Circumvention of anti-dumping duty is one of the foremost challenges for investigating authorities. In spite of the absence of normative provisions concerning circumvention in the WTO's Anti-Dumping Agreement, Member nations of the WTO have developed their own frameworks for dealing with anti-circumvention.
In India, even though the provisions concerning anti-circumvention have been in place since 2011, there have been a very limited number of anti-circumvention investigations. As a result, the jurisprudence and the Designated Authority's practice concerning anti-circumvention investigations is still developing.
In an investigation of circumvention under sub-rule (3) of Rule 25 of Customs Tariff (Identification,Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury)Rules, 1995, the investigating authority examines whether there has been a change in trade practice,pattern of trade or channel of sales by the notified exporters/producers. This examination is done by analyzing whether there is (a) an absence of a justification for such a change, economic or otherwise, other than imposition of anti-dumping duty; (b) evidence that the remedial effects of the anti-dumping duty are undermined in terms of the price and the quantity of the like articles. However, the crucial issue is whether an analysis of "undermining remedial effects" requires the Authority to conduct a detailed examination of material injury to the domestic industry, as is done in an original investigation. Even though the relevant explanation to sub-rule (3) does not stipulate such a requirement, the Indian Authority's practice in its anti-circumvention investigations on this aspect has been inconsistent.
On 30th July 2018, the Designated Authority notified the final findings in an investigation into alleged circumvention of anti-dumping duty on imports of Glass Fibre from China PR by imports of Chopped Strand Mats ("CSM"), one of the types of Glass Fibre (the product subject to anti-dumping duty). The investigation was initiated subsequent to the domestic industry's complaint that M/s Asia Composite Materials (Thailand) Co.Ltd. ("ACM Thailand"), was importing Assembled Glass Roving ("AR", also a type of glass fibre) from China PR into Thailand, converting it into CSM, and thereafter exporting it to India. The domestic industry contended that CSM was being imported into India from Thailand to circumvent the anti-dumping duty on imports of Glass Fibre from China PR, that was notified in the original investigation.
In the course of the investigation, it was determined that ACM Thailand was a step-down subsidiary of Sichuan Weibo New Material Group Co. Ltd. (China), which was a non-cooperating entity during the original investigation and was thus assigned a residual duty rate of 47%. The Authority determined that the manufacturing setup in Thailand was a continuation of Sichuan Weibo's production line, where AR manufactured by it was simply sent to its affiliate company in Thailand for final conversion to CSM.
Against this background, the Authority examined whether there was a change in trade pattern and undermining of remedial effects in terms of sub-rule (3) of Rule 25. The Authority's analysis regarding the same are discussed below.
Change in pattern of trade
In this investigation, the Authority noted that after imposition of the anti-dumping duty, the volume of AR imported from China PR into Thailand increased. At the same time, the volume of CSM exported by ACM to India from Thailand increased. The Authority further noted that in the injury investigation period, there was a steady decline in the market share of CSM imported from China PR into India, while that of CSM imported from Thailand into India increased in the same period. The Authority thus came to the inevitable conclusion that there was a very clear and distinct change in the pattern of trade amongst India, China PR and Thailand.
In the investigation, the Authority noted that it had been advertised on ACM Thailand's website regarding its ability to provide 'good (export) service to customers world-over, particularly in areas where anti-dumping duty was imposed on CSM made in China'. The Authority took note of this statement as evidence, which was not rebutted by ACM Thailand.
Undermining remedial effects of anti-dumping duty
In order to determine whether the remedial effects of the subject measure were being undermined, the Authority first compared the landed value of CSM exports by ACM Thailand to India with the domestic industry's selling prices of CSM. The Authority found that price undercutting was quite significant, being in the range of 2030%.
The Authority also noted that 'preventing deterioration of the domestic industry's market share' is an important objective of anti-dumping duty and therefore considered it important in a determination of "undermining remedial effects". In its examination, the Authority found that while the market shares of both the domestic industry and imports from China PR had decreased, that of the exports from Thailand had increased. The Authority thus concluded that the remedial effects of the original anti-dumping duty were being undermined in terms of quantity as well.
Analysis of material injury to the domestic industry
In the course of the investigation, ACM Thailand submitted that a determination of "undermining remedial effects" required a detailed analysis of material injury under Annexure Il to the AD Rules. ACM Thailand seemed to suggest that an examination of the domestic industry's economic parameters such as capacity, capacity utilization, profits, sales, etc. was required in an anti-circumvention investigation. In support of its submissions, ACM Thailand relied upon the final findings in Indolinone from China PR where the Authority examined injury to the domestic industry as per Rule 1 1 and Annexure Il by evaluating these factors. The Authority's analysis seems to have been based on Rule 6 (1) (iv) which requires summarization of factors of alleged injury, and Rule 26 (5), which stipulates that provisions regarding evidence and procedure under Rule 6 would apply mutatis mutandis to anticircumvention investigations.
However, in the subsequent anticircumvention investigation on Cold-Rolled Stainless Steel from China PR, Korea, European Union, South Africa, Taiwan, Thailand and USA, the Authority adopted a contrary approach. In this investigation, the Authority stated that the AD Rules do not have explicit provisions of either Rule 1 1 or Annexure Il for anti-circumvention investigation. The Authority limited its examination of "undermining remedial effects" by examining only price effect and volume effect. Even though the Authority's practice in ColdRolled Stainless Steel seems consistent with the provisions of AD Rules, the result was that the practice on examining "undermining remedial effects" had become inconsistent and conflicting.
This ambiguity has however been resolved in the present investigation where the Authority has expressed the view that, in an anti-circumvention investigation, the AD Rules require only a determination of whether the remedial effects are being undermined in terms of price effect and volume effect; the AD Rules do not require a detailed material injury analysis to be conducted by the Authority in an anti-circumvention investigation. Therefore, no detailed examination of material injury was carried out in this investigation. The Authority has confirmed its interpretation and practice in Cold-Rolled Stainless Steel, and thus settled the ambiguities that existed earlier.
The AD Rules are clear that the Authority should determine "undermining remedial effects" by examining only price effect and volume effect in an anti-circumvention investigation. The inconsistency in practice regarding examination of material injury in the context of "undermining remedial effects" has now been clarified. The Authority's findings are consistent with the approach of other investigating authorities in countries such as the European Union and Australia. This approach is also a logical one since the purpose of an anti-circumvention investigation is merely to determine whether the existing measures are being circumvented, thus frustrating the objectives of anti-dumping duty. It remains to be seen whether the Authority will maintain this consistent approach given that the Authority is conducting a number of anticircumvention investigations at present.
Trade Remedy News
Trade Remedy measures by India
Trade Remedy measures against India
Indonesian metal duties are not safeguard measures: WTO Appellate Body report
On 15 August the WTO Appellate Body issued its report in the cases brought by Chinese Taipei and Viet Nam in "Indonesia Safeguard on Certain Iron or Steel Products" (DS490 and DS496). On appeal, Indonesia, Chinese Taipei, and Viet Nam all challenged the Panel's finding that the specific duty applied by Indonesia on imports of galvalume is not a safeguard measure subject to the WTO safeguard disciplines. However, the Appellate Body found that the Panel was not only entitled, but indeed required to ascertain, on its own motion, whether the measure at issue was a safeguard subject to the WTO safeguard disciplines. It also discussed the essentials required to be satisfied for a measure to qualify as a "safeguard measure", i.e., (i) the measure must suspend in whole or in part a GATT obligation or withdraw or modify a tariff concession; and (ii) the suspension, withdrawal or modification in question must be designed to prevent or remedy serious injury to a Member's domestic industry caused or threatened by an increase in imports of the subject product. Thereafter, on examination, the Appellate Body agreed with the Panel that the measure at issue in this dispute is not subject to the WTO safeguard disciplines. The Appellate Body also upheld the Panel's findings with respect to the other grounds of appeal.
EU's certain energy sector measures violate WTO law: DSB Panel report
On 10 August, the WTO circulated the panel report in the case brought by the Russian Federation in "European Union and its Member States Certain measures relating to the Energy SectoÈ' (DS476). Russia had challenged certain energy measures taken by EU and three of its member states, Croatia, Hungary and Lithuania which regulate the natural gas sector and seek to facilitate the development of natural gas infrastructure within the European Union. The Panel determined that two of the seven measures maintained by the EU
and its member states were incompatible with and therefore, in violation of, WTO law.
Russian measures on Ukrainian railway equipment - WTO issues panel report
On 30 July the WTO circulated the panel report in the case brought by Ukraine in "Russia Measures affecting the importation of railway equipment and parts thereof' (DS499). Ukraine had challenged Russia's application of conformity assessment procedures for railway products to suppliers from Ukraine of rolling stock, railroad switches and other railroad equipment (railway products). Ukraine's claims centered on three sets of measures and a challenge to the overall cohesive impact of these measures. Panel's findings regarding the same are discussed below:
(a) Russia, through fourteen "instructions", suspended the certificates of conformity issued to suppliers of Ukrainian railway productions. The Panel determined that Ukraine had established limited violation in so far as two of the 14 instructions issued by Russia did not transmit the results of the assessment in a precise and complete manner to the applicant, contrary to the obligation in Article 52.2 of the TBT Agreement.
(b)Russia, through three decisions, rejected applications for new certificates submitted by suppliers of Ukrainian railway products pursuant to CU Technical Regulations 001/2011 and 003/201 1. The Panel determined that in three out of four cases of rejection, Russia applied its measures more strictly than necessary and also failed to communicate precise and complete information as to why the applications were rejected.
(c)Certain Russian Authorities denied recognition to certificates of conformity issued by other Customs Union countries such as Belarus or Kazakhstan. The Panel determined that such a practice was in violation of Article and Article Ill:4 of GATT 1994 and was inherently discriminatory. (d)Russia systemically prevented imports of Ukrainian Railway products into Russia by following the foregoing measures. Regarding the alleged systematic prevention by Russia of imports of Ukrainian railway products, the Panel found that Ukraine had not established its claims of inconsistency with Russia's nondiscrimination obligations (Articles and Xlll:l of the GATT 1994) and Russia's obligation not to impose restrictions on international trade (Article Xl:l of the GATT 1994), because Ukraine had not demonstrated the existence of the alleged systematic prevention of imports of Ukrainian railway products into Russia.
Ukrainian fertilizer anti-dumping duties — DSB Panel finds inconsistencies in investigation by Ukraine
On 20 July the WTO circulated the panel report in the case brought by Russia in "Ukraine — AntiDumping Measures on Ammonium Nitrate" (DS493). Russia had challenged the antidumping measures maintained by Ukraine on imports of ammonium nitrate from Russia. The Ukrainian authorities had originally imposed antidumping measures on these imports following an anti-dumping investigation, which they extended pursuant to an interim and expiry review determination. Russia made substantive and procedural claims challenging the Ukrainian authorities' review determinations, while also challenging some aspects of the determinations made in the original investigation. The Panel determined most issues in Russia's favour, finding various inconsistencies with the investigation carried out by Ukraine. The issues discussed pertain to dumping and likelihood-ofdumping determinations, injury-related aspects of their determination, and their decision to include a Russian producer, that allegedly had a de minimis dumping margin in the original investigation phase, within the scope of the review determination.
Russia also raised procedural claims under Articles 6.2 and 6.9, Article 6.8 and paragraphs 3, 5 and 6 of Annex Il, and Articles 12.2 and 122.2 of the Anti-Dumping Agreement. The Panel upheld most of Russia's claims under Article 6.9 while rejecting one set of claims under Articles 6.2 and 6.9.
China initiates dispute against US solar cell duties and renewable energy measures
On 16 August, the WTO circulated to its members two requests as filed by China for consultations with the United States. The subject of the requests pertains to US safeguard duties imposed on imports of crystalline silicon photovoltaic products as well as regarding measures at the State and Municipal level that provide incentives for the use of domestically sourced renewable energy products and technologies.
China considers that the safeguard measure imposed by the United States on crystalline silicon photovoltaic products is inconsistent with the obligations of the United States under the GATT 1994 and the Agreement on Safeguards. Similarly, the measures in respect of renewable energy are also alleged to be violating various provisions of GATT, TRIMs Agreement and SCM Agreement.
India Customs & Trade Policy Update
Indian retaliatory measures against USA to cover trade loss, postponed
Ministry of Finance had by Notifications dated 206-2018 amended First Schedule to Customs Tariff and revised the jumbo exemption notification, to increase import duty on goods under Chapter 7, 8, 28, 38, 72 and 73 from USA, with effect from 4-8-2018. This additional duty on commodities such as almonds, apples fresh and other diagnostic reagents, etc., will now be effective from 18-9-2018. The increase of import tariffs is in connection with certain measures by the United States of America on import of certain aluminium and steel articles from India.
Textile products Customs duties increased on various textile products
India has increased customs duty on number of textile products from 7th of August. This time the list of products include carpets and textile floorings, and various articles of apparel and clothing accessories, covered by Chapters 57, 61 and 62 of Customs Tariff. The move is seen as primarily to extend protection to domestic industry. It may be noted that India recently increased import duties on mobile phones and ink cartridges, and Japan has, according to some reports, registered a formal protest with the Indian government.
Petroleum coke import policy revised — Import for fuel prohibited
Ministry of Commerce and Industry has amended import policy related to petroleum coke by allowing its import only to cement, lime kiln, calcium carbide and gasification industries for use as feed stock or in manufacturing process on actual user condition. Import of pet coke for fuel has been prohibited. Ministry of Environment, Forest and Climate Change in consultation with Customs and DGFT will bring out detailed guidelines on regulating and monitoring imports. Policy Condition No. 6 has been inserted in Chapter 27 of ITC (HS) 2017 by DGFT Notification 25/2015-2020 dated 17-8-2018.
SCOMET - Amendments in Appendix 3, procedural relaxations and export authorisations
The Central Government has made a total of 139 amendments in Appendix 3 to Schedule-2 of ITC (HS) Classifications of Export and Import Items, 2018. These amendments have been made to align India's SCOMET list with the amendments made to Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies in December 2017 to which India is a signatory. Notification No. 17/2015-2020, dated 3-7-2018 has been issued for the purpose.
Procedural relaxation for issue of authorizations for repeat orders: By Public Notice 20/2015-20, dated 12-7-2018, DGFT has relaxed the procedure specifies criteria subject to which the approval will be granted for repeat orders.
Issuance of export authorisation/license by DGFT (Hqrs): DGFT has decided that export authorisations for SCOMET items would be issued by the SCOMET cell, DGFT (Hqrs). Issues relating to revalidation of SCOMET authorisations after expiry, penal action in terms of FTDR Act, grant of MEIS and other benefit, etc. would continue to be handled by the concerned jurisdictional Regional Authority, in terms of the existing provision in FTP/HBP. The Trade Notice also clarifies that where the permission has been granted by DGFT (Hqrs) before issuance of this Trade Notice, jurisdictional RAs would immediately issue export authorisations in respect of such SCOMET cases. Trade Notice 20/2018-19, dated 6-7-2018 has been issued for this purpose.
Anti-dumping investigation — Use of 'total adverse facts available' when not correct
United States Court of International Trade has set aside Department of Commerce's order which used total adverse fact available in an antidumping investigation. While it upheld the department's finding on non-reporting of service related revenues and exporters failure to report properly it home market sales in respect of a within-scope part, the court however found that department's conclusion that company withheld necessary information that was specifically requested with respect to "accessories" was not supported by substantial evidence. It was also held that the commerce department's determination that exporter impeded the review by selectively reporting incomplete and unreliable documentation was not supported by substantial evidence.
Commerce's findings that Hyundai Heavy Industries [HHI] had service-related revenues, and that HI-II failed to report service-related revenues separately from the gross unit price despite repeated requests from Commerce, are supported by substantial evidence, was upheld by the Court after noticing that the department had asked HHI on three separate occasions to separately report service-related revenue. Twice, HI-II did not; and the third time, HI-II provided a worksheet which was not responsive in the form or manner requested by Commerce. Commerce's finding that HHl's failure to report properly its home market sales, inclusive of the price of within-scope parts, warrants the use of adverse facts available is supported by substantial evidence. It observed that the same part that Plaintiff reported as non-subject merchandise in its home-market sales database was also sold in the United States and properly reported as subject merchandise in the U.S. sales database, and the Plaintiff did not acknowledge or address this contradictory treatment of the part in question.
However, in respect of information on accessories, the court observed that department did not find that any of the components should have been reported as accessories. It was noted that the department never made a factual finding that any "accessories" referenced in such sales documentation were non-subject merchandise that should have been separately reported as accessories, and in fact never defined 'accessories'. Similarly, in respect of selective reporting and other discrepancies as well, it was found that the department's finding was without any evidence. [Hyundai Heavy Industries Co. Ltd.v. United States - Slip Op. 18-101, dated 14-82018, US CIT]