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Trade Remedies
When a company exports its product at a price lower than its normal value, (that is generally the price at which that product is sold on the domestic market of the exporting company), the exporting company is said to be "dumping". The practice of dumping is traditionally regarded as an unfair trade practice. Therefore, in the case of dumping, authorities of the importing country should be entitled to adopt measures in order to protect their domestic industry from such unfair competition. The GATT expressly allows the authorities of Contracting Parties to adopt measures in case an exporting company is dumping. Article VI GATT establishes that GATT Contracting Parties are allowed to impose anti-dumping measures to offset the margin of dumping of the dumped goods, provided that it can be shown that such dumping is causing or threatens to cause "material injury" to domestic industries of the like products. It is necessary to demonstrate first that there is dumping and second, that, as a result, the domestic industry is suffering material injury. However, the principles included in Article VI GATT remain very basic. They appeared to be insufficient in view of the increasing use of the anti-dumping measures during the 80's and 90's. The number of anti-dumping investigations and measures has indeed sharply increased since the GATT was signed in 1947. Somewhat paradoxically, the increasing use of anti-dumping proceedings is closely related to the worldwide movement of trade liberalisation. When tariffs and other trade barriers are high, domestic industries are sheltered from international competition. In such a situation, there is no need for domestic industries to consider alternative forms of protection, such as those provided by the trade remedies. Successive rounds of trade liberalisation under the GATT, which culminated in the Uruguay Round Agreements, have lowered tariff levels around the world. They have also resulted in the progressive elimination of non-tariff barriers. As a result, domestic industries exposed to increasing international competition have found it necessary to use whatever protection remained possible under the GATT/WTO system, leading to increasing reliance on anti-dumping and other trade laws. The increasing use of anti-dumping measures made necessary more specific and clear rules regarding the use of anti-dumping measures. This is precisely the role of the Agreement on the Implementation of Article VI of the GATT which was adopted during the Uruguay Round, also called the Anti-Dumping Agreement. The Anti-Dumping Agreement adopted during the Uruguay Round further develops the general principles included in Article VI GATT. It details the rules applicable to determine whether anti-dumping measures may be imposed: how to determine the "normal value" of the concerned product; how to calculate the "export price"; which factors or elements must be taken into consideration to determine whether there is injury; which rules of "due process" must be observed when carrying out an anti-dumping investigation, etc. The Agreement on Subsidies and Countervailing Measures ('ASCM') which was adopted during the Uruguay Round is two-fold: on the one hand, it disciplines the use of subsidies; on the other hand, it deals with the measures which countries can take to counter the effect of subsidies, i.e. the so-called "countervailing measures". Subsidies are defined in the ASCM as including three elements: there must be a financial contribution; by a government or any public body within the territory of a Member; and it must confer a benefit. Not all subsidies are covered by the ASCM, rather only specific subsidies where access is expressly limited to "certain enterprises" or to a designated geographic region. Specificity will not exist in cases where access to a subsidy is established through objective criteria or conditions that are neutral, economic in nature and horizontal in application. However, a subsidy may be considered specific in view of the manner in which it is used by certain enterprises or granted, despite the fact that there are no express limitations on access and objective criteria are used to determine eligibility. The fact that a specific subsidy exists under the ASCM does not necessarily imply that it is an illegal subsidy. Accordingly, the ASCM differentiates between "prohibited" subsidies, those that are not allowed in any circumstances, and "actionable" subsidies, which may be challenged under the ASCM if the complaining Member can demonstrate the existence of adverse effects. Prohibited subsidies are subsidies contingent upon export performance (i.e. export subsidies). It is generally felt that these types of subsidies are specifically designed to distort international trade and therefore should be disallowed. Prohibited subsidies also include subsidies contingent upon the use of domestic over imported goods (i.e. import substitution subsidies). If a subsidy is not prohibited under the ASCM, Article 5 provides that it may be actionable if it is a specific subsidy that causes adverse effects to the interests of other Members. Unlike prohibited subsidies, the complaining Member must show that the subsidy in question has an adverse affect on its interests, otherwise the subsidy will be considered permissible (i.e. non-actionable). Article VI of GATT 1994 and Part V of the ASCM govern the use of countervailing measures by WTO Members to remove the injury caused by the (unfairly) subsidised imports of other exporting members. WTO Members are authorised to levy countervailing duties in response to injury caused or threatened by subsidised imports. Countervailing duties may be imposed only pursuant to investigations initiated and conducted in accordance with the provisions of the ASCM and the Agreement on Agriculture (if it concerns agricultural goods). Under the ASCM, a WTO Member may not impose a countervailing measure unless it has determined (1) the existence and amount of a countervailable subsidy; (2) injury to a domestic industry; and (3) a causal link between the subsidised imports and the injury. The substantive elements relating to the determination of injury and a causal link of the ASCM Agreement are nearly identical to that under Article 3 of the Anti-Dumping Agreement. The calculation of the amount of subsidy serves to establish the level of the countervailing measures since no countervailing duty can be levied in excess of the amount of subsidy found to exist. Safeguards are measures taken in violation of GATT obligations that cause injury to domestic industries of like products, or those in competition, or whose import is increasing. The Agreement on Safeguards lays down the rules for the imposition of safeguards. It imposes a series of procedural and substantive requirements. The Agreement on Safeguards provides that safeguard measures may be imposed only if the product at issue is being imported in such increased quantities, under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products. If a WTO Member determines that injury has occurred, that Member is permitted to "suspend the obligation in whole or in part or to withdraw or modify the concession." The measures imposed must, however, be applied only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment. In practice, Members generally employ tariffs, tariff rate quotas, or quantitative restrictions (primarily quotas) as safeguard measures. These measures must be product-specific and they must be applied to all imports irrespective of the source. Office of the General Counsel
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