TWN Info Service on WTO and Trade Issues (May17/07)
8 May 2017
Third World Network
WTO Committee debates rise in AD actions, EU's AD Regulation
Published in SUNS #8455 dated 4 May 2017
Geneva, 3 May (Kanaga Raja) -- A regular meeting of the WTO Committee on
Anti-Dumping Practices on 27 April saw several developed members highlighting a
sharp rise in new anti-dumping actions last year which they claimed was due
mainly to overcapacity in emerging markets, in particular China.
This claim was however countered by China which underlined that the Committee
is not the appropriate forum to address the issue of overcapacity and
In turn, China pointed out that a certain member (the United States) has
implemented more than 200 anti- dumping and countervailing measures on imports
of steel products from other WTO members.
The meeting also discussed proposed amendments by the European Union, on 9
November 2016, to its Basic Anti-Dumping Regulation, with Russia and several
other countries expressing concern over this proposed amendment.
Meanwhile, a meeting of the WTO Negotiating Group on Rules on 2 May, amongst
others, saw New Zealand highlighting a new proposal it has jointly submitted
with Iceland and Pakistan on disciplines for fisheries subsidies (see separate
RISE IN ANTI-DUMPING ACTIONS
According to trade officials, at the meeting of the AD Committee on 27 April,
Japan, the United States, Mexico and Canada highlighted a sharp rise in the
number of new anti-dumping investigations. They claimed that this rise was due
mainly to overcapacity in emerging markets, especially China.
Japan highlighted the high number of new AD investigations initiated in 2014
and 2015. It said that 154 new investigations were initiated in the first half
of 2016 alone.
Japan said that this is the result of overcapacity in steel and other sectors,
mainly from producers in emerging markets.
The US also pointed to China, saying that of the 22 WTO members reporting
anti-dumping activity in the last six months, 18 have targeted China, mainly in
the steel sector.
According to the US, significant excess capacity in China has given members no
choice but to address the problem through anti-dumping actions.
The US said that China is not allowing the market to dictate supply and demand.
On the contrary, it is increasing government intervention.
Mexico said the magnitude of government intervention creates distortions and
injury not only in the producer's home market but that of other countries.
China's policies are impacting the rest of the world, and members need to
explore solutions to the problem, it added.
Canada said trade remedies such as anti-dumping measures are legitimate
responses to these concerns and will continue to be applied if products are
It noted the revised paper on industrial overcapacity which Canada, the US, the
EU and Japan submitted to a meeting of the WTO Committee on Subsidies and
Countervailing Measures on 25 April (see SUNS #8453 dated 2 May 2017).
In response, China emphasised that the AD Committee is not the appropriate
place to discuss so-called over-capacity or government intervention.
It said that government intervention can come in both good and bad forms, and
so can overcapacity. According to China, market forces must be allowed to
operate and to do so, competition must take place.
It also pointed out that a causal link has to be established between
overcapacity, government intervention and injury.
According to trade officials, China pointed out that a certain member (the US)
has implemented more than 200 anti-dumping and countervailing measures on
imports of steel products from other WTO members.
According to China, over the last 30 years, this member has initiated over 100
investigations on one product alone - hot-rolled steel.
Duties of nearly 130% have been applied on imports of that product originating
from China for 20 years, and yet China continues to maintain high exports to
In addition, this member is now resorting to other rarely-used remedies,
notably Section 232 investigations, on steel and aluminium imports, China
[According to the US Department of Commerce, a Section 232 investigation is
conducted under the Trade Expansion Act of 1962, as amended, with the purpose
of determining the effect of imports on national security.]
China said that it is concerned with this development, and called on the US to
explain its intentions regarding resort to such investigations.
Based on this, who is restricting trade, China asked, noting that while Chinese
steel accounts for half of world production, only a small portion of that is
China stressed that trade remedies are legitimate, as long as the
investigations comply with WTO rules.
EU BASIC ANTI-DUMPING REGULATION
According to trade officials, Russia expressed concerns about the proposed
amendments to the EU's Basic Anti- Dumping Regulation.
Russia said the good news is that the EU Commission seems to have given up its
"non-market economy" (NME) designation and that all WTO members will
be treated as market economies.
The bad news, however, is that this NME designation is being replaced by
another WTO-inconsistent measure - the concept of "significant
distortion", whereby EU investigators may be allowed to discard domestic
prices and costs (including the costs of raw material inputs) in the exporting
country due to the existence of significant distortions in the exporter's
Russia pointed out that this appears to be a "face lift" of the old
NME concept. It said that it is outdated and outrageous in light of the WTO
Appellate Body's findings in DS473, "EU - Anti-Dumping Measures on
Bio-diesel from Argentina."
According to Russia, the Commission's proposal seems to punish all producers
with a comparative advantage, and therefore is inconsistent with Article
184.108.40.206 of the WTO Anti-Dumping Agreement as well as Article 6 of the GATT.
In a communication (G/ADP/W/497), Russia posed several questions regarding the
proposal for the EU Basic Anti-Dumping Regulation concerning the determination
of normal value.
Russia asked the EU to explain what are the reasons and intentions for changing
the provisions of calculation of normal value.
Russia referred to Recital (2) of the Proposal, "in view of developments
with respect to certain countries that are Members of the WTO, it is
appropriate that, for those countries normal value should be determined on the
basis of paragraphs 1 to 6a of Article 2 of Regulation (EU) 2016/1036".
Russia asked the EU to clarify what countries and what developments this
Recital refers to?
The EU was also asked to clarify whether this Recital refers only to the
countries that are currently treated by the EU as non-market economy countries.
In particular, will the provisions of this Recital be applied to any of the
Member States of the Eurasian Economic Union that are WTO Members.
Should the Recital refer not only to the countries currently treated by the EU
as non-market economy countries, please explain what other countries it refers
to and what developments in them are meant, Russia asked.
According to Article 6a (a) of the Proposal, there might be cases when "it
is not appropriate to use domestic prices and costs in the exporting country
due to the existence of significant distortions".
Russia asked the EU to clarify what criteria are going to be used in order to
evaluate the "significance" of such "distortions".
According to the Explanatory Memorandum to the Proposal, the proposed
methodology of normal value calculation "would allow the Commission to
establish and measure the actual magnitude of dumping being practised in normal
market conditions absent distortions".
Russia asked the EU to explain the meaning of the notions "actual
magnitude of dumping" and "normal market conditions absent
The EU was also asked to describe the methodology that is envisaged by the
Commission's drafters in order to evaluate "actual magnitude of
dumping" and "normal market conditions absent distortions".
According to trade officials, Bahrain (on behalf of the Gulf Cooperation Council),
China, Pakistan, Kazakhstan and Indonesia voiced concerns over the EU's
Bahrain said that the proposal by the EU Commission raised significant
questions for exporters to the EU, particularly the idea that EU investigators
can reject exporters' reported costs if significant distortions are found to
According to Bahrain, the EU seems to be trying to disadvantage certain
exporters without developing a clear concept, which would lead to
Such practices have already been found to be inconsistent with WTO rules
through dispute proceedings, it pointed out.
China commended the EU's shift away from NME designation. It said rising
protectionism means members must be particularly cautious in amending their
trade remedy practices.
It said this is one of the reasons why China made its new proposal on 24 April
on advancing negotiations on anti- dumping disciplines and other trade
However, China pointed out that the concept of "significant
distortion" is not defined in any WTO agreements. It leads some to wonder
whether this is an evolved version of the NME designation with a new title.
China asked the EU how it planned to implement this concept consistent with WTO
According to trade officials, the EU said that the Commission's proposal was
still subject to review and approval by the European Parliament and Council.
The EU cannot prejudge the outcome of that review, thus it was not in a
position to address the questions raised by members.
If and when the amendments are adopted, the EU will inform WTO members and
questions on the final measure can be submitted.
Asked whether WTO members could submit comments during the review, the EU said
numerous opportunities were given for comment prior to the publication of the
CHINA'S PROTOCOL OF ACCESSION
According to trade officials, China reminded the meeting that Section 15(a)(ii)
of its 2001 Protocol of Accession to the WTO expired on 11 December 2016 and
that members can no longer use the "surrogate methodology" permitted
by this provision in anti-dumping investigations.
Most members using the surrogate methodology have clearly stated their
intention to comply with their WTO obligations, but a few have not, said China.
China asked these members to respect their WTO obligations. It pointed out that
this was a legal - and not a political - issue and that China would use all
necessary measures to defend its rights.
The US said this was no longer an issue appropriate for discussion in the
Committee, as the matter was now the subject of WTO dispute proceedings (DS515
The US maintained that the expiry of a single provision under the section in
question does not mean members must grant China market economy status.
According to trade officials, Mexico also asked if it was appropriate to
discuss this matter in the Committee given that dispute proceedings are under
Mexico reiterated that it did not necessarily agree with China's interpretation
of Section 15 of the Protocol and that it can be interpreted in different ways.
Japan said that it was concerned with China's interpretation of the Protocol's
provisions. It said members may continue to use methodologies not based on a
strict comparison with costs in China.
In response, China underlined that the issue was appropriate for discussion in
It brought the dispute cases to the WTO because China adheres by the rules, and
it believed the DSB would justify China's complaint.
The Protocol reflects a compromise made by China and WTO members 16 years ago,
in black and white, and it was time to honour those commitments and terminate
the surrogate methodology, China said.
The Committee also discussed several country-specific concerns.
According to trade officials, the EU voiced concern over the US decision to
impose AD duties on imports of certain carbon and alloy steel cut-to-length
plate from Austria, Belgium, France, Germany, and Italy.
It maintained that the imported amounts were low and the dumping margins were
inflated as a result of the use of the "targeted" dumping methodology
which was recently condemned by the WTO in DS464, "US - Anti- dumping and
Countervailing Measures on large residential washers from Korea."
The EU said without the use of this methodology, no dumping would have been
found on some of the exports.
Japan reiterated its concerns with longstanding US AD measures on imported
Japanese products, including 16 that were in force for more than 20 years and
one that has been in place for 38 years.
Japan said that an AD measure can be extended beyond the normal 5-year limit
only if the authorities determined further dumping was probable, and not
Korea questioned US practices in investigations which led to the imposition of
AD duties on corrosion-resistant steel products as well as hot-rolled and
cold-rolled steel flat products.
According to Korea, US authorities denied information submitted by the targeted
companies and applied "total facts available", which has been
facilitated by amendments adopted in 2017 giving investigators greater leeway
to adopt this practice.
Korea said that use of this was contrary to WTO jurisprudence. Exporters were
being subject to "total facts available" regardless of how hard they
tried to cooperate with investigators, Korea added.
Korea also voiced concerns over use by the US Department of Commerce of a
practice known as "particular market situation" (PMS) in a review of
an AD order on imports of Korean oil country tubular goods (OCTG).
Under Section 504 of the Trade Preferences Extension Act of 2015, the US
Department of Commerce has the authority to address market distortions in the
production of foreign merchandise as part of its calculation of dumping margins
in anti-dumping proceedings.
This was used for the first time in the Korean OCTG case, which increased the
dumping margin and subsequent duties.
Korea underlined that the use of "total facts available" and PMS have
serious implications for the fundamental fairness and legitimacy of the trading
system as a whole.
Korea's concerns over the use of the PMS methodology were shared by China and
China said it was concerned about the orientation of US trade policy and
potential distortions to global supply chains. It also questioned the
consistency of Section 504 with WTO rules.
In response, the US said some of the investigations in question were still
The US maintained that Japan's "chronic" complaints about
longstanding measures are not justified. It argued that 80% of the measures
imposed on Japanese imports have been terminated.
As for the older measures, the US said that the Japanese firms in question have
not participated in reviews of the measure. The lack of evidence presented on
their part limits information available to the investigating authorities.
On Korea's concerns about the "total facts available" and the PMS
methodology, the US said neither practices have resulted in new
"thresholds" for imposing duties or the imposition of new standards.
Under Section 504, Commerce may use alternative costs if the cost of materials
reported does not accurately reflect the cost of production, said the US.
The Korean OCTG case was the first where PMS was applied, and Commerce will
continue developing this concept on a case-by-case basis when facts and
circumstances warrant, it added. +