Antidumping body still has much to do

Antidumping body still has much to do

By Erry Bundjamin

JAKARTA (JP): The issue of dumping goods has received a great
deal of attention in Indonesia recently. As such, it is
necessary, in order to avoid confusion, to familiarize people
with the minimum essential procedural and technical requirements
the Indonesian Anti-Dumping Committee (KADI) must comply with in
investigating the dumping of imports.

Investigating alleged dumping according to the Anti-Dumping
Agreement of the World Trade Organization (WTO) is not an easy
task. KADI must act impartially and in a manner determined both
by the agreement and Indonesian antidumping legislation.

The WTO agreement and Indonesian legislation do not
necessarily conform to one another, but if the provisions in the
legislation are less favorable than those in the agreement, they
would probably be challenged by the exporting countries under the
WTO dispute settlement mechanism.

Article 5.2 of the WTO agreement stipulates that an
investigation can only be initiated if the investigating
authorities have prima facie evidence of dumping prices, injury
and causality.

Article 5.4 provides that a petition must be lodged on behalf
of the domestic industry harmed by the dumping. Also, the total
output of the domestic industry supporting the petition must be
more than 50 percent of the total production of the like product
made by that portion of the domestic industry expressing either
support or opposition to the petition.

But no investigation shall be initiated when producers
supporting the petition account for less than 25 percent of total
production of the like product made by the domestic industry.

The national legislation says very clearly the output of
producers who are also importers of the product in question will
not be taken into account in the calculations.

These substantive procedural requirements must be met before
an investigation starts. In the United States, in antidumping
cases on cement, for instance, the government proposed remedying
substantive procedural issues after initiation, but this was
rejected on the grounds that substantive procedural issues were
only relevant before the investigation began.

The panel of the General Agreement on Trade and Tariffs
(GATT), therefore, recommended the U.S. government terminate the
antidumping duties.

Clear details of the product under investigation and the scope
to be covered in the investigation must be given in the petition,
to enable a fair determination of both dumping and injury. The
term "like product" itself is not well defined in either the WTO
agreement or in the national legislation.

In the WTO Anti-Dumping Agreement the term basically refers to
a comparison between one product and another to examine whether
they are identical and/or closely resemble one another.

In practice, however, the assessment is based on physical
characteristics and uses, interchangeability, customer and
producer perceptions of the product, manufacturing facilities and
production processes.

In several GATT/WTO panel rulings, the term "like product" has
been narrowly interpreted. Failure to define like products
correctly in an investigation would certainly lead to the
exporting country challenging any decision made by the
investigating authorities.

In the absence of evidence such as dumping prices, injury and
causality -- factors which should be meticulously assessed
throughout the investigation -- no antidumping duties can be
imposed.

In many cases a dumping margin can easily be found. In the
current prolonged economic crisis, injury may not be difficult to
find. However, injury must be attributable to imports. Thus,
investigators must examine "any known" factors causing the
injury. Injury would not be attributable to imports in a
situation where, for example, the domestic producers were found
to be inefficient, unintegrated, mismanaged and so forth.

In Europe, a cost and benefits analysis has been embodied in
its antidumping regulation: even if the above three factors have
been proved in the investigation, antidumping duties will not be
imposed if the European Commission finds that their imposition
would not be in the community's interests.

This happened in the unbleached cotton fabric case involving
the Indonesian textile industry. Given the characteristics of
Indonesian industries, it is highly advisable that the Anti-
Dumping Committee also give due consideration to a cost and
benefit analysis in their investigations.

KADI cannot avoid dealing with sophisticated legal, political
and economic factors. KADI certainly realizes that although the
main objective of an investigation probably is to protect local
producers, it is nevertheless imperative that it be impartial,
objective and precise in the investigation to comply with the WTO
agreement and national legislation. This would avoid any
challenges from users or exporting countries.

Meanwhile, industries should be able to compete by improving
their efficiency. Wasting time on frivolous cases with no firm
legal basis detracts industries from the very objective of
antidumping actions and can be counterproductive in the long run.

Except in one case, no decision in an Indonesian antidumping
investigation has ever been challenged, which can be credited to
KADI. But with the increasing use of antidumping petitions much
remains to be done.

The writer is a lawyer at the Jakarta-based Bundjamin and
Partners law firm. He specializes in international trade and has
defended clients in antidumping proceedings.