Academic journal article Law and Policy in International Business

Commentary on the First Five Years of the WTO Antidumping Agreement and Agreement on Subsidies and Countervailing Measures

Academic journal article Law and Policy in International Business

Commentary on the First Five Years of the WTO Antidumping Agreement and Agreement on Subsidies and Countervailing Measures

Article excerpt


The Symposium brochure states that, "In the case of these Agreements ... the primary U.S. objective was defensive: to maintain effective remedies to address unfair trade practices." While this statement is certainly accurate as to the Antidumping Agreement, I submit that it is not an accurate or useful characterization of the Agreement on Subsidies and Countervailing Measures.

On the issue of subsidies, the United States was successful in its effort to transform a GATT discipline that was deficient both in its substance and enforcement mechanism into a WTO regime that would provide a meaningful remedy for U.S. companies encountering subsidized competition in markets outside the United States. To obtain such a regime, U.S. negotiators did not have to accept any significant weakening of the substance of U.S. countervailing duty law. They did accept--as a necessary consequence of obtaining the new binding system of dispute resolution needed to provide a true remedy against subsidies encountered in non-U.S, markets--the proposition that U.S. countervailing duty decisions could be challenged in that same binding dispute resolution process. On the whole, I submit that this bargain is working very well for the United States. Keeping in mind this distinction between the two agreements, let me offer some observations on the experience thus far under each agreement.


A. Department of Commerce Practice

During the debate over the Uruguay Round Agreements Act (URAA), much concern was expressed that substantive changes in U.S. law required by the new Antidumping Agreement would "raise the bar," making it more difficult for petitioners to obtain relief. Such concerns focused on, inter alia, higher "de minimis" margin levels; comparing weighted-average U.S. price to weighted-average home market price (instead of comparing the price of each U.S. sale to a single home market weighted average price); and changing from "purchase price" and "exporter's sale price" to the new "export price" and "constructed export price."

Today, after five years of experience under the new law, these petitioner-side concerns have largely disappeared. The difference in de minimis levels has not proved significant. The Department of Commerce (DOC) has coped with the "averages to averages" methodology by making comparisons on the basis of narrowly-defined product groupings.(1) Furthermore, the new definitions of "export price" and "constructed export price" have significantly favored petitioners, as many import sales that would have fallen into the more respondent-favorable "purchase price" category under the old law are now being put in the "constructed export price" category, resulting in higher dumping margins.

In addition, the DOC has adopted a number of interpretations under the new law that have tended to increase the dumping margin in most cases. First, the DOC is much more likely to find a raw material or component supplier, or a company in the chain of distribution, to be "affiliated" to the exporter. The consequence of such a determination is usually a higher dumping margin and invariably more arduous verification. Second, in selecting the home market sales appropriate for comparison with each grouping of U.S. sales, the DOC must eliminate below-cost home market sales, scrutinize home market sales to related parties to ascertain whether they are at arm's length, and determine which products sold to home market customers are most nearly identical to the product category sold in the United States. The DOC has changed the order in which these analyses are made, and has done so in a manner that, in most cases, tends to increase the dumping margin.

Finally, the DOC has substantially raised the bar for the revocation of orders in changed circumstance reviews. Not too many years ago, an order would be revoked if a certain number of annual reviews found all sales to have been made at fair value, or if a greater number of reviews had found (as to a particular exporter) no imports at all. …

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