Transcript A Short Course in International Trade Law

WORKSHOP ON TRADE
REMEDIES - ANTIDUMPING
Professor David A. Gantz
University of Arizona,
James E. Rogers College of Law
Ho Chi Minh City, August 2004
[email protected]
Sponsored by
The U.S.-Vietnam Trade Council
Education Forum
[email protected]
1
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
2
I. Safeguards, cont’d.


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
3
I. Safeguards, cont’d.


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%
4
I. Safeguards, cont’d.


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
5
I. Safeguards, cont’d.


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
6
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
7
II. Dumping, cont’d.



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
8
II. Dumping, cont’d.



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
9
II. Dumping, cont’d.


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
10
II. Dumping, cont’d.


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
11
II. Dumping, cont’d.


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.
12
II. Dumping, cont’d.


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
13
II. Dumping, cont’d.

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
14
II. Dumping, cont’d.


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.
15
II. Dumping, cont’d.


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
16
II. Dumping, cont’d.

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.
17
II. Dumping, cont’d.


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
18
II. Dumping, cont’d.


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.
19
III. Trade Remedies – Subsidies


US doesn’t bring countervailing duty
(CVD) actions against NMEs
US may nevertheless bring WTO actions
against Vietnam (once Vietnam is a
member) in WTO DSB against Vietnam’s
prohibited or actionable subsides under
Parts II and III of SCM Agreement
20
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)
21
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 R&D
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)
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