Few companies know all the opportunities the World Trade Organization (“WTO“) offers to resolve trade-related problems or frictions. The WTO’s functioning does not depend only on its Dispute Settlement Body (“DSB“). It has several committees that can be even more powerful than the DSB. Examples are the Committee on Anti-Dumping Practices (“AD Committee“) and the Committee on Subsidies and Countervailing Measures (“SCM Committee“). This Blog explains how both offer a forum to resolve practical and strategic issues companies are facing.
Overview and conduct of the committees
The AD Committee oversees the implementation and operation of the Anti-Dumping Agreement (“ADA“) and the application of anti-dumping measures by all WTO Members (“Members“). The SCM Committee has the same objective with regard to the Agreement on Subsidies and Countervailing Measures (“ASCM“) and oversees subsidies and anti-subsidy duties imposed by Members.
Both Committees review and discuss the manner in which anti-dumping and anti-subsidy measures are applied. In doing so, they can issue guidelines, interpretative notes, and case studies, that can indicate how a certain provision should be interpreted or applied. Even their meeting notes can provide an indication how a certain topic should be looked at. All these can be used in investigations/proceedings in WTO Member States.
The potential of AD and SCM committees – some examples
Treatment of goods: captive use and inward processing
Take, for instance, the practically important issue of the treatment of captive goods, i.e., goods traded within the same company, or goods imported under the inward processing regime, in anti-dumping investigations. Currently, Members interpret these situations differently.
For instance, the European Commission (“Commission“) has excluded captive use data in determining injury to its domestic industry in some cases, but included this in other cases.[1] Similarly, with respect to goods imported under an inward processing regime, the Commission’s practice is inconsistent; it has excluded such imports in determining export price in some cases, while in other instances, it has included such imports.[2]
Such diverging practices create uncertainties and make it difficult for companies to comply with the rules. An agreement at the level of the AD Committee on how to treat captive goods or goods under inward processing would enhance predictability and improve the functioning of the anti-dumping instrument.
Lesser duty rule
The AD and/or the SCM committees could also be used to converge on methodologies, for instance, on the lesser-duty rule (“LDR“) in joint anti-dumping and anti-subsidy investigations. The ADA and ASCM encourage investigating authorities to consider the lesser of the dumping or subsidy margin on the one hand, and the injury margin on the other hand, when imposing anti-dumping or anti-subsidy measures. The application of the LDR is not clear in the case of joint anti-dumping and anti-subsidy investigations. Further, since 2018, Commission is allowed to disregard the LDR for anti-subsidy investigations.[3] Will investigating authorities strictly apply this LDR or will the position of the Commission prevail? The SCM Committee could be used to discuss and resolve or harmonize such situations.
Transnational subsidies
Another example to discuss would be how to treat transnational subsidies. Traditionally, the presumption was that governments only subsidize their own domestic producers. However, the Commission has recently found instances where, in its view, China provided “transnational” subsidies, i.e., subsidies to producers located in other Members (specifically, Egypt[4] and Indonesia[5]). Whether the ASCM permits this interpretation is not clear.[6] Indonesia has challenged the European Commission’s interpretation in a WTO dispute.[7] The ASCM Committee would have been an alternative or complementary avenue.
Procedure to use WTO Committees
The procedure to use WTO Committees functions similar to the WTO negotiating procedure. Participation in Committee procedures and meetings are reserved to Members, i.e., governments. Business has no direct access. Companies that wish to make use of the WTO Committees must convince a Member to get the issue on the agenda of the Committee.
The first step is to lay out the problem and the preferred solution in a simple and convincing way. The second step would be to find the Member or Members that would champion the discussion (your position) at the Committee. This requires some due diligence. The third step would be to ensure that other Members are briefed on the topic and are able to express their (preferably aligned) views. Depending on the topic, a wider or targeted advocacy approach may be helpful.
[1] For exclusion, see for example, recital 67 to Commission Implementing Regulation (EU) 2017/325 of 24 February 2017 imposing a definitive anti-dumping duty on imports of high tenacity yarns of polyesters from China following an expiry review. For inclusion, see for example, recitals 26-27 to Commission Implementing Regulation (EU) 2020/1336 of 25 September 2020 imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols from China.
[2] Arnoud Willems, Bregt Natens and Maryanne Kamau, Inward Processing in EU Anti-Dumping Proceedings, 17(6) Global Trade and Customs Journal 233-240 (2022). For inclusion, see recitals 26, 38-43 toCouncil Implementing Regulation (EU) No 541/2012 of 21 June 2012; For exclusion, see recital 8 to Council Regulation (EC) No 2381/95 of 10 October 1995 imposing a definitive anti-dumping duty on imports of disodium carbonate originating in the U.S.
[3] The UK Parliament, New trade defence investigations, 22 March 2021.
[4] Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics from China and Egypt.
[5] Commission Implementing Regulation (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia.
[6] Victor Crochet and Vineet Hegde, China ‘Going Global’ Policy: Transnational Production Subsidies under the WTO SCM Agreement, 23(4) Journal of International Economic Law 841-863 (2020).
[7] DS616: European Union — Countervailing and Anti-Dumping Duties on Stainless Steel Cold-Rolled Flat Products from Indonesia.
