Anti-Dumping
Information Paper

Issue

The World Trade Organization (WTO) Anti-Dumping (AD) Agreement allows countries to impose anti-dumping duties to protect their producers from injury caused by imports of dumped goods. Since the conclusion of the last round of multilateral trade negotiations many more countries have become active users of anti-dumping measures and the number of measures in force internationally is at an all-time high. This situation, along with emerging variances in the way individual countries interpret and apply the WTO obligations, argues for the need to make further progress in clarifying and improving the rules to ensure greater international coherence and predictability in their application.

Anti-dumping Activity

Dumping occurs when foreign exporters sell their goods in international markets at prices lower than the price in their home market (referred to as "normal value"), or at prices below full cost of production. Countries may impose anti-dumping duties equal to the margin of dumping if it is determined, through an investigation, that the dumped imports are causing injury to domestic producers of the same product.

The WTO Anti-dumping Agreement sets out rules for the conduct of anti-dumping investigations, including initiation of cases, calculation of dumping margins, the application of remedial measures, injury determinations, enforcement, reviews, duration of the measure and dispute settlement. The AD Agreement applies to trade in goods only. Trade in services is not covered by this agreement. The text of the AD Agreement is available at the WTO website.

Prior to the adoption of the WTO Agreements in 1995, the use of anti-dumping measures was mainly the domain of a few, largely developed, countries, e.g. Australia, Canada, the EU, the U.S. and Mexico. However, since the implementation of the WTO Agreements, the number of countries with anti-dumping laws has increased dramatically. There are now 64 countries with anti-dumping regimes in place. This, as well as increased trade liberalization, has fostered a marked rise in the use of anti-dumping measures around the world. Chart 1 shows that the number of total measures taken each year increased significantly in recent years, with traditional users taking more cases and many developing countries becoming more active users. In fact, in total, since 1995, new users have taken more measures than traditional users.

The total number of new anti-dumping measures taken by WTO Members each year increased from 129 in 1994 to 236 in 2000. This trend is expected to continue given the expected rise in import sensitivity due to the current economic downturn. Several new users have taken a significant number of measures in 2000, Argentina (16), India (55), Brazil (9) and South Africa (13). This compares to measures taken by traditional active users such as Canada (14), the United States (34), the European Union (41), Australia (5) and Mexico (7) .^[1] As of December 31, 2000, a total of 1,119 anti-dumping measures were in place globally. The sectors most affected by anti-dumping actions have been base metals (39%), mostly steel, followed by chemicals (13%), plastics (11%), textiles (9%), machinery and equipment (7%) and agriculture and food (4%). The steel sector in particular has seen an increase in anti-dumping complaints in recent months. The global over-capacity of steel production has resulted in declining prices and there has been an increase in steel exports from markets where internal demand has collapsed. As a result, open steel markets like Canada and the United States have attracted a large percentage of low-priced exports, which has led to an increase in anti-dumping complaints.

Canada as a User and a Target of Anti-Dumping Measures

Measures taken by Canada accounted for 7% of total measures in place in 2000. This compares with the United States and the European Union, which remain the principal users of anti-dumping actions, accounting for 22% and 20%, respectively, of all measures in place. Next are South Africa (10%), India (9%) and Mexico (7%). Chart 2 shows that Canada’s anti-dumping measures in place on December 31, 2000 were primarily directed against Europe (35%) and Asia (35%), followed by North America (20%), Latin America (9%) and Africa (1%).

As Chart 3 displays, metal products (mainly steel) account for most of Canadian measures in place (66%), followed by food and agriculture (13%). In terms of trade value, it is estimated that Canadian anti-dumping measures affected approximately $1 billion of imports in 1998, or less than 1 percent of total imports.

Canadian exports do not stand out as a major target of anti-dumping actions. In 2000, less than 1% of all measures in place were directed towards Canadian exports with the U.S. accounting for most of these measures (7 measures). Mexico had only 1 measure against Canadian exports. Beyond North America, there are currently only three anti-dumping measures in place against Canadian exports: one by Australia, one by South Africa and one by China.^[2]

The WTO Experience

With the increase in the number of countries using anti-dumping measures, different interpretations of the Anti-dumping Agreement have developed, resulting in a divergence of anti-dumping practices throughout the world. The lack of congruence in the interpretation and application of the Agreement has led to concerns over the consistency, transparency and predictability in the application of anti-dumping actions.

The variance in the interpretation of the AD rules has led to numerous requests for WTO disputes settlement in this area. The WTO Dispute Settlement Body has issued decisions in nine disputes concerning anti-dumping measures. The decisions in these disputes dealt with a wide range of issues including specific methodological questions concerning the calculation of margins of dumping and the determination of injury to the domestic industry. While these decisions can be helpful in providing guidance on anti-dumping obligations, these Panels have also been called upon to interpret provisions of the Agreement which do not provide clear guidance on appropriate practices. In these circumstances Panels were asked to reach decisions on matters that have not been adequately considered by WTO Members in the negotiating process. While Panel decisions do not set precedent for other disputes, the breadth of issues addressed and their importance reinforces the need for WTO Members themselves to further clarify and refine the rules in order to increase predictability and reduce the need to resort to dispute settlement procedures.

Issues to Address

Canada must balance its import and export interests in developing its position on anti-dumping measures.

Canada supports anti-dumping negotiations aimed at clarifying and improving existing provisions in order to promote greater international convergence in practices. This will increase market access predictability and reduce unnecessary restrictions to trade. At the same time, Canada has an interest in maintaining the effectiveness of anti-dumping measures to address injurious dumping.

The Government of Canada consulted with domestic stakeholders prior to and following the Seattle WTO Ministerial meeting. As a result of these discussions, the following list of issues has been developed for further consideration and refinement domestically in advance of a possible new round of multilateral trade negotiations.

1. Transparency and procedural fairness in the conduct of anti-dumping investigations and the application of anti-dumping measures.
2. Consistency and predictability with respect to key methodological issues, especially with regard to:

1. Recurrent dumping practices involving certain importers and exporters and the use of source switching to avoid anti-dumping measures.
2. Opportunity to consider broader public interests such as those relating to competition policy and the impact of anti-dumping measures on down-stream users and consumer organizations.
3. Clarification of methods of duty enforcement in order to reduce unnecessary burdens on importers and exporters of the goods subject to the measure.
4. The standard of review contained in the AD Agreement and its impact on anti-dumping cases as well as its capability for general application.

Prepared by:
Department of Finance
International Trade and Finance Branch
Last Updated: 06/22/01

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¹ WTO Secretariat, Rules Division Antidumping Measures Database.  [Return]

² WTO Semi-Annual Reports.  [Return]