Transcript Slide 1

RULES NEGOTIATIONS:
WAY FORWARD
ICRIER 6 April 2006
Abhijit Das,
Senior Trade Officer, UNCTAD India Programme
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Rules Negotiations: What is
cooking
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Procedural improvements in anti-dumping investigation
More precision in dumping margin determination
Improvements in injury analysis and causality
Tightening of disciplines on reviews
Expeditious dispute resolution
Expand prohibited subsidies
Acceptance of specific methodologies for determination of benefit
Harmonise anti-dumping and cvd investigation procedures
Improvements in cvd investigation procedure
Improvements in definition of de facto export subsidy
Disciplines on fisheries subsidies
Will the final dish be delicious for all or even for any one
country?
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Overall balance in Rules
negotiations
• Australia, Canada, EU, Egypt, FANs,
India, New Zealand and US are active in
Rules negotiations.
• But, US and Japan likely to be the key
players in determining the ambition level
and overall balance in the Rules
Negotiations: their position would be
crucial in deciding the way forward
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US interests in ADA negotiations
• Overwhelmingly defensive interest
• A few issues in which it has a positive
interest include:
Rules on anti-circumvention
Improvements in the provision on New
Shipper Review
Improvement in the standard of review
provision
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Japan (FANs) interest in ADA
negotiations
• Offensive interest in almost all provisions of the ADA
• Detailed proposals made on increasing precision and
predictability in
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initiation
dumping margin determination
defining material injury
injury evaluation
causality
mandatory application of lesser duty rule
public interest
reviews, particularly sunset reviews
due process and investigation procedure
• Defensive interest mainly in anti-circumvention and NSR
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ADA negotiations: can interests be
balanced
• Given the extensive interest of Japan (FANs) in
amendments to the ADA, US may have to give up more
than what it is likely to gain in ADA negotiations
• In ADA negotiations difficult to achieve balance
between interest of Japan (FANs) and US
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ADA- US interests: Anticircumvention
• US seeks to address two situations of
circumvention which undermine effectiveness of
trade remedy rules through :
 minor alteration in the product
 replacement of trade in the product by trade in
its sub-components which are assembled in the
importing country or in a third country
• US proposal – impose anti-dumping duty / cvd
on a product not subject to original investigation
if any of the above two situations of anticircumvention arises
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Anti- circumvention: How do others
view it
• FANs - Anti-Circumvention is a complex issue and the
Informal Group was not able to reach a conclusion even
on the basic question of what constitutes circumvention
 Legitimate right of business to change their source of supply.
 Difficult to differentiate between the real circumvention and
legitimate business behavior.
 With increasing globalization, fast development of products using
new technology, new products can be developed very fast.
 Need to exercise caution, otherwise anti-circumvention provision
could lead to further abuse of anti-dumping measures
• Canada and EU have a nuanced position and look
forward to the issue being addressed by NGR.
• India has faced problems relating to circumvention, but
has opposed rules
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Anti- circumvention: Way forward
• US and EU already apply anti-circumvention
provision – not challenged so far under DSU
• To ensure predictability and more fair rules, may
be better to include anti-circumvention provision
in the ADA
 Need to clearly define the rights and obligations
under anti-circumvention proceedings
 Need to be more precise on when anticircumvention provision can be invoked
 Limited duration for anti-circumvention duty
remaining in place
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ADA- US interests : NSR
• US envisages a two-step approach for NSR
• New concept of threshold determination
requiring the parties to establish that:
 they are not related to any of the parties
currently subject to duties.
 they are engaged in bona fide sales to the
importing country.
• If positive threshold determination, then no duty
would be levied during the review
• NSR would not be on an accelerated basis
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NSR: How do others view it
• Most of the countries opposed to US
proposal
• ‘bona fide commercial sales’ will be
subject to higher and strict standards
• deletion of the need for accelerated review
against the interest of genuine NSRs
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NSR: Way forward
• In certain cases India has also faced
problems similar to that faced by US
• Need to retain the requirement of
accelerated review
• The requirement of ‘bona fide commercial
sales’ could be made more precise for
preventing abuse and protecting the rights
of exporters
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ADA – Japan (FANs) interests:
Sunset reviews
• Initial proposal of FANs sought termination
of anti-dumping duties at the end of the 5year period.
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Sunset reviews: How do others
view it
• Other countries have underscored the
need for strengthening disciplines on SSR
• Illustrative list of parameters suggested for
the ‘likelihood’ test
• Major users opposed to automatic
termination of anti-dumping duties at the
end of the 5-year period
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Sunset Reviews: Way forward
• ‘Likelihood’ test is extremely subjective, if not outright
speculative
• Suggested list of parameters for the ‘likelihood’ test has
limited scope for improving the situation.
• Recent proposal from Japan provides the middle ground Automatic termination of anti-dumping duties after x no.
of years
 Initiate SSR before the end of 5th year on receipt of a
well documented petition by or on behalf of the domestic
industry
 Clearer standards for ‘likelihood’ test
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ADA- Japan (FANs) interests: LDR
• India has joined the FANs on this issue
• Mandatory application of LDR proposed
• NIP to be calculated using one of the following:
 Current price of the like product produced by domestic
producers
 The price of the domestic like product during a period
prior to being affected by dumping
 Price of non-dumped imports of the product under
investigation
 Constructed price method
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LDR: How do others view it
• Following strong objections by US and Egypt :
 Article 9:1 allows Members discretion to impose duty up
to dumping margin
 How to quantify injury margin on the basis of one injury
factor (price)
 Imposition of LDR may lead to duty absorption
 Implementing LDR will be resource intensive
 Implementing LDR will be complex
• Other countries implementing LDR appear keen
only to preserve their existing practise
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LDR: Way Forward
• Limit mandatory application of LDR to
original investigation
• Provide flexibility to the country to notify a
preferred methodology to be followed, with
reasoned explanations in cases of
deviation
• If need be, expand the category of
permitted methodology to include other
practices not covered
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Subsidies Issues – US interest:
Expanding Prohibited Subsidies
• US has proposed expanding the list of
prohibited subsidies to include ‘intrusive govt.
interference in the marketplace’
Art. 6.1 subsidies
Subsidies which have forestalled industry
restructuring
Creation and maintenance subsidies – steel
sector specified.
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Expanding Prohibited Subsidies:
How do others view it
• Nuanced support from certain developed
countries
• Generally opposed by developing countries
as it would severely restrict policy space
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Expanding Prohibited Subsidies:
Way Forward
• As the US proposal is not well developed, is
it a mere straw man to be demolished after
concessions have been extracted?
• Would introduce disciplines on capacity –
new element in the ASCM context
• Clear
definition
of
creation
and
maintenance subsidies needed.
• Prohibition should not apply to developing
countries
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Fisheries Subsidies: Important element
for overall balance in Rules Negotiations
• Disciplines on fisheries subsidies appear
essential for achieving overall balance in
Rules Negotiations- US on the offensive and
some of the FANs (Japan, Chinese Taipei and
Korea) on the defensive.
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Fisheries Subsidies: Who has what
interest
• US, New Zealand, Australia etc are seeking
general prohibition on fisheries subsidies –
top down approach
• Japan, Korea etc. resisted negotiations.
Appear willing to live with bottoms up
approach
• Brazil has sought to link disciplines with
fisheries patently at risk
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Rules negotiations: India’s interest
• Need to tread a finely balanced path in ADA
negotiations with tilt towards export interest
• In subsidies need to seek improvements in
provisions on:
 export competitiveness
 reasonable and effective verification system for
duty concessions
• In fisheries subsidies protect:
 Interests of small fishermen
 Support for deep sea fishing
 Inland fishing
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Rules Negotiations
• No overall winner
• Most countries would have to give up some
issues of their crucial interest
• Domestic industry and DGAD need to be
prepared to implement improved procedural and
transparency requirements
• There could be some surprises towards the end.
• Need to visualise end game and be adequately
prepared for it
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THANK YOU
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