Ecuador

I. Legal Authority to Impose Antidumping and Countervailing Duties

A. Treaties or Agreements

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.

B. Legislation

   Law No. 12 of 22 May 1997, published in Official Journal No. 82 of 9 June 1997, the Foreign Trade and Investment Law, "LEXI", entered into force in Ecuadorian territory and authorizes the Foreign Trade and Investment Council (COMEXI) to impose anti-dumping duties countervailing duties and safeguard measures.

C. Regulations

   Law No. 12 of 22 May 1997, published in Official Journal No. 82 of 9 June 1997, the Foreign Trade and Investment Law, "LEXI", entered into force in Ecuadorian territory and authorizes the Foreign Trade and Investment Council (COMEXI) to impose anti-dumping duties, countervailing duties and safeguard measures.

D. Administrative Practice, Handbook or Guide

II. Authorities Responsible for Conducting Investigations

A. Injury

B. Antidumping and Countervailing Duties

   The Trade Practices and Safeguards Division of the Ministry of Foreign Trade, Industrialization and Fisheries (MICIP), is responsible for initiating and conducting dumping, subsidies and safeguard investigations.

III. Methodologies/Definitions

A. Like Product

   A product which is alike in all respects to the product under investigation, or a product which, although not alike in all respects to the product under consideration, has characteristics which are similar to or closely resemble those of the comparable product and allow it to perform the same functions.

B. Domestic Producers

   The term "domestic industry" shall be interpreted as referring to domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of these products.

C. Standing

D. Polling

E. Normal Value

   An import is considered as being at a dumped price if the export price is less than the normal value of a like product destined for consumption in the country of origin or of export in the ordinary course of trade, when compared at the same market level. The normal value of a product exported to Ecuador is the price actually paid or payable for a like product when sold for consumption or use in the domestic market of the country of origin or of export in the ordinary course of trade. In the absence of such ordinary course of trade, as in the case of centrally-planned economies, the point of reference shall be the normal value of a market economy country with characteristics similar to the country with a centrally planned economy that is under investigation.

   The following shall be taken into account for the purposes of determining the normal value:

         1. When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits.

         2. Sales of the like product 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, selling and general 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 the authorities determine that such sales are made within an extended period of time in substantial quantities and are at prices which do not provide for the recovery of all costs within a reasonable period of time.

   If prices which are below per unit price at the time of sale are above weighted average per unit costs for the period of investigation, such prices shall be considered to provide for recovery of costs within a reasonable period of time.

   Costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration.

   Authorities shall consider all available evidence on the proper allocation of costs, including that which is made available 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.

   Unless already reflected in the cost allocations under this paragraph, costs shall be adjusted appropriately for those non-recurring items of cost, which benefit future and/or current production, or for circumstances in which costs during the period of investigation are affected by start-up operations. The amounts for administrative, selling and general 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 producer in question in respect of production and sales in the domestic market of the country of origin of the same or general category of products;

         (b) the weighted average of the actual amounts incurred and realized by other exporters or producers subject investigation in respect of production and sales of the like product in the domestic market of the country of origin;

         (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 country of origin.

F. Calculation of Cost of Production

   The production cost includes the cost of direct materials and components, indirect manufacturing costs, including general selling and administrative costs.

G. Export Price

   The price actually paid or payable for the product sold for export to Ecuador. In cases where there is no export price or where it appears to the investigating authority 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 basis of the price at which the imported products are first resold to an independent buyer, or if the products are not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as the authority may determine.

H. Export Price - Adjustments

   In making a fair comparison between the normal value and the export price, the following, inter alia, shall be deducted in the form of adjustments to the export price:

         (a) The amounts directly connected with the costs incurred by the exporter, taking into account conditions agreed with the buyer for delivery of the product (f.o.b.,c.i.f.,etc);

         (b) the amounts for direct costs in providing guarantees, technical assistance and other after-sales services;

         (c) the costs of commission paid in connection with the sales under consideration;

         (d) wages paid to full-time sales personnel.

   The investigating authority may consider other reasonable adjustments, for which purpose it shall consider the terms and conditions of sale, differences in quantities, physical differences and differences in taxation. The export price and the normal value shall be examined on a comparable basis, taking into account the agreed conditions for the delivery of the goods, preferably at the ex-factory level and in respect of sales made at as nearly as possible the same time.

   The amount of the adjustments to the normal value and the export price shall be calculated on the basis of relevant information for the period of investigation of the practice or in the light of the data for the latest financial year available. When an interested party asks for a particular adjustment to be taken into consideration, it shall provide the corresponding evidence.

I. Injury

   A significant overall impairment in the position of a domestic industry.

   A material loss or impairment or the deprivation of any lawful, normal gain which the domestic producers of the goods in question may suffer, or an impediment to the establishment of new industries. A determination of injury shall be based on sufficient evidence and involve an objective examination of the following factors. The volume of imports at dumped or subsidized prices, particularly to determine whether there has been a significant increase, in absolute terms or relative to total production or consumption in Ecuador of the product concerned. The impact which the importation of dumped or subsidized goods has or may have on the prices of like products in the Ecuadorian domestic market.

   Consideration shall be given in this respect to whether the imported product is sold in the domestic market at a price significantly lower than that of like products or whether the effect of such imports is to depress prices to a significant extent or to prevent a reasonable price rise which would otherwise have taken place. The impact which dumped or subsidized imports have on the domestic producers affected, taking account of the impact on output, utilization of installed capacity, inventories, sales, market share, growth, profits, return on investments, cash flow, capitalization, employment and wages, among other factors. Period of review of injury or threat thereof.

   The review of the injury or threat of injury shall comprise a period covering imports of the like product in the last twelve (12) months for which information is available.

   The investigating authority may modify such period or extend it to cover imports made before and/or after the initiation of the investigation. If the investigation relates to products originating in or consigned from countries in respect of which there are no applicable international obligations, consideration shall be given to whether the country of export or of origin would provide evidence of injury to Ecuadorian exports. If such evidence is not provided, Ecuador may impose anti-dumping or countervailing duties simply on a finding of dumping or subsidization.

J. Threat of Injury

   Threat of a serious injury shall be understood to mean serious injury to a domestic industry that is clearly imminent, and it shall be based on facts and not merely on allegation, conjecture or remote possibility. Threat of injury is an imminent and clearly foreseen danger of injury to a domestic industry. A determination of a threat of injury to domestic industry shall be based on facts and not merely allegation, conjecture or remote possibility.

   The change in circumstances which would create a situation in which the subsidy would cause injury must be clearly foreseen and imminent.

   In making a determination regarding the existence of a threat of material injury, the authorities should consider, inter alia, such factors as:

               
• Nature of the practice in question and the trade effects likely to arise from the dumping and the subsidization;
                 
• a significant rate of increase of dumped or subsidized imports into the domestic market indicating the likelihood of substantially increased importation
                 
• sufficient freely disposable, or an imminent substantial increase in, capacity of the exporter indicating the likelihood of substantially increased subsidized exports to the Ecuadorian market in unfair conditions, taking into account the availability of other export markets to absorb any additional exports;
                 
• whether the imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and
                 
• inventories of the product being investigated.

   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 exports at dumped and subsidized prices are imminent and that, unless protective action is taken, material injury would occur.

   With respect to cases where injury is threatened by dumped or subsidized imports, the application of anti-dumping or countervailing measures shall be considered and decided with special care. The review of the injury or threat of injury shall comprise a period covering imports of the like product in the last twelve (12) months for which information is available.

   The investigating authority may modify such period or extend it to cover imports made before and/or after the initiation of the investigation.

K. Material Retardation

   For the purposes of determining material retardation of the establishment of an industry in Ecuador, the investigating authority shall examine, inter alia, feasibility studies, loans negotiated and contracts for procurement of machinery related to new investment projects or the expansion of existing plant.

L. Cumulation

M. De Minimis Provision

1. Antidumping

   The following criteria shall be taken into account:

         1. In the case of dumped imports, the following shall be considered eligible:

               
• The volume of dumped imports from a particular country accounting for less than 3 per cent of imports of that product.
                 
• The volume of dumped imports from countries which individually account for less than 3 per cent of the imports of the like product and collectively represent less than 7 per cent of those imports.

         2. In the case of subsidized imports, the following shall be considered negligible:

               
• The volume of subsidized imports from a particular developed country accounting for less than 3 per cent of total imports of that product.
                 
• The volume of subsidized imports from developed countries which individually account for less than 3 per cent of imports of the like product and collectively represent less than 7 per cent of those imports.
                 
• The volume of subsidized imports from a particular developing country accounting for less than 4 per cent of total imports of that product.
                 
• The volume of imports from developing countries which individually account for less than 4 per cent of imports of the like product and collectively represent less than 9 per cent of those imports.

         3. A margin of dumping of less than 2 per cent, expressed as a percentage of the export price, shall be considered de minimis.

         4. Subsidies granted to the investigated product shall be considered de minimis if their global level calculated on a per unit basis is less than:

               
• 1 per cent of the value of the product in the case of imports originating in developed countries;
                 
• 2 per cent in the case of imports originating in developing countries;
                 
• 3 per cent in the case of imports originating in the developing countries referred to in Article 27.11 of the Agreement on Subsidies and Countervailing Measures of the World Trade Organization.

2. Countervailing

   Same provisions as in the previous section.

N. Margin of Dumping

   The margin of dumping is defined as the difference between the normal value and the export price, calculated with reference to the latter price.

   The margin shall be calculated per unit of the product imported into Ecuadorian territory at the dumped price. Where the product under investigation consists of goods which are not physically identical with each other, the margin of dumping shall be estimated according to the type of good, in such a way that the normal value and the export price involved in each calculation correspond to comparable goods.

   When the margin of dumping is calculated by the type of good, the margin for the product under investigation shall be determined as the weighted average of all the individual margins which have been estimated.

   The weighting shall be calculated according to the proportion of each type of good relative to the total volume of the product exported during the period of investigation.

   In submitting its conclusions, the investigating authority shall be responsible for recommending the amount of the anti-dumping or countervailing duties applicable, taking into account the difference between the normal value and the export price of the product or the amount of the subsidy, as the case may be, and the level of injury caused to the domestic industry. In no case may the anti-dumping or countervailing duties be greater than the margin of dumping or the amount of the subsidy. It is desirable that the amount of the duty be less than the full margin of dumping or the total amount of the subsidy if such lesser duty would be adequate to remove the injury to the domestic industry, and that the imposition be permissive in the territory of all members.

O. Subsidy Rate

IV. Steps of the Investigation

A. Petition Filing

   Proceedings to investigate unfair international trade practices shall be initiated ex officio or at the request of a major proportion of the domestic industry. The investigating authority may initiate an investigation ex officio, when there is sufficient evidence to assume that injury has been caused by dumped or subsidized imports. Investigations to determine the existence, degree and effect of any alleged unfair practice shall be initiated upon a written application by or on behalf of the domestic industry.

   The application may also be made by an association of producers which, for the purposes of the application, represents a major proportion of domestic production. An investigation shall not be initiated unless the authorities have determined, on the basis of an examination of the degree of support for, or opposition to, the application, expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry.

   The application shall be considered to have been made "by or on behalf of the domestic industry" if it is supported by those domestic producers whose collective output constitutes more than 50 per cent of the total production of the like product produced by the part of the domestic industry expressing either support for or opposition to the application.

   However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25 per cent of the total production of the like product produced by the domestic industry. When domestic producers are related to the exporters or importers of the allegedly dumped or subsidized product, the term "domestic industry" may be interpreted as referring to the rest of the producers.

   The word "related" shall be within the meaning of Article 4.1(i) of the Anti-Dumping Agreement. In exceptional circumstances, in the case of regional markets, domestic industry may be divided into two or more separate markets.

   The producers within each market may be regarded as a separate domestic industry if they sell most of their production of the product in question in that market and if the demand in that market is not to any substantial degree supplied by the producers of the product in question located elsewhere in the country.

   In such circumstances, injury or threat of injury may be found to exist even where a major portion of the total domestic industry is not injured, provided there is a concentration of dumped or subsidized imports into that regional market and they cause or threaten to cause injury to the producers of all or almost all the production within such market. The application must be submitted in writing, using the forms prepared for the purpose and issued to the interested party by the investigating authority, and the requisite documents shall be attached.

   The application shall contain the information reasonably available to the applicant on the following:

         1. Identity of the applicant, name or business name and domicile of the applicant, and where appropriate, his agent; activity in which he is engaged and documents in support thereof.

         2. Description of the volume and value of the domestic production of the like product, indicating the specifications and characteristics, the tariff heading and other identifying data.

         3. Where a written application is made on behalf of the domestic industry, the application shall identify the industry on behalf of which the application is being made by a list of all known domestic producers of the domestic product (or associations of domestic producers of the like product) and, to the extent possible, a description of the volume and value of domestic production of the like product represented by such producers.

         4. The names of the country or countries of origin or export in question.

         5. The identity of each known foreign exporter or producer.

         7. Information on prices at which the product in question is sold when destined for consumption in the domestic markets of the country or countries of origin or export (or, where appropriate, information on the prices at which the product is sold from the country or countries of origin or export to a third country or countries, or on the constructed value of the product) and information on export prices or, where appropriate, on the prices which the product is first resold to an independent buyer in the territory of the importing Member.

         8. Information on the evolution of the value and volume of the imports of the allegedly dumped or subsidized product.

         9. The effect of the imports on the prices of the like product in the domestic market.

         10. The impact of the imports on the domestic industry, as demonstrated by relevant factors and indices having a bearing on the state of the domestic industry, such as actual and potential decline 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.

         11. In the case of a subsidy, the application must identify the encouragement, incentive, premium, subsidy or help of any kind provided to the imported good or its raw materials and inputs in the country of origin or of export, the authority or agency providing such support, indicating where appropriate the applicable law and, where possible, the value or amount thereof and its impact on the price of the imported product.

         12. Determination of the injury, threat of injury or material retardation of the establishment of a productive activity in Ecuador, caused by the imports at dumped or subsidized prices.

         13. Evidence and documents to verify the information provided and arguments in support of the need to apply anti-dumping duties or countervailing duties.

         14. Elements to determine the causal relationship between the practice and the injury.

         15. The investigating authority shall require interested parties making available confidential information to provide non-confidential summaries thereof.

         16. Other relevant information deemed necessary.

         17. Place and date of submission of the application.

         18. A study justifying the presumption of injury to domestic production caused by the unfair practice.

   All the information on volumes and values submitted to the investigating authority by the applicant enterprise shall pertain to the previous four years and to the part of the current year of the investigation that has elapsed so far. The application shall be submitted to the Trade Practices and Safeguards Division of the Ministry of Foreign Trade, Industrialization and Fisheries, in the original and with two copies.

   On receipt of the application to impose anti-dumping or countervailing duties, the investigating authority shall have thirty (30) days from the date of receipt to evaluate and review compliance with the requirements and shall inform the applicant whether the application is accepted or not. When, in the opinion of the investigating authority, there is good reason to do so, the above period may be extended by up to fifteen (15) working days. If, within that period, the investigating authority finds it necessary to request further information for the purposes of acceptance of the application, it shall do so from the applicant.

   Such request shall interrupt the period established in the above paragraph, which shall recommence when the applicant provides the information requested. Once the information has been obtained, the investigating authority shall, within the above-mentioned period, proceed to accept the application. Any application to be submitted to the General Secretariat of the Andean Community for the initiation of an investigation and the application of anti-dumping duties, countervailing duties or safeguard measures to a product originating in the Andean subregion must be channeled through the investigating authority of Ecuador, subject to compliance with all the formal requirements established, for each case, in this resolution.

   Within fifteen (15) working days of receiving the corresponding documentation, the investigating authority shall verify compliance with the application requirements and, if these have all been met, shall immediately transmit the file to the General Secretariat of the Andean Community.

   If the application does not meet the requirements, it shall be returned to the applicant for revision.

   Once the final result of the investigation by the General Secretariat of the Andean Community is known, the Ministry of Foreign Trade shall notify the Customs Technical Committee for implementation of the measure, if the General Secretariat has so determined.

B. Initiation of Investigation

   The application shall be accepted and a dumping or subsidies investigation shall be initiated, provided:

         
• It is established that the application is submitted on behalf of a major proportion of the domestic industry;
           
• the information, documents and the study submitted are sufficient to presume or to determine the existence of an unfair practice, injury to the domestic industry and the causal relationship between the unfair practice and the injury.

   The MICIP Under-Secretary for Foreign Trade and Integration shall declare that it is appropriate to initiate a dumping or subsidization investigation, in a resolution that indicates the de facto and de jure reasons for the decision. An investigation shall not be initiated in cases where the volume of dumped or subsidized imports is negligible, or where the margin of dumping or global level of subsidization is de minimis or where the injury caused by the imports in question is negligible. For such purposes, the criteria set out in Article 36 [sic] of this Resolution shall apply.

   Where it is not appropriate to initiate an investigation, this shall be so stated in a reasoned resolution, which shall be notified to the applicant within five (5) working days following the date of issue.

   The permissible legal remedies against such a resolution shall apply. When the application is accepted, in the course of the investigation into dumping or subsidization practices the investigating authority shall hold consultations with the parties concerned, namely, the government authorities and the exporters of the exporting country, and the importers and domestic producers of the product in question, in order to find a mutually agreed solution.

   Where, in the process of the consultations a mutually agreed solution is reached between the parties, the initiation of an investigation shall be declared inappropriate or the investigation shall be suspended.

   If, after one month from the commencement of the consultations no mutually agreed solution has been reached, the investigation shall be continued. Notwithstanding the provisions of this Article, the Ministry of Foreign Trade may arrange consultations throughout the period of the investigation, but this shall not suspend or prevent continuation of the investigation. When the investigation is initiated, the investigating authority shall prepare a file containing all the information pertaining to the case.

   The file shall include a separate section containing information of a confidential nature.

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