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The Compatibility of South African Anti-Dumping Laws with WTO Disciplines

Document Cited authorities 2 Cited in Related
Vincent
Pages347-370
Published date01 August 2017
Date01 August 2017
AuthorSaloni Khanderia
DOI10.3366/ajicl.2017.0199
INTRODUCTION

Laws to govern anti-dumping are regulated by national and international disciplines on the same. Hence, while countries enact laws to outline disciplines on anti-dumping, these may often result in a clash with their international obligations. International anti-dumping regulations consequently restrict the application of domestic anti-dumping laws, thereby making it mandatory for countries to align domestic disciplines with those of internationally accepted standards.1 In general, the anti-dumping regime has been pivotal to the world trading system in order to sustain fair trading relations among its Members.

In the current era, the World Trade Organisation (WTO)2 governs the regulation of dumping.3 Accordingly, the WTO's Anti-Dumping Agreement (ADA),4 read along with Article VI of the General Agreement on Tariffs and Trade (GATT),5 is the relevant international law on the subject matter. Interestingly the ADA does not per se prohibit dumping, but on the contrary merely provides remedial action against the exporter in the event that dumped imported products cause or threaten to cause material injury to the domestic industry of the importer. Being a multilateral agreement, it imposes an obligation upon its Members to harmonise their respective domestic laws within the parameters of this Agreement.6

At the national level, anti-dumping is currently regulated in South Africa by means of the International Trade Administration Act 2002 (ITAA)7 and its pertinent regulations, namely the Anti-Dumping Regulations of 2003 (ADR).8 The South African anti-dumping regime is considered to be one of the oldest and entered its centennial year in 2014. Although the country's participation in the WTO remains dismal because of the fact that it has not initiated even a single dispute in the WTO, the procedures that this country has adopted for the purpose of investigating dumping and material injury caused thereby, has often been a contentious issue. Hence, while it has been involved in merely four disputes in the WTO as a respondent, all these have pertained to South Africa's domestic anti-dumping regulation and its non-compliance with the WTO disciplines in this regard.9

Despite the fact that South Africa has been making considerable efforts to bring its domestic anti-dumping legislation in line with its international obligations set forth in the WTO, foreign governments have often raised objections in the WTO's dispute settlement and alleged that the country's anti-dumping laws do not fully comply with the WTO disciplines in this regard. This article accordingly evaluates South Africa's national anti-dumping regime and its compatibility with WTO disciplines on the subject and points out glaring inconsistencies with the multilateral Agreement.

 WHEN IS DUMPING CONSIDERED TO HAVE OCCURRED?

Since dumping has both economic and legal implications, the concept has been defined both economically and legally. Consequently, for the purpose of economics, Viner defines dumping as a form of price discrimination where differential pricing is adopted to sell different units of the same good at different prices in different markets.10 Viner's definition has served as a foundation for the legal definition of dumping. Accordingly, the GATT's definition of dumping11 is currently the most authoritative.12 The GATT provides that:

For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another

is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or,

in the absence of such domestic price, is less than either

the highest comparable price for the like product for export to any third country in the ordinary course of trade, or

the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit.13

 In the present era, the imposition of anti-dumping measures has become a significant characteristic in the international regulation of trade because of the political reinforcement that these measures are backed by.14

Accordingly, dumping would be ruled if, on the basis of a comparison of ‘like’ products, the home market price (referred to as the normal value) exceeds the export price.15 The concept of ‘like’ products has been defined in the text of the Agreement itself and is interpreted to mean products that are identical in all respects to or have characteristics closely resembling those of the product under consideration.16

The difference between the export price and the normal value is hence considered to be the margin of dumping.17 However, the Agreement authorises a Member to construct the export price in circumstances when either the export price is unavailable or when such a price is ‘unreliable due to a compensatory arrangement between the exporter and the importer and a third party’.18 The export price may consequently be constructed on the basis of the price at which the imported product is first resold to an independent buyer.19 The test to determine the normal value is fourfold:20 first, the sale must occur in the ‘ordinary course of trade’; second, the products must be ‘like’; third, the products must be ‘destined for consumption in the exporting country’; and last, this price must be ‘comparable’.21

In the event that there are no or insufficient sales of like products in the ‘ordinary course of trade’ in the exporting country's domestic market, the Agreement on Anti-Dumping permits the determination of dumping on the basis of (a) ‘comparison with a comparable price of a like product sold to a third country provided that price is representative’; or (b) ‘with the cost of production in the country of origin [which could also be the exporting country] plus a reasonable amount for administrative, selling and general costs and for profit’.22

Hence, there must be a fair comparison between the normal value and the export price, at the same level of trade, for sales made at nearly the same time.23

 THE ANTI-DUMPING ENVIRONMENT IN SOUTH AFRICA

The anti-dumping legislation in South Africa dates back to the year 1914 by virtue of the Customs and Tariff Act,24 making it the fourth country in the world to enact legislation on anti-dumping.25 After several amendments and legislation being enacted over a period of time,26 anti-dumping is currently regulated by virtue of the International Trade Administration Act 2002 (ITAA), read along with the Anti-Dumping Regulations 2003 (ADR). However, the Customs and Excise Act 1964 continues to regulate the imposition of anti-dumping duties on dumped imports.27 The Act and the Regulations have been passed in order to comply with the obligations imposed by the WTO's Anti-Dumping Agreement.28 Accordingly, the International Trade Administration Commission (the Commission) currently administers the regulation of the provisions of the Act and its pertinent Regulations.29

South Africa has been one of the most prolific users of anti-dumping measures.30 Even though it is has been a Member of the WTO since the latter's inception in 1995, whether or not the WTO's Anti-Dumping Agreement is a part of South African municipal law has been a matter of contention, given that the Agreement has not yet been specifically promulgated as a municipal law in South Africa.31 Nevertheless, the country's Constitution specifically provides that the courts, while interpreting any legislation, must prefer the interpretation that is consistent with international law to the interpretation that is inconsistent.32 The Court, in the Chairman of the Board of Tariffs and Trade v. Brenco,33 indicated that the obligations set forth by the WTO's Anti-Dumping Agreement offer some assistance in adjudging the fairness of the investigating authorities in the matter of anti-dumping investigations.34 The Supreme Court of Appeals, in Progress Office Machines v. SARS,35 provided much more clarity as to South Africa's relationship with the Anti-Dumping Agreement. It elucidated that an international agreement would only become a law in the Republic of South Africa when it is enacted by the national legislation. However, the passing of the ITAA and the ADR indicate the intention of the South African Parliament to give effect to the provision of the treaties (in this case being the WTO's Anti-Dumping Agreement), provided that the latter is in conformity with section 233 of the South African Constitution.36

Hence it remains vital that the provisions of the ITAA, read along with the ADR 2003, are in conformity with the obligations set forth by the WTO in this regard.

 EVALUATING THE COMPATIBILITY OF THE SOUTH AFRICAN ANTI-DUMPING REGIME WITH THE WTO DISCIPLINES The Meaning of ‘Dumping’ According to South African Laws vis-à-vis the WTO Disciplines

The ITAA 2002 defines ‘dumping’ as:

The introduction of goods into the commerce of the Republic or the Common Customs Area at an export price contemplated in section 32(2)(a) that is less than the normal value, as defined in section 32(2) of those goods.37

The regulation of anti-dumping is therefore not merely limited to the Republic of South Africa, but is also extended to the Southern African Customs Union (SACU) which is comprised of Botswana, Lesotho, Namibia and Swaziland (commonly referred to as BLNS countries) apart from South Africa.38 Accordingly, the Commission is responsible for the investigation, determination of dumping, injury, causality and the duties, on the basis of which it makes recommendations to the Minister of Trade and Industry (South Africa).39 The final decision-making power as to whether or not to implement the anti-dumping duty nevertheless rests with the latter.40 Consequently, the determination of whether a product has been dumped in the SACU...

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