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Normative Obsolescence of the WTO Anti-Dumping Agreement—Topography of the Global Use and Misuse of Initiations and Measures

Published online by Cambridge University Press:  22 May 2015

Julien CHAISSE  and
Debashis CHAKRABORTY
Julien CHAISSE
Affiliation:
The Chinese University of Hong Kong, SAR, People's Republic of [email protected]
Debashis CHAKRABORTY
Affiliation:
Indian Institute of Foreign Trade, New Delhi, [email protected]
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Abstract

The Anti-Dumping (AD) mechanism is susceptible to potential misuse for protectionist purposes, and the current explosion of AD disputes indicate a massive problem in the way international trade rules are implemented. The current World Trade Organisation (WTO) negotiations have identified areas within the Anti-Dumping Agreement (ADA) for possible reform; accordingly, the present analysis discusses these areas of concern relating to the AD provision. First, recent trends in AD practice will be analyzed both quantitatively and qualitatively to show the growing role of Asian economies. In particular, the traditional targets of AD activism, China and India, have initiated a number of AD investigations over the last decade, while imposing final measures on several occasions. Second, the ADA will be examined alongside a discussion of the potential risks of misinterpretation. Third, the paper will analyze all the complaints lodged at the WTO Dispute Settlement Body (DSB) on ADA to date.

Type
Articles
Information
Asian Journal of International Law , Volume 6 , Issue 2 , July 2016 , pp. 233 - 263
Copyright
Copyright © Asian Journal of International Law 2015 

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Footnotes

*

Associate Professor, Faculty of Law, and Director of the Centre for Financial Regulation and Economic Development (CeFRED), The Chinese University of Hong Kong.

**

Assistant Professor of Economics, Indian Institute of Foreign Trade, New Delhi. The authors would like to thank Maxime Baudoin, Sufian Jusoh, and Bryan Mercurio for comments on earlier drafts of this paper. We also thank the editor and two anonymous reviewers of the Journal for their constructive comments, which helped us to improve the manuscript. The views expressed by the authors here are personal.

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20. For instance, the US basically considers that the “provision of Article 17.6(h) of the Anti-dumping Agreement (which stipulates in part that ‘Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities’ measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations’) should lead to the conclusion that countries’ calculation of dumping margin based on the zeroing method should be found inconsistent with the agreement”. But the Appellate Body adopted opposite views, not accepting the legitimacy of zeroing practice under the Anti-dumping Agreement in a number of cases, including DS 294 (United States-Laws, Regulations and Methodology for Calculating Dumping Margins (Zeroing)), DS 322 (United States-Measures Relating to Zeroing and Sunset Reviews), and DS 350 (United States-Continued Existence and Application of Zeroing Methodology). This is part of the reasons that in the Doha Round, the US proposed to negotiate and adopt clearer and more precise rules under the Anti-dumping Agreement to permit the use of zeroing in both investigations and administrative reviews in anti-dumping procedures [FN22]. This is a clear example showing that the quasi-judicial activities of the DSM under the WTO can trigger multilateral negotiations so as to restrict the exercise of the quasi-judicial power of the Appellate Body. Chang-fa LO, “The Role of Dispute Settlement Mechanism in Facilitating Multilateral Trade Negotiations” (2014) 9 Asian Journal of WTO and International Health Law and Policy 407 at 410.

21. Up to the 1980s, the “anti-dumping club” initiated almost all cases.

22. For instance, among the five cases filed by China since September 2008, four (U.S.-Anti-Dumping and Countervailing Duties; EU-Steel Fasteners; U.S.-Tyres; and EU-Footwear) were aimed at changing the rules, especially the provisions in China's Accession Protocol. For example, in the U.S.-Anti-Dumping and Countervailing Duties case, China challenged the decision by the US authorities to impose both anti-dumping and countervailing duties against several products imported from China. In addition to the usual claims under the GATT, the Anti-dumping Agreement, and the SCM Agreement, two claims made by China are particularly interesting, and are described in more detail in Henry GAO, “Elephant in the Room: Challenges of Integrating China into the WTO System” (2014) Asian Journal of WTO and International Health Law and Policy 137 at 141–3.

23. RAJU, K.D., “WTO Anti-dumping Protectionism: 2005 and Beyond” in J.K. MITTAL and K.D. RAJU, eds., World Trade Organisation and India: A Critical Study of Its First Decade (Delhi: New Era Law Publications 2005)Google Scholar, at 204.

24. The question of to whom this is a “problem” is open to interpretation. Most authors argue that anti-dumping measures are an impediment to free trade.

25. See CHAISSE, Julien and CHAKRABORTY, Debashis, “The Evolving and Multi-layered Investment Regulatory Framework between the European Union and India” (2014) 20 European Law Journal 385Google Scholar.

26. Chad P. BOWN, “The Global Resort to Antidumping, Safeguards, and other Trade Remedies Amidst the Economic Crisis”, World Bank Policy Research Working Paper No. 5051, 2009.

27. WTO Panel Report, United States-Anti-Dumping Measures on Shrimp and Diamond Sawblades from China, WT/DS422/R/Add.1, 8 June 2012; United States-Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice from Brazil, WT/DS382/R, 25 March 2011.

28. HORLICK, Gary and VERMULST, Edwin, “The 10 Major Problems With the Anti-dumping Instrument: An Attempt at Synthesis” (2005) 39 Journal of World Trade 67Google Scholar at 67–70.

29. See MARSDEN, Philip, ed., A Competition Policy for the WTO (London: Cameron May, 2003)Google Scholar, arguing that the discussion of competition rules at the WTO should focus on whether competition authorities tolerate business practices that may exclude business competitors; REICH, Arie, “The WTO as a Law-Harmonizing Institution” (2004) 25 University of Pennsylvania Law School Journal of International Economic Law 321Google Scholar at 355–6 (acknowledging “a common criticism that [the WTO] only caters to the interests of business and multinationals and not to ‘plain people”’); BUTCHER, Bill and IP, Mary, “Are Chinese Consumers Winners or Losers Under WTO Membership?” (2007) 4 Macquarie Journal of Business Law 71Google Scholar at 72 (arguing that the primary focus of the WTO is not on the consumers of products and services but rather in trade itself); cf. Joshua D. WRIGHT, “The Antitrust/Consumer Protection Paradox: Two Policies at War with Each Other” (2012) 121 Yale Law Journal 2216 (arguing that the link between antitrust and consumer protection has been clearly established in the literature regarding domestic law).

30. Art 2.4.2, Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, 15 April 1994; Annex 1A, Marrakesh Agreement Establishing the World Trade Organisation, 1868 U.N.T.S. 201.

31. JACKSON, J.H., “Introduction: Perspectives on Antidumping Law and Policy” (1979) 1 Michigan Yearbook of International Legal Studies 1–10Google Scholar; Gary N. HORLICK and Eleanor C. SHEA, “The World Trade Organization Antidumping Agreement” (1995) 29 Journal of World Trade 5 at 5; BRONCKERS, Marco C.E.J. and MCNELIS, N., “Rethinking the ‘Like Product’ Definition in WTO Anti-Dumping Law” (1999) 33 Journal of World Trade 73Google Scholar at 73.

32. The export price is the price at which it is designated to be sold. For a presentation of the substantive rules for dumping calculations, see JACKSON, John H., DAVEY, William J., and SYKES, Alan O., Cases, Materials and Text on Legal Problems of International Economic Relations, 5th ed. (Eagan, MN: West, 2008) at 770–782Google Scholar.

33. See DIAMOND, Richard, “A Search for Economic and Financial Principles in the Administration of United States Countervailing Duty Law” (1989–1990) 21 Law and Policy in International Business 507Google Scholar at 533–4.

34. See art. XXI, General Agreement on Tariffs and Trade, 30 October 1947, 61 Stat. A-11, 55 U.N.T.S. 194 at art. VI. Note that dumping itself is not per se incompatible with the WTO. The causal link is critical. Also, this third and additional requirement can “constrain the ability of countries to impose duties against the exporter. However, the failure of art. VI or the ADA to provide a definition of what constitutes material injury limits the usefulness of that provision as a shield. While the Appellate Body has held that injury determinations can only be based on “an ‘objective examination’ of ‘positive evidence’” (Appellate Body Report, United States-Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, P 192, WT/DS184/AB/R (July 24 2001)) and verifiable evidence, these terms still give much leeway to the examining agencies for determining how to interpret evidence and do not even require the importing country to disclose all of the factors it considered in reaching its conclusion.” See BOLTON, Reid M., “Anti-Dumping and Distrust: Reducing Anti-Dumping Duties Under the WTO Through Heightened Scrutiny” (2011) 29 Berkeley Journal of International Law 66Google Scholar at 75.

35. WTO Appellate Body Report, Thailand-Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland (Thailand-H-Beams), WT/DS122/AB/R, 12 March 2001.

36. The DSU largely contributes to ensuring the conformity of domestic anti-dumping measures with international rules. In this respect, the Appellate Body stated that: “Article XVI:4 of the WTO Agreement provides that ‘[e]ach Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements’, which include the Anti-Dumping Agreement and the SCM Agreement.” Appellate Body Report, United States-Continued Dumping and Subsidy Offset Act of 2000, para. 301, WT/DS217/AB/R, WT/DS234/AB/R (16 January 2003). On the very issue of compliance with WTO law, see Julien CHAISSE, “Deconstructing the WTO Conformity Obligation: A Theory of Compliance as a Process” (2015) 38 Fordham International Law Journal 57 at 64.

37. See William ASCHER, “Expanding the ‘Geography’ of Policy Options to Reduce Greenhouse Gas Emissions: A Commentary on Hari Osofsky's The Geography of Solving Global Environmental Problems” (2013–14) 58 New York Law School Law Review 859 at 866. The Agreement contains rules governing the calculation of dumping margins. In the usual case, the Agreement requires either the comparison of the weighted average normal value to the weighted average of all comparable export prices, or a transaction-to-transaction comparison of normal value and export price (art. 2.4.2). A different basis of comparison can be used if there is “targeted dumping”: that is, if a pattern exists of export prices differing significantly among different purchasers, regions, or time periods. In this situation, if the investigating authorities provide an explanation as to why such differences cannot be taken into account in weighted average-to-weighted average or transaction-to-transaction comparisons, the weighted average normal value can be compared to the export prices on individual transactions.

38. European Union-Anti-Dumping Measures on Biodiesel from Indonesia-Request for Consultations by Indonesia, G/ADP/D104/1; G/L/1071; WT/DS480/1, 17 June 2014.

39. GATT Penal Report, EC-Anti-Dumping Duties on Audio Tapes in Cassettes Originating in Japan (EC-Audio Cassettes), ADP/136, 13 April 1995.

40. WTO Appellate Body Report, European Communities-Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India (EC-Bed Linen), WT/DS141/AB/R, 1 March 2001.

41. WTO Panel Report, United States-Final Dumping Determination on Softwood Lumber from Canada (US-Softwood Lumber V), WT/DS264/R, para. 128, 13 April 2004.

42. Request for Consultations by the European Communities, United States-Continued Existence and Application of Zeroing Methodology (US-Continued Zeroing), WT/DS350/1, 3 November 2006.

43. Summing up the findings for United States-Anti-Dumping Measure on Shrimp from Ecuador, the panel noted that, “USDOC acted inconsistently with Article 2.4.2 in its final and amended final affirmative determinations of sales at less than fair value (dumping) with respect to certain frozen warm water shrimp from Ecuador, and in its final anti-dumping duty order”. WTO Panel Report, United States-Anti-Dumping Measure on Shrimp from Ecuador (US-Shrimp Ecuador), WT/DS335/R, para. 23, 30 January 2007.

44. WTO Appellate Body Report, United States-Continued Dumping and Subsidy Offset Act of 2000 (US-Offset Act), WT/DS217/AB/R, WT/DS234/AB/R, 16 January 2003.

45. WTO Panel Report, United States-Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan (US-Hot-Rolled Steel), WT/DS184/R, 28 February 2001.

46. If you are excluding the use of a product by another unit of the same company, or consumption by the same company is excluded, the total production will always be less in the books.

47. WTO Panel Report, Argentina-Definitive Anti-Dumping Duties on Poultry from Brazil (Argentina-Poultry Anti-Dumping Duties), WT/DS241/R, 22 April 2003.

48. WTO Appellate Body Report, European Communities-Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil (EC-Tube or Pipe Fittings), WT/DS219/AB/R, 22 July 2003.

49. WTO Panel Report, European Communities-Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil (EC-Tube or Pipe Fittings), WT/DS219/R, 7 March 2003.

50. WTO Panel Report, European Communities-Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India (EC-Bed Linen), WT/DS141/R, 30 March 2000.

51. WTO Panel Report, Egypt-Definitive Anti-Dumping Measures on Steel Rebar from Turkey (Egypt-Steel Rebar), WT/DS211/R, 8 August 2002.

52. Art. VI(8) permits the investigating authorities to use the available data if the respondent refuses or if the submitted data is non-viable.

53. It is pertinent that no clear-cut definition is available for a “non-market economy”. Usually, economies that do not work on market principles are considered as NMEs, for example, China, Vietnam, and Russia.

54. This Act is popularly known as the “Byrd Amendment”.

55. Jacob VINER, Dumping: A Problem in International Trade (Chicago: University of Chicago Press, 1923) at 147.

56. Indiscriminate recourse to AD actions has caused alarm among researchers, analysts, and administrators about its efficacy and its misuse as a protectionist measure. The current AD practice has created a paradoxical situation in which it is out of line with the spirit and philosophy of the WTO.

57. See CHAISSE, Julien and CHAKRABORTY, Debashis, “Implementing WTO Rules Through Negotiations and Sanction: The Role of Trade Policy Review Mechanism and Dispute Settlement System” (2007) 28 University of Pennsylvania Journal of International Economic Law 153–185Google Scholar. See also CHAISSE, Julien and MATSUSHITA, Mitsuo, “Maintaining the WTO's Supremacy in the International Trade Order—A Proposal to Refine and Revise the Role of the Trade Policy Review Mechanism” (2013) 16 Journal of International Economic Law 9Google Scholar.

58. In CHAKRABORTY, Debashis, CHAISSE, Julien, and KUMAR, Animesh, “Doha Round Negotiations on Subsidy and Countervailing Measures: Potential Implications on Trade Flows in Fishery Sector” (2011) 6 Asian Journal of WTO and International Health Law and Policy 201–234Google Scholar, it was estimated that the comparable figure for SCM related cases stands at 36.14 percent, which underlines the greater intensity in potential abuse of AD provisions; as noted in Julien CHAISSE, Debashis CHAKRABORTY, and Animesh KUMAR, “Mastering a Two-edged Sword: Lessons from the Practice and WTO Litigation on Safeguards” (2015) Richmond Journal of Global Law and Business 563; the figure for Safeguard actions is, however, 48.84 percent.

59. For instance, in DS 221 involving Section 129(c)(1) of the Uruguay Round Agreements Act, the dispute settlement body noted that Canada had failed to establish that the US actions were inconsistent with arts. VI:2, VI:3, and VI:6(a) of the GATT 1994; arts. 1, 9.3, 11.1, 18.1, and 18.4 of the ADA, and arts. 10, 19.4, 21.1, 32.1, and 32.5 of the ASCM, among other provisions.

60. The comparable figure for SCM-related cases stands at 42.17 percent, which raises questions on the harassment quotient of the “violation” claimed. Chakraborty et al., supra note 58.

61. This has been observed in DS 374 involving a complaint by Indonesia on South Africa-Anti-Dumping Measures on Uncoated Woodfree Paper.

62. This has been observed in DS 89 involving a complaint by South Korea on United States-Anti-Dumping Duties on Imports of Colour Television Receivers from Korea.

63. The cases include, DS 282, involving a complaint by Mexico on United States-Anti-Dumping Measures on Oil Country Tubular Goods (OCTG) from Mexico; DS 244, involving a complaint by Mexico on United States-Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan; and DS 221, involving a complaint by Canada on United States-Section 129(c)(1) of the Uruguay Round Agreements Act.

64. For these cases, a panel has been formed which involves both developed and developing countries. The examples include DS 239, involving a complaint by Brazil on United States-Anti-Dumping Duties on Silicon Metal from Brazil; and DS 319, involving a complaint by the EC on United States-Section 776 of the Tariff Act of 1930.

65. For instance, DS 385, involving a complaint by India on European Communities-Expiry Reviews of Anti-dumping and Countervailing Duties Imposed on Imports of PET from India.

66. This has been observed in DS 313, involving a complaint by India on European Communities-Anti-Dumping Duties on Certain Flat Rolled Iron or Non-Alloy Steel Products from India.

67. For instance, in DS 405 violations of arts. 2.2, 6.5, 6.10, 9.2, and 18.4 have been noted by the DSB; European Union-Anti-Dumping Measures on Certain Footwear from China, WT/DS405/5, 9 December 2011.

68. Casey J. LARTIGUE, Jr., “Policymakers Dumping on Trade” (2001) CATO Institute, online: <http://www.cato.org/publications/commentary/policymakers-dumping-trade>.

69. STEGEMANN, Klaus, “Anti-dumping Policy and the Consumer” (1985) 19 Journal of World Trade 466Google Scholar at 467.