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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.
Law 7 (1991) orders the National Government to regulate the protection of domestic production against unfair international trade practices and set the requirements, procedures, and factors to determine the corresponding imposition of duties.
Law 170 of December 15, 1994, which incorporates into domestic law the Agreement establishing the World Trade Organization (WTO) and the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, in order to counter dumping practices by imposing antidumping duties.
Decree 991 of 1998 regulates the application of antidumping duties.
The provisions set forth in Decree 991 of 1998 shall apply pursuant to Colombia's obligations deriving from the international agreements to which it is party, in particular the Agreement establishing the World Trade Organization done at Marrakesh April 15, 1994, including the General Agreement on Trade and Tariffs of 1994 (1994 GATT) and the Agreement on the Implementation of Article VI of the GATT of 1994 attached to it.
INCOMEX prepared a practical handbook on dumping and subsidies to explain the procedures and conditions to be used in aplying measures of this nature, which has been distributed to relevant actors involved in foreign trade.
It also has a guide on the procedures and documents that must be submitted in making requests for investigations of dumping and subsidies, which is delivered to the petitioners, prior to the official presentation of the request.
II. Authorities Responsible for Conducting Investigations
The investigations referred to in Decree 991 shall be carried out by the Colombian Foreign Trade Institute (INCOMEX: Instituto Colombiano de Comercio Exterior) and shall be undertaken in the general interest.
Antidumping duties shall be imposed in the general interest, for corrective or preventive purposes, whenever dumping exists, and in general on any importer of the goods affected by such duties. The duties are imposed with respect to a country and, if appropriate, especially to the producers and exporters of that country.
Preventive: INCOMEX Corrective: MINISTRY OF FOREIGN TRADE.
B. Antidumping and Countervailing Duties
Antidumping and countervailing duty investigations are to be conducted by the Colombian Foreign Trade Institute, INCOMEX which is also authorized, and the competent authority, to impose provisional findings.
A. Like Product
Like product is understood to mean an identical product, i.e. alike in all aspects to the product in question, or, when no such product exists, another product which, though not alike in all respects, has characteristics very similar to those of the product in question.
B. Domestic Producers
For the purposes of this decree, the expression "branch of domestic production" shall be understood to encompass all of the domestic producers of like products, or those among them whose collective output constitutes a major proportion of the total domestic production of those products. Nonetheless, when some producers are related to the exporters or importers, or are themselves importers of the product allegedly dumped, the expression "branch of domestic production" may be interpreted to refer to the rest of the producers.
In exceptional circumstances, the national territory may be divided, for the purposes of the production in question, into two or more competing markets, and the producers of each market may be considered as a distinct branch of production if:
(a) the producers in that market sell all or almost all of their production of the product in question in that market, and
(b) in that market, demand is not substantially covered by producers of the product in question situated in another part of the territory.
In these circumstances, one may consider that there is injury even when a significant part of the total branch of domestic production is not injured so long as there is a concentration of the dumped imports in that isolated market and, moreover, the dumped imports cause injury to the producers of all or almost all of the production in that market.
A request shall be considered to have been made by or on behalf of the domestic indsutry, based on the degree of support of domestic producers of the like product, the product having presumably been imported at dumping prices.
INCOMEX shall request domestic producers for written support of the request in order to substantiate this standing. The silence of a producer shall only indicate a lack of interst on the part of the producer and shall not be interpreted as a declaration of support or opposition.
In order to initiate an investigation, it shall be considered that the request is made by or on behalf of the industry when it is supported by domestic producers whose joint production represents more than 50 percent of the total production of the like product produced by the part of the domestic industry that indicated its support or opposition to the request. Nonetheless, no investigation shall be initiated when the domestic producers who expressly support the request represent less than 25 percent of the total production of the like product produced by the domestic industry.
In the case of fragmented industries that entail an unusually large number of producers, INCOMEX shall determine the degree of support and opposition by using statistically valid sampling techniques.
In the case of fragmented branches of production that entail an unusually large number of producers, INCOMEX shall determine the degree of support and opposition by using statistically valid sampling techniques.
E. Normal Value
A product shall be considered to be dumped, i.e. brought into the Colombian market at a price below its normal value, when its export price, upon export to Colombia, is less than the comparable price in the course of normal operations of a like product sold for consumption in the exporting country.
Normal value is the comparable price actually paid or to be paid for the product like the product exported to Colombia, when it is sold for consumption in the country of origin or export. Where none is available, the normal value shall be established bearing in mind the price of export to a third country or the constructed value.
In the case of a centrally-planned economy, the normal value shall be the domestic price or export price in a third country with a market economy. Normal value is understood to mean the price actually paid or to be paid for a product like that imported into Colombia when it is sold for consumption in the domestic market of the country of origin or export, in normal commercial operations.
When the like product is not sold in the course of normal commercial operations in the domestic market of the country of origin or export, or when, because of the low volume of sales in the domestic market of the country of origin or export, or a special situation in the market, they do not allow for an adequate comparison, the normal value may be obtained as follows:
This shall be obtained from the cost of production in the country of origin, plus a reasonable margin for administrative and sales expenses, and profit. For this purpose, the data from the producer of the product under investigation, or average figures from the data of other producers of goods like that under investigation, or arrived at by another reasonable method, shall be taken into account. The profit shall not be greater than what is generally obtained in the sale of products of the same category in the domestic market of the country of origin. Normally a quantity sufficient to determine the normal value shall be considered to be the sales of the like product sold for consumption in the domestic market of the exporting country, if those sales represent five percent or more of the sales of the product in question to Colombia; nonetheless, a lesser proportion shall be accepted when there is evidence showing that the sales in the domestic market, though they represent such a lesser proportion, are of sufficient magnitude to allow for an adequate comparison.
Without prejudice to the provisions of the previous article for calculating the normal value, all those sales in the country of export or origin, or exports to third countries, that do not constitute normal commercial operations, and specifically those that reflect the losses sustained, may be excluded. Sales that reflect losses sustained shall be understood to mean those in which the weighted average of the prices is less than the weighted average of the unit costs, and that such sales have been made within a time period that will normally be one year and never less than six months, and when the sales are undertaken in such conditions that they account for a significant volume, i.e. not less than 20% of the total sales volume considered in calculating the normal value.
For imports from or originating in countries with centrally-planned economies, the normal value shall be obtained based on the comparable price in the course of normal commercial operations at which a like product is actually sold in a third country with a market economy, for domestic consumption, or, if there is none, for export, or based on any other measure deemed appropriate by the investigating authority.
In these cases, in selecting and evaluating the advisability of selecting a given country with a market economy as the basis from which the normal value shall be obtained, INCOMEX should bear in mind the following criteria, among others:
1) the production processes in the country with a market economy and the country with the centrally-planned economy;
2) the scale of production;
3) the quality of the products.
For the purposes of the provisions of Article 12 of this decree, INCOMEX may make adjustments related to the following factors, among others:
1. The amount corresponding to a reasonable estimate of the value of the difference in the characteristics of the product in question.
2. The amount corresponding to the import duties or indirect taxes that must be paid by a like product and the materials physically incorporated into it, when sold for consumption in the country of origin or export and that are not paid or are returned when the product is exported to Colombia.
3. The following sales expenses:
In order to determine the normal value in investigations of products from countries with which Colombia has not signed trade treaties or agreements, INCOMEX may select, without conditions, either the price paid when the like product is sold for consumption in the domestic market of the country of origin or the exporting country, in the course of normal trade, or the representative price or the calculated price of a like product.
In determining the normal value, INCOMEX may depart from the criteria established in Article 9 of Decree 991/98 to exclude sales in the country of origin or the exporting country.
F. Calculation of Cost of Production
The calculated price of a like product shall be based on the cost of production in the country of origin, plus a reasonable margin for administrative costs and sales, as well as for profit.
For this purpose, consideration shall be given to data from the producer of the product under investigation, or to the average of data from other producers of goods similar to the one under investigation, or another reasonalbe method may be sued.
The profit or benefit shall not be higher than the one usually obtained from the sale of products of the same category in the domestic market of the country of origin.
G. Export Price
When there is no export price, or when in the view of INCOMEX the export price is not reliable because of an association, relationship, or compensatory arrangement between the exporter and importer or a third party, the export price may be calculated based on the price at which the imported products are sold for the first time to an independent buyer.
If the products are not sold to an independent buyer or the sale is not done in the same conditions in which they were imported, the price may be calculated on a reasonable basis to be determined by INCOMEX. On calculating the export price, the necessary adjustments shall be made to take account of all the expenditures incurred up to sale including, among others: the costs of transportation, insurance, maintenance, loading and unloading; the import duties and other taxes incurred after export from the country of origin, a reasonable margin of general, administrative, and sale-related expenses, a reasonable margin of profit, and any fee habitually paid or agreed upon.
H. Export Price - Adjustments
The export price and the normal value should be examined on a comparable basis, bearing in mind the conditions agreed upon for delivery of the goods, preferably ex-factory, and based on operations undertaken on the most recent possible dates.
In addition, INCOMEX, depending on the particular circumstances, shall make adjustments to offset the differences that affect price comparability.
To this end, the following aspects should be taken into account, as appropriate: When the comparison of the normal value, export price, and adjustments that need to be made requires a conversion of currencies, it should be done using the exchange rate on the date of sale, with the caveat that when a sale of foreign currency in the futures markets is directly related to the export sale in question, the exchange rate of the futures sale shall be used.
The fluctuations in exchange rates shall not be taken into account, and in an investigation the authorities shall give the exporters at least 60 days to adjust their export prices so as to reflect sustained movements in the exchange rates during the period under investigation. When the export price has been constructed, and price comparability has been affected accordingly, INCOMEX shall establish the normal value at a commercial level equivalent to that for the reconstructed export price, or it shall take due account of the elements of adjustment that may be taken into consideration pursuant to this decree. In order to establish a valid comparison between the normal value and the export price, adjustments may be made to offset, among others, the differences in the conditions of sales and taxation, the differences in levels of trade, in the amounts, and in the physical characteristics, and any other differences also shown to affect price comparability. The amount of the adjustments shall be calculated based on the relevant information for the period under investigation of the practice, or taking into account the data from the last economic year for which they are available.
Some of the factors indicated in Articles 13 and 14 of this decree may overlap, and INCOMEX should ensure that the adjustments already made are not duplicated. When in an investigation an interested party requests that some adjustment be taken into consideration, it shall bear the responsibility for submitting the evidence justifying such a request.
For the purposes of the provisions of the previous article, INCOMEX may make adjustments, among others, related to the following factors:
In those cases in which the export price is constructed, consideration should also be given to the expenditures, including duties and taxes, incurred between import and re-sale, as well as profit.
Unless otherwise indicated, this concept refers to significant injury caused to a branch of domestic production, a threat of significant injury, or a significant delay in the establishment of such a branch of production. The determination of the existence of the injury should be based on sufficient evidence and shall include an objective examination of the following factors:
1. Performance of all the economic factors and indices that influence the real and potential diminution in sales, profits, volume of output, market share, productivity, return on the investments, or use of capacity; the factors that affect domestic prices; the extent of the margin of dumping; the real or potential negative effects on cash flow, stock, employment, salaries, growth, and the capacity to mobilize capital or investment. This list is not exhaustive and none of these factors in isolation nor several of them together will necessarily suffice to obtain a decisive orientation.
2. Volume of dumped imports, particularly to determine whether they have increased significantly in absolute terms and in relation to total production or consumption in the importing country, among others. Normally the volume of imports subject to dumping will be considered insignificant when it is determined that the imports from a given country account for less than three percent of the imports of the like product in Colombia, unless the countries that individually account for less than three percent of the imports of the like product in Colombia, when taken together, account for more than seven percent of those imports.
3. To determine the effect of the dumped imports on prices, INCOMEX shall take into account, among other factors, whether there has been a significant undervaluing of prices of the dumped imports as compared to the price of a like product manufactured in Colombia, or whether the effect of such imports is to otherwise lower prices significantly or impede, to the same extent, an increase that otherwise would have occurred.
4. The showing of a causal relationship between the imports subject to dumping and the injury to the branch of domestic production shall be based on an examination of all relevant evidence that INCOMEX has and shall include, among other considerations, an evaluation of all the relevant economic factors and indices discussed at paragraphs 1, 2, and 3 of this article.
INCOMEX shall also examine any other known factors distinct from the dumped imports which also injure the branch of domestic production, and the damages caused by those other factors that should not be attributed to the dumped imports.
Among the factors that may be relevant in this respect are the volume and prices of the imports not sold at dumping prices, contraction of demand or changes in the structure of consumption, any restrictive trade practices of the foreign and domestic producers, and the competition between them, technological advances, and net earnings from export activity, and the productivity of the branch of domestic production. The effect of the dumped imports shall be evaluated in relation to the domestic production of the like product when available data make it possible to identify it separately using criteria such as the production process, producer sales, and producer profits.
If it is not possible to make such a separate identification of that production, the effects of the dumped imports shall be evaluated by examining the production of the most restricted group or array of products that includes the like product and in respect of which the necessary information can be provided. The absence of negative trends or the presence of positive trends in any or several of the factors considered in this article is not decisive in determining the existence of significant injury and the causal relationship between dumped imports and that significant injury.
J. Threat of Injury
To determine the threat of significant injury by the dumped imports, consideration shall be given to the imminent effects on the factors indicated in Article 16 of this decree, including the following, among others:
1. A significant rate of increase of the dumped imports in the domestic market that indicates the likelihood of a substantial increase in imports. The likelihood of a substantial increase in imports may also be determined based, among others, on the following facts:
2. The fact that imports are made at prices that will have the effect of driving down or significantly containing the increase of the domestic prices or sales volumes of the domestic producers, and which will likely make the demand for new imports increase; and,
3. The inventories in the country exporting the product under investigation.
None of these factors alone will necessarily suffice to obtain a decisive orientation, but taken together they should lead to a conclusion as to the imminence of new exports at dumping prices and whether, unless corrective measures are adopted, significant injury will ensue. The causal relationship between dumped imports and the threat of significant injury shall be evaluated mindful of the likely effects on the economic factors and indices and consistent with the provisions of the fourth paragraph of the previous article.
K. Material Retardation
To determine significant delay in the establishment of a branch of production in Colombia, INCOMEX shall examine the following factors, among others:
1. The feasibility studies, loans negotiated, and/or contracts for the purchase of machinery leading to new investment projects or to expand existing plants.
2. The existence of dumped imports.
3. Adequate and sufficient supply of the market, considering the volume of imports being dumped and the volume of all other imports, the volume of existing production, and the project's potential.
The causal relationship between dumped imports and significant delay in establishing a branch of domestic production shall be evaluated pursuant to the provisions of the fourth paragraph of Article 16 of this decree. None of these factors alone will necessarily suffice to obtain a decisive orientation.
When the imports of a product from more than one country are subject to antidumping investigations, INCOMEX may cumulatively evaluate the effects of those imports if it determines that: the margin of dumping established in relation to the imports of each supplier country is more than de minimis, defining this term as in the paragraph of Article 15 of this decree, and the volume of imports from each country is not insignificant, as provided in the second paragraph of Article 16 of this decree, and a cumulative evaluation should be undertaken of the effects of the imports in light of the conditions of competition between the imported products and the like domestic product.
M. De Minimis Provision
An investigation may be concluded at any time, among other reasons, when the margin of dumping is de minimis or the volume of imports is insignificant.
The amount of the subsidy shall be considered de minimis if it is less than 1 percent ad valorem.
N. Margin of Dumping
This shall be the amount by which the normal value exceeds the export price.
Said margin shall be calculated by unit of the product imported to the national territory at dumping prices.
Without prejudice to the provisions of Article 11 to 14 of Decree 991/98, the margin of dumping shall normally be established by comparing a weighted average of the normal value and a weighted average of the prices of all comparable export transactions, or by comparing the normal value and export prices, on a transaction by transaction basis.
The margin of dumping may be calculated by comparing the normal value established on the basis of the weighted average and the individual export prices if INCOMEX finds a pattern of export prices that are significantly different for the different buyers, regions, or periods, and if an explanation is given as to why those differences cannot be duly taken into account by a comparison between weighted averages or on a transaction-by-transaction basis.
O. Subsidy Rate
The amount of a duty may generally be expressed in one of the following forms, or in a combination of same, if necessary: in ad-valorem percentage; or in accordance with a base price.
If there are no applicable international obligations on this matter, countervailing duties may be determined, prior to the establishment of the subsidy, and consideration will be given as to whether the exporting country or the country of origin would provide evidence of injury to Colombian exports.
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