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									Seminar on Trade Remedies and the WTO
   Chamber of Commerce of Serbia
                                         Richard King
                                        White & Case LLP
                                             Brussels




               Belgrade
       29 and 30 November 2004




                                               www.whitecase.com
  GENERAL PRESENTATION OF THE WTO
AGREEMENTS IN THE PERSPECTIVE OF THE
       ACCESSION TO THE WTO




                                       Page 2
Effects of WTO Accession on Trade Remedies



   Bound tariffs
   MFN/National Treatment required
   Imposition of Trade Measures subject to the WTO Agreements
   Enforceable dispute settlement




                                                                 Page 3
International Trade Trends: Increasing International
Use of Trade Remedy Laws


 Changing Trade Laws
      o   Three Important Trends in Trade Regulation
              The lowering of tariffs and the elimination of barriers in the context of
               multilateral trade agreements
              The growth of regional trading blocks with preferential trading rights
               that further reduce tariffs and non-tariff barriers to regional partners
              The standardization of trade rules through international codes and the
               implementation of trade laws based upon those standards




                                                                                      Page 4
International Trade Trends: Increasing International
Use of Trade Remedy Laws


 Historical Perspective
     o Prior to 1970, high tariffs and non-tariff barriers were the methods to
        regulate trade
            International trade opportunities were limited by high tariff walls
            No international standards or recognized procedural rights
            Most cases were handled diplomatically
            To protect domestic industries, countries had remedies such as
             high tariffs, licenses and quotas




                                                                                   Page 5
International Trade Trends: Increasing
International Use of Trade Remedy Laws


  o The GATT Tokyo Round Agreements in 1979: the new age in trade
     regulation
         Tariff rates were reduced, making certain industries vulnerable to
          imports
         A new agreement on countervailing duties
         Antidumping agreement expanded
         To protect domestic industries, certain developed countries, such as
          the United States, Canada, E.G., Australia, relied on unfair trade laws




                                                                                    Page 6
International Trade Trends: Increasing International
Use of Trade Remedy Laws


 o The Uruguay Round Agreements: Further significant changes in global trade
   regulation
         Further reduction of global tariffs
         Further implementation and standardization of rules – antidumping,
          safeguards, subsidies and countervailing measures, services,
          agriculture, textiles and clothing, market access, government
          procurement, import licensing, pre-shipment inspection, rules of origin,
          standards, technical barriers to trade, and intellectual property rights
         Tariff reductions led more countries to implement trade laws to protect
          domestic industries
         Enforceable dispute settlement also was implemented


                                                                                 Page 7
Number of Countries Initiating
Antidumping Investigations : 1983 - 1998


     21
     20
     19
     18
     17
     16
     15
     14
     13
     12
     11
     10
      9
      8
      7
      6
      5
      4
      3
      2
      1
      0
          1983- 1984- 1985- 1986- 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997-
          1984 1985   1986 1987   1988 1989   1990 1991   1992   1993 1994 1995 1996    1997   1998

                                                                                                      Page 8
AD Measures In effect Globally
By Year 1983 - 1998



   1000
    900
    800
    700
    600
    500
    400
    300
    200
    100
      0
          1983- 1984- 1985- 1986- 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997-
          1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1194 1995 1996 1997 1998




                                                                                                      Page 9
Presentation of the WTO Antidumping
             Agreement




                                      Page 10
International Trade Remedy Laws


 The WTO Antidumping Agreement (Agreement on Implementation of Article VI
   of the GATT 1994):
     o Established      international disciplines for the conduct of antidumping
       proceedings
     o Some countries make the provisions of the WTO Antidumping Agreement
       directly enforceable
     o Other countries implement the WTO Antidumping Agreement via
       domestic legislation




                                                                                   Page 11
International Trade Remedy Laws


  The Antidumping Law
     o   What is an Antidumping Duty?
           An import duty assessed (or minimum import value)
            designed to offset injurious dumping
           Requirements:
                Dumping
                Material injury or threat of material injury, or "material
                  retardation“
                Causation




                                                                              Page 12
Definition of Dumping (Article 2.1)



   Dumping is defined as the export of a product at a price less than its normal value
   “Normal value:” the preferred basis is
       o the comparable price,
       o in the ordinary course of trade,
       o for the like product
       o when destined for consumption in the exporting country


   Normal value is the price for domestic sales in the exporting country




                                                                                      Page 13
Definition of the term "like product" (Article 2.6)



  A "like product" is a product which is identical, i.e. alike in all respects, to the
   product imported
  If there is no identical product, the term "like product" can be interpreted to
   mean a product which, although not alike in all respects, has characteristics
   closely resembling those of the imported product




                                                                                          Page 14
 "Ordinary course of trade"




 The Agreement does not define the term "ordinary course of trade”
 Sales at below-cost prices may be considered “outside the ordinary course of
   trade” (see Article 2.2.1 )
 Some countries regard sales between related parties as outside the ordinary
   course of trade




                                                                                 Page 15
Situations in which domestic prices may be rejected as
the basis for normal value (Article 2.2)


 When
     o there are no sales of the like product
     o in the ordinary course of trade
 or when such sales do not permit a proper comparison
     o because of a particular market situation (term not defined; not often used)
     o or the low volume of sales in the domestic market of the exporting country


 the normal value is taken to be either
     o the export price to a third country or
     o constructed value


                                                                                     Page 16
Low volume of sales (footnote 2 to Article 2.2)



    Domestic sales in the exporting country are normally considered sufficient
     (or “viable”) if such sales constitute 5 per cent or more of the sales to the
     importing country.
    A lower ratio nevertheless may be acceptable.




                                                                                     Page 17
Definition of the export price to a third country
and constructed value (Article 2.2)


   The export price to a third country is:
     o the comparable price
     o of the like product
     o when exported to an appropriate third country,

   Constructed value is cost plus profit:
     o the cost of production in the country of origin, plus
     o a reasonable amount for administrative, selling and general expenses, plus
     o a reasonable amount for profits




                                                                                    Page 18
Alternatives for Normal Value under the AD Agreement




                       DOMESTIC PRICES IN
                     THE EXPORTING COUNTRY




         EXPORT PRICE TO                  CONSTRUCTED VALUE
         A THIRD COUNTRY               IN THE EXPORTING COUNTRY




                                                                  Page 19
Constructed export price (“CEP”) (Article 2.3)


             (transactions between related parties)


    Where there is no export price (e.g. because there are no domestic sales), or
    Where it appears that the export price is unreliable because of association (or a
     compensatory arrangement) between the exporter and the importer
     The export price may be constructed on the basis of the price at which the
     imported products are first resold to an independent buyer




                                                                                     Page 20
Fair comparison between normal value and export price
(Article 2.4)


   The comparison must be made at the same level of trade, normally at the ex-
    factory level, and in respect of sales made at as nearly as possible the same time
    Due allowance must be made for differences which affect price comparability,
    including differences in:

     o   Conditions and terms of sale
     o   Taxation
     o   Quantities
     o   Physical characteristics
     o   Levels of trade, and
     o   Any other differences which are demonstrated to affect price
         comparability


                                                                                    Page 21
Normal value and D Export Price must be compared
appropriately




        NORMAL                              ADJUSTED
                           Adjustments
         VALUE                            NORMAL VALUE




      EXPORT PRICE         Adjustements   ADJUSTED PRICE




                                                           Page 22
    Methods of calculating the margin of dumping (Article
    2.4.2)


    The Agreement provides for three specific methods for calculating the margin:

       o   normal value per transaction versus export price per transaction
       o   weighted average normal value versus weighted average export
       o   price
       o   weighted average normal value versus export prices per transaction

    However, the use of the third method is limited to circumstances which cannot be
     taken into account appropriately by using the first two methods.




                                                                                     Page 23
Summary and recap – What is Dumping?



 The Antidumping Law
     o Dumping = Export Price < Normal Value
          Export Price - Net price of the product sold in the export market

          Normal Value - In most cases, the net price of sales in the exporter's local
           market




                                                                                          Page 24
“Net” export price and normal value


    The Antidumping Law
      o "Net Price"

           Net of discounts and commercial rebates

           Net of movement expenses

           Net of selling expenses

           For "constructed export price," net of selling expenses in the importing
             market and value added in the importing market




                                                                                   Page 25
Sample Dumping Margin Calculation

 Dumping calculation regarding imports of a single product (« model 1»)

       Gross price € 1.50 per unit                    Gross price € 1.50 per unit
                                                  Movement expenses
   Movement expenses                              € 0.25
   € 0.50                                         Selling expenses
   Selling expenses                               € 0.25                                   Cost of production
   € 0.25                                                                                  € 0.90

                                                    =     Net price
      =    Net price                                      € 1.00
           € 0.75


                       Company A’s                              Normal Value:
                        Export Price                     Company A’s home market price

CIF / Export price = € 85
Dumping margin / Model 1 = (Net home market price – Net export price) / CIF export price
                          = (€ 1.00 – € 0.75) / € 0.85
                          = 29.4 percent                                                                  Page 26
Definition of Injury




                       Page 27
Introduction



The margin of dumping is determined for each exporter investigated (in accordance with AD
Agreement art. 6.10; AD Act art. 49)

In contrast, injury is determined by industry and by country investigated (in accordance
with AD Agreement art. 3; AD Act Section III)




                                                                                            Page 28
Meaning of the Term "Injury"
(AD Agreement art. 3 n.9; AD Act art. 19)


The term "injury" has three meanings:

         Material injury to a domestic industry ("current or present injury")

         Threat of material injury to a domestic industry ("future injury")

         Material retardation of the establishment of a domestic industry




                                                                                 Page 29
Definition of the term "domestic industry"
(AD Agreement art. 4.1; AD Act art. 24)



"Domestic industry" has two meanings:

        the domestic producers as a whole of the like products, or

        the producers whose collective output constitutes a major proportion of the
         domestic production of the like products




                                                                                       Page 30
Exclusion of Certain Domestic Producers From
the Definition of Domestic Injury



When producers are related to the exporters or importers or are themselves importers of
the product investigated, the term "domestic industry" may be interpreted as referring to
the rest of the producers.

The term "related" is defined in terms of "control."




                                                                                            Page 31
Basic Principles for the Determination of Injury



The determination of injury must be based on positive evidence and involve an objective
examination of:

         the volume of the dumped imports
         the effect of the dumped imports on prices in the domestic market for like
          products, and
         the consequent impact of these imports on domestic producers of like products.




                                                                                           Page 32
Rules for Analyzing the Volume of Imports and
Their Effect on Prices
(AD Agreement art. 3.2; AD Act art. 20(i))


Volume: a significant increase in dumped exports, either in absolute terms or relative to
production or consumption in the importing country.

Price:

            significantly lower than the price of the like product ("price undercutting") or
            have forced down the price of the like product ("price depression")/or
             prevented price increases which would otherwise have occurred ("price
             suppression").




                                                                                                Page 33
Cumulation of Injury




                       Page 34
Definition of the Term ("Cumulation")


Cumulative assessment consists in determining injury by taking all the imports investigated jointly
into account, in this case for dumping.

The cumulative assessment referred to in the AD Agreement relates to the cumulation of imports
from more than one country.

The cumulative assessment of imports from different exporters in the same country is not regulated
explicitly by the AD Agreement.

In the case of countervailing duties, the cumulative assessment of imports from more than one
country is regulated by Article 15.3 of the SCM Agreement.




                                                                                             Page 35
Rules for Cumulative Assessment
(AD Agreement art. 3.3)


Cumulative assessment is permissible provided that the following tests are satisfied:

         The margin of dumping established in relation to the imports from each
          country is more than de minimis, i.e., not less than 2 per cent, in accordance
          with the definition given in Article 5.8 of the Agreement

         The volume of imports from each country is "not negligible", i.e., not less than
          3 per cent of the total volume of imports of the like product, unless imports
          which individually account for less than 3 per cent collectively account for
          more than 7 per cent of such imports.

         A cumulative assessment is appropriate in light of the conditions of
          competition between the imported products and the like domestic product.


                                                                                        Page 36
Economic Impact




                  Page 37
Rules for Analyzing the Impact of the Imports on Domestic
Producers of the Like Product
(AD Agreement art. 3.4; AD Act art. 21)


The examination of the impact must include an evaluation of all relevant economic factors
and indices having a bearing on the state of the industry involved in the investigation.




                                                                                            Page 38
Rules for Analyzing the Impact of the Imports on Domestic
Producers of the Like Product (AD Agreement art. 3.4)

  Article 3.4 of the Agreement specifically mentions 16 variables
         o   productivity
         o   market share
         o   margin of dumping
         o   domestic prices
         o   actual and potential decline in sales
         o   inventories
         o   output
         o   employment
         o   wages
         o   negative effects on cash flow
         o   utilization of capacity
         o   profits
         o   return on investments
         o   investment
         o   ability to raise capital
         o   growth
  The Agreement notes that this list is not exhaustive and that no one or several of these
   factors is decisive.
                                                                                              Page 39
Causality




            Page 40
Causal Relationship



It must be demonstrated that the dumped imports cause injury through the effects of
dumping.

The interpretation of these words is controversial. They can be interpreted as meaning that
it must be demonstrated:

      that the dumped imports cause injury or
      that injury caused by the dumped imports originated from the fact that they
        are dumped.




                                                                                              Page 41
Causal Relationship



 The Agreement is silent on how a causal relationship can be established between the
   dumped imports and the injury (it only says that this relationship must be demonstrated).

 Nor does the Agreement deal with the methods that could be used to demonstrate the
   existence of a causal relationship.




                                                                                               Page 42
Causal relationship



 Many countries demonstrate the existence of a causal relationship simply by establishing
   a "symmetry in time" between the dumped imports and injury. Some countries have
   applied economic causality tests between the prices of the imports and domestic prices.

 Other countries apply econometric "causality" tests between the prices of the imports
   investigated and domestic prices.




                                                                                             Page 43
Other Factors




                Page 44
Examination of Other Alternative Factors Causing Injury (AD
Agreement art. 3.5; AD Act art. 21)


The causal relationship analysis should take into account any known factors other than the
dumped imports which are injuring the domestic industry.

Injuries caused by these "other factors" must not be attributed to the dumped imports.

The Agreement illustrates the concept of "other factors" with examples such as:

         the volume and value of imports not sold at dumping prices
         contraction in demand
         competition between foreign and domestic producers
         changes in patters of consumption
         developments in technology
         export performance and productivity of the domestic industry



                                                                                             Page 45
Threat of Material Injury




                            Page 46
Determination of a Threat of Injury
(AD Agreement art 3.7; AD Act art. 22)

Threat of injury is “future injury” that must be clearly foreseen or imminent.

“Future injury” derives from an expectation that the current circumstances will change creating a
situation in which dumping would cause injury.




                                                                                              Page 47
Determination of a Threat of Injury
(AD Agreement art 3.7; AD Act art. 22)


A determination of a threat of injury must be based on facts and not on “allegation, conjecture
or remote possibility.”

Antidumping measures may be levied if the national authority determines that such measures
are necessary to prevent the clearly foreseen an imminent material injury to the domestic
industry.




                                                                                            Page 48
Procedural Aspects




                     Page 49
Basis for filing applications ( Articles 5.1 and 5.4)


 Investigations normally are initiated upon a written application submitted by or on behalf
    of the domestic industry
 “By or on behalf of the domestic industry:” The application must be supported by
    domestic producers whose collective output constitutes
       o   more than 50 per cent of the production of the domestic producers expressing a
           position on the application (either support or opposition) AND
       o   at least 25 per cent of total domestic production
 “Domestic production" means the production of the like product attributable to the
    domestic industry




                                                                                          Page 50
Initiation ex officio (Article 5.6)


 In special circumstances, the authorities may initiate an investigation ex officio (without
    having received a written application)
 The authorities must have sufficient evidence of dumping, injury and a causal link




                                                                                         Page 51
Supporting evidence for initiation (Article 5.2)


   An application must include evidence of dumping, injury and a causal link
   Simple assertion unsubstantiated by relevant evidence cannot be considered sufficient to
    meet these requirements
   The information contained in the application should be such as is reasonably available to the
    applicant




                                                                                             Page 52
The application should contain:
   o the identity of the applicant
   o a description of the volume and value of the domestic production of the like product
   o A list of all known domestic producers of the like product, and their volume and value of
       production
   o   a complete description of the allegedly dumped product
   o   the names of the country or countries of origin or export in question
   o   the identity of each known exporter or foreign producer
   o   a list of known importers
   o   information on the normal value
   o   information on export prices (or constructed export prices)
   o   information on the evolution of the allegedly dumped imports
   o   information on the effect of those imports on domestic prices of the like product
   o   information on the consequent impact of the imports on the domestic industry, as demonstrated
       by relevant factors and indices having a bearing on the state of the domestic industry

                                                                                                Page 53
Authorities’ Examination of the evidence ( Article 5.3)
 The accuracy and adequacy of the evidence provided in the application must be
    examined to determine whether there is sufficient evidence to justify the initiation of
    an investigation

Rejection of an application (Article 5.8)
 The authorities must reject an application as soon as they are satisfied that there is
    not sufficient evidence of dumping or injury




                                                                                              Page 54
Avoidance of publicity before investigation (Article 5.5)
 Unless a decision has been made to initiate an investigation, any publicizing of the
    application must be avoided

Prior notification of the government of the exporting country (Article 5.5)
 Before proceeding to initiate an investigation, the authorities must notify the
    government of the exporting country concerned




                                                                                         Page 55
Public notice and explanation of determinations:
General Principles


 Public notice must be given of any initiation of an investigation (Article 12.1) and of any
    preliminary or final determination
 Public notice must also be given of the acceptance of a price undertaking, of the
    termination of such an undertaking, and of the termination of a definitive anti-dumping
    duty, as well as of the initiation and completion of reviews pursuant to Article 11
 Such notices must set forth, in sufficient detail, the conclusions reached by the
    authorities on all issues of fact and law (Article 12.2)




                                                                                                Page 56
Notification requirements


 Member countries and other interested parties known to the authorities must be notified of
    the initiation of an investigation (Article 12.1) and any subsequent determinations (Article
    12.2)




                                                                                              Page 57
Time-limit for concluding investigations (Article 5.10)


   Except in special circumstances, investigations shall be concluded within one year, and
    in no case more than 18 months, after their initiation




                                                                                          Page 58
Guarantees of "due process"
(Articles 6.2, 6.1, 6.1.2, 6.4 and 6.9)

 Throughout the investigation all interested parties shall have a full opportunity for the
    defence of their interests
 All interested parties must be given notice of the information which the authorities require
    and ample opportunity to presenting writing all evidence which they consider relevant
 Subject to the requirement to protect confidential information, evidence presented by one
    interested party must be made available promptly to other interested parties participating
    in the investigation
 Interested parties should have opportunities to see the information used by the authorities
    in the investigation and to prepare presentations on the basis of that information
 Before a final determination is made, the authorities must inform the parties of the
    essential facts which form the basis for the decision whether to apply definitive measures.
    Such disclosure should take place in sufficient time for the parties to defend their interests



                                                                                                Page 59
Verification of information supplied during the course of an
investigation (Article 6.6 and 6.7)


 The authorities must satisfy themselves as to the accuracy of the information supplied by
    the parties
 The information received may be validated by carrying out investigations ("verifications")
    in the territory of other Member countries, provided that the following conditions are
    satisfied:
      o The Agreement of the exporters involved is obtained

      o The Government of the Member country in question is notified and does not object

 The reports describing the results of the verifications must be made available to the
    parties to which they pertain
 Subject to the obligation to protect confidential information, these reports may also be
    made available to the applicants



                                                                                           Page 60
"Facts available" (Article 6.8)


 Preliminary and final determinations may be made on the basis of the facts available when
    an interested party:
      o refuses access to necessary information

      o does not provide it within a reasonable period or

      o significantly impedes the investigation




                                                                                         Page 61
Collection of anti-dumping duties:
General Principles (Article 9.2)

   Anti-dumping duties are assessed per supplier
   They must be collected
       o In the appropriate amounts; and

       o On a non-discriminatory basis -- I.e., on all imports found to be dumped and causing injury
          (except where a price undertaking has been agreed)




                                                                                                  Page 62
Treatment of exporters not included in the examination
(Article 9.4)


 When individual margins have not been determined for some exporters, the duties applied to
   such exporters shall not exceed the weighted average of the margins of dumping established
   on an individual basis
     o However, these calculations should exclude, on the one hand, any zero and de minimis margins
        and, on the other, margins established on the basis of the facts available




                                                                                               Page 63
Reviews


 Refund reviews: The amount of anti-dumping duty shall not exceed the margin of dumping;
    refund reviews must be carried out upon request
 New shipper reviews: The authorities must promptly carry out a review for exporters affected
    by antidumping duties who do not have an individual margins because they did not export
    the product during the period of investigation
 “Interim” reviews An anti-dumping duty should remain in force only as long as and to the
    extent necessary to counteract dumping which is causing injury
 “Expiry” reviews: Anti-dumping duties lapse five years after being imposed if the authorities
    do not initiate an Article 11 review within 5 years




                                                                                           Page 64
Recap of AD procedures: What must authorities do?


 1.   Review the application; decide whether to initiation an investigation
 2.   Prepare the questionnaires for
                     exporters
                     importers
                     domestic producers
 3.   Issue supplemental questionnaires if necessary
 4.   Analyse and tabulate the questionnaire responses
 5.   verification – typically, send expert officials to the interested party’s offices to veryfy
      the accuracy and completeness of the questionnaire replies.




                                                                                                    Page 65
Recap of AD procedures: What must authorities do?


 6.    Calculation of dumping margin
 7.    injury and domestic interest analysis (if applicable under domestic law)
 8.    Provisional measures, if applicable
 9.    Disclosure of essential facts
 10.   Opportunity for written and oral comments by interested parties
 11.   issue of definitive measures – in case of positive dumping and injury findings and
       positive decision of Community interest. Definitive measures may be less than
       dumping margin (“lesser duty” rule)
 12.   Assessment of duties; reviews




                                                                                            Page 66
Presentation of the WTO Agreement on
             Safeguards




                                       Page 67
Overview and Purpose of the Safeguard Law



Article XIX of GATT 1994 (the "Escape Clause") allows WTO Members to provide temporary
protection to domestic industries facing increased import competition.

This temporary protection is known as "safeguards."

The Safeguard Agreement sets forth specific procedures for implementing Article XIX.




                                                                                         Page 68
Purpose of Safeguard Measures



The purpose of safeguard measures is to prevent an emergence of injury incurred from
increased imports.

Safeguard measures afford domestic companies time to

      improve their position relative to the imports
      shift their resources to other fields




                                                                                       Page 69
Definition of Domestic Industry
(Safeguard Agreement art. 4.1(c))



Domestic industry means:

     Domestic producers of as a whole of the like or directly competitive products; or
     Domestic producers of like or directly competitive products, of which combined
       output constitutes a major proportion of the total production of the domestic
       industry.


Like product means:

     Products which are identical in all respects; or
     Products whose characteristics significantly resemble those of imported products.

                                                                                          Page 70
Increased Imports



Safeguard measures may be applied only when a product is being imported in such
increased quantities and under such conditions as to cause or threaten to cause serious
industry to the domestic industry. (Safeguard Agreement art. 2.1).

The increased quantity warranting a safeguard measure may be either an absolute increase
or an increase relative to domestic production. (Safeguard Agreement art. 2.1).




                                                                                           Page 71
Serious Injury or Threat of Serious Injury
(Safeguard Agreement art. 4.1)


Serious injury means a significant overall impairment of the position of a domestic industry.

Threat of serious injury means a serious injury that is clearly imminent.

Determinations of the existence of threat must be based on facts and not on conjecture or remote
possibility.




                                                                                                Page 72
Comparison of the Safeguard Injury Test and
Antidumping Injury Test


 The Safeguard Agreement injury test was intended to be greater than the injury test in the
 Antidumping Agreement.

 However, ultimate discretion was left with the administering authority. This discretion may
 lower the burden for a showing of injury.




                                                                                               Page 73
Criteria for Assessing Injury and Threat of Injury
(Safeguard Agreement arts. 2.1, 4.2(a))


 All relevant factors of an objective and quantifiable nature must be considered.

 The Agreement provides an illustrative list of the relevant factors:

       rate and amount of the increase in imports of the product concerned in absolute or
         relative terms,
       share of the domestic market taken by the increased imports, and
       changes in the level of sales, production, productivity, capacity utilization, profits
         and losses, and employment.




                                                                                                 Page 74
Causality
(Safeguard Agreement art. 4.2(b))


Safeguard measures are not permitted unless there is a finding of the existence of a causal
link between the increased imports of the product concerned and the serious injury of threat
thereof to the domestic industry.
If factors other than the increased imports are causing simultaneous injury to the domestic
industry, the injury from such other factors may not be attributed to the increased imports.




                                                                                               Page 75
Primary Safeguard Remedies
(Safeguard Agreement arts. 5.1, 6)


Two primary safeguard remedies:

     Quantitative import restrictions (e.g., import quotas), and
     Increased import duties.




                                                                    Page 76
Quantitative Restrictions
(Safeguard Agreement art. 5.1)


Quantitative import restrictions normally must be limited to restricting only the injurious
imports.

      A measure shall not reduce the quantity of imports below the level of a recent
        period which shall be the average of imports in the last three representative years.
      If there were no imports during the past three years, available statistics should be
        used.

This requirement may be ignored only when there is clear justification that a different level
(i.e., lower than the pre-import surge level) is necessary to prevent or remedy serious injury.




                                                                                                  Page 77
Import Quotas
(Safeguard Agreement art. 5.2(a))


Safeguard measures shall be applied to a product being imported irrespective of its source
(Safeguard Agreement art. 2.2).

       Safeguard measures must be applied on a MFN basis.
If achievable, an agreement with all exporting countries regarding the allocation of shares
of the import quota should be reached.

If such an agreement is not reasonable practicable or exporting countries cannot agree to a
quota allocation, the exporting countries should receive a quota share proportional to the
total value or volume of their shipments during a previous representative period.




                                                                                              Page 78
Departures from the Prescribed Methods of
Allocating Quotas (Safeguard Agreement art. 5.2(b))


If the imports from certain exporting countries have increased at a disproportionate rate in
relation to the total increase in imports, the standard methods for allocating quotas may be
disregarded.

Any departure from the prescribed quota allocation methods must comply with the
Safeguard Agreement.

     Mandatory consultations under the auspices of the Committee on Safeguards
     Demonstration that:
          o imports from certain countries increased disproportionately;

          o the reasons cited from departing from the prescribed quota allocation
             methods are justified; and
          o the conditions of the departure are equitable to all suppliers of the concerned
             product.
                                                                                               Page 79
Departures from the Prescribed Methods of
Allocating Quotas (Safeguard Agreement art. 5.2(b))


  o   No departures from the prescribed quota allocation methods in the case of threat of
      serious injury.
  o   No departures permitted from the prescribed time limits (art. 7.1).




                                                                                            Page 80
Increased Import Duties/Provisional Safeguard Measures
(Safeguard Agreement art. 6)


Provisional measures available for critical circumstances where delay would cause damage
which would be difficult to repair.

     Preliminary determination that there is clear evidence that increased imports have
        caused or are threatening to cause serious injury.
     Only in the form of tariff increases.
     Increased tariffs must be refunded if the final determination is negative.
     Duration of provisional measure not to exceed 200 days.
     Time of provisional measure counts toward the time limits.




                                                                                           Page 81
"Degressivity" Requirement
(Safeguard Agreement art. 7.4)


 If the expected duration of a safeguard measure is over one year, the measure shall be
 liberalized progressively at regular intervals during the period of application.

 If the expected duration of a safeguard measure exceeds three years, the measure must be
 reviewed not later than the mid-term of the measure.

      If appropriate, the measure should be withdrawn or the pace of liberalization
         should be increased.

 The Agreement does not prescribe the extent or schedule of a phase-out.




                                                                                            Page 82
Duration of Safeguard Measures
(Safeguard Agreement art. 7)


Safeguard measures may be imposed only for such period as may be necessary.

The initial period of a safeguard measure may not exceed four years.

A safeguard measure may be extended if

     such measure continues to be necessary to prevent or remedy serious injury; and
     there is evidence that the industry is adjusting.




                                                                                        Page 83
Duration of Safeguard Measures
(Safeguard Agreement art. 7)


Under the Agreement, the total period for a safeguard measure (including the period of any
provisional measure) imposed by non-developing country WTO Members shall not exceed
eight years. (Safeguard Agreement art. 7.3)

The Safeguard Agreement permits developing countries to impose safeguard measures for
periods up to ten years. (Safeguard Agreement art. 9.1).




                                                                                             Page 84
Limitations on the Reimposition of Safeguard Measures
(Safeguard Agreement arts. 7.5, 7.6)


After a safeguard measure is terminated, a new measure cannot be reimposed immediately.

Generally, a new safeguard measure may be imposed until a period equal to half of the time
period for which the original measure was in effect has elapsed and the period of non-
application was at least two years.

     Note that for non-developing countries this period is equal to the time period for
        which the original measure was in effect. (Safeguard Agreement art. 7.5).




                                                                                             Page 85
Limitations on the Reimposition of Safeguard Measures
(Safeguard Agreement arts. 7.5, 7.6)



If the original safeguard measure was 180 days or less, a new safeguard measure may be
imposed if:

    at leased one year has elapsed since the date of introduction of the safeguard
       measure; and
    a safeguard measure has not been applied on the same product more than twice in
       the five year period immediately preceding the date of the introduction of the
       measure.




                                                                                         Page 86
The Price of Safeguard Measures: Compensation
(Safeguard Agreement art. 8)


Unlike antidumping measures or countervailing duty measures, WTO Members imposing
safeguard measures must compensate the affected exporting countries.

The relevant WTO Members may agree on any adequate means of trade compensation to
compensate for the adverse affects of the safeguard measure.

If no agreement is achieved with 30 days of consultations, the affected country may
unilaterally suspend the application of substantially equivalent concessions or other WTO
obligations with respect to the country imposing the safeguard measure to compensate for
the adverse affects of the safeguard measure.




                                                                                       Page 87
The Price of Safeguard Measures: Compensation
(Safeguard Agreement art. 8)


There is a three year suspension of the collection of compensation or retaliation in cases
where the safeguards are based on an absolute increase in imports.

     Where the safeguards are based on a relative increase, the affected WTO Member
        may seek compensation immediately.




                                                                                        Page 88
AD vs. Safeguards – economic rationales



Safeguard measures may be applied only when a product is being imported in such increased
quantities and under such conditions as to cause or threaten to cause serious industry to the
domestic industry. Measures are intended to give the domestic industry time to restructure
and prepare for foreign competition. No proof of “unfair trade” needed.

Dumping measures are applied only when dumping and subsequent injury occur. Purpose: to
ensure “level playing field” for domestic and foreign companies.

The Safeguard Agreement injury test was intended to be greater than the injury test in the
Antidumping Agreement.




                                                                                           Page 89
AD vs. Safeguards – advantages and disadvantages


AD is targeted at problem countries, while safeguard measures stop imports from all
sources. The use of AD can be directed against certain countries, while safeguard
measures are erga omnes.

AD lasts at least five years, the level of protection is constant throughout this period.
Safeguard measures last not more than four years and must be reviewed at mid-term.

AD has a lower injury standard than safeguards

WTO Dispute Settlement Body so far has overturned all safeguards it has considered.




                                                                                            Page 90
Presentation of the WTO Agreement on Subsidies and
              Countervailing Measures




                                                     Page 91
The Countervailing Duty Law



  The WTO Agreement on Subsidies and Countervailing Measures (the "SCM
    Agreement"):
      o   Establishes international disciplines for provision of subsidies
      o   Establishes disciplines for the conduct by the importing country of
          countervailing investigations and reviews, and the imposition of countervailing
          measures




                                                                                            Page 92
The Countervailing Duty Law



   Key concepts include:
     o Definition of Subsidy

             There is a "financial contribution" by a government
             A "benefit" is thereby conferred, and
             The subsidy is "specific”




                                                                    Page 93
The Countervailing Duty Law



 What is "specific"?
     o   Export subsidies
     o   Domestic content subsidies
     o   Subsidies limited to a designated geographical region,
     o   Subsidies specific to an enterprise or industry or group of enterprises or industries,
         whether de jure (explicit limitation or non-objective criteria) or de facto (by application)




                                                                                                        Page 94
The Countervailing Duty Law



 Categories of Subsidies (Subject to WTO Dispute Settlement)
    1. PROHIBITED SUBSIDIES:
            Export subsidies; and
            Domestic content subsidies




                                                                Page 95
The Countervailing Duty Law


  2. Actionable subsidies: Specific subsidies that cause "adverse effects" to the interests
     of other members. "Adverse effects" include
             Injury to the domestic industry
             “Nullification or impairment" of WTO benefits, or
             “Serious prejudice"
             Subsidies are presumed to cause "serious prejudice" where subsidises are provided
              for debt forgiveness; or subsidies are provided to cover a firms operating losses




                                                                                              Page 96
Standards for serious prejudice



   the subsidy impedes the imports of a like product from another Member
   the subsidy impedes the exports of a like product of another Member to a third
    country market
   the subsidy results in significant price undercutting in the same market or significant
    price suppression, price depression or lost sales in the same market
   the subsidy results in an increase in the world market share of the subsidizing
    Member in the subsidized product as compared to the average share it had during the
    previous period of three years and this increase follows a consistent trend over a
    period when subsidies have been granted




                                                                                              Page 97
The Countervailing Duty Law




   Countervailing Duty Actions in the Importing Country
      o   Subsidy + Injury = Countervailable Subsidy




                                                           Page 98
The Countervailing Duty Law


 What is a Countervailable Subsidy?
   Export Subsidy
     o Country A provides a cash benefit of 10 percent of the f.o.b.
       value of any export
              There is a financial contribution by a government, only provided to exporters
     o   Country B provides an income tax exemption for export earnings
              There is a financial contribution by a government
              There is a financial benefit (if there was taxable income), only
               provided to exporters




                                                                                               Page 99
The Countervailing Duty Law


   What is a Countervailable Subsidy?
    Domestic Subsidy
     o Country A provides an income tax exemption limited to the steel industry
              There is a financial contribution by a government
              There is a financial benefit (if the company has taxable income), only provided to a
               specific industry
     o   Country B provides inputs to the steel industry at a price lower
         than the market price
              There is a financial contribution by a government and a financial benefit, only provided to
               a specific industry




                                                                                                      Page 100
The Countervailing Duty Law


 What is a Countervailable Subsidy?
   Domestic Subsidy
     o Country A provides an income tax exemption limited to the steel industry

            There is a financial contribution by a government
            There is a financial benefit (if the company has taxable income), only provided to a specific
             industry
     o Country B provides inputs to the steel industry at a price lower
       than the market price
            There is a financial contribution by a government and a financial benefit, only provided to a
             specific industry




                                                                                                     Page 101
The Countervailing Duty Law


   What is Not a Countervailable Subsidy?
     o   Country A provides a line of credit at the market rate to the steel industry
              There may be a financial contribution by a government, provided on a specific basis
              No financial benefit to the company
     o   Country B provides police and fire protection NOT provided on a discriminatory basis




                                                                                                     Page 102
The Countervailing Duty Law



 What is Not a Countervailable Subsidy?
     o   Country C provides a tax holiday to new industries in the country, depending upon
         the number of industries that receive such benefits and how the government uses its
         discretion to provide such benefits
     o   Country D reduces the corporate tax rate from 40 to 35 percent
              There may be a financial contribution by a government NOT provided on a
               discriminatory basis




                                                                                          Page 103
Legal Frameworks of the WTO and the European Union:
            Differences and Similarities




                                                  Page 104
EU Antidumping Legislation and Procedures




 The EU implemented the WTO AD, SCM and Safeguards Agreements via Regulations
 The EU Regulations generally track the WTO Agreements
 However, there are some differences between the EU Regulations and the WTO Agreements




                                                                                    Page 105
EU Basic AD Regulation (Council Regulation (EC) No 384/96
of 22 December 1995 on protection against dumped imports
from countries not members of the European Community)
                   Main differences from the WTO Antidumping Agreement:




1.   “Lesser duty rule”
        Optional under the WTO Anti-Dumping Agreement
        Mandatory under the EU AD Regulation




                                                                          Page 106
« Lesser Duty Rule »



     Dumping Margin / Company A          Injury Margin / Company A

                       € 1.00                               € 0.80
           € 0.75                              € 0.75




   Net Export Price / Net Normal Value   Net Export Price / Non injurious Community net price
   = (€ 1.00 - € 0.75) / € 0.75          = (€ 0.80 - € 0.75) / € 0.75
   = 33.33 percent                       = 6.25 percent




            Antidumping Measure for Company A: 6.25 percent.


                                                                                       Page 107
EU Basic AD Regulation (Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports from
countries not members of the European Community)
                   Main differences from the WTO Antidumping Agreement:


  Community/domestic interest

   Optional under the WTO Anti-Dumping Agreement
   Mandatory under the EU AD Regulation




                                                                          Page 108
EU Basic AD Regulation (Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports from
countries not members of the European Community)

                       Main differences from the WTO Antidumping Agreement:


 Negligible imports:

      WTO ADA: Import share test. Imports are negligible if less than 3 percent of total
       imports, unless all negligible countries exceed 7 percent

      EU: Import share test PLUS market share test.

            o The European Commission must conduct an analysis of the Community
               interest. No such requirement can be found in the WTO ADA.

            o Negligible imports: Imports from a country are negligible if they represent
               less than 1 percent of Community consumption (unless such countries
               collectively account for more than 3 percent). This is in addition to the WTO
               negligibility rule (3 percent/7 percent of total imports)

                                                                                               Page 109
EU Safeguards Legislation and Procedures




                                           Page 110
EU Safeguards in General



“Global” or general safeguards apply to imports from all WTO Members.
There are separate safeguards provisions for:
non-WTO members; and
Goods of Chinese origin (agreed to in China’s Protocol of Accession to the WTO)




                                                                                  Page 111
The EU Safeguard Regulation


The EU’s WTO Safeguard Regulation does not reproduce precisely the language of the WTO
Safeguards Agreement. For example:

     Article 2 of (b) The WTO Agreement refers to “such increased quantities, absolute or relative to
     production.” In contrast, the EU Regulation refers to “such greatly increased quantities….”. (d)
     Also, Article 2 of the WTO Agreement sets forth the requirement that imports be in increased
     quantities “and under such conditions as to cause or threaten to cause serious injury…” In
     contrast, the EU Regulation requires that imports be in greatly increased quantities , “and/or on
     such terms or conditions as to cause, or threaten to cause, serious injury.”




                                                                                                    Page 112
Institutional Organizations for Trade Remedies




                                                 Page 113
 Some WTO Members have extensive trade remedy organizations (such as the EU and
    the U.S.)
 Others have small or medium-sized permanent authorities
 Others assign trade cases within an existing governmental structure on an ad hoc
    basis.




                                                                                     Page 114
Organization chart of DG Trade




             A                         B                          C                               D                            E                            F                      G
                                  F-H. WENIG              K. FALKENBERG                      F. LE BAIL                 I. WILKINSON                R. PETRICCIONE       J. AGUIAR MACHADO

                                                     Development and                Development and                Industrial trade issues.     Co-ordination of WTO     Services.
Resources. Interinstitutional    Trade defence
                                                     management of free trade       management of trade            Trade                        and OECD matters.        Agricultural trade
 relations and                                       and economic partnership       relations with candidate        relations with industrial   Dispute settlement and   questions.
communications                                       agreements with ACP            countries, countries of the    countries. Market            Trade Barriers           Sustainable
policy. Information                                  countries,                     CIS, Balkans, Mediterranean,   access.                      Regulation               development
technology                                           Latin America, GCC and Iran.   and South                      Export-related trade
                                                     GSP.                           and South-East Asia.           policy.
                                                                                                                   Conseiller: A. DALVIN

           A.1                        B.1                       C.1                             D.1                           E.1                          F.1                   G.1
     B. PRAGNELL                   P. KLEIN           H. STANDERTSKJOLD             G. FRONTINI CATTIVELLO                     -                       J. CLARKE                   -

Human, administrative            Trade defence       Negotiation and management     Trade aspects of               Standards and                 Co-ordination of WTO,    Trade in services;
and financial resources;         instruments:        of trade and free-trade        European                       certification, TBT            OECD, Trade Related      GATS. Investment.
external service;                general policy,     agreements with Latin           neighbourhood policy.                                       Assistance;
programming                      complaints office   America, GCC and Iran. GSP     Trade relations with                                         GATT; 133 Committee.
                                                                                    candidate countries,
                                                                                    and countries of the CIS
                                                                                    and Balkans
           A.2                                                                                                                                                                          Page 115
O. DE LAROUSSILHE               C.A: W. MUELLER         C.A: H. HOUBEN                  C.A.:L. RUBINACCI             C.A: I. KIOUSSI                    C.A.:              C.A: A. JESSEN
  Organization chart of DG Trade


Interinstitutional relations and       B.2                     C.2                     D.2                        E.2                         F.2                        G.2
 communications policy
    C.A: S. KOFLER               N. MAC DONALD              C. MAERTEN              P. MEYER                 R. PLIJTER             I. GARCIA BERCERO                J. SCHAPS

                               Trade defence                               Negotiations and
                               instruments:         Economic partnership   management of trade or                                  Dispute settlement and      Agriculture, fisheries,
                               investigations I.    agreements 1           free-trade agreements                                   Trade Barriers Regulation   sanitary and
                               Monitoring of                               with Mediterranean                                                                  phytosanitary
                               third country                               countries, and South and                                                            measures,
                               measures                                    South-East Asia. TREATI.                                                            biotechnology

                             C.A: S. GOSPAGE        C.A.:                   C.A:                                                    C.A: N. ZAIMIS              C.A: O. JONES
                                                                                                      Steel, coal, shipbuilding,
                                                                                                      automotive, chemical and
                                                                                                      other industries

           A.3                      B.3                        C.3                                               E.3                                                     G.3
         P. RUYS

                               B. ADINOLFI                         -
                                                                                                      Market access. Trade                                     R. SCHLEGELMILCH
                                                                                                      relations with USA,
                                                                                                      Canada, EFTA, Australia
                                                                                                      and New Zealand.


                                                                                                                                                                Sustainable
    Information technology   Trade defence         Economic partnership                                                                                         development
                             instruments:          agreements 2                                                                                                 (including trade and
                             investigations II                                                                                                                  environment); dialogue
                                                                                                                                                                with civil society. Trade
                                                                                                                                                                relations with China
                                                                                                                                                                       .
                              C.A: G.WELGE          C.A: M. DIHM                                       C.A.: P. GARZOTTI                                        C.A: R. RATCHFORD


                                    B.4                                                                           E.4
                                 D. AVOT                                                              F. PERREAU DE PINNINCK

                                                                                                      Export-related trade                                            Page 116
                                                                                                      policy (export credits,
                                                                                                      controls; third countries
                                                                                                      practices).
EU Staffing of AD Cases


Department “B” of DG Trade deals with antidumping and antisubsidy investigations.

Section B.1. processes the complaints and decides whether a case should be initiated. After that
the other sections take over the investigation.

Different units handle dumping and injury

Other units deal with reviews, monitoring of undertakings, etc.

For an investigation, the personnel assigned usually are:

       The head of the units (responsible for a number of cases)
       Two or three officials to handle the investigation regarding injury and Community interest
       Two officials to handle the dumping investigation (drafting questionnaires, reviewing questionnaire
        replies, conducting verification, drafting notices…)


                                                                                                      Page 117
2004 EU AD Statistics


On 30 September 2004: 129 anti-dumping measures in force

Initiations: In January-September 2004, 25 new investigations were initiated, as well as a
             number of reviews (e.g., 24 “interim” reviews).

Measures: 5 provisional and 8 definitive measures were imposed.

Terminations: 2 new investigations were terminated without the imposition of measures.




                                                                                             Page 118
US AD Statistics


Roughly 90 percent of DOC dumping determinations are affirmative, while only about 65
percent of ITC injury determinations are affirmative.


                                              Combined Antidumping Data
                                1994   1995     1996    1997    1998      1999   2000   2001   2002   2003
  INITIATIONS                   51     14        21      15      36       46      45    77      35     36
  PRELIMS                       46     23        16      16      28       34      22    61      44     19
  FINALS                        31     38        12      15      17       37      35    34      58     20

  DUTY ORDERS                   16     23        9       11      9        19      21    32      26     16

  REVOCATIONS                   28     12        6       4       25       48      57     8      9      2

  AD REVIEWS COMPLETED          49     96       126     104     111       92      86    74      81     65

  SUNSET REVIEW REVOCATIONS                                      4         1     148    10      9

  SUNSET REVIEW CONTINUATIONS                                             36     125    27      2      5




                                                                                                             Page 119
Central European country example: Bulgaria


Bulgarian AD/AS Legislation:
Decree of the Council of Ministers No. 287/04.12.1996 “On protection against dumped or subsidized
import of goods in the Republic of Bulgaria”, amended on June 6, 1997. Compatible with WTO ADA.
Organization and procedure:
An AD investigation is initiated not later that 45 days after the filing of a petition. The Council of Ministers
publishes a decree in the “State Gazette” announcing the initiation of the investigation. The investigation
is conducted by a commission, whose members are appointed by the Minister of Economy. After the
completion of an investigation the commission proposes AD measures (or termination of the procedure).
The decision is taken by the Minister of Economy.
Only one case:
Bulgaria has conducted only one AD investigation, against imports of active baker’s yeast from Turkey.
The Commission that conducted the investigation included officials from the Ministries of Economy,
Finance, Agriculture and Foreign Affairs. The investigation was initiated in January 2002 and terminated
without imposition of measures in September 2003.
                                                                                                           Page 120
    Summary of Central European Anti-Dumping Actions as reported
    in Semi-Annual Reports of Members (1 July 2002-30 June 2003) –
    Central and Eastern European Countries




               Initiations           Provisional Measures (negative preliminary     Definitive Duties (negative    Price Undertakings   Revocatio Measures in force
                                     determinations and affirmative preliminary    determinations not included)                         ns notified on 30 June 2002
                                        determinations where no measures                                                                            (definitive duties
                                             imposed are not included)                                                                                  and price
                                                                                                                                                     undertakings)
      Total     Countries involved     Total          Countries involved          Total      Countries involved     Total   Countries
       0         BULGARIA               0                                          0                                 0       involved      nr              nr
       0      CZECH REPUBLIC            0                                          0                                 0                     0               1
       0           LATVIA               2         Estonia         Lithuania        1         Estonia                 1        Belgium      0               1
       0         LITHUANIA              0                                          0                                 0                     0               7
       0          POLAND                2          Czech           Russia          2          Czech       Russia     0                     nr              8
                                                  Republic                                   Republic



    "nr" indicates that the Member in question did not submit a separate table reporting revocations and/or a separate table reporting measures in force.




                                                                                                                                                             Page 121



.
    Summary of Anti-Dumping Actions as reported in Semi-Annual
    Reports of Members (1 July 2002-30 June 2003) – Central and
    Eastern European Countries


                                                             Lithuania
                       Definitive duties in force                                          Undertakings in force
       Country/customs           Product                Date imposed         Country/customs         Product                  Date
          territory                                                             territory                                   imposed
       Belarus            Burnt lime                    1/28/2001           Latvia                   Safety matches    3/23/2001
                          Grey Portland                 10/12/2001          Belarus                  Grey     Portland 2/21/2003
       Russia             cement
                          Burnt lime                    1/28/2001                                    cement
                          Grey Portland                 10/1/2002
       Ukraine            Grey Portland                 10/12/2001
                          cement


                                                                      Latvia
                                                                                      FINAL MEASURES
                                                                                                                     Dumped      % of
                                                                                                                      imports   trade
                                                             Provisional                                       Trade
           Country/        Product         Initiation                             Definitive         Price             as % of volume
                                                             measures/                                        volume
                                                                                                                     domestic investiga
                                                                                                                     consump ted (of
                 1            2               3                    4                   5               6         11      12       13
                                             Date           Date, dumping       Date, dumping         Date,
                                                               margin              margin           dumping
                                                                                                     margin
       Estonia        Portland cement      3/12/2002         12.12.2002:          02.04.2003.           -     Year     Year     Year
                                                                                                              2001:    2001:    2001:
                                                             margin: 7,41        margin: 7,41                 18260    6,44%     97%
                                                              LVL[1]/t[2]      LVL/t; proposed                 tons
                                                                               duty: 5,5 LVL/t[3]



                                                                                                                                          Page 122



.
    Summary of Anti-Dumping Actions as reported in Semi-Annual
    Reports of Members (1 July 2002-30 June 2003) – Central and
    Eastern European Countries


                                      Czech Republic
                                     Definitive duties in force
          Country/customs                          Product                       Date of

                territory                                                      imposition

             Germany                 Salt for human consumption
                                                                              11.10.2000
                                               (4 products)




                                                                               Bulgaria
                                                                                                                 No Final Measures
     Country/ Customs             Product                        Date
                                                             of Initiation   Provisional Measures
        Territory
                                                                                                    No dumping   No injury         Case        Other
                                                                                                                                 withdrawn
                                                                                                                                              04.07.03
       Turkey               Active baker's yeast
                                                             16.1.2002                                                                        Termina-
                                                                                                                                                tion




                                                                                                                                             Page 123



.
    Summary of Anti-Dumping Actions as reported in Semi-Annual
    Reports of Members (1 July 2002-30 June 2003) – Central and
    Eastern European Countries




                                                                   Slovenia
                                                                                           NO FINAL MEASURES
        Country/           Product           Initiation   Provisional
                                                                                                                                        Basis
                                                          measures/           No dumping   No injury       Case      Other     Trade
                                                                                                                                         of
                                                          determinations                                                      volume
                                                                                                         withdrawn                      deter
        Customs                                                                                                               1998      minati
                                                                                                                                         on
        territory
           1                   2                3                4                7            8          9           10       11         14
                                               Date           Date,              Date         Date       Date        Date
                                                           dumping margin
                    Fresh or frozen turkey
       Hungary      breast, skinless,        11.3.1999                                                 02.2.2000             1,185 MT     HM
                    boneless, half breast




                                                                                                                                     Page 124



.
Implications of the WTO Agreements for the
               Private Sector




                                             Page 125
Situation for Industries in non-WTO Countries


 ADVANTAGE:

 The government of a non-WTO member has little or no limitation on the imposition of
 import measures from other countries, absent commitments in other agreements (such as
 FTAs).



 DISADVANTAGE:

 Other countries have little or no limitation on the imposition of import measures against
 imports from the non-WTO member, absent commitments in other agreements.




                                                                                             Page 126
Situation for Industries in WTO Countries


ADVANTAGE:

Other WTO members can apply import measures against imports from the WTO Member
country only pursuant to the GATT and relevant WTO agreements. If other WTO Members
breach their obligations, the Member can seek binding dispute resolution.


DISADVANTAGE:

The government of the WTO Member country can apply import measures only pursuant to
the GATT and relevant WTO agreements (and, if it breaches its obligations, can be subject
to binding dispute resolution).




                                                                                            Page 127
Producers’ Responsibilities as Complainants




                                              Page 128
Supporting evidence for initiation (Article 5.2)


  A complainant must file an application.
  The application must include evidence of dumping, injury and a causal link
  Simple assertion unsubstantiated by relevant evidence cannot be considered sufficient to
     meet these requirements
  The information contained in the application should be such as is reasonably available to the
     applicant




                                                                                           Page 129
In particular, the application should contain the following information:

     the identity of the applicant
     a description of the volume and value of the domestic production of the like product
     Identify all known domestic producers in the industry, along with their volume and
      value of production of the like product
     a complete description of the allegedly dumped product
     the names of the country or countries of origin or export in question
     the identity of each known exporter or foreign producer
     a list of known importers



                                                                                         Page 130
   information on the normal value (domestic prices in the exporting country or,
    where appropriate, the prices for export to a third country or the constructed
    value)
   information on export prices or, where the export price is constructed, data on the
    prices of first resale to an independent buyer in the importing country
   information on the evolution of the allegedly dumped imports
   information on the effect of those imports on domestic prices of the like product
   information on the consequent impact of the imports on the domestic industry, as
    demonstrated by relevant factors and indices having a bearing on the state of the
    domestic industry



                                                                                        Page 131
Examination of the evidence ( Article 5.3)
 The authorities must examine the accuracy and adequacy of the evidence provided in
    the application to determine whether there is sufficient evidence to justify the initiation
    of an investigation

Rejection of an application (Article 5.8)
 The authorities must reject an application as soon as they are satisfied that there is
    not sufficient evidence of dumping or injury




                                                                                                  Page 132
Other activities of complainants



 answering domestic producer questionnaires
 commenting on the questionnaire responses of exporters and importers
 submitting legal arguments; opportunity for a hearing




                                                                         Page 133
Domestic producers’ questionnaire


SECTION A – INTRODUCTION

SECTION B – GENERAL INFORMATION: Details of the company; Shareholders; Legal Representative;
Operational Links with Other Entities; Range of Products; Accounting Practices; trading with the Country Concerned

SECTION C – PRODUCT CONCERNED: Scope of Investigation; Product; Company Control Number; Technical
description; Product Comparability;

SECTION D – PRODUCTION, PURCHASES AND STOCKS: Production and Capacity; Purchases of the Product
Concerned; Stocks;

SECTION E – SALES: Total sales of the product concerned produced by your company to unrelated customers;
Total sales of the product concerned produced by your company to related customers; resales to related and
unrelated customers; Captive use;

SECTION F – DISTRIBUTION SYSTEM AND SELLING PRICES: Distribution system and channels of sale; Price
Setting; Imports of raw materials and finished products into the EC;

                                                                                                         Page 134
Domestic producers’ questionnaire


SECTION G – TRANSACTION BY TRANSACTION LISTING: Sales transactions in the Community during
the IP; Explanation of the apportionment of costs to transactions shown in the
tables to be completed under point G.1 above; Credit Notes

SECTION H – COST OF PRODUCTION: Accounting System; Production Process; Cost of Production;
Suppliers of Direct Materials; Related Suppliers;

SECTION I – PROFITABILITY: Profitability of the Product Concerned; profit in the Absence of Injurious
Dumping; Cash flow for activities concerning the product concerned; Investments; Ability to raise capital; ROI

SECTION J – EMPLOYMENT: Personnel employed; Wages

SECTION K – CAUSALITY

SECTION L – COMMUNITY INTEREST



                                                                                                           Page 135
Producers’ Responsibilities as Respondents



 AD investigations impose substantial burdens on exporters and importers: They must
    answer questionnaires and undergo verification.
 If a company's exports are found to be dumped, then dumping duties probably will apply
    for at least 5 years.
 It is possible to seek review of the dumping duties, but review proceedings also are
    burdensome.
 Companies can undertake "audits" to determine their risk of dumping.
 Serbia and Montenegro, however, have not often been subject to AD investigations.




                                                                                      Page 136
Exporters’ questionnaire


SECTION A: GENERAL INFORMATION: Identity and Communication; Legal Representative; Corporate
Information
SECTION B: PRODUCT DESCRIPTION: Scope of the Investigation; Domestic and Export Product
Specifications; Formats for product description (PCN); Comments on the product concerned
SECTION C: OPERATING STATISTICS: Company's net turnover; Total Quantity and Value of Sales;
Production and Capacity Statistics; Stocks; Employment; Investments
SECTION D: EXPORT SALES TO THE EUROPEAN COMMUNITY: General information; Sales to
independent customers; Sales to related parties
SECTION E: DOMESTIC SALES: General information; Sales to independent customers; Sales of related
parties to independent customers
SECTION F: COST OF PRODUCTION: Accounting system and policies; Production process and cost of
production of the product concerned
SECTION G: PROFITABILITY: Profit and Loss
SECTION H: ALLOWANCES - FAIR COMPARISON: Allowances on Export Sales; Allowances on
Domestic Sales
                                                                                              Page 137
Importers’ questionnaire


SECTION B: Details of the company, Contractual links with other entities, Corporate Information, Legal
Representative; Range of Products; Accounting Information; Turnover;

SECTION C: Scope of the investigation; Product;

SECTION D: Transaction-by-transaction list; Summaries; Documented purchase transactions;

SECTION E: Global figures (all sales)

SECTION F: Distribution network; Prices of subject merchandise sold in the EU; Additional costs;

SECTION G: Employment figures

SECTION H: Profitability of the product concerned

SECTION I: Other injury factors

SECTION J: Other Questions: Market Share; Customers; Suppliers; Description of the Market;

                                                                                                         Page 138
So far, Serbia and Montenegro have not often been subject to AD investigations.




                                                                                  Page 139
Serbia & Montenegro – TDIs Included in the FTAs


Subsidies – the FTAs very concise provisions, included in the “State Aid” chapter, stipulating that if a
Party considers that a particular practice is incompatible with the objectives of the FTA and causes or
threatens to cause injury to its domestic industry or agriculture, it may take appropriate measures
under the conditions laid down, inter alia, by the Agreement on Subsidies and Countervailing
Measures (only the FTA with Romania specifically mentions the SCM Agreement). However, the
language is not specific and also relates to the provisions on safeguard agreements in the FTAs.

Dumping – the FTAs contain very general language stating that if a country finds that dumping is
taking place in bilateral trade relations, it may take appropriate measures against that practice in
accordance with the Article VI of the GATT 1994.

General safeguards – the FTAs state that the country may act if any product is imported in such
increased quantities and under such conditions as to cause or threaten to cause serious injury to
domestic producers of like products or serious disturbances in any related sector of the economy.



                                                                                                      Page 140
Serbia & Montenegro – International Trade Agreements



Free trade zone establishment in Southeast Europe is based on the Memorandum of
Understanding on Liberalization and Facilitation of Trade Requirements (MoU) signed within
the framework of the Stability Pact in Brussels on June 27, 2001 by Albania, Bosnia and
Herzegovina, Bulgaria, Macedonia, Moldavia, Romania, FR Yugoslavia and Croatia. Serbia and
Montenegro have concluded bilateral FTAs with the other participants in the process. FR
Yugoslavia has concluded free trade agreements with the Republic of Macedonia in 1996
(prior to the initiative for Stability Pact), Hungary (in force since January 1st 2002) and Bosnia
and Herzegovina (in force since July 2002).

Stability Pact partners are countries of Southeast Europe, EU Member States, EC
Commission, 22 OECD Member States, four G-8 Member States, UN, OECD, OSCE as well as financial
institutions.




                                                                                                Page 141
EU Antidumping Investigations Against imports from
Serbia & Montenegro



                                                                              Sunset review
                                                    Def.      Termi-
        Product          Status    Initiation                         Initiation      Outcome
                                                 measures     nation
    Hot-rolled coils Terminated C4,             L31,       L294,
    (flat rolled                07.01.99,       05.02.2000 17.09.2004
    products of iron            p.3             , p.15     , p. 1
    or non alloy
    steel)

    Malleable tube     Terminated C151,                     L208,
    or pipe fittings              29.05.99,                 18.08.2000
                                  p.21                      , p.53

    Polyester          Expired                  L348,                    C230,       Continuation
    staple fibres                               17.12.88,                15.09.90,   of measures
                                                p. 49                    p. 3


                                                                                                    Page 142
U.S. Antidumping Investigations Against imports from
Serbia & Montenegro

                                    DATE OF                         DATE OF
                     DATE OF                      DATE OF FINAL                     DATE OF
    PRODUCT                       PRELIMINARY                     ANTIDUMPING                   COMMENTS
                    INITIATION                   DETERMINATION                    REVOCATION
                                 DETERMINATION                    DUTY ORDER
                                                                                                ITC NEG
 STEEL WIRE NAILS   07/02/1981
                                                                                                PRELIM
 ANIMAL GLUE AND
                    01/26/1977     08/03/1977      10/28/1977      12/22/1977      01/11/1991
 INEDIBLE GELATIN
 STEEL WIRE NAILS                                                 PW 02/03/1986
 WELDED CARBON
                                                                     TERM
 STEEL PIPE AND     08/09/1985     12/31/1985      03/14/1986
                                                                   04/22/1986
 TUBE
 TAPERED ROLLER
                    09/19/1986     02/06/1987      06/29/1987      08/14/1987      11/24/1995
 BEARINGS
 INDUSTRIAL
                    10/17/1989     04/24/1990      08/27/1990      10/16/1990
 NITROCELLULOSE
                                                                                                ITC NEG
 BALL BEARINGS      03/11/1991     04/10/1991
                                                                                                PRELIM
 TART CHERRY
 JUICE AND                                                                                      ITC NEG
                    04/16/1991
 CHERRY JUICE                                                                                   PRELIM
 CONCENTRATE
 WELDED CARBON
 STEEL PIPE AND     08/09/1985     10/16/1985      12/31/1985      12/31/1985                   08/08/1986
 TUBE




                                                                                                             Page 143
CASE STUDY ON ANTIDUMPING MEASURES




                                     Page 144
EU AD Investigation Timeline: Seamless Pipes and Tubes from
Slovakia)



Timeline: Seamless Pipes and Tubes from Slovakia
    31-Aug-96      Publication of Notice of Initiation
                   Deadline by which exporters, importers and other interested parties should contact the Commission to
    15-Sep-96      check whether they are listed in the complaint and request a questionnaire (if such questionnaire
                   had not yet been sent).
                   In the case of sampling, deadline by which exporters who wish to be included in the sample, or to be
                   considered co-operating parties even though they are not included in the sample, must make
    21-Sep-96
                   themselves known. Shortly thereafter the Commission will select which exporters to include in the
                   sample. Such exporters can then obtain a questionnaire, which must be returned within 37 days.
                   Deadline for submission of questionnaire responses by exporters, importers, and Community industry. In
                   cases of sampling, deadline for submission of questionnaire responses by exporters seeking
    10-Oct-96      individual treatment.Deadline for submissions on injury and Community interest by interested parties
                   (e.g. exporters, importers, Community producers, consumer groups, etc.)General deadline for all
                   interested parties to request a hearing, should they wish to have one.
                   Deadline for submission of questionnaire responses by exporters selected for inclusion in the
    28-Oct-96
                   sample.
    28-May-97      Latest date for imposition of provisional measures (actually imposed on May 29)
    24-Nov-97      Latest date for imposition of definitive measures (actually imposed on November 17)



                                                                                                                Page 145
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia

Like Product
All seamless pipes and tubes subject to investigation were found to be alike in their essential
physical and technical characteristics and in their end uses. Some exporters argued their
products should not be considered as like products with those of the Community producers or
other exporting producers due to:
     quality and technical differences
    differences in the distribution channels
    use and perception by the market.

The Commission considered imported products and products made in the Community as like
products because:
    products concerned are distributed through similar channels
    application and overall use are similar and there is a high degree of interchangeability and
       competition between all products – imported and manufactured by the Community producers
    the basic technical and physical characteristics of all imported products were identical to, or
       closely resembled, those of the products manufactured by Community producers.
                                                                                                 Page 146
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Dumping Investigation – Normal Value
The Slovak producer contested the methodology the Commission used to determine normal
value for some product groups. It claimed that:
     the Commission should not have calculated normal value on the basis of profitable sales
       only, but on the basis of all sales in the product groups, since the groups were profitable
       overall.
     The Commission rejected this claim as Article 2 (4) of the basic Regulation stipulates that
       sales made at a loss should only be excluded from the establishment of normal value
       where such sales constitute more than 20 % of all domestic sales.




                                                                                                     Page 147
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Dumping Investigation – Export Price
The Slovak producer objected to the Commission's decision to deduct a 4 % profit margin
from the prices charged by its Italian subsidiary, finding the margin excessively high. The
Commission concluded that an adjusted figure of 3,8 % should be applied.




                                                                                              Page 148
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Dumping Investigation – “Fair Comparison”
The Slovak company asserted that a “distribution channel allowance” was justified in order
to reflect the fact that the company sold directly to stockists on its domestic market
whereas it sold through its related Italian and Swiss companies on the Community market.

The Commission, however, had already adjusted the normal value downwards to reflect the
fact that sales in the Community were mainly to large customers; hence, there was no
justification for granting a further allowance.




                                                                                             Page 149
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Injury Investigation
Imports of all seamless pipes and tubes originating in the Slovak Republic were, between
1993 and 1995, subject to a tariff quota system, i.e. duty free within the limits of a quantitative
ceiling; as soon as the ceiling was reached, a duty of 30 % was levied. This system lapsed at
the end of 1995.

Community consumption in tonnes per month amounted to 89 900 tonnes in 1992, 69 700 in
1993, 84 070 in 1994, 92 730 in 1995 and 92 130 during the investigation period (September 1,
1995 – August 31, 1996).




                                                                                                 Page 150
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Injury Investigation – Cumulation
The Commission concluded that the dumped imports from Russia, the Czech Republic,
Romania and the Slovak Republic should be assessed cumulatively for the purpose of
injury analysis. The Commission asserted that the criteria set out in Article 3 (4) of the basic
Regulation were found to be met in order to cumulate the imports from all four countries
concerned, namely:
      the margin of dumping established and relating to each country was more than de minimis
         (i.e. between 5,1 % and 38,2 %)
     the volume of imports from each country was not negligible
     none of the exporting countries held a de minimis market share, namely below 1 %, since
        their market shares ranged from 3 % to 8,3 %
     the imported products were found to be interchangeable, to be following similar price
        trends, to have similar channels of distribution and similar low-price policy resulting in a
        high level of price undercutting (i.e. between 17,5 % and 43,2 %), to be simultaneously
        present in the same geographical areas and to compete therefore with each other and
        with those manufactured by the Community industry.
                                                                                                       Page 151
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Community Interest – Impact on Community Industry
Likely effect of imposition of measures – price of imports is expected to rise, market supply and
sales volumes to drop, Community industry would be able to increase output and sales, which
would lead to increase in capacity utilization and drop of unit cost.
Likely effect of non-imposition of measures – Community industry situation is expected to
deteriorate (depressed production levels and capacity utilization rates, loss of market share,
financial losses and reduction in employment).




                                                                                                    Page 152
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Community Interest – Impact on Importers and downstream users
Importers – only a small percentage of their turnover consists of the subject product. Hence, the
measures would have a minimal effect on their performance.
Downstream users – machinery industry; transport of oil, gas, water, etc.; chemical and petro-
chemical industries; power stations; the automobile and construction industries. The Commission
believes the impact on the costs of downstream user industries of any price increases resulting
from adoption of anti-dumping measures would be insignificant, if any.


On the basis of the above elements, it is concluded that there is no compelling reason not
to remedy the trade-distorting effects of injurious dumping and that the implementation of
protective measures are in the interest of the Community.



                                                                                                    Page 153
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Measures imposed
The Czech Republic: 5.1 – 28.6 % (Undertaking – no duty imposed)
Hungary: 36.50 % (Undertaking – no duty imposed)
Poland: 7.1 – 30.1 % (Undertaking – no duty imposed)
Romania: 9.8 – 38.2 % (Undertaking – no duty imposed)
Russia: 26.80 % (Undertaking – no duty imposed)
Slovakia: 7.50 % (Undertaking – no duty imposed)
Croatia: no duty (in 2000 in another AD investigation AD duty of 23% was imposed but not
collected as an undertaking was accepted)
Ukraine: in 2000 in another AD investigation AD duty of 38.5 % was imposed but not collected as
an undertaking was accepted

                                                                                                  Page 154
EU AD Investigation Against Imports of Seamless Pipes
and Tubes from Slovakia


Review Proceedings
Expiry and interim review was initiated in November 2002, concerning imports from Poland,
Russia, the Czech Republic, Romania and the Slovak Republic. The duties were not
amended.
The measures for Slovakia, Poland and the Czech Republic lapsed on May 1, 2004 following
their accession to the European Union.
With regard to measures against imports from Russia and Romania, on July 16, 2004, the
Commission decided to no longer apply the measures, as it found that a part of the
Community industry was engaged in anti-competitive practices during the antidumping
investigation. However, there is an ongoing interim and expiry review against imports from
Romania and Russia.
As for Croatia and Ukraine, the measures are about to expire on February 18, 2005, unless
an expiry review is initiated.

                                                                                             Page 155
Case Study on Safeguard Measures




                                   Page 156
Timeline of a typical U.S. Safeguards Investigation

Timeline: U.S. Steel Safeguards
             Pursuant to USTR request, ITC initiated safeguard
22-Jun-01    investigation against imports of steel; notice published in the
             Federal Register
 13-Jul-01   Interested parties to file an entry of appearance
             Interested parties to file request for participation in injury
22-Aug-01
             hearings
10-Sep-01    Date for filing pre-hearing briefs on injury
17-Sep-01    ITC started conducting hearings on injury
             ITC found that imports of 16 out of 33 steel products
 22-Oct-01
             investigated were seriously injuring the U.S. industry
             Interested parties to file request for participation in remedy
 23-Oct-01
             hearings
 29-Oct-01   Date for filing pre-hearing briefs on remedy
 5-Nov-01    ITC started conducting hearings on remedy
             ITC transmitted to the President a report on its safeguard
19-Dec-01
             investigation
             Proclamation of U.S. President Bush published, imposing
 5-Mar-02
             safeguard measures on steel imports
 20-Mar-02   Effective date of Safeguard Measures against Steel Imports

                                                                               Page 157
Procedures in a typical U.S. safeguards investigation


1. USTR asks ITC to conduct a safeguard investigation
2. ITC institutes a safeguard investigation
3. Interested parties file entry of appearance
4. ITC conducts hearing on injury
5. ITC conducts hearing on remedy
6. ITC submits a findings report to the President of the United States
7. The President publishes a proclamation imposing the safeguard measures




                                                                            Page 158
U.S. Safeguard Case Study




                            Page 159
Serious Injury



Factors considered by the ITC include:

      Significant idling of productive facilities in the domestic industry,
      Inability of a significant number of firms in the industry to carry out domestic
        production of profit, and

      Significant unemployment or underemployment within the domestic industry.




                                                                                          Page 160
Threat of Serious Injury



Factors considered by the ITC include:

       A decline in the sales or market share, a higher and growing inventory, a downward
          trend in production, profits, wages, productivity, or employment in the domestic
          industry;

       The extent to which firms in the domestic industry are unable to generate adequate
          financial 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

       The extent to which the domestic market is the focal point for the diversion of exports
          of the relevant product by reason of restraints on exports of such product to, or on
          imports of such product into, third country markets.
                                                                                              Page 161
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


OVERVIEW

The Case Was Brought Based on a Request Filed by the U.S. Trade Representative

      USTR Requested an investigation covering certain steel products broadly defined as
        flat-rolled, long products, tubular products, and stainless steel products

Period of investigation

      The ITC examined years 1996 through 2000, and the period January to June 2000 to
        January to June 2001




                                                                                     Page 162
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



OVERVIEW

Like or Directly Competitive Product

      The ITC collected data on 33 product categories
      The ITC ultimately found that there were 27 domestic industries producing like or
        directly competitive products

          o The ITC found that carbon and alloy slabs, plate, hot and cold-rolled steel and
            coated steel were one like product.

          o The ITC found that carbon and alloy and stainless steel strand, rope, cable, and
            cordage were one like product.

                                                                                               Page 163
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



OVERVIEW

Serious Injury or Threat

      The ITC found injury in 8 categories and was evenly divided on injury in 4 categories
      The ITC’s injury findings covered approximately 80 percent of the steel products that
        were subject to the investigation




                                                                                               Page 164
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



NAFTA Exclusion
      The ITC is required to exclude products from Mexico or Canada from a safeguard
        action if: 1) the country is not one of the top five suppliers of the product in the
        most recent three year period, or 2) the products did not contribute importantly to
        the serious injury or threat
NAFTA Findings
      The ITC excluded 6 products from Canada, including flat rolled products, and
        reached one tie vote.
      The ITC excluded 9 products from Mexico.
      The President ultimately excluded all products from Canada and Mexico



                                                                                               Page 165
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



ITC’s Recommended Remedy
      The ITC recommended tariffs on most products
         o   A 20% tariff was recommended for flat-rolled products, except for slabs, for
             which a tariff-rate quota was recommended on imports in excess of 7 million
             tons in the first year




                                                                                            Page 166
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


The President’s Action

       The President treated all of the ITC’s evenly divided votes as affirmative
         determinations

       The President imposed a tariff on most products
           o   The President placed a 30% tariff on flat-rolled products, except for slab
           o   The President imposed a tariff-rate quota on slab, with a 30% tariff on over
               quota entries

       The President excluded a number of developing countries from the safeguard
         action



                                                                                              Page 167
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



Post Presidential Action
       Product Exclusions
           o   Approximately 25% of the steel products subject to the President’s action
               were excluded
                   To be eligible for exclusion, the party requested an exclusion had to
                    show either that the product was not produced by a U.S. producer, or
                    that the product was not produced in sufficient quantities to meet
                    demand
           o   The next round of product exclusion requests is expected to begin in
               November, 2002 and to conclude in March, 2003




                                                                                            Page 168
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


                          Carbon and Alloy Flat-Rolled Products
                                         ITC Phase


Like or Directly Competitive Product
       The ITC found that slabs, plate, hot and cold-rolled products and coated products
          were one like or directly competitive product
            o   The ITC found that imported and domestic flat products shared similar
                physical characteristics, uses, production processes, and channels of
                distribution
            o   The ITC also found that a price correlation existed between the different
                types of flat-rolled steel



                                                                                            Page 169
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



Serious Injury
   The ITC found that the domestic flat-rolled producers were seriously injured
        o   The ITC found that there was a significant idling of the domestic industry’s
            productive facilities and that a significant number of firms were unable to carry
            out production operations at a reasonable level of profit
        o   The ITC also found declines in capacity utilization, prices, operating income,
            capital expenditures, and the number of production workers




                                                                                                Page 170
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


   Substantial Cause
     o   The ITC found that imports were a substantial cause of the domestic industry’s
         injury
     o   The ITC found that imports increased in absolute terms and relative to domestic
         production
                  Imports increased from 18.4 million tons in 1996 to 20.9 million tons in 2000
                  Imports increased from 10% of domestic production in 1996 to 10.5% in
                   2000
     o   The ITC focused on the import peak in 1998 discounting subsequent declines
                  Imports increased from 19.3 million tons in 1997 to 25.3 million tons in 1998
                  Imports declined in 1999 and 2000, but remained above 1996 levels
                  The domestic industry’s performance continued to worsen after the peak

                                                                                                   Page 171
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



    o   The ITC found that prices declined
            Import prices declined
               Flat-rolled average unit values declined from $370 per ton in 1996 to
                $331 per ton in 2000, reaching a period low of $298 per ton in 1999
            Domestic prices declined
               Flat-rolled average unit values declined from $470 per ton in 1996 to
                $418 per ton in 2000, reaching a period low of $415 per ton in 1999.




                                                                                        Page 172
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


The ITC discounted alternate causes of injury
   Declining domestic demand
        o   The ITC found that the decline in demand occurred late in 2000 and that the
            domestic industry showed signs of injury prior to that time

   Domestic capacity outstripped demand
        o   The ITC did find that domestic capacity exceeded demand
                Flat-rolled demand increased by 7.8 percent from 1996 to 2000
                Domestic capacity increased by 15.9 percent from 1996 to 2000

        o   The ITC found that domestic overcapacity did not play as important a role as
            imports in causing the injury because the domestic industry did not lead prices
            down
                                                                                              Page 173
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


  Poor Management
         o The ITC noted that the domestic industry weakened after the 1998 import peak

         o The ITC found that poor equity performance was caused by the low prices caused
           by imports
  Legacy Costs
         o The ITC found that legacy costs were present in 1996 when the domestic industry
           was earning reasonable profits
  Intra-Industry Competition
         o The ITC found that the cost advantages enjoyed by minimills existed throughout
           the period of investigation
                                                                                          Page 174
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



  Buyer Consolidation
       o The ITC found that there was buyer consolidation, especially among
          automobile manufacturers, the consolidation was an ongoing process that did
          not suddenly occur in 1998




                                                                                        Page 175
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


NAFTA Findings
      Canada
         o   The ITC found Canada was a top five supplier in the most recent three year
             period, but did not contribute importantly to the serious injury
                    Imports declined absolutely and relative to domestic production from 1996-
                     2000
                    The domestic industry agreed that imports from Canada did not contribute
                     importantly to the injury
      Mexico
         o   The ITC found that Mexico was a top five supplier in the most recent three
             year period and contributed importantly to the serious injury
                    Imports from Mexico increased absolutely and relative to domestic
                     production
                    The domestic industry did not argue that Mexico should be excluded
                                                                                                  Page 176
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


Remedy – 4 Years
      Slabs
          o   The ITC recommended a first year tariff-rate quota of 7 million tons, with a
              20% tariff imposed on imports in excess of the quota
      Plate, Hot and Cold Rolled and Coated Steel
          o   The ITC recommended a first year tariff of 20%




                                                                                             Page 177
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)


Presidential Action
The President did not alter the ITC’s finding that certain flat-rolled products consisted of
one like or directly competitive product
The President imposed a remedy to last for 3 years plus one day
The President imposed a tariff-rate quota on slab imports

        1st year - Approximately 5 million tons duty free, and 30% thereafter
        2nd year – Approximately 5.5 million tons duty free, and 24% thereafter
        3rd year – Approximately 6 million tons duty free, and 18% thereafter




                                                                                               Page 178
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



The President imposed a tariff on certain flat-rolled products
       1st year – 30%
       2nd year – 24%
       3rd year - 18%
The President excluded Canada and Mexico
       Can be subjected to remedy if there are surges
The President excluded all developing country WTO members
       Can be subjected to remedy if there are surges




                                                                 Page 179
                       Steel
Inv. No. TA-201-73, U.S. ITC Pub. 3479 (Dec. 2001)



Post Presidential Action

The President delegated authority to the USTR to exclude products

The first round of the exclusion process concluded in late August, 2002
       Thousands of requests were made
       727 exclusion requests were granted, accounting for approximately 25% of steel
          subject to the action

The process for requesting exclusions is expected to resume in November, 2002




                                                                                         Page 180
Mandate and Jurisprudence of the WTO
      Dispute Settlement Body




                                       Page 181
Dispute Settlement Understanding



The dispute settlement mechanism was implemented in 1995, along with the WTO
formation. It aims to provide Members with a legal framework for solving disputes arising in
the course of implementing the WTO agreements. It enforces the obligations already
agreed.

WTO Members can ask for panels and (possibly) appeal procedures.

If a Member does not comply with WTO recommendations on bringing its practice in line
with WTO rules, then trade compensation or sanctions, for example in the form of duty
increases or suspension of WTO obligations may follow.

WTO Members are consistently making use of the mechanism. The mechanism can protect
weaker Members against unilateral action by the strongest.

On the other hand, Member sometimes are reluctant to invoke dispute settlement for
political reasons.


                                                                                               Page 182
Consultation and Dispute Settlement


The dispute settlement understanding applies to consultations and dispute settlement under
the WTO trade remedy agreements.
For example, Article 17.1 of the Anti-Dumping Agremement provides: The dispute settlement
understanding is applicable to consultations and the settlement of disputes under the
Agreement (Article 17.1)
If any Member considers that any benefit accruing to it, directly or indirectly, under the
Agreement is being nullified or impaired or that the achievement of any objective is being
impeded by another Member, it may request in writing consultations with the Member in
question, with a view to reaching a mutually satisfactory resolution (Article 17.3)

Each Member must afford sympathetic consideration to any request from another Member for
consultation (Article 17.3)

A Member that has requested consultations may refer the matter to the Dispute Settlement
Body ("DSB") (Article 17.4)
      if it considers that the consultations have failed to achieve a mutually agreed solution, and
      if final action has been taken by the authorities of the importing Member                       Page 183
 The Member affected may also refer the matter to the DSB (Article 17.4)
          o   when a provisional measure has a significant impact and
          o   when the importing member has adopted that measure in contravention of the
              provisions of Article 7.1 of the Agreement

 At the request of the complaining party, the DSB will establish a panel to settle the dispute
   (Article 17.5)
 The rules governing the working of the panels are the same as those laid down in the
   Understanding
 The assessment criteria are that
          o   the facts have been established properly, and that
          o   their evaluation has been unbiased and objective (Article 17.6)


                                                                                           Page 184
   Panel decisions may be appealed to the WTO Appellate Body.
   The Dispute Settlement Body adopts the panel reports within 60 days of their circulation to
    WTO Members, unless a party decides to appeal. Parties to a dispute may appeal a panel
    report at any time before the panel report is adopted by the DSB.
   Appeals are limited to issues of law covered in the panel report and legal interpretations
    developed by the panel.




                                                                                           Page 185
Timeline of a DSB procedure




       Day      Action
        1      Filing request for consultations
        11     Response to request for consultations
        31     Beginning of mandatory consultation period
        61     End of mandatory consultation period
       241     Normal end of panel procedures and circulation of Panel reports to Members
               Panel procedures can be extended by not more than three months
       301     Latest date for filing of a notice to appeal
     241 - 301 Appeal period
     361 - 391 Circulation of Appellate Body report
     391 - 421 Adoption of AB report by the DSB




                                                                                            Page 186
Recent WTO Disputes Regarding Safeguards:

 There has been a significant number of cases.
 So far, the DSB has not approved a single safeguard determination.




                                                                       Page 187
U.S. - Steel Safeguards



The WTO Appellate Body affirmed a panel ruling that the U.S. steel safeguard measures
were WTO-inconsistent. The measures breached a number of obligations of the United
States under the Agreement on Safeguards, including:

The requirement to provide a "reasoned and adequate explanation" for its determinations
regarding factors such as "unforeseen developments" and "increased imports."

The Appellate Body also found that the safeguard measure breached the principle of
"parallelism", because the U.S. included all imports for the purpose of its injury analysis,
but then exempted the free trade partners of the United States from the application of the
measure.




                                                                                               Page 188
United States – Definitive Safeguard Measures on Imports
of Circular Welded Carbon Quality Line Pipe from Korea,
WT/DS202/AB/R (March 2002), WT/DS202/R (Oct. 2001)


Safeguard measures are “extraordinary remedies to be taken only in emergency situations.”
Two “basic inquires”

         1.   “Is there a right to apply a safeguard measure?”

         2.   “If so, has that right been exercised, through the application of such measure,
              within the limits of set out in the treaty?”

There needs to be a meaningful exchange of information on the actual safeguard measure
prior to the effective date of the safeguard measure. The WTO Member imposing the
safeguard measure must allow sufficient time to the other Members to analyze the measure,
consider its likely consequences, conduct appropriate consultations domestically, and
prepare for consultations with the WTO Member imposing the safeguard measure.



                                                                                            Page 189
United States – Definitive Safeguard Measures on Imports
of Circular Welded Carbon Quality Line Pipe from Korea,
WT/DS202/AB/R (March 2002), WT/DS202/R (Oct. 2001)


The United States violated Articles 2 and 4 by including Canada and Mexico in the analysis of
whether increased imports caused or threatened to cause serious injury but excluding Canada
and Mexico from the application of the safeguard measure.




                                                                                           Page 190
United States – Definitive Safeguard Measures on Imports
of Circular Welded Carbon Quality Line Pipe from Korea,
WT/DS202/AB/R (March 2002), WT/DS202/R (Oct. 2001)


WTO Members must take all “reasonable steps” to ensure that it has excluded developing
countries from the safeguard measure if the developing countries fall below the three
percent de minimis threshold.




                                                                                         Page 191
United States – Definitive Safeguard Measures on Imports
of Circular Welded Carbon Quality Line Pipe from Korea,
WT/DS202/AB/R (March 2002), WT/DS202/R (Oct. 2001)

In violation of Article 4.2(b), the United States “did not adequately explain how it ensured that
injury caused to the domestic industry by factors other than increased imports was not
attributed to increased imports.”




                                                                                                Page 192
United States – Definitive Safeguard Measures on Imports
of Circular Welded Carbon Quality Line Pipe from Korea,
WT/DS202/AB/R (March 2002), WT/DS202/R (Oct. 2001)


Safeguard measures “may be applied only to the extent that they address serious injury
attributed to increased imports.”

Under GATT Article XIX:1(a), WTO Members imposing safeguard measures must demonstrate
the “unforeseen developments” justifying the need for such measures.




                                                                                  Page 193
Chile – Price Band System and Safeguard Measures
Relating to Certain Agricultural Products, WT/DS207/R
(May 2002)

Chile violated Article 4.2(a) (threat of serious injury) by failing to evaluate each of the factors
listed therein.

Chile violated Article 4.2(b) (causal link) because its causation analysis was “strictly limited to
its statement that international prices, import prices and domestic prices are linked” and
because its determination did not consider other potential causes of injury.

A WTO Member imposing safeguard measures can ensure that it has applied “safeguard
measures only to the extent necessary to prevent or remedy serious injury and to facilitate
adjustment” only by demonstrating that “there is, at a minimum, a rational connection between
the measure and the objective of preventing or remedying serious injury and facilitating
adjustment.”




                                                                                               Page 194
United States - Safeguard Measures on Imports of Fresh,
Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS 177-78/AB/R (May 2001), WT/DS177-78/R (Dec. 2000)


Safeguard measures may be applied only if the surge in imports is “unforeseen.”

The ordinary meaning of the phase “unforeseen developments” requires that the
developments which led to a product being imported in such increased quantities and
under such conditions as to cause or threaten to cause serious injury to domestic
producers must have been “unexpected.”

The national authority must make an explicit finding that the surge in imports was
unforeseen.




                                                                                      Page 195
United States - Safeguard Measures on Imports of Fresh,
Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS 177-78/AB/R (May 2001), WT/DS177-78/R (Dec. 2000)


The Safeguard Agreement’s “like product” consideration is virtually identical to that of the
Antidumping Agreement and the Subsidies Agreement.
       Thus parties can look to prior antidumping and countervailing decisions for
          precedent regarding like product interpretation.
Growers and feeders of live lamb may not be included as producers of the like product
(lamb meat).
Like products must directly compete with each other.
       Live lamb production does not directly compete with processed lamb meat.




                                                                                               Page 196
United States - Safeguard Measures on Imports of Fresh,
Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS 177-78/AB/R (May 2001), WT/DS177-78/R (Dec. 2000)


Data considered by the national authority must be “representative” of the domestic industry
as a whole.

       The ITC considered questionnaire responses from only six percent of the
          domestic producers. Other data considered were also uneven or incomplete.

       The WTO Panel found that the data used as the basis of the ITC’s determination
          was not sufficiently representative of “those producers whose collective output . .
          . constitutes a major proportion of the total domestic production” of the like
          product.




                                                                                            Page 197
United States - Safeguard Measures on Imports of Fresh,
Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS 177-78/AB/R (May 2001), WT/DS177-78/R (Dec. 2000)


The Safeguards Agreement does not require that increased imports be “sufficient” to cause
serious injury, nor does it require that the increased imports “alone” be capable of causing or
threatening to cause serious injury.

Injury from other factors must not be attributed to the increased imports.

The Appellate Body found that the ITC failed to explain how it “ensured that the injurious
effects of the other causal factors were not included in the assessment of injury ascribed to
increased imports.”




                                                                                             Page 198
United States - Definitive Safeguard Measures on Imports of
Wheat Gluten from the European Communities,
WT/DS166/AB/R (December 2000)


 Appellate Body reversed the Panel approach regarding causation.

 Increased imports “alone”, or “in and of themselves”, or “per se” need not be capable of
 causing injury that is serious.

 Thus, the national authority should determine whether the increase in imports, not alone,
 but in conjunction with other relevant factors, cause serious injury.




                                                                                             Page 199
United States - Definitive Safeguard Measures on Imports
of Wheat Gluten from the European Communities


However, it is essential for the national authority to examine whether factors other than
increased imports are simultaneously causing injury.

If the national authority does not conduct this examination, it cannot ensure that injury
caused by other factors is not “attributed” to increased imports.




                                                                                            Page 200
Argentina - Safeguard Measures on Imports of Footwear,
WT/DS121/AB/R (December 1999)



The use of the phrase “is being imported” indicates that it is necessary to examine the most
recent imports (present tense) and not just the trends in import levels over the preceeding
five years.

The national authority must evaluate each of the factors listed in Article 4.2(a).

       The factors listed in Article 4.2(a) are: the rate and amount of the increase in
        imports of the product concerned in absolute and relative terms, the share of the
        domestic market taken by increased imports, changes in the level of sales,
        production, productivity, capacity utilization, profits and losses, and employment.




                                                                                               Page 201
Korea - Definitive Safeguard Measure on Certain Dairy
Products, WT/DS98/AB/R (December 1999)



The Safeguards Agreement imposes an obligation on a Member applying a safeguard
measure to ensure that the measure applied is not more restrictive than necessary to
prevent or remedy serious injury and to facilitate adjustment.




                                                                                       Page 202

								
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