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Compendium of Antidumping and Countervailing Duty Laws in the Western Hemisphere
I. Legal Authority to Impose Antidumping and Countervailing Duties
Article VI of the GATT 1995, the WTO Antidumping Agreement ("AD Agreement") and the Agreement on Subsidies and Countervailing Measures ("SCM Agreement").
These Agreements apply to all WTO signatories.
Decreto Legislativo no. 30, de 15 de dezembro de 1994 - aprovação dos resultados da Rodada Uruguai, incluindo o Acordo de Implementação do Art. VI do GATT 1994 e o Acordo sobre Subsídios e Medidas Compensatórias; Decreto no. 1.355, de 30 de dezembro de 1994 - promulgação do Decreto Legislativo no. 30/94; Lei 9.019, de 30 de março de 1995 - estabelece a natureza jurídica dos direitos antidumping e compensatórios e estabelece as autoridades competentes para aplicação de tais medidas.
Decreto no. 1602, de 23 de agosto de 1995 - regulamenta as normas que disciplinam os procedimentos administrativos, relativos à aplicação de medidas antidumping, com base no Acordo de Implementação do Art. VI do GATT 1994; Decreto no. 1751, de 22 de dezembro de 1995 - regulamenta as normas que disciplinam os procedimentos administrativos, relativos à aplicação de medidas compensatórias, com base nos Acordos sobre Subsídios e Medidas Compensatórias e sobre Agricultura, do GATT 1994.
II. Authorities Responsible for Conducting Investigations
The Secretary for Foreign Trade (SECEX) of the Ministry of Industry, Trade and Tourism, is the competent authority to determine, through an administrative process, the margin of dumping or the amount of subsidy, the existence of material injury or threat thereof or material retardation, and the causal relationship between them.
SECEX is the competent authority to initiate or renew an investigation and to end it, with no application of measures, when the existence of dumping or subsidies or damage caused by it is not established. (Dec. 1602/95 - Art. 3; Dec. 1752/95 - Art. 3).
B. Antidumping and Countervailing Duties
The Finance Minister and the Minister of Industry, Commerce and Tourism are the competent authorities to apply provisional measures and definitive rights, to alter or revoke definitive rights as a result of a concluded review, and to enact or end commitments. (Dec. 1602/95 - Art. 2 & Art. 64.2, Dec. 1752/95 - Art. 2 and Art. 73.2).
A. Like Product
"Like product" is a product which is identical, i.e. alike in all respects to the product under considertion, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration. (Dec. 1602/95 - Art. 5.1; Dec. 1752/95 - Art. 4 paragrafo unico).
B. Domestic Producers
"Domestic industry" means the domestic producers as a whole of the similar product or those domestic producers whose collective production of the similar product constitutes a major proportion of the total domestic production, except that:
(i) where a domestic producer is related to an exporter or importer of the dumped or subsidized goods, or is an importer of such goods, "domestic industry" may be interpreted to exclude such domestic producers;
(ii) in exceptional circumstances, the territory of Brazil may be divided into two or more regional markets and the domestic producers of the similar product in any of those markets may be considered separately.
AD law, Art. 17; CVD law, Art. 24. The producers within a regional market may be considered separately if they sell all or almost all of their production of the product in question in that market and if the demand in that market is not supplied to any substantial degree by the producers of the product in question located elsewhere in the territory.
In such cases, even when a significant share of the national production has not been affected, damage can be found if thee is a concentration of imports that are the object of dumping or subsidized product on that amount, and those imports are causing damage to producers of all or almost all of the production of that regional market. AD law, Art. 17-4; CVD law, Art. 24-4.
To have standing to file "on behalf of the domestic industry" the petition must be supported by producers accounting for more than 50 percent of the total domestic production of the similar product that expressed either support or opposition to the petition.
However, no investigation will be initiated if the domestic producers, who explicitly support the petition, represent less than 25% of the total domestic production of the similar products Dec. 1602/95 - Art 21.1.c, Dec. 1752/95 - Art. 30.1.c Art. 20-3; Art. 28-3.
SECEX may take steps to determine the degree of support or opposition to the petition expressed by domestic producers of the similar product with the purpose of verifying that the petition is, in fact, filed on behalf of the domestic industry.
In the case of a fragmented industry involving numerous producers, SECEX may use statistically valid sampling techniques to determine the degree of support or opposition. Art. 20-2; Art. 28-2.
E. Normal Value
Normal value shall be determined on the basis of the price of similar products sold in the ordinary course of trade destined for consumption in the home market of the exporting country. (Dec. 1602/95 - Art. 5 caput). Home market sales will normally be considered a sufficient quantity for the determination of the normal value when the similar product destined for the home market of the exporting country constitute at five percent or more of the sales of the product under consideration destined for sale in Brazil.
A lower percentage will be considered sufficient when it is demonstrated that this quantity is sufficient to permit an adequate comparison. (Dec/1602/95 - Art. 5.3).
Where there are no sales of the like product in the ordinary course of trade in the domestic market or when, because of the particular market situation or the low volume of the sales, an adequate comparison is not possible, normal value will be based either on:
1) the price of the like product when exported to a third country, provided that this price is representative, or
2) a constructed value in the country of origin i.e., the cost of production in the country of origin, plus a reasonable amount for administrative and selling costs and for margin of profits. Dec. 1602/95 - Art. 6 caput.
Sales of the like products in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative and selling costs may be treated as not being in the ordinary course of trade by reason of price, and may be disregarded in determining normal value only if it is determined that the sales below per unit costs are made:
1) within an extended period of time, normally one year, but never less than six months;
2) in substantial quantities, i.e. when it is determined that the weighted average selling price of the transactions under consideration for determination of the normal value is below the weighted average per unit costs, or that the volume of sales below per units costs represents not less than 20 percent of the volume sold in the transaction under consideration for the determination of the normal value and
3) at prices that do not provide for the recovery of all costs within a reasonable period of time.
The price will be considered sufficient to permit recovery of costs within a reasonable period of time if it is below the average per unit costs at time of sale but above the average per unit costs for the period of investigation. (Dec. 1602/95 - Art. 6.1, 6.2 e 6.3).
Sales between parties considered associated or that have a compensatory contractual relationship may be treated as not being in the ordinary coure of trade and may be disregarded in determining normal value unless it is demonstrated that the prices and costs related to that parties are comparable to those between unrelated parties. (Dec. 1602/95 - Art. 6-4).
F. Calculation of Cost of Production
For the purpose of calculating constructed value, costs will be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with generally accepted accounting principles of the exporting country and reflect the costs associated with the production and sale of the product under consideration.
It shall be considered available evidence on the proper allocation of costs, including that which is made available by the exporter or the producer in the course of the investigation provided that such allocations have been historically utilized by the exporter or producer, in particular in relation to establishing appropriate amortization and depreciation periods and allowances for capital expenditures and other development costs. (Dec.1602/96 - Art. 6.5 e 6.6).
Appropriate adjustment shall be made for those non-recurring items of costs which benefit future and/or current production, or for circumstances in which costs during the period of investigation are affected by start-up operations, unless already reflected in the cost allocations discussed in the preceding paragraph.
The adjustment made for start-up operations shall reflect the costs at the end of the start- up period or, if the start-up period extends beyond the period of investigation, the most recent costs which can reasonably be taken into account during the investigation. (Dec. 1602/95 - art. 6.7 e 6.8).
For the purpose of calculating the constructed value, the amounts for administrative and selling costs and for profits shall be based on actual data pertaining to production and sales in the ordinary course of trade of the like product by the exporter or producer under investigation.
When such amounts cannot be determined on this basis, the amounts may be determined on the basis of:
(a) the actual amounts incurred and realized by the exporter or the producer in question in respect of production and sales in the domestic market of the exporting country of the same general category of products;
(b) the weighted average of the actual amounts incurred or realized by other exporter or producers subject to investigation in respect of production and sales of the like product in the domestic market of the exporting country;
(c) any other reasonable method, provided that the amount for profit so established shall not exceed the profit normally realized by other exporters or producers on sales of products of the same general category in the domestic market of the exporting country. (Dec. 1602/95 - Art. 6.9 e 6.10).
G. Export Price
Export price is the price of the product exported to Brazil, free of taxes, discounts and rebates actually granted and directly related to the sales concerned. (Dec. 1602/95 Art. 8).
In cases where there is no export price or where it appears that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the following basis:
1) the price at which the imported product is first resold to an independent buyer; or
2) a reasonable basis, in cases where the imported product is not resold to an independent buyer or not resold in the same condition as imported. Art. 8, Único.
H. Export Price - Adjustments
Adjustments may be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability. (Dec. 1602/95 - Art 9-1).
In cases involving constructed export prices, allowances should also be made for costs incurred between importation and resale, including duties, taxes, and profits accruing. Art. 9-2.
If in these cases price comparability has been affected, the normal value shall be established at the level of trade equivalent to the level of trade of the constructed export price, or due allowance shall be made as warranted under the paragraph above. (Dec.1602/95 - Art. 9-3).
The value of these adjustment shall be calculated on the basis of relevant data corresponding to the period of investigation or on the basis of data corresponding to the most recent completed fiscal year. Art. 9-4.
Injury means material injury or the threat of material injury to an industry already established or the retardation of the establishment of an industry. AD law, Art. 14; CVD law, Art. 21.
An injury determination shall be based on positive evidence and shall include an objective examination of
a) the volume of dumped or subsidized imports,
b) their effect on prices of the like product in Brazil, and
c) the consequent impact of the dumped or subsidized imports on the domestic industry. (Dec.1602/95 - Art. 14.1; Dec. 1751/95 - Art. 21.1).
With regard to the volume of dumped or subsidized imports, it shall be considered whether the volume is not insignificant and whether there has been a significant increase in dumped or subsidized imports, either in absolute terms or in relation to production or consumption in Brazil. (Dec. 1602/95 - Art. 14.2; Dec. 1751/95 - Art. 21.2).
With regard to the effect of the dumped or subsidized imports on price, it will be examined whether there has been significant price undercutting by the dumped (subsidized) imports as compared with the price of a like product of Brazil, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. (Dec. 1602/95 - Art. 14.4; Dec. 1751/95 - Art. 21.5).
No one or several of these factors can necessarily give a decisive guidance (Dec. 1602/95 - Art. 14.5; Dec. 1751/95 - Art. 21.6). The examination of the dumped (subsidized) imports on the domestic industry shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential declines in sales, profits, output, market share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments, and, for countervailing duty investigations, in the case of agriculture, whether there has been an increased burden on government support programmes (Dec. 1602/95 - Art. 14.8; Dec. 1751/95 - Art. 21.13).
This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance (Dec. 1602/95 - Art. 14.9; Dec. 1751/95 - Art. 21.14).
It must be also demonstrated that a causal relationship exists between the dumped (subsidized) imports and the injury to the domestic industry, based on an examination of the relevant evidence and of other factors which may at the same time be causing injury to the domestic industry.
Injury caused by these other factors must not be attributed to the imports. (Dec. 1602/95 - Art. 15 caput; Dec. 1751/95 - Art. 22 caput).
Other factors that may be relevant in this respect include, among others, the volume and prices of imports not sold at dumping prices (or not subsidized), contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry. (Dec. 1602/95 - Art. 15.1; Dec. 1751/95 - Art. 22.1).
The effect of the dumped (subsidized) imports shall be assessed in relation to the domestic production of the like product when available data permit the separate identification of production on the basis of such criteria as the production process, producers' sales and profits. (Dec 1602/95 - Art. 15.2; Dec. 1751/95 - Art. 22.2). If such separate identification is not possible, the effects of the dumped (subsidized) imports shall be based on an examination of the production of the narrowest group or range of products, which includes the like product, for which the necessary information can be provided. (Dec.1602/95 - Art. 15.3; Dec. 1751/95 - Art. 22.3).
J. Threat of Injury
The determination of the existence of a threat of material injury shall be based on facts and not merely on conjecture.
The change in circumstances which would create a situation in which the dumping (subsidies) would cause injury must be clearly foreseen and imminent. Art. 16; Art. 23.
In determining the existence of a threat of material injury, the following factors, among others, shall be considered:
1) a significant rate of increase of dumped (subsidized) imports, indicating the likelihood of substantially increased importation;
2) sufficiently freely disposable, or an imminent, substantial increase in, the capacity of the exporter indicating the likelihood of a significant increase in the export of the dumped (subsidized) product to Brazil, taking into account the availability of third-country markets to absorb any additional exports;
3) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase the demand for further imports;
4) inventories of the product being investigated;
5) in the case of countervailing duty investigation, nature of the subsidy or subsidies in question and the trade effects likely to arise there from. Art. 16-1; Art. 23-1.
No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped (subsidized) exports are imminent and that, unless protective action is taken, material injury may occur. (Dec. 1602/95 - Art. 16.2; Dec. 1751/95 - Art. 23.2).
K. Material Retardation
The term "injury" includes material retardation of the establishment of a domestic industry. (Dec. 1602/95 - Art. 14 caput; Dec. 1751/95 - Art. 21 caput).
There are no separate provisions for material retardation.
See discussion of injury above.
For injury analysis purposes, where the imports of a product from more than one country are simultaneously subject to investigations, it may be cumulatively assessed the effect of such imports only if it is determined that
(a) the margin of dumping or the amount of countervailable subsidy established in relation to the imports from each country is not de minimis and the volume of imports from each country is not negligible; and
(b) the cummulation of the effects of the imports is appropriate given the conditions of competition between the imported products and between the imported products and the like domestic product. (Dec. 1602/95 - Art. 14.6; Dec. 1751/95 - Art. 21.7).
M. De Minimis Provision
The margin of dumping shall be considered de minimis if it is less than two percent of the export price. Art. 14-7.
The volume of dumped imports from an individual country shall normally be considered as negligible if the volume of dumped imports account for less than three percent of imports of the like product in Brazil, unless countries which individually account for less than 3 percent of the imports of the like product in Brazil collectively account for no more than 7 percent of imports of the like product in Brazil. (Dec. 1602/95 - Art. 14.3).
The amount of countervailable subsidy is considered de minimis if it is less than one percent ad valorem. Art. 21-8.
For developing countries, the amount of countervailable subsidy is considered de minimis if the overall level of countervailable subsidies granted upon the product in question does not exceed two percent ad valorem. (Dec. 1751/95 Art. 21.9).
For those developing countries that have eliminated export subsidies prior to the expiry of the period of eight years the date of entry into force of the WTO Agreement and for the least developing countries listed in Annex IV of the law, the amount of countervailable subsidy will be considered de minimis if the overall level of countervailable subsidies granted upon the product in question does not exceed three percent ad valorem. (Dec. 1751/95 - Art. 21.10, 21.11, 21.12).
The volume of subsidized imports from an individual country shall normally be considered as negligible if the volume of subsidized imports account for less than three per cent of imports of the like product in Brazil, unless countries which individually account for less than 3 percent of the imports of the like product in Brazil collectively account for more than 7 percent of imports of the like product.
For developing countries, the volume of subsidized imports from an individual country shall normally be considered as negligible if the volume of subsidized imports account for less than four percent of imports of the like product in Brazil, unless countries which individually account for less than 4 percent of the imports of the like product in Brazil collectively account for more than 9 per cent of imports of the like product. (Dec. 1751/95 - Art. 21.3 and 21.4).
N. Margin of Dumping
The margin of dumping is the amount by which the normal value exceeds the export price. (Dec. 1602/95 - Art. 11).
The regulation requires that a fair comparison be made between the export price and the normal value, at the same level of trade, normally ex-factory, and in respect to sales made as nearly as possible at the same time.
The interested parties in questions (i.e., subject to investigation) shall be informed of the type of information necessary to assure a fair comparison.
An unreasonable burden of proof shall not be imposed on the interested parties. (Dec. 1602/95 - Art. 9 caput).
When the comparison requires a currency conversion, such conversion should be made by using the exchange rate in effect on the date of sale, unless a sale of foreign currency on the forward market is directly linked to the export sale involved.
In that case the rate of exchange in the forward sale shall be used. Art. 9-5.
Fluctuations in exchange rates shall be ignored. Exports shall be allowed at least sixty days to adjust their export prices to reflect sustained movements in exchange rates during the period of investigation. (Dec. 1602/95 - Art. 9.7).
The existence of margins of dumping shall be determined on the basis of a comparison of:
(1) a weighted-average normal value with a weighted-average of prices of all comparable export transactions; or
(2) normal value and the export prices for each transaction. (Dec. 1602/95 - Art. 12 caput).
The weighted-average normal value shall be compared to individual export prices in situations where there is a pattern of export prices which differ significantly between buyers, regions, or periods of time and if it is explained why such differences cannot be taken into account adequately by use of a weighted-average-to-weighted-average or transaction-to-transaction comparison. Art. 12-1.
Sampling techniques may be used to establish normal value or export price.
Specifically, the authorities may use those prices which appear with the greatest frequency or those that are most representative, when there is a significant volume of transactions to be examined. Art. 12-2.
An individual margin of dumping shall be determined for each known exporter or producer concerned of the product under investigation. (Dec. 1602/95 -Art. 13 caput).
In cases where the number of known exporters, producers, importers, or types of products involved is so large as to made such a determination impracticable, the investigation may be limited to a reasonable number of interested parties or products by means of statistically valid samples based on the information available at the time of sample selection or to the largest percentage of the volume of the exports from the country in question which can reasonably be investigated. (Dec. 1602/95 - Art 13.1).
O. Subsidy Rate
A subsidy shall be deemed to exist when a benefit is conferred as
a) the exporting country provides income or price supports, directly or indirectly, which increase exports or reduce imports of whatever product, or
b) there is a financial contribution by the government or any public body within the exporting country's territory where:
i) the government practice involves a direct transfer of funds, potential direct transfers of funds or liabilities; or
ii) government revenue that is otherwise due is foregone or not collected.
The exemption of an exported product from duties or taxes borne by the like product when destined for domestic consumption, or the remission of such duties or taxes in amounts not in excess or those which have accrued, shall not be deemed to be a subsidy, in accordance with the provisions of Article XVI of GATT 1994 and the provisions of Annexes I through III of the Agreement on Subsidies and Countervailing Measures; or
iii) the government provides goods or services other than general infrastructure, or purchases goods; or
iv) the government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the functions described above which would normally be vested in the government and in no real sense differs from practices normally followed by governments. (Dec. 1751/95 - Art. 4).
The subsidies defined in the preceding paragraph, specific subsidies, and prohibited subsidies (as defined in Article 3 of the Agreement on Subsidies and Countervailing Measures) shall be deemed to be countervailable, i.e. subject to countervailing measures.
The non-actionable subsidies listed in Part IV of the 1994 GATT Agreement on Subsidies and Countervailing Measures (Dec. 1751/95 - Arts. 5-13) shall not be deemed to be countervailable.
The amount of the countervailable subsidy shall be calculated per unit of subsidized product exported to Brazil, based on the benefit enjoyed during the period covered by the investigation into the existence of countervailable subsidies. (Dec. 1751/95 - Art. 14). Government participation in equity capital, government loans, loan guarantees provided by the Government and supplies of goods or services or purchases of goods by the Government shall not be deemed to be benefits, provided that they meet the conditions of Art. 15 of Dec. 1751/95.
The following may be deducted from the total subsidy to calculate the amount of the countervailable subsidy:
a) expenses necessarily incurred to qualify for or benefit from the subsidy; and
b) taxes levied on exports of the product to Brazil, when such taxes are designed specifically to neutralize the subsidy. (Dec. 1751/95 - Art. 16). Articles 17-19 of Dec. 1751/95 define the methodology for calculating the amount of the subsidy per unit of product in cases where the subsidy:
a) was not granted on the basis of the quantities produced, exported, or shipped; or
b) was not granted for the present or future acquisition of fixed assets.
In general, an individual amount of countervailable subsidy shall be determined for each known individual exporter or producer concerned of the product under investigation. (Dec. 1751/95 - Art. 20 caput).
In cases where the number of types of products or of known exporters, producers and importers involved is so large that it is impractical to calculate individual amounts of countervailable subsidy, the investigation may be limited to a reasonable number of interested parties, transactions or products based on statistically valid sampling techniques (based on the information available at the moment the sample is selected) or to the largest volume of production, sales or exports which is representative and which can be investigated within the time-limits of the investigation. (Dec. 1751/95 - Art. 20.1).
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