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Anti-dumping Proceeding in Ukraine: What’s new after WTO accession

More than a year has passed since Ukraine became a member of the multilateral trading system of the WTO. It is now of great value to analyze whether accession to the WTO has created a stable and predictable trade environment in Ukraine and what challenges Ukraine faces to comply with the high standards declared by the WTO.

The aim of this article is to trace the practice of invocation of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (hereinafter — the WTO AD Agreement) in Ukraine by respective authorities that conduct anti-dumping investigations in Ukraine — the Ministry of Economy and the Inter-Departmental Commission for International Trade in cooperation with the State Customs Service.

De Minimis Dumping and Negligible Injury

One of the provisions that became operational on the day that Ukraine acceded to the WTO relate to rules which refer to de minimis dumping and negligible injury. Both the WTO AD Agreement and On Protection of the National Producer against Dumped Imports Act of Ukraine (hereinafter — the AD Act) provide that the margin of dumping is considered to be de minimis if this margin is less than 2%. The volume of dumped imports is regarded as negligible if the volume of dumped imports from a particular country is found to account for less than 3 per cent of imports of a like product in the importing country. Pursuant to Article 5.8 of the WTO AD Agreement, an application by the domestic producer for initiation of investigation has to be rejected and an investigation has to be terminated promptly once the investigating authorities are satisfied that there is no sufficient evidence of either dumping or of injury to justify proceeding with the case. The same rule is stipulated by the AD Act in Articles 12.9 and 16.4, respectively, which came into force on 16 May 2008.

At first glance it seems that the aforesaid provision is clearly enough and easy to apply. But it is now well understood that it is not so easy to promptly terminate an investigation even when the investigating authorities have at their discretion obvious evidence of either de minimis dumping or negligible injury.

Before Ukraine entered the WTO in 2008, it had already practiced to conduct anti-dumping investigations and imposed anti-dumping measures starting from 1999. During those 10 years the particular practice of carrying out anti-dumping investigations was developed, including certain routine steps to be taken within one year¹ of investigation. Now if the investigating authorities receive, after several months of an investigation, proof that, for instance, the volume of imports is negligible, it is complicated in practice to terminate an investigation immediately, since the usual practice of duration of an investigation is approximately one year.

Another issue which is worth mentioning in this respect is as follows. Before Ukraine’s accession to the WTO, the investigating authorities practiced the application of a zero anti-dumping duty on non-dumping exporters, since the rule regarding de minimis dumping was not in force. Consequently, such exporters remain subject to a review procedure. But now, if the dumping margin of an exporter is de minimis, the imposition of zero anti-dumping duty is irrelevant because Article 5.8 requires termination of the investigation in respect of such an exporter.

However, the AD Act still contains a provision stipulating that individual exporters having de minimis dumping margin continue to be subject to an anti-dumping procedure and can be subject to further review procedures. We believe that this provision is inconsistent with Ukraine’s obligations under the WTO AD Agreement. The investigating authorities in this respect should apply provisions of the WTO Agreement, taking into account that international treaties ratified by the Parliament of Ukraine prevail over national legislation².

Export Price Definition

Another problem that should also be mentioned is application by the investigating authorities of an import price instead of an export one for the purposes of calculating the dumping margin.

For the purposes of calculating the dumping margin, the export price of the subject merchandise is compared with the normal value. Normal value is the price of a like product, destined for consumption in the exporting country (usually the country of origin of goods) in the ordinary course of trade. Normal value is compared with the export price of the product exported from one country to another. Articles 2.1 and 2.4 of the WTO AD Agreement explicitly provide that for the purposes of dumping determination the export price is used. In other words, the price of products while leaving the territory of the exporting country.

However, in Ukraine the investigating authorities often use the import price, as recorded by the State Customs Service, instead of the export price for the purposes of calculating the dumping margin for a foreign exporter or producer. Ukrainian importers are usually the ones who control the customs clearance procedure in Ukraine, and foreign producers and exporters do not control the prices declared by Ukrainian importers during customs clearance of the product in the bodies of State Customs Service of Ukraine. At the same time, importers are rarely engaged in an anti-dumping proceeding. Foreign producers and exporters should not bear responsibility for the prices declared by importers during customs clearance or become a victim of the unpredictable and unclear procedure of customs valuation in Ukraine.

Once our country is bound under the WTO AD Agreement, the respective investigating authorities should cease to use the import price for the purposes of calculating the dumping margin for foreign producers and exporters.

Analysis of all Relevant Factors and Indices

In order to impose an anti-dumping measure the existence of both dumped imports and injury caused to domestic industry by dumped imports should be found. Article 3.4 of the WTO AD Agreement contains the list of 15 factors that shall be considered by the investigating authorities for examination of the impact of dumped imports on domestic producer.

This list is mandatory and the investigating authorities are obliged to consider all factors listed in Article 3.4 of the WTO AD Agreement and the results of such examination have to be reflected in the final determination. This issue was subject to repeated analysis by the WTO Dispute Settlement Body.³

The AD Act contains similar list of factors, but final determinations passed by the investigating authorities in Ukraine both before and after WTO accession, do not contain an examination of all factors listed in Article 3.4 of the WTO AD Agreement. Taking into account the unanimous position of the Panel and the Appellate Body in respect of interpretation of Article 3.4, we believe that the investigating authorities in Ukraine should examine all listed factors in Article 3.4 while injury analysis and the results of such examination have to be reflected in a final determination.

Judicial Review

A great problem arises after a final determination is made. Some companies (usually importers of goods that were not interested parties to an investigation) submit a claim to the national court arguing that their rights are violated. Ukrainian experience shows that those companies speculate around the fundamental right to protection in court. Indeed, nobody can be deprived from judicial recourse, but what rights can we talk about if a challenging company was created just before a final determination, for instance?

We believe that pursuant to Article 12 of the WTO AD Agreement, at the beginning of an anti-dumping proceeding the investigating authorities should personally provide as many known producers, exporters and importers as possible with basic information regarding an investigation in order to encourage the latter to cooperate. This will serve as excellent evidence in the legal proceeding if non-respondents try to contest a decision adopted by the Commission.

Administrative courts consider cases regarding final determinations passed upon results of anti-dumping proceedings. In Ukraine a court proceeding usually continues for a long time (often for a few years). Of course, the system of administrative courts is quite new, having only started operating in 2005. This circumstance also explained long-drawn proceedings in administrative courts. But delaying a trial in respect of final determinations upon results of anti-dumping proceedings violates Ukraine’s obligations under the WTO AD Agreement and may be subject to a dispute settlement proceeding within the frame of the WTO. In particular, Article 13 of the WTO AD Agreement provides, inter alia, that each Member whose national legislation contains a provision on anti-dumping measures shall maintain judicial, arbitral or administrative tribunals or procedures for the purposes of prompt review of the administrative actions relating to final determinations and reviews of determinations.

In conclusion, an anti-dumping investigation is one of the main instruments for maintaining fair competition in the sphere of international trade. Ukraine is making efforts on a step-by-step basis, to follow internationally recognized rules of conducting anti-dumping investigations. This article raised the main problems which are waiting their turn to be solved by the Ukrainian authorities. We believe that experts engaged in the activity of both government authorities and the private sector will accelerate such vital changes.