Tue, 15 Aug 2000

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.