to wait up to two years between
noticing a problem and obtaining relief.

(d)       Changing requirements for complainants

A number of survey respondents that had been involved in submitting previous complaints
survey made the point that the Commission often changes its requirements on complaints
which can be frustrating. However, it was also conceded by that this is often related to WTO
or court cases.

(e)       Comparison with state aid complaints

The complaints procedure for AD/AS cases was compared with state aid complaints. It was
claimed that the latter takes between half a day and three days to prepare and to be taken
seriously by the Commission.

(f)       Burden on industry wishing to submit a complaint

Many survey respondents made the point that complaints are very burdensome for industry,
particularly SMEs. However, the same people said that most companies can cope with it. It
was conceded by many that questions raised by the Commission about the complaint, whilst
sometimes inconvenient, are often valid.

A particular problem was highlighted in respect of industries producing products with many
types, models or grades e.g. clothing. This significantly complicates the collection of data for
complainants. It was acknowledged that the Commission makes efforts to work with industry
in order to find workable solutions but that this is only a case by case basis.

(g)       Sensitivity of confidential information and complaints

It was claimed that the need to provide confidential and sensitive information is off-putting
for some business people and, on these grounds, they do wish to get involved with
complaints.

(h)       Difficulties in getting necessary information for complaint

Difficulties were noted by some respondents with regard to collecting evidence on normal
value and, particularly, subsidies.

It was claimed that this is a particular problem for SMEs that don't have subsidiaries in
overseas markets.

Some participants had tried using EC delegations based in the respective countries but they
had not seemed willing or able to help.




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Some survey respondents made the point that the Commission should devote resources
towards finding out about subsidies in other countries rather than leaving it up to EC industry.

(i)       Transparency on vetting of complaints

The point was made that the Commission is not transparent on the vetting of complaints. It
was claimed that there should be more transparency to give interested parties an
understanding of how many complaints are accepted or rejected.

(j)       Representativeness of complaint

Some survey respondents thought that the minimum 25% production threshold could be
higher.

(k)       Non-discrimination in complaint

Some concerns were raised about countries "unnecessarily" being included in complaints.
Some complainants had experienced disagreements with the Commission where companies
had reasons not to include a particular country.

However, there was general agreement on the point that complainants should not be allowed
to arbitrarily choose countries. A number of survey respondents felt that a high standard with
regard to non-discrimination at the complaint stage is good.

The point was made by some that other countries have done this in their anti-dumping
complaints against the EC or its Member States. It was felt that it is important for the EC to
set a good example on this point.

(l)       Identification of users/importers at the start of the investigation

A point was raised that complaints do not always accurately identify major users and
importers of the product concerned. In this regard, it was claimed that the Commission
should do more of its own research on the sector in question to ensure that key users and
importers are contacted at the start of the case. The original letter and distribution of
questionnaires, it was claimed, should be targeted more accurately.

(m)       Transparency of investigation process

In general, participants felt that transparency was sufficient for interested parties to represent
and defend their interests.

With regard to access to information, most participants felt overall that they have sufficient
information. This includes survey respondents across a diverse range of opinions with regard
to TDI i.e. it included both those who have argued for and against measures.

However, some concerns were raised about transparency:

      •   It was claimed that the Commission sometimes maintains an unnecessary degree of
          confidentiality on internal matters. Examples raised by survey respondents included
          issues such as a) who are the members of the advisory committee b) the agenda of
          advisory committee meetings c) how the Advisory Committee votes d) names and
          contact details of handlers in a particular case.


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      •   Information on when cases are being presented to the Committee is crucial for
          interested parties given the importance of lobbying.

      •   A point raised on duty calculations is that there is no way for complainants to check
          what the Commission does. There are cases where dumping margins are lower than
          the complainants expected based on their knowledge of the market. Some
          complainants said that they would like to be able to see the full dumping and injury
          margin calculations. At the same time, there would be significant concern amongst
          complainants if transparency was raised for exporters. On balance, therefore, the
          need to respect the confidentiality of information from both sides was acknowledged.

(n)       Access to non-confidential files by interested parties

The majority of survey respondents praised the Commission for the fact that access to non-
confidential files is always readily available. In addition, most people commented on the fact
that the files are always well organised.

However, concerns were raised by survey respondents about the content of non-confidential
submissions. Interestingly, this concern was raised in the context of the non-confidential
responses of both complainants and exporters. Some observed that this varies from case to
case and questioned whether there are internal guidelines.

(o)       Member States access to information

Several concerns were raised by Member States about access to information (it can be noted
that these comments were made by a number of Member States and not only those that
traditionally tend to be against AD in principle):

      •   One member state claimed that the working document (i.e. the document received by
          Member States outlining the Commission's findings and proposed conclusions) is not
          detailed enough to take a view about whether the Commission is right or not.

      •   Another Member State said that, due to the fact that the report is a summary, it is
          impossible check Commission's findings.

      •   Another one said that the reports are not always sufficiently specific and it is not
          clear how the Commission reached all conclusions.

All Member States acknowledged the fact that they can consult all of the Commission's files
at any stage during an investigation. However, in response to the question about how often
Member States had used the facility to consult the confidential files of the Commission, it
was discovered that only two Member States had done so. Even for those Member States,
they had only done so in one case each.

Even though all information is available to the Member States in the confidential files, this
tends to be very rarely used because Member States say they do not have the time or
resources. Thus, they rely on the working document as their principal briefing on the case.

(p)       Information made available on the website and through seminars




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The TDI section of the DG Trade website received overall positive reviews but suggestions
for improvement.

Many survey respondents praised the website for providing comprehensive and up to date
information. Others commented that they found it hard to find what they wanted and many
people did not seem to be aware of everything that was available on the site.

Two specific comments were made about the website:

      •   The case-specific timetables provided on the website were particularly praised by
          those people that had seen them.

      •   The point was made that the initiation of cases could be made more obvious on the
          website.

Several survey respondents praised Commission efforts to give information through
seminars.

(q)       Protection of Confidential Information

The Commission was universally praised for its care in handling confidential information.

(r)       Hearings & submissions

All survey respondents felt that there is sufficient opportunity to participate in the
investigation in terms of oral hearings and written submissions.

There was universal agreement that the Commission is always available for hearings,
meetings and telephone conversations.

A point was made that the Commission does not always answer points raised in submissions.

One person also raised the question of whether a hearing officer could be present at AD or
AS Hearings. In competition hearings, it was claimed, there is always a hearing officer.

(s)       Questionnaires

There was a general complaint about the complexity of questionnaires, particularly for SMEs.

However, overall, survey respondents found questionnaires to be complex and heavy but, at
the same time, reasonable and logical.

Several EC industry participants with experience of other AD regimes made the point that EC
questionnaires are reasonable compared to others.

For industries with many product models or types, e.g. clothing, the transaction by
transaction listing is a very big job. PCNs are complicated and can vary between cases.

One such problem stems from the fact that each company has its own system and it is
difficult to change to be in line with questionnaire requirements.




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Whilst it was understood that PCNs are necessary for the systematic organisation of data and
allowing comparison with exports, a concern was raised that decisions on the PCN are often
taken by case handlers who have no experience in industry and do not know the intricacies of
product.

One person stated that case handlers have too much discretion in deciding how a product is to
be classified e.g. in deciding subdivisions, though it was observed that this does vary between
cases.

A number of survey respondents praised the Commission for its efforts on simplification of
the questionnaire for SME complainants.

Further, it was noted that it is good from the complainants' perspective when the Commission
uses sampling for injury. However, heavy questionnaires are still required to be completed
by the members of the sample.

(t)       Deadlines for completing questionnaires

Several survey respondents made the complaint that deadlines are not always respected by
users.

At the same time, the point made by others that users and importers are not directly in
involved in the case and therefore the incentive for them to participate is lower. The more
that complainants and exporters play an active role in the case, the more chance they have of
influencing the case in their direction. However, it was highlighted that there is not the same
incentive for users and importers and it often only becomes real to them after actual measures
are adopted at the provisional stage.

(u)       Treatment of non-cooperators

One Member State stated that the rules on treatment of non-cooperating exporters are
draconian.

(v)       Consultation with Member States

Several Member States raised concerns about the short time in which they have to analyse
and take a decision on cases. It was claimed that 10 days is not enough to do everything that
has to be done e.g. receive the working document, analyse it, consult (both internally and
externally), and get ministerial sign off.

The problem was raised that MS know nothing about the case between seeing the complaint
prior to initiation and just before the adoption of provisional measures.

(w)       Provisional Measures

Respondents from EC Industry highlighted the difficulties arising from the need to wait nine
months from initiation before provisional measures are adopted. Many survey respondents
from EC industry requested that provisional duties be adopted more quickly.

Given the comments made about the length of time to get a complaint accepted by the
Commission, a further nine months before any relief is obtained is, it is claimed, far too long.



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Injury is allowed to continue completely unchecked for a minimum of a year from the date
that EC industry first starts suffering a problem and sometimes as long as a year and a half.

Further, it is claimed, there is too much opportunity for surges of imports prior to the
adoption of measures.

It was noted that provisional measures are not really provisional at all. Rather, they are draft
definitive measures. In this regard, one survey respondent made the point that nine months is
too long to wait for provisional measures given the level of detail in the preparatory stage.

At the same time, several survey respondents from EC industry said that, whilst they would
support more rapid provisional measures, they would be concerned if provisional measures
were adopted only to be later removed (the implication being that it would be better to have
no duties than weak provisional measures which would be later removed).

Further, a number of survey respondents pointed out that, like exporters, EC complainants
often request extensions due to difficulties in completing questionnaires within the given
deadline. The Commission adopts a flexible approach to such requests from all interested
parties. If shortening the nine month timetable between initiation and adoption of provisional
measures meant that the Commission would have to enforce time limits more strictly, there
would in fact be less support for introducing quicker provisional measures.

Others raised the point that, while nine months may be the norm, more rapid provisional
duties could be used in specific circumstances. For example, where parallel investigations
are occurring in other major markets, such as the US, trade diversion could occur. Thus, it
was suggested, provisional duties could be adopted earlier in exceptional circumstances (see
appendix 1 of annex 6 for an example of parallel investigations and the scope for trade
diversion).

(x)       Level of measures

Most survey respondents found that the level of AD or AS measures are acceptable and
reasonable. On the whole, EC complainants feel that sufficient protection is provided against
injuriously price imports.

Implicit in this is that most survey respondents were relatively positive about the mandatory
lesser duty rule applied by the EC (which has the impact of lowering anti-dumping measures
below the dumping margin in about 50% of cases).

However, most EC industry survey respondents raised a concern with the lesser duty rule.
These concerns were not about the lesser duty rule per se but rather that it is unfair that other
major markets, such as the US, do not have it. This means that when there are parallel
investigations and duties applied to the same product from, say China, in the EC and US, the
US tends to have higher measures which encourages trade diversion towards the EC.

(y)       Retroactivity

Several survey respondents asked why duties are not collected retroactively more often. In
cases such as the one raised in section Annex 6, appendix 1 (TCCA), where there is a serious
risk of trade diversion, this could be one solution. It could also be helpful in preventing
surges in imports just before provisional duties are adopted.



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A number of people questioned the reason why, if there are good reasons to conclude that
quicker provisional measures are not practical, the Commission does not make any use of
retroactivity provisions? If a provision is there, they asked, why has the Commission decided
not to use it given that it could help to remedy injurious situations at an earlier date within
existing EC law and WTO rules?

(z)        Non-discrimination

There were mixed views on the need to be non-discriminatory in the adoption of measures.
Some believe that if, say, for political reasons, Member States would like one country to be
excluded from measures in a multi-country investigation, there should be nothing stopping
measures being imposed or maintained against other countries. Others are of the view that
this may not be WTO consistent and that the EC should not send out the signal that there is
any arbitrariness in the way that it implements trade defence measures.

(aa)       Definitive Measures & Overall Length of Investigation

The overall length of investigation was raised as a problem by complainants.        If the
complaint takes six months to prepare (which in many cases happens), it is fifteen months
before provisional measures are taken.

The point was also made that a complaint cannot be made until injury has occurred for at
least a year and perhaps even longer and therefore injury can be suffered for several years
before protection is obtained..

Typical timeline for AD investigation

  Injurious pricing
  commences                                                Commission initiates                                              Definitive
                                                           investigation                                                     measures
             6 months                           6 months                                                          6 months

                                                                               9 months
                             Data exists to                                                       Provisional
                             indicated injury                                                     measures




              Typical time between problem starting and protection for EC industry
                                    = 2 years and 3 months


Two further points were made by survey respondents on the duration of investigations:

      •    Where provisional measures have not been adopted (which occasionally happens),
           definitive measures should be adopted much earlier.

      •    There is no reason for an AS investigation to have a thirteen month deadline while an
           AD investigation has a fifteen month deadline. Many survey respondents suggested
           that they should be aligned at 13 months.

(bb)       Interim Reviews

No views were expressed on EC interim reviews.



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However, some participants in the US interviews contrasted the low number of interim
reviews with the high number of US administrative reviews.

(cc)      Expiry reviews

Several concerns were raised about expiry reviews:

      •   Some EC industries complained that the Commission requires proof of things which
          cannot be proven. They claimed that the preparation of a request for an expiry review
          is worse than, or at least as bad as, an original complaint.       It is felt that the
          Commission expects those requesting an expiry review to prove what will happen in
          the future which, of course, is impossible.

      •   Some EC industry survey respondents complained of a built in bias against extending
          measures beyond five years. They claimed that there is an underlying view that five
          years protection is enough. They stressed that, in some situations, protection is just as
          necessary after five years as it was at the beginning of the investigation.

      •   A point was raised about a particular type of situation where anti-dumping duties do
          their job by shutting irresponsible exporters out of the market while still allowing
          responsible exporting companies to continue trading following the imposition of an
          anti-dumping duty. In a combined expiry/interim review, a problem can occur if the
          responsible companies are found to have zero or de minimis margins. In a case he
          had experienced, he had been certain that less responsible companies would start
          trading again following the expiry of measures. However, he claimed, this could not
          be used as the basis to continue the measures.

Survey respondents generally were positive that a deadline now exists for expiry reviews.
However, some felt that, while fifteen months is better than the previous situation of no
deadline, it could be shorter.

2.2       Substance

(a)       Overall views on dumping calculation

Few strong views were expressed on the dumping/subsidy calculations. Some commented
that the Commission does a good job on calculating the dumping margin. Others commented
that the Commission is generally trusted to get the calculation right.

(b)       Non-market economy methodology

Whilst there seems to be general approval of the EC's non-market economy methodology,
some Member States questioned the analogue countries sometimes used (particular reference
was made to the US).

(c)       Market economy treatment

With regard to market economy treatment for countries with an economy in transition, some
EC industry survey respondents raised questions about some of the companies that have
received MET. The question was raised in the context of whether young, inexperienced case
handlers (who sometimes play a key role in conducting the analysis particularly at the on-site



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verification) are really able to apply five criteria. Concerns were raised that it may be easy
for applicants to cheat in the face of such inexperienced officials.

However, one complainant pointed out that they had provided the Commission with updated
information about a successful MET applicant during the investigation and it was taken into
account.

Several survey respondents from EC industry made the point that once a positive decision on
MET has been made, there is no real opportunity to challenge it. They questioned how the
Commission's conclusions can be disproved. Also, by the time the decision comes, it was
claimed, it is too late to challenge it. MET has big impact when granted and therefore this
determination is very important.

Some EC industry survey respondents underlined the importance of appropriate adjustments
when MET is granted (whether on a country basis as with Russia) or for individual
companies (as with economies in transition such as China). Complaints are satisfied with the
MET approach overall but not if it provides the exporters concerned with an unfair advantage
(i.e. lower margin due to subsidised inputs and the consequent impact on normal value).

(d)       Calculation of SGA and profit in constructed normal value calculations

With regard to SGA and profit calculations, concerns were raised that, following the bed
linen WTO ruling, SGA and profit can no longer be based on one 'other' company when data
from the company concerned cannot be used. It was claimed that, if the Commission uses
other methods allowed (i.e. 2.6 (b) and (c)), there are problems with transparency.

(e)       Auditing of costs for normal value purposes

Other concerns were raised about case handlers' ability to audit accurately costs of exporters
(given the crucial importance of costs in determining normal value). Complainants can give
guidelines on likely cost structure and items to check. However, it was questioned whether
case handlers are able to judge costs correctly? Complainants can never be sure that cost
structures have been properly audited.

(f)       Taking into account the cause of dumping?

Several participants raised the point that it makes a difference whether the cause of dumping
is a high domestic price or a low export price. A link here was made to enforcement of WTO
rules (in opening markets with high levels of protective trade barriers) and ambition in the
DDA negotiations. If dumping is due to a closed market, the cause of the closed market
should be attacked (as a complement to anti-dumping measure).

(g)       Subsidy calculation

Survey respondents had very little comment on the subsidy calculation.

One of the survey respondents in the US claimed that the Commission is not applying
specificity test consistently. It was claimed that there only needs to be one small group that
is de facto excluded from the subsidy and the Commission concludes that there is specificity.

Several EC industry survey respondents raised the question of using AS measures against
non-market economies or economies in transition (e.g. China). However, it was


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                                                                                                             Annex 2, Page 14

acknowledged that getting information and finding benchmarks to calculate subsidy margins
is problematic. Nevertheless, it was questioned whether this should be a barrier to using the
AS instrument.

(h)       Injury & Causal Link

No strong points were raised on injury and causal link.

Most survey respondents said that the Commission's analysis is done in a professional way
and injury & causality are not a controversial topic.

A small number of points were made:

      •   It was claimed that the definition of domestic industry should not exclude related
          producers. This is part of EC industry and should not be excluded from the overall
          picture.

      •   With regard to like product, several participants claimed that Commission gives
          insufficient attention to quality and uses which can be critical when considering
          causality.

      •   One survey respondent made the point that, given the institutional structure within
          which TDI operates, once a complaint has been accepted, the Commission is likely to
          find injury and to defend its decision to initiate.

(i)       Injury margin

On the calculation of the injury margin in the context of the lesser duty rule, EC industry
survey respondents claimed that the profit margin used is often not sufficient.

Also, a problem was highlighted in cases where there are high and low value products yet
average EC industry costs are used for the injury margin calculation. It was claimed that the
non-injurious price is not sufficiently high for high value products. This penalizes high cost
products within a range of products of the complainant. The impact of duties is limited for
such products and thus injury is not removed.

A problem was raised with regard to the confidentiality of calculation. It was pointed out that
the Commission calculates the injury margin "in a black box". Unlike the dumping
calculation, where the whole calculation is revealed to the relevant interested parties (i.e. each
exporter being investigated sees the whole calculation for their own dumping margin), only
the Commission sees the whole injury margin calculation.

(j)       A general comment on Community interest

Of all the substantive elements, Community interest was the subject on which survey
respondents made comments. It has to be first recognised that how Community interest is
viewed by any particular survey respondent depends on their general attitude to anti-
dumping. There are many different views on dumping ranging from total support to the
view that it should be abolished.

Survey respondents were reminded that the evaluation study is not performing a full review
of substantive concepts such as Community interest (see section 1 for more information on


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the scope of this evaluation). Rather, it is looking at the operation and efficiency of TDI and
it was in this context that the following points on Community interest were made.

In general, users felt that the process of the Community interest aspects of the investigation
works well. Interested parties from all sides consulted in the survey felt that they have
sufficient information and opportunity to make their points to the Commission at hearings
and in writing.

To the extent that there is a concern from interested parties that often oppose measures (e.g.
users, importers, consumers etc.), it is about the impact of their submissions on the final
conclusions and an apparent 'bias' towards always finding that measures are in the
Community interest.

(k)       Interpretation of a lack of response from users, importers and consumers

Some Member States and various organisations representing importers and consumers felt
that the Community interest analysis is too biased in favour of concluding that measures are
not in the Community interest due to the interpretation of 'non-cooperation' from users,
importers or consumers. The point was made that the Commission treats lack of response
from interested parties that might oppose the measure as an indication that there is no issue.

An example was given from the provisional regulation concerning trout from Norway 2 :

          No user or consumer associations made themselves known within the time limit set in
          the notice of initiation. The Commission services therefore also contacted the
          associations of users and consumers known from the recent salmon investigations and
          invited them to submit information regarding the ongoing proceeding. However, no
          replies were received either from individual users, their representative associations or
          from consumer associations. Given the non-cooperation of these parties, it can be
          provisionally concluded that the imposition of any anti-dumping measure would not
          unduly affect their situation.


Other survey respondents felt that if users have an interest, they will respond. Therefore, no
responses from users means that there is no basis not to proceed with measures where the
other conditions are met.

(l)       Community interest in an enlarged EC

It was noted that the user interest is growing in an enlarged EC. A concern was raised that,
with 25 or more Member States, the balance may be altered in that complaining industries
may be concentrated in a small number of Member States while users may be dispersed
throughout all Member States. In this context, it was noted that lobbying is becoming more
intense and making cases more difficult from the perspective of complaints.

(m)       Representation of consumers in AD or AS proceedings

A particular problem was raised in the context of TDI proceedings on consumer products.



2
    Commission Regulation 1628/2003 (Official Journal L232 18 September 2003).


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Unlike users or importers, who often have a strong financial incentive to cooperate and put
forward their points to the Commission, individual consumers typically are not aware of
possible AD or AS measures on products.

Thus, for consumers, the Commission relies on the input of a small number of consumer
organisations in the EC. One problem that was raised is that, even in these dedicated
consumer organisations, there is actually only a very small number of people across Europe
who have the expertise to participate in cases.

Further, consumers organisations tend to be modest with limited resources. The problem
raised is that the time required to get involved in an AD or AS investigation is great and the
chance of success (in terms of really influencing the outcome) is perceived as being low.
Thus, while consumer organisations do get involved in some cases involving consumer
products, their role in some cases is more limited than in others.

The point was made that the Commission could chase for more for information provided by
consumers. At the same time, with current limited resources, a concern was raised that
consumer organisations could not participate fully in every investigation even if the
Commission offered it.

(n)       Concerns raised by complainants about Community interest

A number of points were raised by EC industry complainants with regard to Community
interest:

      •   Some EC industry survey respondents pointed out that users questionnaires often
          contain very little information. It was claimed that this means the Commission ends
          up drawing conclusions from poor and unsubstantiated information.

      •   One survey respondent from EC industry pointed that the Commission uses new
          concepts in Community interest to justify a particular finding. For example, in a case
          involving ferro silicon, it was claimed, the Commission applied a new concept of
          cumulative cost burden for users which was only ever used in the context of one case.

      •   One industry survey respondent objected to the Commission concluding that industry
          is no longer viable. They asked whether the Commission can really make this
          assessment in the context of a TDI investigation. In one case, it was claimed, an
          industry went out of business and now industry is in the hands of exporters
          (magnesium).

(o)       Analysis of market situation prior to measures

One survey respondent from a consumer organisation raised the point that previous market
situation is never considered in the Community Interest analysis. It was claimed that
academic research has shown that most anti-dumping cases are brought by industries already
concentrated at an EC level and that this should at least be considered in anti-dumping case.
When considering injury, for example, it was suggested that the Commission should look at
whether there was competition in the first place? A monopolist may have been earning
excessive profits and AD duties merely provide a means to restore them. The Commission
should take this into account.




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2.3       Institutions

(a)       Political nature of decision making

Most EC industry survey respondents made the point that the process of adopting AD and AS
measures is too political. The point was made that the Commission conducts a very detailed
investigation and makes its conclusions on the basis of the extensive work undertaken.
However, given that the adoption of measures is taken on a vote by the Member States, the
ultimate decision is taken by people who are not involved in the detail of the investigation.

It was claimed by some survey respondents that TDI measures should be adopted as a
Commission decision as in competition policy. Member States should be consulted but
without their opinion being binding. The Commission, it was suggested, is in the best
position to make what is essentially a technical decision because they have been investigating
the issue.

(b)       Impact of change in voting and the Eurocoton decision

Most survey respondents felt that voting change (AD and AS measures must now be rejected
by a simple majority in the Council rather than accepted by a simple majority) and the
Eurocoton judgement 3 have had a significant effect, though participants felt that there has not
yet been a case where this has really been tested.

Many EC industry participants expressed the opinion that the change in voting and the
Eurocoton decision had somewhat eased the problems caused by the political nature of the
decision-making process. They felt that the political element of decision-making has been
reduced by these two developments.

Some Member States expressed concern that it would now be very difficult for a Commission
proposal for AD or AS measures to be blocked.

With regard to the Eurocoton decision, a number of survey respondents pointed out that it is
not clear how Member States would motivate the rejection of Commission proposal. Some
stated that there is an "understanding" from the council Presidency that the Council
Secretariat Legal Service would do this.

A further question was raised as to how decisions could be motivated if each Member State
voting against was doing so for different reasons?

(c)       Member States

Most survey respondents made points about the role of the Member States in the adoption of
AD and AS measures.

Many participants felt that the Member States have a crucial role in providing a check on the
Commission.


3
  Case C-76/01 P Eurocoton and Others v Council and United Kingdom, 30 September 2003. The ECJ ruled that Member States must state
reasons if it does not accept a proposal to impose AD duties from the European Commission.




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Given the comments made in the previous point about the fact that it may be more difficult
for Member States to block measures in future, several Member States felt that their role
during the consultation stages of the investigation has been reduced. However, some pointed
out that the role of Member States may have to change slightly. It was suggested that
Member States can still influence the case during the investigation (i.e. before the
consultation stage by which time it becomes too late to influence the outcome). Member
States were very positive about the Commission's willingness to discuss progress in the
investigation with any Member State at any stage of the investigation. It was suggested that
this type of involvement has become much more important to Member States if they want to
influence the outcome of an investigation.

(d)       How Member States make their decisions

It was pointed out by a significant number of survey respondents, including representatives
from several Member States, that Member States often vote in their own national interest
rather than the Community interest. Some Member States believe that the Community
interest is a cumulation of the twenty five Member State national interests. Other believe that
Community interest is a concept distinct from a simple cumulation of Member State national
interests.

(e)       Representatives on the Advisory Committee

Concern was raised by several survey respondents about the quality of some Member State
representatives on the Advisory Committee. TDI is a very technical area and, it was claimed,
some Member States have representatives that are not sufficiently knowledgeable on the
technical aspects of the subject.

(f)       Lobbying

There was general agreement that lobbying has become an important part of the process for
everybody, though there were differing views on whether this is a good or bad thing.

All Member States consulted welcome being contacted by interested parties as it provides
them with an alternative source of information to the Commission. However, it was
generally acknowledged that, in some cases, lobbying can be overdone. Some Member
States talked of being bombarded with materials.

Some EC industry survey respondents made the point that Member States allow their
decisions to be heavily influenced by the lobbying of users that have not participated in the
original investigation. Such parties, it was claimed, should be ignored.

(g)       Internal organisation

There was general agreement amongst survey respondents that the current organisation of the
TDI service in DG Trade is better as one complete directorate rather than when it was split
into separate directorates for dumping and injury.

There was universal criticism of the system when the directorate was split into two.
However, the desirability of two genuinely separate administrative bodies, as in US system,
was raised by some.

(h)       Role of Commission


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Some survey respondents claimed that the Commission has two conflicting roles in TDI
investigation. First, it is the objective investigator while, second, it takes on the role in
establishing the case on behalf of EC industry (which, it was claimed, is also partly about
defending its decision to initiate the investigation). In this sense, the Commission was
described as being both prosecutor and judge.

It was suggested that the complaints office could be separated from the investigation teams as
a way to alleviate this perceived problem.

(i)       Case handlers

Some participants complained of internal politics affecting TDI investigations and there were
mixed reviews of case handlers. Several participants had experienced case handlers that did
not want to share information with their colleagues or to discuss overall views on a case with
each other. This was found to be unacceptable.

Generally, however, most survey respondents felt that investigation teams do function
properly.

A concern was raised about the high turnover of staff amongst case handlers. Investigations
where case handlers have changed in the middle of a case were particularly highlighted as
problematic. It was claimed that the Commission should try to ensure permanent staff
throughout proceeding.

Some survey respondents also made the point that they would like to see case handlers
specialised by sector.

2.4       Effectiveness of measures

(a)       Overall effectiveness

Overall, many expressed that AD and AS measures work in providing protection against
dumped and subsidised pricing practices.

The level of measures was generally felt to be adequate by most parties that had made
complaints. However, in certain specific cases, it was felt that protection had not been
sufficient.

As mentioned earlier, there were some complaints about the lesser duty rule from the
perspective that that complainants obtain lower levels of protection than domestic industries
get under other regimes such as the US.

It was observed that, given that AS measures generally turn out to be significantly lower than
AD measures, industry is less interested the AS instrument.

(b)       Circumvention & Enforcement

There was almost universal agreement that the biggest issue for survey respondents from EC
industry is enforcement of measures. It was claimed that the biggest problem in this regard is
in relation to exports from China.




Evaluation of EC Trade Defence Instruments – Annex 2; Survey of interested parties on EC TDI (final report December 2005)
                                                                                                             Annex 2, Page 20

The point was made that circumvention is worse in certain industries than in others. Some
industries have simpler product types and a good match with CN codes. Problems tend to
arise when CN codes have to be split.

Many of the problems are, in fact, customs problems. In this context, it was claimed that
customs authorities and agencies (e.g.. the 25 Member State customs administrations and
OLAF) do not give sufficiently high priority to enforcing TDI. Several respondents had
complaints relating to Olaf (both in terms of its efficiency and the low priority given to TDI).
One respondent found Olaf to be efficient.

Participants in the survey generally praised the Commission for being proactive on
circumvention. problems. It was acknowledged by all complainants the Commission has
improved a lot in trying deal with such problems and is showing more flexibility in finding
solutions. The preparedness to open ex officio investigations was cited as an example of a
good development.

Difficulties in getting actual evidence of circumvention was raised as a significant problem.
In this regard, it was suggested that the Commission should consider doing random-checks
on-spot to discourage exporters and traders from engaging in circumvention activity.

At the same time, some survey respondents raised the point that the Commission had been
reluctant to initiate circumvention cases and, instead, encouraged the submission of new
complaints.

With regard to Olaf, the point was made that there should be transparency between Olaf and
DG Trade in the context of enforcing TDI. To the extent that this was a criticism, it was
directed at Olaf rather than the Commission.

(c)       Price undertakings

Many complainants strongly made the point that they do not like price undertakings. There is
a feeling that the problem of circumvention is even greater with undertakings and they do not
like the lack of transparency. Thus, a strong preference was expressed for duties to correct
dumping or subsidies rather than undertakings.

However, one participant noted that the Commission has improved significantly in
monitoring undertakings.

(d)       Retaliation against EC companies for being involved in AD action

In a small number of cases, there has been retaliation against EC companies making anti-
dumping complaints.

However, very few people interviewed in the survey had experienced any retaliatory threats
for participating in complaints. Though it has clearly occurred in certain cases, it remains an
isolated problem.

Retaliation included threats from companies not to import EC products and pressure from 3rd
country governments (including harassment through unrelated regulatory procedures).
Harassment has also included physical violence and threats but in a very small number of
cases.



Evaluation of EC Trade Defence Instruments – Annex 2; Survey of interested parties on EC TDI (final report December 2005)
                                                                                                             Annex 2, Page 21


3.        SAFEGUARDS

Very few points were made on safeguards in the survey. Most survey respondents had no
experience of them and, therefore, had no views to express.

There was a general perception amongst survey participants that use of safeguards is not
encouraged by the Commission and Member States. Thus, complainants tend to think only
about AD and AS complaints. On reflection, many questioned why this is the case. Some
felt that they should have access to instrument if it is there and that there should not be a prior
attitude against it.

In this regard, certain advantages of safeguards were acknowledged by some EC industry
participants. For example, it was pointed that safeguard investigations are shorter and less
burdensome than AD and AS investigations. It was claimed that, given that the duration of
the investigation and burden on complainants are both concerns generally raised by EC
industry, this makes more use of safeguards worth considering. Some concluded that
safeguards are a valuable tool alongside the other trade defence instruments.

Some survey respondents stated that they did not think that safeguards should be used, giving
the following reasons:

          •     They are imposed against 'fair trade'

          •     Proving that serious injury has been directly caused by volume is difficult

          •     The political nature of safeguards is more likely to affect bilateral relations.

          •     Industries need political weight to be able to use it.

          •     Price measures are preferable to quantity measures. Safeguards are too restrictive
                and affect our customers too much. AD and AS measures are less disruptive to
                trade.

On the other hand, it was pointed out that safeguards can maintain traditional trade flows
which may work to the advantage of developing countries.

It was also highlighted that safeguards are not relevant to all industries. They are of use only
to those industries where a surge in imports is possible. Some industries require sophisticated
distribution networks (e.g. electronic or chemical products) and, therefore, a short term surge
is not really possible. As agriculture becomes more liberalised safeguards may be important
due to the likelihood of sudden surges of imports.

With regard to procedure for safeguard investigations, the only issue that was raised was to
question why only Member States can request a safeguards investigation. It was asked why
EC industry cannot be a complainant?




Evaluation of EC Trade Defence Instruments – Annex 2; Survey of interested parties on EC TDI (final report December 2005)
                                                                                                                         Annex 3


ANNEX 3 – INTERVIEWEES FOR SURVEY IN EC AND US

               Organisation                                                     Name of Person
EC Industry
Eurofer                                          Gordon Moffat,
Eurocoton (2 meetings)                           Michelle Anselme
CIRFS (2 meetings)                               Colin Purvis
CEFIC (2 meetings)                               Judit Perez Tasso
UK Steel (2 meetings)                            Ian Rodgers
British Steel (2 meetings)                       Lyall Syme
BASF                                             Bernhard Marcinowski
EFMA (2 meetings)                                Sean Mackle
Eurometaux (2 meetings)                          Monique Jones
Euroalliages                                     Ines Van Lierde
Cogent/Orb Electrical Steels Ltd                 Bill Ford
EC Member States
Czech Republic                                   Jana Klimova
France                                           Emanuelle Ivanov Durand
Italy                                            Pasquale de Micco
Denmark                                          Stig Munck Larsen
Netherlands                                      Arnold van Rhijn
Sweden                                           Bo Esselius
Sweden                                           Björn Nellhede
UK                                               Colin Bailey
Spain                                            Ana Ocon Mora
Belgium                                          Charles Godart
Other EC interests
UNICE                                            Adrian Van Hoven
Foreign Trade Association                        Maria Linder
UK Consumers Association                         Phil Evans
BEUC (European Consumers Association)            Dominic Forest
Thai Office of Commercial Affairs, Brussels      Chakarin Komolsiri
European Commission
Harald Wenig
Peter Klein
Hannes Welge
Wolfgang Mueller
Marko Latti
Francisco Perez Canado
Stephen Gospage
Alberto Spagnolli
US Administration
US International Trade Commission                James Lyons, General Counsel
US International Trade Commission                Robert Carpenter, Director Investigations
US International Trade Commission                Catherine De Filippo, Chief Applied Economics Dvision
Department of Commerce                           Joseph Spetrini, Acting Assistant Secretary for Import Administration
Department of Commerce                           Ron Lorenzen, Director of Office of Policy
Department of Commerce                           Laurie Parkhill, Office Director
Department of Commerce                           Michael Rill
Department of Commerce                           John Herrman, Special Assistant to the Assistant Secretary
Department of Commerce                           Robert Heilferty, Senior Counsel
USTR                                             John Henderson, Director, Trade Remedies
USTR                                             Roy Malmrose, Director, Industrial Subsidy Policy
Other US interviewees
Skadden Arps Slate Meabher & Flom LLP            John Mangan
Skadden Arps Slate Meabher & Flom LLP            Jeffery Gerrish
Collier Shannon Scott                            Paul Rosenthal
Wilmer Cutler Pickering Hale & Dorr              Gary Horlick
Steptoe & Johnson                                Susan Esserman
Mayer Brown Rowe & Maw                           James Jochum, Former Assistant Secretary of Import Administration
Mayer Brown Rowe & Maw                           Margeurite Trossevin, Former Deputy Counsel, DOC
American Iron & Steel Institute                  Barry Solarz, Vice President, Trade & Economic Policy
American Institute for International Steel       David Phelps, President
TradeWins LLC                                    John Magnus, President
Thai Office of Commercial Affairs                Chaveevarn Chandanabhamma, Minister (formerly Minister in Brussels office)
Crowell and Moring                               Jeff Snyder




Evaluation of EC TDI; Annex 3 – Survey Interviewees (Final Report December 2005)
                                                                                                                                                       Annex 4, Page 1

                                                                                                            (c)   Transparency and access to information.
                                                                                                            (d)   Confidentiality of business sensitive information –
                                                                                                                  are companies confident that confidentiality will be
     Evaluation of EC Trade Defence Instruments (TDI)                                                             respected when they submit business information?
               Discussion Issues for Business                                                               (e)   Is there sufficient opportunity to participate in the
                                                                                                                  investigation (hearings, submission, disclosure etc.)?
1.       EXPERIENCE OF TDI                                                                                  (f)   Length of investigation and timetable for adoption of
         • Name and affiliation of respondent                                                                     measures (i.e. 9 months for provisional measures, 13
         • What is your experience with EC TDI (complainant,                                                      and 15 months for definitive dumping and subsidy
           importer/user, exporter, trade/industry association                                                    measures respectively)
           official)?                                                                                       (g)   Complexity of questionnaires – could they be
         • Have you been involved in TDI investigations against                                                   simplified and, if so, in what way?
           EC exports?                                                                                      (h)   Decision-making process for adopting measures.
         • Do you have specific experience of US TDI? In what                                               (i)   WTO non-discrimination requirements (i.e. MFN)
           context?                                                                                               and complaints/adoption of measures.
                                                                                                            (j)   Interim-reviews
2.       ANTI-DUMPING AND ANTI-SUBSIDY                                                                      (k)   Expiry reviews
         INSTRUMENTS                                                                                        (l)   Other procedural issues affecting the needs and
                                                                                                                  opportunities of economic operators.
2.1      Trends
         (a)   Why does anti-dumping activity fluctuate?                                              2.3   Substance
         (b)   Why has anti-subsidy activity remained at low levels                                         (a)   Definition of EC industry in view of globalisation
               in comparison to anti-dumping?                                                                     (exclusion due to relation or imports).
                                                                                                            (b)   Dumping and Subsidy Margins
2.2      Procedure                                                                                                (i)     Dumping calculation –
         (a)   Is the threshold for accepting complaints set at a                                                         • Normal Value – issues may include non-
               reasonable level?                                                                                             market economy methodology, related
         (b)   Access to instrument for EC industry attempting to                                                            companies, SGA and rate of profit in
               prepare complaints – issues might include cost,                                                               constructed normal value calculation.
               problems achieving standing, problems collecting                                                           • Export Price – issues may include related
               necessary evidence of dumping or subsidy, SMEs,                                                               companies.
               problems unique to particular sectors etc.                                                                 • Comparison and Adjustments


EVALUATION OF EC TDI ; Annex 4 – Discussion Issues Lists for EC Survey (Final Report December 2005)
                                                                                                                                                        Annex 4, Page 2


                             • De minimis dumping                                                                 •   Registration and retroactivity.
                   (ii)      Subsidy calculation -
                             • Definition of subsidy                                                 2.4   Institutions
                             • Calculation of benefit                                                      (a)     How do you view the role of Member States in
                             • CVD and countries in transition.                                                    adopting measures?
                             • De-minims subsidy                                                           (b)     Impact of change in Council voting procedures
                                                                                                                   introduced in 2004 and of Eurocoton judgement.
         (c)       Injury and Causality                                                                    (c)     Internal organisation of Commission investigations,
                   • Determination of material injury - issues might                                               particularly with regard to the dumping/subsidy and
                       include threshold for 'material' injury, captive                                            injury investigations.
                       production, and treatment of non-complainants.                                      (d)     How do you perceive ex parte meetings between
                   • Like product                                                                                  Member States and economic operators (lobbying)?
                                                                                                           (e)     Any other comment on the respective roles of the
                   • Threat of material injury and material retardation
                                                                                                                   Commission and Member States.
                   • Causal link - attribution of injury between
                       dumped/subsidised imports and other factors.
                                                                                                     2.5   Effectiveness of anti-dumping and anti-subsidy
                                                                                                           instruments
         (d)       Injury margin for implementation of lesser duty rule
                                                                                                           (a)    Application and enforcement – issues may include
                   – issues might include identification of non-injurious
                                                                                                                  circumvention, absorption, OLAF, customs.
                   price, relevant costs and rate of profit to be used in
                                                                                                           (b)    Type of measures – duties and undertakings.
                   calculating the NIP.
                                                                                                           (c)    Level of measures
                                                                                                           (d)    Threat of retaliation and disincentive to make
         (e)       Community Interest
                                                                                                                  complaints
                                                                                                           (e)    Examples of successful measures and those that
         (f)       Post-measure substantive issues
                                                                                                                  failed to achieve their objective
                   • Expiry review – likely continuation / recurrence
                      of dumping/subsidy/injury.
                                                                                                     2.6   Comparison with US
                   • Interim review – changed circumstances.                                               (a)  Substance
                   • Circumvention                                                                              (i)    Dumping calculation methodology (e.g.
                   • Absorption                                                                                        adjustments, zeroing, domestic sales tests
                   • Duty refunds                                                                                      such as 5% test and % of profitable sales)
                   • Suspension


EVALUATION OF EC TDI; Annex 4 – Discussion Issues Lists for EC Survey (Final Report December 2005)
                                                                                                                                                     Annex 4, Page 3

                   (ii)   Subsidy calculation methodology (e.g. pre-                                       (d)    Community Interest
                          privatisation       subsidies,        allocation                                 (e)    China and TPSSM/special textiles safeguard
                          methodologies)
                   (iii) Injury and causal link – may include injury                                 3.3   Procedure
                          factors considered, treatment of captive                                         (a)   Initiation of investigations
                          production, attribution of injury.                                               (b)   Provisional and definitive safeguard measures
         (b)       Procedure                                                                               (c)   Decision-making
                   (i)    Complaint – sufficient evidence threshold,                                       (d)   Type and duration of measures
                          who can make complaints?                                                         (e)   Compensation
                   (ii)   Questionnaire and verification
                   (iii) Provisional and definitive measures – speed                                 3.4   Institutions
                          of adopting measures, duty collection systems
                          and efficiency of duty collection., disclosure.                            3.5   Effectiveness of measures
                   (iv)   Administrative review
                   (v)    Judicial review.                                                           3.6   Comparison with US
                   (vi)   Treatment of confidential information.
                   (vii) Cost of procedures                                                          Cliff Stevenson
                   (viii) Support of SMEs                                                            Chief Economist and Head of EU Trade Practice
                   (ix)   Byrd amendment                                                             Mayer, Brown, Rowe and Maw LLP
                                                                                                     cstevenson@mayerbrownrowe.com
         (c)       Institutions – split of dumping/subsidy and injury                                +32 (0)2 502 5517 (Brussels office)
                   between two US agencies.                                                          +44 (0)207 334 2041 (London office)

3.       SAFEGUARDS

3.1      Why have safeguards traditionally been seen as unusable
         in the EC?

3.2      Substance
         (a)   Increased imports
         (b)   Serious injury
         (c)   Causality


EVALUATION OF EC TDI; Annex 4 – Discussion Issues Lists for EC Survey (Final Report December 2005)
                                                                                                                                                      Annex 4, Page 4

                                                                                                           (d)   Confidentiality of business sensitive information –
                                                                                                                 are companies confident that confidentiality will be
                                                                                                                 respected when they submit business information?
     Evaluation of EC Trade Defence Instruments (TDI)                                                      (e)   Is there sufficient opportunity to participate in the
            Discussion Issues for Member States                                                                  investigation (hearings, submission, disclosure etc.)?
                                                                                                           (f)   Length of investigation and timetable for adoption of
4.       EXPERIENCE OF TDI                                                                                       measures (i.e. 9 months for provisional measures, 13
         • Name of person and Member State represented.                                                          and 15 months for definitive dumping and subsidy
         • What is your role? In what way are you involved in TDI?                                               measures respectively)
         • Have you been involved in TDI investigations against                                            (g)   Complexity of questionnaires – could they be
           EC exports?                                                                                           simplified and, if so, in what way?
         • Do you have specific experience of US TDI? In what                                              (h)   Decision-making process for adopting measures.
           context?                                                                                        (i)   WTO non-discrimination requirements (i.e. MFN)
                                                                                                                 and complaints/adoption of measures.
5.       ANTI-DUMPING AND ANTI-SUBSIDY                                                                     (j)   Interim-reviews
         INSTRUMENTS                                                                                       (k)   Expiry reviews
                                                                                                           (l)   Other procedural issues affecting the needs and
5.1      Trends                                                                                                  opportunities of economic operators.
         (a)   Why does anti-dumping activity fluctuate?
         (b)   Why has anti-subsidy activity remained at low levels                                  5.3   Substance
               in comparison to anti-dumping?                                                              (a)   Definition of EC industry in view of globalisation
                                                                                                                 (exclusion due to relation or imports).
5.2      Procedure                                                                                         (b)   Dumping and Subsidy Margins
         (a)   Is the threshold for accepting complaints set at a                                                (i)     Dumping calculation –
               reasonable level?                                                                                         • Normal Value – issues may include non-
         (b)   Access to instrument for EC industry attempting to                                                           market economy methodology, related
               prepare complaints – issues might include cost,                                                              companies, SGA and rate of profit in
               problems achieving standing, problems collecting                                                             constructed normal value calculation.
               necessary evidence of dumping or subsidy, SMEs,                                                           • Export Price – issues may include related
               problems unique to particular sectors etc.                                                                   companies.
         (c)   Transparency and access to information.                                                                   • Comparison and Adjustments
                                                                                                                         • De minimis dumping

EVALUATION OF EC TDI; Annex 4 – Discussion Issues Lists for EC Survey (Final Report December 2005)
                                                                                                                                                      Annex 4, Page 5

                   (ii)      Subsidy calculation -
                             • Definition of subsidy                                                 5.4   Institutions
                             • Calculation of benefit                                                      (a)     How do you view the role of Member States in
                             • CVD and countries in transition.                                                    adopting measures?
                             • De-minims subsidy                                                           (b)     Do you feel sufficiently informed?
                                                                                                           (c)     Are working documents adequate?
         (c)       Injury and Causality                                                                    (d)     Basis for Member States to decide how they vote,
                   • Determination of material injury - issues might                                               their internal organisation and decision-making
                       include threshold for 'material' injury, captive                                            process.
                       production, and treatment of non-complainants.                                      (e)     Impact of change in Council voting procedures
                   • Like product                                                                                  introduced in 2004 and of Eurocoton judgement.
                                                                                                           (f)     Internal organisation of Commission investigations,
                   • Threat of material injury and material retardation
                                                                                                                   particularly with regard to the dumping/subsidy and
                   • Causal link - attribution of injury between
                                                                                                                   injury investigations.
                       dumped/subsidised imports and other factors.
                                                                                                           (g)     How do you perceive ex parte meetings with
                                                                                                                   economic operators (lobbying)?
         (d)       Injury margin for implementation of lesser duty rule
                                                                                                           (h)     Any other comment on the respective roles of the
                   – issues might include identification of non-injurious
                                                                                                                   Commission and Member States.
                   price, relevant costs and rate of profit to be used in
                   calculating the NIP.

         (e)       Community Interest
                                                                                                     5.5   Effectiveness of anti-dumping and anti-subsidy
                                                                                                           instruments
         (f)       Post-measure substantive issues
                                                                                                           (a)    Application and enforcement – issues may include
                   • Expiry review – likely continuation / recurrence
                                                                                                                  circumvention, absorption, OLAF, customs.
                      of dumping/subsidy/injury.
                                                                                                           (b)    Type of measures – duties and undertakings.
                   • Interim review – changed circumstances.                                               (c)    Level of measures
                   • Circumvention                                                                         (d)    Threat of retaliation and disincentive to make
                   • Absorption                                                                                   complaints
                   • Duty refunds                                                                          (e)    Examples of successful measures and those that
                   • Suspension                                                                                   failed to achieve their objective
                   • Registration and retroactivity.


EVALUATION OF EC TDI; Annex 4 – Discussion Issues Lists for EC Survey (Final Report December 2005)
                                                                                                                                                     Annex 4, Page 6


5.6      Comparison with US                                                                          6.    SAFEGUARDS
         (a)  Substance                                                                              6.1   Why have safeguards traditionally been seen as unusable
              (i)      Dumping calculation methodology (e.g.                                               in the EC?
                       adjustments, zeroing, domestic sales tests
                       such as 5% test and % of profitable sales)                                    6.2   Substance
              (ii)     Subsidy calculation methodology (e.g. pre-                                          (a)   Increased imports
                       privatisation       subsidies,        allocation                                    (b)   Serious injury
                       methodologies)                                                                      (c)   Causality
              (iii) Injury and causal link – may include injury                                            (d)   Community Interest
                       factors considered, treatment of captive                                            (e)   China and TPSSM/special textiles safeguard
                       production, attribution of injury.
         (b)  Procedure                                                                              6.3   Procedure
              (i)      Complaint – sufficient evidence threshold,                                          (a)   Initiation of investigations
                       who can make complaints?                                                            (b)   Provisional and definitive safeguard measures
              (ii)     Questionnaire and verification                                                      (c)   Decision-making
              (iii) Provisional and definitive measures – speed                                            (d)   Type and duration of measures
                       of adopting measures, duty collection systems                                       (e)   Compensation
                       and efficiency of duty collection., disclosure.
              (iv)     Administrative review                                                         6.4   Institutions
              (v)      Judicial review.
              (vi)     Treatment of confidential information.                                        6.5   Effectiveness of measures
              (vii) Cost of procedures
              (viii) Support of SMEs                                                                 6.6   Comparison with US
              (ix)     Byrd amendment
         (c)  Institutions – split of dumping/subsidy and injury
              between two US agencies.                                                               Cliff Stevenson
                                                                                                     Chief Economist and Head of EU Trade Practice
                                                                                                     Mayer, Brown, Rowe and Maw LLP
                                                                                                     cstevenson@mayerbrownrowe.com
                                                                                                     +32 (0)2 502 5517 (Brussels office)
                                                                                                     +44 (0)207 334 2041 (London office)



EVALUATION OF EC TDI; Annex 4 – Discussion Issues Lists for EC Survey (Final Report December 2005)
                                                                                                                                                 Annex 5, Page 1


ANNEX 5 – BASIC DESCRIPTION OF US TRADE DEFENCE INSTRUMENTS



1.     OVERVIEW.......................................................................................................................................................3
     1.1       LEGAL AUTHORITY .....................................................................................................................................3
     1.2       INSTITUTIONS ..............................................................................................................................................3
2.     ANTI-DUMPING AND COUNTERVAILING DUTIES ...............................................................................4
     2.1       SUBSTANCE .................................................................................................................................................4
        (a)    Summary of Statute and Regulations..........................................................................................................4
        (b)    Definition of Dumping ................................................................................................................................4
        (c)    Normal Value..............................................................................................................................................5
        (d)    Export Price/Constructed Export Price......................................................................................................7
        (e)    Dumping Calculation .................................................................................................................................7
        (f)    Exporter-Specific Dumping Margins..........................................................................................................8
        (g)    All Others Rate ...........................................................................................................................................9
        (h)    Subsidy........................................................................................................................................................9
        (i)    Financial Contribution ...............................................................................................................................9
        (j)    Benefit.........................................................................................................................................................9
        (k)    Specificity .................................................................................................................................................10
        (l)    Allocation of the Benefit ...........................................................................................................................11
        (m)       Subsidy Rate Calculation.....................................................................................................................11
        (n)    Non-Market Economies ............................................................................................................................12
        (o)    Injury ........................................................................................................................................................12
        (p)    Like Product .............................................................................................................................................12
        (q)    Material Injury .........................................................................................................................................13
        (r)    Cumulation ...............................................................................................................................................13
     2.2       PROCEDURE...............................................................................................................................................13
        (a)    Overview of Procedures ...........................................................................................................................13
        (b)    Petition and Initiation...............................................................................................................................16
        (c)    Petition Requirements...............................................................................................................................17
        (d)    Standard for Initiation ..............................................................................................................................17
        (e)    Industry Support .......................................................................................................................................17
        (f)    Time Limits ...............................................................................................................................................18
        (g)    Target of the Investigation........................................................................................................................18
        (h)    Notice of Initiation....................................................................................................................................18
        (i)    ITC Preliminary Investigation Phase .......................................................................................................19
        (j)    Negligibility ..............................................................................................................................................19
        (k)    Period of Investigation .............................................................................................................................19
        (l)    Questionnaire ...........................................................................................................................................19
        (m)       Description of the Standard Dumping Questionnaire .........................................................................20
        (n)    Time Limits ...............................................................................................................................................21
        (o)    Verification ...............................................................................................................................................21
        (p)    Written Argument .....................................................................................................................................21
        (q)    Hearings ...................................................................................................................................................22
        (r)    Disclosure and Access to Information ......................................................................................................22
        (s)    Overview of Duties ...................................................................................................................................23
        (t)    Provisional Measures ...............................................................................................................................23
        (u)    Final Phase of ITC Injury Investigation ...................................................................................................23
        (v)    Definitive Duties.......................................................................................................................................24
        (w)       Undertakings........................................................................................................................................24
        (x)    Structure of an Undertaking .....................................................................................................................25
        (y)    Types of Duties .........................................................................................................................................25
        (z)    Level of Duties..........................................................................................................................................25


Evaluation of EC Trade Defence Instruments – Annex 5; Basic Description of US TDI (Final Report, December 2005)
                                                                                                                                                 Annex 5, Page 2

        (aa)        Duty Absorption...................................................................................................................................25
        (bb)        Scope....................................................................................................................................................26
        (cc)        Circumvention......................................................................................................................................26
        (dd)        Revocation ...........................................................................................................................................26
        (ee)        Sunset...................................................................................................................................................26
        (ff)        Judicial Review....................................................................................................................................27
3.      SAFEGUARDS.................................................................................................................................................27
     3.1        SUBSTANCE ...............................................................................................................................................27
        (a)     Summary of Statute and Regulations........................................................................................................27
        (b)     Injury Phase Considerations ....................................................................................................................28
        (c)     Increased Imports.....................................................................................................................................28
        (d)     Injury or Threat of Injury to the Domestic Industry .................................................................................28
        (e)     Causation..................................................................................................................................................29
        (f)     Adjustment Plans ......................................................................................................................................29
        (g)     Types of Relief ..........................................................................................................................................30
        (h)     Presidential Discretion to Impose Relief ..................................................................................................30
        (i)     Limits on Relief Granted...........................................................................................................................30
        (j)     Exclusion of Certain Countries ................................................................................................................31
        (k)     Exclusion of Certain Products..................................................................................................................31
     3.2        PROCEDURES .............................................................................................................................................31
        (a)     Overview of Procedures ...........................................................................................................................31
        (b)     Petition and Initiation...............................................................................................................................31
        (c)     Petition Requirements and Initiation........................................................................................................32
        (d)     Questionnaires..........................................................................................................................................32
        (e)     Hearings ...................................................................................................................................................32
        (f)     Disclosure and Access to Information ......................................................................................................32
        (g)     Interagency Process Regarding Presidential Action ................................................................................33
        (h)     Appellate Review ......................................................................................................................................33
        (i)     Limits on Subsequent Investigations.........................................................................................................33




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1.        OVERVIEW

1.1       Legal Authority

U.S. trade defense instruments are governed by domestic laws, which implement the United
States obligations under the relevant WTO Agreements. The WTO Agreements themselves do
not have direct legal effect under U.S. law.

The statutory authority for U.S. anti-dumping and countervailing (anti-subsidy) measures is
found in Title VII (sections 701-783), of the Tariff Act of 1930, as amended. The statutory
authority for safeguard actions is found in Title II (sections 201-204) of the Trade Act of 1974,
as amended. These statutory authorities were most recently amended by the Uruguay Round
Agreements Act to implement the WTO Agreements.

1.2       Institutions

The institutions that play a role in the imposition and enforcement of U.S. trade defense
instruments are: the U.S. Department of Commerce (Commerce), the International Trade
Commission (ITC), the Office of the United States Trade Representative (USTR), the Bureau of
Customs and Border Protection (Customs), the Court of International Trade and the Court of
Appeals for the Federal Circuit.

Commerce, a cabinet level agency of the executive branch, has primary responsibility for
enforcement of the U.S. anti-dumping and countervailing duty laws. Responsibility within
Commerce for conducting investigations and administering anti-dumping and countervailing
duty measures rests with Import Administration, and decision-making authority has been
delegated by the Secretary of Commerce to the Assistant Secretary for Import Administration.

The ITC, which is an independent agency comprised of six commissioners (3 Democrats and 3
Republicans) appointed by the President for 12-year terms, is responsible for making the injury
determinations in anti-dumping and countervailing duty proceedings.

The ITC is also responsible for conducting safeguard investigations. However, it is the President
that makes the final determination as to whether relief will be provided and the extent of that
relief. The President is advised by the USTR, which is part of the Office of the President.

Customs collects anti-dumping and countervailing cash deposits and duty assessments, in
accordance with instructions received from Commerce. Customs’ role is ministerial. Customs
does not have decision-making authority in AD/CVD or safeguards cases.

The Court of International Trade is responsible for judicial review of anti-dumping and
countervailing duty and safeguard determinations by Commerce and the ITC. Decisions by the
Court of International Trade may be appealed to the Court of Appeals for the Federal Circuit.
Although further appeal to the U.S. Supreme Court is possible, review by the Supreme Court is
rarely sought and was last granted in 1979.


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2.         ANTI-DUMPING AND COUNTERVAILING DUTIES

2.1        Substance

(a)        Summary of Statute and Regulations

Commerce is required by law to impose anti-dumping or countervailing duties if the following
conditions exist:

           (i)       either,

                     (A) the subject merchandise is being, or is likely to be, sold in the
                     United States at less than normal value; or

                     (B) a government is providing, directly or indirectly, a
                     countervailable subsidy with respect to the manufacture,
                     production or export of the subject merchandise, and

           (ii)      an industry in the United States is materially injured or threatened with material
                     injury, or the establishment of an industry in the United States is materially
                     retarded, by reason of the dumped or subsidized imports.

The United States has a bifurcated system in which Commerce determines whether dumping or
subsidization exists and the ITC determines whether the U.S. domestic industry is injured by
reason of those dumped or subsidized imports.

The U.S. anti-dumping and countervailing duty laws are found in Title VII (sections 701-782) of
the Tariff Act of 1930, 1 as amended (“the Act”).

Commerce’s implementing regulations are codified in Title 19 of the Code of Federal
Regulations, Part 351 (“Commerce Regulations”).

The ITC’s implementing regulations are codified at Title 19 of the Code of Federal Regulations,
Part 207 (“ITC Regulations”).

The Act and Regulations were amended, as necessary, to reflect the WTO Agreement on the
Implementation of Article VI of GATT 1994 (“the Anti-dumping Agreement”) and the WTO
Agreement on Subsidies and Countervailing Measures (“SCM Agreement”), which were
negotiated in the Uruguay Round.

(b)        Definition of Dumping

Dumping is defined as the extent to which the “normal value” of the merchandise exceeds the
export price to the United States. The comparison of export price and normal value is normally

1
    These provisions are codified at 19 U.S.C. §§ 1671 et seq.


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made at the “ex-factory” level, i.e., exclusive of movement expenses. The dumping calculation
is complex, usually requiring numerous adjustments to export price and normal value to
eliminate differences that effect price comparability.

(c)       Normal Value

Whenever possible, normal value is determined on the basis of prices at which the exporter sells
the foreign like product for consumption in the exporting country (“home market prices”). The
three most common situations where home market prices do not provide a basis for determining
normal value are: (1) the home market is not “viable” (i.e., total sales in the home market are
less than 5% of total sales to the United States); (2) sales in the home market were made at prices
below the cost of production; or (3) there are no home market sales of a comparable product. If
normal value cannot be based on home market sales, Commerce will base normal value on prices
at which the exporter sells the foreign like product in third countries, or on the basis of a
“constructed value.”

Note that the U.S. law defines “foreign like product” as an identical or comparable product
“produced in the same country by the same person.” An exporter’s normal value is therefore
never based on sales by other companies.

There is a preference in U.S. law for determining normal value on the basis of actual prices. If
possible, therefore, Commerce will use a viable third country market rather than constructed
value when home market sales are unavailable. However, Commerce has the discretion to use
constructed value in lieu of third country sales if the agency deems it to be more appropriate in a
given case.

Constructed value is most commonly used when, although the home market is viable, home
market sales are found to be below the cost of production or otherwise outside the ordinary
course of trade, or when there is no comparable product sold in the home market.

          Constructed Value = Cost of Manufacturing, including, material, labor,
          variable and fixed overhead (“COM”) + selling general and administrative
          expenses (SG&A) + profit

Sales below cost. If, within an extended period of time, prices are below cost for a substantial
quantity of sales, Commerce will disregard the below cost sales when calculating normal value.
“Substantial quantities” means 20% or more and an “extended period of time” is normally one
year. Therefore, if below cost sales during the period of investigation are less than 20% no sales
are disregarded.

          Cost of Production = COM + SG&A

Sales to affiliated parties. Home market sales to affiliated parties are only used in the normal
value calculation if they are “in the ordinary course of trade.” In 2002, in response to an adverse
WTO decision, Commerce adopted a new test to determine if affiliated party sales are in the
ordinary course of trade. Sales to affiliates will be treated as in the ordinary course of trade if
prices to the affiliate fall, on average, within a defined range around prices for the same or


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comparable merchandise sold to all unaffiliated customers. The price range for sales within the
ordinary course of trade is between 98 percent and 102 percent, inclusive, of prices to
unaffiliated customers. If sales to affiliates fall outside this range, Commerce normally requests
the affiliate’s downstream sales. If, however, sales to the affiliate are less than 5% of the home
market, Commerce will simply disregard them.

Adjustments. Numerous adjustments are made to normal value to ensure comparability to the
export transactions. Adjustments include:

          Difference in Merchandise (“Difmer”): When the product sold in the home market is not
          identical to the product sold to the United States, the normal value is adjusted by the net
          difference in variable manufacturing costs incurred to produce the different physical
          characteristics. If the difmer adjustment exceeds 20% of the total average cost of
          manufacturing, on a model-specific basis, sales of the product will not be used to
          determine normal value. Normally in such cases, Commerce will use a constructed
          value.

          Packing: To eliminate differences in packing costs, the packing costs for home market
          sales are deducted from normal value and packing costs for sales to the United States are
          added to normal value.

          Circumstances of Sale: These adjustments account for differences in direct selling
          expenses such as commissions, warranties and credit expenses.

          Level of Trade: Comparisons are made, to the extent possible, between sales at the same
          level of trade. If, however, sales in the home market are made at a different level of trade
          and the record evidence demonstrates that the difference in level of trade affects price
          comparability, Commerce makes a level of trade adjustment to normal value.

Non-Market Economies. When the exporting country is a non-market economy (“NME”),
Commerce does not determine normal value on the basis of prices and costs in the NME.
Instead, Commerce constructs a normal value using what is commonly referred to as the “factors
of production” method. Under that method, the NME producer provides Commerce with its
factors of production, i.e., labor hours, quantities of inputs, energy consumption and capital
costs. Commerce then constructs normal value by valuing those factors, plus an amount for
SG&A and profit, in a surrogate market economy that is a significant producer of comparable
merchandise and is at a comparable level of economic development.

Over the years, Commerce has compiled a significant amount of market-economy data on which
to value the factors of production. Commerce publishes an index of that information on the
Import Administration website. In addition, Commerce has established a practice of using the
NME producer’s actual cost for inputs that the producer purchases from a market economy,
rather than use a surrogate value for those input costs.

If there is inadequate surrogate value information available to use the factors of production
method, Commerce has the discretion to rely on prices at which comparable products produced



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in a surrogate market economy are sold in other markets, including the United States.
Commerce has rarely, if ever, resorted to this alternative.

Before Congress amended the anti-dumping law to establish the factors of production method,
Commerce’s NME method relied to the extent possible on price and cost information from
surrogate market economy producers. That approach was abandoned due, at least in part, to
difficulties in finding surrogate producers willing to cooperate in the investigation.

(d)       Export Price/Constructed Export Price

Commerce bases it calculation of export price on the first sale to an unaffiliated party.

Export Price: U.S. law defines “export price” as the price at which the product is first sold
before importation by the producer or exporter outside of the United States to an unaffiliated
purchaser in the United States, or to an unaffiliated purchaser outside the United States for export
to the United States. In sum, export price sales are made by someone outside the United States
to an unaffiliated party in, or for export to, the United States.

Constructed Export Price (“CEP”): There are other circumstances, however, in which the first
sale to an unaffiliated party is made in the United States (before or after importation) by someone
affiliated with, or acting on behalf of the foreign exporter or producer. These are not situations
in which someone in the United States is merely facilitating a sale by the foreign exporter or
producer (e.g., arranging customs clearance). Rather, they are situations in which the selling
activity is taking place in the United States. In such cases, the price to the affiliate is not a
legally permissible basis to determine export price. Commerce therefore constructs an export
price. To do so, Commerce deducts from the price to the first unaffiliated purchaser in the
United States all selling expenses incurred in the United States by or on behalf of the exporter or
by the affiliated reseller. 2

Non-market Economies: In NME cases, Commerce applies the normal rules for calculating the
export price or constructed export price.

(e)       Dumping Calculation

The merchandise under investigation must fall within a single product type – what is referred to
in U.S. law as a single “class or kind” of merchandise.3 The subject merchandise is, however,
frequently comprised of multiple subcategories or models, not all of which are comparable to
each other. For example, an investigation of widget imports may include various sizes of
widgets ranging from one to ten inches. As discussed above, if the variable cost of
manufacturing a ten-inch widget is more than 20% higher than the cost of a one-inch widget,
Commerce would find that sales of one inch widgets are not comparable to sales of ten inch
widgets. In addition, even if the products are identical, the sales transactions may not be
comparable for other reasons, e.g., they may be made at different levels of trade. To perform the

2
  These CEP deductions are in addition to the normal adjustments made to determine export price.
3
  If the petition covers more than a single class or kind of merchandise, Commerce will conduct separate
investigations of each class or kind of imports.


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dumping calculation, therefore, Commerce creates groups of comparable transactions, taking
into account, to the extent possible, physical characteristics and level of trade so that sales to the
United States are compared to the most comparable transactions in the home market.

In an investigation, Commerce normally uses an average-to-average comparison. Under that
method, Commerce calculates a single weighted-average export price for each group of
comparable transactions, using all export transactions within the group. Likewise, Commerce
calculates a single-weighted-average normal value for each group of comparable transactions,
using all home market transactions in the group. Commerce then compares the two weighted-
averages to determine the amount of dumping, if any, that occurred in each group of comparable
transactions.

Commerce then calculates the total amount of dumping by adding the amount, if any, by which
the normal value for each group of comparable transactions exceeds the export price for the
group. The total amount of dumping is then divided by the total value of the export sales to the
United States to arrive at an ad valorem dumping margin.

If, for a particular transaction group, the normal value is equal to or less than the export price,
Commerce assigns a dumping value of zero to that comparison group when calculating the total
amount of dumping. This is the practice commonly referred to as “zeroing.” The total value of
U.S. sales in the “zero dumping” groups are included in the denominator of the ad valorem
margin calculation, i.e., the total dumping is allocated over total U.S. sales of the product under
investigation. This method has been found illegal by panels and the Appellate Body, notably in
the case concerning the US anti-dumping duties on imports of softwood lumber from Canada
(DS264).

In reviews and final assessment proceedings, Commerce uses a transaction-to-average
comparison. Under that method, Commerce calculates monthly weighted-average normal values
for each group of comparable transactions. Commerce then compares each sale to the United
States to the normal value for the month in which the sales was made. The total amount of
dumping is determined by summing up the positive amounts of dumping, while the negative
amounts of dumping are set a zero – a variation of the “zeroing” practice applied in initial
investigations. As a rule, this “zeroing” practice will inflate the margin of dumping even more
than the one applied in original investigations Commerce then calculates importer-specific
assessment rates by dividing the amount of dumping on sales to the importer over the entered
value of those imports. Commerce applies “zeroing” here as well on a transaction by transaction
basis. In essence, the importer pays in excess of the actual margin of dumping of the exporter
concerned. No refund proceeding for this excess payment is available.

(f)       Exporter-Specific Dumping Margins

Commerce calculates an exporter-specific dumping margin for each individually investigated
exporter. If, in an investigation, Commerce determines that an exporter’s dumping margin is
zero or de minimis, that exporter is excluded from the application of the order, i.e., that
exporter’s merchandise is not subject to anti-dumping or countervailing duties or to subsequent
review. The exporter’s merchandise enters the United States free of any anti-dumping duty
liability.


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(g)        All Others Rate

When, due to the large number of exporters, Commerce limits the number of individually
investigated companies, Commerce calculates what is known as the “all others” rate, which
applies to all uninvestigated exporters. The all others rate is the weighted-average of the rates
determined for the investigated companies, excluding zero or de minimis rates and rates based
entirely on facts available. In U.S. – Japan Hot Rolled Steel, the WTO Appellate Body found
that the Anti-dumping Agreement required the United States to exclude from the all others rate
calculation not only margins based entirely on facts available, but also any margins based in part
on facts available. U.S. law has not yet been amended to implement that decision, although the
United States has expressed its intention to do so.

(h)        Subsidy


The definition of a subsidy in the U.S. countervailing duty law is taken almost verbatim from the
SCM Agreement. The elements of a subsidy are: (1) a financial contribution or income or price
support by the government, 4 which (2) confers a benefit. A subsidy may be subject to
countervailing measures only if it is specific.

(i)        Financial Contribution

A government financial contribution is deemed to exist if the government

       •   makes a direct transfer of funds (e.g., grant, loan, equity infusion) or potential transfer of
           funds (e.g., loan guarantee);
       •   foregoes or does not collect revenue that is otherwise due (e.g., tax credits);
       •   provides goods or services, other than general infrastructure, or
       •   purchases goods

A government financial contribution may be made directly or indirectly. An indirect financial
contribution occurs when the government makes a payment to a funding mechanism, or entrusts
or directs a private party to make the financial contribution.

(j)        Benefit

A benefit is an artificial advantage, i.e., it is the extent to which the recipient is better off than it
otherwise would have been absent the government’s financial contribution. To measure a
subsidy benefit, therefore, Commerce uses a market benchmark, such as a commercial loan rate
(including a risk premium if the recipient is not creditworthy), or a market price for goods
provided. The U.S. statutory guidelines for market benchmarks are essentially identical to the
guidelines in Article 14 of the SCM Agreement.



4
    Income or price support has the same meaning as in Article XVI of GATT 1994.


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To calculate the subsidy benefit, Commerce compares what the government provided to what the
marketplace would have otherwise provided, e.g., the difference between the interest on a
government loan and the interest that would have been paid on a comparable commercial loan. 5
The “net countervailable subsidy” is that difference, less: (1) any fees or similar payments made
to qualify for or receive the subsidy; (2) loss in value of the subsidy due to a government-
mandated deferral of receipt; and (3) any export taxes, duties or other charges imposed on
exports of the subject merchandise to the United States by the foreign government to offset the
subsidy.

(k)       Specificity

Not all government largesse constitutes a countervailable subsidy. Only subsidies that are
“specific” may be subject to countervailing duties. The specificity of an alleged subsidy is often
a very contentious issue in a countervailing duty investigation.

A subsidy is specific if it is limited to an enterprise, industry, or group of enterprises or industries
within the jurisdiction of the granting authority. Thus, while the specificity of a federal subsidy
program is determined at the national level, the specificity of a subsidy granted by a state
government is determined at the state level. Moreover, a subsidy may be specific in law (de
jure) or in fact (de facto).

A subsidy is de jure specific if the granting authority, or the legislation under which it operates
the subsidy program, explicitly limits access to the subsidy to certain enterprises or industries.
If, however, the granting authority or the legislation establishes objective, neutral criteria under
which eligibility for, and the amount of, the subsidy is determined automatically (e.g., certain tax
benefits), the subsidy is not specific.

A subsidy is de facto specific if, despite the absence of any express limitation,


      •   the number of actual subsidy recipients is limited,
      •   a certain enterprise or industry is a predominant user of the subsidy, or
      •   a certain enterprise or industry receives a disproportionately large amount of the subsidy.

A subsidy that is limited to enterprises or industries within a designated geographical region
within the jurisdiction of the granting authority is also specific. (Note that the US also considers
“regional aid” i.e. federal government aid to a limited number of regions, to be specific, even if
the aid is generally available within the regions concerned).

Finally, subsidies that are contingent on export performance or on the use of domestic over
imported goods – the two types of subsidies prohibited under the WTO rules – are deemed to be
specific in all cases.


5
  Certain types of government assistance, such as grants and tax benefits, have no counterpart in the market. Thus,
the benefit from a grant or tax credit is simply the face value.



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(l)       Allocation of the Benefit

Commerce determines the subsidy benefit received in a particular period based on when the
benefit is realized by the recipient. When the benefit is realized depends upon whether the
subsidy is “recurring” or “non-recurring.”

Recurring subsidies are those that provide benefits on a recurring basis. For example, the
Commerce Regulations identify tax exemptions, price supports and the provision of goods or
services as types of subsidies that Commerce will normally treat as providing recurring benefits.
The benefit from a recurring subsidy is expensed in the year of receipt. For example, in the case
of a direct tax credit the benefit (tax savings) is received each year when the company files its tax
return. The benefit is therefore attributed to that year.

In addition, if the subsidy benefits may fluctuate from year to year, Commerce treats the subsidy
as recurring. For example, a long-term variable rate loan is a recurring subsidy. The amount of
the benefit varies from year to year with the interest rate, and the benefit received each year is
expensed in that year.

Non-recurring subsidies generally provide a lump sum benefit amount. For example, the
Commerce Regulations specifically identify grants, debt forgiveness and equity infusions as
types of subsidies that Commerce normally treats as non-recurring. In the case of a non-
recurring subsidy, Commerce calculates the benefit (e.g., the amount of the grant or debt
forgiveness) then amortizes the benefit over a certain number of years, based on the average
useful life of assets in the industry, using a declining balance method. The rationale is that,
given the time value of money, the value of the benefit realized in each subsequent year
diminishes. The “time value of money” approach inflates the face amount of the subsidy to take
account of notional interest on the unamortized part ; as the unamortized amount declines every
year, the amount of subsidy allocated to each year declines. Thus, the benefit calculated for the
period of investigation or review will be lower the further removed in time the investigation or
review is from the time at which the subsidy was granted, i.e., where you are in the benefit
stream.

In a recent change in methodology (June 2003), the US accepted that a privatization or other
change in ownership, at arms-length and for fair market value, removes the benefit of prior non-
recurring subsidies. This change was made following the British Steel (DS138) and Certain
products from the EC (DS212) WTO cases brought by the EC.

(m)       Subsidy Rate Calculation

Once the amount of the benefit for a particular period has been calculated, Commerce calculates
the ad valorem subsidy rate by attributing the benefit to production. Commerce attributes export
subsidies only to products that were exported during the period. In contrast, all other subsidies
(“domestic” subsidies) are attributed to all products sold by the company during the period.

          Subsidy Program A (export subsidy)

                     Net benefit during the period:                                 $100 ÷


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                     Total Export Sales during the period:                          $10,000
                     Subsidy Rate:                                                  1%

          Subsidy Program B (domestic subsidy)

                     Net benefit during the period:                                 $2,000 ÷
                     Total Sales during the period:                                 $40,000
                     Subsidy Rate:                                                  5%

          Total Ad Valorem Subsidy Rate:                                            6%

(n)       Non-Market Economies

Although there is no explicit exclusion of non-market economies in the U.S. countervailing duty
law, Commerce’s longstanding interpretation of the law is that it does not apply to non-market
economies. In the landmark decision in Georgetown Steel, the Court of Appeals upheld
Commerce’s interpretation. However, primarily in response to concerns about imports from
China, legislation has recently been introduced in the U.S. Congress that would explicitly apply
the countervailing duty law to non-market economies.

(o)       Injury

As noted above, under the bifurcated U.S. system, the ITC is responsible for making the injury
determination. Anti-dumping or countervailing duties may be imposed only if the domestic
industry is materially injured, or threatened with material injury, or the establishment of an
industry is materially retarded, by reason of the dumped or subsidized imports. The ITC
therefore must find both injury and a causal link between the imports and the injury.

(p)       Like Product

The ITC must determine whether there is injury to the domestic industry, which is generally
defined as producers of the “domestic like product.” The Commission’s injury analysis must
therefore begin with defining the like product and the U.S. industry. Note that the ITC’s like
product determination may differ from the like product used by Commerce to determine industry
support for purposes of initiation (see discussion of Procedures below).

The domestic like product is defined as the product that is “like,” or “most similar in
characteristics and uses,” to the subject imports. In determining the domestic like product, the
ITC considers: physical characteristics and uses; channels of distribution; common
manufacturing facilities, production processes, and production employees; customer and
producer perceptions; and, if appropriate, price. 6 No single factor is determinative and the ITC
may consider other factors, as appropriate.


6
  Note that these factors are very similar to those used by Commerce to determine if the subject imports constitute a
single class or kind of merchandise or multiple classes or kinds. See footnote 9, below.



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In defining the like product, the ITC ignores minor product variations and looks for clear
dividing lines. Thus, the ITC may define the domestic like product to include a broader range of
merchandise than is within the class or kind of imports under investigation (e.g., the domestic
like product might be “widgets” even though only imports of “blue” widgets are under
investigation). The Commission may also find that there are multiple domestic like products that
correspond to the class or kind of imports under investigation (e.g., if the class or kind of imports
were citrus fruit, lemons, limes and oranges might constitute separate domestic like products).

Once the Commission defines the domestic like product, the industry is normally defined as all
U.S. producers of that product. The only exceptions to that general rule are where a “regional
industry” exists, and the exclusion of certain related parties.

(q)        Material Injury

The statute defines material injury as “harm which is not inconsequential, immaterial, or
unimportant.” 7         In determining whether material injury exists, the Commission must
consider: the volume of the subject imports, the effect of the imports on prices in the United
States for the domestic like product (price undercutting, price depression, or price suppression),
and the impact of the imports on U.S. producers of a domestic like product (e.g., declines in
output, sales, market share, profits, employment).

(r)        Cumulation

In evaluating injury, the statute requires the Commission to cumulatively assess the impact of
imports from all countries with respect to which petitions were filed, or cases were self-initiated,
on the same day, if the imports compete with each and with domestic like products in the United
States. In evaluating a threat of injury, the Commission has the discretion to do a cumulative
assessment but is not required to do so.

2.2        Procedure

(a)        Overview of Procedures

Generally, the procedures for anti-dumping and countervailing duty investigations are identical,
but there are a few differences, primarily in the timing of decisions. An investigation normally
takes between 12 and 18 months, with many, if not most, cases probably falling within the 15-18
month range. There are five determinations made during the course of the investigation, which
occur in the following order: Commerce’s decision to initiate, the ITC’s preliminary injury
determination (if negative the entire proceeding is immediately terminated), Commerce’s
preliminary dumping or subsidy determination, Commerce’s final dumping or subsidy
determination and, finally, the ITC’s final injury determination.

The timeline for these determinations is set out below. Notice of each of the Commerce and ITC
determinations is published in the Federal Register. The bases for Commerce’s preliminary
determinations are normally explained in the Federal Register notice. Commerce final

7
    Section 771(7) of the Act.


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determinations, however, are normally more lengthy because they also respond to comments
submitted by interested parties on the preliminary determination. Thus, although Commerce
publishes a notice of the final determination in the Federal Register, the explanation for the
decision and the agency’s response to comments is contained in a “Decision Memorandum”
posted on Import Administration’s website (http://ia.ita.doc.gov). Similarly, the ITC also
publishes a notice of its preliminary and final injury determinations in the Federal Register, but
the detailed explanation of the decisions is contained in published reports which are posted on
the ITC’s website (http://usitc.gov).




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         STAGE                                      WHAT HAPPENS                                            TIMING

Petition                           Industry files petition simultaneously with
                                   Commerce and the ITC

Initiation                         Commerce initiates an investigation against                          20 days for
                                                                                                        Commerce to decide
                                   one or a number of countries                                         whether to initiate;
                                                                                                        may be extended
                                                                                                        another 20 days if
                                                                                                        necessary to
                                                                                                        determine industry
                                                                                                        support
ITC Preliminary                    The ITC determines whether there is a                                Within 45 days of the
                                                                                                        filing of the petition
   Injury                          “reasonable indication” of material injury; if                       or, if Commerce
   Determination                   the ITC preliminary determination is negative                        extended the period of
                                   the investigation is terminated                                      initiation, 25 days
                                                                                                        after receiving notice
                                                                                                        of Commerce’s
                                                                                                        decision to initiate
Commerce                           If Commerce makes an affirmative preliminary                         AD prelim within 140
                                                                                                        days from initiation;
  Preliminary                      determination, Commerce orders Customs to                            can be extended to
  Determination and                suspend liquidation 8 of entries of the subject                      190 days
  Provisional                      merchandise and to collect cash deposits or                          CVD prelim within 65
                                                                                                        days from initiation;
  measures                         bonds for all entries of subject merchandise on                      can be extended to
                                   or after the date of publication of the                              130 days;
                                   preliminary determination; if Commerce makes                         AD - provisional
                                                                                                        measures may be
                                   a negative preliminary determination, the                            imposed for 4 to 6
                                   investigation continues but these provisional                        months
                                   measures are not imposed                                             CVD – provisional
                                                                                                        measures for 4 months
                                                                                                        only
Undertakings                       Price undertakings (AD), or                                          After an affirmative
                                                                                                        preliminary
                                   Quotas or elimination of subsidies (CVD),                            determination, up to
                                   may be proposed by exporter to Commerce                              30 days prior to the
                                                                                                        final determination

Commerce Final                     If Commerce makes an affirmative final                               Final determination
                                                                                                        within 75 days after
  Determination                    determination, Commerce orders Customs to                            prelim; may be
                                   continue suspension of liquidation (i.e.,                            extended to 135 days
                                   suspension of final assessment) and to collect                       in AD cases; CVD
                                                                                                        final may be aligned
                                   cash deposits; if Commerce makes a negative                          with AD final if there
                                   final determination, the investigation is                            are simultaneous
                                   terminated, suspension of liquidation is                             cases.
                                   discontinued and all cash deposits are refunded
8
  “Liquidation” refers to the final assessment of duties, i.e., a “liquidated” Customs entry means that the
merchandise has entered the United States and the final duty liability has been determined and assessed. When
liquidation is suspended, the goods enter the United States but Customs does not assess final duties because the final
assessment amount has not yet been determined.


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                                                                                                                  Annex 5, Page 16


ITC Final Injury                   If the ITC makes an affirmative final                                ITC final within 120
                                                                                                        days of affirmative
   Determination                   determination of injury, Commerce issues an                          Commerce prelim, or
                                   anti-dumping or countervailing duty order;                           45 days of affirmative
                                   cash deposits at the rates established in                            Commerce final,
                                                                                                        whichever is later. If
                                   Commerce’s final determination are required                          Commerce prelim is
                                   for all entries of subject merchandise on or                         negative but final is
                                   after the date of the ITC final determination,                       affirmative, 75 days
                                                                                                        from Commerce final
                                   bonds are no longer sufficient. If the ITC
                                   determination is negative, Commerce orders                           Commerce publishes
                                   Customs to discontinue suspension of                                 AD/CVD Order
                                                                                                        within 7 days of
                                   liquidation and return all cash deposits.                            notification of ITC
                                                                                                        final
Administrative Review Each year, an interested party may request a                                      Requests for
                                                                                                        administrative
                      review to determine the amount of duties to be                                    (assessment) review
                      assessed on specific entries during the previous                                  must be made during
                      12 months (18 months for the first review                                         the anniversary month
                                                                                                        of the order
                      period). If no review is requested for a
                      particular exporter, entries of that exporter’s
                      merchandise will be assessed at the cash
                      deposit rate in effect at the time of entry.
Expiry (“Sunset”)     The order is revoked unless Commerce and the                                      Sunset reviews are
                                                                                                        automatically initiated
   Review             ITC determine that dumping or subsidization                                       30 days prior to the
                      and injury are likely to continue or recur;                                       fifth anniversary of
                      revocation is effective as of the fifth                                           the order
                      anniversary of the order. All subsequent
                      entries are liquidated without regard to
                      AD/CVD duties.


(b)       Petition and Initiation

Typically, anti-dumping and anti-subsidy investigations are initiated by a petition filed by the
domestic industry. Petitions are filed simultaneously with Commerce and the ITC, but
Commerce makes the decision whether to initiate an investigation. Commerce does have the
authority to self-initiate an investigation, but that authority has rarely been used.

A petition may be filed by any domestic “interested party”, which is defined to include: U.S.
manufacturers, producers or wholesalers of a domestic like product; a union or group of workers
which is representative of an industry engaged in the manufacture, production, or wholesale in
the United States of a domestic like product; a trade or business association a majority of whose
members manufacture, produce or wholesale a domestic like product in the United States, and an
association, a majority of whose members are composed of interested parties that fall within the
preceding groups.

Potential petitioners may, and normally do, submit draft petitions to Commerce for review and
comment before they are formally filed. This “pre-petition counseling” enables Commerce to



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make petitioners aware of potential problems, such as the adequacy of supporting information. If
Commerce raises significant concerns with a draft petition and those concerns cannot be
addressed, it is unlikely that the petition will ever be formally filed. Commerce is prohibited
from disclosing the existence of a draft petition.

(c)       Petition Requirements

In addition to identifying the petitioner, a petition must contain information reasonably available
to the petitioner on: (1) the identity of the industry on behalf of which the petitioner is filing,
including the names and contact information for all other known members of the industry; (2) the
degree of industry support for the petition, including the volume and value of U.S. production of
the domestic like product, and the volume and value of the domestic like product produced by
the petitioner and each of the other identified producers; (3) a detailed description of the subject
imports, including technical characteristics, uses and tariff classification; (4) the name of the
country (or countries) where the subject imports are produced; and (5) the names and addresses
of each person alleged to be dumping or receiving subsidies and the percentage of total exports
to the United States accounted for by that person in the most recent 12-month period.

The petition must also allege the elements necessary for the imposition of anti-dumping or
countervailing duties (i.e., dumping or subsidization and injury) and provide information
reasonably available to the petitioner in support of those allegations, in particular documentary
evidence on export price and normal value, or the alleged subsidy.

When a petition is filed, it is a public document that immediately becomes part of the
administrative record of the investigation. Although the public has access to petitions,
Commerce does not publicize their existence.

(d)       Standard for Initiation

Although a petition is filed simultaneously with Commerce and the ITC, as noted above,
Commerce has sole authority to determine whether the petition is sufficient to warrant an
investigation. In order to initiate an investigation, Commerce must determine that the petition
alleges the elements necessary for relief and includes information reasonably available to the
petitioner supporting the allegations. With the exception of the industry support determination
(discussed below), Commerce’s initiation decision is generally based on the adequacy and
accuracy of the information contained in the petition. Commerce may ask the petitioner for
additional information or clarification. However, Commerce does not accept comments on the
petition from other interested parties, except for comments pertaining to industry support.

(e)       Industry Support

Commerce must also determine that the petition is supported by the U.S. domestic industry, a
decision that is subject to strict numerical requirements. The requisite industry support exists if:
(1) domestic producers or workers supporting the petition account for at least 25% of total
production of the domestic like product, and (2) those supporting domestic producers and
workers account for at least 50% of the production of the domestic like product by that portion of
the industry that expresses either support for, or opposition to, the petition. Normally,


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Commerce will conduct the industry support analysis on the basis of the like product defined in
the petition. It is not uncommon, however, for the like product definition to be heavily disputed
at the ITC for purposes of the injury analysis.

                                        INDUSTRY SUPPORT
If the petition itself does not establish support by producers or workers accounting for more than
50% of total production, Commerce is required to poll the industry or rely on other information
to determine if the requisite support exists. Polling situations rarely arise, however. Expressions
of support or opposition by workers and the position of management are given equal weight. As
a result, if workers and management express opposing views they cancel each other out and are
counted as neutral. Moreover, except where the facts demonstrate the existence of a regional
industry, the ITC examines the domestic industry “as a whole”, i.e., all producers of the domestic
like product. The ITC’s investigation is not limited to petitioners.

(f)       Time Limits

Normally, Commerce must decide whether to initiate within 20 days after the filing of the
petition. If additional time is necessary to determine whether the requisite industry support
exists, Commerce may extend the initiation decision for 20 days, with a total of 40 days being
the maximum time within which Commerce may make the initiation decision. Occasionally, if a
petitioner believes that Commerce has significant problems with a petition (usually in the area of
industry support) the petitioner will withdraw the petition before the deadline to avoid having the
petition rejected. The petitioner may then revise and resubmit the petition. If a petition meets
the statutory requirements, Commerce must initiate the investigation. Commerce does not have
the discretion to decline a legally valid petition.

(g)       Target of the Investigation

A single petition normally covers a single “class or kind” of merchandise, but may cover imports
of the subject merchandise from multiple countries. Commerce treats multi-country petitions as
requests for separate investigations of imports from each country. Thus, Commerce will initiate
separate proceedings for each country, with a separate case number and administrative record.
Occasionally, respondents claim that the petition covers multiple classes or kinds of
merchandise. If Commerce determines that is the case, it will define the separate classes or kinds
of merchandise and conduct separate investigations of each. 9

(h)       Notice of Initiation


Commerce will publish in the Federal Register a Notice of Initiation which identifies the
petitioner, the products and countries subject to investigation and an explanation of Commerce’s
examination of the allegations and information in the petition.


9
 To define a “class or kind” of merchandise Commerce considers the following factors: physical characteristics;
expectations of the ultimate purchaser; ultimate use of the product; and channels of trade in which the product is
advertised and sold.


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                                                                                                                  Annex 5, Page 19

(i)       ITC Preliminary Investigation Phase

Because the ITC is required to make a preliminary injury finding within 25 days after initiation,
the ITC initiates the preliminary phase of its investigation very soon after a petition is filed. In
this preliminary phase, the ITC issues questionnaires to domestic producers of the “like” product,
U.S. importers and foreign producers. Normally, approximately three weeks after the petition is
filed, the ITC also holds a public conference with the investigation staff (Commissioners are not
present). At the staff conference, interested parties may present legal and factual arguments and
testimony by witnesses. The ITC staff may ask questions, and usually does so. Parties may also
file post-conference briefs. The staff then prepares a report to the Commission presenting and
analyzing all of the information obtained during the preliminary phase of the investigation.

Approximately four days after receiving the report, the Commission holds a public meeting in
which the Commissioners may question the staff and then each Commissioner announces his or
her vote on the preliminary injury determination. The vote of the majority constitutes the
determination of the Commission. A tied vote is deemed to be an affirmative determination.

(j)       Negligibility

An investigation must be terminated immediately if the Commission finds that imports of the
subject merchandise are “negligible”. Negligible imports are defined as imports accounting for
less than 3 percent of the volume of all such products imported into the United States in the most
recent 12-month period preceding the filing of the petition for which data is available. If cases
are initiated on multiple countries (on the same day) that individually account for less than 3
percent of the total volume of subject imports, but imports from those countries collectively
exceed 7 percent of total imports, the imports for those countries are deemed not to be negligible.

(k)       Period of Investigation

In a dumping investigation, Commerce normally examines sales made during the four most
recently completed fiscal quarters as of the month preceding the month in which the petition was
filed. In a subsidy investigation, Commerce normally will examine information relating to the
most recently completed fiscal year for the government and the exporters. If the fiscal years
differ, Commerce normally looks at the most recently completed calendar year.

The ITC’s injury investigation generally covers the three years prior to filing of the petition but
that information is normally updated in the final phase of the investigation to include more recent
data.

(l)       Questionnaire

Commerce obtains the bulk of the information considered in an investigation by issuing
questionnaires and verifying the responses to the questionnaires. Questionnaires contain
instructions for completion, including the time period for which data is requested and definitions
of terms, and the deadline for responding to the questionnaire. Responses to the original
(“standard”) questionnaire are reviewed by the case analysts, and supplemental questionnaires
are sent out to clarify the initial response and obtain additional information, as necessary.


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Normally, at least one round of supplemental questionnaires is necessary. Multiple supplemental
questionnaires, time permitting, are not uncommon.

(m)       Description of the Standard Dumping Questionnaire

Commerce’s initial anti-dumping questionnaire is highly standardized, but may be tailored, as
necessary, to meet the specific needs of a particular case. Normally, in an investigation, the
questionnaire is sent out as soon as possible, at least by the time of the ITC’s preliminary injury
determination. The questionnaire is divided into five parts:

Section A. This section may be sent out in advance of the other sections. The Section A
information is relevant to certain methodological decisions that Commerce must make, and the
Section A response may be used to tailor the remainder of the questionnaire, as appropriate. For
example, Section A requests information on the volume and value of sales to the United States
and in the home market and, if necessary, third country markets. This information is necessary
to determine the appropriate market in which to calculate normal value. Section A also requests
information on corporate structure and affiliations and sales to affiliated parties which is
necessary, for example, to determine if an export price or constructed export price calculation is
appropriate. Section A also requests information on the sales and distribution process;
accounting and financial practices; the merchandise sold to the United States and the
merchandise sold in the home (or third country) market; further manufacturing in the United
States; and exports through intermediate countries.

Section B (Normal Value). The response to this section is comprised of two parts: a computer
tape or disk containing information on all home market sales during the POI, including product
and customer identifiers, dates of sale, quantities, prices and adjustments to price (e.g., level of
trade, indirect expenses, packing costs); and (2) a narrative description of each of the elements in
the sales listing.

Section C (Export Price). This section requests for sales to the United States the same
information requested in Section B for home market sales. In addition, Section C also requests
information on international movement charges and duty drawback, 10 and information to
determine if export price or constructed export price is appropriate.

Section D (Cost of Production). Section D seeks information on the cost to produce the
merchandise. This section is required if it is likely that normal value will be based on a
constructed value. For example, section D is required if the petitioner makes a timely allegation
that the respondent is making sales in the home market at prices below the cost of production.

Section E. This section is used, if necessary, to obtain information on further manufacturing in
the United States.

Non-Market Economy Questionnaires. In cases involving a non-market economy, Commerce
uses a special questionnaire that requests information on the producer’s factors of production in

10
  “Duty drawback” refers to programs under which the duties paid on imported inputs are refunded when the
products produced from those inputs are exported.


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                                                                                                                  Annex 5, Page 21

lieu of Section B of the standard questionnaire. In addition, NME exporters who wish to receive
a company-specific rate must complete a “separate rates” questionnaire to establish that the
company’s export activities are free of government control.

(n)       Time Limits

Normally, respondents are given 21 days from issuance of the questionnaire to complete Section
A, and at least 30 days from receipt of the questionnaire for the remaining sections. Extensions
may be requested, but must be in writing and filed before the deadline expires. Normally,
extensions do not exceed two weeks. It is common for Commerce to grant one two-week
extension of the 30-day deadline to respond to the initial questionnaire. Subsequent extensions
are much less common, as are extensions for responding to supplemental questionnaires.

(o)       Verification

In an investigation, Commerce bases its preliminary dumping determination on the unverified
questionnaire responses. Verification takes place after the preliminary determination.
Verification of the export price and normal value questionnaires normally takes one week. If
there is also a cost questionnaire response (Section D), verification of that response normally
takes an additional week. In addition, where U.S. sales are made through an affiliate in the
United States, Commerce will also conduct a sales verification in the United States, which
normally takes approximately one week. In subsidy cases, information received from the
government is also verified.

Normally at least two weeks prior to verification, Commerce sends the respondent a standardized
verification outline which sets out the various steps in verification, and the records and
supporting information that Commerce will need to examine at verification. The outline
identifies specific transactions in the sales database that will be verified and notifies the
respondent that an additional group of unidentified transactions will also be verified.

The key element of verification is the completeness checks. These are the various means by
which Commerce tests the thoroughness and accuracy of the information in the questionnaire
response. The most import of these checks is for completeness and accuracy in the listing of
U.S. and home market sales.

Following verification, Commerce issues a Verification Report. The purpose of the verification
report is to create a factual record of what was done at verification and the results, i.e., whether
the information in the response was verified, or whether discrepancies were found. The report is
intended to be purely factual. The report does not contain an analysis of the information verified
or draw any conclusions.

(p)       Written Argument

In an investigation, within 50 days of publication of the preliminary determination, interested
parties may submit written comments on the preliminary determination (commonly referred to as
a “case brief”). Within 5 days after the deadline for case briefs, parties may submit rebuttal
briefs, which must be limited to issues raised in case briefs.


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                                                                                                                  Annex 5, Page 22



Comments typically address both legal and methodological issues and questions of fact. Case
briefs should contain the party’s comments on all issues the party believes to be in dispute. In
the final determination, Commerce will only address those comments raised in the case briefs.
Failure to address an issue in the case brief may affect the party’s ability to raise that issue in a
subsequent court challenge.

(q)       Hearings

Within 30 days after publication of the preliminary determination, any interested party may
request a public hearing. The purpose of the hearing, which takes place late in the investigation,
is not for parties to raise new issues. Rather, the purpose is to clarify or elaborate on issues
previously raised. Under Commerce’s regulations, parties may make an affirmative presentation
at the hearing only on issues raised in their case brief, and may make a rebuttal presentation only
on issues raised in that party’s rebuttal brief.

(r)       Disclosure and Access to Information

U.S. law requires that the administrative records of anti-dumping and countervailing duty
proceedings include copies of all information presented to or obtained by Commerce during the
course of the administrative proceeding, including all government memoranda pertaining to the
case and a record of any ex parte meetings with decision-makers.

Interested parties have extensive access to the administrative record, which is facilitated by a
requirement that written submissions must be provided (“served”) by the submitting party to all
other interested parties. Commerce maintains two “service lists.”

Public Service List. All parties that participate in a proceeding are placed on a “public” service
list. Whenever a party makes a submission, the party must provide each person on the public
service list with a copy of the public version of the submission. In the public version all business
proprietary information is redacted.

APO Service List. The other service list is comprised of independent representatives (normally
legal counsel) who have applied for and been granted access to business proprietary information
under what is known as an Administrative Protective Order (APO). Copies of the business
proprietary version of all submissions must be provided by the submitting party to all individuals
on the APO service list.

The public and APO service lists for each proceeding are available on Import Administration’s
website.

Only in very limited circumstances does Commerce decline to release certain information under
APO (e.g., to protect certain confidential sources). Thus, normally the representatives have
access to the full administrative record on which Commerce will base its determination.

Normally within five days of issuing a preliminary or final determination, Commerce discloses
its calculations, including computer printouts, under APO and will, if requested, conduct a


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                                                                                                                  Annex 5, Page 23

disclosure conference. The scope of disclosure is normally limited to a factual presentation by
Commerce of the calculations. Although Commerce will answer specific factual questions, legal
or methodological arguments and comments are not normally addressed during disclosure.

Within five days of disclosure, a party may submit comments on what it believes to be
“ministerial” errors in the calculation. A ministerial error is defined as an error in an arithmetic
function, a clerical error resulting from (e.g.) inaccurate copying, and similar types of
unintentional administrative errors.

Commerce will correct a “significant” ministerial error in a preliminary determination. A
significant error is defined as one that makes a difference of at least 5 percentage points, but not
less than 25 percent of the weighted average margin. Commerce will amend a final
determination to correct any ministerial error.

(s)       Overview of Duties

The United States has a “retrospective” assessment system. Under that system, the liability for
antidumping duties attaches at the time of entry, but duties are not actually assessed until later.
At the time of importation, Customs collects security in the form of a cash deposit or bond to
cover the estimated duty liability. Definitive duties are not assessed until at least one year later,
when parties have the opportunity to request an “administrative review” to determine the amount
of the assessment. As noted above, the assessment of the final liability is based on a
methodology incorporating “zeroing”.

(t)       Provisional Measures

When Commerce issues a preliminary affirmative determination of dumping or subsidization, it
orders the imposition of provisional measures. Specifically, Commerce instructs Customs to
suspend liquidation (i.e., final duty assessment) of entries of the subject merchandise on or after
the date of publication of the preliminary determination, and to require the importer to post a
cash deposit or bond in the amount of the estimated anti-dumping or countervailing duties. After
publication of the ITC’s final injury determination, the “provisional measures” period is over and
bonds in lieu of cash deposits are no longer permitted. A cash deposit in the amount of the
estimated duties is required on all future imports.

(u)       Final Phase of ITC Injury Investigation

Following Commerce’s preliminary determination of dumping or subsidization, the ITC enters
the final stage of its injury investigation. Taking into account the record developed during the
preliminary phase and any comments by Commissioners on data collection issues, the staff
prepares questionnaires for U.S. and foreign producers, U.S. importers and U.S. purchasers to
obtain the information necessary for a final determination.

The staff again prepares a report for the Commission presenting and analyzing all of the
information obtained during the investigation. Parties also receive the staff report and may file
pre-hearing briefs.



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                                                                                                                  Annex 5, Page 24

Soon after Commerce issues a final affirmative determination of dumping or subsidization, the
Commission holds a public hearing. The hearing is considered a forum for fact finding. The
Commissioners ask questions and solicit information. Parties express their views and may
submit supplemental information. Persons testify at the hearing under oath.

Following the hearing, the staff prepares a final report to the Commission. The public record is
then closed and parties have an opportunity to comment on information on which they have not
previously had an opportunity to comment.

Shortly after the deadline for final comments, the Commission holds a public briefing and votes.


(v)       Definitive Duties

Within seven days after an affirmative final determination of injury by the ITC, Commerce
issues an anti-dumping or countervailing duty order in which it instructs Customs to impose
duties “upon further advice” from Commerce. Thus, although definitive duties are ordered,
Commerce’s advice as to the amount of those duties comes later.

Once a year, during the anniversary month of the anti-dumping or countervailing duty order,
interested parties may request a review to determine the amount of duties to be assessed on each
entry made during the previous year (“period of review”). 11 Antidumping duties are calculated
based on sales data during the period of review. The duties are calculated on a transaction-
specific basis and are assessed on an importer-specific basis. Countervailing duties are
calculated based on the amount of the subsidy benefit received during the period of review.
Based on the results of the review, Commerce advises Customs regarding the amount of duties to
be assessed on imports made during the period of review.

If, based on the results of the review, the duties owed are less than the cash deposits, the excess
cash deposits are refunded with interest. If the duties owed exceed the cash deposits the
additional duties, plus interest, are collected.

If no review is requested, soon after the close of the anniversary month Commerce advises
Customs to assess duties on imports during the review period in an amount equal to the cash
deposits paid at the time of importation -- a process referred to as “automatic assessment.”

(w)       Undertakings

Commerce has sole authority to negotiate undertakings, commonly referred to under U.S. law as
“suspension agreements.” Commerce’s longstanding policy is that suspension agreements are a
sparingly used exception to the normal remedy, i.e., the imposition of duties. The majority of
suspension agreements have been accepted in non-market economy cases.



11
   The first review period is normally approximately 18 months because it covers imports on or after the date of the
preliminary determination, up through the month preceding the anniversary month of the order.


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                                                                                                                  Annex 5, Page 25

(x)        Structure of an Undertaking

Generally, the law provides that a suspension agreement will require:

       •   the exporters accounting for substantially all (at least 85%) of the imports to eliminate
           dumped sales by either (a) ceasing exports to the United States, or (b) not selling the
           subject merchandise for export to the United States at prices less than a specified
           constructed normal value;

       •   the government of the exporting country, or exporters accounting for substantially all of
           the imports agree to eliminate subsidized imports by either (a) ceasing exports to the
           United States, or (b) eliminating or offsetting the subsidy; or

       •   the government or exporters agree to eliminate the injurious effects of dumped or
           subsidized imports (this type of agreement is very rare; it may only be used in if
           Commerce determines it is “more beneficial” to the domestic industry than continuation
           of the investigation); or

       •   the foreign government agrees to restrict the volume of exports to the United States
           (countervailing duty and non-market economy cases only).

In addition, Commerce may not accept a suspension agreement unless it determines that the
agreement is in the public interest and that effective monitoring of the agreement is practicable.

(y)        Types of Duties

Normally Commerce assesses duties on an ad valorem basis. 12 As explained above, for
antidumping duties, the ad valorem rate is normally calculated on an importer-specific basis, by
dividing the total amount of dumping duties owed on the transactions examined by the entered
value of the imports during the period of review. For countervailing duties, the ad valorem rate
is normally calculated by dividing the total amount of the subsidy benefit received during the
period of review by total value of the relevant sales during the period.

(z)        Level of Duties

The United States does not have a lesser duty rule. Commerce is required by law to impose
duties in an amount equal to the amount of dumping or subsidization found to exist.

(aa)       Duty Absorption


During the second and fourth review periods following publication of an anti-dumping duty
order, Commerce will, upon request, determine whether duties have been absorbed by the
foreign producer or exporter. This situation normally arises when the goods are sold in the
United States through an affiliated party or when the exporter is itself also the importer. In such

12
     In exceptional cases, Commerce has calculated a specific duty amount (e.g., x cents per pound).


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cases, Commerce will normally find that duty absorption exists unless the foreign producer or
exporter can demonstrate that the cost of the duties has been passed on to the first unaffiliated
purchaser in the United States.

Commerce notifies the ITC of the results of the duty absorption inquiry for the ITC to consider
in the five-year sunset review. The duty absorption finding does not, however, have any effect
on Commerce’s calculation of the anti-dumping duties to be assessed.

(bb)      Scope

While an order is in effect, questions may arise whether a specific product falls within the scope
of the order. Questions concerning the scope of an order are resolved by Commerce. An
interested party may submit technical information concerning a particular product and request
that Commerce make a scope ruling. If Commerce can decide the issue based on the language
of the scope and prior determinations by Commerce and the Commission, it will make a ruling
without conducting a formal inquiry. If the issue is more complex, however, Commerce will
initiate a formal inquiry and solicit information and comment from interested parties.

(cc)      Circumvention

An interested party may request that Commerce conduct an inquiry to determine whether certain
imports are circumventing the order. There are three types of circumvention inquiries: (1)
products that have undergone a “minor alteration” such that they now fall outside the technical
description in the scope; (2) products that are comprised of inputs from the subject country but
undergo minor assembly in a third country before importation into the United States; and (3)
imports into the United States of parts and components that then undergo minor assembly in the
United States.

(dd)      Revocation

Commerce has two procedures under which an order may be revoked, in whole or in part, other
than through a five-year sunset review (discussed below). First, if the producer/exporter has
been found not to be dumping in three consecutive review periods, Commerce will revoke the
order with respect to that producer/exporter, unless there is substantial evidence that revocation
is likely to lead to a recurrence of dumping. In addition, Commerce has broad authority to
revoke an order, in whole or in part, whenever it determines that there are “changed
circumstances” sufficient to warrant revocation. Normally, this procedure is used when the
domestic industry no longer has an interest in maintaining all or a part of the order. If
substantially all of the industry expresses no further interest, Commerce will revoke.

(ee)      Sunset

Every five years an anti-dumping or countervailing duty order must be reviewed to determine
whether dumping or subsidies and material injury are likely to continue or recur if the order is
revoked. If the decision regarding either dumping/subsidies or injury is negative, the order is
revoked. This is known as a “five year sunset review.” As in the original investigation,
Commerce makes the determination with respect to dumping or subsidies and the ITC makes the


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determination with respect to injury. Initiation of the sunset review is automatic. No later than
30 days prior to the fifth anniversary of the order, Commerce must publish a notice initiating the
review. If no interested party responds to the Notice of Initiation, or the responses do not contain
all the required information, Commerce and the ITC will conduct the review under an expedited
schedule. Parties may waive participation in the Commerce proceeding, in which case
Commerce would issue a decision that dumping or subsidies are likely to continue or recur.
Parties would then focus solely on the ITC’s review of injury. The U.S. waiver provisions were
found to be inconsistent with the WTO Anti-dumping Agreement in United States - Sunset
Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina.

(ff)      Judicial Review

Any interested party who participated in the anti-dumping or countervailing duty proceeding
(i.e., investigation, review, scope determination, anti-circumvention inquiry) has the right to
challenge the results of that proceeding in the Court of International Trade (CIT). A majority of
cases are challenged in court.

The CIT does not review the determinations of Commerce and the ITC de novo. Rather, the
court reviews the determination “on the record” and will reverse the decisions of those agencies
only if the determination is not supported by substantial evidence or is not otherwise in
accordance with the law. The CIT is required to accord the agency deference in interpreting the
statute and regulations that it administers. On findings of fact, the purpose of the court is to
determine whether the agency’s determination is supported by the evidence, not whether the
court would have reached the same or a different conclusion based on the record evidence.

Despite this deferential standard of review, the CIT frequently overturns the agency’s
determination in at least some respects. In such cases, the court remands the decision to the
agency for further consideration in light of the court’s opinion.

Once the decision of the CIT is final, the agencies or the parties have the right to appeal the
court’s decision to the Court of Appeals for the Federal Circuit (CAFC).

3.        SAFEGUARDS

3.1       Substance

(a)       Summary of Statute and Regulations

The global U.S. safeguards law is found in Title II (Sections 201-204) of the Trade Act of 1974,
as amended. A global safeguards action under U.S. law is often referred as a “Section 201”
action due to its location in the Trade Act. The U.S. law implements U.S. obligations under the
WTO Agreement on Safeguards and Article XIX of GATT 1994. The regulations of the U.S.
International Trade Commission (the “ITC”) governing Section 201 investigations can be found
at 19 Code of Federal Regulations, Part 206.

Section 201 allows the United States to escape from its obligations under international trade
agreements when increased imports of a product are found to be a substantial cause of serious


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injury, or threat of serious injury, to the U.S. industry producing a like or directly competitive
product. Safeguard measures are intended to be of limited duration while the domestic industry
adjusts to import competition.

Global safeguards do not require the finding of an unfair trade practice as in the case of U.S.
antidumping and countervailing duty laws. Another major difference from the unfair trade
practice statutes is that safeguard investigations apply to all countries that export the subject
merchandise to the U.S., while antidumping and countervailing duty proceedings are country
specific.

The ITC is responsible for conducting safeguard investigations, although the President makes the
final determination as to whether relief will be provided and the extent of that relief. The ITC’s
investigation is conducted in two phases: the injury phase and the remedy phase.

(b)       Injury Phase Considerations

During the injury phase of an investigation, the ITC considers three basic criteria: (i) whether
imports of the subject merchandise have increased; (ii) whether U.S. producers of a like or
directly competitive product with the subject merchandise are being seriously injured, or
threatened with serious injury; and (iii) whether the increased imports were the substantial cause
of the serious injury or threat of serious injury to the domestic industry.

(c)       Increased Imports

Imports are considered to have increased when the increase is “either actual or relative to
domestic production.” The U.S. safeguards law does not specify a minimum amount by which
imports must have increased, nor the time period during which the increase must have occurred.
Typically, the ITC will examine the import trends over the most recent five-year period. The
ITC has considered longer and shorter periods, however, when warranted by the circumstances.

(d)       Injury or Threat of Injury to the Domestic Industry

The ITC must find that the domestic industry is seriously injured or threatened with serious
injury at the time the ITC makes its determination. The injury standard under Section 201 is
considered to be more difficult to meet than the injury standard in the antidumping and
countervailing duty statutes because of its requirements that the injury or threatened injury must
be serious. The term “serious injury” is defined as “a significant overall impairment in the
position of a domestic industry.” The term “threat of serious injury” is defined as “serious injury
that is clearly imminent.”

In making its determination of serious injury, the ITC must consider all relevant economic
factors, including, but not limited to:

          (i) the significant idling of productive facilities in the domestic industry;

          (ii) the inability of a significant number of firms to carry out domestic production
          operations at a reasonable level of profit; and



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          (iii) significant unemployment or underemployment within the domestic industry.

With respect to determining whether a threat of serious injury exists, the ITC is also directed to
consider all relevant economic factors, including, but not limited to:

          (i) a decline in sales or market share, a higher and growing inventory (whether
          maintained by domestic producers, importers, wholesalers, or retailers), and a downward
          trend in production, profits, wages, productivity, or employment (or increasing
          underemployment) in the domestic industry;

          (ii) the extent to which firms in the domestic industry are unable to generate adequate
          capital to finance the modernization of their domestic plants and equipment, or are unable
          to maintain existing levels of expenditures for research and development; and

          (iii) the extent to which the United States market is the focal point for the diversion of
          exports of the article concerned by reason of restraints on exports of such article to, or on
          imports of such article into, third country markets.

In examining whether serious injury or threat exists, the ITC should not regard the presence or
absence of any of the economic factors that it is required to evaluate as being “necessarily
dispositive.”

(e)       Causation

The causation requirement under Section 201 is considered to be more difficult to meet than the
causation requirement in the antidumping and countervailing duty statutes because increased
imports must be a “substantial cause” of injury. As defined in the statute, “substantial cause”
means a “cause which is important and not less than any other cause.” In determining whether
increased imports are a substantial cause of serious injury, the ITC is directed by the statute to
“consider the condition of the domestic industry over the course of the relevant business cycle,”
but the ITC “may not aggregate the causes of declining demand associated with a recession or
economic downturn in the United States economy into a single cause of serious injury or threat
of injury.” The statute also directs the ITC to “examine factors other than imports” that may be a
cause of injury and include the results of its examination in its report. The ITC typically engages
in a two part analysis, first examining whether the increased imports are an important cause of
the serious injury, or threat, and second, if they are, whether other possible causes of injury are a
more important cause of the serious injury. The ITC is not required to make a finding that an
injury caused by other factors is not attributable to imports.

(f)       Adjustment Plans

Petitioners may submit to the ITC an adjustment plan to explain how the domestic industry plans
to facilitate positive adjustment to import competition, either at the time the petition is filed or
within 120 days of the filing of the petition. The ITC, in determining what action to recommend,
and the President, in deciding whether to take action, are directed to consider any adjustment
plans submitted.




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(g)       Types of Relief

If the ITC makes an affirmative injury determination, it may recommend to the President any of
the following forms of trade relief, or any combination of these measures:

      •   An increase in or imposition of a tariff

      •   A modification or imposition of a quantitative restriction

      •   A tariff-rate quota system where goods enter at a higher duty once the quota is filled

      •   Trade adjustment assistance or other appropriate adjustment measures

      •   Initiation of international negotiations to address the underlying cause of the increase in
          imports

      •   Implementation of any other action authorized under law that is likely to facilitate
          positive adjustment to import competition

Where more than one product is under investigation, the ITC’s relief may be different for each
product.

(h)       Presidential Discretion to Impose Relief

The President makes the final determination as to whether relief will be provided and the type
and duration of such relief. The President is to take “all appropriate and feasible action within
his power which the President determines will facilitate efforts by the domestic industry to make
a positive adjustment to import competition and provide greater economic and social benefits
than costs.” In deciding what action to take, if any, the President is directed to take into account
the ITC’s report, industry adjustment plans, factors related to the national economic interest of
the United States, including consumer interests, and other statutory factors. The President must
report to Congress the relief he is granting. If he takes action that differs from the ITC or decides
not to grant any relief, Congress is authorized to pass a joint resolution within 90 days to direct
the President to take the action recommended by the ITC.

(i)       Limits on Relief Granted

Initially, the President may grant relief for a period of up to four years and this may be extended
one or more times. The overall period of relief may not exceed eight years, however. A tariff
may not be increased to a level that is more than 50 percent ad valorem above the rate existing
before relief was granted. Any quantitative restriction imposed must allow entry of at least that
quantity or value of imports entered during the most recent three years that is representative of
imports of such item, unless the President determines that a different quantity or value is clearly
justified in order to prevent or remedy serious injury. If action is taken for more than one year in
the form of a tariff, tariff-rate quota or quantitative restriction, it must be phased down at regular
intervals.




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(j)       Exclusion of Certain Countries

As noted above, safeguard actions apply to all countries that export the subject item to the United
States. However, the North American Free Trade Agreement (“NAFTA”) limits the relief that
may be imposed on imports from Canada and Mexico. The President must exclude imports from
Canada or Mexico from relief if he determines that imports from such country or countries do
not account for a substantial share of total imports or do not contribute importantly to the injury
or threat of injury found by the ITC. These countries may be included at a later day if it is
determined that a surge of imports from a NAFTA country or countries is undermining the
effectiveness of the action taken. Certain other FTAs concluded with the U.S. provide for the
exclusion from safeguard measures of imports from the FTA partner, if certain conditions are
met. The President may also exclude imports from certain WTO developing countries from
safeguard measures.

(k)       Exclusion of Certain Products

The President has the authority to exclude specific products from a safeguard remedy. Typically,
a notice is published in the Federal Register requesting the submission of exclusion requests and
outlining the procedures and timeline for such exclusion requests. The President makes the
decision whether to exclude specific products and notices of such exclusions are published in the
Federal Register.

3.2       Procedures

(a)       Overview of Procedures

When the ITC commences a safeguard investigation, it must publish a notice in the Federal
Register to alert the public to the investigation. The overall investigation must be completed
within 180 days from the receipt of the petition or request. Typically, the ITC has 120 days (150
days in more complicated cases) to complete the injury phase and, assuming there is an
affirmative injury determination, 60 days to complete the remedy phase. Typically, a tied vote of
the ITC in a trade remedy investigation is considered as an affirmative determination. In a
safeguard investigation, a tied vote of the ITC on the injury determination may be considered an
affirmative determination by the President. Only those members of the ITC who agreed to the
affirmative injury determination may vote on the remedy recommendations. The ITC forwards
its findings and any remedy recommendations in a report to the President.

The President has complete discretion to decide whether relief will be granted and the type and
duration of such relief, subject only to statutory time deadlines. Within 60 days of receiving the
ITC’s report, the President must decide whether to provide relief to the U.S. industry and the
type of relief to provide. The President may request additional information from the ITC within
15 days of receiving its report. The ITC then has 30 days to provide such information.

(b)       Petition and Initiation

An entity that is representative of a domestic industry (including a trade association, firm,
certified or recognized union, or group of workers) may file a petition with the ITC requesting an
investigation under Section 201. The law also authorizes the President, U.S. Trade


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                                                                                                                  Annex 5, Page 32

Representative (“the USTR”), the Senate Committee on Finance and the House Committee on
Ways and Means to make such a request. While it is unusual for the request not to come from
sources within the industry concerned, it is not unprecedented. For example, the USTR
requested a recent safeguard action against steel imports. Prior to that, the Administration had
not requested the initiation of a safeguard action since 1985. In addition, the ITC may initiate an
investigation on its own initiative. The ITC is required to promptly make each petition, request
or ITC motion available for public inspection (with the exception of business confidential
information).

(c)       Petition Requirements and Initiation

Petitions must describe the imported product, provide detailed information supporting the claim
that increased imports are causing serious injury, and set forth the remedy requested. The
petition is also required to include data, covering at least the most recent five years, on volumes
of imports, domestic sales and production, productivity, employment, capacity utilization of the
domestic industry and overall financial performance. The petition must also include a
description of the steps being taken, or planned to be taken, by firms and workers in the industry
to make a positive adjustment to import competition. If the petition is properly filed, the ITC
will promptly institute an investigation (subject to the limitations on subsequent investigations
for the same product, discussed below).

(d)       Questionnaires

Once the ITC initiates an investigation, it sends out formal questionnaires to members of the
domestic industry, importers, foreign producers and U.S. purchasers of the subject merchandise.
The ITC uses the data reported in the responses to the questionnaires, along with other
information gathered by ITC staff, to produce a staff report that is released to the parties in a
confidential form and released to the public in a non-confidential form (with business proprietary
information redacted from the report).

(e)       Hearings

The ITC is required to hold a public hearing during the injury phase of the investigation, and if it
makes an affirmative injury determination, it must hold a second hearing during the remedy
phase. All interested parties, including consumers, may appear, testify, and present evidence.

(f)       Disclosure and Access to Information

The ITC releases confidential business information submitted to it under administrative
protective order (“APO”) to authorized representatives of interested parties that are parties to the
proceeding. As with antidumping and countervailing duty proceedings, only in very limited
circumstances will the ITC decline to release certain information under APO. Parties to the
investigation must serve all information subject to APO on all other parties that have applied for
and been granted access to APO materials.




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The ITC’s final report to the President is made available to the public (with the exception of
information which the ITC determines to be confidential) and a summary of the report is
published in the Federal Register.

(g)       Interagency Process Regarding Presidential Action

After the ITC makes its recommendations to the President, an interagency group, chaired by the
Office of the USTR, conducts an information-gathering process to examine all of the relevant
issues involving whether to take action. Interested parties typically may provide written
submissions, present hearing testimony and provide other input.

(h)       Appellate Review

ITC decisions are appealable to U.S. courts on procedural grounds only. WTO members may
seek review of any U.S. action under the WTO Dispute Settlement Understanding. Canada and
Mexico may seek review of a U.S. safeguard action under NAFTA.

(i)       Limits on Subsequent Investigations

As a general rule, the ITC may not initiate a new investigation covering the same subject matter
within one year of completing a prior investigation, unless good cause is found to exist.
Moreover, an item that has been the subject of prior relief under Section 201 may not be the
subject of a new action unless a period of time equal to the period of prior relief has elapsed
since termination of that relief. This rule does not apply to relief in effect for 180 days or less,
however.




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                                                                                                                                           Annex 6, Page 1


ANNEX 6 - ANALYSIS OF DIFFERENCES BETWEEN EC AND US TDI



1.     INTRODUCTORY COMMENTS............................................................................................................. 2
2.     ANTI-DUMPING (AD) & ANTI-SUBSIDY (AS) .................................................................................... 2
     2.1       PROCEDURE.......................................................................................................................................... 2
        (a)    Who can bring complaints? ................................................................................................................. 2
        (b)    Threshold for anti-dumping complaints .............................................................................................. 2
        (c)    The US does not formally assess injury at the complaint stage........................................................... 4
        (d)    Evidence required from complainants on prices ................................................................................. 5
        (e)    Effort required from complainants in preparing complaint ................................................................ 5
        (f)    Early injury determination .................................................................................................................. 6
        (g)    Questionnaires..................................................................................................................................... 6
        (h)    Assistance to complainants, particularly SMEs .................................................................................. 7
        (i)    Cooperation and ability to participate in the investigation................................................................. 7
        (j)    Verification .......................................................................................................................................... 8
        (k)    Lower US tolerance of incomplete or inaccurate information ............................................................ 8
        (l)    Longer verifications............................................................................................................................. 9
        (m)       Confidentiality ................................................................................................................................ 9
        (n)    Publicly available information .......................................................................................................... 10
        (o)    Availability of complaint ................................................................................................................... 10
        (p)    Provisional Measures ........................................................................................................................ 10
        (q)    Price Undertakings............................................................................................................................ 11
        (r)    'Success rates' .................................................................................................................................... 11
        (s)    Proportion of provisional measures made definitive......................................................................... 12
        (t)    Disclosure.......................................................................................................................................... 13
        (u)    Magnitude of measures...................................................................................................................... 13
        (v)    Impact of administrative reviews on US duty levels .......................................................................... 16
        (w)       Judicial Review............................................................................................................................. 17
        (x)    Cost.................................................................................................................................................... 18
        (y)    Interim reviews .................................................................................................................................. 18
        (z)    Expiry reviews ................................................................................................................................... 18
        (aa)      Retrospective duty collection ........................................................................................................ 19
     2.2       DUMPING............................................................................................................................................ 20
        (a)    Dumping calculation methodologies are similar but small differences can be significant ............... 20
        (b)    Normal Value..................................................................................................................................... 22
        (c)    Export Price....................................................................................................................................... 23
        (d)    Comparison of normal value and export price .................................................................................. 24
        (e)    Calculation software ......................................................................................................................... 24
     2.3       SUBSIDY ............................................................................................................................................. 25
        (a)    Higher subsidy margins and duties ................................................................................................... 25
        (b)    Anti-subsidy in non-market economy situations ................................................................................ 26
     2.4       INJURY & CAUSAL LINK..................................................................................................................... 26
     2.5       PUBLIC INTEREST ............................................................................................................................... 26
     2.6       INSTITUTIONS ..................................................................................................................................... 27
        (a)    US system is bifurcated...................................................................................................................... 27
        (b)    Nature of decision-making................................................................................................................. 27
        (c)    .US more partisan?............................................................................................................................ 28
        (d)    More case handlers working on TDI in the US ................................................................................. 28
        (e)    Specialised case-handlers in both DOC and ITC .............................................................................. 28
     2.7       EFFECTIVENESS OF MEASURES ........................................................................................................... 29
3.     SAFEGUARD............................................................................................................................................ 29
     3.1       GENERAL ATTITUDE TOWARDS SAFEGUARDS ..................................................................................... 29
     3.2       PROCEDURE........................................................................................................................................ 30
APPENDIX 1 - TIMELINE OF PARALLEL EC AND US AD INVESTIGATION INVOLVING
TCCA/CHLORINATED ISOCYANURATES ................................................................................................ 31



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1.        INTRODUCTORY COMMENTS

This section is primarily based on a technical analysis of EC and US trade defence
instruments (TDI) in order to identify the main differences. In addition, where survey
respondents commented on differences between the EC and US, these are noted.

It should be noted that this is not an evaluation of US TDI. The purpose of the comparison
with the US is to provide a benchmark against which EC TDI can be assessed. The survey
has identified a list of issues that will be considered in the evaluation of EC TDI. Likewise,
the technical comparison with the US will provide a list of differences which will be added
to the list of issues for the evaluation of EC TDI. They will then be used to help in
identifying strengths and weaknesses in EC TDI.

This section merely identifies the differences between EC and US TDI, without any detailed
analysis of where such differences indicate a strength or weakness of the EC system. The
analysis of the differences is incorporated into the evaluation in section 2 of the main report.

2.        ANTI-DUMPING (AD) & ANTI-SUBSIDY (AS)

2.1       Procedure

(a)       Who can bring complaints?

In the US, trade unions or groups of workers can bring complaints by or on behalf of a
domestic industry. This does not happen in the EC.
Article 5.1 of the basic EC AD regulation states that an investigation to determine the
existence, degree and effect of any alleged dumping shall be initiated upon a written
complaint by any natural or legal person, or any association not having legal personality,
acting on behalf of the Community industry.
This means that a trade union could submit a complaint as an agent for an EC industry if it
was empowered to do so.
(b)       Threshold for anti-dumping complaints

Claims were made by EC industry that the EC is tougher on accepting anti-dumping
complaints than the US i.e. that the threshold of evidence to initiate a case is higher for the
EC than it is for the US.

This is a difficult issue to assess. However, it is useful to start by looking at the relative
number of anti-dumping cases initiated by the EC and US. Looking at anti-dumping cases
initiated, it is certainly true that the US has opened significantly more investigations than the
EC since the creation of the WTO.




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                                                                                Annex 6, Page 3

          Number of anti-dumping investigations initiated 1

                                        1995-2004
                   US                      350
                   EC                      287


However, it should be acknowledged that US imports are greater than EC imports.
Therefore, it could be expected that the US would initiate more anti-dumping investigations
than the EC overall.

In order to assess whether the US has higher propensity than the EC to initiate anti-dumping
investigations, it is necessary to look at the number of initiations relative to imports. The
following table does this for the years 2000-2004.

          US and EC imports and anti-dumping investigations

                        Imports (bn euros) 2          AD Investigations
                            US             EU             US             EU
               2000       1297.6          995.6            46            31
               2001       1278.9          983.4            77            27
               2002       1235.9          941.5            34            20
               2003       1124.7          940.4            37            7
               2004       1181.6         1029.3            21            29
                          6118.7         4890.2           215            114



Over the period 2000-2004, US imports were 25% higher than EC imports. At the same
time, the US initiated 89% more anti-dumping investigations than the EC. This would
suggest that, at least recently, the US has a higher rate of initiating AD investigations.

Over the longer period 1995-2004, the US initiated 22% more investigations than the EC,
which is broadly in line with what might be expected given the higher level of US imports.

This evidence would suggest that the US has relatively a higher rate of initiating anti-
dumping investigations than the EC. Of course, to really measure this, one would have to
know the number of complaints received and rejected to make a definitive conclusion on the
propensity to initiate anti-dumping cases. Nevertheless, the fact that the US proportionately
initiates more cases than the EC is perhaps indicative of the fact that, as survey respondents
claim, the EC has a higher complaint threshold.

It can be noted that the US and EC broadly adopt similar absolute numbers of definitive anti-
dumping measures, particularly when the higher level of US imports is taken into account.




1
    Based on WTO, European Commission and DOC statistics.
2
    All import data from DG Trade website


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           1995-2004

                                            EC                 US               US/EC
           Initiations                      287                350               1.22
           Provisional measures             190                297               1.56
           Definitive measures              188                174               0.92


           2000-2004

                                            EC                 US               US/EC
           Initiations                      114                215               1.89
           Provisional measures              85                180               2.11
           Definitive measures              89                 103               1.16


The above data confirms that, in the long run, the EC and US adopt similar levels of
definitive anti-dumping measures 3 . For the recent past (i.e. 2000-2004), the US has adopted
16% more definitive measures than the EC which is not out of line with the difference in
imports.

The above would also seem to be confirm that US initiation rates are relatively higher,
particularly for the past five years.

Overall, it is difficult to make definitive conclusions about the relative EC and US
propensities to initiate anti-dumping investigations. The number of cases initiated depends
on many factors, some of which will be unique to either the EC or US (including the number
of complaints received). However, benchmarked against the US, it does appear that the EC
initiation standard for anti-dumping complaints is stricterthan – that of the US since the WTO
was created. In addition, for the last 5 years the EC appears to have been applying a higher
standard, perhaps bearing out what survey respondents said.

(c)        The US does not formally assess injury at the complaint stage

One possible explanation for the apparently higher initiation rate in the US may be the fact
that there is no formal review of injury by the ITC at the initiation stage. In the US, the DOC
has sole responsibility for determining whether a complaint provides a sufficient basis to
initiate an investigation. This means that the ITC, the agency responsible for injury, has no
formal role in deciding whether or not there is sufficient evidence of injury to initiate an
investigation. The DOC does review the injury allegations in the petition but this is not an in-
depth analysis.

The EC assesses in detail whether there is sufficient evidence of both dumping and injury
before initiating an investigation. Therefore, it does seem to be the case that the EC requires
a higher level of evidence than the US in order to be persuaded to initiate anti-dumping
investigations.

From the point of view of the US, the lower initiation threshold is balanced by the fact that
the ITC makes a preliminary determination of injury relatively quickly. The preliminary

3
    It can be noted that the US imposes significantly more provisional measures than the EC which, although not
        all US provisional measures are made definitive, is potentially more disruptive for imports..


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injury determination is made by the ITC within 45 days of the submission of the complaint
(i.e. 25 days after initiation of the case). Several survey respondents made the point that the
injury threshold applied at this stage is perhaps higher than the injury threshold applied by the
EC in accepting complaints.

An analysis of the stages at which investigations resulting in no measures are terminated
perhaps backs up this point. From data for the period 2000-2003, as shown in the following
table, it appears that 39% of cases resulting in no measures were terminated as a result of an
ITC negative preliminary decision after only 45 days from submission of complaint (25 days
after initiation of the investigation).

          US AD and CVD investigations resulting in no measures 4

                                             2000         2001         2002     2003   TOTAL
          ITC negative (prelim)                  10           10           17       10     47 38.84%
          ITC negative (final)                    5           36            7        5     53 43.80%
          ITA negative (prelim)                   0            1            0        1      2   1.65%
          ITA negative (final)                    2            8            0        2     12   9.92%
          Withdrawal                              0            1            0        6      7   5.79%
          TOTAL                                  17           56           24       24    121 100.00%



It appears to be the case that the injury analysis done at the initiation stage by the DOC is not
as rigorous as the Commission's analysis of injury pre-initiation, thus explaining the higher
initiation propensity of the US. Nevertheless, it may be the case that the ITC preliminary
determination is possibly more rigorous than the EC pre-initiation injury analysis. It should
be noted, however, that, to the extent that the preliminary ITC injury determination can result
in termination of weak injury cases quickly, by this time, respondents already have had to fill
in a questionnaire. Identifying weak injury cases at the pre-initiation stage is preferable to
resources being wasted between initiation and a preliminary injury determination.

(d)       Evidence required from complainants on prices

The EC requires firm documentary evidence of prices (usually invoices) in order to establish
sufficient evidence of dumping. The US is more flexible. {The DOC will accept affidavits
attesting to oral quotations or knowledge of actual prices, salespersons’ “call reports”, market
research information provided by a market research firm etc.

(e)       Effort required from complainants in preparing complaint

Those EC companies that had been involved in US cases felt that the threshold is slightly
lower, but that the amount of documentation required of US industry is very significant.

One of the US participants in the survey from the complainants' side made the point that, in
his experience, EC complaints seem less voluminous than US petitions. In looking at the
non-confidential versions of US complaints they certainly seem to be at least as thick, and in
some case significantly thicker, than EC complaints. Also, US petitioners point out that they
typically incur $1million legal fees for preparation of an anti-dumping complaint.


4
      Decisions are counted by country not by product. Thus, an ITC negative final decision involving 5
      countries is counted as 5 negative decisions.


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                Annex 6, Page 6

These facts seem to be correct. However, this is partly due to a much more formalistic
approach in the US than in the EC. There is no evidence that the more formalistic complaints
contain more substance than EC complaints. In fact, as discussed above, the reverse seems to
be true in some cases. This does not mean, however, that US complainants can merely turn
up at the DOC and they will be successful in getting a case initiated.

(f)       Early injury determination

Some US commentators pointed out that under the US approach, all parties have a chance to
go through injury arguments very early on in the case.

While the DOC may apply a lower injury standard than the EC on initiation of cases, the ITC
preliminary injury analysis may well apply a higher standard than the EC applies in assessing
complaints. This means that there is an opportunity for those opposing the imposition of
measures in the US to intervene early if the injury case is weak and to get the case closed.

In the EC, interested parties do not have chance to comment on the injury case until the case
has been initiated. Then it will be 9-15 months before any decision is made compared to the
initial 45 day injury decision in the US. At the same time, this apparent disadvantage of the
EC system in fact gives all parties (and not only those who can afford costly legal counsel to
be able to make rapid representations) a proper opportunity to fully exercise their rights of
defence before the far reaching decision on whether or not to impose measures.

Also, it can be noted that the US has a much higher proportion of provisional measures that
are not made definitive compared to the EC (see 2.1(s) below). From data presented in
section 2.1(b) above, for the past five years, the US adopted 111% more provisional anti-
dumping measures than the EC yet only 16% more definitive measures. This may imply that
some weak injury cases may make it through to the definitive stage of the investigation
before they are thrown out but in the meanwhile provisional measures are adopted. In other
words, the early injury determination does not necessarily apply a high injury standard before
provisional measures are adopted. The fact is that of the 83% of US anti-dumping
investigation terminated without measures on the grounds of no injury, more than half of
them were not terminated until the definitive stage of the investigation (44% of all
terminations were at the USITC final stage compared to 39% at the USITC preliminary
stage).

A much higher proportion of EC provisional anti-dumping measures are made definitive than
is the case for the US. This would suggest that the EC provisional injury analysis is almost at
the standard of its definitive analysis and, therefore, much higher than the US preliminary
injury analysis.

Overall, therefore, the ITC preliminary injury analysis may well be not much more than the
standard applied by the EC at the complaint stage.

(g)       Questionnaires

Both the EC and US use detailed questionnaires to collect information from cooperating
parties.




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                                                                                                Annex 6, Page 7

In the EC, questionnaires are sent to exporters, importers, EC producers and users. Each of
these groups receives a single questionnaire which is dispatched at the start of the
investigation.

Because of the bifurcated nature of the US system (see 2.6), cooperating parties receive
different questionnaires from the DOC and ITC. The DOC, like the EC, basically sends out
one questionnaire, though there can be supplemental questionnaires. Unlike the EC, however,
the ITC usually has several rounds of questionnaires during the various phases of the
investigation.

In the US, the ITC collects additional information after preliminary measures have been
adopted taking into account additional periods to the information requested in the original
questionnaires. This means that the ITC can use updated data during the investigation. EC
practice, on the other hand, is to have one round of data collection and then for the whole
investigation to be based on that data (the DOC approach is basically the same as that of the
EC). Thus, for the analysis of dumping, injury and causal link, updated data is not usually
used. In fact it is European Commission policy to ignore data relating to periods following
the investigation period. 5

EC industry survey respondents who had experience of US anti-dumping cases stated that, for
exporters, the questionnaire is much more onerous than the equivalent questionnaire used by
the EC.

(h)        Assistance to complainants, particularly SMEs

The EC has a number of initiatives to assist SMEs. Likewise the US provides assistance to
SMEs (the DOC's Petition Counselling and Analysis Unit and the ITC Trade Remedy
Assistance Office).

However, the point was stressed by many participants in the US survey that it is virtually
essential to use counsel in US proceedings. The cost of obtaining counsel may make it much
more difficult for SMEs to file cases in the US. In some instances, however, US Producers
may form ad hoc groups that share the expense of counsel.

In the EC, industries more often than not submit complaints without the use of a law firm
(usually done through relevant industry associations).

(i)        Cooperation and ability to participate in the investigation

In the EC, whether an exporter is considered cooperating or not depends on whether the
questionnaire is completed and on-site verification takes place. Non-cooperating exporters
do not normally play any role in the investigation including submitting injury arguments.

In the US, exporters sometimes choose not to participate in the DOC dumping investigation
and instead focus on injury at ITC. There is a perception amongst some that the DOC
always finds dumping, and that their money is better spent on a defence at the ITC where a
significant number of investigations are terminated.




5
    This is not the case for the analysis of Community Interest which is a more prospective analysis.


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                Annex 6, Page 8

In the EC, there is nothing in principle that stops the Commission from accepting injury
arguments from exporters that have not completed the questionnaire. Moreover, an exporter
can also have its own injury margin even without cooperating for dumping purposes provided
that it fully cooperates with regard to its export prices and related information. However, such
partial cooperations occurs rarely..

Exporters are often represented in the injury investigation by an industry association that will
organise an injury defence on behalf of the whole industry. The EC always accepts such
participation from industry and trade associations, provided that the normal deadlines are
respected.

Thus, it would appear that this is not a major difference between the EC and US.

(j)       Verification

The general practice of the EC is to verify the questionnaires of as many parties as possible.
Unless sampling has been used, it will verify all questionnaires received from complainants
and respondents. It also often verifies questionnaires completed by importers and users.

The DOC adopts a similar approach with regard to respondents.

However, unlike the EC, the US does not verify all complainants. The ITC will generally
only verify information from the biggest US producer(s).

In the EC survey, some claimed that the EC verifies petitioner’s questionnaire responses
much more thoroughly than US does. This appears to be true. Verification usually occurs
prior to the adoption of provisional measures. Even after provisional measures the EC
appears to be more systematic in conducting verifications of the data provided by
complainants.

The ITC verifies at least one US producer (after provisional measures) and sometimes two.
Usually companies that have the greatest financial impact and largest financial losses are the
ones selected and two to three days are spent at each company. This contrasts with EC where
the general rule is that questionnaire responses of all complaining companies are verified.

(k)       Lower US tolerance of incomplete or inaccurate information

There appears to be a difference between the EC and US approach at verification. The US is
stricter than the EC on the necessity for information provided in the original questionnaire
response to be almost fully complete and accurate. In the US, companies must certify as to
the accuracy of information provided. Incorrect information is often heavily penalised
through rejection of information and use of facts available (though "neutral" facts available
are used for minor inadvertent errors).

The Commission adopts a more flexible approach and allows small errors or omissions to be
put right at the verification. Whilst the DOC has a practice of allowing correction of minor
errors or omissions at verification, survey respondents made the point that the US is more
formal than the EC in its approach at verification.

The lower tolerance of the US to incomplete or inaccurate questionnaires, and the use of best
information available and adverse inferences, has the result that respondent exporters make
every effort to provide very reliable information. Companies know they may be subject to


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                Annex 6, Page 9

verification and the level of accuracy is generally high. The DOC usually only find small
inaccuracies at verification.

For the EC, there appears to be a lower threshold of completeness and accuracy which, if it is
met, means that the Commission will be quite flexible in receiving corrections and additional
information during and sometimes even after the verification. .

(l)       Longer verifications

A verification of a full exporter's questionnaire response by the DOC typically lasts for two
weeks (one week for sales, one week for costs).

For the EC, they are usually 2-3 days in total.

This suggests that the US is more thorough in verifying the responses of exporters. However,
one survey respondent claimed that US exporters' verifications tend to be very formalistic and
like a complete audit of the information contained in the questionnaire. The EC approach is
different in that within 3 days a lot less can be done.

(m)       Confidentiality

US law requires that the administrative records of anti-dumping and countervailing duty
proceedings include copies of all information presented to or obtained by the DOC.
Interested parties have extensive access to the administrative record, which is facilitated by a
requirement that written submissions must be provided ("served") by the submitting party to
all other interested parties.      With regard to confidential information, independent
representatives (normally legal counsel) can have access to business propriety information
under an Administrative Protective Order (APO) (see annex 5, 2.2(r)).

In the EC, interested parties only have access to the non-confidential files, which usually –
due to inherent limitations in summarizing confidential information - contain little
information. The EC does not have an equivalent to the APO system.

The implications of this are quite far reaching. In the US, for example, lawyers and
consultants representing complainants can go through all of the exporters' dumping
calculations and try to find reasons why the dumping margin should be higher. By the same
token, respondents have full access to Commerce's calculations and therefore can ensure that
the information has been used correctly and argue for changes that would bring the margin
down. In the EC, neither complainants, nor their lawyers, have access to any confidential
information from the exporters. Thus, very little information is known about the detail of the
dumping calculation, either by EC complainants or by their advisers. This means that a lot of
trust is put in the European Commission. It also means that it is harder for complainants to
challenge a dumping calculation by the Commission because they do not have sufficient
information to do so. This is quite the opposite in the US where complainants regularly
challenge DOC dumping calculations in the courts.

On the other hand, the fact that lawyers can do so much work with the confidential data has a
significant cost implication.




Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                Annex 6, Page 10

(n)       Publicly available information

The US has much more information publicly available than the EC. Indeed, non-confidential
documents are actually available to the public in the US. All non-confidential documents
relating to an investigation are available to any member of the general public who visits the
reading room.

All parties that participate in a proceeding are placed on a public service list. Whenever a
party makes a submission, the party must provide each person on the public service list with a
copy of the public version (i.e. excluding confidential information) of the submission.

In the EC, non-confidential information is only available to those interested parties that have
registered their interest in the investigation.

(o)       Availability of complaint

In the US, the non-confidential version of the complaint becomes publicly available as soon
as it is submitted to the DOC i.e. before a decision has been taken to initiate. This is also
different from the EC where the fact that a complaint has been received is formally kept
confidential until the day of initiation.

(p)       Provisional Measures

When provisional measures are imposed, they come into effect much earlier in the US than in
the EC.

In the EC, provisional measures do not come into effect until the maximum deadline of nine
months has passed both for AD and AS measures.

For the US, provisional measures are adopted as early as 140 days from initiation and, in fact,
once the ITC has made its preliminary determination after 25 days (45 days from submission
of complaint), industry is virtually certain that preliminary measures will be adopted due to
the extremely low number of negative dumping findings at the DOC preliminary stage. In
fact, between 2000 and 2003, there were only two cases of a negative preliminary DOC
finding (less than 2% of all negative determinations during this period). Thus, 25 days after
initiation (i.e. preliminary ITC determination) parties know whether or not there will
provisional measures. In the EC, this is not known for nine months.

The 45 day preliminary injury investigation is thorough and there are often negative
determinations at this stage. By contrast, in the EC, once a case has been initiated, it is
unlikely to be terminated for at least nine months and possibly even fifteen months.
However, as noted in 2.1(s) below, it appears that US provisional injury analysis is not at the
same level as that in the EC. Of course this makes sense given that the comparison is
between a 45-day preliminary injury investigation with no verification, and a 9-month EC
investigation with all information verified.

A practical example of the difference in timing of provisional measures is shown in appendix
1 for the TCCA investigation. This involved the EC and US having AD investigations on
basically the same product (both investigations included China).




Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                                Annex 6, Page 11

(q)        Price Undertakings

In the US, normally price undertakings will not be accepted unless complainants agree. That
is not the case in the EC where price undertakings can be adopted in situations where the EC
industry would have preferred to have anti-dumping measures.

(r)        'Success rates'

The proportion of investigations initiated that result in definitive measures being adopted is
sometimes called the "success rate".

We can calculate success rates for the EC and US based on the proportion of decisions to
impose measures as a proportion of the total decisions for each year.

                                            EC definitive ADD               US definitive ADD
                                              as % of total                   as % of total
                                                decisions 6                     decisions
           1980-2004                               55%                             42%
           Of which:
           1980-1994                                  53%                         39%
           1995-2004                                  57%                         50%


For the period 1980-2004, 55% of EC AD investigations resulted in the imposition of
definitive AD measures. For the US, the figure appears to be lower at 42%. This would
suggest a much higher 'success rate' in EC investigations than in the US.

The implication of this is that the EC has terminated less cases than the US taking into
account this period as a whole. This would appear to back up the belief that the US has a
lower threshold for initiating anti-dumping cases but is just as tough as the EC in adopting
measures.

For the EC, the trend pre- and post-WTO has not really changed. Interestingly, however, the
picture for the US is slightly different looking at the period since the creation of the WTO.
Between 1980 and 1994, 39% of US investigations resulted in measures, whilst the success
rate increased to 50% for the period 1995-2004. The US success rate is now closer to that of
the EC.

The fact that there is a difference between success rates at least partly reflects the fact that a
significant number of cases are terminated at the preliminary ITC stage. As noted above, this
is perhaps due to the fact that a lower injury threshold is applied by the US at the initiation
stage but that some of the weak injury cases are thrown out at the preliminary ITC
determination only 25 days into the investigation. It is suggested that such cases would
probably never have been opened in the EC, which would explain why there appears to be a
lower success rate in the US.



6
    Note that these figures do not include cases where the complaint was withdrawn which, in the absence of the
      withdrawal, would have resulted in a negative decision. In the EC, this can cover up to one third of cases
      meaning that the percentages of the EC are in all likelihood overstated.


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                 Annex 6, Page 12

(s)       Proportion of provisional measures made definitive

Taking the period 1980-2004, the extent to which provisional measures are made definitive is
shown in the following graphs.

          US Provisional and Definitive Measures 1980-2004


              80
              70
              60
              50
                                                                                US Prov
              40
                                                                                US Def
              30
              20
              10
               0

                00
                02
                04
                80
                82
                84
                86
                88
                90
                92
                94
                96
                98


             20
             20
             19
             19
             19
             19
             19
             19
             19
             19
             19
             19
             20



          EC Provisional and Definitive Measures 1980-2004


              80
              70
              60
              50
                                                                                EC Prov
              40
                                                                                EC Def
              30
              20
              10
               0
                02
                04
                80
                82
                84
                86
                88
                90
                92
                94
                96
                98
                00
             20
             20
             19
             19
             19
             19
             19
             19
             19
             19
             19
             19
             20




Looking at the two graphs above (which are both on the same scale), it is clear that there is a
bigger gap between provisional and definitive measures in the US than in the EC.

We can aggregate the total number of provisional measures for this period and express them
as a proportion the total number of definitive measures. This is not a precise measure as there
will be definitive measures in 1980 where the provisional measure was adopted in 1979.
Likewise, there will be provisional measures in 2004, where the definitive measure is in 2005
and not included in the data. However, for the period as a whole, this will be a relatively
small issue, and the calculation should provide a good indicator of the extent to which
provisional measures are made definitive.

For the EC the provisional/definitive ratio is 89%, while for the US it is much lower at 54%.
This suggests that the EC is applying a higher standard in adopting provisional measures. In



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                                                                                            Annex 6, Page 13

fact, it implies that EC provisional determinations may not be so provisional and are, in fact,
a draft version of the definitive determination. In considering the lower figure for the US, it
should be taken into account that it can be expected by their nature that not all provisional
measures will be made definitive. The EC is perhaps applying a level of analysis that is
higher than is actually required for a decision that is provisional in nature.

(t)       Disclosure

There is no formal disclosure of definitive dumping and injury findings in the US prior to the
adoption of definitive measures as there is in the EC. Disclosure conferences are held after
preliminary and final determinations, at which time the margin calculation is provided. The
parties have an opportunity to request correction of ministerial (clerical) errors in the
calculation .

The situation is different in the EC where all interested parties receive written disclosure
packages setting out details of relevant calculations (as appropriate given confidentiality
requirements) and all legal reasoning. For provisional duties, disclosure normally occurs just
after provisional measures have been adopted. In the case of definitive duties, the disclosure
documents are sent some way in advance of the measures actually being adopted.

However, the fact that APO gives interested parties’ representatives access to the confidential
files of the DOC and ITC means that additional disclosure is not as necessary, since every
detail of the case can be followed throughout the investigation. The implication of this,
however, is that in order to fully exercise their rights of defence, interested parties must
engage counsel to be able to take advantage of APO access. Whilst a respondent without
counsel can receive full disclosure of its own margin calculation and public DOC decision
memoranda etc, they will not be able to defend themselves as well as respondents being
advised by counsel with access to much more information through the APO system.

(u)       Magnitude of measures

At face value, US anti-dumping measures appear to be generally higher than in the EC when
initially imposed following the investigation.

Because different duties are applied to different companies, there is always a range of duties
applied in any particular case. We have analysed the upper and lower end of these ranges to
see if there is any systematic difference between the EC and US.

The following charts indicate the level of all measures adopted by both the EC and US for the
period 2000-2004 7 . The measures for the EC and US are graphed in date order but the dates
do not necessarily correspond between the EC and US. Nevertheless, the charts do provide
an interesting overall picture of the relative duty levels during this period.

Trend lines have been added. They do not measure any real trends except they reflect the fact
that the US duties, on average, are higher than the EC ones.




7
      The EC cases were taken by date of imposition while the US cases are on the basis of date of original
      initiation of the investigation. However, for the purpose of comparing overall levels of duty, this makes no
      difference.


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                              Annex 6, Page 14


                    Anti-Dumping Duties 2000-2004 (lower)

   300
   250
                                                                                US
   200
                                                                                EC
   150
                                                                                Linear (EC)
   100
                                                                                Linear (US)
     50
      0
          1
               4
                    7
                         10
                              13
                                   16
                                        19
                                              22
                                                   25
                                                        28
                                                             31
                                                                  34
                                                                        37
                    Anti-Dumping Duties 2000-2004 (higher)

   450
   400
   350
   300                                                                          US
   250                                                                          EC
   200                                                                          Linear (US)
   150
                                                                                Linear (EC)
   100
    50
     0
          1
               4
                    7
                         10
                              13
                                   16
                                         19
                                              22
                                                   25
                                                        28
                                                             31
                                                                   34
                                                                        37




The above graphs demonstrate that there is a clear and systematic difference between EC and
US duty levels. Of course, one would expect that measures would vary from case to case
according to the particular circumstances. Looking at the overall figures does not take into
account the fact that the products and countries analysed are different. However, if this was
the explanation for the difference, one would expect that over time such differences would
cancel out (i.e. sometimes the US would be higher, sometimes the EC would be higher).

To further support the fact that initial US duties are systematically higher than EC duties, we
have identified parallel cases (i.e. where both the EC have investigated the same product from
the same country). Of course, these investigations do not necessarily cover the same time
period but they do seem to support the hypothesis that US duties are, on average, higher than
the EC. Again, the comparison has been done for the upper and lower ends of the range of
duties applicable.




Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                                     Annex 6, Page 15

          High duties (%)

           Case                                              Country            EC          US
           Hand pullet trucks                                China                46.7       383.6
           Foundry coke products                             China                43.6      214.89
           Trichloroisocyanuric acid (TCCA)                  China                42.6      285.63
           Barium carbonate                                  China                31.7        81.3
           Silicon                                           Russia               23.6       79.42


          Low duties (%)

           Case                                              Country            EC           US
           Silicon                                           Russia                  22.7         56.11
           Foundry coke products                             China                   43.6         48.55
           Barium carbonate                                  China                    3.4         34.44
           Hand pullet trucks                                China                    7.6         26.49
           Trichloroisocyanuric acid (TCCA)                  China                    7.3         75.78


Finally, we can include some older data 8 that confirms the same trend.

                                       1990-1994                                 1995-1999

                            Median Duty           Mean Duty          Median Duty            Mean Duty

                 US              56.2                 37.9                47.6                30.9

                 EC              31.0                 22.0                27.7                24.8



There are a number of comments that can be made about the fact that US duties appear to be
higher than EC duties;

     •    Most of the common cases identified above involve China, for which both the EC and
          US still use non-market economy methodologies. The NME methodology used by
          each is different (see 2.2(b) below) which can give dramatically different results and
          is probably the cause of some differences above.

     •    There is no lesser duty rule in the US. US measures are based on purely on the
          dumping margin whereas in the EC, a significant number of duties are based on the
          injury margin as a result of the lesser duty rule (though as indicated in 2.2(a), even
          looking at EC and US dumping margins, there is a difference).

     •    The differences in the US and EC duty collection systems (see 2.1(aa)) need to be
          taken into account when comparing the level of duties paid. For the US, the duty
          rates quoted above are those based on the data in the original investigation. However,
          it is possible that these rates are more or less than those actually paid. For an exporter


8
     Anti-Dumping action in the US and around the world. June 2001. Congress Budget Office.


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                              Annex 6, Page 16

          that requests an administrative review each year, the duties payable will depend on the
          actual data for each one-year annual review period. For such companies, the original
          duty rates are only the "cash deposit" rate (a type of security until the actual duty level
          is known). However, for a company that does not request administrative reviews, this
          is the level of duty that will apply.

(v)       Impact of administrative reviews on US duty levels

With regard to administrative reviews and the possibility for rates to come down from those
found in the original investigation, we have tried to collect some data to look at the impact of
such reviews. However, no data is readily available apart from the annual number of
administrative reviews completed (source: DOC website).

  1995          1996           1997          1998           1999          2000       2001     2002          2003
   96            126            104           111            92            86         74       81            65


This data must be carefully interpreted. Each administrative review relates to one or more
exporters and will result in importer-specific assessment rates. If, for example, two importers
have bought products from an exporter, an administrative review would calculate the level of
duty payable by each of the importers.

In order to be able to assess the impact of administrative reviews on the level of duty actually
payable in the US, we have tried to identify some examples of recent administrative reviews.
We have identified the reviews from two sources a) US notification of anti-dumping activity
to the WTO (document G/ADP/N132/USA) and b) administrative reviews published in the
Federal Register up to September 2005. This is not supposed to be an exhaustive analysis but
at least gives an indication of what happens in US administrative reviews (where a range is
given, more than one exporter was involved).

                 Product (Source)                                       Original             After Review
                 Honey (Argentina)                                  27.04%-55.15%             0.00-55.15%
      Stainless steel plate in coils (Argentina)                         9.86%                    2.71%
  Carbon and certain alloy steel wire rod (Brazil)                       94.73%                  98.69%
            Softwood lumber (Canada)                                 2.26%-15.83%            0.91%-9.10%
              IQF raspberries (Chile)                                    6.33%              0.25%-13.41%
           Stainless steel bar (Germany)                                 13.63%                   0.01%
                      PET film                                          24.14%                    6.28%
  Carbon and certain alloy steel wire rod (Mexico)                       20.11%              1.06%-5.45%
                   Glycine (China)                                      155.89%                   2.95%
 Automotive replacement glass windshields (China)                         9.84%              0.93%-0.91%
           Preserved mushrooms (China)                             121.47%-198.63%          0.24%-198.63%
                   Garlic (China)                                       376.67%             10.78%-19.68%
                  Uranium (France)                                      19.95%                   12.62%
             Stainless steel bar (India)                                 12.45%                   19.8%


The above table suggests that in most cases, the administrative reviews did result in lower
duties, in some cases very significantly lower. In three cases (shaded), it appears that the
review resulted in a higher duty.

Complainants, exporters and importers all have a right to request a review. Thus,
complainants can request a review if they believe that the dumping margin has increased and


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                         Annex 6, Page 17

importer or exporters can request a review if they believe that the dumping margin has gone
down. Importers can only request a review for the exporters from which they have exported
the product concerned.

Of course, amended rates in an administrative review will only apply to the company subject
to the review. The original investigation rates would still apply for exporters who have not
had a review.

Of course, in the EC, there is the possibility for measures to be reviewed through an interim
review.

          EC Interim Reviews

          1996     1997     1998      1999     2000     2001     2002      2003   2004
           20       7        16        15       20       14       35         8     26


However, few of these interim reviews relate to reviews of the level of the dumping duty. In
2004, only one out of 26 interim reviews related to an attempt by exporters to get a lower
duty. Moreover, this case was tied in with an expiry review, so it was not actually during the
five year duration of the measure. ]

(w)       Judicial Review

There are far more challenges to anti-dumping and CVD orders in the US than there are in
the EC.

In the EC, we have calculated that there have been 124 CFI and ECJ cases between 1970 and
2005 concerning TDI (see annex 7, 4.1). In the US, no data is produced on the number of
AD/CVD cases challenged. However, we have checked the Court of International Trade's
electronic docket and there were approximately 143 complaints filed in the past 12 months
regarding AD/CVD cases. The actual number of administrative decisions challenged is less,
because it is frequently the case that multiple parties file and then the cases are consolidated.
Nevertheless, it is confirmed from this data that there is far more TDI litigation in the US
than in the EC.

Judicial review in the US is used more by both parties (petitioners and respondents), whereas
historically in the EC few cases have been taken by petitioners (though this has changed more
recently e.g. EFMA, Eurocoton and Eurometaux). Overall, complainants have accounted for
around 10% of all cases where the Commission has been challenged on TDI. In the US,
again there are no figures breaking down the plaintiffs in TDI court challenges. However,
one of our experienced lawyers in Washington DC estimated from experience that the split
between complainants and respondents is pretty even, with perhaps respondents being a little
ahead. Note also that it is not uncommon for both sides in the US to file challenges.

A further difference relating to judicial review is that, in the US, it is possible for the courts to
remand cases. (Cash deposits are still collected while the case is on remand).

One possible implication of the much higher incidence of judicial review in the US is that the
European Commission has somewhat more discretion, since less scrutiny by courts means
that it is less likely to be challenged. Some survey respondents told us that the DOC and ITC



Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                Annex 6, Page 18

are over-thorough – down to the very last detail – because they are more likely to be
scrutinised.

This may not be a difference to do with TDI. It has to be recognised that US business is
generally more litigious than its EC counterpart. Legal cultures in the EC and US are very
different and this has implications for the discretion that is conferred on authorities.
Ultimately, therefore, this may not be so much a difference in US and EC TDI but, rather, a
difference in legal culture.

(x)       Cost

It is clear that the US system is much more costly than the EC both for complainants and
respondents. Questionnaires are bigger and verifications are longer, resulting in heavy legal
procedures and costs.

Also, in the US it is very rare for a petition to be filed without counsel. This makes it
difficult for small industries composed of SMEs to make complaints.

Although many determinations are appealed in the courts, and this would appear to be
desirable because it makes the DOC and ITC very careful in its actions, the appeals take a
long time. This becomes very expensive for plaintiffs because the DOC and ITC will often
appeal adverse rulings. There are cases where the outcome of administrative reviews are
appealed and – even before the case is finalised – the next review is started. Appeals relating
to different strands of the same case may be taking place at the same time, which is extremely
confusing and costly to administer for the plaintiffs.

In the EC, industries often submit complaints without law firms assisting them. In addition,
while exporters who respond to an EC TDI investigation often retain counsel in the EC, the
fees are very modest compared to those typically quoted in the US.

(y)       Interim reviews

The key difference on interim reviews relates to duty collection. In the EC, interim reviews
are the only means by which an exporter can get the duty level amended. In the US, because
this can be done through the administrative review process, interim (or 'changed
circumstances') reviews have much less importance.

(z)       Expiry reviews

With regard to expiry reviews, an EC survey respondent claimed that the US has a higher
proportion of expiry reviews that result in continuation of the measures. It was claimed that
the US operates under a presumption of the recurrence of problems; rather than requiring a
positive finding of the likelihood of a recurrence of problems, as is the case in the EC.

Indeed, the US has had problems of WTO consistency with its approach to expiry reviews in
terms of establishing the likelihood of recurring problems if duties were allowed to expire
(OCTG and the corrosion resistant steel cases).

Reviewing the data has established that the US initiates a higher proportion of expiry reviews
than the EC and, of the reviews initiated, the US maintains measures in a higher proportion of
cases than the EC.



Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                             Annex 6, Page 19

                                                              EC                       US

                                                    Jan 00 – 19 Oct 05          Jan 00 - 4 Oct 05

                                                        No               %       No            %
    Cases due to expire                                 142                      115
    Expiry review initiated                              60           42.3%      97          84.3%
    Expired without review 9                             82           57.7%      18          15.5%

    Number of expiry review
    decisions                                            38                       71
    Extension of measures                                21           55.3%       63         88.7%
    Termination of measures                              17           44.7%        8         11.3%


The US figures are based on normal expiry reviews and do not include transition reviews (i.e.
relating to pre-1995 measures).

For the period analysed, the EC has a much higher proportion of cases that expired without
review; 57.8% compared to 15.5%.

Furthermore, of those reviews initiated, 88.7% of US cases resulted in a continuation of the
measure. For the EC, the figure is lower at 55.3%.

(aa)      Retrospective duty collection

EC duties are set prospectively and, unless an interim review is requested, which is relatively
rare, the level stays the same for the five year duration of the duty. In the US, duties are
calculated retrospectively based on an administrative review of actual export prices for the
previous year and, as noted above, the levels often decline.

One of the key differences here is that in the EC, if an exporter subject to anti-dumping
dutiesraises prices, the duty is still applied to the higher price. In the US, if the price is
increased, the duty paid will be less. Further, if the price is equal to or above the normal
value, no duty will be paid i.e. exporters can get 0% margin regardless of what their initial
margin was.

If the dumping margin is zero in three consecutive administrative reviews, the exporter can
be excluded from the duty order. This means that they are also excluded from any future
expiry reviews. They can only be brought back in with a new complaint.

Some US survey respondents raised negative points about the retrospective system. The
issue raised was that it creates a problem of uncertainty for exporters and importers. It is
difficult to stay in the market because the importer takes on an uncertain liability. For US
industry also it can be problematic because US industry has no certainty that duties will
remain in place. EC industry does have greater certainty through the fact that duties, once
adopted, often remain in place for 5 years.


9
      For the US, expiry reviews are automatically initiated. The figure for the US under this row measures the
      number of cases where the measure was revoked because there was no domestic response to the DOC's
      notice of initiation i.e. neither the DOC or ITC made any assessment whether the measure should be
      revoked or not and the measure was allowed to expire.


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                                                                                              Annex 6, Page 20

Some US survey respondents told us that manipulation of administrative reviews and new
shipper reviews reduced the effectiveness of protection received by anti-dumping duties and
that the EC system does not have the same scope for manipulation.

2.2        Dumping

(a)        Dumping calculation methodologies are similar but small differences can be
           significant

Both the EC and US closely follow the WTO Agreement in relation to the calculation of
dumping and to that extent the two methodologies employed are extremely close. However,
despite the detailed rules contained in the WTO Agreement and – on the whole – both
administrations' close observance of these rules, there are some differences.

As agreed with the Commission, an extensive survey of every small difference in US AD
law and procedure with regard to the substance of the dumping calculations is not within the
scope of this report. However, we have identified some of the principal differences and these
can have a significant impact on the dumping margins calculated.

An analysis of the dumping margins found by both the EC and US for the last five years
shows that the range of US margins is significantly higher than for the EC. Of course, for the
US, the dumping margins found are equal to the measures applied (reviewed in 2.1(u) above).
For the EC, however, the dumping margins are not always the basis for the dumping duty
and, therefore, on average the EC dumping margins are higher than the EC measures applied.

The following charts indicate the level of dumping margins found in the definitive
determinations by both the EC and US for the period 2000-2004. The measures are graphed
in date order but the dates do not necessarily precisely correspond between the EC and US.
Nevertheless, the charts do provide an interesting overall picture of the relative levels of
dumping margins calculated during this period.

The trend lines have been added. They do not measure any real trends except they reflect the
fact that the US margins, on average, are higher than the EC ones.


                               Dumping margins (lower)

   300
   250
                                                                                US
   200
                                                                                EC
   150
                                                                                Linear (US)
   100
                                                                                Linear (EC)
      50
      0
           1
               4
                    7
                         10
                              13
                                   16
                                        19
                                              22
                                                   25
                                                        28
                                                             31
                                                                  34
                                                                        37




Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                                 Annex 6, Page 21


                               Dumping margins (higher)

   450
   400
   350
   300                                                                            US
   250                                                                            EC
   200                                                                            Linear (US )
   150
                                                                                  Linear (EC)
   100
    50
     0
         1
              4
                    7
                         10
                              13
                                   16
                                        19
                                             22
                                                   25
                                                        28
                                                             31
                                                                  34
                                                                        37
There are many reasons why the level of dumping margins may vary, and one of them is the
different methods used for calculating dumping margins.

The point was made by some US respondents that care should be taken in comparing
margins. First, it was claimed, the initial margin is only relevant for a) determining de
minimis or zero dumping and b) setting cash deposit rate for first year. In many cases, actual
duty paid is lower due to administrative reviews (which indeed is true as we have established
in2.1(v)). However, administrative reviews are company specific and therefore the higher
level of duties still apply to other companies that have not requested such a review.

Second, the point was made that, in most cases, there is no difference between 50% and
350%. Thus, the high end of the dumping margins is irrelevant. If you compare the low end
of duty ranges, it was claimed, the US is as low as the EC. Our analysis suggests that this is
not true and the lower US dumping margins are in fact higher in general than for the EC.
However, it is true that the gap between the margins is smaller at the lower end of the range
than for the higher levels.

It is particularly interesting to compare similar cases involving the same products and
countries. This confirms that US margins do appear to be higher.

Highest dumping margins found (%)

 Case                                              Country             EC       US
 Hand pullet trucks                                China                 46.7    383.6
 Foundry coke products                             China                  60    214.89
 Trichloroisocyanuric acid (TCCA)                  China                 42.6   285.63
 Barium carbonate                                  China                 31.7     81.3
 Silicon                                           Russia                24.8    79.42




Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                                    Annex 6, Page 22

Lowest dumping margins found (%)

 Case                                              Country            EC               US
 Silicon                                           Russia                       23.6        56.11
 Foundry coke products                             China                         60         48.55
 Barium carbonate                                  China                         3.4        34.44
 Hand pullet trucks                                China                         7.6        26.49
 Trichloroisocyanuric acid (TCCA)                  China                         7.3        75.78


It is hard to explain why US low margins tend to be higher than EC low margins. The high
margins can be explained, at least partly, by the US being more prone to use facts available
with adverse inference.

Also, the highest margins may also be affected by differences in the approach to calculating
residual duties when there is a high level of non-cooperation. In the EC, the residual duty in
the situation of a high level of non-cooperation is often based on the highest dumped model
whereas in the US it is often based on the highest dumped transaction.

(b)       Normal Value

A number of differences in relation to normal value exist. These principally relate to issues
that are not dealt with by the WTO Agreement. Examples include:

•     The 5% representativeness test for domestic sales is done for each model/type in EC,
      whereas it is only done globally in US. Thus, as long as domestic sales are at least 5% of
      export sales, the DOC will use all types/models to assess normal value. In the EC, the
      Commission applies the text globally in the same way as in the US, and then on a type by
      type basis. Thus, the Commission can reject prices of individual types that fail the 5%
      test, while such prices would be used by the DOC.

•     In the WTO Agreement, while there are rules on the maximum proportion of sales below
      cost that is permissible (i.e. if loss making transactions account for less than 20% of all
      sales by volume, those prices must stay in the normal value determination) there is no
      guidance on a minimum level of profitable sales on which to base normal value. In the
      EC, the Commission has adopted an informal guideline that sales at a profit must
      constitute at least 10% of the sales by volume. The DOC has no such minimum level of
      profitable sales.

•     If the DOC finds that one exporter has a zero, or de minimis, dumping margin, that
      exporter drops completely out of the scope of the measure. This means that it is excluded
      from all future reviews of the measure. If it is felt that such a company has started
      dumping, a whole new investigation must be started. In the EC, this is not the case. Zero
      or de minimis dumping margins mean that no measure will apply. However, in future
      reviews, the Commission can re-consider the position of such exporters if the evidence
      warrants it.

•     There is a significant difference with regard to the method used to calculate normal value
      in non-market economy (NME) situations.




Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                               Annex 6, Page 23


      •   The EC selects an analogue country. This requires at least one company in that
          country to complete a questionnaire on domestic prices and costs which is used as the
          basis to determine the normal value in NME situations.

      •   In the US, the DOC will analyse the production process of the NME exporters and the
          volume of all inputs used. The inputs (or factors) are valued in a surrogate market
          economy (imputed market economy values). The DOC publishes data used in
          previous investigations as to provide a guide for future cases.

      •   A further difference with the EC is that there is much more comment and debate in
          the US on the surrogate values used. In the EC, comments must be received on the
          choice of analogue country within 10 days of the initiation of an investigation. In
          practice, due to the need to find a cooperating company in other countries that might
          be proposed, it is in fact very difficult to challenge the analogue country to be used.
          In the US, while DOC will start off with certain values that it has itself determined or
          the parties have submitted, there can be significant changes depending on what other
          evidence parties submit. The DOC even allows the use of actual input costs in an
          NME situation where the input has been imported from a market economy.

•     The EC has developed an approach whereby individual companies can apply for market
      economy treatment. In addition, whilst not set out in the regulation, the EC has informal
      procedures for reviewing the treatment of countries in transition to market economies and
      can graduate countries to full market economy status. In the US, individual companies
      cannot apply for market economy treatment. Such treatment can be granted on a country
      basis or on an industry basis (although the latter is viewed as a useless provision and is
      never used).

(c)       Export Price

It was claimed by one of the US survey respondents that, with regard to constructed export
price, the US performs a strange and complicated calculation of profits to be subtracted from
the actual export price.

The following is an extract from the DOC anti-dumping manual on calculating constructed
export price (CEP) profits.

          In a market economy case, CEP profit is calculated by first deriving the ratio of per-unit US expenses
          to the respondent's total expenses and then multiplying this ratio by the total actual profit earned by the
          respondent.

          For example, assume the following:

          Total US expenses (per unit) = $0.45

          Total expenses - $8,200,000

          Total profit = $800,000

          In this case, CEP profit would equal $0.0439 per unit, calculated using the following formula.

          CEP profit = (.45/8,200,000) x 800,000 = $0.0439

The logic of this calculation is not easy to understand.


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                                                                                Annex 6, Page 24

The EC adopts a more straightforward approach. Profit margins can be determined on the
basis of information provided to the Commission by other independent importers. If no such
data exists, the Commission uses other reasonable but similar methods. For example, there
are cases where information from an importer in a separate anti-dumping investigation in a
similar product sector was used.

(d)       Comparison of normal value and export price

In making the comparison between normal value and export price, one of the most
controversial differences between the EC and US concerns the use of zeroing.

The US continues to use zeroing in situations where there is multiple averaging across
different models or types. If the weighted average export price is above that of the normal
value for a particular model, it does not allow 'negative' dumping to cancel out the dumping
found for other models. In other words, the US applies a zero to that model instead of the
negative dumping value. This makes the overall level of dumping higher than if the negative
and positive values were offset before determining the final margin of dumping.

The EC used to use the same approach, but it has stopped this practice following the Bed
Linen ruling of the WTO Dispute Settlement Body.

The US does not use other types of zeroing (i.e. so-called targeted dumping by time, region
etc) in the original investigation whereas, in principle, the EC does. However, even the EC is
using this type of zeroing much less frequently.

However, in administrative reviews, the US uses zeroing for every transaction. This is the
subject of a current WTO dispute.

It was very interesting to discuss this issue with survey respondents in the US. With the
retroactive duty system, it was argued that "zeroing" in administrative reviews is only
replicating a situation where the level of duty is calculated on each shipment as it arrives in
the US. When the level of duty is calculated on each shipment, a negative dumping margin
does not make sense. This would imply that US customs should be making a payment to the
importer, an absurd situation. Instead, if a product is deemed not to be dumped in such a
situation, then no duty should be paid. By how much it is not dumped is irrelevant. However,
it remains the fact that the nature and the extent of zeroing in US administrative reviews is
wider than in original US investigations.

A detailed consideration of this issue is outside the scope of this report. However, the
comment can be made that the above logic for continuing to use zeroing does not justify the
use of inter-model zeroing in the original investigation.

A final comment on zeroing is that it does not affect every case. It only has an impact on
those cases where there is a large variation in export prices, such that some transactions are
not dumped.

(e)       Calculation software

The US uses software (the SAS programme) to calculate dumping which is widely available.
This means that all parties with APO access can calculate the dumping margin of every
respondent.



Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                                    Annex 6, Page 25

No such software exists in the EC. The Commission undertakes its own calculations which
are set up manually in a spreadsheet. A printout of the spreadsheet calculation is sent to each
of the exporters (only the exporters see the calculations due to the confidential nature of the
data contained in them).

Unlike the US, each exporter can only check its own calculations and not those of its
competitors. Likewise, EC industry is not able to check any of the dumping calculations.
They can only engage in the discussion of the methodologies used.

2.3       Subsidy

(a)       Higher subsidy margins and duties

It would appear that the US method produces somewhat higher subsidy margins that the EC
method.

The data in annex 7, 2.11-2.13 indicates that US margins are higher, though the differences
are not as great as those apparent when looking at AD duties and margins.

One reason why the differences may not be as great is the fact that neither the EC nor US
have initiated any AS investigations against China. Many of the very high US duties involve
Chinese exporters.

Two parallel cases (i.e. where the EC and US looked at similar products from the same
country) indicate that US margins are higher:

Lowest subsidy margins (%)

 Case                                              Country            EC               US
 DRAMs (CVD)                                       South Korea                  34.8        44.29
 PET Film (CVD)                                    India                         3.8        18.66


Highest subsidy margins (%)

 Case                                              Country                       EC       US
 DRAMs (CVD)                                       South Korea                  34.8    44.29
 PET Film (CVD)                                    India                        19.1    24.48


We have identified two possible explanations so far for the higher US subsidy margins:

      •   On some of the older cases, the US used a specific method for privatised companies
          which was found to be inconsistent with WTO rules. For cases involving companies
          that had been privatised, the change in method resulted in lower margins.

      •   US margins can vary from EC margins due to the fact that, for non-recurring
          subsidies, the US amortizes the benefit on a declining balance basis, while the EC
          does this on a straight line basis. Thus, for non-recurring subsidies, the magnitude of
          margins in the US will depend on how long ago the subsidy was received. If the
          subsidy was received just before the investigation was initiated, the benefit would be
          high when calculated on a declining balance basis. Note that it is possible in the US


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                  Annex 6, Page 26

          to request administrative reviews where the subsidy was recent and the benefit would
          be lower in ensuing years. However, this is not done automatically by the US, even
          though it is clear that the amount of benefit would be lower in later years.

(b)       Anti-subsidy in non-market economy situations

In the US, CVD cannot be used against non-market economies. In the EC, there is nothing
that stops the AS instrument being used against NMEs. However, in practice, AS is never
used against such countries.

2.4       Injury & Causal Link

A number of issues emerged in the comparison of EC and US AD and AS in relation to injury
and causal link.

      •   The outcome of injury determination appears to be less certain in the US than in
          the EC. The US has a higher rate of cases terminated on findings of no injury. In
          fact, in the US, for the majority of cases that do not result in measures, the reason is
          that the ITC did not find injury (either at the preliminary and final stage). However,
          as discussed in 2.1(b) above, it is arguable that the EC applies a higher standard in
          assessing injury at the initiation stage than the US. If this is the case, it really is not
          surprising that the US terminates more investigations than the EC on injury grounds.

      •   The US considers data on companies that have gone out of business (to avoid
          "survivor bias") whereas the EC will only look at businesses that are still going-
          concerns.

      •   The US always considers injury to the whole domestic industry. From the domestic
          industry, it will select certain companies to fill in detailed questionnaires. Not all
          complainants have to complete questionnaires. The EC only considers injury to the
          complainants.

      •   The ITC does not require complainants to prepare a full transaction listing. In order
          to calculate price undercutting the ITC will select representative transactions. In the
          EC, all complainants have to complete a questionnaire with a full transaction listing
          for all domestic sales.

      •   The ITC often uses updated information relating to a period after the investigation
          period (IP) (i.e. in the final stage, they may request additional data in a second or
          even third questionnaire). In the EC, the Commission only uses information strictly
          from the IP.

      •   The ITC can issue an administrative subpoena, if necessary, and obtain information
          by court enforcement. However, this happens is only a small number of cases (less
          than 1%).

2.5       Public Interest

Unlike the EC, the US does not have a public interest test for AD & AS. There is no
provision in US law that allows the broader public interest to be taken into account,
evenwhere wider considerations of public policy clearly exist.


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                Annex 6, Page 27

Users and consumers may participate in the investigation, but they normally only make
comments relating to injury. One problem for users/consumers is that they do not have
standing and therefore cannot be granted access to confidential information under APO.

The ITC can take the interests of users into account if, for example, there is limited supply in
the US and they are purchasing on availability grounds rather than for price. Similarly, their
interests can also be taken into account if users are choosing to import for reasons of quality.

2.6        Institutions

DG Trade of the European Commission has competence for all aspects of AD and AS
investigations, including both procedure and substance. AD and AS are administered under
a politically controlled system with a politically appointed Commissioner and the necessity of
Council approval before any definitive measures can be adopted although the framework is a
strictly legal one.

(a)         US system is bifurcated

The Department of Commerce (DOC) is responsible for assessing AD/AS complaints 10 ,
initiating investigations and issuing and administering duty orders. The DOC is also
responsible for calculating dumping and subsidy margins which, in all cases, determine the
level of AD or AS measures. The DOC is a cabinet level agency of the executive branch of
government and therefore is under political control. That said, decision-making authority is
delegated by the Secretary of Commerce to the Assistant Secretary for Import Administration
and dumping determinations appear to be undertaken in a purely technical manner.

The International Trade Commission (ITC) is responsible for making injury determinations in
AD and AS investigations. The ITC is an independent agency comprise of six
Commissioners (3 from each of the two main political parties, Republicans and Democrats).
Although the Commissioners can have a reputation for looking at cases in certain ways, the
decisions appear to be truly independent and based on the technical aspects of each case.

Some participants in the US survey compared the EC system to that which existed
historically in the US. Until 1979, the US Treasury Department was responsible for the
dumping calculation. US survey participants confirmed that the Treasury Department did not
operate with the same level of transparency that the DOC now operates under. Also, survey
participants claimed, decisions were much more political.

Even further back, until the 1950s, the Treasury Department conducted both the
dumping/subsidy and injury analysis.

(b)        Nature of decision-making

US participants in the survey raising this point implied that the EC system (described as non-
transparent and extremely political) has similarities to the way the US system used to work.

The EC system is somewhat more complex than the US system because it involves not only a
decision of the investigating authority, i.e. the Commission, but also a decision of 25 Member



10
     "Import Administration" is the branch of the DOC dealing with TDI.


Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                Annex 6, Page 28

States. Moreover, the fact that the EC has to operate in a mutilingual environment with adds
to the complexity.

The framework in which the EC system is operated is nevertheless a legal one, as evidenced
by the Court ruling on Eurocoton. Complexity is added by the fact that the EC carries out a
number of additional tests before measures are applied, notably the lesser-duty rule and the
Community interest test.

In the US, AD and AS are considered by some to be political in nature. However, in the
conduct of investigations, the DOC and ITC approach their tasks in a purely technical way.
The US has no public interest test and this means that the investigation focuses on the
technically defined issues of dumping/subsidy margin calculations and injury/causality
determinations. The adoption of measures is automatic if the requirements are met.

(c)       .US more partisan?

A number of survey respondents claimed that the US DOC and ITC are more partisan than
the European Commission. This is extremely difficult to assess.

However two comments can be made in this regard:

      •   The more complex nature of EC TDI investigations (e.g. a public interest test and
          Member States’ decision-making) perhaps makes the Commission more cautious in
          adopting measures. In the US, the investigation is more partisan in the sense that the
          focus is really only on whether domestic industry should be protected or not.

      •   The US has been targeted in other countries' TDI investigations much less than the
          EC. This has perhaps increased the sensitivity of using TDI for the Commission and
          EC Member States. Perhaps there is less concern in the US about taking into account
          export interests when undertaking TDI actions and more determination to press ahead
          as an active user of TDI.

(d)       More case handlers working on TDI in the US

There are 163 people working on TDI in Directorate B of DG Trade (currently there are 13
vacancies).

This compares with over 300 people (including 35 lawyers) and 75 people working on TDI in
the DOC and ITC respectively.

(e)       Specialised case-handlers in both DOC and ITC

Whilst some case handlers in the EC have professional backgrounds in law, economics and
accountancy, there is no systematic recruitment of professionals in each of these areas.

Further, case handlers are allocated to cases on a case-by-case basis. As a result, case
handlers can be allocated to either the dumping or injury aspects of investigations. Further,
while some case handlers have informally developed specialisations in particular countries,
specialisation of case handlers in specific industries is avoided.

In the US, by definition DOC staff work on the dumping side of the investigation and ITC
staff work on the injury analysis.


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                                                                                Annex 6, Page 29

Also, in both the DOC and ITC, every investigation team conducting a cost audit would
include an accountant.

In the ITC, every injury determination is allocated at least six staff including a lawyer,
economist, and accountant. The team will also include an industry specialist that keeps up to
date on an industry whether or not there are any current investigations in that sector.

One survey respondent claimed that the accountancy expertise of US case handlers is
exaggerated. The same person explained that the best case handlers actually have a tax and
customs background.

In the EC, a team assigned to the dumping or injury part of a case would include also
somebody with a strong accounting background (eg acquired in tax or customs field),
although not necessarily an accountant by profession. Moreover, the Commission does
organise internal training on accountancy and auditing issues.

2.7       Effectiveness of measures

As in the EC, enforcement of US measures is also a significant concern of US industry.

Some participants in the EC survey felt that the US has a big advantage with a single, unified
customs authority. The EC has potentially more problems with enforcement caused solely by
the fact that AD and AS measures are imposed by a multitude of different customs authorities
(each Member State has its own customs authority). However, the Commission has stepped
up efforts to reinforce coordination with national customs authorities in the area of TDI.

In the US, those on the domestic industry side felt that there are some problems. First,
following the 9/11 disaster in New York, the priority of US Customs has shifted towards
security which has resulted in a lower priority being placed on TDI implementation.

Also, US survey respondents highlighted recent problems in collecting duties (particularly on
new shipper reviews). More than $100 million of anti-dumping duties on Chinese imports
were not collected in 2003 because of problems with collecting the duties in new shipper
reviews (as reported in 'Inside US Trade' on 26 March 2004).

US survey respondents also said that traditional types of circumvention (e.g. screwdriver
plants, origin and classification misdeclarations etc.) have been experienced in US for a long
time.

In general, however, US respondents thought that US measures are well enforced. As in the
EC, problems emerge in specific situations.

3.        SAFEGUARD

3.1       General attitude towards safeguards

Safeguards have traditionally been used more by the US than the EC. However, most
participants in the US survey claimed that the safeguard instrument has been weakened by
the adverse WTO rulings. In addition, those representing US industry interests complained
about the political aspects of the decision to adopt measures. Overall, the feeling seems to be
that industry will need compelling reasons to use safeguards again.



Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                      Annex 6, Page 30

In the EC, there has not been very much experience of safeguards and therefore survey
respondents had few comments on safeguards. In addition, there is a general perception in
the EC that use of safeguards is not encouraged by the Commission and Member States.
This explains why safeguards have been less used in the EC. However, in recent years, the
EC has started to have a small number of safeguard cases.

The US and EC safeguard laws both contain the same definition of serious injury (i.e.
significant overall impairment in the position of Community producers. The EC legislation
contains a list of factors to be considered in the examination of serious injury. These include
all of the factors mentioned in the WTO safeguards agreement, though the EC does not use
identical wording to that found in the WTO provisions. US legislation does not list all of the
factors but does list some factors to be taken into account when considering serious injury:-

      (i) the significant idling of productive facilities in the domestic industry,

      (ii) the inability of a significant number of firms to carry out domestic production
      operations at a reasonable level of profit, and

      (iii) significant unemployment or underemployment within the domestic industry;

In determining whether there is causation, the ITC must find that imports are a substantial
cause of injury (i.e. a cause which is important and not less than any other cause). US law
does not require the ITC to determine that injury caused by other factors is not attributable to
imports. The EC adopts the approach that imports must be a genuine and substantial cause of
serious injuryA number of US practices on the substance side have been found to be WTO
inconsistent. This includes the lack of a determination of unforeseen circumstances; failure
to separate and distinguish other causes of injury: and the absence of a sudden, sharp,
significant, and recent increase in imports.

Due to the fact that the President makes the final decision on whether safeguards should be
adopted, and at what level, safeguards have more of a political element than AD and AS.
The President can be influenced by lobbying from various interests, including those that
oppose the measures. In this way, US safeguards are effectively subject to a public, although
non-transparent interest test. As in AD and AS, the EC applies the Community interest test
before adopting safeguard measures.

3.2       Procedure

In the US, it is usually a domestic industry that submits a safeguards petition. In the EC,
Member States request the initiation of a case. It is not possible for industries to complain
directly to the Commission.



The President can exclude imports from NAFTA countries (Canada & Mexico).




Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                                                                         Annex 6, Page 31


    APPENDIX 1 - TIMELINE OF PARALLEL EC AND US AD INVESTIGATION INVOLVING TCCA/CHLORINATED
    ISOCYANURATES




                                                   11 months


         6 months (can be as short as 4.5 months)



US investigation                                   US provisional                                   US definitive
    initiated                                      duties adopted                                   duties adopted
 10 June 2004                                    16 December 2004                                   10 May 2004



                   10 July 2004
                  EC investigation                                                        7 April 2005                7 October 2005
                      initiated                                                       EC provisional duties            EC definitive
                                                                                            adopted                  decision expected

                                                     9 months



                                                                              15 months




    Evaluation of EC TDI - Annex 6; EC/US comparison (Final Report December 2005)
                                                                                                                                    Annex 7, Page 1


ANNEX 7 - EC & US STATISTICS ON TRADE DEFENCE INSTRUMENTS

1.      ANTI-DUMPING........................................................................................................................................ 3
     1.1        EC & US INITIATIONS .......................................................................................................................... 3
     1.2        EC & US PROVISIONAL MEASURES ..................................................................................................... 4
     1.3        EC & US DEFINITIVE MEASURES ......................................................................................................... 5
     1.4        EC AD TERMINATIONS 1980-2004 ...................................................................................................... 6
     1.5        US ITC INJURY DETERMINATIONS 1980-2003 ..................................................................................... 7
     1.6        EC & US COUNTRIES TARGETED BY AD ............................................................................................. 8
        (a)     EC Top 10 Countries in AD Investigations 1995-2004 ....................................................................... 8
        (b)     US Top 10 Countries in AD Investigations 1995-2004 ....................................................................... 9
     1.7        EC AD EXPIRY REVIEWS 1996-2004 ................................................................................................. 10
        (a)     AD Expiry Reviews Initiated.............................................................................................................. 10
        (b)     Expiry Reviews Outcome: Confirmation of measures ....................................................................... 10
        (c)     Expiry Reviews Outcome: Termination of measures ......................................................................... 11
     1.8        EC AD INTERIM REVIEWS 1996-2004................................................................................................ 12
        (a)     Interim Reviews Initiated................................................................................................................... 12
        (b)     Interim Reviews Outcome: Confirmation of measures ...................................................................... 12
        (c)     Interim Reviews Outcome: Termination of measures........................................................................ 13
     1.9        US AD & CVD EXPIRY REVIEWS (SUNSET REVIEWS) 1998-2004..................................................... 14
        (a)     Expiry Reviews Outcome: Confirmation of measures ....................................................................... 14
        (b)     Expiry Reviews Outcome: Termination (Revocations) of measures .................................................. 14
     1.10       EC AD MEASURES EXPIRED 1996-2004 ............................................................................................ 15
     1.11       EC ANTI-DUMPING REFUNDS ............................................................................................................. 16
        (a)     Refunds Applications Lodged ............................................................................................................ 16
        (b)     Refunds Decisions Adopted ............................................................................................................... 16
     1.12       US ANTI-DUMPING ADMINISTRATIVE REVIEWS ............................................................................... 16
     1.13       EC RANGE OF DUTIES IN AD CASES 2000-2004 ................................................................................. 17
     1.14       EC DUMPING MARGINS IN AD CASES 2000-2004.............................................................................. 18
     1.15       USA RANGE OF DUTIES IN AD CASES 2000-2004 .............................................................................. 19
2.      COUNTERVAILING DUTIES ............................................................................................................... 20
     2.1        EC & US INITIATIONS ........................................................................................................................ 20
     2.2        EC & US PROVISIONAL ANTI-SUBSIDY MEASURES ............................................................................ 21
     2.3        EC & US DEFINITIVE ANTI-SUBSIDY MEASURES ............................................................................... 22
     2.4        EC CVD TERMINATIONS 1980-2004.................................................................................................. 23
     2.5        US ITC INJURY DETERMINATIONS 1980-2003 ................................................................................... 24
     2.6        EC COUNTRIES TARGETED BY CVD .................................................................................................. 25
     2.7        EC CVD EXPIRY REVIEWS 1996-2004 .............................................................................................. 26
        (a)     CVD Expiry Reviews Initiated........................................................................................................... 26
        (b)     Expiry Reviews Outcome: Confirmation of measures ....................................................................... 26
        (c)     Expiry Reviews Outcome: Termination of measures ......................................................................... 26
     2.8        EC CVD INTERIM REVIEWS 1996-2004 ............................................................................................. 27
        (a)     Interim Reviews Initiated................................................................................................................... 27
        (b)     Interim Reviews Outcome: Confirmation of measures ...................................................................... 27
        (c)     Interim Reviews Outcome: Termination of measures........................................................................ 27
     2.9        CVD MEASURES EXPIRED 1996-2004 ............................................................................................... 28
     2.10       US COUNTERVAILING DUTY ADMINISTRATIVE REVIEWS .................................................................. 29
     2.11       EC RANGE OF DUTIES IN CVD CASES 2000-2004............................................................................... 30
     2.12       EC SUBSIDY MARGINS IN CVD CASES 2000-2004 ............................................................................ 31
     2.13       USA RANGE OF DUTIES IN CVD CASES 2000-2004............................................................................ 32
3.      SAFEGUARDS.......................................................................................................................................... 33
     3.1        EC& US INITIATIONS ......................................................................................................................... 33
     3.2        EC & US PROVISIONAL MEASURES ................................................................................................... 34
     3.3        EC & DEFINITIVE MEASURES............................................................................................................. 35
4.      EC COURT CASES: ECJ AND CFI 1970-2005 .................................................................................... 36
     4.1        CASES BY TYPE OF TRADE DEFENCE INSTRUMENT .............................................................................. 36



Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                                          Annex 7, Page 2

   4.2   CASES BY TYPE OF PROCEEDING ......................................................................................................... 36
   4.3   CASES BY IDENTIFY OF APPLICANT ..................................................................................................... 37
   4.4   CASES BY ACT IN DISPUTE ................................................................................................................. 37
   4.5   CASES BY COURT ORDER ................................................................................................................... 38
   SOURCES .......................................................................................................................................................... 40




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                                                          Annex 7, Page 3




1.               ANTI-DUMPING

1.1              EC & US initiations

                                                                 EC and US AD Initiations 1980-2004
     90

     80

     70

     60

     50
                                                                                                                                                                                EC
     40                                                                                                                                                                         US
     30

     20

     10

      0
          1980   1981 1982   1983   1984   1985   1986   1987   1988   1989   1990   1991   1992   1993   1994   1995   1996   1997   1998   1999   2000 2001 2002 2003 2004




           1980         1981         1982          1983          1984          1985          1986          1987          1988          1989          1990
EC           25           47           55            36            48            36            24            39            39            26            43
US           16           14           35            46            38            69            83            16            42            24            35
           1991         1992         1993          1994          1995          1996          1997          1998          1999          2000          2001      2002      2003   2004
EC           20           30           21            43            33            24            41            21            66            31            27        20         7     29
US           66           84           37            51            14            21            14            36            46            46            77        34        37     21




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                     Annex 7, Page 4




1.2        EC & US PROVISIONAL MEASURES


                                   EC & US Provisional Measures 1980-2004

      80

      70

      60

      50
                                                                                                                  EC
      40
                                                                                                                  US
      30

      20

      10

      0
     87

     88

     89

     90

     91

     92

     93

     94

     95

     96

     97

     98

     99

     00

     01

     02

     03

     04
     80

     81

     82

     83

     84

     85

     86




   20

   20
   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   20

   20

   20  1980     1981      1982      1983     1984      1985     1986      1987      1988   1989   1990
EC        6       10        18        21       11         9        6        13        28     10     23
US        7       10        21        30       34        54       52        45        35     23     25
       1991     1992      1993      1994     1995      1996     1997      1998      1999   2000   2001   2002   2003   2004
EC       18       18        16        25       21        11       33        28        12     38     18     15      9      5
US       43       54        67        46       23        16       16        28        34     22     61     44     19     34




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                     Annex 7, Page 5




1.3         EC & US DEFINITIVE MEASURES

                                        EC & US Definitive Measures 1980-2004

     60


     50

     40

                                                                                                                       EC
     30
                                                                                                                       US
     20

     10


      0
      80

      81

      82

      83

      84

      85

      86

      87

      88

      89

      90

      91

      92

      93

      94

      95

      96

      97

      98

      99

      00

     01

     02

     03

     04
   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   19

   20

   20

   20

   20

   20
          1980   1981     1982      1983     1984      1985     1986      1987      1988   1989   1990
EC           7     10        7        19        4         8        4         9        10     18     18
US           5      4        5        13       20        12       26        53        12     24     14
          1991   1992     1993      1994     1995      1996     1997      1998      1999   2000   2001   2002   2003    2004
EC          19     16       19        19       13        23       23        26        14     40     12     25      3       9
US          19     16       42        16       23         9       11         9        19     21     32     26     16       8




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                                                                Annex 7, Page 6

1.4        EC AD TERMINATIONS 1980-2004


                                               EC Terminations in AD Cases 1980-2004

   30


   25

   20

   15

   10

      5


      0
          1980
                 1981
                        1982
                                1983
                                       1984
                                              1985
                                                     1986
                                                            1987
                                                                   1988
                                                                          1989
                                                                                 1990
                                                                                        1991
                                                                                                1992
                                                                                                       1993
                                                                                                              1994
                                                                                                                     1995
                                                                                                                             1996
                                                                                                                                    1997
                                                                                                                                           1998
                                                                                                                                                  1999
                                                                                                                                                         2000
                                                                                                                                                                 2001
                                                                                                                                                                        2002
                                                                                                                                                                               2003
                                                                                                                                                                                      2004
                                                                                               Year



 1980        1981              1982           1983          1984          1985           1986             1987              1988           1989          1990           1991           1992
   12          14                10             10            10            19             18                4                 8              5            17             11             12
 1993        1994              1995           1996          1997          1998           1999             2000              2001           2002          2003           2004
    8           8                 8             25            13            15             18               27                12              2            21              2




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                                                                                     Annex 7, Page 7




1.5               US ITC INJURY DETERMINATIONS 1980-2003


                                                             AD Case Summary 1980-2003
      50
      45
      40
      35
      30                                                                                                                                                                                 Affirmative
      25                                                                                                                                                                                 Negative
      20                                                                                                                                                                                 Terminated
      15
      10
       5
       0
           1980
                   1981
                          1982
                                 1983
                                        1984
                                               1985
                                                      1986
                                                             1987
                                                                    1988
                                                                           1989
                                                                                  1990
                                                                                         1991
                                                                                                1992
                                                                                                       1993
                                                                                                              1994
                                                                                                                     1995
                                                                                                                            1996
                                                                                                                                   1997
                                                                                                                                          1998
                                                                                                                                                 1999
                                                                                                                                                        2000
                                                                                                                                                               2001
                                                                                                                                                                       2002
                                                                                                                                                                              2003
                          Affirmative                  Negative                   Terminated                                        Affirmative                       Negative           Terminated
      1980                          9                        15                     10                               1991                    19                             40                    6
      1981                          4                         5                      6                               1992                    38                             47                    4
      1982                         12                        25                     28                               1993                    11                              9                   16
      1983                         12                        14                      8                               1994                    29                             26                    4
      1984                         16                        13                     29                               1995                     9                              6                    3
      1985                         26                        20                     36                               1996                     9                              2                    2
      1986                         37                        14                     12                               1997                    14                              7                    2
      1987                         17                        15                      4                               1998                    22                             11                    0
      1988                         21                        14                      3                               1999                    20                             24                    6
      1989                         17                         9                      3                               2000                    18                             15                    2
      1990                         15                         4                      2                               2001                    40                             43                    9
                                                                                                                     2002                    12                             21                    2
                                                                                                                     2003                    14                             11                   10




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                    Annex 7, Page 8




1.6       EC & US COUNTRIES TARGETED BY AD

(a)       EC Top 10 Countries in AD Investigations 1995-2004


                       EC Top 10 Countries Targeted in AD cases 1995-2004



                                                                                                     China
                                          6%
                       6%                                                                            India
                                                                                        24%
          7%                                                                                         Thailand

   8%                                                                                                Russia
                                                                                                     South Korea
                                                                                                     Indonesia
                                                                                                     Malaysia
                                                                                                     Ukraine
      8%                                                                                      12%
                                                                                                     Chinese Taipei
                    9%                                                       11%                     Poland
                                             9%




EC AD Targets 1995-2004

 Country                No. of AD measures
 China                                  32
 India                                  15
 Thailand                               14
 Russia                                 12
 South Korea                            11
 Indonesia                              10
 Malaysia                               10
 Ukraine                                 9
 Chinese Taipei                          8
 Poland                                  8


Note: Targets are counted by the number of anti-dumping measures imposed rather than by
the number of cases initiated.




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                               Annex 7, Page 9




(b)       US Top 10 Countries in AD Investigations 1995-2004

                              US Top 10 Countries Targeted in AD cases 1995-2004



                                                                                                     China
                                     4%          4%                                                  EC
                             4%
                                                                                        27%
                      5%                                                                             Japan
              5%
                                                                                                     South Korea
                                                                                                     Chinese Taipei
                                                                                                     India
            5%                                                                                       Indonesia
                 7%                                                                                  South Africa
                                                                                         19%
                            8%                                                                       Mexico
                                                   12%
                                                                                                     Russia

                                                                                                     Thailand




Top 10 countries cited in AD cases 1995-2004

 Country                   No. of AD measures
 China                                     44
 EC                                        31
 Japan                                     20
 South Korea                               13
 Chinese Taipei                            12
 India                                      9
 Indonesia                                  8
 South Africa                               8
 Mexico                                     7
 Russia                                     7
 Thailand                                   7


Note: Targets are counted by the number of anti-dumping measures imposed rather than by
the number of cases initiated.




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                Annex 7, Page 10




1.7         EC AD EXPIRY REVIEWS 1996-2004

(a)         AD Expiry Reviews Initiated


                                   EC Expiry Reviews Initiated 1996-2004

   18

   16
   14

   12
   10
      8

      6

      4
      2

      0
             1996        1997          1998         1999         2000         2001      2002    2003    2004



          1996      1997          1998          1999           2000          2001       2002    2003    2004
             2         4            16            13              9            12         13       4       5


(b)         Expiry Reviews Outcome: Confirmation of measures

                         AD Expiry Reviews: Confirmation of measures 1996-2004

   14

   12

   10

      8

      6

      4

      2

      0
             1996        1997          1998         1999          2000          2001     2002    2003    2004
                                                                   Year



          1996      1997          1998          1999           2000          2001       2002    2003    2004
             2         2             6             2             11             7         12       4       5




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                Annex 7, Page 11

(c)       Expiry Reviews Outcome: Termination of measures

                       AD Expiry Reviews: Termination of measures 1996-2004

   8
   7
   6
   5
   4
   3
   2
   1
   0
          1996          1997         1998          1999         2000          2001      2002   2003    2004
                                                                Year



       1996         1997          1998          1999           2000          2001       2002   2003     2004
          0            3             7             3              4             6          6      5        4




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                  Annex 7, Page 12

1.8       EC AD Interim Reviews 1996-2004

(a)       Interim Reviews Initiated


                                AD Interim Reviews Initiated 1996-2004

   40
   35
   30
   25
   20
   15
   10
      5
      0
            1996         1997         1998         1999         2000         2001       2002    2003    2004
                                                                Year



      1996          1997          1998          1999           2000          2001       2002     2003     2004
        20             7            16            15             20            14         35        8       26


(b)       Interim Reviews Outcome: Confirmation of measures


                     AD Interim Reviews: Confirmation of measures 1996-2004

   25

   20

   15

   10

      5

      0
            1996         1997         1998          1999         2000         2001       2002    2003    2004
                                                                 Year



      1996          1997          1998          1999           2000          2001       2002     2003     2004
         3             6            13            18             14             6          9       21       16




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                               Annex 7, Page 13

(c)         Interim Reviews Outcome: Termination of measures




                       AD Interim Reviews: Termination of measures 1996-2004

   12

   10

      8

      6

      4

      2

      0
             1996        1997         1998          1999         2000         2001      2002   2003   2004
                                                                 Year



          1996      1997          1998          1999           2000          2001       2002   2003    2004
             1         8            11             0              6             1         10      8       2




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                      Annex 7, Page 14




1.9                    US AD & CVD EXPIRY REVIEWS (SUNSET REVIEWS) 1998-2004

(a)        Expiry Reviews Outcome: Confirmation of measures

                AD & CVD Expiry Reviews: Confirmation of measures 1999-2004

     140

     120
     100

      80

      60

      40

      20

       0
                1999                2000                2001                2002          2003             2004



1999               2000                2001              2002                2003         2004

34                 124                 23                2                   5            18




(b)        Expiry Reviews Outcome: Termination (Revocations) of measures


               AD & CVD Expiry Reviews: Termination of measures 1998-2004

     160
     140
     120
     100
      80
      60
      40
      20
       0
               1998             1999             2000             2001             2002        2003         2004



1998               1999                2000              2001               2002          2003             2004

4                  1                   150               10                  9            0                11




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                Annex 7, Page 15




1.10      EC AD MEASURES EXPIRED 1996-2004




                                         AD Measures Expired 1996-2004

   20


   15


   10


    5


    0
            1996          1997         1998          1999         2000          2001     2002    2003    2004
                                                                  Year




       1996         1997          1998          1999           2000          2001       2002    2003    2004
         19           18             5             7              4             8         14      18      12




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                      Annex 7, Page 16




1.11                EC ANTI-DUMPING REFUNDS

(a)         Refunds Applications Lodged

       1998         1999          2000          2001           2002          2003        2004
          9            2             2             7            N/A           N/A         N/A


(b)         Refunds Decisions Adopted

                                   1998          1999           2000          2001
 Partial Refund                       5             8              3             2
 Full Refund                          1             1              1             0
 Inadmissible                         2             0              0             0
 Withdrawn                            8             3              0             0
 No refund                            0            11              2             1
 Total                               16            23              6             3


Note: The refund procedure appears to have gradually become irrelevant as a tool t obtain
refund of duties paid in excess of what is necessary to offset the actual dumping margin.
Between 1985-1995, only 53 refund decisions were published, of which 9 granted a full
refund, 26 granted a partial refund and 15 were rejected as inadmissible. Between 1996-2003
only 5 refund decisions were published of which 3 granted a partial refund.

1.12        US ANTI-DUMPING ADMINISTRATIVE REVIEWS


                   US AD Administrative Reviews Completed 1980-
                                       2003

      140
      120
      100
       80
       60
       40
       20
        0
     97
     98
     99
     00
     01
     02
     03
     93
     94
     95
     96
     90
     91
     92
     87
     88
     89
     81
     82
     83
     84
     85
     86
     80




   19
   19
   20
   20
   20
   20
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19
   19




 1980       1981    1982      1983      1984     1985      1986      1987     1988      1989   1990
    4         48      77        65        71       30        33        63       46        41     58
 1991       1992    1993      1994      1995     1996      1997      1998     1999      2000   2001   2002   2003
   85         81      69        49        96      126       104       111       92        86     74     81     65




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                    Annex 7, Page 17




                  1.13      EC RANGE OF DUTIES IN AD CASES 2000-2004



     EC Duty Range-Lower Level      EC Duty Range-Higher Level       Product                                                              Date


 1                           8.4                             27.7    Polyester staple fibres (PSF)                                         14-Jul-00
 2                           5.7                             22.3    Hot-rolled flat products of non-alloy steel                          10-Aug-00
 3                           6.3                             49.4    Malleable cast iron tube or pipe fittings                            18-Aug-00
 4                          18.9                             18.9    Black colorformers                                                   13-Oct-00
 5                           7.6                             34.2    Polyethylene terephthalate (PET)                                     30-Nov-00
 6                           4.8                             35.4    Polyester staple fibres                                              28-Dec-00
 7                          22.3                             43.4    Ammonium nitrate                                                     25-Jan-01
 8                          43.6                             43.6    Coke of coal in pieces with a diameter of more than 80 mm            15-Dec-00
 9                           5.3                               20    Styrene-butadiene-styrene thermoplastic rubber                       22-Sep-00
10                          19.7                             20.5    Cathode-ray colour television picture tubes                          20-Oct-00
11                           5.8                             45.7    Solutions of urea and ammonium nitrate                               22-Sep-00
12                           1.5                             37.8    Hot rolled coils (Flat rolled products of iron or non-alloy steel)   05-Feb-00
13                            23                             38.5    Seamless pipes and tubes of non-alloy steel                          17-Feb-00
14                           4.7                             30.7    Electronic weighing scales (REWS)                                    30-Nov-00
15                          17.7                             38.5    Recordable compact disks                                             18-Jun-02
16                           6.9                               28    Zinc Oxides                                                          05-Mar-02
17                          22.5                             22.5    Ferro Molybdenum                                                     06-Feb-02
18                           5.7                             24.2    Urea                                                                 19-Jan-02
19                           7.5                             62.6    Polyethylene terephthalate film                                      23-Aug-01
20                           8.4                             66.1    Compact fluorescent lamps                                             19-Jul-01
21                          17.8                             50.7    Iron or steel ropes and cables                                       04-Aug-01
22                          11.3                             11.3    Internal gear hubs for bicycles                                      26-Oct-01
23                          14.9                               15    Aluminium foil                                                       17-May-01
24                             5                             52.6    Welded Tubes and Pipes of iron or non-alloy steel                    27-Sep-02
25                            15                               75    Tube and Pipe Fittings if iron or steel                              24-Aug-02
26                          32.3                             32.3    Ring Binder Mechanisms                                               08-Jun-02
27                          18.3                               21    Sulphanilic acid                                                      25-Jul-02
28                           3.7                               7.9   Polyester textured filament yarn (PTY)                                25-Jul-02
29                           8.9                             32.1    Furfuryl alcohol                                                     31-Oct-03
30                          10.8                             40.7    Paracresol                                                           20-Sep-03
31                          22.7                             23.6    Silicon                                                              24-Dec-04
32                           6.9                             18.1    Sodium Cyclamate                                                     11-Mar-04
33                            30                             54.4    Large rainbow trout                                                  11-Mar-04
34                          13.1                             13.1    Cotton-type bed linen                                                04-Mar-04
35                           6.5                             66.7    Okoume' plywood                                                      12-Nov-04
36                           7.8                             22.9    Polyethylene terephthalate (PET)                                     19-Aug-04




        Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                              Annex 7, Page 18




                 1.14      EC DUMPING MARGINS IN AD CASES 2000-2004



     Low dumping margin       High dumping margin          Product                                                              Date
 1                  8.4                      20.8          Polyester staple fibres (PSF)                                          14-Jul-00
 2                 12.1                      52.6          Hot-rolled flat products of non-alloy steel                          10-Aug-00
 3                  6.3                      65.7          Malleable cast iron tube or pipe fittings                            18-Aug-00
 4                 49.8                      49.8          Black colorformers                                                    13-Oct-00
 5                  1.4                      73.7          Polyethylene terephthalate (PET)                                     30-Nov-00
 6                  4.8                      35.4          Polyester staple fibres                                              28-Dec-00
 7                 22.3                      41.6          Ammonium nitrate                                                      25-Jan-01
 8                   60                        60          Coke of coal in pieces with a diameter of more than 80 mm            15-Dec-00
 9                  5.3                        20          Styrene-butadiene-styrene thermoplastic rubber                       22-Sep-00
10                  0.7                      20.5          Cathode-ray colour television picture tubes                           20-Oct-00
11                  5.8                        55          Solutions of urea and ammonium nitrate                               22-Sep-00
12                 27.1                      56.3          Hot rolled coils (Flat rolled products of iron or non-alloy steel)   05-Feb-00
13                 40.8                     123.7          Seamless pipes and tubes of non-alloy steel                          17-Feb-00
14                  4.7                      12.8          Electronic weighing scales (REWS)                                    30-Nov-00
15                 17.7                      38.5          Recordable compact disks                                              18-Jun-02
16                  6.9                      69.8          Zinc Oxides                                                          05-Mar-02
17                 38.5                      38.5          Ferro Molybdenum                                                     06-Feb-02
18                   10                      90.3          Urea                                                                  19-Jan-02
19                  7.5                      65.3          Polyethylene terephthalate film                                      23-Aug-01
20                  8.4                      66.1          Compact fluorescent lamps                                              19-Jul-01
21                 17.8                      55.2          Iron or steel ropes and cables                                       04-Aug-01
22                 36.6                      36.6          Internal gear hubs for bicycles                                       26-Oct-01
23                 14.9                      26.8          Aluminium foil                                                       17-May-01
24                    5                      65.3          Welded Tubes and Pipes of iron or non-alloy steel                    27-Sep-02
25                  7.7                      83.9          Tube and Pipe Fittings if iron or steel                              24-Aug-02
26                  144                       144          Ring Binder Mechanisms                                                08-Jun-02
27                   21                      24.6          Sulphanilic acid                                                       25-Jul-02
28                  6.1                        17          Polyester textured filament yarn (PTY)                                 25-Jul-02
29                   78                       112          Furfuryl alcohol                                                      31-Oct-03
30                 10.8                      40.7          Paracresol                                                           20-Sep-03
31                 23.6                      24.8          Silicon                                                              24-Dec-04
32                  6.9                      18.1          Sodium Cyclamate                                                     11-Mar-04
33                 24.8                      54.5          Large rainbow trout                                                  11-Mar-04
34                 13.1                      13.1          Cotton-type bed linen                                                04-Mar-04
36                  6.5                      66.7          Okoume' plywood                                                      12-Nov-04
37                  2.6                      22.9          Polyethylene terephthalate (PET)                                     19-Aug-04




       Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                 Annex 7, Page 19




                  1.15      USA RANGE OF DUTIES IN AD CASES 2000-2004



     US Duty Range-Lower Level      US Duty Range-Higher Level       Product                                                          Date
 1                          7.51                            33.81    Stainless Steel Butt-Weld Pipe Fittings                        23-Feb-01
 2                         24.32                           114.51    Steel Concrete Reinforcing Bars                                18-May-01
 3                          2.07                           232.86    Stainless Steel Angle                                          07-Sep-01
 4                        156.29                           156.29    Foundry Coke Products                                          12-Sep-01
 5                         48.55                           214.89    Honey                                                          17-Sep-01
 6                         24.67                           305.56    Solid Agricultural Grade Ammonium Nitrate                      19-Nov-01
 7                          2.38                           243.46    Pure Magnesium                                                 29-Nov-01
 8                         27.04                            55.15    Certain Hot-Rolled Carbon Steel Flat Products                  10-Dec-01
 9                          1.67                           164.75    Low Enriched Uranium                                           08-Jan-02
10                         19.95                            19.95    Stainless Steel Bar                                            13-Feb-02
11                          30.8                            49.86    Welded Large Diameter Line Pipes                               27-Feb-02
12                            2.5                          125.77    Certain Folding Gift Boxes                                     07-Mar-02
13                          3.71                            124.5    Automotive Replacement Glass Windshields                       04-Apr-02
14                          5.96                            12.44    Certain Softwood Lumber Products                               22-May-02
15                         15.32                           247.88    Silicomanganese                                                23-May-02
16                         13.72                            70.71    Folding Metal Tables and Folding Metal Chairs                  27-Jun-02
17                              2                           24.14    Polyethylene Terephthalate Film, Sheet, and Strip (PET film)    01-Jul-02
18                              1                             6.33   IQF Red Raspberries                                             09-Jul-02
19                          1.18                            369.1    Carbon and Certain Alloy Steel Wire Rod                        29-Oct-02
20                         20.98                            74.14    Sulfanilic Acid                                                08-Nov-02
21                         12.97                              116    Ferrovanadium                                                  28-Jan-03
22                         56.11                            79.42    Non-Malleable Cast Iron Pipe Fittings                          26-Mar-03
23                          6.34                              75.5   Silicon Metal                                                  07-Apr-03
24                            6.6                           15.61    Lawn and Garden Steel Fence Posts                              12-Jun-03
25                        249.89                           329.94    Certain Frozen Fish Fillets                                     09-Jul-03
26                         36.84                            63.88    Saccharin                                                      12-Aug-03
27                          6.91                           144.16    Polyvinyl Alcohol                                              01-Oct-03
28                         34.44                              81.3   Barium Carbonate                                               01-Oct-03
29                          8.86                              8.86   Hard Red Spring Wheat                                          23-Oct-03
30                        135.18                           135.18    Certain Malleable Iron Pipe Fittings                           19-Nov-03
31                          7.35                           111.36    Refined Brown Aluminum Oxide                                   12-Dec-03
32                         105.8                            105.8    High and Ultra-High Voltage Ceramic Station Post Insulators    30-Dec-03
33                         12.91                           118.75    Prestressed Concrete Steel Wire Strand                         04-Feb-04
34                          5.22                            78.45    Certain Color Television Receivers                             03-Jun-04
35                          9.47                           157.68    Polyethylene Retail Carrier Bags                               06-Aug-04
36                        136.86                           136.86    Tetrahydrofurfuryl Alcohol                                     06-Aug-04
37                          2.26                           122.88    Floor-Standing, Metal-Top Ironing Tables and Certain Parts     09-Aug-04
38                         26.49                            383.6    Hand Trucks and Certain Parts                                  02-Dec-04
39                          5.51                           217.94    Carbazole Violet Pigment 23                                    29-Dec-04




        Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                                                                Annex 7, Page 20




2.               COUNTERVAILING DUTIES

2.1              EC & US INITIATIONS


                                                      EC & US CVD Initiations 1980-2004
     70

     60

     50

     40
                                                                                                                                                                                         EC
     30
                                                                                                                                                                                         US
     20

     10

      0
     0

            1

                   2

                          3

                                 4

                                        5

                                               6

                                                      7

                                                             8

                                                                    9

                                                                           0

                                                                                  1

                                                                                         2

                                                                                                3

                                                                                                       4

                                                                                                              5

                                                                                                                     6

                                                                                                                            7

                                                                                                                                   8

                                                                                                                                          9

                                                                                                                                                 0

                                                                                                                                                        1

                                                                                                                                                               2

                                                                                                                                                                      3

                                                                                                                                                                             4
    8

             8

                    8

                           8

                                  8

                                         8

                                                8

                                                       8

                                                              8

                                                                     8

                                                                            9

                                                                                   9

                                                                                          9

                                                                                                 9

                                                                                                        9

                                                                                                               9

                                                                                                                      9

                                                                                                                             9

                                                                                                                                    9

                                                                                                                                           9

                                                                                                                                                  0

                                                                                                                                                         0

                                                                                                                                                                0

                                                                                                                                                                       0

                                                                                                                                                                              0
 19

          19

                 19

                        19

                               19

                                      19

                                             19

                                                    19

                                                           19

                                                                  19

                                                                         19

                                                                                19

                                                                                       19

                                                                                              19

                                                                                                     19

                                                                                                            19

                                                                                                                   19

                                                                                                                          19

                                                                                                                                 19

                                                                                                                                        19

                                                                                                                                               20

                                                                                                                                                      20

                                                                                                                                                             20

                                                                                                                                                                    20

                                                                                                                                                                           20
            1980          1981          1982         1983          1984          1985          1986         1987          1988          1989          1990
EC             0             1             3            2             1             0             0            0             1             2             0
US             9            11            60           19            37            37            28            8            17             7             7
            1991          1992          1993         1994          1995          1996          1997         1998          1999          2000          2001          2002          2003   2004
EC             0             0             0            0             0             1             4            8            20             0             6             3             1      0
US            11            22             5            7             2             1             6           12            11             7            18             4             5      3




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                                                                       Annex 7, Page 21




2.2              EC & US PROVISIONAL ANTI-SUBSIDY MEASURES

                                                           EC & US Provisional Measures 1980-2004

   50
   45
   40
   35
   30
                                                                                                                                                                                             EC
   25
   20                                                                                                                                                                                        US
   15
   10
      5
      0
          1980
                 1981
                        1982
                               1983
                                      1984
                                             1985
                                                    1986
                                                            1987
                                                                   1988
                                                                           1989
                                                                                  1990
                                                                                         1991
                                                                                                1992
                                                                                                       1993
                                                                                                              1994
                                                                                                                     1995
                                                                                                                            1996
                                                                                                                                   1997
                                                                                                                                          1998
                                                                                                                                                 1999
                                                                                                                                                        2000
                                                                                                                                                               2001
                                                                                                                                                                      2002
                                                                                                                                                                             2003
                                                                                                                                                                                     2004
           1980          1981            1982              1983           1984           1985          1986          1987           1988           1989           1990
EC            1             0               0                 1              0              0             0             0              0              0              0
US            7             7              45                17             36             32            28            10             18              6              4
           1991          1992            1993              1994           1995           1996          1997          1998           1999           2000           2001              2002    2003   2004
EC            1             0               0                 0              0              0             0             2              5             10              0                 2       1      1
US            9            26               1                 7              3              0             3             7              9              0             15                 6       4      2




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                    Annex 7, Page 22




2.3         EC & US DEFINITIVE ANTI-SUBSIDY MEASURES

                                        EC & US Definitive Measures 1980-2004
   20
   18
   16
   14
   12
   10                                                                                                             EC
      8                                                                                                           US
      6
      4
      2
      0
     80

     81

     82

     83

     84

     85

     86

     87

     88

     89

     90

     91

    92

    93

    94

    95

     96

     97

     98

     99

     00

     01

     02

    03

    04
  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19




  20
  19

  19

  19

  19

  19

  19



  20

  20

  20

  20
          1980   1981     1982      1983     1984      1985     1986      1987      1988   1989   1990
EC           1      0        0         1        1         0        0         0         0      0      0
US           6      3       11        15       12        18       13        14         7      6      2
          1991   1992     1993      1994     1995      1996     1997      1998      1999   2000   2001   2002   2003   2004
EC           0      0        0         0        0         0        1         2         7     11      0      3      2      2
US           2      4       16         1        2         2        0         1         6      6      6     10      2      3




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                  Annex 7, Page 23

2.4       EC CVD TERMINATIONS 1980-2004



1980       1981      1982      1983       1984      1985      1986       1987      1988   1989   1990   1991   1992
   1          0         0         1          0         1         0          0         0      0      0      1      0
1993       1994      1995      1996       1997      1998      1999       2000      2001   2002   2003   2004
   0          0         0         0          0         1         4          5         0      3      0      0




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                  Annex 7, Page 24




2.5        US ITC INJURY DETERMINATIONS 1980-2003


                                 CVD Case Summary 1980-2003
      60


      50


      40

                                                                                                          Affirmative
      30                                                                                                  Negative
                                                                                                          Terminated
      20


      10


       0
    80

    81

    82

    83

    84

    85

    86

    87

    88

    89

    90

    91

    92

    93

    94

    95

    96

    97

    98

    99

    00

    01

    02

    03
  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  20

  20

  20

  20
               Affirmative       Negative        Terminated                     Affirmative   Negative   Terminated
       1980              2             55           9                  1991               1          3            5
       1981              1              0          16                  1992              18         25            1
       1982             18             53          42                  1993               1          0            0
       1983              3              2           3                  1994               2          6            3
       1984              8              8           6                  1995               2          0            0
       1985              8             12          18                  1996               0          0            1
       1986             10              7           9                  1997               1          4            1
       1987              4              1           3                  1998               7          1            3
       1988              3              3           4                  1999               6          5            6
       1989              2              0           1                  2000               1          0            0
       1990              1              2           1                  2001              15          5            4
                                                                       2002               1          1            2
                                                                       2003               2          3            1




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                  Annex 7, Page 25




2.6           EC COUNTRIES TARGETED BY CVD

EC Top 10 Countries in CVD Investigations 1980-2003


                                    EC-Countries Targeted by CVD-1995-2004                          India
                                                                                                    Chinese Taipei
                                                                                                    South Korea

                         1 2%
                          ,                                                                         Indonesia
                  1 2%
                   ,                           ,
                                              1 2%    ,
                                                     1 2%
                                        ,
                                  1 2% 1 2%
                                   ,                                                                Thailand
            ,
           1 2%
                                                                                          1 34%
                                                                                           4,       Malaysia
   2, 5%
                                                                                                    Australia
                                                                                                    Norway
                                                                                                    Peru
      3, 7%
                                                                                                    Philippines
              4, 10%
                                                                                                    Saudi Arabia
                                                                                 6, 15%
                                         6, 15%                                                     Singapore
                                                                                                    South Africa




EC CVD Targets 1995-2004 (to 30/6/04)

 Country                        No. of CVD cases
 India                                        14
 Chinese Taipei                                6
 South Korea                                   6
 Indonesia                                     4
 Thailand                                      3
 Malaysia                                      2
 Australia                                     1
 Norway                                        1
 Peru                                          1
 Philippines                                   1
 Saudi Arabia                                  1
 Singapore                                     1
 South Africa                                  1




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                               Annex 7, Page 26




2.7       EC CVD Expiry Reviews 1996-2004

(a)       CVD Expiry Reviews Initiated

 Year          No.
    1996                 1
    1997                 0
    1998                 0
    1999                 0
    2000                 0
    2001                 0
    2002                 0
    2003                 1
    2004                 1


(b)       Expiry Reviews Outcome: Confirmation of measures

There were no confirmations of CVD measures following an expiry review during this
period.



(c)       Expiry Reviews Outcome: Termination of measures



      1996          1997          1998          1999           2000          2001       2002   2003    2004
         0             0             1             0              0             0          0      0       0




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                               Annex 7, Page 27




2.8       EC CVD INTERIM REVIEWS 1996-2004

(a)       Interim Reviews Initiated

      1996          1997          1998          1999           2000          2001       2002   2003    2004
         1             0             1             0              1             1          2      1       0


(b)       Interim Reviews Outcome: Confirmation of measures

      1996          1997          1998          1999           2000          2001       2002   2003    2004
         0             0             0             1              0             0          1      0       0


(c)       Interim Reviews Outcome: Termination of measures

      1996          1997          1998          1999           2000          2001       2002   2003    2004
         0             0             1             0              1             0          0      1       0




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                               Annex 7, Page 28




2.9       CVD MEASURES EXPIRED 1996-2004



      1996          1997          1998          1999           2000          2001       2002   2003    2004
         0             0             1             0              0             0          0      3       2




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                                           Annex 7, Page 29




2.10       US COUNTERVAILING DUTY ADMINISTRATIVE REVIEWS


                     US CVD Administrative Reviews Completed 1980-
                                          2003
    60

    50

    40

    30

    20

    10

     0
     80

           81

                 82

                       83

                             84

                                   85

                                         86

                                               87

                                                     88

                                                           89

                                                                 90

                                                                       91

                                                                             92

                                                                                   93

                                                                                         94

                                                                                               95

                                                                                                     96

                                                                                                           97

                                                                                                                 98

                                                                                                                       99

                                                                                                                             00

                                                                                                                                   01

                                                                                                                                         02

                                                                                                                                               03
   19

          19

                19

                      19

                            19

                                  19

                                        19

                                              19

                                                    19

                                                          19

                                                                19

                                                                      19

                                                                            19

                                                                                  19

                                                                                        19

                                                                                              19

                                                                                                    19

                                                                                                          19

                                                                                                                19

                                                                                                                      19

                                                                                                                            20

                                                                                                                                  20

                                                                                                                                        20

                                                                                                                                              20
       1980     1981        1982        1983       1984    1985       1986       1987        1988    1989       1990
          0       28          20          39         40      29         39         22          19      25         30
       1991     1992        1993        1994       1995    1996       1997       1998        1999    2000       2001       2002    2003
         53       21           9          14         25      34         12         14          12       5         13         11       6




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                            Annex 7, Page 30




2.11      EC RANGE OF DUTIES IN CVD CASES 2000-2004



          Duty Range-Lower Level      Duty Range-Higher Level       Product                                           Date
     1                            1                           10    Polyester staple fibres (PSF)                       2000
     2                          1.8                          3.5    Stainless steel fasteners                           2000
     3                          0.2                          8.4    Polyethylene terephthalate (PET)                    2000
     4                            1                          8.2    Styrene-butadiene-styrene thermoplastic rubber      2000
     5                          4.4                         13.1    Flat rolled products of iron or non-alloy steel     2000
     6                          4.1                          9.1    Polyester textured filament yarn (PTY)              2002
     7                           10                           10    Ring Binder Mechanisms                              2002
     8                          7.1                          7.1    Sulphanilic acid                                    2002
     9                         34.8                         34.8    DRAMs                                               2003
   10                           7.3                          7.3    Recordable compact disks                            2003
   11                             7                         15.7    Graphite electrode systems                          2004
   12                           4.4                         10.4    Cotton-type bed linen                               2004




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                    Annex 7, Page 31

2.12      EC SUBSIDY MARGINS IN CVD CASES 2000-2004



         Low subsidy margin          High subsidy margin           Product                                           Date
    1                     1                           10           Polyester staple fibres (PSF)                     2000
    2                  2.31                         4.71           Stainless steel fasteners                         2000
    3                  0.37                          8.4           Polyethylene terephthalate (PET)                  2000
    4                  0.06                          1.5           Styrene-butadiene-styrene thermoplastic rubber    2000
    5                   4.9                         12.3           Flat rolled products of iron or non-alloy steel   2000
    6                     1                          9.1           Polyester textured filament yarn (PTY)            2002
    7                    10                           10           Ring Binder Mechanisms                            2002
    8                   7.1                          7.1           Sulphanilic acid                                  2002
    9                  34.8                         34.8           DRAMs                                             2003
   10                   7.3                          7.3           Recordable compact disks                          2003
   11                  22.4                         31.1           Graphite electrode systems                        2004
   12                  3.09                        10.44           Cotton-type bed linen                             2004




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                         Annex 7, Page 32




2.13      USA RANGE OF DUTIES IN CVD CASES 2000-2004



     Duty Range-Lower Level       Duty Range-Higher Level      Product                                                       Date


 1                       20.28                        29.14    Certain Hot-Rolled Carbon Steel Flat Products                 2001
 2                        2.23                        12.15    Low Enriched Uranium                                          2002
 3                            2                         13.7   Stainless Steel Bar                                           2002
 4                       18.79                        18.79    Certain Softwood Lumber Products                              2002
 5                       18.66                        24.48    Polyethylene Terephthalate Film Sheet, and Strip (PET film)   2002
 6                        2.76                          6.74   Carbon and Certain Alloy Steel Wire Rod                       2002
 7                        2.87                          2.87   Sulfanilic Acid                                               2002
 8                        5.29                          5.29   Hard Red Spring Wheat                                         2003
 9                       44.29                        44.29    Dynamic Random Access Memory Semiconductors                   2003
10                       62.92                        62.92    Prestressed Concrete Steel Wire Strand                        2004
11                       17.33                        33.61    Carbazole Violet Pigment 23                                   2004




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                   Annex 7, Page 33




3.        SAFEGUARDS

3.1       EC& US INITIATIONS


                    EC and USA Safeguard Initiations 1995-2004

          2
        1.8
        1.6
        1.4
        1.2
          1                                                                                                 EC
        0.8                                                                                                 US
        0.6
        0.4
        0.2
          0
               1995     1996      1997     1998      1999      2000     2001      2002   2003   2004



               EC            US
      1995               0             1
      1996               0             2
      1997               0             1
      1998               0             1
      1999               0             2
      2000               0             2
      2001               0             1
      2002               1             0
      2003               1             0
      2004               1             0




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                      Annex 7, Page 34




3.2       EC & US PROVISIONAL MEASURES




                EC and USA Provisional Safeguard Measures 1995-2004

           1
         0.9
         0.8
         0.7
         0.6
         0.5                                                                                                      EC
         0.4                                                                                                      US
         0.3
         0.2
         0.1
           0
               1995      1996      1997      1998      1999      2000      2001         2002   2003   2004



               EC            US
      1995               0             0
      1996               0             0
      1997               0             0
      1998               0             0
      1999               0             0
      2000               0             0
      2001               0             0
      2002               1             0
      2003               1             1
      2004               1             0




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                                   Annex 7, Page 35




3.3       EC & DEFINITIVE MEASURES


               EC and USA Definitive Safeguard Measures 1995-2004

          1
        0.9
        0.8
        0.7
        0.6
        0.5                                                                                                 EC
        0.4                                                                                                 US
        0.3
        0.2
        0.1
          0
               1995     1996      1997     1998      1999      2000     2001      2002   2003   2004




               EC            US
      1995               0             0
      1996               0             1
      1997               0             0
      1998               0             1
      1999               0             0
      2000               0             0
      2001               0             0
      2002               1             1
      2003               0             0
      2004               1             0




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                        Annex 7, Page 36




4.        EC Court Cases: ECJ and CFI 1970-2005

4.1       Cases by type of trade defence instrument

TRADE DEFENCE INSTRUMENT                                           NO. OF CASES (ECJ AND CFI)

ANTI-DUMPING                                                       112

ANTI-SUBSIDY                                                       4

SAFEGUARDS                                                         8

TOTAL                                                              124



4.2       Cases by type of proceeding

TYPE OF PROCEEDINGS                                                NO. OF CASES (ECJ AND CFI)

Action for annulment:                                              108

-of which Action for annulment appealed:                           11

-of which Action for interim measures:                             7

Reference for preliminary ruling:                                  10

Action for damages: 4                                              4

request for           confidential         treatment         of 2
documents: 2

TOTAL                                                              124




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                            Annex 7, Page 37




4.3       Cases by identify of applicant



TYPE OF APPLICANT                                                                       NO. OF CASES

Exporter (producer)                                                                     57

Unrelated importer                                                                      26

Related importer                                                                        19

Community industry (association of Community industry; complainants) 13

Member State                                                                            5

Users                                                                                   3

Consumer protection association                                                         3

Exporter State                                                                          2

OEM                                                                                     1

Other (customs agent)                                                                   1




4.4       Cases by Act in Dispute

ACT IN DISPUTE                                                                                 NO. OF CASES

Council Regulation imposing definitive anti-dumping duties                                     74

Commission Regulation imposing provisional anti-dumping duties                                 17

Council Decision terminating an anti-dumping proceeding                                        3

Council Regulation repealing a Council Regulation accepting undertakings                       1

Commission Decision refusing to grant the applicant an interested third party 2
status

Council Regulation repealing a Council Regulation imposing definitive anti- 1
dumping duties

Council Regulation extending definitive anti-dumping duties                                    2




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                        Annex 7, Page 38


Commission Decision on refunding anti-dumping duties

Commission Decision imposing definitive anti-dumping duties (ECSC)                         1

Commission Decision terminating an anti-dumping proceeding                                 2

Commission Decision refusing an undertaking                                                2

Commission Decision refusing access to the non-confidential file                           1

Council Regulation imposing definitive anti-dumping duties following a 3
review

Commission Decision terminating a review procedure                                         1

Notice of initiation of an anti-dumping proceeding                                         3

Council Decision rejecting to adopt a proposal to impose definitive anti- 5
dumping duties

Council Regulation imposing definitive countervailing duties                               2

Commission Decision refusing to initiate an anti-subsidy proceeding                        1

Council Regulation imposing safeguard measures                                             5

Commission Regulation imposing provisional safeguard measures                              3



Note: In certain cases more than one act were in dispute.

4.5       Cases by Court Order

 COURT ORDER                                                                               NO OF CASES

 Dismissal as inadmissible                                                                 21

 Dismissal as unfounded                                                                    72

 Validity of act in dispute not affected (preliminary rulings)                             4

 Annulment of TDI-measure                                                                  18

 Other:

 grant of damages                                                                          1

 grant of interim measure                                                                  1

 Declaration of admissibility (no final judgement)                                         1




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                        Annex 7, Page 39


 grant of confidential treatment                                                           2

 no proceed to final judgement                                                             2

 interpretation of Council Regulation or Commission decision                               5


Note:: in three judgements, the courts ordered the application partly inadmissible and partly
unfounded.




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                        Annex 7, Page 40




SOURCES

European Commission

Import Administration, Department of Commerce of the United States of America

United States International Trade Commission

World Trade Organisation (WTO)




Evaluation of EC TDI; Annex 7 – Statistics on EC/US TDI (Final Report, December 2005)
                                                                                   Annex 8, Page 1


ANNEX 8 - EXTRACT FROM PROJECT TERMS OF REFERENCE

Related to a contract to carry out an evaluation of the European Community’s trade defence
practice

1. INTRODUCTION:

The objective of the European Community’s Trade Defence Instruments (TDI) is to either
remedy market distortions created from unfair trade practices by third countries, such as
dumping or subsidies, or to address the serious deterioration of the situation of European
Community producers arising from unforeseen sharp and sudden import surges (through
safeguard action). The legal basis for these instruments is provided by the relevant WTO
agreements, which have been transposed into Community legislation by Council Regulation
(EC) No 384/96 (the basic anti-dumping Regulation), Council Regulation (EC) No 2026/97
(the basic anti-subsidy Regulation) and Council Regulations (EC) No 517/94/ 519/94 and
3285/94 (the basic safeguard Regulations).

Anti-dumping measures were created to counter dumping practices, the most frequently
encountered trade-distorting practices. Dumping occurs when manufacturers from a non-EU
country sell goods in the EU below the sales price in their domestic market, or below the cost
of production.

Anti-subsidy measures were designed to combat certain types of subsidies, which are made
available to manufacturers by public authorities and which can also distort trade when they
help to reduce production costs or cut the prices of exports to the EU unfairly. Safeguard
measures may be used by WTO members to restrict imports of a product temporarily if its
domestic industry is seriously injured or threatened with injury caused by a surge in imports.

2. OBJECTIVES

The objectives of the current project, which is tendered by DG Trade, are:

a) to provide a broad description of the European Community’s trade defence practice in
terms of institutional arrangements, substantial provisions, administrative procedures and
investigation practices, while also giving an account of the United States’ practice in this area
or the purpose of providing an element of comparison;

b) to identify and evaluate differences between the European Community and the United
States, higlighting their strong and weak points;

c) to identify possible areas for improvement of the European Community’s trade defence
laws and practice, with a view to increase their efficiency (e.g. in terms of transparency,
enforceability of measures and streamlining of procedures).

3. THE PROJECT FOCUS OR CONTEXT OF THE PROJECT

The European Commission’s Directorate-Generals and Services carry out regular ex post
evaluations of their activities and policies. In the case of the European Community’s trade
defence it was considered useful to have such an evaluation carried out by an external body.

The beneficiaries of this project are: 1) European Community operators and third country
exporters involved in trade defence investigations as well as consumers; 2) the EU citizens


EC Evaluation of TDI; Annex 8 – Terms of Reference (Final Report, December 2005)
                                                                                   Annex 8, Page 2

exercising the right to scrutinise the policymaking process; 3) other EU institutions involved
in the work of the Commission; 4) management and staff of the Commission’s Trade Defence
services and other Commission services;

4. WORK TO BE CARRIED OUT / SERVICES TO BE RENDERED

The work to be carried out consists in an extensive and detailed report which addresses the
objectives set out in point 2 above.

i) The description of the European Community’s trade defence practice should be the result
of an analysis carried out both at the theoretical and empirical level. The former will assess
the Community’s legislative framework in terms of the institutional arrangements, substantial
provisions and administrative procedures set out therein. The latter will evaluate the
implementation of this framework in terms of the way the actual investigations are carried
out, including investigative practices, and the results of trade defence actions. In this respect,
the evaluation study is expected to feature a significant amount of fieldwork, compiling the
views of a number of important actors and stakeholders in trade defence matters, such as
representatives of the domestic industry and of European Community Member States’
administrations, through direct interviews and questionnaires. A similar account is expected
regarding the United States: as this is for purposes of comparison, this account can be more
concise than the one concerning the European Community’s practice;

ii) The differences between the European Community’s and the United States’s systems
should be highlighted in terms of their respective legislations (and how they have been
developed in different directions albeit within the common WTO framework), including the
decision-making process, and of the concrete results of their respective trade defence actions.
The strong and weak points of each approach should be identified;

iii) The evaluation study must provide concrete recommendations, as set out in point 2c
above, whose implementation is arguably feasible. These recommendations should be made
both regarding the legislative framework (including the decision-making process) and current
investigative practice.




EC Evaluation of TDI; Annex 8 – Terms of Reference (Final Report, December 2005)
                                                                                                Annex 9 , Page 1


ANNEX 9 - COMMENTS ON RESEARCH METHODOLOGY

1.        SOURCES OF DATA

     •    Survey (covering both views on EC TDI and comparison between EC/US – The
          objective of the survey is to gather the views of the following parties: European
          Commission, EC Member States, EC Industry Associations, EC companies involved
          in complaints, EC importers/users/consumers that have been affected by TDI,
          exporters involved in EC TDI proceedings, US TDI agencies, US industries making
          complaints, US users/importers in TDI investigations, US respondents in TDI
          investigations, and US lawyers.

     •    Technical analysis – Joint technical work of Mayer, Brown, Rowe & Maw LLP
          Brussels/London/Washington DC offices to identify and catalogue differences
          between EC and US.

     •    Analysis of other published sources - Key sources include: EC & US legislation,
          EC & US TDI decisions, EC & US official statistics on TDI decisions (including
          annual Commission reports to the Parliament (1980 to 2004), WTO Panel and
          Appellate Body Rulings, judgements of the Court of First Instance / European Court
          of Justice, European Commission website, US International Trade Commission
          website, US Import Administration/Department of Commerce website, academic
          articles on TDI in trade journals.

2.        SURVEY METHODOLOGY

For the survey, where possible, face to face interviews were conducted with participants due
to the number and complexity of potential issues to address.

Survey participants were sent a list of 'discussion issues' to provide structure to, and
stimulate, discussion. Two discussion lists were produced; one for EC business and one for
Member States (the only real difference being that the latter contained some specific issues to
be addressed from the perspective of Member States).

Interviews with other parties (e.g. European Commission, US interviewees, other EC parties)
was structured around the EC business discussion issue list.

The advantages of the discussion issues list over a formal questionnaire can be summarised as
follows:

     •    Questions in a formal questionnaire are specific in nature. Thus, they guide the
          respondent into commenting on the particular focused on in the question. If the
          'question' is left more general, different respondents may respond in different ways.
          Each discussion issue was designed to prompt the respondent to raise their particular
          comments or concerns rather than being led by a specific questions.

     •    All of the respondents have been intimately involved in TDI issues either as an
          interested party or a Member State. They can therefore be expected to have
          considerable experience and knowledge. The checklist does not need more
          explanation for such people as the issues in themselves will provoke thoughts on
          which the respondent can comment.


Evaluation of EC TDI; Annex 9 – Comments on research methodology (Final Report December 2005)
                                                                                                Annex 9 , Page 2


     •    The discussions will, as far as possible, take place face to face. Thus, to the extent
          that a particular issue in the list does not provoke comments, we asked more specific
          questions on the topic to prompt them.

     •    Even without specific questions, the list of discussion issues is six pages long (a
          questionnaire would have been longer to take account of all the issues that needed to
          be discussed). For presentation purposes, we formatted this with 2 pages to a page in
          landscape format. This gives a reasonable 3 page document which will provide the
          working discussion list for consultations with interested parties.

The results in the survey were highly successful. Typically, meetings have lasted at least
two hours and provided detailed comments on many issues.

3.        STRUCTURE OF THE DISCUSSION LIST

The discussion lists are reproduced in annex 4.

The discussion lists have three sections.

Section 1 gathers information about the interest and experience of the survey respondent.
This is useful in several ways:

     •    for summarising the composition of the sample surveyed

     •    to identify those participants that have experience of the US system that may be able
          to provide useful information in terms of the comparison between EC and US TDI.

     •    to assess the extent to which EC industry is concerned about the TDI activity of other
          countries against EC exports. The fact that the EC is consistently targeted more by
          TDI investigations than it undertakes itself seems to influence opinions on TDI by
          some interested parties. It will therefore be useful to assess the importance of this
          factor in conditioning the answers of interested parties.

Section 2 covers the detailed points on anti-dumping and anti-subsidy which have been
combined into one section. The reason for combining the two is that, apart from the dumping
and subsidy calculations, the substance and procedure for these two instruments is virtually
identical. Thus, the most effective way to cover these two instruments is to work through
them both at the same time, separating discussion as appropriate (e.g. time limits under
procedure and dumping/subsidy calculation under substance).

Section 3 covers safeguards. This section is much shorter given the relatively low level of
experience in this area.

4.        CHOOSING INTERVIEWEES

The survey is very focused and targeted on people with real experience and knowledge. The
initial list of key industry and Member State contacts was discussed with the European
Commission.

In speaking with these key contacts, we have tried to identify other suitable interviewees for
the survey. The idea is that the industry associations, for example, have been happy to



Evaluation of EC TDI; Annex 9 – Comments on research methodology (Final Report December 2005)
                                                                                                Annex 9 , Page 3

provide us with contacts in some of their members that might be willing to participate in the
survey.

For the US, interviewees were chosen by colleagues in our Washington DC Office. It was
ensured that we met senior staff of the main US agencies and other interesting contacts




Evaluation of EC TDI; Annex 9 – Comments on research methodology (Final Report December 2005)
                                                                               Annex 10


ANNEX 10 – ACRONYMS AND ABBREVIATIONS USED IN THE REPORT


AD                         Anti-Dumping

APO                        Administrative Protective Order

AS                         Anti-Subsidy

CFI                        European Court of First Instance

CEP                        Constructed export price

CIF                        Cost, insurance, freight

Commerce                   US Department of Commerce

Commission                 European Commission

CVD                        Countervailing Duties

DG                         European Commission Directorate General for

Competition                Competition

DOC                        Department of Commerce

DG Trade                   European Commission Directorate General for Trade

EC                         European Community

ECJ                        European Court of Justice

EX WORKS                   Factory gate

FOB                        Free on board

ITC                        US International Trade Commission

MET                        Market Economy Treatment

PCNs                       Product Control Numbers

SGA                        Sales and general administrative expenses

TCCA                       Trichloroisocyanuric acid

TDI                        Trade defence instruments

US                         United States

WTO                        World Trade Organisation




Evaluation of EC TDI; Annex 10 - Acronyms (Final Report December 2005)

				
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