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X-raying Injury Findings in South Africa's Anti-Dumping Investigations

Document Cited authorities 1 Cited in Related
Vincent
Date01 February 2015
Pages144-173
DOI10.3366/ajicl.2015.0114
Published date01 February 2015
INTRODUCTION

Internationally anti-dumping investigations are conducted under the rules of the World Trade Organization (WTO) Anti-Dumping Agreement (AD Agreement).1

Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, in WTO, The Results of the Uruguay Round of Multilateral Trade Negotiations, WTO (1995), pp.166–96.

Where a WTO member is not satisfied with the procedures used in an investigation by the importing country, it may refer the matter to the WTO Dispute Settlement Body, which will then appoint a panel to investigate whether the investigation was conducted in accordance with the provisions of the Agreement. The aggrieved member raises the specific issues it wants the panel to consider and specifies the relevant provisions of the relevant Agreement.2

See, e.g. South Africa – Anti-Dumping Duties on Frozen Meat of Fowls from Brazil WT/DS439/1 (25 June 2012).

 Strictly speaking, these rulings only apply to the parties to the dispute and although stare decisis does not apply, these rulings provide insight into whether a future panel would uphold or strike down a member's procedures. South African anti-dumping procedures have been challenged in the WTO on four occasions,3

See South Africa – Anti-Dumping Duties on Certain Pharmaceutical Products from India WT/DS168/1 (13 April 1999); South Africa – Definitive Anti-Dumping Measures on Blanketing from Turkey WT/DS288/1 (15 April 2003); South Africa – Anti-Dumping Measures on Uncoated Wood free Paper WT/DS374/1 (16 May 2008); South Africa –Meat of Fowls.

 but to date no dispute involving South Africa has progressed to a panel

In 2013 the panel in China – X-ray Equipment4

China – Definitive Anti-Dumping Duties on X-ray Security Inspection Equipment from the European Union WT/DS425/R (circulated 26 February 2013) (China – X-ray Equipment).

was requested to consider several issues, including China's injury and causality findings. These findings are scrutinised in this paper and used to determine to which extent South African procedures meet the requirements of the Agreement. The paper first sets out the injury and causality requirements of the AD Agreement, followed by the like provisions in South Africa's legislation and highlighting any differences. It then analyses the findings in China – X-ray Equipment, before evaluating South Africa's procedures. It concludes with recommendations on how the South African procedures could be improved INJURY AND CAUSALITY UNDER THE AD AGREEMENT

The General Agreement on Tariffs and Trade (GATT) 1994 provides:

No contracting party shall levy any anti-dumping … duty on the importation of any product of the territory of another contracting party unless it determines that the effect of the dumping … is such as to cause or threaten material injury to an established domestic industry, or is such as to retard materially the establishment of a domestic industry.5

Article VI(6)(a).

Although ‘dumping’ is clearly defined both in article VI of GATT6

Article VI(1) of GATT.

and in the AD Agreement,7

Article 2(1) of the AD Agreement.

 ‘material injury’ is not defined in either document. As regards material injury, the AD Agreement provides that a ‘determination of injury … shall be based on positive evidence and involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like products, and (b) the consequent impact of these imports on domestic producers of such products’.8

Ibid., article 3(1).

 This provision thus sets out two separate examinations that need to be undertaken: first, in respect of the volume of dumped imports and the effect thereof on price, and, secondly, the consequent impact of these imports on the domestic industry. In article 3(2), the AD Agreement then provides as follows

With regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in the importing Member. With regard to the effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of a like product of the importing Member, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.

Like article 3(1), article 3(2) contains two elements. The first requires that it be determined whether there has been ‘a significant increase’ in the volume of the dumped imports, either in absolute terms or relative to production or consumption in the importing member. No definition is provided as to the meaning of ‘significant’ either as regards this article or any of the following articles that use the same terminology. The second requirement is that an examination of prices needs to be undertaken. It must be determined whether there has been significant price undercutting by the dumped product, whether the domestic industry's prices have been significantly depressed, or whether the industry's prices have been significantly suppressed, that is, that necessary price increases could not be effected. Price injury is therefore a separate injury requirement and if ‘significant’ price injury cannot be found, whether expressed as price undercutting, depression or suppression, this requirement of the AD Agreement has not been met.

Article 3.4 of the AD Agreement, provides as follows:

The examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments. This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.

Panels and the Appellate Body have held that the determination of injury ‘shall include an evaluation of all relevant economic factors and indices’.9

Article 3(4) of the AD Agreement, as interpreted by WTO EC – Bed Linen Panel Report, para. 6.167; WTO Guatemala – Cement II Panel Report, para. 8.283; WTO Mexico – HFCS Panel Report para. 7.128; WTO Thailand – H-Beams Panel Report, para. 7.231; WTO Egypt – Rebar Panel Report, para. 7.37.

Thus, each of the factors has to be evaluated.10

See, e.g. Mexico – HFCS, para. 7.129, where it was held that:

while the authorities may determine that some factors are not relevant to or do not weigh significantly in the decision, the authorities may not simply disregard such factors, but must explain their conclusion as to the lack of relevance or significance of such factors' and that ‘authorities are required to consider, and their determination must reflect the consideration of, all the factors concerning injury.

 Every single indicator does not have to indicate a negative pattern and a holistic determination must be made on the overall evaluation of the factors.11

Ibid., Mexico – HFCS, para. 7.129.

 Article 3(6) then provides that:

The effect of the dumped imports shall be assessed in relation to the domestic production of the like product when available data permit the separate identification of that production on the basis of such criteria as the production process, producers’ sales and profits. If such separate identification of that production is not possible, the effects of the dumped imports shall be assessed by the examination of the production of the narrowest group or range of products, which includes the like product, for which the necessary information can be provided.

This shows the importance of accurately determining the product to be investigated, as well as the domestic like product. If the scope of the investigation is too wide, it may be difficult to prove injury, but if the scope is too narrow, it may be very easy to circumvent any measures imposed. At the same time, in many industries different products may be produced on the same equipment, making it difficult to determine injury strictly on the basis of the domestic like product only.

Although article 3(4) specifically relates to injury and article 3(5) to causality, there is some overlap between the two articles. Thus, it is submitted that the ‘margin of dumping’ is not an injury factor, but can merely be an indication of the cause of injury. Likewise, ‘factors affecting domestic prices’ cannot be an injury indicator, but are related to the causality determination. These therefore also have to be taken into consideration in the determination of causality. As regards causality, the final issue considered in this article, the AD Agreement provides as follows:

It must be demonstrated that the dumped imports are, through the effects of dumping … causing injury within the meaning of this Agreement. The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities. The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports…12

Article 3(5) of the AD Agreement.

Evident from this provision is not only that an investigating authority must determine whether there is a link between the dumped imports and the domestic industry's material injury but also that it must undertake an analysis to determine whether...

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