WORKSHOP ON TRADE REMEDIES ANTIDUMPING

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WORKSHOP ON TRADE REMEDIES - ANTIDUMPING
Professor David A. Gantz University of
Arizona, James E. Rogers College of Law Ho Chi
Minh City, August 2004
gantz_at_law.arizona.edu Sponsored by The
U.S.-Vietnam Trade Council Education
Forum usvtc_at_usvtc.org
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I. Trade Remedies - Safeguards

• GATT, Art. XIX contains escape clause
  permitting reimposition of tariffs or quotas as a
  result of increasing imports causing serious
  injury to domestic producers
• Such language found in GATT 1947 and most other
  trade agreements

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I. Safeguards, contd.

• Another requirement is unforeseen
  circumstances, unexpected surges as a result of
  tariff concessions, which is difficult to prove.
• WTO Agreement on Safeguards provides detailed
  procedural and substantive requirements for
  initiation of safeguard measures

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I. Safeguards, contd.

• Many countries, such as US, exempt FTA partners
  from global safeguards, although WTO Appellate
  Body has made this very difficult.
• Developing country exports are exempted if a
  country represents under 3 of total exports, or
  developing countries in the aggregate, under 9

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I. Safeguards, contd.

• US Steel Safeguards confirmed that only
  increased imports throughout the period of
  investigation would be sufficient justification
  for safeguards.
• FTA members who were major producers Mexico and
  Canada could not be excluded if their imports
  were covered in the investigation

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I. Safeguards, contd.

• Difficulties with regard to showing that imports
  were cause of serious injury, FTA issues,
  unforeseen circumstances, makes a WTO legal
  safeguards action by Member nations unlikely.
• U.S. has special safeguards for market
  disruption for NMEs lower standard

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II. Trade Remedies - Dumping

• Dumping most common of trade remedies over 100
  WTO Members have AD laws, as does Vietnam
• Most common users are US, India, EU, Australia
  and Argentina
• To impose AD duty, domestic industry needs to
  show dumping, and material injury

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II. Dumping, contd.

• WTO AD Agreement defines dumping as price
  discrimination between foreign and domestic
  markets
• More logical focus on sales below production
  cost, or predatory pricing, is not used
• AD laws best seen as a safety valve for freer
  trade worldwide

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II. Dumping, contd.

• Normal Value (NV) (usually price in home market)
  compared to Export Price (EP)
• If EP is lower than NV, difference is dumping
  margin, with de minimis level of 2
• AD Agreement provides detailed procedural
  protections and substantive rules for national
  investigating authorities

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II. Dumping, contd.

• Under AD Agreement and national laws, various
  adjustments are to be made to NV and EP so as to
  provide a fair comparison.
• Adjustment for freight, circumstances of sale,
  differences in merchandise are designed to result
  in a fair comparison at the ex factory level

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II. Dumping, contd.

• Non-Market economy countries, such as Vietnam and
  China, are treated differently
• US, EU assume that various materials and
  production costs (input data) are not set by
  market forces, but through government decisions,
  and are therefore untrustworthy

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II. Dumping, contd.

• Instead, Commerce (or the Commission) uses a
  surrogate, normally a market economy country
  such as India or Bangladesh that is a significant
  producer of the product, and is at a similar
  level of development
• In theory this seems reasonable, but the lack of
  detailed public data from producers in the
  surrogate country permit Commerce to make many
  assumptions or adjustments that may be adverse to
  NME country producers.

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II. Dumping, contd.

• China, in its Accession Agreement with the United
  States, accepted the concept of NME treatment for
  15 years!
• US and China had recent discussions as to how
  China can become a market economy for AD purposes
  (like Russia) but it likely will take many years
  to change

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II. Dumping, contd.

• Commerce initially determined that Vietnam would
  be given NME treatment as part of Basa/Catfish,
  based on
• Government intervention in economy
• Non-convertibility of dong
• Controls on foreign investment and investors
• Use of government pricing committees
• Discriminatory treatment of SOEs
• Restrictions on private land ownership
• Weak rule of law

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II. Dumping, contd.

• While the surrogate approach is used for NV,
  Vietnamese (and most Chinese), exporters have
  been given separate rates for determining EP
• This is based on Commerce determination that the
  exporters determine selling prices without
  government direction or interference.

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II. Dumping, contd.

• In BASA/Catfish, Commerce used input data from
  India and Bangladesh, and found margins of
  approximately 36-64
• The US International Trade Commission found
  material injury, based on the significant
  increases in Vietnamese imports over three years,
  and lower prices in the U.S. market

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II. Dumping, contd.

• While small producer countries are exempt from AD
  injury findings if they have imports which are
  less than 3 individually or less than 7 in the
  aggregate (Art. 5.8), Vietnam was responsible for
  a far larger share of total U.S. imports.

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II. Dumping, contd.

• In Shrimp, Commerce found preliminary AD margins
  of 12.11 to 19.60 for most Vietnamese
  producers, although a group of others received
  93.13 margins
• A Bangladeshi company was used as the surrogate
  for most input prices

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II. Dumping, contd.

• Final AD determination could result in higher or
  lower margins, after verification in Vietnam and
  a hearing in Washington
• If final AD margins are found, likely that USITC
  will find material injury, as Vietnam source
  imports (and those from five others, China,
  Brazil, Ecuador, India, Thailand) are rapidly
  increasing, while the U.S. domestic producer
  market share is decreasing.

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III. Trade Remedies Subsidies

• US doesnt bring countervailing duty (CVD)
  actions against NMEs
• US may nevertheless bring WTO actions against
  Vietnam (once Vietnam is a member) in WTO DSB
  against Vietnams prohibited or actionable
  subsides under Parts II and III of SCM Agreement

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III. Subsidies

• Subsidy defined (Art. 1 of SCM Agreement) as
  financial contribution that confers a benefit on
  recipient
• Actionable or yellow light subsidies are
  domestic subsidies that are specific and cause
  injury, nullification or impairment or serious
  prejudice. (Arts. 5,6)

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III. Subsidies

• Export (Red Light) subsidies are prohibited
  under Art. 3 except for least developed
  developing countries.
• Certain subsidies (Art. 8) were from 1995-2000
  specifically excluded Green Light subsidies
  were certain environmental, regional and RD
  subsidies.

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III. Subsidies

• Developing countries, including Vietnam once
  Vietnam is a member and no longer treated as an
  NME, receive certain benefits
• Excluded if their exports are 4 or less of
  import value, 9 or less in aggregate
• 2 de minimis level instead of 1
• Grace periods for export subsidies (now expired)