International Trade: Comparison of U.S. and Foreign Antidumping Practices

Published by the Government Accountability Office on 1990-11-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United   States   General   Accounting   Office

GAO               Report to Congressional Requesters

November   1990
                  Comparison of U.S.
                  And Foreign
                  Antidumping Practices

National Security and
International Affairs Division

November 7,199O

The Honorable Bob Packwood
Ranking Minority Member
Committee on Finance
United States Senate
The Honorable Daniel Patrick Moynihan
United States Senate
As requested, we are providing a comparison of the antidumping policies and practices of the
United States and its major trading partners. This report follows our July 1990 fact sheet on
the use of the GATT Antidumping Code(GAO/NSWW~~SFS).
We are sending copiesof this report to the Secretary of Commerce,the Office of the U.S.
Trade Representative, and the International Trade Commission.Copieswill also be made
available to other parties upon request.
Pleasecontact me on (202) 275-4812 if you or your staff have any questions concerning this
report. The major contributors to this report are listed in appendix II.

Allan I. Mendelowitz, Director
International Trade, Energy, and Finance Issues
Executive Summary

                  During the current Uruguay Round of the General Agreement on Tariffs
                  and Trade negotiations, somesignatories to its 1979 Antidumping Code
                  are seeking to limit the use of antidumping measuresand to more clearly
                  define what constitutes dumping and its injurious effect on domestic
                  Senators Daniel Patrick Moynihan and Rob Packwood asked GAO to com-
                  pare the antidumping policies and practices of certain major trading
                  partners with those of the United States, focusing primarily on the fol-
                  lowing areas: (1) how much evidenceis neededto initiate investigations,
                  (2) how open, or “transparent,” antidumping practices are to the parties
                  involved and to the public, and (3) what rights of appeal on
                  antidumping decisions are available.

                  The Antidumping Code establishesguidelines for measuresto counter
Background        the ill effects of dumping-defined as the sale of exported products at a
                  price lower than that charged for the sameor a like product in the home
                  market of the exporter. To initiate an investigation, the code requires
                  that signatories have “sufficient” evidenceof dumping and resulting
                  injury and that petitions be made by or on behalf of the industry
                  affected. The code also calls for using procedures that will result in an
                  equitable and open antidumping process.The code sets guidelines for
                  the use of antidumping measuresand related practices, but member
                  countries are responsible for implementing the codeunder their own
                  laws and regulations.
                  GAO examined the   practices of traditional users of antidumping laws
                  (Australia, the United States, Canada,and the European Community)
                  and a new user, Mexico. Other US. trading partners have had little prac-
                  tical experience with antidumping actions.

                  Sufficiency of evidence is not fully defined by the Antidumping Code.
IZesultsinBrief   As a result, signatories can exercise a great deal of discretion in
                  reviewing antidumping petitions and their supporting evidence when
                  determining whether formal proceedingsare necessary.Industry repre-
                  sentatives and trade specialists have expressedspecific concernsthat
                  the level of evidence required to initiate an investigation is low in the
                  United States, the European Community, and Mexico. Fewer complaints
                  were directed at Canada and Australia.

                          Execntlve snlnmuy

                          Although the code doesnot explicitly require that a party have
                          “standing” to bring a petition (which refers to determining whether
                          petitioning parties represent a major proportion of their industry),
                          industry representatives and trade specialists have also expressedcon-
                          cern about the perceived laxness in practices for determining standing.
                          The degreeof transparency varies among the signatories reviewed. In
                          general, the United States appears to have the most open antidumping
                          system, while the Mexican and European Community systems seemthe
                          least open in providing information on their decision-making process.
                          Each of the signatories included in GAO'S review provides appeal rights
                          to affected parties through administrative and judicial review. Signato-
                          ries’ administrative review of antidumping determinations differs in
                          impact, frequency of use, and practice. Whether or not antidumping
                          duties automatically terminate after a certain period of time greatly
                           affects the importance and use of administrative review. The scopeof
                          judicial review is broader in the United States than in the other


Sufficiency of Evidence   Trade experts and representatives of industries accusedof dumping
                          have raised concernsabout the large amount of discretion signatories
                          have in deciding whether evidenceto initiate antidumping investigations
                          is sufficient. The decision to initiate is important becauseof the poten-
                          tially disruptive effects antidumping investigations can have on trade.
                          U.S. initial reviews of antidumping allegations and supporting evidence
                          are viewed by many as less rigorous than those of other signatories pri-
                          marily because(1) the Department of Commerceis precluded from con-
                          sidering information from respondentsat the initial stage;(2) the U.S.
                          antidumping system fosters the initiation of investigations by focusing
                          almost exclusively on dumping, rather than on injury and causation;
                          (3) Commercestrictly adheresto set time frames; and (4) Commerce
                          assumesthat the petitioner has standing unless proven otherwise.

                          GAO'S review indicated that only 6 out of an estimated 171 petitions
                          received by Commercefrom 1986 through 1989 were dismissed without
                       Executive Summary

                       investigation. However, a Commerceofficial explained that many poten-
                       tial petitions are eliminated through informal discussions.
                       The European Community and Mexican initial reviews are also thought
                       to be less rigorous, although for different reasons.For example, GAO'S
                       review indicated that the Community’s screeningprocessfocused prlma-
                       rily on the determination of injury and was less strict regarding evi-
                       denceof dumping.
                       The laxness with which signatories determine whether a petitioner has
                       “standing” has raised concernsthat petitioners without standing may
                       causeinitiation of an investigation without sufficient evidenceof i@uy,
                       Such weakly supported investigations place a heavy administrative
                       burden on the accusedparties and can disrupt trade.

Transparency           Although the transparency of procedures followed by all major signato-
                       ries has increased appreciably in recent years, U.S. procedures are still
                       widely believed to be more transparent than those of Australia, Canada,
                       the European Community, and Mexico. This opennessis a function of
                       several factors, including U.S. public hearings, its comprehensiveand
                       publicly available antidumping decisions,and its thorough disclosuresof
                       the basesof its decisions.Australia and Canada also have fairly trans-
                       parent procedures, although both lack someof the features of the U.S.
                       Conversely, antidumping participants have criticized the procedures of
                       the European Community and Mexico for their lack of transparency,
                       although they have noted that procedures have improved in the Euro
                       pean Community.

Rights of Appeal       While the Antidumping Code doesnot provide for appeal rights, admin-
                       istrative and judicial review is available in the signatories GAO
                       examined. Administrative review generally involves modifying or
                       revoking antidumping measures,basedon changedprices or conditions.
                   ,   GAO found that the use of such review differs among the signatories. For
                       example, the United States performs a large number of administrative
                       reviews becauseit ‘relies on these reviews to determine actual dumping
                       amounts. In addition, affected parties use administrative review in
                       attempting to end the imposition of antidumping duties. These actions

Esecutlve Summary

occur becauseUS. law, as well as Mexican law, lacks a “sunset provi-
sion,” which automatically terminates antidumping duties after a fixed
period of time.
Judicial review, which involves appeals of antidumping decisions made
to courts, is rather limited in most countries becausethe scopeof the
courts review is primarily confined to issuesof law. However, the U.S.
Court of International Trade has interpreted its scopeand jurisdiction
broadly, to include review of factual issuesnot strictly related to the
law. As a result, judicial review in the United States is thought to be
more extensive and effective than that of others included in GAO'S
review. Affected parties are more likely to bring appeals in the United
States than elsewhere. Parties in Australia, Canada,the European Com-
munity, and Mexico have been less inclined to appeal antidumping deci-
sions to the courts for a variety of reasons.

practices; it contains no recommendations.

report. However, responsible officials were consulted during the review,
and their views were incorporated where appropriate.

                                             GAO/TUSIMWlw) lntenutoxul   Wade

Executive Summary
Chapter 1                                                                                            8
Introduction                 How Governments Deal With Bumping
                             Antidumping SystemsVary
                             DissensionLimits Progressin GATT Antidumping                           11
                             Objectives,Scope,and Methodology                                        12

Chapter 2                                                                                            15
Sufficiency of               ConcernsFocuson Decisionsto Investigate
                             Sufficiency of Evidence Provisions Open to Interpretation
Evidencefor Initiating       U.S., EC, and Mexican Screeningof Petitions Criticized                  18
Investigations               ConcernsAbout Determining “Standing”                                    22
                             Conclusions                                                             23

Chapter 3                                                                                            25
Improving           Antidumping Transparency Requirements
                    Protection of Confidential Information Complicates
Transparency of the     Transparency Goals
Antidumping Process tinclwions                                                                       33

Chapter 4                                                                                            35
Appeal Rights Are            Administrative Reviews Vary by Country
                             Additional Level of Review in Canada and Australia
Limited But Still            Judicial Review Could Be More Effective                                 39
Evolving                     Conclusions                                                             44

Appendixes                   Appendix I: Antidumping Laws and Practices of South                     46
                                Korea, Brazil, Japan, and India
                             Appendix II: Major Contributors to This Report                          48

Tables                       Table 2.1: Differences in Initial Screeningof Antidumping               17
                                 Petitions and Supporting Evidence
                             Table 2.2: Antidumping Petitions FiIed and Investigations               18
                             Table 4.1: Number of Antidumping Casesand Reviews                       36
                                 Conducted, 1986-1989

                             Page 6                                     GAO/TWLUH1w) lntenuttond   Trade


CIT        Court of International Trade
M:         European Community
GAO        General Accounting Office
GATT       General Agreement on Tariffs and Trade
In:        International Trade Commission
Chapter 1


                        Dumping is the sale of products for export at a price less than that
                        charged for the sameor a like product in the “home” market of the
                        exporter. Such international price differences, or discrimination, may
                        occur as a result of businessstrategies that exporters use, including:
                        (1) increasing an overseasmarket share; (2) temporarily distributing
                        products in overseasmarkets to offset slack demand in the home
                        market; (3) lowering unit costs by exploiting large-scaleproduction or
                        learning by doing; and (4) maintaining stable prices during periods of
                        exchangerate fluctuations. These businessstrategies could lead to
                        dumping, as defined by international trade agreements.

                        Views on the harm causedby dumping differ. Economistsgenerally
                        view dumping as harmful only when it involves “predation,” that is,
                        intent by the dumping party to eliminate competition and gain monopoly
                        power in a market. In practice, such predatory dumping has rarely been
                        documented. International trade rules, which take political as well as
                        economicconcernsinto account, view dumping and its potential harm
                        more broadly. These rules define dumping as an unfair trade practice
                        when it “materially”L injures a competing industry in the importing
                        country. The rules provide for the imposition of antidumping duties, or
                        fees, to neutralize the injurious effect of unfair pricing practices.

                        The problem of dumping is not a recent phenomenon.Early in the
How Governments         20th century, the United States and Canadaenacted laws to deal with
Deal With Dumping       this practice. During and after World War I, the U.S. Congressadopted
                        several antidumping statutes. The first U.S. antidumping legislation, the
                            tidumping Duty Act of 1916, required that “predatory intent” be
                    /8” shown.   However, soon after its enactment, the act was considered insuf-
                        ficient to protect U.S. producers from dumped imports becauseof the
                        predatory intent requirement. To supplement the 1916 act, the Congress
                        enacted the Antidumping Duty Act of 1921, which forms the basis of
                        current U.S. antidumping laws. This act provided for the application of
                        antidumping duties to offset a margin of dumping.2
                        The General Agreement on Tariffs and Trade (GAG), which came into
                        effect in 1948, defines the responsibilities and operating rules agreed
                        upon by contracting governments to guide their conduct of international

                        ‘The term “material” la subject to interp~.        The Tariff Act of 1930, as amended, defines mate
                        rial lqjury a8 “baml that la not Nconm?quenual, -,            or unimpoltant:


                        P8ge8                                                       GAO/NSlAD&lM) lnt.ernationaI Trade
chapter 1

trade relations. The agreement includes a special provision on dumping;
the provision does not prohibit dumping, but, rather, allows for a per-
mitted responseto dumping in certain circumstances.Article VI of the
agreement allows GATT contracting parties to use antidumping duties to
offset the margin of dumping, provided that dumped imports can be
demonstrated to causeor threaten to cause“material injury” to com-
peting domestic firms.
Over time, someGATT membersbegan to view other countries’ use of
antidumping laws as creating a new barrier to trade. Therefore, during
the Kennedy Round of GATT negotiations (1962-1967), the GATT con-
tracting parties negotiated an Antidumping Codethat provided a series
of rules elaborating on the procedures and methodologiesto be used in
applying antidumping duties.

Negotiators took up the antidumping issue again in the Tokyo Round of
GATT negotiations (1973-1979), partly to provide symmetry with a new
agreement dealing with subsidies.The Tokyo Round produced six major
agreements,or “codes,” designedto reduce nontariff barriers to trade,
including a new Antidumping Code.GATT membersare not required to
accept these codesand, in fact, not all have chosento do so. As of Sep-
tember 1990, there were 24 signatories to the 1979 GATT Antidumping
Code,representing only 35 of the 97 GATT member countries.3
The present code requires determinations of dumping and material
injury, as well as a demonstration that dumped imports are causing the
injury (“causation”).4 The code provides rules that (1) define dumping
and injury, (2) describe the procedures by which signatory governments
verify dumping allegations and apply antidumping measures,and
(3) provide for dispute settlement. The code also requires signatories to
submit semiannual reports of any dumping actions taken during the pre-
ceding half year.
Our July 1990 report on the use of the 1979 Antidumping Code showed
that between 1980 and 1989, Australia, the United States, Canada,and
the European Community (EC)initiated 96 percent of the 1,456 new

 %Ggmtmb of the 1979 Antidumping code are Australia, Austria, Brazil, Canada, Czechoslovakia,
 the Ewopean Community (lMgium, Denmark, FWKX, Germany, Greece, Ireland, Italy, Luxembourg,
 theNethertands,portugal,f%mhandthe           UnitedKh@onO,&~~C   Flnland,How! Kong,Hungw,
 India, Japan, South Korea, Mexico, New Zealand, Norway, Pakistan, Poland, Romania, Singapore,
 Sweden, SW,              the united states, and Yugaalavia.
 ‘The Antidumping Code dots not require that dumping be shown to be the primary cause of ~Nury.

 P8ge 9                                                   GAO/IWAD-9l-59     Intem~tional   Trade
                      casesreported.5In addition, Mexico has been relatively active in initi-
                      ating antidumping casessince it joined the code in 198’7,while South
                      Korea and Brazil have initiated considerably fewer cases.

                      The United States, Canada,the EC,and Australia have the most devel-
Antidumping Systems   oped antidumping systems and practices, while other signatories lack
vary                  practical experience with applying antidumping measures.A number of
                      foreign government officials and experienced attorneys in countries
                      actively using antidumping laws, fearing possible abuseof these laws,
                      have expressedconcern over their adoption and use by newly industri-
                      alizing countries such as Mexico, South Korea, and Brazil. Others, how-
                      ever, believe such fears are exaggerated;they note that the antidumping
                      laws should be seenas an improvement over the systems of onerous
                      trade barriers that they replaced.
                      Information   on antidumping procedures in countries other than the
                      United States, Canada,the EX,and Australia is limited. Of the 11 code
                      signatories6designated for our review, Z-Hong Kong and Singapore-
                      have no national antidumping laws or systems. Due to their free-trade
                      orientation, these countries do not support the use of antidumping laws
                      and have not initiated any actions. South Korea, Brazil, Japan, and India
                      have all developed national statutes to deal with dumping. However,
                      Japan and India have reported no caseinitiations to the GATT, and South
                      Korea and Brazil have reported only five and two initiations, respec-
                      tively, between 1980 and 1989. As a result, these countries’ actual
                      antidumping systems and procedures are not well known. Therefore, our
                      analysis focuseson the traditional users of antidumping laws (the
                      United States, the EC,Canada, and Australia) and the new user with the
                      largest number of casesinitiated, Mexico. Appendix I contains a limited
                      discussionof the laws and practices of South Korea, Brazil, Japan, and
                      The United States maintains a bifurcated system, established in 1954,
                      whereby separate agenciesdetermine whether the imports are being
                      dumped and whether the dumped imports causeinjury. Currently, the
                      U.S. Department of Commerceis responsible for making preliminary and
                      final determinations of dumping, while the U.S. International Trade
                      Commission(ITC)makes preliminary and final injury determinations.
                      %mathal       Track Use of the GATT Antidmphg      Code (GAO/NSW90-23SF’S,       July 251990).
                      ‘%e United States (for comparison), the EC, Canada, Mexico, Japan, south Korea, Hong Kong, Brazil,

                      Pye 10                                                    GAO/MIAJS@l6s Intemtiond          Tr8de
                   The Canadian system is similarly bifurcated; however, Revenue Canada,
                   which makes the preliminary and final dumping determinations, is also
                   responsible for making the preliminary injury determination. The Cana-
                   dian International Trade Tribunal only makes the final injury determi-
                   nation. Oneother major difference is that the Tribunal plays an
                   adjudicatory role, whereas the ITC’Sefforts are not only adjudicatory
                   but also investigative in nature.

                   The EChasjurisdiction over the use of antidumping measuresin all
                   member states. The ECchargesone agency,the European Commission,
                   with responsibility for conducting both dumping and injury investiga-
                   tions and making recommendationsto the ECCouncil of Ministers, which
                   has sole authority to impose and collect antidumping duties. ECmember
                   states also play a role in making antidumping decisions,through partici-
                   pation in the Advisory Committee, which advises the Commissionat
                   various stagesduring the proceedings.
                   Although the Australian CustomsService handled all phasesof decision-
                   making in past cases,far-reaching 1988 changesto Australia’s legisla-
                   tion established the Antidumping Authority. The Authority now makes
                   final recommendationsconcerning both dumping and injury (the Cus-
                   toms Service continues to make preliminary determinations of dumping
                   and iqjury). The Authority is an administrative fact-finding body only;
                   it lacks the adjudicatory powers of a tribunal.
                   Finally, Mexico’s antidumping laws, enacted in 1986, give its Secretariat
                   of Commerceand Industrial Development responsibility for making both
                   dumping and injury determinations.

                   Antidumping becamean issue late in the Uruguay Round of GATT negoti-
DissensionL&nits   ations, which began in 1986. In 1989, countries targeted by antidumping
Progressin GATT    measures,led by Hong Kong, raised the issue of renegotiating the 1979
Antidumping        Antidumping Code during the Uruguay Round of GAIT negotiations.
                   These countries sought to limit the use of antidumping measuresand
Negotiations       wanted clearer definitions of what constitutes dumping and injury.

                   Signatories started to present proposals in late 1989, and negotiations
                   began early in 1990. Countries agreedthat the vaguenessof the code’s
                   terminology has led to different interpretations of the code and to the
                   development of separate, divergent systems and practices by the major
                   signatories. Proposals have been geared toward harmonizing and
                   imposing more discipline on antidumping practices.

                   P8ge 11                                    GAO/NSL#B14@   Intemationd   Trade
                       However, progress in the negotiations has been extremely limited, and
                       negotiators remain divided on many issues.As of August 1990, parties
                       were unable to reach agreementon a text to be used as the basis for
                       negotiation. One GAIT insider has expressedpessimismover prospects
                       for successfulconclusion of the negotiations. Others have stressedthat
                       the negotiations are extremely complicated and difficult. Although
                       many parties agree on the need for procedural reforms to provide
                       increasedtransparency (open procedures) and adequatejudicial review,
                       a few procedural issues,such as determining a complainant’s standing to
                       bring a case,remain divisive.

                       The most important and contentious issuesin the negotiations involve
                       not procedural but substantive matters: determination of dumping,
                       injury, and causation. Representativesof somecountries targeted in
                       antidumping investigations believe that although improved procedures
                       are important, the fundamental issue is methodology: the rules for
                       determining dumping and injury. If these rules remain unfair, then
                       improved procedures have little value, one official stressed.
                       U.S. industry views of the GATT antidumping negotiations mainly focus
                       on issuesof dumping methodology and are quite polarized. Traditional
                       users of antidumping measures,such as steel producers and semicon-
                       ductor manufacturers, together with the U.S. Chamber of Commerce,
                       opposeany changesthat will weaken current antidumping rules. In con-
                       trast, U.S. exporters and importers, multinational corporations, and
                       computer manufacturers support revisions of antidumping rules, partic-
                       ularly the methods for calculating dumping, to reflect actual pricing
                       practices. In spite of the lobbying efforts of groups seeking changesto
                       the antidumping laws, U.S. officials support the position of the tradi-
                       tional users of antidumping law in the GMT negotiations, and they have
                       strongly resisted proposed changesto the dumping calculation methods.

                       Senators Daniel Patrick Moynihan and Rob Packwood requested that we
Objectives,Scope,and   compare certain antidumping proceduresof the 1979 GATT Antidumping
Methodology            Codesignatories who are msjor U.S. trading partners with those of the
                       United States.
                       The objective of our review was to assessthe antidumping procedures
                       and practices of the United States, the EC,Canada,Australia, Mexico,
    chapter 1

    and, to a lesserextent, South Korea, Brazil, Japan, India, Hong Kong,
    and Singapore,’ in the following areas:
q sufficiency of evidenceto initiate investigations and to make prelimi-
  nary and final determinations,
. transparency to the parties involved and to the public, and
l available rights of appeal.
    To determine the legal requirements for applying antidumping mea-
    sures, we reviewed the 1979 GATT Antidumping Code and discussedlegal
    requirements with responsible government officials in the United States
    and its major trading partners. We also reviewed the antidumping legis-
    lation of these countries. To identify countries’ antidumping procedures,
    we obtained and reviewed relevant regulations and procedural guide-
    lines, when available. We also reviewed law journal articles and recent
    textbooks discussingthe legislation and practices of these countries.

    To assessactual antidumping practices, we interviewed government
    officials from agenciesresponsible for administering antidumping laws,
    other knowledgeable officials involved with making antidumping policy
    decisions,and numerous lawyers, consultants, and industry representa-
    tives who have had experience with antidumping investigations in the
    United States, the EC,Canada,Mexico, and AustraIia.8 The industry rep-
    resentatives we contacted included both those who have filed
    antidumping petitions and those who have been named in petitions. We
    also met with representatives from Hong Kong, Singapore,Brazil, and
    the GATT Secretariat to obtain affected exporters’ and GATT officials’ per-
    spectives on antidumping practices of code signatories and to receive a
    status report on the GATT Uruguay Round negotiations concerning the
    Antidumping Code.
    Our information on antidumping practices is primarily basedon
    research of available studies and discussionswith knowledgeable practi-
    tioners. We did not perform any case-specificanalysis of antidumping
    As requested, we did not obtain written agency commentson a draft of
    this report. However, we discussedthe information in this report with

    ‘Appendix I contains a Iimited discussion of the laws and practicea
                                                                      of South Korea, Brazil. Japan, and
    India Hong Kong and SIn@pore have IW antidumping       kgWatIon and are not discussed further.

    ‘%rou&out the rest of this report, we refer to these experts, who are Involved with the application
    of antidumping laws, as antidumping “practitioners.”

    Page 13                                                    GAO/NSIADB1-33 Intemationrl         Trade
Department of Commerceand other agency officials during the course
of our review and have incorporated their comments where appropriate.
Our work was performed from July 1990 through September 1990 in
accordancewith generally acceptedgovernment auditing standards.

Page14                                   GAO/IMAD-BlM)   IntematIonaI   lhde
Sufficiency of Evidence for
Initiating Investigations

                   The 1979 Antidumping Code and various national regulations allow the
                   five signatories we reviewed a great deal of discretion in determining
                   whether preliminary evidence is sufficient to initiate investigations.
                   This discretion has permitted signatories to establish differing methods
                   for reviewing antidumping petitions and supporting evidenceto deter-
                   mine whether formal proceedingsare necessary.While industry repre-
                   sentatives and trade specialists expressedspecific concernsthat the
                   level of evidence required to initiate an investigation is low in the
                   United States, the EC,and Mexico, fewer complaints were directed at
                   Canada and Australia. We also found that the rate at which
                   antidumping petitions are acceptedfor investigation varies by
                   Although the code doesnot explicitly require that a petitioner have
                   “standing” in order for an investigation to be initiated (i.e., determining
                   whether petitioning parties represent a major proportion of their
                   industry), practitioners expressedconcern about the perceived laxness
                   in how a signatory determines standing. Determining a complainant’s
                   standing to bring a caseis viewed as one of several important issues
                   being discussedduring the Uruguay Round; however, it remains

                   key decisionswhich rely, in varying degrees,on the extent of evidence
Decisionsto        available. These decisions are basedon answering the following
Investigate        questions:
               . Should an antidumping investigation be initiated?
               l Is an affiiative preliminary determination of dumping and resultant
                 il@lry warranted?
               l Is an affirmative final determination of dumping and resultant injury
                   Sufficiency of evidence seemsto be the most controversial factor in
                   making the first decision-whether to initiate an antidumping investiga-
                   tion. For preliminary and final determinations, methodology issues(e.g.,
                   perceived inequities in calculating the dumping margin) rather than evi-
                   dent&y issuesseemto represent a stronger area of concern.

                   The decision to open a caseis critical becauseof the potentially disrup
                   tive effects antidumping actions can have on trade and becauseof the
                   heavy burden investigations place on respondentsand other parties.

                   Page 15                                      GAO/NSUD-#lM)   Intemationd   Trade
                        Antidumping investigations commonly involve requests that foreign
                        exporters and domestic importers fill out detailed questionnaires, which
                        can be as long as 200 pages.Questionnairesmust be completed, trans-
                        lated as necessary,and returned to the investigating authority within
                        about 36 days. Such requests can be particularly burdensome for small
                        companiesthat lack sophisticated bookkeeping records or the resources
                        to engagethe servicesof attorneys or consultants to represent their
                        Parties that elect not to complete questionnaires can be put at a disad-
                        vantage with respect to caseoutcomes.The code states that when par-
                        ties do not provide requested information within a reasonableperiod,
                        authorities may basefindings on the best information available, which
                        may simply be information supplied by the petitioner and the ir@ued
                        industry in support of the dumping allegation. In a recent study, one
                        practitioner noted that the M=,when faced with an uncooperative party,
                        baaedits findings on the least favorable information available, stating
                        that there should be “no bonus for non-cooperation.”

                        When subject to anantidumping action, somesmall businessesmay
                        simply “surrender” to the system by ceasingexports of the allegedly
                        dumped product to the country initiating the action and pursuing other
                        markets where trading policies are more open. A representative of the
                        GMT Secretariat acknowledged that an antidumping investigation
                        involves very comprehensiveand burdensomerequests for information.
                        He further suggested,however, that dealing with such an antidumping
                        investigation can be viewed as a potential cost of participating in
                        another country’s market.

Sufficiency of          written request that includes evidenceof (1) dumping, (2) injury, and
EvidenceProvisions      (3) a causal link between the dumped imports and the alleged injury.
Opento Interpretation   Rather than specifying what information is needed,the code simply
                        says that there must be “sufficient evidence” to support the allegations.
                        However, proposals that attempt to better define the concept of suffi-
                        cient evidencehave been consideredduring the Uruguay Round.
                        In the meantime, the legislative languageused by someof the signatories
                        we reviewed essentially leavesthe issue of deciding what evidence is
                        neededto support an antidumping petition up to the appropriate author-
                        ities. Although the provisions for each signatory addressthe need to
                        substantiate the dumping, ir@ry, and causation elements of an

                        P8ge 16
                                          chapter 3

                                          antidumping action, what is neededto establish sufficient evidencefor
                                          these elements varies by country.
                                          Also, somesignatories’ legislation incorporates the provision that the
                                          antidumping complaint need only include evidencethat is “reasonably
                                          available” to the petitioner. Government officials pointed out that there
                                          is no quantifiable, objective standard of how much evidence is “reason-
                                          ably available” as well as how much is “sufficient.” Rather, the amount
                                          of evidence neededdiffers from caseto caseand dependsupon the
                                          nature of the product involved as well as on a myriad of other related
                                          factors. These factors include the size of the petitioning company and
                                          the accessibility of meaningful product and industry data.
                                          We found that the discretion allowed by the code has permitted the sig-
                                          natories to use varying practices to review submitted antidumping com-
                                          plaints and decide whether to initiate formal investigations. Somekey
                                          difference are noted in table 2.1.

Tmblo2.1:Diffo~rinlnitkl~olAnt#ufflpkrg                   P@tiUOlNUfldSupoortkrgEVidOnW

                                            EE                  Canada                 Awtmlia                 EiiEi%v             Mexico
Primary focus of review                     Dumping             Dumping, injury,       Dumping, injury,        Injury             Dumping, injury,
                                                                and cause              and cause                                  and cause
Minimum dumoina marain                      0.5                 5                      None used               1-2                None used
standare (in &%nt)       -
Precluded from                              Yes                 No                     Yes                     No                  No
considering information
other than that submitted
by the petitioner and facts
in the oublic domain
Days allowed for initial                    20                  30                     55                      OpenC              56
review of oetitionsb
                                          %tandard used for identifying cases which may be deemed as too small or frivolous to pursue in light of
                                          the time and resources needed to process an antiiumping case. The dumping margin is the percent by
                                          which the price charged for the same or a like product in the home market of the exporter exceeds the
                                          export price.
                                          bThis figure represents the number of days between the filing of an antiiumping complaint and the
                                          decision to initiate a case. Some signatories also allow time for a review of the complaint to assure that
                                          it has been properly documented. For example, Canada allows an additional 21 days.
                                          cT)le EC does not have a statutory deadfine. Estimates of the time it takes the Commission to decide
                                          whether an investigation is warranted range from 6 weeks to several months.
                                          dAlthough regulations indicate 5 days, of5ciis estimated that the average period between the filing of a
                                          complaint and a formal initiition of an antidumping duty proceeding is approximately 3 months.
                                          Source: Data provided by off&Is from the five signatories.

                                          P8ge 17                                                        GAO/IWADB189 Internationd Trade
                                         k?hffl&ncy of Jlvidsneefor

                                         The interpretive nature of the Antidumping Code and implementing reg-
U.S.,EC, and Mexican                     ulations has also allowed for variations in the proportion of filed peti-
Screeningof Petitions                    tions for which investigations are undertaken, as shown in table 2.2.
Criticized                               During our review, practitioners expressedconcernsregarding the min-
                                         imal thresholds of evidencethe United States applies in its decisionsto
                                         initiate formal antidumping investigations. While similar concernswere
                                         expressedregarding the ECand Mexico, fewer complaints were directed
                                         at Canada and Australia.
Tablo 2.2:   AntIdumping FotlUonmFiled
and IV              lnln8t8d                                                                                 E-
                                                               !iEz           c8n8d#          A-             conwnunltrc         Moxko
                                         Period                Calendar       Fiscal          Calendar        NA                March 1990-
                                                               year 1989      year 1989       year 1989                         August 1990
                                         Number of             28             11              83              NA                8
                                         petitions filed
                                         Number of
                                         initiated             28             10              24              NA                 3
                                         Estimated             1W             91b             38              50                 38
                                         percent of
                                         petitions which
                                         result in
                                         Note: NA indicates that the information was either not avaitabk or not applicable.
                                         ‘A Commerce official estimated that only 33 percent ta 50 percent of potential antiiumping cases infor-
                                         mally brought to the agency’s attention are actually filed.
                                         bCanadian data include petitions received during its fiscal year-April 1,1989, through March 31,199o.
                                         During this time, Revenue Canada also received 41 “enquiries,” which inch&d telephone calls and
                                         letters without supporting documents as well as substantive submissions, The 11 cases noted above
                                         represent complaints deemed properly documented.
                                         Qccording to a Commission official, the EC does not maintain officii records of the total number of
                                         antidumping petitions submitted. He estimated, however, that about SOpercent of the petitions
                                         received result in the initiation of an investigatktn.
                                         Sources: U.S. Department of Commerce, Ftevenue Canada, Australian Customs Service, European
                                         Commission, and Mexico’s Secretariat of Commerce and Industrial Devekpment.

U.S. Screening Seenas                    Initial U.S. reviews of antidumping allegations and supporting evidence
                                         are viewed as less stringent than those of other signatories because
Least Stringent                          (1) the Department of Commerceis precluded from considering informa-
                                         tion from respondents,(2) the U.S. system focusesduring the pre-initia-
                                         tion phase on whether dumping occurxd rather than on the elements of
                                         injury and causation, and (3) the Department of Commerceadheresto
                                         set time frames for making a decision on initiating an investigation, thus
                                         limiting the depth of screening.

                                         Page 18
                           z           of lcvidence for
                           lntttulng Invea~tionB

Information Considered     During its initial review of an antidumping complaint, Commerceis pre-
During Initial Screening   cluded from considering information from respondents.When deciding
                           to initiate an investigation, Commerceessentially judges each petition
                           only on its own merit, without considering information other than that
                           included in the petition, supporting data submitted by the petitioner,
                           and facts within the public domain.
                           Although this limitation in Commerce’sreview of evidence may seemto
                           result in inadequate screening,it appears that Congressintended that
                           initial reviews be kept simple to avoid burdening petitioners. In an
                           opinion,1the Court of International Trade (CIT)has stated that the Con-
                           gresspurposely restricted the type of information Commerceconsiders
                           in order “to alleviate the burden of petitioners in initiating antidumping
                           proceedings.” Someindustry and foreign government representatives
                           believe that the standard of proof required to compel initiation of a pro
                           ceeding in the United States is too low.

U.S. System Fosters        Commerce’sapproach to screeningcomplaints is to somedegreethe
                           result of the bifurcation of the U.S. system. Under this system, petitions
Initiation                 are filed simultaneously with Commerce,which has primary responsi-
                           bility for assessingthe extent of dumping, and with the ITC,which has
                           primary responsibility for assessinginjury. The statute directs Com-
                           merce to determine within 20 days whether the allegations in the peti-
                           tion have all the elements necessaryto impose a duty and, if so, whether
                           to commencean investigation.
                           Commerceis thus responsible for deciding whether information reason-
                           ably available to the petitioner concerning material iqiury is contained
                           in the petition. However, rrc, rather than Commerce,has jurisdiction
                           over and expertise regarding matters dealing with material injury. Com-
                           merce officials explained that although the decision to initiate an inves-
                           tigation is essentially made by Commerce,Commercewill usually obtain
                           informal assurancefrom ITC(which acts in an advisory capacity during
                           this initial phase of the process)that there is reasonableevidenceof

                           A common criticism of the bifurcated system in the United States
                           involves the limited consideration of whether there is a causal link

                           ‘3 Court of International Trade 110,538 F. Supp. 418 (lBSZ), aftied   in part and reviewed in part 1
                           CA IT 39,706 F.2d 1663 (1983).

                           Page 19                                                     GAO/NSUMlM)        Intemationd Trade
                           chapter 2
                           Saffldency of Mdence for
                           Inttiadng Investigations

                           between the dumped imports and the alleged injury. One foreign govern-
                           ment official expressedconcern that since dumping and injury are han-
                           dled by two separate agenciesand, in effect, assessedin isolation,
                           causality tends to be assumedrather than subjected to scrutiny. A for-
                           eign trade expert expressedsimilar concerns.He suggestedthat
                           dumping and injury matters be viewed together. Otherwise, it is less
                           likely that the dual decisionmakerswill have a sufficient overview and
                           appreciation of the injury context within which to make a fully
                           informed and objective decision, particularly on the key issue of
                           The relatively short time frame allowed for making decisionsto initiate
                           formal investigations in the United States, and Commerce’sstrict adher-
                           enceto this deadline, is also thought to hamper the degreeof screening
                           that may be given to submitted petitions.
                           A Commerceofficial stated that somescreeningof potential petitions
                           takes place even before petitions are filed. He estimated that for every
                           two or three casesthat may be brought to Commerce’sattention, only
                           one is ultimately filed. Oncea caseis formally filed, however, a vast
                           majority are acceptedby Commercefor investigation, according to the
                           official. Another Commerceofficial further noted that, in general, the
                           United States may not go into as much depth as other countries in its
                           review of evidence for initiating an investigation.

                           ITCsimilarly finds very few, if any, of the petitions to be insufficient at
                           the initiation stage.According to statistics from Commerce,an estimated
                           144 antidumping petitions were received from 1986 through 1989, and
                           only 6 caseswere dismissed during this 4year period.

EC Screening fU30 Viewed   The ECis also consideredless stringent than someof the other signato
                           ries in its initiation of antidumping investigations, although for different
as Less Stringent          reasonsthan those cited for the United States. The EXis viewed as
                           focusing almost exclusively on the extent of evidenceof injury during
                           the initial screeningprocess,as requiring a low regulatory threshold of
                           evidence for substantiating dumping, and as having an administering
                           authority that exercisesa great deal of discretion in deciding whether to
                           initiate formal proceedings.
                           In the EC,the purpose of screening antidumping petitions before initi-
                           ating an investigation is to ensure that the complaint is (1) admissible,

                           Page 20                                      GAO/YWIAD@l-b8Intemational Trade
Sufficiency of Evidence for
lnitLdIlg Inventigations

(2) made on behalf of the EC industry affected, and (3) complete, pro-
viding sufficient evidenceto justify the initiation of a full proceeding.
Initial EC screeningof petitions focusesprimarily on determining injury
and, according to industry representatives, the level of data required to
establish injury is extensive. A government official explained that more
rigorous standards are applied in this area since complainants can be
expected to supply full details of the injury suffered by the industry,
especially with the assistanceof trade and/or industry associations.
Trade association representatives, in turn, estimated that it may take
about 6 to 9 months to develop the proposal to initiate an antidumping
investigation; data for up to 4 years are requested to be compiled.
On the other hand, the EC’Sthreshold regarding evidenceof dumping
tends to be low. Government officials explained that they do not place
as much emphasis during the pre-initiation phase on determining
dumping since petitioners usually do not have accessto information
neededto fully establish and document the extent of dumping; this
information includes, for example, knowledge of a competitor’s pricing
policy in a foreign country or of his production costs. The EClooks more
closely at the calculations of and verification for dumping during the
investigation phase. During the initial screening,the ECalso tends to be
less strict about the need for providing evidence of causality between
dumping and injury. Often, simply demonstrating that dumping and
injury occur simultaneously is sufficient.
Unlike the Department of Commerce,the ECCommissionis not prohib-
ited from obtaining and reviewing information from affected parties
other than the petitioner during the initial review of the filed complaint.
Onepractitioner noted that the ECrepresentatives will sometimessolicit
information from the affected domestic industry. Another practitioner
believed that the EICCommissionis at least willing during the pre-initia-
tion phase to listen to representations of caserespondentsand is not as
concernedwith preventing the appearanceof conducting improper
“backroom deals” as is the United States.
The Commissionis believed to exercise a great deal of discretion
regarding various aspectsof the antidumping process.For example, one
member state had recommendedagainst holding formal proceedingsfor
about six caseswhich the Commissionstill opened for investigation. All
were subsequently closed without measuresbeing taken.

Page 21                                      GAO/NSIADB1-52International Trade
                        Foreign government representatives raised concernsregarding the lim-
                        ited extent of review and scrutiny that the ECgives to antidumplng peti-
                        tions and suggestedthat ill-founded allegations can readily pass such a
                        cursory review. In one case,for example, the M: initiated an
                        antidumping investigation against a country which did not produce or
                        even have the capability to produce the raw material in question. In
                        another case,an antidumping investigation was initiated basedon a
                        petition which contained multiple mathematical errors in the com-
                        plainant’s calculation of the dumping margin.

Mexican Initiation of   Mexico initiated its first antidumping casein 1987 and since then has
                        initiated a total of about 30 cases.In general, Mexico’s antidumping reg-
Formal Investigations   ulations are viewed by somepractitioners as being vague and open to
Leads to Concern        use as a protectionist device. U.S. industry representatives described
                        Mexico’s corresponding antidumping practices (including those directed
                        at deciding whether or not an antidumping investigation is warranted)
                        as loose and inconsistent.
                        Factors that may have contributed to this critical view of Mexico’s ear-
                        lier antidumping practices include the newnessof the system, the lack of
                        implementing guidelines regarding the review of antidumping cases,and
                        the Mexican administration’s earlier trade philosophy of protecting its
                        infant industries. A Mexican government official stated the current
                        administration has introduced more “toughness” into its review of
                        dumping allegations and the level of evidenceprovided to support the
                        unfair trading practices. Accordingly, the number of antidumplng cases
                        initiated in Mexico has declined. During 1989, Mexico initiated only
                        6 antidumping cases,in contrast to 17 casesinitiated in 1987.

                        The Antidumping Code doesnot explicitly require “standing” to file a
ConcernsAbout           complaint and initiate an investigation. Instead, the code stipulates that
Detelmining             requests to initiate antidumping investigations be made by or “on behalf
“Standing”,             of the industry affected.” During our review, however, practitioners
                        expressedconcernsregarding the general laxness with which signato-
                        ries determine whether the complainant represents a sufficient propor-
                        tion of the industry and thus has “standing” to file a complaint and
                        initiate an investigation. They contend that casesin which the petitioner
                        does not represent a major proportion of its industry can be argued to
                        contain insufficient evidenceof injury.

                        Page 22                                     GAo/NsLm-#182 rnt.ematioMl Trade
              chpter 2
              Saffldency of Evidence for

              A GAIT official referred to standing as one of several “substantive”
              issuesof discussion during the Uruguay Round. Oneproposal being con-
              sidered, for example, attempts to define the term a “major proportion”
              of the industry to represent a specified percentageof the total domestic
              production of the product comparable to the dumped item.
              Although Mexico is the only signatory we reviewed that has established
              a formal minimum threshold, or percentage,of industry production in
              order to determine standing, this threshold has been criticized as being
              too low. Mexico’s laws essentially require that the petitioners be respon-
              sible for producing at least 25 percent of the domestic production of the
              product comparable to the one allegedly dumped.
              The United States, on the other hand, assumesthat standing exists for
              any petition filed unless a majority of the industry shows opposition. A
              U.S. Commerceofficial explained that when the remainder of the
              industry (aside from the direct petitioner) has knowledge of a petition
              and does not opposeit, the petition is consideredsatisfactory and in
              compliance with the requirements of GATT. Petitioners usually provide
              information to show what proportion of the industry they represent,
              and Commercewill generally accept the data presented.Also, Commerce
              has not established any formal or informal standards for what consti-
              tutes a major proportion of the industry.
              What constitutes a “major proportion” of the industry has also not been
              precisely defined in the EC,Canada,or Australia. An ECCommissionoffi-
              cial estimated that, in practice, the minimum threshold in the ECwas
              about 40 percent. Canadian officials recalled that they have initiated
              several antidumping caseswhich involved even less than 40 percent of
              the industry. In contrast to the U.S.’ approach of assuming standing, we
              were told that both the M: and Canada actively verify (by, for example,
              obtaining input from industry specialists and using available trade sta-
              tistics) that the majority of the domestic industry supports the petition.

Conclusions   involve the sufficiency of the threshold of evidenceused to determine
              whether to initiate an investigation and the laxness in practices for
              determining whether petitioning parties represent a major proportion of
              their industry. Proposals being consideredduring the Uruguay Round
              that attempt to better define the conceptsof sufficient evidence and

              Page 22                                     GAOAUtUAD4lds Intenutiond   Trade

      standing will not alleviate these concernsbut will help provide more gui-
      danceto new users of the Antidumping Code as well as to the traditional

      P8ge 24                                    GAO/N6IAD414W Intemationd lhde

Chapter 3

Improving Transparmcy of the
Antidumpbq          Process

                      The 1979 Antidumping Code requires that signatories adopt procedures
                      that are equitable and open, or transparent, regarding the processof
                      investigating antidumping cases.Despite someimprovement, procedures
                      used to make determinations are still secretive, according to informed
                      sourcesin most of the signatories. Thesesourcesalso express concerns
                      about the authorities’ reluctance to fully disclosethe basesfor making
                      antidumping decisions.Concernsabout the secretivenessof the process
                      are heightened by the lack of accessinterested parties have to confiden-
                      tial information used to develop antidumping cases,especially casesini-
                      tiated by the EC,Australia, and Mexico. These countries do not allow
                      even limited disclosure of confidential information, as do the United
                      States and Canada.The United States has made a number of proposals
                      in the Uruguay Round of GATT negotiations intended to increasethe
                      transparency of the processby improving the quality, amount, and time-
                      liness of information made available to parties during an antidumping

                      When authorities decide to initiate an ,mvestigation, the Antidumping
Antidumping           Code requires that a public notice be published and that notice also be
Transparency          given to various interested parties, incIuding the firms subject to the
Requirements          investigation, the petitioner, and any other affected importers or
                      exporters. The code also requires that opportunities be given to the peti-
                      tioner, importers, exporters, and the governments of exporting countries
                      to seeaII nonconfidential information that is relevant to the petition and
                      to make presentations to the authorities on the basis of this information.
                      In addition, the Antidumping Coderequires that all foreign suppliers
                      and other interested parties be aIlowed to present evidence and have
                      opportunities to confront and rebut parties with adverse interests
                      during antidumping investigations. Also, public notice is to be given of
                      any preliminary or final finding. In the caseof affirmative findings,
                      such notices are expected to set forth the findings and conclusions
                      reached on all issuesof fact and law consideredmaterial by the investi-
                      gating authorities, and the reasonsand basesfor the decision.

Implementation of     U.S. procedures are widely believed to be more transparent than those
                      of the other four signatories. This transparency is a function of several
Procedures Varies     factors, including the U.S.’ public hearings, comprehensiveand publicly
                      available antidumping decisions,and adequate disclosuresof the bases
                      of decisions.Australia and Canada also have fairly transparent

                      Pa#e 22                                     GAO/AMA.D@169Inter~tional   Trade
                              Conversely, antidumping caseparticipants criticized the proceduresof
                              the ECand Mexico for their lack of transparency, although they noted
                              that procedures have improved in the EC.Much criticism was directed
                              toward the lack of transparency of Mexico’s antidumping procedures,
                              although to somedegreethis lack may be related to the fact that Mexico
                              only recently becamea signatory to the Antidumping Code;therefore it
                              has not had an opportunity to fully develop the necessarymechanisms
                              for a transparent system.
                              In their attempts to comply with the requirements of the Antidumping
                              Code,the signatories we examined have tried to set up various mecha-
                              nisms to make their antidumping procedures more transparent. The
                              mechanismshave not always been uniformly implemented, however,
                              resulting in varying degreesof transparency. The mechanismsinclude
                          l notifying parties to an investigation,
                          . disclosing antidumping determinations,
                          . exchanging information between parties, and
                          l holding meetings of parties to an investigation.

Notification of Parties       In conformance with the Antidumplng Code,the signatories we
                              examined have established policies to notify parties about when an
                              investigation will be undertaken. In addition to being notified, the par-
                              ties (i.e., affected importers, exporters, and domestic producers) are
                              asked, usually by meansof a questionnaire, to supply information
                              related to the investigation and are given the opportunity to provide
                              submissionsin their defense.The government of the affected exporters
                              is also notified.
                              Four of the five signatories reviewed require that at least a preliminary
                              finding of dumping be established before any antidumping duties are
                              levied. In casessubject to procedures administered by these four signa-
                              tories, respondent firms do have an opportunity to defend themselves
                              before any antidumping duties are levied against them.
                              Mexico’s laws do not reflect this approach, however, since its regula-
                              tions allow provisional duties to be levied within 6 working days after a
                              petition is acceptedand an investigation is initiated. Although on sev-
                              eral occasionsMexico has levied duties before exporters have been
                              given a chanceto defend themselves,Mexican officials have stated that
                              they have stopped this practice.

                              P8ge 26                                     GAO/NSlADB1M) Inter~cionrl   Trade
                            Antidumping Procem

Disclosure of Antidumping   Roth Canadian and U.S. investigating authorities provide details about
Determinations              their calculations and determinations in disclosure meetings with
                            involved parties. Antidumping caseparticipants appear to be generally
                            satisfied with the information on determinations provided by U.S.
                            authorities and the Canadian International Trade Tribunal.
                            In contrast, ECprocedures for disclosing determinations were cited
                            numerous times for their lack of transparency, despite recent improve-
                            ments. Under procedures that the ECadopted in 1988, the Commission
                            publishes relatively comprehensivestatements of the underlying rea-
                            soning for its decisions in the Official Journal of the European Commu-
                            nities. The Commissionalso disclosesfurther information regarding the
                            rationale for its decisions upon request. However, to obtain further
                            information, interested parties must submit written requests and must
                            specify the particular issueson which information is sought. According
                            to two attorneys involved with ECantidumping cases,while the under-
                            lying rationale for determinations is much better known now than in the
                            past, concern still exists that not enough information is provided. This
                            continuing concern may be related to the fact that accessto certain
                            information regarding the basis of a decision, such as the methodology
                            used, is sometimes limited.

                            Criticism was also directed toward the lack of transparency in Mexico’s
                            procedures for disclosing the basesof determinations. Mexican regula-
                            tions provide that parties affected by an antidumping complaint are
                            entitled to information made available to the government. A Mexican
                            government official noted that the administering authority must also
                            show that it has the proper elements to justify making a positive deter-
                            mination of dumping, including elements evidencing dumping, injury,
                            and a causal link.
                            Mexican authorities, however, have not always contacted parties in a
                            timely fashion or provided an adequate explanation of their decisions.
                            Moreover, according to a Mexican government official, authorities will
                            only discusstheir methodology in general terms. Internal documents and
                            computations are not shared with parties.
                            A US. proposal in the Uruguay Round seek to ensure that signatories
                            routinely disclosethe rationale for their antidumping decisions.Onepro-
                            posed change would require that published decisionsset forth the facts
                            and conclusionsof law on which a decision is basedin sufficient detail
                            so that the reasoning is clear. Another proposed changewould require,
                            in the caseof a preliminary or final determination of dumping, that the

                            Pyre 27                                    GA0/NsIAD@15@ lntern8tiond   Trule
                     b1prodnglban6puenc~   of the

                     include public hearings, meetings between parties to an investigation,
                     and individual meetings between one party and the investigating
                     authority. Mexico is the only signatory that doesnot provide for meet-
                     ings between parties. However, at the time of our review, Mexico report-
                     edly was in the processof implementing public hearings.
                     In the ECand Australia, meetings of parties, which provide opportuni-
                     ties for parties to state their caseand make rebuttal arguments, can be
                     requested. These meetings are closed in the ECbut open to the public in
                     Australia. In both signatories, however, such meetings have rarely been
                     held. According to an attorney in the EC,such “confrontational” meet-
                     ings tend to be counterproductive, since no real dialogue occurs and the
                     respondent is generally forced to assumea defensive stance.
                     During an investigation, meetings can also be held between the
                     antidumping authorities and individual parties in somecountries. The
                     purpose of these meetings is to give parties the opportunity to provide
                     evidence on their behalf. For example, in the ECat least one such
                     meeting takes place during the courseof an investigation. The meeting is
                     conducted in an informal atmosphere, and no official records are kept.
                     In contrast to the EC,the United States routinely prepares official
                     records of meetings. Both the CommerceDepartment and the ITCare
                     required to put in the public record information such as the identity and
                     affiliation of all persons present and a summary of the factual informa-
                     tion submitted.

                     The Antidumping Code recognizesthat someinformation supplied by
Protection of        parties to an investigation may, by its nature, be considered confiden-
Confidential         tial; therefore the code provides that such information will not be dis-
Information          closedwithout prior authorization. What constitutes confidential
                     information, however, is vague and open to interpretation. Many com-
Complicates          plaints about the lack of transparency in signatories’ procedures revolve
Transparency Goals   around interested parties’ inability to seeconfidential information in
                     their adversaries’ submissionsand in antidumping decisions.This lack
                     of accessmakes it difficult for parties to adequately understand and
                     rebut the facts of the original complaint and the rationale for the
                     resulting decision. Furthermore, while parties may be required to pro-
                     vide nonconfidential versions of confidential submissions,antidumping
                     caseparticipants have expressedconcernsabout the usefulnessof these
                      “nonconfidential summaries.”

                      ptgt29                                    0A0/lwAD-91ds   lntmn8tiond   Trtdt
                             E=zl      Tmuputncy
                                                   of the

                             Complaints about the lack of procedural transparency appear to be
                             fewer in the United States and Canada,where steps have beentaken to
                             permit legal representatives of involved parties to share confidential
                             information. The U.S.’ negotiating position before the Uruguay Round
                             includes proposals that signatories recognizein the code the desirability
                             of establishing administrative protective order procedures and accept
                             certain amendmentsto the codethat would lead to providing more
                             useful nonconfidential summaries.

Protection of Confidential   A comprehensivedefinition of what constitutes “confidential informa-
Information Obscures         tion” is not included in the code. It only states that an example of confi-
                             dential information is information that, if it were disclosed,would be of
Basis for Antidumping        significant competitive advantage to a competitor or would have a sig-
Decisions                    nificantly adverse effect upon the supplier or the source of the informa-
                             tion. Agreements not to divulge such information have a negative effect
                             on the level of transparency in antidumping determinations and result in
                             a lack of adequate disclosure of the baseson which decisionsare made.

                             Antidumping caseparticipants told us that the transparency of the
                             antidumping decisionmaking processeshas improved in most of the sig-
                             natories reviewed during the past few years. However, with the excep
                             tion of the United States and the Tribunal in Canada,complaints
                             continue to be made regarding the availability of sufficient information
                             for parties to adequately understand the basesof antidumping
                             For example, an attorney told us that while the transparency of the
                             decisionmaking processhas recently increased in Australia, published
                             determinations continue to be inadequate to understand the basesof a
                             decision. These determinations are basedon confidential information,
                             such as pricing data and calculations, which is not divulged. A respon-
                             dent to a current antidumping proceeding in Australia also expressed
                             similar concernsabout the adequacy of information.
                             A Canadian attorney told us that nonconfidential versions of
                             antidumping determinations carried out by RevenueCanada are useless.
                             Another antidumping caseparticipant stated that while the authority
                             feels that it must provide better nonconfidential information in deci-
                             sions, in actual practice disclosure of information underlying determina-
                             tions continues to be inadequate.

                             Pytao                                       GAo/7muD-s18BxnterMti4BMlTNde
                            chtpttr 3
                            lmprovlng Trmuptrtncy   of the
                            Antidumping Pmcaa

Use of Nonconfidential      According to the code, parties providing confidential information may
Summaries                   be requested to submit nonconfidential summaries of this information to
                            the appropriate authorities. These nonconfidential summaries are then
                            made available for adversarial review. Antidumping caseparticipants,
                            however, regularly criticized nonconfidential summaries as a poor sub-
                            stitute for supplying the underlying information. With few exceptions,
                            antidumping caseparticipants in Canada,Australia, and the ECcharac-
                            terized these summaries as marginally useful at best and, at times,
                            Although Mexico has a legislative requirement for supplying nonconfi-
                            dential summaries, a Mexican government official told us that in prac-
                            tice nonconfidential summaries are not prepared, The absenceof such
                            summaries tends to further reduce the level of transparency in Mexico.

The Use of Administrative   Roth the United States and Canada appear to have made some progress
Protective Orders to        in reconciling the need for transparent procedures with the need to ade-
                            quately protect confidential information. The system in the United
Protect Confidential        States, which usesadministrative protective orders, allows confidential
Information                 information to be disclosedto an attorney or other representative of a
                            party to the case.These disclosures are backed up by pledgesof confi-
                            dentiality and by the threat of imposing sanctions in caseof violations.
                            However, somepractical difficulties, including questions of cost and
                            administrative workability, may make it difficult for other countries to
                            institute a similar system.
                            Antidumping caseparticipants and government officials in all signato-
                            ries we examined expressedfewer complaints regarding the trans-
                            parency of the U.S. and Canadian systems. There have been complaints,
                            however, about RevenueCanada, which, unlike its sister agency,the
                            Canadian International Trade Tribunal, doesnot routinely provide
                            accessto confidential information.
                            The United States adopted the use of administrative protective orders
                            following passageof the Trade Agreements Act of 1979. Before 1980,
                            when confidential information was first made available to adversaries’
                            legal representatives, proceedingswere secret. This secrecy led to what
                            one published source characterized as “proceedings where parties were
                            frequently shooting in the dark.” In 1988, accessto confidential infor-
                            mation was broadened with respect to information submitted to the ITC.

                            P8gt 31                                   GAO/7vsuDeldB   lnttm8tion8I   lhdt
                            Attorneys representing both complainants and respondentsin U.S.
                            antidumping casesconsider the investigation processto be relatively
                            transparent. According to one attorney, accessto information in the
                            antidumping processis key for participants, and, in his opinion, the
                                 . *
                            admnustrative    protective order system is the “single largest advance”
                            for getting fair results. According to another attorney, the system in the
                            United States works well: Any problems with the system usually stem
                            from the difficulty of controlling such large quantities of information.

                            Complaints concerning the Canadian antidumplng system’s lack of
                            transparency largely involve the activities of RevenueCanada,which is
                            responsible for making dumping determinations. Although Revenue
                            Canada is legally authorized to releaseconfidential information to
                            involved parties even if nonconfidential summaries prove inadequate, it
                            rarely does.In contrast, the Canadian International Trade Tribunal, the
                            agency responsible for the injury determination, provides accessto con-
                            fidential information through a system similar to the one in the United
                            States. Attorneys active in the Canadian market give the Tribunal high
                            marks for the transparency of its procedures.

Other Signatories’          While developing an administrative protective order system in the EC,
                            Mexico, and Australia may be one way to increasethe transparency of
Difficulties in             those signatories’ overall antidumping procedures, it is not clear that
Implementing an             their respective processeswill readily incorporate such a system. Prac-
Administrative Protective   tical difficulties may stand in the way.
Order System
                            One difficulty concernsthe inability of the ECto provide effective sanc-
                            tions against parties in caseof unauthorized disclosure of confidential
                            information. The importance of providing effective sanctions is high-
                            lighted in the United States, where the CommerceDepartment generally
                            will aIlow disclosure only to attorneys, who are subject to disbarment
                            from practice in the event of a violation. According to European govem-
                            ment officials, in the EC12 national laws and 12 separate legal systems
                            exist, with no centralized infrastructure to effectively enforce and mon-
                            itor the preservation of confidentiality of information.
                            According to an ECrepresentative, a seconddifficulty in establishing the
                            use of a&nin&rative protective orders is that individual ECfirms tend
                            to be more secretive and, therefore, are uncomfortable about sharing
                            such sensitive information with outsiders. The firms are concernedthat
                            an administrative protective order system may be abused,may lead to

                            Pt#t8a                                      GAO/N~lM)      rnterxutiorul Tr8dt
                        Antidumping Pntttw

                        unauthorized disclosure of confidential information, and may become
                        legally burdensome.
                        As for Mexico, given its current level of development and economic
                        problems, it may have difficulty justifying and implementing what is
                        consideredto be an expensive system. Mexican officials further added
                        that the concept of allowing administrative protective orders is foreign.
                        They believe it would take considerablechangeand effort to have such
                        a concept incorporated into its system. Attorneys in the United States
                        agree that the administrative protective order system has increasedthe
                        transparency of the U.S.’ overall antidumping process,but at a very
                        high cost for all parties involved. In fact, even in the United States one
                        government official was not convinced that the benefits outweighed the
                        Although an Australian attorney noted that Australia has no apparent
                        constraints against implementing an administrative protective order
                        system, Australian officials told us that they have not considered
                        adopting one.

U.S. Proposals in the   The United States is proposing several amendmentsto the Antidumping
                        Code to strengthen the obligation on investigating authorities to provide
Uruguay Round           parties with adequate accessto information. The amendmentspropose
Concerning              that (1) a person claiming confidential treatment for information be
Nonconfidential         required to show “good cause” for such treatment, not merely “cause”;
Summaries               (2) the obligation on investigating authorities to provide a nonconfiden-
                        tial summary be mandatory, not discretionary; and (3) the code specify
                        that the summary have sufficient detail so as to permit a reasonable
                        understanding of the substanceof the confidential information. The pro-
                        posal does not state that the code should require countries to adopt such
                        systems in order to increasethe transparency of their antidumping pro-
                        cedures.It does, however, recommendthat a footnote to the code be
                        amendedto recognizethe desirability of establishing administrative pro-
                        tective order systems.

                        Although the transparency of antidumping procedures followed by the
Conclusions             maor signatories has increasedin recent years, practitioners say the
                        antidumping systems of most of the signatories still lack sufficient pro-
                        cedural openness.The greatest amount of criticism is directed toward
                        the failure of signatories to adequately discloseinformation related to

                        Pyt33                                       GAO/NSIAIb9149 Inttmtrional   Trade
industry submissionsand the rationale for making antidumping determi-
nations. To somedegree,the authorities are constrained from adopting
procedures that are completely open and transparent becauseof the
need to protect confidential information. Despite this constraint, there
appears to be room to increasethe amount and quality of information
made available to parties to an investigation without compromising con-
fidentiality requirements.
U.S. proposals in the Uruguay Round of negotiations addressmany of
the concernsover procedural opennessand due processidentified in this
chapter. If accepted,the proposed changesshould help to increasethe
transparency of the antidumplng procedures followed by the five major

Ptgt34                                     GAo/NslAD-e169 lnttrn8tionrl   Trdt
Chapter 4

Appeal Rights Are Limited But Still Evolving

                          Although the Antidumping Code does not require signatories to provide
                          appeal rights to affected parties, the antidumping systems of the signa-
                          tories we examined allow for both administrative and judicial review.
                          Administrative review in this report means(1) examining whether
                          antidumping determinations should be modified or revoked on the basis
                          of changedprices or circumstancesand (2) considering questions about
                          specific importations. We found that administrative review systems in
                          the countries we examined vary in importance, frequency, and practice.
                          Judicial review, which involves appeals of antidumping issuesbefore
                          courts, also varies in prevalence and importance. Although U.S.judicial
                          review is consideredto be more extensive than that of other countries,
                          somesignatories are considering changesto their systems that will pos-
                          sibly expand the scopeof their judicial review.

                          The United States, the EC,Australia, Canada, and Mexico all provide for
Administrative            administrative reviews of both dumping and injury determinations.
ReviewsVary by            Administrative reviews are typically carried out by the agency that con-
country                   ducted the original determination. Proceduresfor initiating and exe-
                          cuting these reviews vary by country. For example, while all the
                          signatories we examined undertake reviews on request by interested
                          parties, Canada and Australia also provide for automatic reviews of
                          dumping determinations by the authorities.1

Differing Importance of   The importance of administrative reviews of antidumping determina-
                          tions also varies in different countries. Administrative reviews are par-
Reviews                   ticularly important in the United States for two reasons:(1) They are
                          neededto determine the actual amount of duty owed2and (2) the U.S.
                          system lacks a “sunset provision,” which would end antidumping mea-
                          sures after a fixed amount of time. Although the existence of sunset pro-
                          visions may lessenthe significance of administrative review in Canada
                          and the EC,reviews of specific importations can be important because
                          duties are determined on a case-by-casebasis in both countries. Admin-
                          istrative reviews are probably least important in Australia, where
                          antidumping measuresexpire, with no possibility of extension, after
                          3 years.
                          lRtvtnut Ctnada auttmaticaUy xwcabha        the value on which the duty is based approximately
                          once a year, while the Au&r&an Customs 8ervice reeulprly worms “midttnn” reviews of dumping
                          cxlmbhs18month8aitera         llk?amthasbetnimpased.

                          ~tn$eawhdcpaacsbaaedonthedutyratea                estimaWintheinitialinv~ons,andthe
                          addkhaldutksdue,m    deamhedinthe~erevlew.

                          p*=                                                     GAO/-NSUDSlU@ lnttrnatlond      ‘lhdt
                                         Chapter 4
                                         Apped lU@ts Are Limited But Still Ekolv@

Frequency of                             As shown in table 4.1, the United States and Canada carry out a large
Administrative Reviews                   number of administrative reviews, while the ECand Australia undertake
                                         far fewer reviews. This disparity is likely the result of a number of fac-
                                         tors, including the importance of reviews in the United States, Canada’s
                                         automatic review of antidumping duties, and the existence of sunset
                                         provisions in the JX and Australia.
Tablo 4.1: Numbor of Antidumping Cases
and Revvkwr Conducted, 1M-1 @89                                                               Now cams            RWieWS               TOM
                                         United States                                                 141              355              4%
                                         Canada                                                          76             255              331
                                         European Communitya                                             87              42              129
                                         Australia                                                     120                8              128
                                         Mexicob                                                         30               0               30
                                         aNumbers may be understated because reports do not include cases against nonsignatories.
                                         bMexico’s report for the last half of 1969 was not available.
                                         Source: Signatories’ semiannual reports to the GATT Committee on Antidumping Practices, 1966-1969.

                                         In the United States, requests for Commercereviews of dumping deter-
                                         minations are fairly common.According to a recent study, for example,
                                         reviews were requested for approximately half of the antidumping
                                         orders eligible for review in 1987.3However, practitioners complain that
                                         reviews of dumping determinations are not completed in a timely
                                         fashion and that the resulting backlogs are a problem since reviews are
                                         neededto establish actual duty amounts. A Commerceofficial acknowl-
                                         edgedthat delays are a significant problem. However, he noted that part
                                         of Commerce’sbacklog was inherited when responsibility for handling
                                         dumping determinations was transferred from the Treasury Department
                                         to Commercein 1980.
                                         Foreign government representatives also have voiced concern that Com-
                                         merce administrative reviews place a renewed burden on the respon-
                                         dents to provide more information. Practitioners have expressedmore
                                         concern about the information requirements of the United States than
                                         about those of other countries.
                                         Canada’s administrative review processis similar to that of the United
                                         States, with a few exceptions. For example, in contrast to Commerce’s
                                         practice, RevenueCanada automatically recalculates the value on which
                                         the duty is based approximately once a year.

                                         31ncontrast, requests for International Trade Ckmmission administrative reviews of injury are not a3
                                         common, and revocations based on changed circumstances are even less common.

                                         PIgt 36                                                    GAO/N8IAD91-69 Intematiod          Trade
                    The EChas a smaller number of administrative reviews than the United
                    States for several reasons:(1) The EC’Sregulations contain a sunset pro-
                    vision; (2) adjustments to duty rates resulting from reviews are appli-
                    cable only to future, not past, duties; (3) the ECCommissionenjoys a
                    margin of discretion in conducting reviews, in deciding whether to
                    accept an application for review, and in determining whether to use
                    information provided by parties, according to ECpractitioners; and
                    (4) the EXCommission takes a long time to conduct reviews.4Becauseof
                    these practices, affected parties in the ECdo not often seek administra-
                    tive review.

Effects of Sunset   Countries that incorporate sunset provisions in their antidumping laws
                    receive fewer requests for administrative reviews, since antidumping
Provisions          measuresautomatically expire after a fixed amount of time. The routine
                    expiration of antidumping measuresappears to eliminate the need for
                    many reviews.
                    Australia’s sunset provision is particularly strict. It not only eliminates
                    antidumping measuresafter 3 years, but it also provides no possibility
                    for extension. If Australian firms want continued protection against
                    dumped goods, they must reapply for a new inquiry.

                    Sunset clausesin Canada and the ECboth provide for the expiration of
                    antidumping measures6 years after their imposition but also allow for
                    “sunset reviews” on request. In such instances,if interested parties
                    submit information indicating the continued need for duties, measures
                    can be maintained. Sunset reviews are requested for only a small pro-
                    portion of the measures-that expire, according to Canadian and EC
                    The lack of a U.S. sunset provision has concernedsomeforeign repre
                    sentatives. Antidumping attorneys have suggestedthat the United
                    States should adopt a sunset provision (1) to eliminate the problem of
                    backlogs in Commerceadministrative reviews and (2) to allocate the
                    costs of respondents and petitioners more equitably. The present system
                    is thought to put a heavy burden on res,pondents,who must bear the
                    expenseof annual Commercereviews.

                    4m   &W pnnzeding
                                   may beBP
                                                   aathe initialinv~n,         which is normally not

                    Page 87                                      GAO/lWAD-Bl4l@ lntematlond    Trade
                        However, an attorney who represents U.S. petitioners argues that the
                        high cost of initiating an antidumping casein the United States would
                        make establishing a sunset provision unfair to petitioners. Although this
                        argument might be supportable when antidumping measuresautomati-
                        cally expire, as is the casein Australia, the argument seemsweaker if
                        there is a provision for a sunset review, which allows for the extension
                        of measures,if justified. The experienceof Canada and the ECdemon-
                        strates that under the sunset provision, a majority of measuresare
                        allowed to lapse.
                        Several signatories have proposed in the GATT Uruguay Round negotia-
                        tions that a sunset provision be added to the Antidumping Code.Specifi-
                        cally, it has been recommendedthat antidumping measuresexpire after
                        6 years, with a provision for reviews and extensions.

                        Roth the Canadian and Australian antidumping systems provide for
Additional Level of     another level of review of decisionsmade by RevenueCanada and the
&View   in Cmada  and   At,m-di~   CUSTOMS   Servile.These reviews are not ~anied out by the
Australia               agency that made the initial determination or by the courts.
                        Under the two countries’ procedures, appeals of decisionsto forgo an
                        investigation and appeals of negative preliminary determinations are
                        made to the Canadian International Trade Tribunal and the Australian
                        Antidumping Authority, respectively.6Their decisions are binding on
                        the agency that made the initial decision.
                        The Tribunal and the Authority function somewhat differently. The Tri-
                        bunal is asked only to review whether or not the evidencebefore Rev-
                        enue Canada disclosesa reasonableindication of material injury. The
                        Authority’s role is somewhat broader: It ascertains whether the Austra-
                        lian CustomaService arrived at a lawful finding basedon the material
                        provided for the inquiry. The Tribunal and Authority may only consider
                        the information used by the agenciesto make their decision; other infor-
                        mation or arguments may not be presented for consideration.6

                        %I Canada, review by the Tribunal can occur at another phase of the investigation: After Revenue
                        Canada haa decided to initiate an inv-,        the Deputy Mhiater, exporter, importer, or govem-
                        ment of the country of export may refer the question of a reasonable indication of material injury to
                        %ome xepmmtativea of responder& in Canada who are unable to provide information countering
                        the abgatbm of i@ury prior to the de&ion to initiate an inve&@tion have expressed concern over

                                                                                     GAO/NSLiD-@lM) htemtional          We
                        Appeal Rig&a Am Limited But Still Evolving

                        Parties have not sought Tribunal or Authority review very often. In
                        Canada, there were four such referrals to the Tribunal in 1988, six in
                        1987, and four in 1986. In Australia, the Authority received three
                        requests to review decisionsnot to initiate investigations during 1988,
                        its first year in operation.

                        The antidumping systems of the United States, the EC, Canada,Aus-
Judicial Review Could   tralia, and Mexico all provide for someform of review by a higher-level,
E3eMore Effective       “federal” court. However, judicial review appears to be rather limited in
                        most countries. It is limited because(1) the scopeof review is restricted,
                        thus reducing the number of appeals to the courts; (2) the courts tend to
                        defer to the decisionsof administrative agencies;and (3) someparties
                        (in the EC)are directly prohibited from making appeals.
                        Judicial review by an independent entity is consideredimportant
                        becauseit provides an additional meansof checking the actions and lim-
                        iting the discretion of administering authorities regarding antidumping
                        investigations. Judicial review may be particularly significant in coun-
                        tries where decisionmaking in antidumping procedures is less
                        Experts believe that U.S.judicial review is more effective than that of
                        other countries becauseU.S. courts seemto have interpreted broadly
                        both their jurisdiction and their scopeof review. In addition, parties are
                        more likely to bring appeals of antidumping to the courts for review in
                        the United States than elsewhere.Other systems of judicial review con-
                        tinue to evolve, and somecountries are considering changesthat could
                        allow for more effective review by the courts.
                        Although judicial review of antidumping decisions has becomemore
                        -widespreadin the major user countries, it is a relatively new develop-
                        ment. In the United States, for example, a judicial review processfor
                        antidumping caseswas not well established until 1980.7
                        In the current Uruguay Round negotiations, both the ECand the United
                        States have made proposals dealing with judicial review, but these have
                        been rather broad. The U.S. proposal, for example, calls on signatories
                        to “maintain judicial, arbitral or administrative tribunals or procedures
                        for the purpose...of the prompt review and correction of administrative
                        actions relating to final findings...and reviews.”

                        ‘See Judicial Review of Antidumping and Countervailing De&ions, (GAO/NSIAD-84-29, June 1984).

                        Page 39                                               GAO/NS~169         International   Trade
                            Chapter 4
                            Appeal Bighta Are Limited But Still Evolving

                            In most countries we examined, courts have interpreted their scopeof
                            review to be primarily limited to issuesof law and not factual determi-
                            nations. The US. Court of International Trade is an exception.

U.S. Court Better Able to   The U.S. Court of International Trade is unique becauseit specializesin
Consider Cases              handling international trade cases.Therefore, the CIT is better equipped
                            to becomemore involved in the details and facts of an antidumping case.
                            The CIT’s ability to remand a caseback to the administering authority to
                            reassessspecific points enablesit to be more involved with the factual
                            details of an investigation. The ability of a court to consider factual
                            determinations in a caseis important in antidumping investigations,
                            since controversies largely focus on factual issues.U.S. practitioners
                            believe that, as a result of its expertise and its approach, the CIT is less
                            deferential to administering authorities than other appellate courts and
                            more likely to challenge their decisions.However, Commerceofficials
                            also noted that the CIT infrequently overturns an agency’s decisions
                            The CIT has been criticized for unevennessin its deferenceto adminis-
                            tering agencies.Another apparent shortcoming of judicial review by the
                            CITis the length of time the court takes to make decisionson
                            antidumping appeals, according to foreign sources.

                            Although other countries we reviewed currently lack courts that are
                            able to perform detailed review, this situation may change.Many EC
                            lawyers, dissatisfied with the present system of judicial review, support
                            giving the newly created Court of First Instancejurisdiction over
                            antidumping appeals. This court hears appeals in antitrust casesand
                            may be better able to deal with the facts of a case.However, a proposal
                            to give the Court of First Instance competencein antidumping appeals
                            was not acceptedby the EZCouncil, which choseto reconsider the issue
                            after the new court has been in operation for 2 years.
                            The Australian Administrative Review Council has also recommended
                            that the Administrative Appeal Tribunal be empowered to review on
                            their merits all final dumping determinations. According to an Austra-
                            lian Customs Service official, as of August 1990 no decision had been
                            made on the Tribunal’s authority.

                            Pqge 40                                        GAO/NSIAD91-69   International Trade
         .                       Cb8pter 4
                                 Appeal RIghta Are Limited But Still Evolving

Limited Scopeof Judicial         Parties in Canada,the EC,Australia, and Mexico may bring appeals to
                                 the Federal Court of Canada,the European Court of Justice, the Austra-
Review                           lian Federal Court, and the Federal District Court of Mexico, respec-
                                 tively. Practitioners told us that the scopeof review by these courts is
                                 primarily limited to issuesof law. As a result it has beenobserved that
                                 the courts may be reluctant to challenge antidumping decisionsmade by
                                 administering authorities. In the ECin particular, the Court’s approach
                                 has given the Commissionbroad discretion in making its determinations.
                                 Consequently, many ECpractitioners told us, the Court often tends to
                                 uphold the Commission’sdecisions.
                                 Judicial review by the U.S. Court of Appeals for the Federal Circuit is
                                 comparable to judicial review by the courts described above. CIT deci-
                                 sions are appealable to the Court of Appeals for the Federal Circuit and
                                 ultimately may be appealed to the SupremeCourt. Somepractitioners
                                 believe that this appellate court lacks the expertise of the CIT and tends
                                 to defer to the decisionsof the administering authorities. In particular, a
                                 U.S. attorney stressedthat becausethe factors for determining injury
                                 are not so concrete and are subject to interpretation, the appellate court
                                 may be reluctant to challenge the rrc’s decisions.

Accessibility and Coverage All interested parties are able to requestjudicial review in most coun-
                           tries. However, in the EC,the European Court of Justice has interpreted
of Judicial Review         the provisions of the Treaty of RomeQso as to prohibit independent
                                 importers from appealing casesdirectly to the Court. Instead, these
                                 importers are entitled to challenge a specific importation in ECmember
                                 state courts, and these courts may then refer the issueto the European
                                 Court of Justice. This indirect accessto the European Court of Justice
                                 has several limitations: (1) Arguments may becomedistorted, because
                                 the casesare filtered through national courts; (2) time limits within
                                 which the casemust be referred to the Court are not established; and,
                                 most notably, (3) caseswill not always be referred to the Court.
                                  In most countries, judicial review is limited mainly to determinations
                                  that are considered final, except in the caseof Australia.9 The Austra-
                                  lian system allows for appeal of both positive and negative decisionson
                                  initiation as well as preliminary and final determinations.

                                  *Although IX antidumping laws do not contain provisons for judicial review, the Treaty of Rome
                                  (which &abliihed the EC) includes provisions for judicial review.
                                  QA party in Mexico, however, recently appealed a prelii    determination on constitutional

                                  P8ge 41                                                   GA0/NSIAlM1-58 international Trade
                  Clmpter 4
                  Appeal Righta Are Limited But StiJl Evolving

Judicial Review   Parties in Canada, Mexico, the EC,and Australia have been less likely
                  than U.S. parties to bring appeals casesto the Court for several reasons.
Prevalence and    Practitioners in Canada and the EChave noted that the limited scopeof
Importance        judicial review keeps them from bringing appeals cases.In Canada,par-
                  ties are also not likely to appeal for other reasons,such as (1) the
                  expenseof bringing appeals, combined with Canada’ssmall market size,
                  which reducesthe perceived benefits of appealing, (2) the lack of con-
                  sultants who understand the law well, and (3) the lack of necessary
                  information to appeal RevenueCanadadecisions,according to lawyers
                   and officials. Similarly, exporters to Mexico may be reluctant to appeal
                  becausethey sell only small amounts in the Mexican market.
                  In addition, experienced practitioners considerjudicial review in the EC
                  to be ineffective becausethe Court (1) has infrequently overturned the
                  Commission and (2) has taken an extremely long time-often 2, and as
                  many as 4, years-to make decisions.
                  Although the slow pace of reviews and the small market size may deter
                  Australian parties from bringing appeals, another factor may encourage
                  them to make more appeals. In Australian appeals cases,parties are able
                  to obtain confidential information that was not available to them during
                  the course of the investigation. As a result, someAustralian experts
                  believe that appeals to the Court, which historically have not been
                  common, will increase.

                  It is difficult to assessthe impact that judicial review has had on
                  antidumping practices. In the United States,judicial review has contrib-
                  uted to the interpretation of U.S. antidumping laws and regulations. It
                  appears that CIT’Sscrutiny has had significant effect on Commerceand
                  the ITC. U.S. officials and practitioners claim that judicial review deci-
                  sions affect the way that the agenciesconduct their work. For example,
                  if the courts tell the ITCto consider a particular factor in making its
                  injury determination, it will do so for all subsequentinvestigations, to
                  avoid another challenge in the courts.
                  The impact of judicial review has been less definite in other countries.
                  Somepractitioners note that judicial review has established legal prece-
                  dents and improved procedures. But others, particularly in the EC,are
                  skeptical about the effect of review by the courts, since decisionsso
                  often uphold the determinations of the administering authority.

                  Page 42                                        GAO/NSLUMl-lW International Trade
                            Chapter 4

Other Possible Avenues of   Other opportunities for appeal do not provide a practical alternative for
                            most parties. Appeals to the CATI‘ cannot be brought by private parties,
Appeal                      and the binational panel created by the United States-CanadaFree
                            Trade Agreement deals only with casesinvolving parties from the two
                            Although the Antidumping Code provides for review, signatories have
                            not used this processvery often. In 1988,two cases(one from Japan and
                            the other from Sweden)were referred for conciliation and settlement to
                            the GAIT Antidumping Committee.
                            Somepractitioners believe that use of the GAG dispute settlement mech-
                            anism will increase in the future. An experienced EClawyer believes
                            that Japan may appeal to the GAIT more frequently as a result of the
                            ineffective ECappeals process.Also, an ECofficial noted that provisional
                            changesto GATT procedures have made the dispute settlement process
                            faster. He also observedthat the composition of the dispute settlement
                            panel is likely to work in favor of exporters, since most GAIT members
                            are neither users nor supporters of antidumping measures.1o
                            Nevertheless,others believe that small countries may be reluctant to
                            request review from GATT.One representative from a smaller exporting
                            country voiced concern over possible negative political repercussions
                            that could result from such an action.
                            The United States-CanadaFree Trade Agreement provides for another
                            review option for American and Canadian parties to appeal antidumping
                            casesinvolving the two c~untries.~~The agreementprovides for reviews
                            by a panel consisting of knowledgeable practitioners from the two
                            nations with expertise in the antidumping area. The panel is supposedto
                            apply the samestandard of review and the samelegal principles as
                            domestic courts, and its decisions are binding on both governments.
                            It is difficult to assessthe panel’s impact becauseit has consideredonly
                            a few cases.However, several practitioners said that panel members
                            have tended to interpret the panel’s mandate broadly, suggestingthat
                            the panel will examine antidumping issuesin much greater detail than a
                            typical appellate court would.

                            lOHowever,the parties in a dispute .xttlment cam approvethe compasStlon
                                                                                                  of the panels.
                                          antidumpinglawsw&hcompetftlon leuaNegoUatomhavebeen given 7 years to

                            Pyre 43                                                GAO/NEIAMlbQ Intemational ‘hde
              Ch8pter 4
              Apped Rights Are Limited But Still Evolving

              Administrative reviews are less important in other signatories than in
Conclusions   the United States, where they are neededto set the actual amount of
              duty owed. The United States has been criticized for its lack of a sunset
              provision in its antidumping law, as well as for its slowness in carrying
              out annual reviews of dumping determinations. Signatories have pro-
              posed that the Antidumping Codebe changedto address both these
              In most countries, judicial review is limited to issuesof law. The U.S.
              Court of International Trade is an exception becauseits specialized
              function makes it better able to addressthe details of a case.Although
              judicial review in other countries may be less thorough, the systemsof
              the other signatories we examined continue to develop. Recentproposals
              aimed at more complete judicial review in the ECand Australia indicate
              that substantial changesare possible.
              In the GATT Uruguay Round negotiations, both the United States and the
              EChave made broad proposals introducing judicial review to the
              Antidumping Code.However, it may be difficult to effect changes
              through the Antidumping Code,becausejudicial review doesnot fall
              within the traditional scopeof antidumping rules.

              P8ge 44                                       GA0/lvsuDe149   lntem8tlon8l Tr8de

    P4e 45   GAO/NSIAD91-69 Intemationd Trade
Appendix I

Antidumping Laws and Practices 6f South
Korea, Brazil, Japan, and India

               While South Korea, Brazil, Japan, and India have antidumping legisla-
               tion, few caseshave been initiated and processedby these countries.
               South Korea has initiated five investigations, none of which has resulted
               in the imposition of a duty. Brazil has initiated two investigations, both
               resulting in the application of a duty.* Neither Japan nor India has
               reported any formal antidumping investigations. India and Japan have,
               however, received one and three antidumping petitions, respectively.

               We compared the antidumping legislation of these four countries with
               the GATT Antidumping Code,specifically with respect to provisions for
               sufficiency of evidence,transparency, and available rights of appeal. In
               light of what we believe to be the very broad and interpretive nature of
               the code,the implementing regulations seem,in general, to conform with
               the GAIT Code and addressthe basic tenets of issuesunder review. Each
               country’s regulations, for example, addressthe need to ensure that there
               is “sufficient evidence” to support the dumping, injury, and causation
               elements of an alleged antidumping action. Bach also acknowledgesthe
               need, in varying degrees,to establish transparency in their antidumping
               systems and to provide for a meansof reviewing decisionsmade by the
               administering authorities.

               In the absenceof sufficient caseexperience, it is difficult, if not impos-
               sible, to determine what procedures and policies these countries would
               adopt given an increase in the number of antidumping complaints filed.
               Similarly, the degreeto which a country’s antidumping processesare
               consistent, transparent, and not subject to manipulation can only be
               evaluated in the light of actual experience.
               According to an attorney currently representing a U.S. company
               involved in a South Korean antidumping action, South Korea’s pre-initi-
               ation stage appears to be informal. However, parties seemto enjoy con-
               siderable accessto information during the investigation as well as the
               pre-initiation phasesof the antidumping process.The attorney did
               express concern about South Korea’s seemingly low threshold of evi-
               dencefor initiating an investigation. In his particular case,the South
               Korean government decided to initiate an investigation despite the fact
               that imports were decreasing,domestic production of the imported
               article was rising dramatically, and domestic production was signifi-
               cantly undercutting the price of imports, he explained.

               lIntemational Trade:Useof the GATTAntidumping code (GAO/NSIAD-90-238FS,
                                                                                   July 25. 1990).

               Page 46                                          GAO/NSIAB91-59 Intem~tio~I Trade
          In Brazil, the Customs Policy Commission has responsibility for making
          both dumping and injury determinations. Oncean investigation has been
          initiated, the Commissionsendsout questionnaires to potentially
          affected parties. However, according to a Brazilian government official,
          resource constraints make it very difficult to conduct subsequenton-site
          verification of submitted data. He also noted that Brazil generally pre
          fers and encouragesresolving casesthrough price undertakings2because
          of their administrative convenience.
          The very limited experience under the Japaneseantidumping provisions
          suggeststhat the pre-initiation stage may be more important in Japan
          than it is in the United States and may be viewed as an important oppor-
          tunity for parties to negotiate an agreement.For each of the three
          antidumping petitions filed in Japan, actions were terminated in the pre-
          initiation stage after the Japaneseindustry obtained (1) a “voluntary
          export restraint” agreement from the exporters limiting the amount of
          the allegedly dumped product sold to Japan or (2) other assurancesby
          the appropriate exporting industry to take corrective action. Imple-
          menting guidelines in Japan specifically state that an investigation may
          not be initiated when measuresto eliminate an alleged injurious effect to
          an industry in Japan have been taken.

          Indian legislation provides that before deciding to initiate an investiga-
          tion, the government must satisfy itself that it has “prima facie” evi-
          denceof dumping, injury and, where applicable, causality. However,
          with no casesto serve as a context, this standard gives no indication of
          whether the threshold for initiating an investigation would be any more
          or any less strict than that in the United States.

          2A price undertaking isbasically a voluntary measure by an exporter to increase prices or to cease
          exports at dumped prices to elhinate the ir&riow effect of dumping.

          Page 47                                                    GAo/NsIADa-s9       Intem8tion8l   Trde

---   _
Appendix II

Major Contributors to This Report

                               John Watson,Assistant Director
National      Security   and   Jill Derderian,Evaluator
International Affairs
Division, Washington,
                               Kane Wong, Issue Area Manager
SanFrancisco                   Evelyn Aquino, Evaluator-in-Charge
RegionalOffice                 Robert Tomcho, Evaluator
                               Gerhard Brostrom, Writer-Editor
                               Kimberly Dillon, Intern

                               Richard Perruso, Attorney
Office of the General

(4ss661)                       Page 48                              GAo/NsxAD-g159 Intemational Trade