TRADE REMEDY MEASURES & THEIR APPLICATIONS by: Mr. Mohamed - - PowerPoint PPT Presentation

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TRADE REMEDY MEASURES & THEIR APPLICATIONS by: Mr. Mohamed - - PowerPoint PPT Presentation

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TRADE REMEDY MEASURES & THEIR APPLICATIONS by: Mr. Mohamed Shahabar Abdul Kareem Trade Practices Section 11 November 2014 Driving Transformation, Powering Growth Driving Transformation, Powering Growth 1 Outline Anti-dumping;

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TRADE REMEDY MEASURES & THEIR APPLICATIONS

by:

  • Mr. Mohamed Shahabar Abdul Kareem

Trade Practices Section

11 November 2014

‘Driving Transformation, Powering Growth’

Driving Transformation, Powering Growth 1

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SLIDE 2

Outline

  • Anti-dumping;
  • Countervailing; and
  • Safeguards
  • - bilateral safeguard

2 Driving Transformation, Powering Growth

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LEGAL INSTRUMENTS

3 Driving Transformation, Powering Growth

  • WTO Agreement on Implementation of Article VI
  • f GATT 1994 (ADA)
  • Countervailing & Anti-Dumping Duties Act 1993
  • Countervailing & Anti-Dumping Duties

Regulations 1994

Anti-dumping

  • WTO Agreement on Subsidies and Countervailing

Measures (ASCM)

  • Countervailing & Anti-Dumping Duties Act 1993
  • Countervailing & Anti-Dumping Duties

Regulations 1994

Countervailing

  • WTO Agreement on Safeguards
  • Safeguards Act 2006
  • Safeguards Regulations 2007
  • ACFTA Regulation 2013 – Gazetted 2 Sept. 2013

P.U. (A)

Safeguard

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PART 1: ANTI-DUMPING

4 Driving Transformation, Powering Growth

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  • To address UNFAIR trade practices.
  • What is “DUMPING “?:

– When the export price is lower than the price in the domestic market (normal value) of the foreign producer; – “Dumping margin” is the difference between domestic market price and export price

5 Driving Transformation, Powering Growth

LEGAL INSTRUMENTS

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SLIDE 6

6 Driving Transformation, Powering Growth

ANTI-DUMPING

FUNDAMENTALS OF ANTI-DUMPING INVESTIGATION

Standing of the Domestic Industry

Dumped Imports Magnitude of Injury Causal Link

IMPORTANT!

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SLIDE 7

7 Driving Transformation, Powering Growth

ANTI-DUMPING

STANDING OF DOMESTIC INDUSTRY

  • A dumping investigation can normally be initiated upon

receipt of a written application BY or ON BEHALF of “DOMESTIC INDUSTRY”.

  • The application must meet the following conditions:

> 50%

A A+B

> 25%

A A+B+C

&

  • Domestic producers:

A – Petitioner and Supporter B – Oppose C – Neutral

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SLIDE 8

8 Driving Transformation, Powering Growth

ANTI-DUMPING

  • Producers of LIKE articles/products AS A WHOLE or

COLLECTIVE output constitutes a MAJOR PROPORTION of domestic production.

  • Producers who are RELATED to the exporters or importers or

are THEMSELVES importers, can’t be part of domestic industry. DOMESTIC PRODUCERS

LIKE ARTICLES/PRODUCTS Identical - alike in all aspects

If not, having closely resembling characteristics

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SLIDE 9

9 Driving Transformation, Powering Growth

ANTI-DUMPING

What is a “like product”?

  • A product which is identical, i.e., alike in all

respects, to the product exported (subject merchandise)

Product sold in domestic market Product exported (subject merchandise)

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SLIDE 10

Or….

  • A product, although not identical to the subject

product, having characteristics closely resembling those of the subject product Red Apple Green Apple

Product sold in domestic market Product exported (subject merchandise)

ANTI-DUMPING

Driving Transformation, Powering Growth 10

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SLIDE 11

ANTI-DUMPING

How to determine “like product”

  • Consider, inter alia,

– Characteristics of product; – Uses of product; – Raw materials used; – Manufacturing process; – Tariff classification; – Consumer preference; and – Quality.

Driving Transformation, Powering Growth 11

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ANTI-DUMPING

Driving Transformation, Powering Growth 12

NORMAL VALUE IN THE EXPORTING MARKET (COUNTRY XY) EXPORT PRICE (IN MALAYSIA)

US$100.00 US$80.00

US$20.00 (or 25% margin of dumping)

>

Normal Value is PRICE IN THE EXPORTER’S DOMESTIC MARKET

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SLIDE 13

Dumping margin must NOT LESS THAN 2% (de minimis)

DUMPING MATERIAL INJURY

CAUSAL RELATIONSHIP

  • Other relevant economic factors also analysed to establish

CAUSAL LINK.

ANTI-DUMPING

Driving Transformation, Powering Growth 13

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ANTI-DUMPING

Driving Transformation, Powering Growth 14

ALL RELEVANT ECONOMIC FACTORS IN EVALUATION OF INJURY

Actual or potential decline in:

  • Sales
  • Profit
  • Output
  • Market share
  • Productivity
  • Return on Investments
  • Utilisation of Capacity

Actual or potential negative effects in:

  • Cash flow
  • Inventories
  • Employment
  • Wages
  • Growth
  • Ability to raise capital/

investments

The examination of the impact must include an evaluation of all relevant economic factors.

Article 3.4 of ADA

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ANTI-DUMPING

Driving Transformation, Powering Growth 15

DEFINITION OF “INJURY”

  • Material injury to a domestic industry (“present injury”)
  • Threat of material injury to a domestic industry (“future

injury”)

  • Material retardation of the establishment of a domestic

industry (infant industry)

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ANTI-DUMPING

Driving Transformation, Powering Growth 16

Must consider whether there has been :

  • Price undercutting
  • the price of the imported product is lower than the price
  • f the domestic like product
  • Price depression
  • the price of the domestic like product has declined

(downward trend) over period of time, i.e. one year

  • Price suppression
  • the price of the domestic like product fails to increase as

would have been expected (sell below cost)

PRICE EFFECTS

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ANTI-DUMPING

Driving Transformation, Powering Growth 17

BASIC REQUIREMENTS

Consideration of :

  • the volume of the dumped imports (dumping);
  • the effect of the dumped imports on prices in the

domestic market for like products (price effects); and

  • the consequent impact of these imports on domestic

producers of like products (economic effects).

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ANTI-DUMPING

Driving Transformation, Powering Growth 18

Dumping Margin = Normal Value - Export Price Export Price

DUMPING MARGIN

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ANTI-DUMPING

Driving Transformation, Powering Growth 19

  • Export price (FOB/CIF) = US$40
  • Normal value (price in the exporter’s domestic market) =

US$100

e.g:

Dumping Margin = US$ 100 – US$40 US$100

  • Dumping margin must NOT LESS THAN 2% (de minimis).

Less than 2% dumping margin, the company will not be imposed with any anti-dumping duty.

  • In this case, the dumping margin is 60%.
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ANTI-DUMPING

Driving Transformation, Powering Growth 20

THE APPLICATION

  • Duties imposed on COMPANY-SPECIFIC BASIS &

COUNTRY WIDE.

  • Producer/Exporter with LESS THAN 2% dumping margin

shall be EXCLUDED even if there are dumping, injury and causal link.

  • Investigation can be terminated if the company opt for

PRICE UNDERTAKING prior to preliminary determination.

  • Imposition of anti-dumping duties or price (ad valorem or

specific)undertaking

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Driving Transformation, Powering Growth 21

PART 2: COUNTERVAILING MEASURE (ANTI – SUBSIDY)

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Driving Transformation, Powering Growth 22

  • Countervailing is a measure imposed in the form of duty
  • n imports of product which have been found to be

subsidised in the country of origin

  • Subsidy refers to assistance provided directly or

indirectly by the government to the specific companies/industry/region of exporting country (e.g. financial contribution, tax rebate etc.)

  • Countervailing is a direct challenge on Government’s

policy to provide assistance to companies deemed as subsides. Countervailing measures:

  • Ad valorem or specific duties; and
  • Imposition period - 5 years

COUNTERVAILING MEASURE

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SLIDE 23

Driving Transformation, Powering Growth 23

COUNTERVAILING MEASURE

Subsidies which are countervailable:

  • Prohibited Subsidies (Article 3); and
  • Actionable Subsidies.

What is prohibited subsidies? Two types:

  • Contingent on export performance;
  • Contingent on use of domestic over imported goods

What is actionable subsidies?

  • Adverse effects through use of a subsidy;
  • Serious prejudice;
  • Injury to a domestic industry;
  • Nullification or impairment.
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Driving Transformation, Powering Growth 24

ANTI-DUMPING AND COUNTERVAILING MEASURE

OFFICIAL PETITION RECEIVED INITIATE INVESTIGATION PRELIMINARY DETERMINATION NOTICE OF ESSENTIAL FACTS FINAL DETERMINATION

30 DAYS 120 (+30) DAYS 120 DAYS

TIME FRAME

‒ Petition examined to determine that all requirements are fulfilled ‒ Notice of Initiation of Investigation is gazetted ‒ Inform interested parties to participate ‒ On site visit to domestic producers and importers ‒ Notice of PD is issued ‒ Provisional duties imposed. ‒ On site visit to foreign producers to verify information submitted. ‒ NOEF issued stating the recommendation for final determination. ‒ Notice of FD is issued and Custom Order gazetted. ‒ Final duties imposed.

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Driving Transformation, Powering Growth 25

TIME FRAME REVIEW FOR ANTI DUMPING AND COUNTERVAILING

Year 1 Year 5 Year 2 Year 3 Year 4

IMPOSITION EXPIRY EXPIRY REVIEW NEW EXPORTER/SHIPPER REVIEW ANNUAL REVIEW ADMINISTRATIVE REVIEW

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Driving Transformation, Powering Growth 26

Year 6 Year 10 Year 7 Year 8 Year 9

EXPIRY EXPIRY/SUNSET REVIEW EXTENDED ANTI-DUMPING MEASURES

Year 5

TIME FRAME REVIEW FOR ANTI DUMPING AND COUNTERVAILING

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Driving Transformation, Powering Growth 27

PART 3: SAFEGUARD

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SAFEGUARD

Driving Transformation, Powering Growth 28

What is SAFEGUARD?

  • Domestic industry is suffering serious injury or

facing threat of serious injury caused by surge in imports.

  • Temporary measure to limit imports and

provide time for domestic industry to adjust.

  • Imposition of duties or quota or both on a global

basis.

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SAFEGUARD

Driving Transformation, Powering Growth 29

LIKE PRODUCT

  • Products that are identical or

alike in all respect to the product under investigation (PUI); or

  • In the absence of such products,

another product that although not like in all respect have characteristics closely resembling the PUI DIRECTLY COMPETITIVE PRODUCT Products that are in direct competitive despite differences in:

  • Characteristics;
  • Raw material; or
  • Substitutability in terms of

usage and purpose.

PRODUCT COMPARABILITY

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SAFEGUARD

Driving Transformation, Powering Growth 30

INCREASE IN IMPORTS

  • Increase in import quantity can be either

absolute or relative to domestic production (not consumption).

  • The increment must be sufficiently recent,

sudden, sharp and significant.

(Argentina – Footwear (DS121/AB/R) Para131)

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SAFEGUARD

Driving Transformation, Powering Growth 31

SERIOUS INJURY

  • Significant overall impairment in the position
  • f the domestic industry
  • Higher level than “material injury” required in

Anti-Dumping and Countervailing

  • Level of serious injury determined by

examining the injury factors

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SAFEGUARD

Driving Transformation, Powering Growth 32

Rate & amount of increased Imports Market shares

  • f imports

Changes in sales level Production Productivity Capacity Utilisation Profits and losses Employment

ELEMENTS OF SERIOUS INJURY

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SAFEGUARD

Driving Transformation, Powering Growth 33

THREAT OF SERIOUS INJURY

Additional factors to be examined:

The actual and potential export capacity of the country of export or origin; Build up of inventory of the exporting country; and Probability that the export of the product under investigation will enter the domestic market in increasing quantities.

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SAFEGUARD

Driving Transformation, Powering Growth 34

CAUSAL LINK

Causation is the genuine and substantial relationship of cause and effect between increase in imports and serious injury.

Increase in imports Objective Evidence Serious injury/ threat

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SAFEGUARD

Driving Transformation, Powering Growth 35

GENERAL PRINCIPAL OF MEASURES

  • Applied to all imports irrespective of their source (Most

Favoured Nation – MFN);

  • Applied only to the extent necessary to prevent injury and to

facilitate adjustment.

  • Measures imposed for 4 years with progressive liberalisation

within the imposition period.

(Article 2.2 & 5.1)

E.g: 1st year – 20% 2nd year – 15% 3rd year – 10 % 4th year – 5 % end of 4th year – 0% or current MFN applied rate

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SAFEGUARD

Driving Transformation, Powering Growth 36

FORMS OF MEASURES

  • The form of safeguards measures is unspecific

and vary by cases. But, the most suitable measure will be applied.

Duty Both Quota

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SAFEGUARD

Driving Transformation, Powering Growth 37

SPECIAL AND DIFFERENTIAL TREATMENT (S&DT)

S&DT granted to developing country:

  • SG measure shall not apply to developing

countries with imports:

  • that do not exceed 3% of total import

individually; or

  • unless developing countries less than 3%

together account for more than 9% of total import.

(Article 9.1)

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SAFEGUARD

Driving Transformation, Powering Growth 38

SPECIAL AND DIFFERENTIAL TREATMENT (S&DT)

  • Longer extension = extra 2 years in total application of

SG measure: (4+2=6 years)

  • r (4+4+2=10 years)

(Article 9.2)

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SAFEGUARDS

Driving Transformation, Powering Growth 39

TIME FRAME

OFFICIAL PETITION RECEIVED INITIATE INVESTIGATION PRELIMINARY DETERMINATION FINAL DETERMINATION

30 (+ 30) DAYS 90 (+30) DAYS 200 DAYS

‒ Petition examined to determine that all requirements are fulfilled ‒ Notice of Initiation transmitted to WTO Safeguard Committee ‒ On site visit to local producers /importers. ‒ Public Hearing conducted ‒ Analyse submission – imports, serious injury and causal link. ‒ Notice of PD is issued. ‒ Provisional SG measure imposed. ‒ Consultation with interested parties upon request. ‒ Notice of FD is issued and Custom Order gazetted. ‒ Final SG measure imposed. ‒ Notify SG Committee.

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BILATERAL SAFEGUARD UNDER ACFTA

Driving Transformation, Powering Growth 40

  • The Bilateral Safeguard under ACFTA can be applied to

any parties under the ACFTA. e.g. Malaysia-Thailand or Malaysia-China. Nevertheless, it must be shown that the injury due to the obligation or tariff concessions under the

  • ACFTA. Effective from 2 September 2013.
  • Imposition period under the ACFTA Bilateral Safeguard;
  • Safeguard measure can only be taken during the

transition period.

  • The transition period for a product shall begin from the

date of entry into force of the Agreement and end five years from the date of completion of tariff elimination/reduction for that product.

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BILATERAL SAFEGUARD UNDER ACFTA

Driving Transformation, Powering Growth 41

  • The Bilateral Safeguard under ACFTA can be applied to

any parties under the ACFTA. e.g. Malaysia-Thailand or Malaysia-China. Nevertheless, it must be shown that the injury due to the obligation or tariff concessions under the

  • ACFTA. Effective from 2 September 2013.
  • Imposition period under the ACFTA Bilateral Safeguard;
  • Safeguard measure can only be taken during the

transition period.

  • The transition period for a product shall begin from the

date of entry into force of the Agreement and end five years from the date of completion of tariff elimination/reduction for that product.

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TABLE OF COMPARISON

Driving Transformation, Powering Growth 42

Main Element Anti-Dumping Countervailing Safeguards Price discrimination Subsidies Surge of imports Injury Factor Material Injury

(Threat of Material Injury)

Material Injury

(Threat of Material Injury)

Serious Injury

(Threat of Serious Injury)

Causal Link Volume and price effects and other economic factors Volume and price effects and other economic factors Surge in imports and injury, including economic factors Measure Duties or price undertaking Duties or price undertaking Duties or quotas Affected parties Company-specific and nationwide Company-specific and nationwide Global Exceptions De minimis: <2% DM Negligible Volume: <3% (indv.) or <7% (coll.) De minimis: <1%

[Subsidy level: <2% per unit basis Volume: <4% (indv.) or <9% (coll.)]

Import Volume: <3% (indv.) or <9% (coll.) [S&D] Duration 5 years + extension 5 years + extension 4 years + 4 years [Add 2 years (S&D)]

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43

Trade Measures by Malaysia

NO. PRODUCT COUNTRY STATUS

Anti-Dumping & Countervailing Investigation 1. Hot Rolled Coils  China;  Indonesia; &  ROK Petition Received: 20 May 2014 Date of Initiation: 18 June 2014 Preliminary Determination: 16 Oct. 2014 2. Steel Concrete Reinforcing Bar  China; &  ROK Petition Received: 4 August 2014 Date of Initiation: 2 Sept. 2014 Preliminary Determination: 30 Dec. 2014 Safeguard Initiation 3. Hot Rolled Steel Plates  Global Petition Received: 24 June 2014 Date of Initiation: 18 August 2014 Preliminary Determination: 15 Nov. 2014

On-going New Cases

On-going (new case) On-going (review case) Measures in force Terminate without duties AD Investigation 2 1 3 1 Safeguard Initiation 1

  • 1

Driving Transformation, Powering Growth

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44

Trade Measures by Malaysia (cont.)

NO PRODUCT COUNTRY STATUS

1. Steel Wire Rods  China;  Chinese Taipei;  Indonesia; &  Korea Definitive duties were imposed:  China Nil - 25.2%  Chinese Taipei 9.04% - 25.2%  Indonesia Nil - 25.2%  Korea 3.03% - 25.2%  Turkey Terminated Imposition: 20 Feb. 2013 – 19 Feb. 2018 2. Electrolytic Tinplate  China; &  Korea Definitive duties were imposed:  China Nil - 9.78%  Korea 3.46% - 9.78% Imposition: 16 Nov. 2013 – 15 Nov. 2018

Measures In Force

Cases terminated/rejected by Investigating Authority (no prove of dumping or petitioner retracted petition)

NO. PRODUCT COUNTRY 1. Hot Rolled Coils (Anti-Dumping) Chinese Taipei (2012) 2. Hot Rolled Coils (Safeguard) Global (2011) 3. Certain Hollow Structures (Anti-Dumping) China (2013)

Driving Transformation, Powering Growth

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45

Trade Measures Against Malaysia

SECTORS PRODUCTS QTY Base metals and articles of base metal

  • Welded Stainless Steel Pressure Pipe (US)
  • Certain Cold-rolled Stainless Steel (Canada)
  • Stainless Steel Of Tube-Pipe Fitting (South Africa)
  • Certain Hollow Structural Sections (Australia)
  • Hot Rolled Coils (Australia)
  • Flat Hot-Rolled Steel in Coils and Not in Coils (Thailand)
  • Hot Rolled Coil (Indonesia)
  • Aluminium Mealdish (Indonesia)
  • Galvanised Steel Wires (New Zealand)
  • Stainless Steel Butt-Weld Pipe Fittings (US)
  • Stainless steel kitchen sinks (South Africa)
  • Galvanised and Pre-painted Sheets & Coils (Philippines)
  • Cold Rolled Coil Flat products of Stainless Steel (India)

13

Driving Transformation, Powering Growth

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Thank you

Block 10, Government Offices Complex, Jalan Duta, 50622 Kuala Lumpur, Malaysia Tel: 603-8000 8000 | Fax: 603-6201 2337 Email: webmiti@miti.gov.my | Website: www.miti.gov.my

Driving Transformation, Powering Growth 46