Originally published 30.10.2007

The World Trade Organization (WTO) was established for progressive liberalization of international trade by means of lowering and/or eliminating trade barriers (both tariff and non-tariff) based on the principles of most-favored-nation, national treatment, freer trade, predictability and promoting fair competition, etc. Notwithstanding the fact that the WTO is destined mainly to eliminate any obstacles in international trade, the WTO agreements envisage some exceptions, in particular: (a) actions against dumped imports, i.e. anti-dumping duties; (b) actions against unlawful subsidies, i.e. countervailing duties; (c) actions against surge imports, i.e. safeguard measures (quotas and duties). Taking into account the fact that Ukraine could well become a member of the WTO shortly, it is worth analyzing the practice of applying the said exceptions in Ukraine.

This article proceeds with analyzing the trade measures available under Ukrainian law and allowed under the WTO agreements and concentrates on anti-dumping measures. First of all we shall provide a very brief overview of the WTO agreements applicable to anti-dumping measures; thereafter, we will pay special attention to the provisions of the Ukrainian legislation in the field in a question-and-answer format.

How are Anti-Dumping Measures Regulated Under the WTO Agreements?

Broadly speaking the applicable WTO agreement, i.e. the General Agreement On Tariffs and Trade 1994 (GATT 1994) allows governments to act against dumping where there is genuine (material) injury to the competing domestic industry. In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared with the price on the exporter's home market), and show that the dumping is causing injury or threatening to do so.

Thus, under Article VI of the GATT 1994 anti-dumping measures (anti-dumping measures) shall apply to offset or prevent dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, which causes or threatens to cause material injury to an established industry in the territory of an importing country or materially retards the establishment of a domestic industry. The Agreement On Implementation of Article VI of the GATT 1994 (the Agreement) sets out the rules for application of the anti-dumping measures pursuant to Article VI of GATT 1994. The major guidelines of the Agreement with respect to the anti-dumping measures provide that (a) such measures shall apply in the event of dumping taking place; (b) they may be imposed only when dumped imports are found to cause or threaten to cause material injury to the domestic industry or materially retards the establishment of a domestic industry; (c) the measures may be levied only as a result of investigations initiated and conducted under the Agreement; (d) they must be temporal; (e) the sum of the measures shall be the full dumping margin or less; (f) as a rule, they shall apply to each supplier of products subject to investigation individually; however, the Agreement sets out some exceptions to the said rule. The Agreement also provides for special requirements applicable to investigation, application of measures and establishes the Committee on Anti-Dumping Practices.

Anti-Dumping Investigations Under Ukrainian Law

Taking into account the fact that Ukraine intends to become a member of the WTO, the only legislative act in the field - the On Protection of National Producers against Dumped Imports Act of Ukraine (Anti-Dumping Act) was amended recently in order to comply with the relevant WTO requirements and practice1.

FAQ

When is an Anti-Dumping Investigation Initiated?

Under the Anti-Dumping Act an anti-dumping investigation may be initiated subject to the following conditions: (a) an application on initiation of the anti-dumping investigation is submitted by a national producer; (b) occurrence of dumping (i.e. dumped imports) that is considered as imports of products into the customs territory of Ukraine at lower prices than the comparable prices for the like products of the exporting country, which causes damages to the national producer of like products2; (c) occurrence of injury that is viewed as (i) material injury caused to the national producer; or (ii) a threat of material injury to the national producer; or (iii) material impediment creating or expanding production of like products by the national producer; (d) occurrence of a casual link between the dumping and the caused injury (casual link).

Products Under an Anti-Dumping Investigation

Any product manufactured for trading may be regarded as products under the anti-dumping investigation subject to the following conditions: (a) they are imported into Ukraine from the exporting country at prices lower than comparable prices for like products in the exporting country and (b) identified as such in the public notice on initiation of the anti-dumping investigation (initiation notice).

Who Can Apply for Initiation of an Anti-Dumping Investigation?

The national producer injured by dumping is entitled to request for initiation of an anti-dumping investigation and for applying anti-dumping measures. Pursuant to the Anti-Dumping Act a national producer shall be regarded as an aggregate number of producers of like products or those producers producing the major proportion (more than 50%) of total domestic production of such products3. Furthermore, an anti-dumping investigation may be initiated by an agency of executive power of Ukraine possessing the relevant information and evidence of dumped imports and injury and by the relevant trade union(s) of the national producer.

State Authorities Involved in an Anti-Dumping Investigation - Who Are They?

The Ministry of Economy of Ukraine (Ministry), the State Customs Service of Ukraine (Customs Service) and the Inter-departmental Committee on International Trade (Committee) are involved in anti-dumping investigations. The Committee is a collective state agency chaired by the Minister of Economy of Ukraine. The other members of the Committee are confirmed by the Cabinet of Ministers of Ukraine at the request of the Minister of Economy of Ukraine. The Committee is a responsible for initiating the Investigation, establishing occurrence of dumped imports, injury, the casual link, passing a decision on imposition of anti-dumping measures.

The Ministry is in charge of conducting anti-dumping investigation, collecting information and evidence, obtaining information from state agencies, applicants and interested parties. The Customs Service is usually involved in collecting data.

Stages of an Anti- Dumping Investigation

Anti-dumping investigations pass through the following stages:

  1. Initiation of the anti-dumping procedure by the Ministry;
  2. Initiation of the investigation by the Committee;
  3. Publication of the initiation notice;
  4. Collection of applications from the parties concerned by the investigation and registration of the said parties as interested parties, adopting decision on the hearings;
  5. Carrying out the investigation, collecting relevant data and explanations, e.g.: (a) collecting an insight from interested parties with information related to the investigation and submission of their commentaries thereto; (b) collecting answers to questionnaires of the interested parties; (c) holding consultations (if any), (d) holding hearings (if any);
  6. The adoption by the Committee of a decision on application of provisional anti-dumping measures (if any);
  7. The adoption by the Committee of a final decision in the investigation terminating the latter either (a) without application of any anti-dumping measures, or (b) applying anti-dumping measures;
  8. Appeal against the final decision of the Committee before a court (if any);
  9. Renewal of the investigation (if needed).

How Long Does an Anti-Dumping Investigation Last?

The duration of an anti-dumping investigation shall not exceed 1 year from the day that the decision on initiation thereof comes into force. In certain cases this term can be extended by the Committee up to 18 months. At the same time, Ukrainian legislation does not provide for exact terms for each stage of the investigation. Some terms and deadlines are set out or may be set out in the initiation notice, while others are established by the Committee and the Ministry within the investigation. The duration of each stage of the Investigation usually depends on the circumstances of a certain case, e.g. the number of interested parties involved, the amount of information, documents and other evidence submitted, etc.

What Should be the Language of an Anti-Dumping Investigation?

Pursuant to the Anti-Dumping Act the investigations shall be held in Ukrainian and all information, evidence submitted to the Ministry shall be in Ukrainian or accompanied with the Ukrainian translation. It is worth noting that non-compliance with the said requirement may lead to disregard of the filed information and documents by the Ministry.

Businesses that may be Affected by an Anti-Dumping Investigation - What Should They Do?

According to the Anti-Dumping Act the following individuals and legal entities that may be affected by the results of the anti-dumping investigation are entitled to apply for their registration as interested parties: (a) a foreign producer, exporter or importer of products subject to the investigation, or union (association) of foreign producers, exporters or importers of products subject to the investigation; (b) a national producer, manufacturer or wholesalers of like in Ukraine, etc.

After the registration all interested parties are empowered:

  1. to request hearings and participate therein provided that (a) the request for hearings is submitted in written within the terms established in the initiation notice; (b) they have proved that the results of the anti-dumping investigation may affect their interests; (c) there are justified reasons for hearings to be held;
  2. to request consultations to be held with an applicant or other parties with opposing interests;
  3. to become acquainted with all information and documents in the investigation file submitted by other interested parties if the latter (a) concern their interests; (b) are not confidential; (c) are used within the investigation;
  4. to submit their commentaries on information and documents submitted to the Ministry by the applicant and other interested parties and on application of provisional and final anti-dumping measures, renewal of the investigation, review of the applied anti-dumping measures, etc.;
  5. to participate in consultations held by the Ministry as to their price undertakings and selective methods to be used within the anti-dumping investigation;
  6. to issue their price undertakings to reconsider their prices or terminate export of products under the dumped prices;
  7. to inquire from the Ministry its conclusions, on the basis of which provisional and final anti-dumping measures are imposed, etc.

Questionnaires

Pursuant to the Anti-Dumping Act the Ministry is entitled to send out, shortly after initiation of the anti-dumping investigation, questionnaires to the interested parties containing detailed requests for information focusing on the investigation period for determination of dumping and the injury investigation period for determining the injury. The Ministry usually drafts different types of questionnaire for different types of interested parties. For example, foreign producers, exporters, importers, domestic producers. The questionnaires for exporters are usually designed in such a manner that duly completed questionnaire responses will enable the Ministry to calculate dumping margins and to compare prices charged on the importing country market with the prices charged by domestic/national producers.

Even though the Anti-Dumping Act provides that the Ministry shall send out to interested parties questionnaires on its own, according to the internal practice of the Ministry the interested parties shall, in order to obtain the questionnaire, approach the Ministry with written requests together with requests for registration.

The Anti-Dumping Act provides that responses to questionnaires shall be submitted to the Ministry within 30 days from the day of their receipt. This term may be extended by the Ministry upon request by the interested parties (as a rule, the interested parties are provided with extension periods of 15-30 days). However, taking into account volumes of information and documents requested by the Ministry (sometimes amounting to 100,000 pages) and obligation to submit thereof in Ukrainian or accompanied with a translation in Ukrainian, it is a tough job for the interested parties to collect, translate and file to the Ministry thereof within the terms mentioned (even within the extended terms).

Determination of Dumping and Dumping Margin Calculation

Pursuant to the Anti-Dumping Act a product is considered as being dumped, i.e. introduced into the commerce of another country at less than its normal value, if the export price of the exported product is less than the comparable price, in the ordinary course of trade, for like products in the exporting country.

At the same time, pursuant to the Guidance On Drafting an Application for Initiation of an Anti-Dumping Investigation drafted by the Ministry (the "Guidance"), the dumping margin shall be calculated as follows: (a) the export price shall be subtracted from the normal value/price; (b) the amount received after the said subtraction shall be divided by the average price declared, while importing products into Ukraine; (c) the amount received after the said division shall be multiplied by 100%.

However, the said formula does not fully comply with the Anti-Dumping Act and recent WTO practice in the field, i.e. it does not take into account certain peculiarities having a significant influence on the accuracy and objectiveness of the dumping determination, in particular:

  1. grouping: very often an investigation is initiated against products, different models of which have very distinct technical, physical, qualitative characteristics, prices, etc. Therefore, the dumping margin should not be calculated for such products as a whole. On the contrary, in such a case the dumping margin shall be calculated as follows: firstly, all models of products shall be grouped under the main characteristics; secondly, the dumping margin shall be calculated for each group of products separately; thirdly, the dumping margin may be calculated for products as a whole;
  2. export price calculations: due to the peculiarities of distribution schemes frequently used by foreign producers for the export of products to Ukraine, the average price declared, while importing products into Ukraine, shall not be used as a denominator. As a rule, foreign producers do not sell their products directly to Ukrainian importers. Instead, they sell products for import into Ukraine through their affiliated companies and/or offshore companies reselling the said products to the Ukrainian importers. Therefore, the sale prices of foreign producers (or their affiliated companies) to the first independent buyers, shall be used as a denominator for calculating the dumping margin, instead of the average price declared, while importing products into Ukraine;
  3. neither does the said formula take into account the cost of production test.

The abovementioned inconsistencies with the Anti-Dumping Act and WTO practice have a negative influence on the accuracy and objectivity of the anti-dumping investigation.

Are There any Provisional Anti-Dumping Measures Provided?

Under the Anti-Dumping Act the Committee within the anti-dumping investigation, is entitled in certain cases to apply provisional measures, i.e. anti-dumping duties. At the same time, provisional anti-dumping measures may be applied but not later than 9 months after initiation of the investigation.

What Measures can be Applied as a Result of an Anti-Dumping Investigation?

If as a result of an anti-dumping investigation the Ministry finds that the national producer suffered injury due to dumped imports, the Committee is entitled to adopt a decision on applying anti-dumping measures, i.e. anti-dumping duties.

When are Anti-Dumping Measures Applied?

According to the Anti-Dumping Act the measures shall apply provided that: (a) dumping exists; (b) injury is caused to the national producer; (c) the casual link exists; (d) national interests require the measures to be applied. While determining whether application of the anti-dumping measures meets the national interests all interests shall be taken into account, including those of national producers and consumers, effect of imports subject to the investigation on employment, investments of national producers and consumers and on Ukraine's international economic interests. Moreover, under the Anti-Dumping Act special attention shall be paid to restoring competition on the market.

How are Anti-Dumping Duties Applied?

Anti-dumping duties shall be applied to each supplier (i.e. a producer, an exporter, an importer) of products identified by the Committee in the decision on application of the anti-dumping measures. In the event that several suppliers from the same country import products under investigation and it is impracticable to identify all of them, anti-dumping duties may be applied to the exporting country as a whole.

Anti-dumping duty rates are defined by the Committee for each supplier individually. However, if it is impracticable to identify all suppliers of products, duty rates are determined for the exporting country as a whole. There are two possible ways to define duty rates, in particular: (a) as a percentage of the customs value of products to be calculated on CIF (Ukrainian border) delivery terms; or (b) as a difference between the minimum price4 and customs value of products to be calculated on CIF (Ukrainian border) delivery terms. It is worth noting that anti-dumping duties shall be paid by suppliers notwithstanding other taxes and fees being paid while importing the said products into Ukraine.

For How Long can Anti-Dumping Measures be Applied?

Anti-dumping measures shall apply only for a period as deemed to be necessary to counteract dumping causing injury. In any case, the decision on application of anti-dumping measures shall be effective for not more than five years from the date of their application or from the date of the latest decision of the Committee on review thereof.

Can Applied Anti-Dumping Measures be Reviewed?

The Anti-Dumping Act provides for the following reviews of anti-dumping measures applied: (a) due to the expiry thereof; (b) intermediate review; (c) to establish an individual dumping margin rate for new producers/ exporters; and (d) accelerated review that may be initiated and conducted subject to certain conditions set out in the Anti-Dumping Act.

We believe that the Anti-Dumping Ad sets out a sufficient framework for regulation of anti-dumping investigations in Ukraine. However, Ukrainian legislation as well as the practice of application thereof by the Ministry and the Committee shall be further developed in order to comply in full with the WTO requirements and recent practice in the field.

Footnotes

1. The Ministry of Economy of Ukraine also made public the Guidance on Drafting an Application for Initiation of the Anti-Dumping Investigation. However, the said document is not mandatory and has been drafted only for national producers seeking protection under the Anti-Dumping Act and does not provide for answers to all questions arising within the anti-dumping investigation by applicants or other parties involved.

2. Under the Anti-Dumping Act the investigation shall not be initiated, (a) if the factual or potential amount of the dumped imports from the exporting country is equal to less than 3% of imports of products into the importing country or (b) if the price of the imported products on the territory of Ukraine is lower than the comparable price for like products of the exporting country only for 2%.

3. The Anti-Dumping Act also provides for a special procedure on initiation of anti-dumping investigations by the national producer(s) producing less than 50% but more than 25% of total domestic production of such products.

4. Anti-Dumping Act stipulates certain rules for determining the minimum price of products.

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