Dumping Margin Research Articles

Evolving US Anti-Dumping Actions: What Recent Discretionary Practices Can Tell Us

This study examines how US discretionary practices in anti-dumping (AD) proceedings have developed and affected the extent of dumping margins of exporters in the past decade. Using detailed data on dumping margin calculations by the US Department of Commerce (DOC) from 2008 to 2020, we find that the DOC has endeavored to develop discretionary practices in a more nuanced way to inflate dumping margins for both ‘cooperative’ and ‘uncooperative’ exporters. Our statistical and case study show that although the practices known as targeted dumping and particular market situation are associated with smaller dumping margins than overall dumping margins, they critically increase the extent of dumping margins for cooperative exporters of market economies (ME), sometimes resulting in positive dumping determinations which would otherwise have been negative. We also empirically find that there has been an apparent change in the use of adverse facts available (AFA) that has led to much higher dumping margins for ‘uncooperative’ exporters of ME and non-market-economy (NME)-wide entities since the amendment of the Trade Preferences Extension Act (TPEA) of 2015.

United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China: Nails in the Coffin of Unfair Dumping Margin Calculation Methodologies

AbstractThe WTO Appellate Body report United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China is yet another in a long line of disputes involving US Department of Commerce's dumping margin calculation methodologies. The AB ruled against the United States on three important aspects: (1) the use of the Nails test to rationalize the exceptional method in Article 2.4.2 of the Anti-Dumping Agreement so as to justify using the weighted average-to-transaction methodology in dumping margin calculations; (2) the treatment of multiple companies in a non-market economy as a single NME-wide entity; and (3) the USDOC's policy of using adverse facts available for such an entity. Yet, some aspects of the AB's decision – most notably affirming the use of average prices – significantly weaken Article 2.4.2's pattern requirement and potentially open the door to greater use of the exceptional method.

Antidumping Measures and Most Favoured Nations Treatment Requirement

The debate whether antidumping measures have to applied on MFN basis has started with two decisions of the dispute settlement body in EC-Anti-dumping Measures on Certain Footwear from China and EC-Definitive Anti-dumping Measures on Certain Iron and Steel Fastners from China. The author argues that that the text, context and purpose of article VI of GATT 1994 and the Antidumping Agreement do not require application of antidumping measures on MFN basis. To that extent antidumping measures are exception to MFN. But procedural fairness has to be maintained which mandates application of MFN because absence of procedural fairness puts a question mark on the existence of conditions for application for antidumping measures. However, decision of the appellate body on the facts of the case was right as country wide dumping margin required as per EC law which was questioned in the two cases is another method for application of zeroing.

Anti-dumping protection, price undertaking and product innovation

This paper examines how price undertaking policies affect the product investments of firms in an intra-industry trade model. We show that the dumping margin will decline if the products become more differentiated. Under bilateral anti-dumping actions, relative to those under free trade, the aggregate product R&D investment may either increase or decrease, depending on the tolerable dumping margin set by the governments. By contrast, the aggregate product R&D will definitely decline and the products will become less differentiated if only one government implements anti-dumping actions.

The U.S. Department of Commerce’s approach to targeted dumping: the wrong test and the wrong response

The U.S. Department of Commerce (DOC) defines targeted dumping as a pattern of significant differences in the prices that importers charge in the U.S. to different purchasers, in different regions, or during different periods. If DOC finds targeted dumping, then it calculates the average dumping margin using zeroing, a practice that increases the calculated dumping duty. This article shows that DOC is using an inappropriate statistical test in targeted dumping investigations. The article also shows that a finding of targeted dumping does not justify the use of zeroing, an inherently flawed methodology that DOC has discarded in cases without targeted dumping.

The U.S. Department of Commerce's Approach to Targeted Dumping: The Wrong Test and the Wrong Response

The U.S. Department of Commerce defines targeted dumping as a pattern of significant differences in the prices that importers charge in the U.S. to different purchasers, in different regions, or during different periods. If DOC finds targeted dumping, then it calculates the average dumping margin using zeroing, a practice that increases the calculated dumping duty. This paper shows that DOC is using an inappropriate statistical test in targeted dumping investigations. The paper also shows that a finding of targeted dumping does not justify the use of zeroing, an inherently flawed methodology that DOC has discarded in cases without targeted dumping.

Subsidy‐induced Dumping

AbstractMore than two‐thirds of all anti‐subsidy investigations in the EU are paired with an anti‐dumping investigation against the same non‐EU producers. The outcome may be a two‐component duty where one duty addresses the ‘unfairness’ of the subsidy and the other the dumping behaviour. The philosophy behind this practice is that, at least to some extent, the observed dumping has been induced by the subsidy, and as the GATT Treaty, Article VI commits the claimant not to impose double remedies for the same ‘misbehaviour’, it is necessary to make an assessment of the hypothetical dumping without the subsidy. The EU quantification of the hypothetical dumping margin assumes that an export subsidy translates fully to the dumping margin, while a domestic subsidy leaves the dumping margin unchanged. Using an oligopoly model, we show in this paper that in case of an export subsidy, the EU anti‐dumping duty is lower than the predicted hypothetical dumping margin from the oligopoly model. For a domestic subsidy, the results are ambiguous, and the difference between the size of the duty following the EU procedure and the model predictions is relatively small.

Why the Potential for Trade Diversion should Be Examined Prior to Considering Setting an Antidumping Duty Lower than the Dumping Margin

This paper argues that, where the potential for trade diversion is significant, the protective effects of antidumping measures are heavily diluted, as in such circumstances imports can be sourced from non-subject countries at prices lower than the price of subject imports inclusive of an AD duty reflecting the full dumping margin. Therefore, investigating authorities in World Trade Organization (WTO) Members where the 'lesser duty rule' is part of domestic legislation should examine whether the potential for trade diversion is significant prior to considering setting an AD duty at a level lower than the dumping margin.

Antidumping duties and price undertakings: A welfare analysis

In this paper we examine differences in welfare implications between two trade protection measures: antidumping (AD) duties and price undertakings. Based on a stylized model of duopolistic competition under an effective AD law, we first analyze the case where a foreign firm convicted of dumping is required to pay an AD duty. We then examine the case in which a convicted foreign firm has the option of (i) paying an AD duty or (ii) accepting an undertaking by raising product price to its “normal value.” Taking into account the GATT/WTO policy that an AD duty rate must not exceed the margin of dumping, we show conditions under which a foreign firm chooses to evade its AD fine by a price undertaking. We find that the welfare-maximizing AD duty rate for a dumped product depends crucially on its normal value. If the foreign product's normal value is “critically high,” the optimal AD rate is set to fully reflect the dumping margin. Otherwise, the optimal AD rate is set lower than the dumping margin. From the perspective of social welfare, these findings help to identify the economic conditions under which one policy instrument is chosen over the other against foreign dumping.

Regulation Defies Congressional Mandate: Antidumping and Nonmarket Economies

Foreign producers and importers often have a challenging, uphill battle when defending against a dumping petition. The statutory framework for evaluating whether foreign producers are selling below fair value in the United States leaves significant discretion to the U.S. Department of Commerce and the U.S. International Trade Commission and foreign producers often find themselves on the losing end of a court’s analysis under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., when the court rules that the agency has reasonably interpreted a governing statute. This did not occur, however, in the recent case of Dorbest Limited v. United States, when the U.S. Court of Appeals for the Federal Circuit ruled that the Department of Commerce’s (“Commerce”) regulation for computing labor rates to calculate a dumping margin for a Chinese product defied Congress’ mandate set out in the governing statute.

EC Dumping and Injury Margin Calculation Methods: Ten Major Problems

EC Dumping and Injury Margin Calculation Methods: Ten Major Problems

The Top Ten Problems in Brazil’s Dumping and Injury Margin Calculation Methods

The Top Ten Problems in Brazil’s Dumping and Injury Margin Calculation Methods

Problems with Dumping and Injury Margin Calculations in Ten User Countries

In addition, de facto a third form of dumping exists: Non-market economy dumping. Where a non-market economy is under investigation, dumping may be established in a special manner. In all three cases, the establishment of dumping nominally2 is a technical mathematical exercise, which focuses on facts, notably the prices and costs of merchandise in two separate markets. If dumping and resulting injury are found, anti-dumping duties may be imposed to offset or prevent injurious dumping in the importing country market. Anti-dumping duties therefore are defensive (and not punitive) in nature. Systematic price dumping assumes separation of markets and existence of a closed home market, through governmental or market activity. These conditions should make parallel imports impossible. It is perceived to be “unfair” not to allow competition in one’s home market, yet to benefit from the openness of other markets to sell at low prices there. This perception of unfairness can be said to form the current basis for most anti-dumping legislation, although the ADA itself does not label dumping as “unfair” and the WTO carefully avoids that assertion. However, price differentiation as a pricing policy (as often used within domestic economies) is a widely used instrument to introduce products to new markets (however, the effect of such a policy is often balanced by parallel imports). Similarly, temporary sales below fixed costs (but above variable costs) are common in many industries during downturns in the business or product cycle. Therefore, it is important that key substantive concepts of the ADA are applied appropriately. Furthermore, some ADA rules may need to be revised to better reflect business realities in a globalized economy. In the areas of price and cost dumping, current WTO rules leave too much leeway for dumping to be found and anti-dumping measures to be applied in circumstances where systematic dumping does not take place (and, indeed, where domestic competition laws would not find objectionable conduct). We characterize such dumping as incidental dumping. A finding of incidental dumping, as opposed to systematic dumping, may result from various factors, including, but not limited to:

Dumping and Injury Margin Calculation Methods: Ten Major Problems – Country Study: Mexico

Dumping and Injury Margin Calculation Methods: Ten Major Problems – Country Study: Mexico

Dumping and Injury Margin Calculation Methods: Ten Major Problems in Indonesian Practices

Dumping and Injury Margin Calculation Methods: Ten Major Problems in Indonesian Practices

Dumping and Injury Margin Calculation Methods: Ten Major Problems in South Africa

Dumping and Injury Margin Calculation Methods: Ten Major Problems in South Africa

Working the system: Firm learning and the antidumping process

This paper takes the first systematic look at how prior experience by US firms in filing US AD petitions affects future AD filing activity and outcomes. Such prior experience may affect both the cost of filing petitions, as well as the likelihood of successful outcomes and dumping margin magnitudes. Statistical analysis of data on US AD cases finds that prior AD experience leads to greater filing activity and likelihood of affirmative decisions or suspension agreements, but significantly lower dumping margins. The latter result suggests that experience does not affect dumping margins as much as it lowers filing costs, leading to petitioning of weaker cases.

European Communities–Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India: Recourse to Article 21.5 of the DSU by India

This paper addresses the dispute brought to the World Trade Organization (WTO) by India concerning antidumping duties imposed by the European Communities (EC) on cotton-type bed linen. An earlier complaint brought by India challenged the antidumping duties on a number of points, including the EC practice of ‘zeroing’ for the computation of dumping margins (which had the e.ect of assigning a negative dumping margin a weight of zero when computing a weighted average dumping margin). India prevailed in that dispute, and the EC responded with Council Regulation (EC) No. 1644/2001, amending the original antidumping measure on bed linen from India. India was of the view that the amended measure did not comply with EC obligations under the WTO Antidumping Agreement, and brought the proceeding under Article 21.5 of the DSU that is the subject of this paper.

European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India (AB-2000-13, WT/DS141/AB/R:DSR 2003: III, 965): Recourse to Article 21.5 of the DSU by India

This chapter addresses the dispute brought to the World Trade Organization (WTO) by India concerning anti-dumping duties imposed by the European Communities (EC) on cotton-type bed linen. An earlier complaint brought by India challenged the anti-dumping duties on a number of points, including the EC practice of “zeroing” for the computation of dumping margins (which had the effect of assigning a negative dumping margin a weight of zero when computing a weighted average dumping margin). India prevailed in that dispute, and the EC responded with Council Regulation (EC) No. 1644/2001, amending the original anti-dumping measure on bed linen from India. India was of the view that the amended measure did not comply with EC obligations under the WTO Anti-dumping Agreement, and brought the proceeding under Art. 21.5 of the DSU that is the subject of this chapter.

EC versus United States: Zeroing or No Zeroing - The Biggest Antidumping Issue

Anti dumping duty has become rule of the day and WTO members are using this mechanism as a protectionist measure. This is so because the methodology of calculating dumping margin is not uniform. The US practices zeroing mechanism, which appears to be not in consonance with the agreement on anti-dumping, however the WTO panels have not taken it as seriously as ought to have been and the time calls for an analysis of mechanisms used for calculating dumping margin, specifically zeroing. Zeroing arises in situations where an investigating authority makes multiple comparisons of export price and normal value, and then aggregates the results of individual comparisons to calculate a dumping margin for the product as a whole, which does not appear to be in agreement with the WTO anti-dumping agreement.