Institutional and Substantive Reform of the Anti-Dumping and Subsidy Agreements - Lessons from the Israeli Experience

Abstract

הגירסה העברית של מאמר זה ניתן למצוא ב:http://ssrn.com/abstract=2244182

This article proposes several amendments to the Anti-Dumping (AD) Agreement and the chapter on Countervailing Duties (CVD) of the Subsidies Agreement, drawing from the experience of the State of Israel in AD and CVD administration over more than a decade. In particular, the Article argues for the need for international regulation of the institutional settings of such administration within Member States. To this end, provisions should be added to the relevant WTO agreements that relate to the nature and composition of the national administering authorities, with the guiding principle being to ensure independence of the authorities and objectivity, fairness and transparency of their investigations and determinations. International Law must try to guarantee that these authorities are immune to political pressures from interested parties. I suggest that the authority in these matters be transferred to independent, quasi-judicial bodies, as opposed to administrative agencies that are part of government ministries or controlled by them or by political organs. I argue, based on reason, as well as on evidence from several countries, that such bodies are more likely to produce balanced decisions, taking into account interests of both domestic industry and consumers, and also show that there are precedents within existing WTO law of such institutional regulation. I then proceed to discuss amendments of the substantive law, particularly in relation to the definition of dumping. Here I propose granting clear priority to the establishment of normal value on the basis of actual sales by the foreign producer in his home market, and to restrict the use of the other options offered by the AD Agreement. To this end, I suggest, inter alia, to abolish or restrict the use of the methodology that allows sales made at prices below per unit (fixed and variable) costs of production to be treated as not being "in the ordinary course of trade" by reason of price and therefore disregarded in determining normal value. With respect to the assessment of AD and CV duties, I recommend to require compliance with the "Lesser Duty Rule." I present statistical data from Israel, which shows the significant influence that the application of this Rule has had on the rate of AD duties in Israel. I further recommend the adoption of the Israeli methodology on how to apply the Rule, namely to generally base the calculation upon the price undercutting rate, and not on a target price. In view of the fact that anti-dumping and anti-subsidy procedures and measures are on the rise, and that more and more countries adopt such procedures based on the WTO Anti-Dumping and Subsidies Agreements, it is exceedingly important that these agreements are amended so as to minimize the damage to international trade caused by their use, while at the same time preserving them as a safeguard measure that will allow continued multilateral trade liberalization. This article suggests some ways in which this could be achieved.

Keywords: Anti-Dumping, Countervailing Duties, WTO, Institutional Reform, Israel, Doha Round, Anti-Dumping Agreement, Agreement on Subsidies

JEL Classification: K33, F13