ANTI-DUMPING DUTY IMPOSED BY CHINA ON ON X-RAY SCANNERS EXPORTED BY EUROPEAN UNION AND WTO PANEL REPORT


Dated 26th February 2013

On 25 July 2011, the European Union requested consultations with China concerning the imposition of definitive anti-dumping duties on x-ray security inspection equipment from the European Union, pursuant to China’s Ministry of Commerce Notice No. 1(2011).

The European Union claimed that the measure is inconsistent with various provisions of the Anti‑Dumping Agreement related to the process of the anti-dumping investigation (including failure to provide access to relevant information and insufficient explanation of the basis for the determinations) as well as the anti‑dumping determination at issue (absence of objective examination of the effect of the dumped imports on prices in the domestic market and absence of objective determination of causality).
Panel and Appellate Body proceedings
Summary of key findings
This dispute concerned the imposition by China of anti-dumping duties on imports of certain security inspection equipment (x-ray scanners) from the European Union. The European Union claimed that the anti-dumping duties imposed by China, and the underlying investigation conducted by the Chinese authorities, were inconsistent with various procedural and substantive provisions of the Anti-Dumping Agreement.
The European Union’s claims with respect to MOFCOM’s price effects analysis
The European Union claimed that MOFCOM’s price effects findings did not constitute an objective examination based on positive evidence, contrary to the obligations under Articles 3.1 and 3.2 of the Anti-Dumping Agreement. The basis for the European Union’s claim was that MOFCOM’s price effects methodology was flawed because it involved price comparisons, based on weighted average unit values, in circumstances where MOFCOM did not take into account the “considerable differences” among the products being compared, particularly between “high-energy” and “low-energy” scanners. According to the European Union, the distorting effects of the methodology followed by MOFCOM were exacerbated by the fact that during the POI there were no exports of high-energy scanners from the European Union to China.
The Panel upheld the European Union’s claims against MOFCOM’s price effects analysis, on the basis that MOFCOM failed to ensure that the prices it was comparing as a part of its price effects analysis were actually comparable. In particular, the Panel concluded that MOFCOM’s price undercutting and price suppression analyses were inconsistent with Articles 3.1 and 3.2 because they were not based on an objective examination of positive evidence.
The European Union’s claims with respect to MOFCOM’s findings on the state of the domestic industry

The European Union claimed that MOFCOM did not base its injury finding on positive evidence, that MOFCOM’s injury evaluation did not involve an assessment of all relevant economic factors, and that MOFCOM’s injury analysis ignored the positive state of the domestic industry. The European Union claimed that MOFCOM instead found material injury based on a limited number of negative factors, ignoring the overall development and interaction among the positive and negative factors. The European Union claimed that, as a result, China violated Articles 3.1 and 3.4 of the Anti-Dumping Agreement.
The Panel rejected the European Union’s claim that MOFCOM did not rely upon positive evidence in making its determination, on the basis that the European Union had not presented adequate evidence in this regard. However, the Panel concluded that China acted inconsistently with Articles 3.1 and 3.4 because MOFCOM failed to consider all relevant economic factors, in particular, the “magnitude of the margin of dumping”. Further, the Panel found that MOFCOM’s examination of the state of the industry lacked objectivity, and was not always reasoned and adequate. Finally, in the light of its findings under Articles 3.1 and 3.2 of the Anti-Dumping Agreement, the Panel exercised judicial economy regarding whether MOFCOM acted inconsistently with Article 3.4 by failing to take into account the differences between high-energy and low-energy scanners.
The European Union’s claims with respect to MOFCOM’s causation analysis

The European Union claimed that MOFCOM attributed the injurious state of the domestic industry to subject imports on the basis of a flawed volume effects analysis and a flawed price effects analysis. Further, the European Union claimed that MOFCOM’s non-attribution analysis was inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement because MOFCOM disregarded the actual causes of any negative condition of the domestic industry.
The Panel concluded that MOFCOM acted inconsistently with Articles 3.1 and 3.5 due to the failure to take into consideration the differences in the products under consideration in the price effects analysis and due to the failure to provide a reasoned and adequate explanation regarding how the prices of the dumped imports caused price suppression in the domestic industry, particularly in 2008. The Panel exercised judicial economy with respect to MOFCOM’s analysis of the effect of the volume of subject imports. Finally, the Panel concluded that MOFCOM failed to consider certain “known factors”, and failed to consider evidence relating to other factors that it did explicitly consider, in its non-attribution analysis.
The European Union’s claims with respect to the non-confidential summaries

The European Union challenged two aspects of MOFCOM’s treatment of non-confidential summaries. First, the European Union identified a number of instances in which MOFCOM allegedly accepted non-confidential summaries provided by Nuctech that were not adequate to permit a reasonable understanding of the substance of the information submitted in confidence, contrary to the first two sentences of Article 6.5.1 of the Anti-Dumping Agreement. Second, the European Union claimed that MOFCOM allowed the Public Security Bureau not to submit any non-confidential summaries of confidential information, even though the conditions for application of the “exceptional circumstances” mechanism provided for in the third and fourth sentences of Article 6.5.1 had not been fulfilled. The European Union also pursued dependent claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement.
For the most part, the Panel upheld the European Union’s claims that the non-confidential summaries provided by Nuctech were not adequate, contrary to the first sentence of Article 6.5.1. The Panel also upheld the European Union’s claim that MOFCOM had improperly invoked the Article 6.5.1 exceptional circumstances mechanism by failing to require Nuctech to provide a statement of reasons why the relevant confidential information could not be summarized. The Panel exercised judicial economy in respect of the European Union’s dependent claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement.
The European Union’s claims with respect to the disclosure of essential facts

The European Union claimed that MOFCOM failed to disclose certain essential facts to interested parties, contrary to Article 6.9 of the Anti-Dumping Agreement. The European Union also pursued dependent claims under Articles 6.2 and 6.4.
For the most part, the Panel upheld the European Union’s claims under Article 6.9. In doing so, the Panel was guided by the findings of the Appellate Body in China – GOES, which were circulated during the Panel’s proceedings. The Panel exercised judicial economy in respect of one aspect of the European Union’s Article 6.9 claim, and in respect of its dependent claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement.
The European Union’s claims with respect to the contents of the public notice issued by MOFCOM

The European Union claimed that China violated Article 12.2.2 of the Anti-Dumping Agreement because of alleged shortcomings in the content of MOFCOM’s public notice of affirmative determination providing for the imposition of definitive anti-dumping duties. The European Union made two types of claims under Article 12.2.2. First, in respect of the first sentence of Article 12.2.2, the European Union claimed that MOFCOM failed to include in its public notice certain relevant information on the matters of fact and law which led to the imposition of final measures. Second, in respect of the second sentence of Article 12.2.2, the European Union claimed that MOFCOM failed to include in its public notice the reasons for rejecting relevant arguments made by Smiths during the course of the investigation.
The Panel upheld certain aspects of the European Union’s claims under both the first and second sentences of Article 12.2.2, but rejected other aspects thereof.

SOURCE: GOVT. OF INDIA, Ministry of Finance

 

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