Overview of Trade Remedy Laws Under GATT/WTO: Antidumping, Countervailing Duty and Safeguards

1. Ministry of Finance Overview of Trade Remedy Laws Under GATT/WTO: Antidumping, Countervailing Duty and Safeguards Workshop by Lisa M. Yarmoshuk U.S.-Vietnam Forum, Educational Affiliate of U.S.-Vietnam Trade Council Technical Assistance Program sponsored by U.S. Agency for International Development -- Hanoi, Vietnam August 14, 2001

2. Antidumping Duty (AD) Laws - Pricing Countervailing Duty (CVD) Laws - Subsidies Safeguards Laws - Import Relief Trade Remedy Laws

3. Antidumping and Countervailing Duty Laws History, Procedures and Elements

4. Antidumping Laws Historical Origins Canada - 1904 Statute United States - 1916 Act and U.S. Tariff Act of 1921 Modern Developments GATT 1947 - Article VI Kennedy Round Antidumping Code Tokyo Round Antidumping Code Uruguay Round Antidumping Agreement Development of Domestic AD Laws Origin and Use of Antidumping Laws

5. Antidumping Cases Initiated by the United States and Other Countries Source: Global Trade Protection Report 1999, Rowe & Maw

6. U.S. Antidumping Duty Orders in Effect on January 1, 2000 Source: http://ia.ita.doc.gov/stats/inefecta.htm

7. U.S. Antidumping Investigations Case Activity (1/1/1980-12/31/1999): Initiations Source: http://ia.ita.doc.gov/stats/ad8099.htm

8. U.S. Antidumping Investigations Case Activity (1/1/1980-12/31/1999): Duty Orders Revoked Source: http://ia.ita.doc.gov/stats/ad8099.htm

9. Countervailing Duty Laws Historical Origins Modern Developments GATT 1947 - Article VI United States - 1974 Trade Act Tokyo Round Subsidies Code Uruguay Round Agreement on Subsidies and Countervailing Measures Development of Domestic CVD Laws Origin and Use of Countervailing Duty Laws

10. U.S. Countervailing Duty Orders in Effect on January 1, 2000 Source: http://ia.ita.doc.gov/stats/inefectc.htm

11. U.S. CVD Investigations Case Activity (1/1/1980-12/31/1999): Initiations Source: http://ia.ita.doc.gov/stats/cv8099.htm

12. Basic procedural framework for conducting antidumping and countervailing duty investigations and imposing duties is set forth in WTO Antidumping and SCM Agreements Authorizes or requires agencies to issue regulations designed to achieve consistency and predictability in decision making in administrative proceedings and to provide basic components of procedural fairness: notice hearing right to administrative record right to statement of reasons for decision right to judicial review Administrative Procedures Applicable to AD/CVD Cases

13. Questionnaire Issued Questionnaire Responses Due Supplemental Questionnaire Issued Supplemental Response Due U.S. -Timing of Events in Antidumping Proceedings Timing of DOC Events in LTFV Investigations ITC Preliminary Decision DOC Preliminary Decision ITC Final Decision DOC Final Decision • Antidumping Duty Order • Suspension of Liquidation (continues or lifted) • Publication of F.R. Notice • Disclosure • Ministerial Error Corrections • Suspension of Liquidation (continues or lifted) • Publication of F.R. Notice • Disclosure • Ministerial Error Correction • Suspension of Liquidation (if affirmative) • Verification/Verification Reports Issued • Case Briefs/Rebuttal Briefs • Hearings

14. Organization of Government Agency Responsibilities for Administering AD/CVD Laws: single entity - European Union bifurcated system - United States and Canada Factors to Consider: expertise required number of cases expected complexity of cases AD and CVD cases? Administrative Procedures Applicable to AD/CVD Cases

15. Evidence and Information Standing Period and Scope of Investigation Interested Parties and Notice Investigative Process Dumping/Subsidization Injury Requirements for Initiating an AD/CVD Investigation

16. Protection of Confidential Information Best Information Available Suspension or Termination of an Investigation Public Notice and Explanation of Determinations Imposition of AD/CVD Duties Provisional Measures Other Issues Common to AD/CVD Proceedings

17. General Rules Prospective or Retrospective Systems Critical Circumstances (Retroactive Duties) Judicial Review WTO Panel Review Duration and Review of Duties and Undertakings (“Sunset”) Imposition and Collection of Definitive AD/CVD Duties

18. What is Dumping? Bases for Comparison Requirements to Ensure a Fair Comparison Calculation Issues Sunset Provisions Basic Elements of Antidumping Duty Law

19. Selling in Export Market at Prices Below “Fair Value” or “Normal Value” Determined by Home market price of exporter, or, if not representative Price in third country market, or, if not representative cost of production plus selling, general and administrative expenses and reasonable profit What is Dumping?

20. Same Level of Trade Contemporaneous Sales Disregarding Sales Below Cost Adjustments for for Differences in Price Comparability conditions and terms of sale taxation levels of trade quantities physical characteristics currency fluctuations, etc Requirements to Ensure a Fair Comparison

21. OverviewoftheDumpingMarginCalculation Determine Net U.S. Price Determine Normal Value • Matching • Price Averaging • Level of Trade/CEPOffset • Currency Conversions • Universe of U.S. Sales • Period of Investigation • Date of Sale • Types of U.S. Sales • Transactions (EP/CEP) • Affiliated Persons • Adjustments to Price • Deductions • Additions • Market Viability • Disregarded Sales • Arm’s length test • Below cost test • Samples • Not Appropriate Match • Adjustments to Price • Deductions • Additions Compare Net U.S. Price to Normal Value Calculate The Dumping Margin

22. Definition of a Subsidy: Financial Contribution - transfer of funds, foregone revenue, provision of goods or services or purchase of goods or indirect financial contribution Benefit Specificity Subsidies not Countervailable Under the SCM Agreement: Research & Development Subsidies Subsidies to Disadvantaged Regions Environmental Subsidies Basic Elements of Countervailing Duty Law

23. Calculation Issues SCM Agreement authorizes a country to levy a countervailing duty “calculated in terms of subsidization per unit of the subsidized and exported product” of up to, but no more than, the total amount of the subsidy Two standards of measurement: Cost to the Government (European Union) Benefit to the Recipient (United States) Applicability of Injury Test Requirement Basic Elements of Countervailing Duty Law

24. WTO AD and SCM Agreements require evidence that dumped or subsidized imports are causing injury Article 3 AD Agreement Article 11 SCM Agreement Evidence of: Material injury to a domestic industry Threat of material injury to a domestic industry or Material retardation of the establishment of such an industry Basic Elements of Injury Law

25. Like Product Product line analysis Semi-finished products Domestic Industry Related parties Regional industry Captive Production Cumulation Basic Elements of Injury Law

26. Causation Threat of Material Injury Material Retardation Sunset Provisions Basic Elements of Injury Law

27. Safeguards Law History, Procedures and Elements

28. “Escape Clause” or “Safeguard” Mechanism for Import Relief Restriction of imports of a product temporarily if domestic industry is injured or threatened with injury caused by a surge in imports What are Safeguard Actions?

29. Historical Origins United States Trade Agreements Program 1934 Modern Developments GATT 1947 Article XIX “Grey Area” Measures Uruguay Round Agreement on Safeguards Development of Domestic Laws Origin and Use of Safeguards Law

30. Key Provisions: Requires a transparent, public process for making injury determinations Sets out clearer definitions of the criteria for injury determinations Requires safeguard measures to be steadily liberalized over their duration Establishes an eight year maximum duration for safeguard actions (“sunset clause”) Allows safeguard actions to be taken for three years without the requirement of compensation or the possibility of retaliation prohibits “grey area” measures WTO Agreement on Safeguards

31. Basic procedural framework for conducting safeguard action investigation and imposing safeguards measures is set forth in WTO Agreement on Safeguards Authorizes or requires agencies to issue regulations designed to achieve consistency and predictability in decision making in administrative proceedings and to provide basic components of procedural fairness: notice hearing right to administrative record right to statement of reasons for decision Administrative Procedures -- Safeguard Actions

32. WTO Agreement on Safeguards: “serious” injury” - significant overall impairment in the position of a domestic industry “threat of serious injury” - serious injury that is clearly imminent evidenced by facts evaluation must be objective and quantifiable - rate and amount of increase in imports in absolute and relative terms, share of domestic market taken by increased imports, changes in level of sales, production, productivity, capacity utilization, profits and losses, and employment causal link between increased imports and serious injury or threat thereof United States Safeguards Law: “substantial cause of serious injury, or threat thereof” Determination of Serious Injury or Threat Thereof

33. Only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment Measure chosen should be most suitable for achievement of objective quantitative restrictions (quotas) increase or imposition of a duty Applied to imported product irrespective of source allocation of quotas among supplying countries Normally 4 year duration, maximum of 8 years In some cases safeguard actions can be taken for 3 years without compensation or retaliation Application of Safeguard Measures

34. To some extent developing countries are shielded from safeguard actions: Can only apply a safeguard measure to a product from a developing country if the developing country is supplying more than 3% of the imports of the product, or if developing country members with less than 3% import share collectively account for more than 9% of total imports of the product concerned. Right to extend the period of application of a safeguard measure for a period of up to two years beyond the maximum period. Developing Countries

35. United States - Section 201 of the Trade Act of 1974: Petition filed by representative of an industry or President, USTR, House Committee on Ways and Means or Senate Finance Committee requests investigation Investigation conducted by International Trade Commission - substantial cause or threat of “serious” injury Adjustment plans and commitments Provisional relief - critical circumstances Presidential action: factors to consider include adjustment plan, individual commitments, probable effectiveness, etc International Trade Commission monitoring Modification/termination of action Safeguard Actions in United States Law - Elements