Sep 23, 1987


GENEVA, SEPTEMBER 21 (IFDA/CHAKRAVARTHI RAGHAVAN) – Third world countries have underscored the need for proper definition of some of the concepts like "material injury" used in anti-dumping investigations and levy of countervailing duties, under the Tokyo round anti-dumping code, according to GATT sources.

They urged this at last week’s meeting of the Uruguay round negotiating group on MTN agreements and arrangements, according to participants.

The group, chaired by Chulsu Kim, assistant Minister of Trade of South Korea, is mandate "to improve, clarify or expand, as appropriate", agreements and arrangements negotiated in the Tokyo round MTNS.

Participants in the meeting presented the various proposals and ideas of theirs for changes in the various Tokyo round codes.

The anti-dumping code is one of the Tokyo round agreements, and provides an agreed interpretation and elaboration of the provisions of article VI of the general agreement.

On this code, South Korea has put forward a number of proposals for clarifying or defining concepts and terms used in the code, and which have been the subject of varying and often unilateral interpretations by some of the major importing countries.

While the South Korean proposal covers over 15 issues and terms in the code, India has put forward a separate proposal for a proper definition of the concept of "market injury", that could justify initiation of proceedings and levy of countervailing duties.

Both under GATT, and under the code, mere "dumping" cannot invoke duties. Among other things, the dumping must be shown to have caused "material injury" to domestic producers of the same of like products.

Article three of the code elaborates the concept of injury and enumerates the factors to be taken into account in determining injury.

However, India has pointed out, there is not much guidance in the article for determining the point at which the degree of injury could be called "material".

In this regard, without naming the U.S. India has pointed to the U.S. practice of diluting the concept of "material injury" to the point where findings of material injury have been given even in cases where the market share is "a fraction of one percent".

The practice of "cumulation of imports" to judge material injury has made the situation worse, and as a result imports from third world countries have become subject to vexatious investigations.

The Uruguay round negotiations in this area, India has urged, should result in an understanding on a minimum market share or a "threshold of market penetration", below which there should be a presumption of absence of material injury.

In its proposal, tabled at the May meeting of the group, South Korea has also asked for elimination of the concept of cumulation and for agreement on a market penetration threshold below which imports should be exempt form investigations.

Other South Korea proposals include the question of use of export prices to a third country, rather than a "constructed value", as a measure to judge the non-dumped value. It also seeks to deal with the practice of arriving at "constructed value" of an imported goods by arbitrary fixing of administrative, selling and other costs, minimum profit margins, etc.

South Korea has also suggested proper definition of terms like "domestic industry", and "like product".

The South Korean and Indian proposals reportedly received support of a large number of third world participants, including Singapore, Egypt, brazil, Yugoslavia, Argentina, Chile, and Mexico.

Israel also supported the Indian proposal, while the EEC agreed there was need for a review and stricter definition. The Nordics and Switzerland also said that there were a number of issues that did need review.

Australia, a country that has been increasingly making use of the anti-dumping provisions, and very indiscriminately according to third world countries, however argued that anti-dumping provisions covered "unfair trade practices" and could not be considered protectionist.

The U.S., whose use of anti-dumping investigations has proliferated, promised to give the group its won views by the next meeting.

Japan felt that anti-dumping should not become an unjustified impediment to trade. It expressed concern over pending legislation in the US. and the EEC on anti-dumping, and warned that their enactment would be contrary to the standstill commitment at Punta del Este.

In the discussions on the code on technical barriers to trade, Japan called for greater transparency in standards.

The U.S., among other things, called for transparency in regional standard setting. This appeared to be aimed at the EEC, with whom the U.S. now has a dispute over the proposals to limit hormone levels in beef imports.

The EEC for its part has suggested that the obligations of CPS under the code should extend to actions of local bodies, and in the case of CPS with a federal structure to actions of their constituent states.

India has raised the question of ensuring compatibility of standards issued by recognised national bodies and other standardising bodies within a country.

An Indian paper has noted that in many cases a country had more than one body formulating standards, and at times it was difficult to get information about the standards being formulated.

There should be a national system within each country so that the national body could be made responsible for providing information and ensuring compatibility of standards issued by other recognised bodies within a country. And where standard setting was in the hands of non-official bodies, the government of the country should assume some responsibility to outsiders.

Many CPS, India has complained, did not notify voluntary draft standards, even though effectively these were national standards. Even when they were not national standards, their wide adoption by local industry gave them such status. Something such status was also conferred by legislative references or in other laws that made voluntary standards mandatory.

In all these cases, there should be notifications as required under the code.

Another code that was discussed by the negotiating group this week was the government procurement code.

India, supported by other third world countries, wanted review of the adequacy of the provisions of this code relating to special and differential treatment for third world countries.

The code provides that in negotiations over the list of entities of third world countries to be covered by the provisions of the code, and which would entitle their participation, the developmental, financial and trade needs of third world countries were to be taken into account.

But in practice this was not being done, and the code had only three third world countries as adherents.

Of the four third world countries that actually participated in negotiating the code in the Tokyo round, three had not joined because of the difficulties created by industrial countries to their adherence.

South Korea, among those, which supported the Indian view, noted that it was one of the countries that had negotiated the code but had been blocked from joining the code and enjoying its benefits.

Singapore, a member of the code, supported the Indian and South Korean call for review of the provisions.