SECTION 301: Anti-Dumping Investigation
ANTI-DUMPING
DUTY
____
A. DEFINITIONS
1. What is dumping?
Dumping occurs
when foreign producers sell their products to an importer in the
domestic market
at prices lower than in their own national markets, or at prices below
cost of
production, the sale or importation of which injures or threatens to injure a
domestic industry producing like or comparable products or retards the
establishment of
a potential industry. It is a form of price discrimination
between two national markets.
2. What are the elements of dumping?
There are four (4) elements of dumping, namely:
·
Like
Product - product produced by the domestic industry which is identical
or
alike in all respects to the article under consideration, or in the absence of
such a product,
another product which, although not alike in all respects, has
characteristics closely resembling
those of the product under consideration.
·
Price
Difference - amount by which the normal value (the price prevailing in the
exporting
country) exceeds the export price (selling price to an importer
in the
Philippines).
·
Injury
- means material injury to a domestic industry, threat
of material injury or
material retardation of the establishment of a domestic
industry. Injury test must
be based on positive evidence and shall involve an
objective examination of both
(a) the volume of the dumped imports and the
effect of dumped imports on prices in the
domestic market for like product, and
(b) the consequent impact of these imports on
the domestic producers of such
products.
·
Causal Link - refers
to a finding that the material injury suffered by the domestic industry is the
direct result of the importation of the dumped product. It must be clear that the injury
suffered is directly attributable to
the alleged dumping.
3. What is normal value?
The
foreign producer's domestic selling price is referred to as the "normal
value" of
the article. It is the comparable price in the ordinary course of
trade for the like product when
destined for consumption in the country of
export or origin.
4. What is export price?
"Export
price" refers to (1) the ex-factory price at the point of sale for export;
or
(2) the price assessed at the free-on-board (F.O.B.) level (at the point of
shipment) of the allegedly
dumped product.
In cases where (1) or (2) cannot be used, the export price may be
constructed based on such
reasonable bases as the Secretary of Trade and
Industry/Agriculture or the Commission may determine.
The
export price of an imported product is the price at which such product has been
purchased or agreed to be purchased, at “arm’s length transaction,” by the
person by whom or
for whose account the product is imported, excluding any post
exportation charges such as
ocean freight and overseas insurance.
5. What is an arm’s length transaction?
An
“arms length transaction” refers to a transaction where the price is not
affected by
any relationship between the buyer and the seller, of if there is no
compensation, reimbursement,
benefit, or other consideration given in respect of
the price.
6. What constitutes a domestic industry?
"Domestic
industry" refers to the domestic producers of like products as a whole or
to those
whose collective output of the products constitutes a major proportion
of the total domestic
production of those products in the industry concerned.
When producers are related to the exporters or
importers or are themselves
importers of the alleged dumped articles, the term "domestic industry"
may
be interpreted as referring to the rest of the producers.
7. What is meant by “comparable price”?
"Comparable
price" means the domestic price in the exporting country at the same level
of trade which is sold or offered for sale at wholesale on the date of
exportation to the Philippines.
8. What is a country of export?
A
“country of export” is the country from where the allegedly dumped product
was shipped
to the Philippines, regardless of the location of the seller.
The country of export and the country of
origin may be the same, but not
in all instances.
9. What is a country of origin?
A “country of
origin” is the country where the allegedly dumped product either was wholly
obtained or where the last substantial transformation took place. The
country of origin and the
country of export may be the same, but not in all
instances. In case of a
transshipment where a
product is shipped from a third country that is not the
country where the product was manufactured
or processed, the country of origin
would be different from the country of export.
10. Who is a new foreign exporter?
A
new foreign exporter is an exporter who did not export the allegedly dumped
product during the
investigation period.
11.
What is meant by “non-selected foreign exporter or producer”?
“Non-selected
foreign exporter or producer” refers to a foreign exporter or producer
who has
not been initially selected for the purpose of computing the individual margins
of dumping.
12. What is meant by “non-market economy”?
A
“non-market
economy” refers to the country of
export or origin where the government
(1) has a monopoly, or substantial
monopoly, of trade; and (2) determines, or
substantially influences, the domestic prices of the
products in that country.
13. What is
price depression?
“Price
depression” refers to the extent by which the domestic producer reduces its
selling price
in order to compete with the allegedly dumped product.
14. What is meant by “price suppression”?
“Price
suppression” refers to the extent by which the allegedly dumped product
prevents the
domestic producer from increasing the selling price of its own like
product to a level that will allow
full recovery of its cost of production.
15. What
is meant by “price undercutting”?
“Price
undercutting” is the extent by which the allegedly dumped product is
consistently
sold at a price below the domestic selling price of the like
product.
16. When
does transshipment occur?
There
is transshipment when the allegedly dumped product is not imported directly from
the
country of origin but is physically shipped through a third country without,
however, entering into
the commerce thereof.
B. SCOPE AND COVERAGE
1. What are the articles covered by an anti-dumping protest?
A
dumping protest may cover any specific kind or class of a foreign product which
is being
imported, sold or is likely to be sold, into the Philippines at a price
less than its normal value, the
importation or sale of which might injure, or
retard the establishment of, or is likely to injure an
industry producing like
products in the Philippines.
2. Are there any importations exempted from anti-dumping protest?
Yes.
The following shipments and/or consignments shall not be subject to anti-dumping
protest:
· Products imported by, or consigned to, government agencies not organized for profit
and particularly designated by law or proper authorities to import, directly or through awardees; such
articles as would stabilize and/or supplement shortages; and
· Conditionally duty-free importations enumerated under Section 105 of the Tariff and
Customs Code, as amended.
C. THE
LEGISLATION
1. What is the Anti-Dumping Act of 1999?
Republic
Act No. 8752, otherwise known as the “Anti-Dumping Act of 1999”, which
amended
Section 301 of the Tariff and Customs Code of the Philippines, provides
protection to a domestic
industry which is being injured, or is likely to be injured by the dumping of products
imported into or
sold in the Philippines.
2. When was R.A. No. 8752 signed? effective?
R.A. 8752 was signed on August 12, 1999 and took effect on
September 4, 1999.
3. What is the rationale
for the passage of the new anti-dumping law?
·
To transform
the domestic anti-dumping law into a more workable and simple piece of
legislation providing the safety nets against the inflow of cheap dumped
imports.
·
To strengthen
the rules governing the investigation of anti-dumping cases; and
·
To align the
domestic law with the WTO Agreement on Anti-Dumping Practices.
4. Have the rules and regulations to implement R.A.
8752 been promulgated?
Yes, the Implementing Rules and Regulations (IRR) were signed
by the concerned Secretaries/
Agency Heads and published on July 3, 2000.
The IRR (Joint Administrative Order No. 01, s. 2000)
took
effect on July 10, 2000, i.e.
seven (7) days from its publication.
5. What is Commission Order No. 00-01?
Commission Order No. 00-01 prescribes the internal rules and
regulations governing the conduct
of formal investigation by the Tariff
Commission under Section 301 of the Tariff and Customs Code of
the Philippines,
as amended by Republic Act No. 8752. Deposited
on June 20, 2000 with the
University
of the Philippines Law Center, the Order took effect on July 5, 2000.
6. What agencies administer the anti-dumping legislation?
The following
government agencies are tasked to administer anti-dumping action:
·
Department of Trade and
Industry-Bureau of Import Services (DTI-BIS), in the case of
industrial goods or Department
of Agriculture (DA), in the
case of agricultural products.
- receives
written application and determines whether the application is proper in form and
substance and whether documentary requirements are
complied with;
- determines
whether or not a prima facie case exists to warrant initiation of
investigation; and
- conducts
preliminary investigation to determine whether or not provisional
measures
(dumping bond) may be imposed.
·
Tariff Commission (TC)
-
conducts formal investigation and
submits report of findings to either Secretary for
the issuance of a Department
Order imposing the definitive anti-dumping
duty (in case of affirmative
findings).
·
Bureau of Customs (BOC)
- imposes
the dumping bond and/or definitive duty upon receipt of the Department Order,
through the
Secretary of Finance.
D. PROCEDURES
1. Who may file an anti-dumping protest?
A
protest may be filed by, or on behalf of, the domestic industry, in writing and
embodied
in a notarized form.
2. What is the threshold of support by producers
for the protest (application)
to be accepted?
(a) support by domestic producers whose collective output constitutes more
than fifty percent
(50%) of the total production of the like product produced by
the domestic industry; and
(b) support by producers accounting for at least 25% of the total domestic
production of the
product alleged to be dumped.
3. Who else, aside from the domestic industry, may initiate an anti-dumping
investigation?
In
special circumstances, DTI or DA may, on its own motion, initiate an
anti-dumping investigation
without having received a written application by or
on behalf of a domestic industry. The concerned
authorities should have
sufficient evidence of dumping, injury and a causal link to justify the
initiation
of the investigation.
4. Is the protestant (petitioner) required to post a bond together with his
protest?
Yes,
the protestant shall post a surety bond to answer for any damages which the
importer/
protestee may sustain by reason of the filing of frivolous petition, to
be released only upon affirmative
preliminary
determination.
5. What
is the de minimis rule?
The
protest/application shall be immediately rejected and the investigation
terminated if:
·
the margin of
dumping is de minimis, i.e. less than 2%, expressed as a percentage, of
the
export price; or
·
the volume of
imports from a particular country is less than 3% of all imports of like
products
into the importing country.
However,
this rule does not apply when countries with individual shares
of less than 3%
collectively account for more than 7% of imports of the product under
investigation;
or
·
the injury is
negligible.
6. What is price undertaking?
“Price
undertaking” is a voluntary commitment by the exporter to increase his price
or to cease
exporting to the Philippines at a dumped price, thereby eliminating
the material injury to the domestic
industry.
Offer of price
undertaking shall be made only after a preliminary affirmative determination of
dumping and injury to the domestic industry.
An undertaking
to increase prices or cease exportation at dumped prices may not be accepted
if
its acceptance is impractical, e.g., if the number of actual or potential
foreign exporters is too large,
or other reasons, including reasons of general
policy.
7. What are the stages of an anti-dumping
investigation?
· Prima
Facie Determination
The DTI-BIS or DA, upon acceptance of the properly documented
protest/application, has
five (5) working days to decide whether the facts would
constitute a dumping case. In its
determination, the DTI-BIS or DA undertakes an in-depth evaluation of the data
submitted or provided, together with
any other information obtained
independently.
The following
information are to be provided when applying for the levy of anti-dumping duty:
- volume of
the domestic production of the producers making the application;
- description
of the alleged dumped product;
- names of
the exporting countries, each known exporter or foreign producer, and a list of
the importers of the products; and
- information
on dumping:
>
prices at which the product is sold in the domestic market of the
exporting country, and
export prices;
>
injury
and causality;
>
volume
of dumped imports; and
>
adverse effects of such imports on domestic prices and on the
domestic industries.
· Preliminary
Determination
Once
a prima facie case has been
established, DTI-BIS or DA initiates the preliminary
determination. Before
proceeding to initiate an investigation, the DTI or DA Secretary notifies the
government of the country of export or origin about the impending dumping
investigation.
Within
two (2) days from the initiation of the investigation, the DTI-BIS or DA
notifies all
known interested
parties about the initiation of the investigation and sends a proforma
respondent’s
questionnaire to all the interested parties.
Not later than
thirty (30) working days from receipt of the answer of the respondents and other
interested parties, the Secretary shall make a preliminary determination of the
need for the imposition
of a provisional anti-dumping duty on the basis of the
application, the answer of the respondents, and
the respective supporting
documents or information.
The requirement
of the dumping bond (equivalent to the amount of provisionally calculated
dumping margin) shall be made not sooner than sixty (60) days from the date of
initiation of the
investigation and only for a period of four (4) months.
The Secretary of
DTI or DA shall immediately terminate the anti-dumping investigation upon
finding that:
- the
margin of dumping is de minimis, i.e., less than two percent (2%) of the export price; or
- the
volume of imports from a particular country is less than three percent (3%) of
all imports
of like products. However,
this rule does not apply when countries with individual shares of less than
3%
collectively account for more than 7% of imports of the product under investigation; or
-
the injury is negligible.
· Final Determination
In the
conduct of its final determination, the Commission notifies all interested
parties, receives
representations and/or other submissions, and holds
preliminary conference and public consultations.
Investigators conduct ocular
plant inspection and examination of books of accounts of all concerned
parties
domestically and in the exporting countries.
From
its receipt of the advice from the Secretary of DTI/DA, the Commission has 120
days to
complete its own inquiry and submit
its report of findings to either Secretary.
· Issuance
of Department Order
The DTI or DA
Secretary shall, within ten (10) days from receipt of the affirmative final
determination by the Commission, issue a Department Order imposing an
anti-dumping duty on the
dumped product, unless he has earlier accepted an
undertaking from the foreign exporter to
increase prices or cease exportation at
dumped prices.
In case of a
negative finding by the Commission, either Secretary shall issue, through the
Secretary of Finance, after the lapse
of the period for the petitioner to appeal to the Court of
Tax Appeals, an Order
for the Commissioner of Customs to immediately release the anti-dumping bond
to
the importer.
8. When may the determination of dumping not be appropriate?
·
when sales in
the domestic market of the exporting country are not made in the ordinary
course
of trade (e.g. sales are made below the cost of production); and
·
when the volume of sales in the domestic markets is low.
9. For purposes of determining dumping in the aforementioned instances,
with what is the
export price compared as permitted by the WTO Agreement and the
domestic law?
·
a comparable
price charged for the like product when exported to a third country; or
·
a constructed
value, calculated on the basis of the production costs of the imported
product,
plus general, selling and administrative costs, and profits.
10. What are the economic factors to be considered in determining material
injury to the
domestic industry?
threat of material injury?
· actual or
potential decline in output, sales, market share, profits,
productivity, return on
investments, or utilization of capacity;
· effects
on domestic prices; and
· actual or
potential effects on cash flow, inventories, employment, wages, growth, and
ability
to raise capital or investments.
11. What factors are considered by
the Commission in determining the existence of a threat
of material injury?
·
a significant
rate of increase in the importation of the dumped product into the domestic
market indicating the likelihood of substantially increased importations;
·
sufficient
freely disposable, or an imminent, substantial increase in, production capacity
of the
foreign exporter indicating the likelihood of substantially increased
dumped exports in the domestic
market, taking into account the availability of
other export markets to absorb any additional exports;
·
whether dumped
products are entering at prices that will have a significantly depressing or
suppressing effect on domestic prices, and will likely increase demand for
further importation of the
dumped products; and
·
inventories of
the product being investigated.
12. What factors other than dumped imports may cause the non-levy of
anti-dumping duties?
· contraction in demand or changes in the patterns of consumption;
· trade restrictive practices of, and competition between, foreign
and
domestic producers;
· developments
in technology and export performance; and
· productivity
of the domestic industry.
13. What can the investigating authorities do if the
exporting enterprises, who have
been accorded the right to defend their
interests during the investigation, refuse to cooperate
by providing information?
The
authorities
can decide on the basis of the best information available (BIA).
14. Comparing
the home consumption price with the export price involves the conversion
of the
latter into the exporting country’s currency. What exchange rate should be used for
conversion purposes?
The exchange rate prevailing on the date of sale
should be used for conversion purposes.
However,
if the transaction is based on an exchange rate stated in a forward contract,
that rate
should be used.
15. Where
the volume of domestic sales is “low,” the consumption price in the exporting
country may not provide a proper
basis for price comparison. In such
case, a constructed
value
instead of the domestic
consumption price is used. How is
the constructed value calculated?
The constructed value is calculated on the basis of cost to the
exporting industry producing
the product. The
WTO Agreement on Anti-Dumping Practices lays down the following guidelines for
calculating constructed values:
· Costs
should normally be calculated on the basis of records kept by the exporter or
producer
under investigation, provided that such records are in accordance with
the generally accepted
accounting principles of the exporting country.
·
The
amounts for administrative, sales and general costs and profits should be based
on actual
data pertaining to production and sales, in the ordinary course of
trade of the like product, by the
exporter or producer under investigation.
However, when it is not possible to determine such amounts on the above
basis, the Agreement
provides that they can be determined based on any of the
following:
·
actual
data from other exporters or producers of products in the same general category;
·
the
weighted average of the costs and profits of other exporters of the same
product; and
·
any
other reasonable method, as long as the amount does not exceed that of the
exporters or
producers of the same general category of product.
16. What
is meant by “disclosure of
essential facts”?
Before making the final determination, the Commission is required to
disclose to the interested
parties (e.g. exporters or producers under investigation, their governments, and
importers) the essential
facts on which the decision to apply the duty is made.
The parties are given five (5) days from the date
of receipt of the
essential facts to defend their interests in writing.
E.
MEASURES
1. What are the remedies/measures imposed against dumping?
·
Provisional Measure - takes the form
of a provisional duty - cash
or documentary security -
equal to the estimated difference between the normal
value and the export price of the protested
article. It is applied only after the
DTI-BIS or DA has made a preliminary affirmative determination
no sooner than 60
days from the initiation of the case.
·
Definitive
Duty - final anti-dumping duty imposed, in addition to the regular duty and
other
charges, on a protested product imported from a specific country.
It may be the full margin of dumping
or a lesser amount adequate to
remove the injury to the domestic industry.
2.
What is the lesser duty rule?
Even
after it is established that dumped imports are causing injury to the domestic
industry,
the decision on whether the
amount of duty should be the full margin of dumping or
less should be
made by the
authorities. If a lesser duty is
adequate to remove the injury to the domestic industry,
the lesser duty should
be levied.
F. DURATION OF MEASURES
1. What is the lifetime
of the
anti-dumping measures?
Provisional
anti-dumping duty – four (4)
months, extendible to six (6) months
Definitive
anti-dumping duty – effective for five (5) years from
imposition
2. What is meant by
“sunset
review”?
It is a
review that may be initiated by any interested party or upon own motion of the
Commission before the “sunset date,” (i.e., the 5th year)
to determine whether the expiry of the
anti-dumping duty would likely lead to a
continuation or recurrence of dumping and injury.
3. What is an interim review?
It
is a review conducted by the Commission, motu proprio or upon the
direction of the
Secretary or upon petition of any interested party to determine
whether:
·
the need for
the continued imposition of the anti-dumping duty is no longer necessary to
offset dumping taking into consideration the need to protect the existing
domestic industry; or
·
the existing
duty is not sufficient to counteract the dumping which is causing injury.
At least
one (1) year should have elapsed since the imposition of the anti-dumping duty
before
an interim review can be made.
4.
What is a newcomer review?
It
is a review carried out on an accelerated basis for the purpose of
determining individual
margins of dumping for new exporters (“new shippers”)
in the exporting country in question which
have not exported the product during
the period of investigation on which the measures were based.
The
new foreign exporters may request for such review provided they are not
related to any
foreign exporter who is subject to the anti-dumping duty.
The application must be submitted to the
Commission in
writing and must contain :
i. a description of the foreign exporter’s products; and
ii.
the basis of the request.
G. JUDICIAL
REVIEW
What
are the actions available to the aggrieved and/or interested party?
appeal - within thirty (30) days from receipt of
notice of the final ruling, a petition for
review of such ruling
may be filed with the Court of Tax Appeals by any party in an
anti-dumping
investigation who is adversely affected by the final ruling in
connection with the imposition of an
anti-dumping duty
-
the filing of such petition for review shall not in any way stop or
suspend the imposition
and collection of the anti-dumping duty.
H. PHILIPPINE COMMITMENTS
VIS-À-VIS
THE WTO AGREEMENT ON ANTI-DUMPING
PRACTICES
What
previously WTO-inconsistent provisions in the old dumping law
(Section 301) have been
amended/revised by the new law to align it with the WTO Agreement?
·
withholding of
the release of questioned importation pending the determination of a
prima
facie case of dumping;
·
imposition of
provisional measure immediately upon finding of a prima facie case, effective
up to the final determination of
dumping;
·
inclusion of substitutes in the definition of like
products;
·
country-specific
application of anti-dumping duty;
·
period of
submission of replies to questionnaire limited to 10 days; and
·
retroactive
application of definitive anti-dumping duty on all importations within 150 days
immediately preceding the filing of the protest.
I. STRENGTHENING OF THE ANTI-DUMPING MECHANISM
What
provisions in the new anti-dumping law strengthen the mechanism against dumped
imports?
· proactive
implementation by concerned authorities, including commercial and agricultural
attaches;
· penalty
clause prescribing sanctions on (a) concerned government authorities in addition
to
those provided in the Revised Penal Code and the Anti-Graft and Corrupt
Practices Act - for the
failure of implementing authorities to initiate, investigate and prosecute
anti-dumping cases;
(b) importers who are found guilty of dumping;
· elimination
of the “Special Committee on Anti-Dumping” as the deciding authority and, in
lieu
thereof, the Tariff
Commission;
·
shortening
of the statutory investigative timetable from 150 days to 120 days for the
Commission to complete its formal investigation and submit its report of
findings to the Secretary of
DTI/DA;
· creation
of a Special Unit within the implementing agencies to undertake the tasks
mandated
under the Anti-Dumping Duty Act of 1999; and
· earmarking
of the anti-dumping duty collected for the capacity building/strengthening of
the
implementing agencies.
J. CONTENTIOUS PROVISIONS IN THE ANTI-DUMPING ACT OF 1999
What
provisions in the new law drew strong negative reactions from certain concerned
sectors?
· The
discretion of the Tariff Commission to require or not the imposition of
anti-dumping duty
even in cases where all the elements of dumping have
been established
· The
penalty clause prescribing the following punitive damages to be imposed on any
importer
who knowingly engages in importation of dumped products:
-
revocation of the importer’s license or charter to do business;
-
disqualification of responsible officers from holding official position
in other business entities
in the Philippines; and
-
fine equal to twice the definitive anti-dumping duty imposed.
· The
requirement for the posting of surety bond by the petitioner/protestant upon
filing of
an anti-dumping protest to answer for any damages which the importer/protestee
may sustain by
reason of the filing of a frivolous petition.
K. EFFECTIVENESS
OF THE ANTI-DUMPING LAW
How
effective is the implementation of the new anti-dumping law perceived?
Strengthened
might be the anti-dumping duty law, it can
only be as effective as the
implementing authorities are. Trade, agriculture or finance attaches and other consular officials need
to be more proactive and vigilant in detecting/monitoring normal values in
foreign countries. The Tariff
Commission has endeavoured to be faster and more efficient in the conduct of
formal investigation of
dumping cases without prejudice to the right of all
concerned parties to due process of law.
Further improvements have been introduced in the procedural aspects of
dumping investigation
to expedite the resolution of dumping cases. Accordingly,
the Commission has adopted the following
procedures:
·
verification/ocular
inspection is immediately conducted upon receipt of the case from DTI
or DA;
·
preparation of
the staff report within fifty (50) days from receipt of the case;
·
designation of
an alternate counsel so that in the event that the lead counsel is not available,
motion for resetting of hearings will no longer
be necessary;
·
summary
proceedings, similar to the regular court procedures. Rather than hearing the
testimony of witnesses, their affidavits will be submitted to the opposing party
at least three (3) days
before the scheduled hearing to afford the opposing
party time to study the testimony of the
witnesses and to formulate
clarificatory questions to be asked during the hearing;
· conduct of 5-day marathon hearings; and
·
no dilatory
tactics, unnecessary or unjustified delays, are allowed.
L.
IMPLICATIONS OF THE NEW ANTI-DUMPING LAW FOR BUSINESS
For
business persons, knowledge of the complex rules on the levy of anti-dumping
duty is
essential in their capacities as producers and exporters whose interests
may be adversely affected
by the unfair price practices of producers in other
countries.
In
recent years (1998,1999), there had been a steady increase in the number of
petitions for
anti-dumping duty action filed by domestic producers.
Complaints of dumping are on the rise. While
many of these complaints are due to the inability of domestic
industries, long accustomed to high
levels of protection, to adjust to the
changed competitive environment resulting from the reduction of
tariffs, some
complaints about unfair price practice of foreign suppliers are undoubtedly
genuine. A
better understanding of
the anti-dumping law would enable the affected producing enterprises to make
appropriate use of their right to petition for the levy of anti-dumping duty.
On
the other hand, Philippine exporters are finding that as their exports of
manufactured
products increase, pressures for the levy of such duty, on the
ground that the goods are being
dumped, are mounting from industries in the
importing countries. Under such
circumstances, it is
becoming more essential for enterprises to be familiar with
the rules applicable in this area. An
understanding of the rules could, for instance, enable an exporting enterprise
to take precautionary
steps to avoid anti-dumping actions in foreign markets
where there are increasing pressures from
industrial and other groups for such
actions. It would be in the interest of the exporting enterprise
not to allow
its exports to rise in a market where it is apprehensive of a petition for
anti-dumping
action. Where
possible, such enterprise should diversify its trade to other markets.
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