Inno Anti-dumping service

Inno has the expertise and experience in assisting participating companies to handle the required procedures of the varous stages of an Anti-dumping case. If you have any questions or would like to know more details about anti-dumping investigation, please feel free to contact us.

Legal background

According to the rules of the World Trade Organisation ("WTO"), its member countries may carry out anti-dumping investigations and impose anti-dumping duties against dumping activities of other countries. Anti-dumping refers to a legal system under which the government of a country investigates the dumping of imports and take corresponding anti-dumping measures in accordance with the law. It is a measure internationally adopted to stop unfair competition, regulate international market order and protect the security of the national industries. It is adopted by an increasing number of countries as it is playing an increasing important role in international trade.

In order to provide you with a general idea of anti-dumping and the relevant investigation procedures, we summarized below the main two areas:

1) Definition of "Dumping"

2) General procedures for anti-dumping investigation

Definition of "Dumping"

In simple terms, a product is considered being "dumping" into another country if:

Normal price (sales price in the exporting country) > Export price (sales price in the importing country)

For an Importing Country to initiate an anti-dumping case against the products concerned from an Exporting Country, the following conditions must be met:

  1. There is dumping of the product concerned from the Exporting Country to the Importing Country;
  2. There is possible / actual substantial injury to the Importing Country's domestic industry;
  3. There is a causation relationship between the dumping activities and the injury to the domestic industry; and
  4. The production of the complainant(s) has exceeded the minimum requirement (e.g., >25% of the total production in the Importing Country)

In such case, the Importing Country may initiate an anti-dumping case against the Exporting Country.

Procedures for anti-dumping investigation

In general, there are six steps in an anti-dumping investigation:

  1. Application for an initiation of anti-dumping case by the complainant(s);
  2. Initiation of an anti-dumping case
  3. Anti-dumping investigation
  4. Preliminary determination
  5. Price-undertaking
  6. Final determination

The whole procedure will normally take around one year to complete, depending on the complexity of the cases. However, some cases may extend its due date up to two to three years, subject to the approval of the relevant authority of the Importing Country.

Why should a company participate in an anti-dumping case?
It is very important for the affected companies (including producers, traders, exporters and importers) in the Exporting Country to participate in the anti-dumping cases. By participating in the anti-dumping case, a company an p[resent is operational and financial information to the Importing Country to defend itself and prove that they did not dumped the product concerned to the Importing Country. By doing so, the company can fight for a lower or even nil anti-dumping duty rate.

On the other hand, the non-participating companies will be subject to the highest anti-dumping duty rate, which, based on past experience, could be up to 200% of the value of the product concerned. In addition, the affected companies will have to wait for up to five years before they could have another chance to defend themselves on an expiry review. In other words, a company which successfully obtained a lower or nil anti-dumping duty rate will possess an absolute advantage in pricing and costs over the other companies.

What to expect with an anti-dumping investigation?

In general, there are 7 stages for a company to participate in an anti-dumping investigation carried out by the EC / US:

Stage 1: Informing the EC / US of the company's intention to participate in the case
Stage 2: Completing the Market Economy Status / Individual Treatment and Sampling Forms
Stage 3: Selection of sample companies by the EC / US to participate in the subsequent stages of the investigation
Stage 4: Completing the anti-dumping questionnaire
Stage 5: Facilitating the on-site verification of the information of the anti-dumping questionnaire by the EC / US officials
Stage 6: Attending hearing sessions in the EC / US
Stage 7: Determination of anti-dumping duty rate by the EC / US

As the time schedule for the above stages is extremely tight and the workload involved is heavy, it is essential for the participating companies to devote sufficient manpower for the preparation of information and respond to each of the stages on a timely basis.

Important issues

Many companies encountered great difficulties in participating in an anti-dumping investigation. Based on our experience in assisting various companies to participate in the anti-dumping cases, we summarized below some of the most important issues which a participating company should note:

A) Time
B) Information required
C) Professional assistance
D) Political issues
E) Advanced warning and preparation

A. Time

The timeframe of an anti-dumping investigation is very tight. A participating company has to respond quickly to the investigation and provide the required detailed information within a short period of time. For example, the EC requires the affected companies in the Exporting Country to inform the EC on their intention to participate in the case, and complete and submit the MES / IT and sampling forms within 14 days after the initiation of the investigation. In addition, the participating companies are required to complete and submit the anti-dumping questionnaire within 37 days after being informed by the EC.

B. Information required

The information required for the completion of the MES / IT forms, sampling forms, and the anti-dumping questionnaire is numerous and very detailed. Normally it would require detailed breakdown and analysis on the operational and financial information of the company for the past 3 years to be reported in specific formats.

The required information often involves data which is not readily available and would require much effort from the company to dig out the information from the supporting documents within a short period of time. It is often where mistakes are made. Please note that the EC / US officials could easily classify a company as "non-cooperative" if they spot any mistake during the review of the information or in the on-site verification. If this happens, the company will be subject to the highest anti-dumping duty rate imposed by the EC / US.

As such, it is critical that a participating company is prepared for the heavy workload and devote sufficient manpower to handle the investigation.

C. Professional assistance

Since all anti-dumping investigations involve complicated legal procedures throughout the cases, it is essential for a participating company to engage an experienced lawyer to handle the legal procedures on behalf of the company. The lawyer can also attend and defend the participating company in the hearing sessions held in the Importing Country. As such, it is recommendable to seek advices from lawyers in the Importing Country as they are most familiar with the legal requirements and structure of the country.

In addition, due to the complexity and large volume of financial and operational information analysis required by an anti-dumping case, it is recommendable to seek assistant from an accountant with solid experience in handling such investigation; in particular, the MET / IT form, sampling form and the anti-dumping questionnaire. Please note that the financial and operational information required by an anti-dumping investigation is very different from the day-to-day accounting information. Continuous guidance from an accountant experienced in anti-dumping investigation will greatly increase a company's chance to win the case.

D. Political issues

Despite the fact that anti-dumping investigations are legal procedures, political influences play an extremely important role in the process. A good example is the textile dispute between the EC and China. It is basically a political struggle between the producers and the retailers / importers in the EC, who were defending their interests in the textile market from different point of view (i.e., the producers were defending their profits market in producing textile products, while the retailers / importers were defending their profits margin in trading textile products from China).

As such, lobbying with the interested parties (e.g., producers, traders, importers, wholesalers, retailers, and politicians) is a critical part of the game and it is another reason why it is recommendable to seek assistance from a lawyer in the Importing Country. Their knowledge of the country and their networks with the interested parties will greatly increase the chance of a company to win the case.

E. Advanced warning and preparation

Last but not least, it is very important for the affected companies to be informed about the possible / actual initiation of an anti-dumping investigation against their products. This would allow extra time for the companies to relocate the necessary resources (e.g., manpower) and to prepare the required information. This would also reduce the chance for a company to make mistakes in the information provided to the Importing Country.

In addition, it is recommendable for companies anticipating an anti-dumping investigation against their products to review their accounting system in advance. An accounting system with proper functions could ensure the completeness and accuracy of the information, not only for the management for daily operations, but to increase the company's chance to win an anti-dumping case by minimizing the chance of making un-necessary mistakes during the process.

In view of the above, it is recommendable for companies to establish a long-term relationship with an accountant with solid experience in anti-dumping investigations. The accountant could provide the most up-to-date information on any anti-dumping news related to the company's products and to equip the company with the right tools to handle the heavy workload in participating in an anti-dumping investigation.