WORLD TRADE TN/RL/W/213
30 November 2007
Negotiating Group on Rules
DRAFT CONSOLIDATED CHAIR TEXTS OF THE
AD AND SCM AGREEMENTS
Six years ago, in Doha, Members agreed to negotiations aimed at clarifying and improving disciplines under the AD and SCM Agreements, while preserving the basic concepts, principles and effectiveness of those Agreements. They also agreed to negotiations to clarify and improve disciplines on fisheries subsidies. Four years later, at Hong Kong, Ministers gave more precision to that objective, directed the Negotiating Group on Rules to intensify its work, and mandated me, as Chairman, to prepare consolidated texts of the AD and SCM Agreements. At the time, Ministers expected the Round to be completed in 2006, and I myself had hoped to circulate consolidated texts in July of that year.
That did not happen but we nevertheless made good use of the extra time available to us. In fact, at all times, we were jointly able to keep the pace and direction of the negotiations. With that purpose in mind we concentrated on detailed and text-based proposals. All that collective effort was positive and indeed helped me in moving the process forward. I am particularly thankful for those Participants who were able to clearly identify their priorities and were capable of putting them in legal language in effective time. Likewise, I am thankful to those who, being in a defensive position, nevertheless helped the process by seriously engaging in the discussions.
A new challenge
However, we have now reached a point of diminishing returns in our Negotiating Group and more importantly, we now face the challenge of starting a new phase. The overall negotiating process demands us to enter this new realm. With the prospect of concluding the Doha Round soon, we are now required not only to identify clearly our interests and the language we prefer to foster those national objectives, but rather to find also the way to accommodate others' concerns and interests. It is time to start seeking balance and to help the rest of the multilateral negotiations move forward too. With this perspective in mind I decided not to seek the safety of "waiting and seeing", but rather to assume fully my responsibilities and encourage you to start soon this much needed new stage of negotiations. I am therefore pleased to present the Group with draft consolidated texts as requested by Ministers.
The architecture, aim and objectives of these texts
I am putting these draft legal texts before the Group with the objective of stimulating serious reflection by Participants on the broad parameters of possible outcomes to the negotiations with respect to the mandate in paragraph 28 of the Doha Declaration. There are no brackets and no blanks, not because I expect or ask Participants to agree to the texts at this stage, but indeed because I consider that they are bracketed in their entirety. I thus ask Participants to treat the texts as documents for intensive technical and detailed work in the Group. In order to ensure such a specific and focused discussion, these draft texts are presented in the form of proposed revisions to the existing Agreements on Anti-Dumping and Subsidies and Countervailing Measures, as manifested in specific legal language.
While these draft texts address all aspects of the Doha mandate in paragraph 28, i.e., anti-dumping, subsidies and countervailing measures and fisheries subsidies, they do not reflect every proposal put before the Group. This does not of course preclude that the issues contained in those proposals could be addressed in a subsequent revision; my purpose in circulating these draft texts is precisely to obtain further guidance from Participants. I also note that, since the beginning of these negotiations, there has been a broad acceptance that changes to the anti-dumping rules should, where relevant and appropriate, also be made to the rules regarding countervailing measures, and that is also my intention. I have not in these texts transposed the draft revisions in the anti-dumping rules into the countervail context because our discussions have focused on anti-dumping and because such a transposition will require further technical discussion.
In preparing these draft texts, I have maintained as a paramount principle the need to achieve in the negotiations a balance that takes into account the interests of all Participants. I have therefore attempted to develop texts that I believe could facilitate the negotiation of a balanced outcome. Thus, while all Participants will, I believe, find that a number of their demands have been taken into account in these texts, every Participant will also find things that they do not like, and even that they dislike intensely. That is the normal, and indeed inevitable, result of a negotiating process where the objectives of Participants vary widely and are in many cases mutually incompatible. I call upon Participants to assess these texts as a whole, and to carefully consider those elements that respond to their demands and interests, rather than concentrating on those elements that they do not like.
The process ahead
With respect to further process, I repeat that I do not request or invite Participants to agree to anything in these draft texts at this point. These texts are not the end of our negotiating process but only the first step in a new phase involving further intensive discussions within the Group. What I do expect of Participants is realistic and pragmatic engagement. While up to now we have focused on considering the specific demands of Participants through the examination of negotiating proposals, this new phase of our work must involve real negotiations where Participants will have to take into account the needs of their negotiating partners as they pursue their own objectives.
We will start these discussions in two weeks time, with a first look at the texts in each of the three areas of our work (anti-dumping, subsidies and countervailing measures, fisheries subsidies). At that meeting I need to hear your views as to whether these texts contain the elements necessary to work towards an appropriately balanced outcome, and if not, an explanation why not and, most importantly, where and how you believe such a balance might be found. We will meet again in the weeks of 21 January and 11 February 2008 for a more in-depth process in which we will identify specific problems and then seek to start resolving them. My intention is to circulate revised draft texts as soon thereafter as I have a sufficient basis to do so.
AGREEMENT ON IMPLEMENTATION OF ARTICLE VI
OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994
Members hereby agree as follows:
An anti-dumping measure shall be applied only under the circumstances provided for in 1Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordance with
the provisions of this Agreement. The following provisions govern the application of Article VI of GATT 1994 in so far as action is taken under anti-dumping legislation or regulations.
Determination of Dumping
2.1 For the purpose of this Agreement, a product is to be considered as being dumped, i.e. introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.
2.2 When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume 2, such sales do not permit a proper of the sales in the domestic market of the exporting country
comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits.
2.2.1 Sales of the like product in the domestic market of the exporting country or
sales to a third country at prices below per unit (fixed and variable) costs of
production plus administrative, selling and general costs may be treated as
not being in the ordinary course of trade by reason of price and may be 3disregarded in determining normal value only if the authorities determine 4that such sales are made within an extended period of time in substantial
1 The term "initiated" as used in this Agreement means the procedural action by which a Member formally commences an investigation as provided in Article 5. 2 Sales of the like product destined for consumption in the domestic market of the exporting country shall normally be considered a sufficient quantity for the determination of the normal value if such sales constitute 5 per cent or more of the sales of the product under consideration to the importing Member, provided that a lower ratio should be acceptable where the evidence demonstrates that domestic sales at such lower ratio are nonetheless of sufficient magnitude to provide for a proper comparison. 3 When in this Agreement the term "authorities" is used, it shall be interpreted as meaning authorities at an appropriate senior level. 4 The extended period of time should normally be one year but shall in no case be less than six months.
5quantities and are at prices which do not provide for the recovery of all costs
within a reasonable period of time. If prices which are below per unit costs at
the time of sale are above weighted average per unit costs for the period of
investigation, such prices shall be considered to provide for recovery of costs
within a reasonable period of time.
184.108.40.206 For the purpose of paragraph 2, costs shall normally be
calculated on the basis of records kept by the exporter or producer
under investigation, provided that such records are in accordance
with the generally accepted accounting principles of the exporting
country and reasonably reflect the costs associated with the
production and sale of the product under consideration. Authorities
shall consider all available evidence on the proper allocation of costs,
including that which is made available by the exporter or producer in
the course of the investigation, giving due regard to any cost
provided that such allocations have been historically utilized by the
exporter or producer, in particular in relation to establishing
appropriate amortization and depreciation periods and allowances
for capital expenditures and other development costs. Unless already
reflected in the cost allocations under this sub-paragraph, costs shall
be adjusted appropriately for those non-recurring items of cost which
benefit future and/or current production, or for circumstances in
which costs during the period of investigation are affected by start-up 6operations.
2.2.2 For the purpose of paragraph 2, the amounts for administrative, selling and
general costs and for profits shall be based on actual data pertaining to
production and sales in the ordinary course of trade of the like product by the
exporter or producer under investigation. When such amounts cannot be
determined on this basis, the amounts may be determined on the basis of:
(i) the actual amounts incurred and realized by the exporter or
producer in question in respect of production and sales in the
domestic market of the country of origin of the same general
category of products;
(ii) the weighted average of the actual amounts incurred and
realized by other exporters or producers subject to
investigation in respect of production and sales of the like
product in the domestic market of the country of origin;
(iii) any other reasonable method, provided that the amount for
profit so established shall not exceed the profit normally
realized by other exporters or producers on sales of products
5 Sales below per unit costs are made in substantial quantities when the authorities establish that the weighted average selling price of the transactions under consideration for the determination of the normal value is below the weighted average per unit costs, or that the volume of sales below per unit costs represents not less than 20 per cent of the volume sold in transactions under consideration for the determination of the normal value. 6 The adjustment made for start-up operations shall reflect the costs at the end of the start-up period or, if that period extends beyond the period of investigation, the most recent costs which can reasonably be taken into account by the authorities during the investigation.
of the same general category in the domestic market of the
country of origin.
2.3 In cases where there is no export price or where it appears to the authorities concerned that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer, or if the products are not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as the authorities may determine.
2.4 A fair comparison shall be made between the export price and the normal value. This comparison shall 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 shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which 7are also demonstrated to affect price comparability. In the cases referred to in paragraph 3,
allowances for costs, including duties and taxes, incurred between importation and resale, and for profits accruing, should also be made. If in these cases price comparability has been affected, the authorities shall establish the normal value at a level of trade equivalent to the level of trade of the constructed export price, or shall make due allowance as warranted under this paragraph. The authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties.
2.4.1 When the comparison under paragraph 4 requires a conversion of currencies,
such conversion should be made using the rate of exchange on the date of 89sale taken from a source of recognized authority, provided that when a sale
of foreign currency on forward markets is directly linked to the export sale
involved, the rate of exchange in the forward sale shall be used. Fluctuations
in exchange rates shall be ignored and in an investigation the authorities shall
allow exporters at least 60 days to have adjusted their export prices to reflect
sustained movements in exchange rates during the period of investigation.
220.127.116.11 The source of recognized authority normally used, and the
specific method normally followed by the authorities in applying
subparagraph 4.1, shall be set forth in the laws, regulations or
published administrative procedures of the Member concerned, and
their application to each particular case shall be transparent and
18.104.22.168 If, in a particular case, a Member does not use the source of
recognized authority or specific method set forth in its laws,
regulations or published administrative procedures, it shall explain in
the relevant public notices under Article 12 why it did not use such
source or method.
7 It is understood that some of the above factors may overlap, and authorities shall ensure that they do not duplicate adjustments that have been already made under this provision. 8 Normally, the date of sale would be the date of contract, purchase order, order confirmation, or invoice, whichever establishes the material terms of sale. 9 Sources of recognized authority may include central banks, multilateral financial institutions, widely distributed financial journals, or other sources not created primarily for the purpose of conducting anti-dumping proceedings.
2.4.2 Subject to the provisions governing fair comparison in paragraph 4, the
existence of margins of dumping during thein an investigation phase initiated
pursuant to Article 5 shall normally be established on the basis of a
comparison of a weighted average normal value with a weighted average of
prices of all comparable export transactions or by a comparison of normal
value and export prices on a transaction-to-transaction basis. A normal value
established on a weighted average basis may be compared to prices of
individual export transactions if the authorities find a pattern of export prices
which differ significantly among different purchasers, regions or time periods,
and if an explanation is provided as to why such differences cannot be taken
into account appropriately by the use of a weighted average-to-weighted
average or transaction-to-transaction comparison.
2.4.3 When the authorities aggregate the results of multiple comparisons in order to
establish the existence or extent of a margin of dumping, the provisions of
this paragraph shall apply:
(i) when, in an investigation initiated pursuant to Article 5, the
authorities aggregate the results of multiple comparisons of a
weighted average normal value with a weighted average of prices of
all comparable export transactions, they shall take into account the
amount by which the export price exceeds the normal value for any of
(ii) when, in an investigation initiated pursuant to Article 5, the
authorities aggregate the results of multiple comparisons of normal
value and export prices on a transaction-to-transaction basis or of
multiple comparisons of individual export transactions to a weighted
average normal value, they may disregard the amount by which the
export price exceeds the normal value for any of the comparisons.
(iii) when, in a review pursuant to Articles 9 or 11, the authorities
aggregate the results of multiple comparisons, they may disregard the
amount by which the export price exceeds the normal value for any of
2.4.4 When there are differences with respect to models, types, grades or quality
within the product under consideration, the authorities shall provide exporters
and foreign producers with timely opportunities to express their views
regarding possible categorization and matching for purposes of comparison.
This shall not prevent the authorities from proceeding expeditiously with the
2.5 In the case where products are not imported directly from the country of origin but are exported to the importing Member from an intermediate country, the price at which the products are sold from the country of export to the importing Member shall normally be compared with the comparable price in the country of export. However, comparison may be made with the price in the country of origin, if, for example, the products are merely transshipped through the country of export, or such products are not produced in the country of export, or there is no comparable price for them in the country of export.
2.6 Throughout this Agreement:
(a) The term "product under consideration" shall be interpreted to mean the imported
product subject to investigation or review. The product under consideration shall be
limited to imported products that share the same basic physical characteristics. The
existence of differences with respect to factors such as models, types, grades and
quality shall not prevent imported products from being part of the same product under
consideration if they share the same basic physical characteristics. Whether such
differences are so significant as to preclude inclusion of imported products within a
single product under consideration shall be determined on the basis of relevant factors,
which may include similarity in use, interchangeability, competition in the same
market and distribution through the same channels.
(b) Tthe term "like product" ("produit similaire") shall be interpreted to mean a product
which is identical, i.e. alike in all respects to the product under consideration, or in
the absence of such a product, another product which, although not alike in all
respects, has characteristics closely resembling those of the product under
2.7 This Article is without prejudice to the second Supplementary Provision to paragraph 1 of Article VI in Annex I to GATT 1994.
10Determination of Injury
3.1 A determination of injury for purposes of Article VI of GATT 1994 shall be based on positive 11evidence and involve an objective examination of both (a) the volume of the dumped imports and
the effect of the dumped imports on prices in the domestic market for like products, and (b) the
consequent impact of these imports on domestic producers of such products.
3.2 With regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in the importing Member. With regard to the effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of a like product of the importing Member, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. No one or several of these factors can necessarily give decisive guidance.
3.3 Where imports of a product from more than one country are simultaneously subject to anti-dumping investigations, the investigating authorities may cumulatively assess the effects of such imports only if they determine that (a) the margin of dumping established in relation to the imports
from each country is more than de minimis as defined in paragraph 8 of Article 5 and the volume of
imports from each country is not negligible and (b) a cumulative assessment of the effects of the
10 Under this Agreement the term "injury" shall, unless otherwise specified, be taken to mean material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of such an industry and shall be interpreted in accordance with the provisions of this Article. 11 For purposes of a determination of injury under this Article, imports attributable to any exporter or producer for which the authorities determine a margin of dumping of zero or de minimis shall not be considered
to be "dumped imports".
imports is appropriate in light of the conditions of competition between the imported products and the conditions of competition between the imported products and the like domestic product.
3.4 The examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments. This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.
3.5 It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this Agreement. The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities. The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries ous effects of caused by these other factors must not be attributed 12to the dumped imports. The examination required by this paragraph may be based on a qualitative analysis of evidence concerning, inter alia, the nature, extent, geographic concentration, and timing of
such injurious effects. While the authorities should seek to separate and distinguish the injurious effects of such other factors from the injurious effects of dumped imports, they need not quantify the injurious effects attributable to dumped imports and to other factors, nor weigh the injurious effects of dumped imports against those of other factors. Factors which may be relevant in this respect include,
inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry.
3.6 The effect of the dumped imports shall be assessed in relation to the domestic production of the like product when available data permit the separate identification of that production on the basis of such criteria as the production process, producers' sales and profits. If such separate identification of that production is not possible, the effects of the dumped imports shall be assessed by the examination of the production of the narrowest group or range of products, which includes the like product, for which the necessary information can be provided.
3.7 A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a 13situation in which the dumping would cause injury must be clearly foreseen and imminent. In
making a determination regarding the existence of a threat of material injury, the authorities shall consider the state of the domestic industry during the period of investigation, including an examination of the impact of dumped imports upon it in accordance with paragraph 4, in order to establish a background for the evaluation of threat of material injury. In addition, the authorities should consider, inter alia, such factors as:
(i) a significant rate of increase of dumped imports into the domestic market indicating
the likelihood of substantially increased importation;
12 Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not
sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry. 13 One example, though not an exclusive one, is that there is convincing reason to believe that there will be, in the near future, substantially increased importation of the product at dumped prices.
(ii) sufficient freely disposable, or an imminent, substantial increase in, capacity of the
exporter indicating the likelihood of substantially increased dumped exports to the
importing Member's market, taking into account available evidence concerning the
availability of other export markets to absorb any additional exports;
(iii) whether imports are entering at prices that will have a significant depressing or
suppressing effect on domestic prices, and would likely increase demand for further
(iv) inventories of the product being investigated.
No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped exports are imminent and that, unless protective action is taken, material injury would occur.
3.8 With respect to cases where injury is threatened by dumped imports, the application of anti-dumping measures shall be considered and decided with special care.
3.9 A determination of material retardation of the establishment of a domestic industry shall be based on facts and not merely on allegation, conjecture or remote possibility. An industry may be considered to be in establishment where a genuine and substantial commitment of resources has been made to domestic production of a like product not previously produced in the territory of the importing Member, but production has not yet begun or has not yet been achieved in commercial 14volumes. In making a determination whether an industry is in establishment, and in examining the impact of dumped imports on the establishment of that industry, the authorities may take into account evidence concerning, inter alia, installed capacity, investments made and financing obtained, and 15feasibility studies, investment plans or market studies.
Definition of Domestic Industry
4.1 For the purposes of this Agreement, and except to the extent otherwise provided in Article 5.4, the term "domestic industry" shall be interpreted as referring to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products, except that:
14 The authorities may however consider that an industry is in establishment notwithstanding the existence of established producers of the domestic like product, if those established producers are not able to satisfy domestic demand for the product in question to any substantial degree; provided that under no circumstances shall an industry be considered to be in establishment if the collective production capacity of established producers exceeds 10 per cent of domestic demand for the product in question. 15 Members recognize that an examination of possible material retardation relates to the impact of dumped imports on the efforts of the industry to become established, and that this type of impact may not be reflected in actual or potential declines in performance. Nonetheless, the authorities shall evaluate, to the extent that data exists, available information with respect to all economic factors and indices relevant to an examination of material retardation of the establishment of the domestic industry in question.
16(i) when producers are related to the exporters or importers or are themselves importers
of the allegedly dumped product under consideration, the term "domestic industry" 17,18 may be interpreted as referring to the rest of the producers;
(ii) in exceptional circumstances the territory of a Member may, for the production in
question, be divided into two or more competitive markets and the producers within
each market may be regarded as a separate industry if (a) the producers within such
market sell all or almost all of their production of the product in question in that
market, and (b) the demand in that market is not to any substantial degree supplied by
producers of the product in question located elsewhere in the territory. In such
circumstances, injury may be found to exist even where a major portion of the total
domestic industry is not injured, provided there is a concentration of dumped imports
into such an isolated market and provided further that the dumped imports are causing
injury to the producers of all or almost all of the production within such market.
4.2 When the domestic industry has been interpreted as referring to the producers in a certain area, 19i.e. a market as defined in paragraph 1(ii), anti-dumping duties shall be levied only on the products
in question consigned for final consumption to that area. When the constitutional law of the importing Member does not permit the levying of anti-dumping duties on such a basis, the importing Member may levy the anti-dumping duties without limitation only if (a) the exporters shall have been
given an opportunity to cease exporting at dumped prices to the area concerned or otherwise give assurances pursuant to Article 8 and adequate assurances in this regard have not been promptly given, and (b) such duties cannot be levied only on products of specific producers which supply the area in question.
4.3 Where two or more countries have reached under the provisions of paragraph 8(a) of Article XXIV of GATT 1994 such a level of integration that they have the characteristics of a single, unified market, the industry in the entire area of integration shall be taken to be the domestic industry referred to in paragraph 1.
4.4 The provisions of paragraph 6 of Article 3 shall be applicable to this Article.
16 For the purpose of this paragraph, producers shall be deemed to be related to exporters or importers only if (a) one of them directly or indirectly controls the other; or (b) both of them are directly or indirectly
controlled by a third person; or (c) together they directly or indirectly control a third person, provided that there are grounds for believing or suspecting that the effect of the relationship is such as to cause the producer concerned to behave differently from non-related producers. For the purpose of this paragraph, one shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter. 17 In determining whether to exclude a producer from the domestic industry in cases where that producer is itself an importer of the product under consideration, the authorities shall consider, inter alia, the
extent of that producer's imports of that product relative to its total sales of the domestic like product in the market of the importing country and the range of the allegedly dumped goods imported by that producer relative to the range of its domestic production and sales of the like product. Evidence that the producer's imports of the allegedly dumped product are small relative to its total sales of the domestic like product in the market of the importing country or that the goods imported by that producer represent a limited number of models relative to the range of models of the domestic like product produced and sold domestically by the producer would normally favour a conclusion that the producer should not be excluded from the domestic industry. 18 The reasons underlying any decision by the authorities to exclude from the domestic industry producers that are related to the exporters or importers or are themselves importers of the allegedly dumped product shall be set forth in the relevant public notices or separate reports required by Article 12. 19 As used in this Agreement "levy" shall mean the definitive or final legal assessment or collection of a duty or tax.