Wolters Kluwer. EU Dumping Determinations and WTO Law KLUWER LAW INTERNATIONAL. Henrik Andersen. Law & Business

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1 KLUWER LAW INTERNATIONAL EU Dumping Determinations and WTO Law By Henrik Andersen Wolters Kluwer Law & Business AUSTIN BOSTON CHICAGO NEW YORK THE NETHERLANDS

2 Table of Contents Preface xvü Chapter 1 Introduction Dumping and Its Elements The Challenges and Discussions Concerning Dumping Determinations Dumping Determinations Product Normal Value Export Price Comparison EU Dumping Determinations and WTO Law The Legal Approach Sources of WTO Anti-dumping Law and the EU Measures WTO Sources The WTO Agreements and Decisions from the Ministerial Conference Panel and Appellate Body Reports Customary International Law Principles of Law Other Sources Interpretation of WTO Agreements General Interpretative Approach National Interpretation: Article 17.6(ii) of the ADA EU Dumping Measures and Judicial Reviews 27

3 Vlll Table of Contents Chapter 2 WTO Law as a Rule-Oriented System Evolution of Anti-dumping Law in GATT/WTO Anti-dumping in GATT: from Beginning to the Kennedy Round Non-market Economies The Group of Experts The Kennedy Round ( ) The Tokyo Round ( ) The Uruguay Round ( ) The WTO Anti-dumping Rules: An Overview Substantial Rules Dumping Injury Procedural Rules Initiation of the Investigation Investigation Measures and Anti-dumping Duties Final Words The Enforcement of WTO Anti-dumping Law in the WTO System Dispute Settlement under GATT WTO Dispute Settlement Final Comments EU in GATT/WTO The EU as a WTO Member Evolution of EU Anti-dumping Legislation in Light of GATT/WTO Law Community Interest Guaranties of Rights in Anti-dumping Cases Circumvention " Regulations Inconsistent with EU Law Application of WTO Law in the EU System The Effect of GATT/WTO Provisions in EU Panel and Appellate Body Anti-dumping Reports in EU Final Words 68 Chapter 3 Product under Consideration and Like Product WTO Legislation Practice by Panels and Appellate Body Product under Consideration No Criteria to Determine Product under Consideration 73 43

4 Table of Contents The Binding Definition Like Product 3.3 EU Legislation 3.4 EU Practice Final Product under Investigation Physical, Chemical, and Technical Characteristics The CN Codes Interchangeability Qualitative Differences Different Functionality and Patented Products Different Production Techniques Like Product Comments Chapter 4 Normal Value 4.1 General Rule: Actual Domestic Price WTO Legislation Comparable Prices Ordinary Course of Trade Like Product Destined for Consumption in the Exporting Country Practice by Panels and Appellate Body General Statements about Article VI of GATT 1994, Article 2.1 of the ADA and Normal Value Comparable Prices Ordinary Course of Trade A Definition of Ordinary Course of Trade Tests to Determine Ordinary Course of Trade Destined for Consumption in the Exporting Country Replacing Price in Downstream Sales between Associates EU Legislation The Price Is Based on Sales to Independent Customers Comparability between Normal Value and Export Price Ordinary Course of Trade Sales between Associated Parties ix

5 x Table of Contents Sales below Costs and SAG Normal Value Shall Be Based on the Price in the Exporting Country The Säle Must Be of the Like Product Low-Volume Sales Destined for Consumption EU Practice Comparable Prices Ordinary Course of Trade Sales between Associated Parties Prices below Costs and SAG Local Export Sales Low-Volume Sales The Two 5% Tests Disregard of Some Products from the 5% Calculation i Exporting Country Acceptance of Domestic Sales Below 5% Destined for Consumption in the Exporting Country I Downstream Sales between Associates Alternatives to the Actual Domestic Prices WTO Legislation Third-Country Price I Normal Value Based on Costs, SAG and Profits I Calculation of Costs, Article of the ADA I Calculation of SAG and Profits I Practice by Panels and Appellate Body I General Statements about Article 2.2 and Article VI Calculation of Costs Calculation of SAG and Profits Principal Method in Article Relationship between the Subparagraphs in Article 2.2.2(i), (ii) and (iii) Data from Sales Not Made in the Ordinary Course of Trade l The Same General Category of Products, Article 2.2.2(i) Weighted Average, Article 2.2.2(ii) l

6 Table of Contents xi Any Other Reasonable Method, Article 2.2.2(iii) EU Legislation Calculation of Costs Calculation of SAG and Profit EU Practice Relationship between Article 2.1 and Article Article 2.3: Rejection of Third-Country Prices Construction of Costs Calculation of SAG and Profits Low-Volume Sales Sales below Costs Weighted Average: Article 2.6(a) The Same General Category of Products: Article 2.6(b) Third Method: Any Other Reasonable Method - Article 2.6(c) Final Comments 181 Chapter 5 Export Price WTO Legislation Practice by Panels and Appellate Body EU Legislation EU Practice Actual Export Price Disregarding the Actual Export Price Association and Compensatory Agreements Other Reasons for Disregarding the Actual Export Price Sales through a Trading House Alternative Export Price Final Comments 204 Chapter 6 Comparison between Normal Value and Export Price Adjusting Normal Value and Export Price WTO Legislation Practice by Panels and Appellate Body Differences Affecting Price Comparability and Conditions and Terms Levels of Trade Physical Differences 214

7 xjj Table of Contents Conversion of Currencies Other Differences EU Legislation EU Practice Differences in Physical Characteristics: Article 2.10(a) Import Charges and Indirect Taxes: Article 2.10(b) Discounts, Rebates and Quantities: Article 2.10(c) Level of Trade: Article 2.10(d) Transport, Insurance, Handling, Loading and Ancillary Costs: Article 2.10(e) Packing: Article 2.10(f) Credit: Article 2.10(g) After-Sales Costs: Article 2.10(h) Commissions: Article 2.10(i) Currency Conversions: Article 2.lO(j) Other Factors: Article 2.10(k) Calculating the Dumping Margin WTO Legislation Practice by Panels and Appellate Body The Hierarchy of the Methods in Article Intermediary Step: Multiple Averaging Zeroing Zeroing and the Weighted-Averageto-Weighted Average Method: Article Zeroing and the Transaction-to- Transaction Method: Article Zeroing and the Weighted-Average-to- Transaction Method: Article Zeroing under Article EU Legislation EU Practice The Preferred Method of Article Zeroing Zeroing under the Weighted- Average-to-Weighted-Average Method The Time After EC: Bed Linen The Weighted-Average-to- Transaction Method: First Condition 267

8 Table of Contents xiii The Weighted-Average-to Transaction-Method: Second Condition Zeroing under the Weighted- Average-to-Transaction Method Individual or General Dumping Margins WTO Legislation Practice by Panels and Appellate Body Lack of Information Related Exporters Margin Based on Product Types EU Legislation EU Practice Related Producers Non-cooperating Producers Final Comments 285 Chapter 7 Special Anti-dumping Rules Regarding China China: The Accession to the WTO Normal Value for Chinese Producers WTO Legislation Relation to Article VI of GATT 1994 and ADA The Special Rules EU and the Non-Market Approach towards China No State Specific Market Economy Criteria in EU Law Political and Technical Statements EU Legislation Analogue Country Opening to Market Economy Treatment The Market Economy Criteria EU Practice: The Non-Market Economy Approach for Single Producers Single Producer Examination or Industry Examination? The Five Criteria in Article 2.7(c) State Interference and Market Conditions Determinants Regarding Business Decisions Determinants Regarding Market Conditions International Accounting Standards 309

9 xiv Table of Contents Distortions from the Non-market Economy Property Rights and Bankruptcy Laws Currency Exchanges are Carried Out at Market Rate Market Economy Treatment during the Investigation Establishing Normal Value for Chinese Producers Granted Market Economy Treatment The EU Practice and WTO Law EU Practice: Selection of an Analogue Country The Factors to Select an Appropriate Third Country Same Economic Level Competition on the Market The Säle must be Representative Similar Production Processes Different Types of Quality Access to Raw Materials Labour Costs Devaluation of Currency Determining Normal Value with an Analogue Country Determining Normal Value When No Appropriate Analogue Countries Is Found The EU Practice and WTO law The Problem between Non-Market Treatment and Market Treatment of Chinese Exporters Determining the Dumping Margin Individual Treatment The Country-Wide Margin Final Comments 341 Chapter 8 Final Thoughts 343 Abbreviations 351 Appendix I Article VI of GATT Appendix II Agreement on Implementation of Article VI of GATT 1994 (ADA) 357

10 Table of Contents xv Appendix III Article 15 of the Protocol on Accession of China to the WTO Price Comparability in Determining Subsidies and Dumping 385 Appendix IV Basic Regulation 387 Reports from Panels and Appellate Body (by Name) 427 Council and Commission Regulations and Decisions 431 Regulations and Decisions (by Name) 451 Judgments of the EC Court and Court of First Instance and Opinions of Advocate Generals 467 Bibliography 473 Index 479