James 

J. Nedumpara

Injury and
Causation in
Trade Remedy
Law
A Study of WTO Law and Country
Practices
Injury and Causation in Trade Remedy Law
James J. Nedumpara

Injury and Causation

in Trade Remedy Law
A Study of WTO Law and Country Practices

123
James J. Nedumpara
Jindal Global Law School
O.P Jindal Global University
Sonepat, Haryana
India

ISBN 978-981-10-2196-1 ISBN 978-981-10-2197-8 (eBook)

DOI 10.1007/978-981-10-2197-8

Library of Congress Control Number: 2016947504

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In memory of
my father
Mr. Joseph Nedumpara
Foreword

Trade remedy instruments have gained a unique significance in international trade.

In the last few years, several emerging economies such as Brazil, China, and India
have made increasing use of trade remedies. While such remedies are actively
pursued by traditional and new users alike, there has been rich body of literature as
to how such remedies could impede international trade.
It is widely accepted that trade remedies have a public choice function. Equally
accepted is the fact that the extent of injury needed to trigger the application
of these instruments is not necessarily a matter of mathematical precision. However,
the use and conduct of these measures are regulated by various agreements under
the WTO. For example, the WTO agreements on antidumping, subsidies and
countervailing measures as well as safeguards provide fairly strong disciplines on
the circumstances in which these measures can be applied. The extent and nature of
injury required in the importers’ domestic market may vary depending on the
circumstances, and there are practical limitations that need to be taken into account.
Another perennial source of controversy is the nature of causal link required to
establish connection between imports and the injury to the domestic industry. For
example, the causation standard itself has undergone major treaty changes, espe-
cially in the context of antidumping from the Kennedy Code to the present Uruguay
Round Antidumping Agreement. The Rules Negotiations under the Doha Round
too witnessed a rich menu of proposals on injury and causation.
Trade remedy measures have been frequently challenged before the WTO.
A number of such measures have been brought to the WTO panels and the
Appellate Body. In fact, more than 50 % of the adjudicative work before the panels
and Appellate Body consumes trade remedy disputes. The jurisprudence under the
various trade remedy agreements is dense and complex. It is important that certain
scholarly work is done in the area of injury and causation to understand this
jurisprudence and examine its implications on the existing agreements.
In that context, this study by James Nedumpara on injury and causation in trade
remedy law with a focus on the WTO law and certain members’ practices is a
significant contribution to the existing body of literature in this field. This book has

vii
viii Foreword

traced the origins of the injury and causation provisions in all the three trade remedy
agreements and has provided a rich and thorough examination of the existing WTO
trade remedy jurisprudence. In addition, it has also provided some useful com-
parative perspectives by examining the practice of various WTO members and, in
particular, India. Some of the findings and conclusions of this study will be of
immense help to the users of trade remedy instruments and for negotiators looking
for future revisions or improvements to the existing trade remedy agreements.

Geneva Gabrielle Marceau

May 2016 Counsellor, World Trade Organization
Associate professor, Law Faculty, University of Geneva
President, Society of International Economic Law (SIEL)
Preface and Acknowledgements

Trade remedy laws are firmly rooted either in the complex world of economics or in
the intricacies of accounting. This is not typically a lawyer’s discipline. For whatever
reason, I developed a liking for this subject without fully appreciating the
multi-disciplinary character of this field. This was not entirely surprising considering
that trade remedy practice is one of the most prominent areas of international trade
law practice and provides a lifeline for lawyers committed to remain in this spe-
cialization of practice. In particular, this area of practice flourished in India in the
early 2000s and like any other trade lawyer, I wanted to plunge deep into this field.
Any introductory text book on trade remedies will straightaway mention that
there are only three focal points in a trade remedy case: imports, injury, and
causation. In other words, the requirement to establish causation between imports
and injury to the domestic industry is a vital element. It is central to determining the
liability for the exporters involved in trade remedy cases and for the domestic
industry to get import relief. However, it was not difficult for me to realize that the
international treaty provisions on establishing injury and causation were signifi-
cantly deficient when compared to other disciplines of trade remedy law such as the
determination of dumping or subsidization.
Several scholars have pointed out the logical fallacies in making imports a cause
of injury. Much of the criticism came from the economists. The disconnect could
not have been more apparent, as most of the legal practitioners and policy makers
assumed that imports themselves are a cause of injury. Despite the logical con-
tradictions and structural infirmities, trade remedy actions deserve a special place in
international trade law practice. It is easy to condemn this branch of international
trade law or policy, but for lawyers, businesses, and policy makers, the need for
trade remedies cannot be overemphasized. Rather than condemning the application
of trade remedy measures, I was convinced that the focus should be on making in
the injury and causation findings coherent within the context of the present inter-
national legal framework. This study is a modest attempt in achieving a semblance
of coherence or at least in highlighting the need for more structured enquiries in this
field.

ix
x Preface and Acknowledgements

A substantial body of this publication stems from my doctoral research on the

issues of injury and causation in trade remedy law both within the context of the
WTO and member practices. The work heavily rests on the existing literature,
journal articles, and various interviews, most of which are referenced in this book.
During my research, I had a chance to meet with and speak to some of the leading
exponents of trade remedy practice in various jurisdictions. The discussions were
enriching and inspiring, but most of the practitioners and experts agreed that the
present practices in demonstrating injury and causation required some deeper study
and course correction. Some of the respondents addressed the need for a counter-
factual “but-for” enquiry in injury and causation analysis. I found the discussion on
the counterfactual analysis especially illuminating. I have devoted an entire chapter
on the utility of Common Law analytical tools in the injury and causation analysis.
My own findings and observations emphasize the need for recasting the injury
and causation standards in WTO trade remedy law based on the general theories of
causation in law. In other words, the suggestions for incorporating terms such as
“principal cause,” “substantial cause,” and “a cause in and of itself” are by no
means new and are somewhat unnecessary, in my view. Some of these suggestions
have been discussed at length and explicitly discarded in previous trade negotia-
tions. Trade remedy instruments have a particular public choice function. The
negotiating history of the various trade remedy agreements should not be lost sight
of in this debate.
The use of quantitative tools is another interesting issue. Quantitative tools are
almost impenetrable to most lawyers and there is a general aversion to using such
tools, at least in trade remedy practice. It is surprising that the lack of faith in
economic tools is deep even within some of the advanced jurisdictions. On the
whole, most of the trade remedy users increasingly use qualitative tools—a method
which is generally descriptive and fairly easy to use.
I am grateful to a number of people who helped me navigate the process of
completing this work. I am indebted to Prof. O.V. Nandimath who has been a great
source of support for me by offering valuable guidance and suggestions in improving
the research design and fine-tuning the arguments at various stages of this research.
I am grateful to him for devoting time for guiding me in this research work despite
his multitudinous responsibilities. For several valuable discussions and suggestions,
I am grateful to Prof. A. Jayagovind, Prof. T. Ramakrishna, Prof. Abhijit Das, and
Prof. Thomas Prusa. I have been significantly benefitted by the discussions with
Ms. Nithya Nagarajan, Prof. Raj Bhala, Mr. Sharad Bhansali, Mr. A.K. Gupta,
Mr. Sanjay Notani, Mr. Ashish Chandra, Prof. Mukesh Bhatnagar, Mr. Terence
Stewart, Mr. Jorge Miranda, Ms. Jennifer Hillman, Prof. Mark Wu, and
Dr. Chad P. Bown. Their inputs have helped me explore the field of trade remedies
with greater ease.
The National Law School of India University (NLSIU), Bengaluru, where
I completed my doctoral research, and my employer O.P. Jindal Global University,
Sonipat, provided me exceptional institutional support in the process of completing
this work. I am grateful to Prof. R. Venkata Rao, Prof. Jasphet, and Ms. Padmavathi
at NLSIU for their invaluable support. This is also an opportunity to thank
Preface and Acknowledgements xi

Prof. C. Raj Kumar and Prof. Y.S.R. Murthy at O.P. Jindal Global University who
gave me unstinted support for pursing this research. I also gratefully acknowledge
the research and editorial help provided by Vandana Gyanchandani and Rishabh
Raturi.
I would also like to express my gratitude to Ms. Sagarika Ghosh and Ms. Nupoor
Singh of Springer for their inordinate patience and the most helpful cooperation at
all stages of the production of this book.
Last but not least—as always—I owe a great debt to my family, my mother
Tresa, my wife Sharmila, and son Joseph for their constant encouragement and
love. I am also hugely indebted to my parents-in-law and my siblings for their
unwavering support. Finally, this book is dedicated to my father Joseph Nedumpara
who took the pains, even in his advanced age, to read the final draft and suggest
corrections, but could not live long enough to see I complete this work. I dedicate
this book in his memory.

New Delhi James J. Nedumpara

June 2016
Endorsements

While much attention has been focused on the WTO dispute settlement system’s
jurisprudence regarding dumping margins and subsidies, Professor James
Nedumpara’s book shines a bright and illuminating light on one of the other major
components of trade remedy law—the requirement to demonstrate that dumped or
subsidized or increased imports have caused injury to a domestic industry. His
remarkable book thoroughly covers the entire terrain of causation and injury, from
its evolution in the GATT and the WTO, to its practice in India and jurisdictions
around the world, to the methodologies—both quantitative and qualitative—used in
many jurisdictions to demonstrate a causal link between imports and injury. His
book includes a wealth of data tucked into clear and concise tables that elucidate the
precise differences in the approaches taken by countries around the world to
demonstrating causation, along with an excellent discussion of various theories of
causation from other areas of the law. This book is equally useful to trade law
practitioners and scholars.
Jennifer A. Hillman
Visiting Professor, Georgetown University Law Center,
Former member of the WTO Appellate Body

“James Nedumpara’s extensive analysis of injury and causation in trade remedy

investigations is a significant scholarly contribution in the field of international
trade law. Trade remedies are increasingly critical to the developed and developing
countries in the WTO and it is important to examine how the use of such remedies
could be made more coherent. This book is a must-read for anyone handling trade
remedy investigations at the domestic level or in WTO dispute settlement.”
Rajeev Kher
Member, Competition Appellate Tribunal
& Former Commerce Secretary, Government of India

xiii
xiv Endorsements

“James Nedumpara’s book on injury and causation in the context of WTO trade
remedy rules will become the one-stop shop for those litigating in this field. James
examines in great detail and depth the origins of such rules, how they have been
interpreted in WTO dispute settlement, and how they have been applied in several
national jurisdictions. This is an outstanding contribution to the analytics of world
trade law.”
Jorge Miranda
Consultant, King & Spalding, Washington, D.C.

Injury and Causation in Trade Remedy Law provides an insightful and illuminating
analysis of one of the underexplored areas of trade remedy practice. This
path-breaking study has a contemporary resonance as it analyses in incisive detail
how the WTO Members are currently complying with this requirement. The book’s
important claim is that injury and causation standards should derive its strength
from the public choice theory considerations of these agreements, and not neces-
sarily from causal maximalist positions supported by rigorous economic approa-
ches. The book is a marvelous read and its contents are comparative and
wide-ranging. It is an excellent and enriching contribution in the area of legal
analysis of trade remedies.
Abhijit Das
Professor and Head, Centre for WTO Studies, New Delhi
Contents

1 Injury and Causation in Trade Remedy Law:

An Introduction to the Enquiry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B Injury and Causation in Trade Remedies: Persisting Issues . . . . . . . 2
C Purpose of the Enquiry on Injury and Causation . . . . . . . . . . . . . . . 7
D Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
E Structure and Organization of the Book . . . . . . . . . . . . . . . . . . . . . . 12
F Limitations of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2 Historical Evolution of Injury and Causation in Trade
Remedies Under GATT/WTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B Genesis of Antidumping Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1 Economic Rationale of Antidumping Laws . . . . . . . . . . . . . . . . . 24
2 Movement from Predatory Intent to Injury Standards . . . . . . . . . 26
C Injury and Causation in Antidumping Under GATT 1947 . . . . . . . . 28
1 Antidumping Under Kennedy Round . . . . . . . . . . . . . . . . . . . . . 29
2 Antidumping Under the Tokyo Round Code . . . . . . . . . . . . . . . 35
3 Injury and Causation in Antidumping Under
Uruguay Round . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 37
4 Antidumping, Injury and the Overarching Obligations . . . . .... 38
D Material Injury and Non-attribution in Antidumping
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 41
1 Causation and Non-Attribution: Insights from
Uruguay Round Negotiating Texts . . . . . . . . . . . . . . . . . . . .... 41
2 Causation in Sunset and Interim Reviews . . . . . . . . . . . . . . .... 45

xv
xvi Contents

E Injury and Causation in Subsidies and Countervailing

Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 47
1 Injury and Causation in Tokyo Subsidies Code . . . . . . . . . .... 49
2 Uruguay Round Agreement on Subsidies
and Countervailing Measures . . . . . . . . . . . . . . . . . . . . . . . .... 52
3 Similarities of SCM Agreement and AD Agreement. . . . . . .... 54
F Injury and Causation in Safeguard Investigations . . . . . . . . . . . .... 54
G Injury and Causation Provisions at the End of the Uruguay
Round . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
H Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Appendix 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Appendix 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3 Injury and Causation in Trade Remedy Investigations:
An Analysis of the WTO Jurisprudence . . . . . . . . . . . . . . . . . . . .... 69
A Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 69
B Causal Link in Trade Remedy Investigations: Issues
and Challenges in Implementation . . . . . . . . . . . . . . . . . . . . . . .... 71
1 Concept of Causal Link in WTO Trade Remedy
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 71
2 Injury and Causation: Why a Common Approach
is Desirable for All Trade Remedy Actions?. . . . . . . . . . . . .... 72
3 Injury and Causation Under the WTO:
A Comparison. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 74
C Role of Trends Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 77
1 Volume Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 78
2 Price Effects: Concept of Price Undercutting
and Underselling Analysis . . . . . . . . . . . . . . . . . . . . . . . . . .... 83
3 Trends Analysis and Conceptualizing the Requirement
of “Through the Effects” . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 89
4 Summary on Trends Analysis . . . . . . . . . . . . . . . . . . . . . . . .... 92
D Examination of the GATT/WTO Jurisprudence:
The “Non-attribution” Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 93
1 Identifying and Separating Other “Known Factors”:
Who Bears the Burden? . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 98
2 Non-attribution: Examination of the U.S. Methodology
in Trade Remedy Investigations . . . . . . . . . . . . . . . . . . . . . .... 101
3 Non-attribution Analysis and Its Discontents:
The Application of the ‘but for’ Test . . . . . . . . . . . . . . . . . .... 105
E Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 110
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 113
Contents xvii

4 Injury and Causation in Antidumping Investigations:

Experience of India and Other Jurisdictions . . . . . . . . . . . ......... 119
A Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 119
B Rise of Antidumping in India: Legal Framework
and Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
1 India, Antidumping and the Uruguay Round . . . . . . . . . . . . . . . 122
2 Role of the DGAD and Its Functioning . . . . . . . . . . . . . . . . . . . 124
C Empirics of Injury and Causation Examination in India . . . . . . . . . . 126
1 Examination of Volume and Price Effects. . . . . . . . . . . . . . . . . . 127
2 Lesser Duty Rule in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
D Survey of Injury and Causation in Indian
Antidumping Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
1 Survey of Selected Indian Antidumping Cases . . . . . . . . . . . . . . 133
2 Injury and Causation: Discussion of Phase I Cases . . . . . . . . . . . 136
3 Injury and Causation: Discussion of Phase-II Cases . . . . . . . . . . 141
4 Non-attribution Analysis in Indian Antidumping
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 145
5 Appellate Review of Injury and Causation in India . ......... 149
E Injury and Causation Determination: Practice
of Other WTO Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
1 Traditional Users. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
2 Injury and Causation Practices of ‘New Users’ . . . . . . . . . . . . . . 155
F Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
5 Injury and Causation in Safeguard Investigations:
Experience of India and Other WTO Members . . . . . . . . . . . . . .... 195
A Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 195
B Assessment of Injury and Causation in India’s Safeguard
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 198
C Non-attribution Analysis in India’s Safeguard Investigations . . .... 201
D Injury and Causation Determination: Experience
of Other WTO Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
1 Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
2 Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
3 Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
E Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
6 Injury and Causation in Trade Remedies:
Developments Under the Doha Round . . . . . . . . . . . . . . . . . . . . . . . . . 219
A Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
B Rules Negotiations and Members’ Proposals . . . . . . . . . . . . . . . . . . 220
xviii Contents

C Relationship Between Material Injury and Causation . . . . . . . . . . . . 221

1 Degree of Causal Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . 224
D Non-attribution Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
E Negotiations on Subsidies and Countervailing Measures . . . . . . . . . 231
F Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
7 General Principles of Law on Causation: Application
in the Field of Trade Remedy Investigations . . . . . . . . . . . . . . . . . . . . 233
A Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
B The Concept of Causation: From Hume to Hart and Honoré . . . . . . 234
C Addressing a Plurality of Causes in a Trade Remedy Setting . . . . . . 236
D A Causation Framework for Trade Remedies: Necessity Test . . . . . 237
E Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
8 Findings and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
About the Author

James J. Nedumpara is an associate professor of law and the executive director of

Centre for International Trade and Economic Laws (CITEL) at Jindal Global Law
School. He has several years of experience in the field of international trade and has
worked with leading law firms, corporate firms, and also UNCTAD before joining
academia. His specialization is in trade remedy law and international trade regu-
lation. James received his Ph.D. in law from the National Law School of India
University, Bangalore, and holds master of laws (LL.M) degrees from the
University of Cambridge, UK, the New York University School of Law, USA, as
well as the National University of Singapore, and a bachelor degree in law from the
Mahatma Gandhi University, Kerala, India. He was also a part of the Indian del-
egation that appeared before the WTO Appellate Body in India—Import
Restrictions on Agricultural Products (Avian Influenza) dispute.

xix
Abbreviations

AD Antidumping
ADA Antidumping Agreement
ASCM Agreement on Subsidies and Countervailing Measures
ASEAN Association of Southeast Asian Nations
BoP Balance of payments
CCFRS Certain carbon flat-rolled steel
CEGAT Customs, Excise and Gold (control) Appellate Tribunal
CESTAT Customs, Excise and Service Tax Appellate Tribunal
CITT Canadian International Trade Tribunal
CNCE National Foreign Trade Commission (Argentina)
CNV Constructed normal value
COGS Cost of goods sold
COMPAS Commercial Policy Analysis System
CVD Countervailing duties
DBM Dead burnt magnesite
DECOM Department of Trade Defense (Departamento de Defesa
Comercial) Brazil
DG Safeguards Directorate General of Safeguards
DGAD Directorate General of Anti-Dumping and Allied Duties
DSU Dispute settlement understanding
EC European Commission/European Communities
ECJ European Court of Justice
ECOSOC United Nations Economic and Social Council
EEC European Economic Community
ELT Excise Law Times
FAN Friends of Antidumping
FFTJ Fittings, Flanges and Tool Joint
GATT General Agreement on Tariffs and Trade
GDP Gross domestic product
GOES Grain oriented flat-rolled electrical steel

xxi
xxii Abbreviations

INUS Insufficient but necessary part of an unnecessary but

sufficient set
ITAC International Trade Administration Commission
ITO International Trade Organization
Kennedy Code Kennedy Antidumping Code signed on 30 June 1967
LAB Linear alkyl benzene
LTFV Less than fair value
MOFCOM Ministry of Commerce (China)
NAFTA North American Free Trade Agreement
NESS Necessary element of a sufficient set
NGR Negotiating Group on Rules
NIP Non-injurious price
NME Non-market economy
NSR Net sales realization
PCN Product control number
POI Period of investigation
PPA Protocol of Provisional Application
PSF Polyester staple fiber
PTA Purified terephthalic acid
PVC Polyvinyl chloride
QR Quantitative restrictions
ROCE Return on capital employed
RTA Regional trade agreement
SECOFI Secretariat of the Economy (Secretaría de Economía)
SIL Special import licenses
SIMA Special Import Measures Act 1984
The 1921 Act The US Antidumping Act, 1921
Tokyo AD Code Tokyo Anti-Dumping Code under GATT (1979)
Tokyo Subsidies Code Tokyo Subsidies Code under GATT(1979)
UNCTAD United Nations Conference on Trade and Development
UPCI Unidad de Practicas Comerciales Internacionales
USAFC US Court of Appeals for Federal Circuit
USDOC US Department of Commerce
USITC US International Trade Commission
WTO World Trade Organization
List of Figures

Chapter 2
Figure 1 Antidumping enquiry and multiple causal factors . . . . . . . . . . . 35
Figure 2 Number of trade remedy investigations (1995–2015) . . . . . . . . 55

Chapter 3
Figure 1 The metaphor of “chain of causation”
in Trade Remedy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Figure 2 Interplay of injury factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Figure 3 Price Undercutting illustration . . . . . . . . . . . . . . . . . . . . . . . . 84
Figure 4 Price suppression illustration . . . . . . . . . . . . . . . . . . . . . . . . . 88

Chapter 4
Figure 1 Trends in India’s Antidumping Actions. . . . . . . . . . . . . . . . . . 123

Chapter 5
Figure 1 Trends in safeguards initiation by the WTO members. . . . . . . . 196

xxiii
List of Tables

Chapter 2
Table 1 U.S. statutes on unfair trade and injury to industry . . . . . . . . . . 23
Table 2 Key differences between the US antidumping legislation and
the Kennedy code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Chapter 3
Table 1 Comparison of injury indicators in trade remedies agreements
under the WTO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Table 2 Categories of HP SST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Chapter 4
Table 1 Antidumping Actions by India between 1995–2014 . . . . . . . . .. 121
Table 2 List of Indian AD investigations in the qualitative analysis. . . .. 134
Table 3 Antidumping cases terminated on the request of the Domestic
Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 136
Table 4 Antidumping cases terminated for insufficient injury
and causal link . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 137

xxv
List of Cases

WTO Dispute Settlement Reports

Appellate Body Reports
Argentina—Safeguard Measures on Imports of Footwear, WT/DS121/AB/R
(December 14, 1999)
Brazil—Measures Affecting Desiccated Coconut, WT/DS22/AB/R (February 21,
1997)
China—Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled
Electrical Steel from the United States, WT/DS414/AB/R (November 16, 2012)
China—Measures Imposing Anti-Dumping Duties on High-Performance Stainless
Steel Seamless Tubes (“HP-SSST”) from Japan (October 14, 2015)
Appellate Body Report, European Communities—Anti-Dumping Duties on
Malleable Cast Iron Tube of Pipe Fittings from Brazil, WT/DS219/AB/R (July 22,
2003)
Appellate Body Report, European Communities—Anti-Dumping Duties on Imports
of Cotton-type Bed Linen from India, WT/DS141/AB/R (March 1, 2001)
Appellate Body Report, European Communities—Countervailing Measures on
Dynamic Random Access Memory Chips from Korea, WT/DS299/AB/R (April 21,
2006)
Japan—Countervailing Duties on Dynamic Random Access Memories from Korea,
WT/DS336/AB/R (March 5, 2010)
Korea—Definitive Safeguard Measure on Imports of Certain Dairy Products,
WT/DS98/AB/R (December 14, 1999)
Mexico—Definitive Anti-Dumping Measures on Beef and Rice, WT/DS295/AB/R
(November 29, 2005)
Thailand—Anti-Dumping Duties on Angles, Shapes and Sections of Iron or
Non-Alloy Steel and H Beams from Poland, WT/DS122/AB/R (March 12, 2001)
United States—Anti-Dumping Act of 1916, WT//DS162/AB/R (August 28, 2000)
United States—Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/AB/R (August 23, 2001)

xxvii
xxviii List of Cases

United States—Continued Dumping and Subsidy Offset Act of 2000,

WT/DS217/ARB/BRA (August 31, 2004)
United States—Definitive Safeguard Measures on Imports of Circular Welded
Carbon Quality Line Pipe from Korea, WT/DS202/AB/R (March 8, 2002)
United States—Definitive Safeguard Measures on Imports of Certain Steel
Products, WT/DS252/AB/R (November 19, 2003)
United States—Definitive Safeguard Measures on Imports of Wheat Gluten from
the European Communities, WT/DS166/AB/R (December 22, 2000)
United States—Final Countervailing Duty Determination with respect to certain
Softwood Lumber from Canada, WT/DS257/AB/RW (December 5, 2005)
United States—Subsidies on Upland Cotton, WT/DS267/AB/R (March 3, 2005)
United States—Sunset Review of Anti-Dumping Duties on Corrosion-Resistant
Carbon Steel Flat Products from Japan, WT/DS244/AB/R (December 15, 2003)
United States—Customs Bond Directive for Merchandise Subject to
Anti-Dumping/Countervailing Duties, WT/DS345/AB/R (July 16, 2008)
United States—Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb
Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R (May
16, 2001)
United States—Countervailing measures on certain hot-rolled carbon steel flat
products from India, WT/DS436/AB/R (December 8, 2014)
Panel Reports
Argentina—Definitive Safeguard Measure on Imports of Preserved Peaches,
WT/DS238/R (April 15, 2003)
Argentina—Definitive Anti-Dumping Duties on Poultry from Brazil, WT/DS241/R
(April 23, 2003)
Argentina—Definitive Anti-Dumping Measures on Carbon-Board from Germany
and Definitive Anti-Dumping Measures on Imports of Ceramic Tiles from Italy,
WT/DS189/R (September 28, 2001)
Argentina—Safeguard Measures on Imports of Footwear, WT/DS121/R (June 25,
1999)
China—Anti-Dumping and Countervailing Duty Measures on Broiler Products
from the United States, WT/DS427/R and Add. 1 (September 25, 2013)
China—Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment
from the European Union, WT/DS425/R and Add.1 (April 24, 2013)
Dominican Republic—Safeguard Measures on Imports of Polypropylene Bags and
Tubular Fabric, WT/DS417/R (January 31, 2012)
Egypt—Definitive Anti-Dumping Measures on Steel Rebar from Turkey,
WT/DS211/R (October 1, 2002)
European Communities—Anti-Dumping Duties on Malleable Cast Iron Tube or
Pipe Fittings from Brazil, WT/DS219/R (March 7, 2003)
European Communities—Anti-Dumping Measure on Farmed Salmon from
Norway, WT/DS337/R (November 16, 2007)
List of Cases xxix

European Communities—Countervailing Measures on DRAM Chips, WT/DS299/R

(June 17, 2005)
European Communities—Definitive Anti-Dumping Measures on Certain Iron or
Steel Fasteners from China, WT/DS397/R (December 3, 2010)
Guatemala—Definitive Anti-Dumping Measure on Grey Portland Cement from
Mexico, WT/DS156/R (October 24, 2000)
Korea—Definitive Safeguard Measures on Imports of Certain Dairy Products,
WT/DS98/R and Corr.1 (January 12, 2000)
Korea—Measures Affecting Trade in Commercial Vessels, WT/DS273/R (March 7,
2005)
Mexico—Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from
the United States, WT/DS132/R (February 24, 2000)
Mexico—Definitive Countervailing Measures on Olive Oil from the European
Communities, WT/DS341/R (October 21, 2008)
Thailand—Anti-Dumping Duties on Angles, Shapes and Sections of Iron or
Non-Alloy Steel and H Beams from Poland, WT/DS122/R (September 28, 2000)
United States—Anti-Dumping Act of 1916, Complaint by Japan, WT/DS162/R and
Add.1 (September 26, 2000)
United States—Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/R (February 28, 2001)
United States—Sunset Review of Anti-Dumping Duties on Corrosion-Resistant
Carbon Steel Flat Products from Japan, WT/DS244/R (August 14, 2003)
United States—Countervailing Duty Investigation on Dynamic Random Access
Memory Semiconductors (DRAMS) from Korea, WT/DS296/R (February 21, 2005)
United States—Customs Bond Directive for Merchandise Subject to
Anti-Dumping/Countervailing Duties, WT/DS345/R (August 1, 2008)
United States—Definitive Safeguard Measures on Imports of Carbon Steel
Products, WT/DS252/R (July 11, 2003)
United States—Definitive Safeguard Measures on Imports of Circular Welded
Carbon Quality Line Pipe from Korea, WT/DS202/R (October 29, 2001)
United States—Measures Affecting Imports on Certain Passenger Vehicle and Light
Truck Tyres from China, WT/DS399/R (October 5, 2011)
United States—Safeguard Measures on Import of Fresh, Chilled or Frozen Lamb
Meat from New Zealand and Australia, WT/DS177/178/R (December 21, 2001)
United States—Subsidies on Upland Cotton, WT/DS267/R (September 8, 2004)
GATT Panel Reports
Canadian Countervailing Duties on Grain Corn from the United States,
SCM/140and Corr.1—39S/411 (February 21, 1992)
European Union—Imposition of Anti-Dumping Duties on Imports of Cotton Yarn
from Brazil, ADP/137 (April 4, 1995)
United States—Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled
Atlantic Salmon from Norway, ADP/87 (November 30, 1992)
xxx List of Cases

National cases
Supreme Court of India
Reliance Industries v. Designated Authority, 2006 (10) SCC 368 (Supreme Court of
India)
State High Courts in India
Nirma Limited v. Saint Gobain Glass India Limited, 2012 (281) E.L.T. 321 (High
Court of Madras)
Rajasthan Textile Mills Association v. Directorate General of Anti-Dumping and
Allied Duties, 2002 (144) E.L.T. 45 (High Court of Rajasthan)
Custom Tribunals in India: CESTAT/CEGAT
Agfa Gevaert A.G. v. Designated Authority, 2001 (130) E.L.T. 741 (Custom Excise
& Service Tax Appellate Tribunal, Delhi)
Indian Spinners Association v. Designated Authority, 2004 (170) E.L.T.
144 (Custom Excise & Service Tax Appellate Tribunal, Delhi)
Kothari Sugars and Chemicals Ltd. v. Designated Authority, 2005 (187) E.L.T.
185 (Custom Excise & Service Tax Appellate Tribunal, Delhi)
M/s. Sasol Solvents v. Union of India through Ministry of Finance, Department of
Revenue and the Designated Authority, MANU/CUST/0057/2008-Customs, March
11, 2008 (Custom Excise & Service Tax Appellate Tribunal, Delhi)
Refractory Makers Association v. Designated Authority, 2000 (119) E.L.T.
319 (Custom Excise & Service Tax Appellate Tribunal, Delhi)
Urals Heavy Machine Building Plant v. Designated Authority, 2005 (197) E.L.T.
194 (Custom Excise & Service Tax Appellate Tribunal, Delhi)
Videocon Narmada Glass v. Designated Authority, 2003 (151) E.L.T. 80 (Custom
Excise & Service Tax Appellate Tribunal, Delhi)
United States
Bratsk Aluminum Smelter v. United States, 444 F. 3d. 1369, 2006 (Court of
Appeals, Federal Circuit, Washington D.C., United States)
Gerald Metals Inc. v. United States 132 F. 3d716 (U.S. Federal Circuit, 1997)
European Union
Miwon v. Council of European Union, T-51/96, March 30, 2000 (Judgment of the
Court of First Instance, Third Chamber, Extended Composition)
Sinochem Heilongjiang v. Council of Europe, T-161/94, July 11, 1996 (Judgment
of the Court of First Instance (First Chamber, Extended Composition)

National antidumping/countervailing/safeguards investigation reports

Indian Antidumping Investigation Reports
Imports of Acetone originating in or exported from European Union, Chinese
Taipei, Singapore, South Africa and the United States of America, No. 14/4/2006
(Ministry of Commerce, January 4, 2008) (Final Findings)
List of Cases xxxi

Imports of Acrylic Fiber from Turkey, Hungary and the European Union,
No. 34/1/1998 (Ministry of Commerce, March 24, 2000) (Final Findings)
Imports of Acyclic Alcohols originating in or exported from Singapore, Brazil,
Romania, Malaysia and South Africa, No. 63/1/2001 (Ministry of Commerce, July
29, 2003) (Final Findings)
Imports of Bias Tyres originating in China PR and Thailand, No. 14/9/2005
(Ministry of Commerce, June 29, 2007) (Final Findings)
Imports of Bisphenol-A originating in or exported from the European Union and
Taiwan, No. 47/1199 (Ministry of Commerce, December 6, 2000) (Final Findings)
Imports of Bisphenol-A originating in or exported from USA, No. 15/5/95/ADD
(Ministry of Commerce, March 18, 1997) (Final Findings)
Imports of Butter oil from New Zealand, No. 14/49/2002 (Ministry of Commerce,
September 17, 2003) (Notice of Termination)
Imports of Carbon Black used in rubber applications originating in or exported from
Australia, China PR, Iran, Malaysia, Russia and Thailand, No. 14/21/2008
(Ministry of Commerce, December 24, 2009) (Final Findings)
Imports of Certain ‘Compressors’ originating in or imported from China PR and
Malaysia, No. 14/7/2004 (Ministry of Commerce, July 13, 2005) (Notice of
Termination)
Imports of Certain Phosphorous based chemical compounds originating in or
exported from China PR and European Union, No. 14/3/2009 (Ministry of
Commerce, April 7, 2010) (Final Findings)
Imports of Certain Polyester Staple Fibres (PSF) originating in or exported from
Korea, Thailand, Taiwan and Indonesia, No. 29/1/1998 (Ministry of Commerce,
January 21, 2000) (Final Findings)
Imports of Circular Weaving Machines having six or more shuttles for weaving
PP/HDPE Fabrics originating in or exported from People’s Republic of China,
No. 16/25/2008 (Ministry of Commerce, November 16, 2010) (Final Findings)
Imports of Citric Acid from the People’s Republic of China, No. 29/1/1997
(Ministry of Commerce, March 15, 1999) (Final Findings)
Imports of Coated Paper and Paper Board from China, Singapore, Japan, Hong
Kong, Korea and Finland, No. D-22011/25/2009 (Ministry of Commerce,
November 13, 2009) (Final Findings)
Imports of Coated paper of 80 GSM exported from European Union and Indonesia,
No. 14/7/2003 (Ministry of Commerce, December 15, 2004) (Final Findings)
Imports of D (-) Para Hydroxy Phenyl Glycine Base (PHPG Base) originating in or
exported from the European Union, No. 14/6/2002 (Ministry of Commerce, March
1, 2003) (Final Findings)
Imports of D (-) Para Hydroxy Phenyl Glycine Methyl potassium Dane Salt (PHPG
Dane Salt originating in or exported from China and Singapore, No. 14/23/2002
(Ministry of Commerce, June 24, 2003) (Final Findings)
Imports of Digital offset printing plates originating in or exported from People’s
Republic of China and Japan, No. 14/7/2011 (Ministry of Commerce, October 3,
2012) (Final Findings)
xxxii List of Cases

Imports of Dry Batteries originating in or exported from People’s Republic of

China, No. 53/1/2000 (Ministry of Commerce, July 13, 2001) (Final Findings)
Imports of Electrical insulators from People’s Republic of China, No. 14/6/2011
(Ministry of Commerce, March 20, 2013) (Notice of Termination)
Imports of Gypsum Plaster Board from Indonesia and Thailand, No. 14/10/2003
(Ministry of Commerce, September 2, 2003) (Notice of Termination)
Imports of Hot Rolled Coils/Sheets/Plates/Strips from Russia, Kazakhstan and
Ukraine, No. 14/1/1997 (Ministry of Commerce, November 18, 1998) (Final
Findings)
Imports of Lead Acid Batteries originating in or exported from Japan, Korea, China
and Bangladesh, No. 67/1/200 (Ministry of Commerce, December 1, 2001) (Final
Findings)
Imports of Linear Alkyl Benzene from Iran, Saudi Arabia, Qatar and Switzerland,
No. D-22011/23/2008 (Ministry of Commerce, November 18, 2009) (Final
Findings)
Imports of Magnesium from People’s Republic of China, No. 7/1/97/ADD
(Ministry of Commerce, July 24, 1998) (Final Findings)
Imports of Melamine originating in or exported from European Union, Iran,
Indonesia and Japan, No. 14/35/2010 (Ministry of Commerce, June 1, 2012) (Final
Findings)
Imports of Metallurgical Coke originating in or imported from Japan,
No. 14/41/2002 (Ministry of Commerce, May 14, 2004) (Final Findings)
Imports of Optical Fibre from Korea, No. 24/1/99 (Ministry of Commerce,
November 5, 1999) (Final Findings)
Imports of Para Hydroxy Phenyl Glycine Base originating in or exported from
China and Singapore, No. 51/12001 (Ministry of Commerce, October 1, 2001)
(Notice of Initiation)
Imports of Penicillin-G originating in or exported from the China, No. 14/10/2008
(Ministry of Commerce, May 22, 2009) (Final Findings)
Imports of Phtalic Anhydrite from Korea, Pakistan, Taiwan, Indonesia and Iran,
No. D-22011/32/2008 (Ministry of Commerce, May 28, 2009) (Final Findings)
Imports of Polyester Staple Fibre (PSF) from Korea, Thailand, Taiwan and
Indonesia, No. 29/1/98 (Ministry of Commerce, January 21, 2000) (Final Findings)
Imports of Potassium Carbonate from Russia, Thailand and United States of
America, No. 14/6/2007 (Ministry of Commerce, January 23, 2009) (Notice of
Termination)
Imports of Power steering gear system originating in or exported from China,
No. 14/13/2007 (Ministry of Commerce, June 5, 2009) (Notice of Termination)
Imports of Pre-sensitized Positive Offset Aluminum Plates (PS Plates) from
Bulgaria, China, Malaysia, Singapore and South Korea, No. 14/6/2006 (Ministry of
Commerce, August 23, 2007) (Final Findings)
Imports of Pure Terephthalic Acid from Japan, Malaysia, Spain and Taiwan,
No. 27/1/98 (Ministry of Commerce, April 20, 2000) (Final Findings)
Imports of Soda Ash from Russia and Turkey, No. 14/3/2011 (Ministry of
Commerce, February 9, 2013) (Final Findings)
List of Cases xxxiii

Imports of Sports Shoes (both branded and un-branded) originated in or exported

from China, No. 56/1/2000 (Ministry of Commerce, November 20, 2000) (Notice
of Initiation)
Imports of Styrene Butadiene Rubber from Japan, Korea, Turkey, Taiwan, United
States, Germany and France, No. 30/1/97 (Ministry of Commerce, June 2, 1999)
(Notice of Termination)
Imports of Vinyl Acetate Monomer from Singapore and Iran into India,
No. 58/1/2001 (Ministry of Commerce, February 15, 2002) (Notice of Termination)
Imports of Viscose Staple Fibre excluding Bamboo Fibre originating in or exported
from China and Indonesia, No. 14/6/2009 (Ministry of Commerce, May 17, 2010)
(Final Findings)
Imports of Vitamin B12 originating in or exported from China, Hong Kong and
Japan, No. 14/12/2006 (Ministry of Commerce, October 29, 2007) (Notice of
Termination)
Indian safeguard investigation reports
Imports of Bisphenol-A from China, Germany, United States, Singapore, Taiwan,
Korea and Japan, No. SG/INV/1/2003 (Ministry of Finance, October 27, 2003)
(Final Findings)
Imports of Coated Paper and Paper Board into India, D-22011/25/2009 (Ministry of
Finance, November 13, 2009) (Final Findings)
Imports of Dimethoate technical from China, Notice of Initiation, No. D-22011/07/
2009 (Ministry of Finance, May 14, 2009) (Final Findings)
Imports of Epichlororhydrin from Japan, United States, Belgium and Korea,
No. SG/INV/1/2002 (Ministry of Finance, June 25, 2002) (Final Findings)
Imports of Flexible Slabstock Polyol of molecular weight 3000-4000 used in the
manufacture of Slabstock foams and polyurethane foams mattresses from Singapore
and Japan, No. SG/V/4/97 (Ministry of Finance, September 17, 1998) (Final
Findings)
Imports of Hard Board (High Density Fibre Board) from Thailand, South Africa,
Malaysia, Italy and Pakistan, No. SG-REP/4/98 (Ministry of Finance, November
12, 1998) (Final Findings)
Imports of Linear Alkyl Benzene from Iran, Saudi Arabia, Qatar and Switzerland,
No. D-22011/23/2008 (Ministry of Finance, November 18, 2009) (Final Findings)
Imports of Methylene Chloride from Taiwan and Hungary, No. SG/INV/2/2000
(Ministry of Finance, December 15, 2000) (Final Findings)
Imports of Phenol from Germany, Italy, United States, Tokyo, Korea, Taiwan,
South Africa and Switzerland, No. SG/INV/2/98 (Ministry of Finance, May 12,
1999) (Final Findings)
Imports of Phtalic Anhydrite from Korea, Pakistan, Taiwan, Indonesia and Iran,
No. D-22011/32/2008 (Ministry of Finance, May 28,1999) (Final Findings)
Imports of Starch; Manioc (Cassava, Tapioca) based sago and modified starches
from Thailand, Netherlands, China, United States and Korea, Final Findings,
No. SG/INV/1/2004 (Ministry of Finance, February 16, 2005) (Final Findings)
xxxiv List of Cases

Imports of Uncoated Paper and Copy Paper from Indonesia, Thailand, Finland,
China, Hong Kong, Japan, Singapore and the United States, No. D-22011/27/2009
(Ministry of Finance, November 5, 2009) (Final Findings)
Antidumping investigation reports of South Africa
Imports of Feed Supplements containing by mass 40 % or more Lysine, whether or
not containing added anti-biotics or added melengestrol acetate, commonly known
as L-Lysine Sulphate and its By-Products from fermentation (biolys) originating in
or imported from the United States of America, Investigation Report
No. 193 (Ministry of Trade and Industry, September 11, 2006) (Final Findings)
Imports of Polyethylene terephthalate originating in or imported from China,
Thailand and Indonesia, Report No. 157 (Ministry of Trade and Industry, June 15,
2006) (Final Findings)
Imports of Stainless steel tubes and pipes originating in or imported from China,
India and Malaysia, Final Findings, Report No. 160 (Ministry of Trade and
Industry, July 18, 2006) (Final Findings)
Imports of steel wheel originating in or imported from Brazil, China, Chinese
Taipei and Turkey, Report No. 125 (Ministry of Trade and Industry, July 4, 2005)
(Final Findings)
Imports of toughened glass for incorporation in vehicles originating in or imported
from China, Report No. 184 (Ministry of Trade and Industry, September 6, 2006)
(Final Findings)
Investigation into the alleged dumping of polyethylene terephthalate
(PET) originating in or imported from the People’s Republic of China, India,
Indonesia, South Korea, Chinese Taipei and Thailand, Report no. 154 (Ministry of
Trade and Industry, February 9, 2006) (Final Findings)
Trade remedy investigations by the United States
Circular Welded Non-Alloy Steel Pipe from China, Investigation Report,
No. TA-421-6, 3807 (International Trade Commission, 2005) (Final Findings)
Imports of Bicycles from Czech Republic, 25 Federal Register 9782 (International
Trade Commission, 1960) (Final Findings)
Imports of Carbon Steel Bars and Shapes from Canada, 29 Federal Register 12599
(International Trade Commission, 1964) (Final Findings)
Imports of Cold-Rolled Steel Products from Argentina, Inv. No. 731-TA-829-40
(International Trade Commission, 2000) (Final Findings)
Imports of Ferrite Cores from Japan, 36 Federal Register 1934 (International Trade
Commission, 1971) (Final Findings)
Trade remedy investigation by Canada/against Canada under NAFTA
Hot Rolled Steel Sheet Originating in or Exported from Canada (Dumping)
MEX-96-1904-03 (Binational Panel Review Pursuant to the North American Free
Trade Agreement, June 16, 1997) (Final Findings)
List of Cases xxxv

Imports of Refined sugar originating in or exported from the United States of

America, Denmark, the Federal Republic of Germany, the Netherlands, the United
Kingdom and the Republic of Korea, Final Findings, Inquiry No. NQ-95-002,
(Ministry of Trade and Commerce, November 6, 1995) (Final Findings)
Refined Sugar from the United States, Denmark, Germany, the Netherlands and the
United Kingdom, Inquiry No. NQ-95-002 (Ministry of Trade and Commerce,
November 6 and 21, 1995) (Final Findings)
Legal Instruments/Documents

International legal treaties

Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994 (Anti-Dumping Agreement), Annex 1A, THE LEGAL TEXTS: THE
RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS 1868 U.N.
T.S. 201
Marrakesh Agreement Establishing the World Trade Organization (the WTO
Agreement), Annex 1A, THE LEGAL TEXTS: THE RESULTS OF THE URUGUAY ROUND
OF MULTILATERAL TRADE NEGOTIATIONS,1867 U.N.T.S. 154
Agreement on Safeguards, Annex 1A, THE LEGAL TEXTS: THE RESULTS OF THE
URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS, 1869 U.N.T.S. 154
Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, Marrakesh
Agreement Establishing the World Trade Organization, Annex 1A, THE LEGAL
TEXTS: THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE
NEGOTIATIONS 231, 1869 U.N.T.S. 14
General Agreement on Tariffs and Trade 1994, Apr. 15, 1994, Marrakesh
Agreement Establishing the World Trade Organization, Annex 1A, THE LEGAL
TEXTS: THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE
NEGOTIATIONS 17 (1999), 1867 U.N.T.S. 187, 33 I.L.M. 1153 (1994) [April 14,
1994]
GATT/WTO-related and other international documents
Communication from Japan, Negotiating Group on MTN Agreements and
Arrangements, MTN/GNG/NG8/W/11 (September 28, 1987)
Communication from the Delegation of Hong Kong, Negotiating Group on MTN
Agreements and Arrangements, MTN/GNG/NG8/W/51/Add/1 (December 22,
1989)
Communication from the Republic of Korea, Negotiating Group on MTN
Agreements and Arrangements, MTN/GNG/NG8/W/3 (May 20, 1987)
Negotiating Group on Rules Communication from the United States, Causation
(ADA Article 3.5; ASCM Article 15.5), TN/RL/GEN/59 (July 13, 2005)

xxxvii
xxxviii Legal Instruments/Documents

Negotiating Group on Rules Communication from the United States, Identification

of Additional Issues Under the Anti-Dumping and Subsidies Agreements,
TN/RL/W/98 (May 6, 2003)
ECOSOC, Verbatim Report of the Seventh Meeting of Committee of the
International Conference on Trade and Employment, II, E/PC/T/C/II/PV/7, held in
the Hoare Memorial Hall, Church House, Westminster, S. W. (November 1, 1946)
Group “Non-Tariff Measures” Sub-Group “Technical Barriers to Trade”,
Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the
General Agreement on Tariffs and Trade, MTN/NTM/W/226 (April 5, 1979)
Negotiating Group on Rules, Submission by Australia, TN/RL/W/86 (April 30,
2003)
Negotiating Group on Rules, Communication from Egypt, TN/RL/ W/56 (February
10, 2003)
Negotiating Group on Rules, Communication from the Chairman, Agreement on
the Implementation of Article VI of the General Agreement on Tariffs and Trade,
TN/RL/W/254 (April 11, 2011)
Negotiating Group on Rules, Communication from the United States,
TN/RL/W/130 (June 20, 2003)
Negotiating Group on Rules, Communication of Australia, Paper by Australia:
Comments on Document, TN/RL/W/6, TN/RL/W/22 (October 15, 2002)
Negotiating Group on Rules, Paper from South Africa, Proposals on Issues
Relating to the Antidumping Agreement, TN/RL/GEN/136 (May 29, 2006)
Negotiating Group on Rules, Draft Consolidated Chair Texts of the AD and SCM
Agreements, TN/RL/W/213 (November 30, 2007)
Negotiating Group on Rules, Hong Kong, China; Japan; Korea, Rep. of; Norway;
Switzerland; and the Separate Customs Territory of Taiwan, Penghu, Kinmen and
Matsu, TN/RL/W/233 (March 12, 2008)
Negotiating Group on Rules, New Draft Consolidated Chair Texts for AD and SCM
Agreements, TN/RL/W/236 (December 19, 2008)
Negotiating Group on Rules, Paper by Friends of Antidumping, Antidumping:
Illustrative Major Issues, TN/RL/W/6 (April 26, 2002)
Negotiating Group on Rules, Paper from Friends of Antidumping, Second
Submission of Proposals on the Determination of Injury, TN/RL/W/38 (March 23,
2005)
Negotiating Group on Rules, Paper from South Africa: Proposals on Issues
relating to the Antidumping Agreement, TN/RL/GEN/136 (May 29, 2006)
Negotiating Group on Rules, Proposal of the People’s Republic of China on the
Negotiation on Antidumping, WTO Negotiating Group on Rules, TN/RL/W/66
(March 6, 2003)
Negotiating Group on Rules, Second Submission of India: Antidumping Agreement,
TN/RL/W/26 (October 17, 2002)
Negotiating Group on Rules, Submission from the People’s Republic of China,
Replies to the Questions and Comments of the WTO Members Concerning the
Proposal of China, TN/RL/W/94 (May 5, 2003)
Legal Instruments/Documents xxxix

Negotiating Group on Rules, Working Document from the Chairman,

TN/RL/W/232 (May 28, 2008)
Negotiating Group on Safeguards, Communication from Australia, Hong Kong,
Korea, New Zealand and Singapore, MTN/GNG/NG9/W/8 (October 5, 1987)
Negotiating Group on Safeguards, Communication from Brazil, Elements for a
Comprehensive Understanding of Safeguards, MTN/GNG/NG9/W/3 (May 25,
1987)
Negotiating Group on Rules, Paper from Friends of Antidumping, Second
Submission of Proposals on the Determination of Injury, TN/RL/W/38 (March 23,
2005)
Report of the Inter-sessional Working Party on the Complaint of Czechoslovakia
Concerning the Withdrawal by the United States of a Tariff Concession under
Article XIX of the GATT, GATT/CP/106 (October 22, 1951)
Sub-Committee on Non-Tariff Barriers Group on Anti-Dumping Policies, Draft
Report on the Group on Anti-Dumping Policies, TN/64/NTB/W/19 (April 24,
1967)
Submission from the Nordic Countries, Negotiating Group on MTN Agreements
and Arrangements, MTN/GNG/NG8/W/15 (November 16, 1987)
World Trade Organization, ADP Committee, Recommendations for Data Collection
for Antidumping Investigations, G/ADP/6 (May 16, 2000)
WTO Negotiating Group on Rules, Communication of Australia, Paper by
Australia: Comments on Document, TN/RL/W/6, TN/RL/W/22 (October 15, 2002)
WTO Negotiating Group on Rules, Proposal of the People’s Republic of China on
the Negotiation on Antidumping, TN/RL/W/66 (March 6, 2003)
WTO Negotiating Group on Rules, Second Submission of India: Antidumping
Agreement, TN/RL/W/26 (October 17, 2002)
WTO Negotiating Group on Rules, Submission from the People's Republic of
China, Replies to the Questions and Comments of the WTO Members Concerning
the Proposal of China, TN/RL/W/94 (May 5, 2003)
WTO, Ministerial Declaration of 14 November 2001, WT/MIN (01)/DEC/1, 41 I.L.
M. 746 (2002)
Archive of European Integration, The First Commission Report on Anti-Dumping
and Anti-Subsidy Activities, Information Memo P-87/83 (September 1983)
Committee on Trade and Development, Communication from the European
Communities, WTO Work Program on Special and Differential Treatment—Some
EU Ideas for the Way ahead, TN/CTD/W/20 (November 18, 2002)
Statutes and Regulations
India
Customs Tariff Act (Amended), 1975
Foreign Trade (Development & Regulation) Amendment Act of India, 2010
Antidumping Rules [Customs Tariff (Identification, Assessment and Collection of
Anti-Dumping Duty on Dumped Articles for Determination of Injury) Rules, 1995
xl Legal Instruments/Documents

Collection of Anti-Dumping Duty on Dumped Articles and for Determination of

Injury, Amendment Rules, 2011
Customs Tariff (Anti-Dumping) Rules of India, 1995
United States of America
Anti-Dumping Act of 1916, 15 U.S.C. 72 (1994)
Clayton Antitrust Act (1914), 15 U.S.C. §§ 12–27, 29 U.S.C. §§ 52–53
Customs Tariff Act, 1897
The Revenue Act, 1962, Pub.L. 87–834
Sherman Antitrust Act, 1890, 15 U.S.C. §§ 1–7
Tariff Act, 1890 (a.k.a. “Mckinley Tariff”)
The Tariff Act, 1930, Pub.L. 71–361
Tariff Commission Act, 1970
The Antidumping Act, 1921 19 U.S.C. 160
The Trade Act, 1974, 19 U.S.C. 12
The Trade Agreements Act, 19 U.S.C. §§ 2501–2581
South Africa
International Trade Administration Act of South Africa, 2002
South Africa Customs Tariff Act, 1914
Canada
Antidumping Act of Canada, 1970
Customs Tariff Act of Canada, 1897
Special Import Measures Act of Canada, 1984
UK
British Safeguarding of Industries Act, 1921
China
Anti-Dumping Regulations of the People’s Republic of China, 2004
European Union
Council Regulation (EC), 1372/ 2005 (August 19, 2005)
Australia
Customs Act of Australia, 1904
General Introduction

This book is a comprehensive treatment of injury and causation in the context of

trade remedy law—an arcane area of international trade law. But the book touches
upon, rather eloquently, a larger issue of demonstrating causal link or determining
legal responsibility within the context of economic legislations. Even within the
domain of Common Law, the philosophical and practical nuances of establishing a
link between the cause and effect have puzzled a large section of legal community
for centuries. Having analyzed James Nedumpara’s work, I am convinced that this
problem is more acute in the context of international trade law. One of the vexing
issues is that, in the strict sense, imports need not be a cause-in-fact or a cause in the
economic sense, but is deemed as a cause by virtue of the trade remedy legislation.
But leaving aside that issue, the nature and extent of causal connection itself is
contentious.
This book has several purposes. It has provided a rounded analysis of the WTO
case law and the areas where coherence is needed. In addition, the book has
analyzed the puzzling areas of injury and causation in trade remedy law in the
context of various WTO members including India. The book has provided a facile
introduction to the evolution of injury and causation in trade remedy law and has
examined the legislative history in the USA and several other GATT/WTO
members. The legislative history is key to understanding the role and purport
of these agreements.
The issue of injury and causation in trade remedy will continue to receive good
attention. It is not easy to solve the conundrum, but it will be important to shape the
causality determination in light of a clearer and better appreciation of the changing
role of these instruments. This is where this book could be of immense help and
guidance to the trade law community. While the world is embracing sophisticated
versions of preferential and regional trade agreements, the temptation for import
protection has not diminished in any sense. The WTO statistics indicate that trade
remedy cases have increased in the last decade when compared to the previous
periods in history.
I have no hesitation in saying that this is a unique contribution and I am glad to
have advised Nedumpara as a research guide in shaping the contours of this

xli
xlii General Introduction

research. The readers can gain a broad perspective of how trade remedy instruments
are implemented among various jurisdictions. The book also provides a compelling
analysis of the challenges posed by the WTO panels and the Appellate Body in the
area of injury and causation. The twin assessment of the WTO law and the member
practices is bound to create significant interest for any reader who is keen to know
more about the conduct of trade remedy investigations.

Bengaluru O.V. Nandimath

June 2016 Professor and Registrar
National Law School of India University
Chapter 1
Injury and Causation in Trade Remedy
Law: An Introduction to the Enquiry

Abstract Trade remedy laws predicate their foundation on the very existence of
“injury” to the domestic industry. While the nature and degree of causal relationship is
unspecified in the WTO trade remedy agreements, the WTO panels and the Appellate
Body have crafted certain treaty specific standards on injury and causation in all three
categories of trade remedies. This introductory chapter examines the currently
available literature on the application of appropriate injury and causation standards in
WTO trade remedy law. This chapter sets out the key focus of enquiry of this book and
the desirability of achieving coherence in evaluating injury and the causal link.

A Introduction

The World Trade Organization (WTO) treaty seeks to liberalize international trade
and remove barriers to movement of goods and services. However, the WTO treaty
also permits a member country, in certain circumstances, to impose import restrictions
in the form of higher tariffs or quotas for addressing the harm caused to its domestic
country industry from imports. The unilateral actions permitted under the WTO
include antidumping (AD) actions, countervailing duty (CVD) actions, and safe-
guards. An AD action is taken when a foreign exporter sells a product in the foreign
market at a price lower than its home market price, and consequently injures the
domestic industry. A CVD action may be filed against foreign exporters or producers
who benefit from a government subsidy in their home market and, as a result, injures
the industry in the importing country. In both instances, the effect of the subsidy or
dumping must be to cause or threaten to cause certain harm or damage, known in trade
parlance as “material injury”, to a domestic industry or to “materially retard the
establishment of a domestic industry”. The third category, namely, safeguard actions
are taken when increased imports cause “serious injury” to the domestic industry.
A triumvirate of these actions is popularly known as ‘trade remedies’.
Trade remedy investigations have significant political appeal and have been used by
various domestic constituents to seek import relief. Such measures raise tariffs or adopt
similar measures to specific goods, and effectively neutralize, in a significant measure,

© Springer Science+Business Media Singapore 2016 1

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_1
2 1 Injury and Causation in Trade Remedy Law …

the tariff concessions made in previous trade negotiations. Especially after the estab-
lishment of the WTO, there has been a significant increase in such actions.
Multilateralizing trade remedies through the WTO resulted in a number of countries,
which had hitherto no experience or domestic legislative framework for such instruments
adopting and enforcing them with rigour. As trade liberalization resulted in lowering of
tariffs or other protection across countries, recourse to trade remedy instruments became
widely common. More than 4900 antidumping investigations have been initiated by
WTO members in the last 20 years. The other two trade remedy measures, viz., coun-
tervailing duty actions (CVD) and safeguard actions are also not infrequent.1
Trade remedy laws predicate their foundation on the very existence of “injury”
to the domestic industry. The WTO Treaty and, in particular, the relevant covered
agreements ensure that the afore-mentioned trade remedies can be resorted to only
when there is a causal relationship between dumping/subsidization or increased
imports and the injury to the domestic industry. The domestic industry may suffer
injury on account of a number of factors, which could be a few or many depending
on the facts and circumstances. However, trade remedy measures can only be used
to offset the injury attributable to unfair/increased imports and not for serving
protectionist purposes. Stated differently, injury and causation provisions act as
filters or anti-abuse provisions to the application of trade remedy measures.
Trade remedy measures predated the WTO and even the GATT 1947. However,
the causation (or causality; throughout this book both the terms ‘causality’ and
‘causation’ are interchangeably used) language in the GATT/WTO was often con-
tentious and called for negotiating compromises. The causation language in inter-
national trade remedy treaties has undergone myriad changes since the establishment
of the GATT in 1947. Some of the changes were canvassed by countries that were
keen to ensure harmony between their domestic legislation and international treaties.
The following sections outline the complexities of the problem, the questions
that remain unresolved as a consequence of the interpretation of the WTO dispute
settlement panels and the Appellate Body and the research design of this study.
A review of the relevant literature is also attempted in the introduction to the
research problem. The following discussions also deal with the structure of enquiry
and the methodology adopted in this study.

B Injury and Causation in Trade Remedies: Persisting

Issues

Trade remedy actions occupy an important role in international trade, although they
are widely considered as antithetical to the concept of free trade. Trade remedy
measures enable governments to pursue trade liberalization as they act as a buffer

1
Chad P. Bown (2014), Global Antidumping Database, http://go.worldbank.org/KR19BT5EQ0
(updated as of December, 2014); see also World Trade Organization, Documents online, http://
docs.wto.org (last visited May 26, 2015).
B Injury and Causation in Trade Remedies: Persisting Issues 3

against unforeseen situations where imports are perceived to be causing injury to

the domestic industry. The very concept of injury varies depending on the laws
governing the investigations.2 While antidumping and countervailing duties deal
with ‘material injury’, safeguards investigations deal with ‘serious injury’. Both
these terms are not properly defined in the WTO treaty, but refer to a general
decline in the economic parameters of the domestic industry.
There are built-in restraints in various trade agreements against the indiscrimi-
nate use of such measures. The WTO covered agreements, however, require that the
above trade remedies can be resorted to only when there is a causal relationship
between dumping/subsidization or increased imports and the injury to the domestic
industry. However, the WTO agreements that deal with trade remedies provide only
limited guidance on the meaning, degree or nature of the causal relationship. As
outlined earlier, the absence of a definition on what could constitute “material
injury” or “serious injury” can be problematic; however, the greater challenge for
the investigating authorities is in performing the “non-attribution” test. The
non-attribution test is about isolating and explaining away the role of factors other
than imports to ensure that the injury caused by other factors is not attributed to
dumped, subsidized or increased imports.3
As originally conceived, the non-attribution analysis entailed certain weighing
and comparison of causes. The negotiating history of injury and causation provi-
sions under the Kennedy and Tokyo Rounds or even the WTO treaty established
under the Uruguay Round can provide certain explanatory force to this effect. It is
more or less clear from the negotiating history that the drafters wanted the inves-
tigating authorities to take into account the influence of “other factors” in exam-
ining whether they break the chain of causation or not, rather than examining the
individual impact of each known factor. However, the WTO panels and the
Appellate Body have been extremely critical of the conduct of the non-attribution
analysis of the various national trade remedy investigating agencies.4 The WTO
Appellate Body in a number of cases involving trade remedy measures had ruled
that the investigating agencies have an obligation to segregate and distinguish the
“other known factors” from dumped/subsidized or increased imports and make sure
that the injury caused by such factors is not attributed to such imports.5

2
J.J. Fetzer, Inference for economic modeling in antidumping, countervailing duty and safeguard
investigations, 8(4) WORLD TRADE REVIEW 545, 545-556 (2009).
3
Jorge Miranda, Causal Link and Non-Attribution as Interpreted in WTO Trade Remedy Disputes,
44(4) JOURNAL OF WORLD TRADE 729 (2010) (explaining how non-attribution is conducted in the
context of WTO cases).
4
ALAN O. SYKES, THE WTO AGREEMENT ON SAFEGUARDS: A COMMENTARY 174 (2006). See infra,
Chap. 2 of this book for a detailed discussion on this topic.
5
Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel
Products from Japan, WT/DS184/AB/R, (August 23, 2001)[hereinafter “Appellate Body, US-
Hot-rolled Steel); Appellate Body Report, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R,
WT/DS178/AB/R (May 16, 2001).
4 1 Injury and Causation in Trade Remedy Law …

This requirement is broadly known as the “non-attribution” requirement. The

United States, for instance, lost most if not all safeguard cases in the WTO where its
conduct of non-attribution analysis was challenged. As Appendix of Chap. 3 of this
book demonstrates, several disputes in the WTO have examined the matter of
non-attribution in injury and causation.6
The WTO cases after the US—Hot-rolled Steel have elevated the
“non-attribution” test to the status of an inviolable requirement necessitating the
need to identify and, where possible, separate the role of each factor. Such an
approach is evident from a few selected statements of the Appellate Body in cases
such as US—Line Pipe,7 US—Hot rolled steel8 and US—Wheat Gluten.9 For
example, in the US—Line Pipe, the Appellate Body ruled that one of the objectives
of the non-attribution is to make sure that only an appropriate share of overall injury
is attributed to increased imports.10 However, neither the panels nor the Appellate
Body has provided any clarity as to how this could be done.
There is a strong body of literature that suggests that the injury and causation
standards in the trade remedy field have become incoherent and confusing.11 Jorge
Miranda comments that some of the methodological tools used for the non-attribution
have limitations and could prove misleading or inconclusive.12 Alan Sykes argues
that the causal connection between increased imports and injury is fundamentally
incoherent. As Sykes argues, from the standpoint of economic logic, import quantities
are not a causal or exogenous variable—they are endogenous and result from other
forces.13 Assuming that the imports and domestic products are perfect substitutes,
according to Sykes, the quantity of imports will just equal the difference between
domestic demand and domestic supply at the equilibrium price. Within this frame-
work, the exogenous factors are the determinants of domestic supply, domestic
demand, and the import supply curve. Factors such as consumer tastes and incomes

6
See infra, Chap. 3, Appendix.
7
Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Circular
Welded Carbon Quality Line Pipe from Korea, ¶ 252, WT/DS202/AB/R (March 8, 2002)
[hereinafter Appellate Body Report, US- Line Pipe].
8
Appellate Body Report, United States – Anti–Dumping Measures on Certain Hot–Rolled Steel
Products from Japan, WT/DS184/AB/R (August 23, 2001).
9
Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat
Gluten from the European Communities (“US- Wheat Gluten”), WT/DS166/AB/R ¶ 69 (January
19, 2001) (emphasizing the need to “distinguish” the injury caused by imports from the injury
caused by other factors).
10
Appellate Body Report, US- Line Pipe, ¶ 252.
11
Alan Sykes, The Safeguard Mess: A critique of WTO jurisprudence, 2(3) WORLD TRADE REVIEW
261 (2003); Chad P. Bown, Why are Safeguards Under the WTO so Unpopular, 1 WORLD TRADE
REVIEW 47 (2002); Douglas Irwin, ‘Causing Problems’: The WTO Review of Causation and Injury
Attribution in US Section 201 Cases, 2(3) WORLD TRADE REVIEW 297 (2003).
12
Jorge Miranda, Causal Link and Non-Attribution as Interpreted in WTO Trade Remedy Disputes,
44(4) JOURNAL OF WORLD TRADE 729, 760(2010).
13
ALAN O. SYKES, The Safeguard Mess: A critique of WTO jurisprudence, 2(3) WORLD TRADE
REVIEW 261 (2003).
B Injury and Causation in Trade Remedies: Persisting Issues 5

can affect domestic demand; other factors such as costs of inputs in production and the
state of available production technology can determine domestic supply; other factors
affecting supply and demand in other countries can also determine import supply.
Based on this reasoning, the quantity of import is determined by the interaction of
these forces.
In addition to Sykes, a number of authors have investigated whether affirmative
results of injury and causal link in trade remedy investigations can be explained by
“injury from imports”. These studies include the research published by Kelly,14
Pindyck and Rotemberg,15 Grossman and Mavroidis,16 etc. Some of the studies,
especially in the field of economics, have found that non-import related factors—as
proxied by general macroeconomic conditions such as movements of GDP,
employment or other conditions could be determined as the dominant reasons for
injury depending on the facts of each individual case.17 According to this view, the
prices and quantities of imported and domestic goods in commonly used supply and
demand models of markets in international trade are endogenously determined. The
major shortcoming, in the opinion of certain economists, is that imports per se
cannot be the cause of injury and that it is incorrect to assume that import volumes
or quantities ‘causes’ decline in price or output in the domestic industry.18
However, based on a public choice analysis of the trade remedy laws, Sykes and
others argue that instead of ascribing economic logic to such laws, one has to view
them as part of a grand and political compact among major trading nations.19 Other
commentators have also argued that the economic rationale of trade remedy laws
rests on murky theoretical foundation and is not empirically sustainable.20
A detailed literature review on injury and causation in trade remedy law is
provided in Chaps. 2 and 3 of this book.

14
K. Kelly, An Analysis of Causality in Escape Clause Cases, 37(2) JOURNAL OF INDUSTRIAL
ECONOMICS, 187-207 (1998).
15
R.S. Pindyck & J.J. Rotemberg, Are Imports to Blame? Attribution of Injury under the 1974
Trade Act, 30 JOURNAL OF LAW AND ECONOMICS 101 (1987).
16
Henrik Horn & Petros C. Mavroidis, United States- Safeguard Measures on Imports of Fresh,
Chilled or Frozen Lamb Meat from New Zealand and Australia: What Should be Required of a
Safeguard Investigation?’ in THE WTO CASE LAW of 2001 (H. Horn and P.C. Mavroidis eds.,
2003).
17
See for example, J. Michael Finger, Flexibilities, Rules, and Trade Remedies in THE GATT/WTO
SYSTEM IN THE OXFORD HANDBOOK ON WORLD TRADE ORGANIZATION 428 (Amrita Narlikar et al. eds,
2012).
18
H. Horn and P.C. Mavroidis, United States- Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia: What Should be Required of a Safeguard
Investigation?’ in THE WTO CASE LAW OF 2001 (H. Horn and P.C. Mavroidis eds., 2003). See also
Alan O. Sykes, The Economics of Injury in Antidumping and Countervailing Duty Investigations,
16 INTERNATIONAL REVIEW OF LAW AND ECONOMICS 5, 10 (1996).
19
A.O. Sykes, The Economics of Injury in Antidumping and Countervailing Duty Cases, 16
INTERNATIONAL REVIEW OF LAW AND ECONOMICS 5 (1996).
20
MICHAEL J. TREBILCOCK & ROBERT HOWSE, THE REGULATION OF INTERNATIONAL TRADE 259 (3RD
EDN., 2010).
6 1 Injury and Causation in Trade Remedy Law …

This analytical work would like to steer clear of this debate and assumes that
imports, fair or unfair, are causal under antidumping, CVD and safeguards inves-
tigations. Such an assumption lies at the heart of trade remedy legislations. In that
context, this study enquires whether it is essential to insist on econometric
approaches to establishing injury and causation as hinted by some of the WTO
Panel and the Appellate Body decisions.21 It is important to ask whether most of the
WTO members are capable of doing such a rigorous analysis involving econo-
metrics and sophisticated statistical tools.22 While an econometric approach to
establishing injury and causation has certain intuitive appeal,23 does the evidence
from various countries suggest that the WTO members have the capability to
routinely conduct and establish such analysis? In the light of the above, it is
examined in this study whether the non-attribution test is a process requirement
rather than an economic concept aimed at precise identification of injury and
causation. In order to address this issue, it is important to examine the practices of
the key users of trade remedies to get an understanding of how they conduct injury
and causation. The trade remedy agreements provide a significant amount of leeway
to the member countries in establishing causation and the scope of interference by
WTO panels is narrow in the light of the standard of review suggested for the
dispute settlement panels. Therefore, rather than examining whether such investi-
gations do conform to the requirements of the WTO treaty text and dispute set-
tlement jurisprudence, it is more pertinent to ask how the key users conduct their
injury and causation analysis so as to ensure their treaty obligations. It is pertinent
to add here that the question as to how the role of various causal factors can be
measured or separated is an economic or statistical enquiry whereas the focus of this
study is to examine what treaty obligations the WTO members have assumed in
respect of injury and causation analysis and how the members could potentially
meet their treaty obligations. Towards this end, it is necessary to examine the WTO
member practices as evidenced by the WTO dispute settlement proceedings
examining trade remedy investigations and domestic investigations by some of the
key players. Although the purpose of the non-attribution language is to ensure that
injurious dumped/subsidized/increased imports should have, without the help of
other factors, caused the injury, it should not result in foisting a requirement on
WTO members which is not easy to meet with.
It is also seen that the non-attribution analysis is tied to the nature and degree of
causal relationship between imports and the alleged injury to the domestic industry.
Prior to the conclusion of the Uruguay Round (1986–1994), various GATT rounds
had addressed the issue whether imports should be the “principal cause” of injury,

21
Appellate Body Report, US –Line Pipe, ¶ 252.
22
J.P. Durling & M. P. McCullough, Teaching Old Laws New Tricks: The Legal Obligation of
Non-Attribution and the Need for Economic Rigor in Injury Analyses Under US Trade Law, in
HANDBOOK OF INTERNATIONAL TRADE (E. Kwan Choi & James Hartigan eds., 2004).
23
K. Kelly, An Analysis of Causality in Escape Clause Cases, 37(2) JOURNAL OF INDUSTRIAL
ECONOMICS 187-207 (1998); G.M. Grossman, Imports as a Cause of Injury: The Case of the US
Steel Industry, 20 (3 &4) JOURNAL OF INTERNATIONAL ECONOMICS 201, 223 (1986).
B Injury and Causation in Trade Remedies: Persisting Issues 7

or “substantial cause” of injury, or the “predominant cause of injury” or a just a “a

cause”. These issues invoked significant epistemological difficulties from a cau-
sation point of view.24 This analytical work proceeds on the proposition that cau-
sation in trade remedy law is a policy dependent matter and that a scientific or
econometric approach is neither necessary nor strictly enforced in practice. To
elaborate, a strict non-attribution may be required if the authorities have to establish
a “genuine and substantial relationship of cause and effect” between imports and the
alleged injury; however, the degree of cause will be less rigorous if imports have to
be just a “cause”. In order to examine this proposition, this research seeks to
examine the evolution and the traditional role of each of the trade remedies dating
back to the early twentieth century.
Furthermore, a review of WTO case law25 and the discussions in the Rules
Negotiations26 under the Doha Round clearly indicate that the current state of play
in injury and causation is controversial and is lacking in coherence. For instance,
Terence, Dwyer and Hein argue that the Appellate Body has “overreached” its
mandate in these cases.27 While negotiations are taking place in Geneva on
reforming the Antidumping Agreement and the Subsidies and Countervailing
Measures Agreement, it is perceived that the injury and causation issue cannot be
addressed without introducing conceptual clarity on the meaning of causation itself.
However, current negotiations do not indicate that such an effort has been made.
This research study is an attempt in understanding the meaning of injury and
causation in the context of trade remedy law by grounding its basis in the general
theories of causation in law. It is further examined whether the Necessary Element
of a Sufficient Set (NESS) test elaborated upon by Richard Wright could provide a
conceptual grounding to the theory of causation in trade remedy law.

C Purpose of the Enquiry on Injury and Causation

Establishing injury and causality or even conducting non-attribution is not neces-

sarily legal, but may require multidisciplinary approaches. There could be umpteen
economic or non-economic factors which could explain the poor state of the
domestic industry and, therefore, it will be difficult to establish whether a factor

24
RAJ BHALA, MODERN GATT LAW 804 (2005).
25
Douglas A. Irwin, ‘Causing Problems’: The WTO Review of Causation and Injury Attribution in
US Section 201 Cases, 2(3) WORLD TRADE REVIEW 297 (2003); Jorge Miranda, Causal Link and
Non-Attribution as Interpreted in WTO Trade Remedy Disputes, 44(4) JOURNAL OF WORLD TRADE
729 (2010); Alan Sykes, The Safeguard Mess: A critique of WTO jurisprudence, 2(3) WORLD
TRADE REVIEW 261 (2003).
26
See Infra Chap. 6.
27
Terence P. Stewart, Amy S Dwyer & Elizabeth M. Hein, Trends in the Last Decade of Trade
Remedy Decisions: Problems and Opportunities for the WTO Dispute Settlement System, 24
(1) ARIZONA JOURNAL OF INTERNATIONAL AND COMPARATIVE LAW 251, 277 (2007).
8 1 Injury and Causation in Trade Remedy Law …

alone or in combination with other factors is substantially causing injury to the

domestic industry in the importing country. One of the key objectives of this
research is to understand the scope and meaning of non-attribution, which is an
important element in the injury and causation determination. The emphasis on
separating and isolating the impact of each causal factor is fraught with imper-
fections and inaccuracies. This study seeks to provide a thorough and compre-
hensive analysis of the WTO jurisprudence on injury and causality with special
reference to the non-attribution test. While doing so, this study also seeks to bridge
the information gap regarding the WTO member practices in the field of injury and
non-attribution analysis in trade remedy investigations.
Several developed and developing nations have become prominent users of the
trade remedy instruments. While the United States, Canada and the European Union
have been the traditional users, new users such as India, China, Brazil, and
Argentina have also been aggressive in pursuing trade remedy actions. This book
has examined the injury and causation analysis of both the traditional and new
users. In particular, an effort has been made to understand the key determinants
which are given weightage or consideration in the injury and causation analysis.
Every effort was made to understand how the traditional and new users conduct the
non-attribution test in the injury and causation analysis. Another consideration was
whether the major users are receptive to using rigorous economic analysis and
quantitative tools.
In addition, this study proceeds on the basis that the key to resolving the cau-
sation muddle in trade remedy law is to find out an appropriate conceptual standard
in the general theories of law. For example, this book has devoted several pages for
examining the utility of the “but-for” test. Central to this enquiry is the nature of
causal connection itself, i.e., whether the imports should be the necessary cause,
sufficient cause or a mere cause, including the degrees of necessity and sufficiency
required in this connection. Based on this premise, this research seeks to ground the
injury and causality debate in trade remedy in the general principles of law. This
enquiry is based on the assumption that the current approaches to establishing
injury and causation, especially the approaches suggested by the WTO Appellate
Body are, to an extent, incoherent and impose an onerous procedural requirement
on trade remedy authorities.
Issues relating to injury and causality in antidumping and subsidies are central to
the ongoing Rules negotiations of the Doha Round in the WTO. This study is aimed
at informing the debate of the ongoing negotiations and filling the existing gaps in
knowledge in this field. Towards this objective, there is a fairly detailed analysis of
the proposals in the Rules negotiations under the Doha Round. A major hypothesis
of study was that injury and causation determination in trade remedy investigations
is a policy dependent exercise and is not amenable for a strict and rigorous standard
of causation.
D Methodology 9

D Methodology

The study involves an understanding of the evolution of injury and causality

instruments in various domestic legal systems and under various international trade
agreements. A large part of the analysis undertaken in this work is descriptive and
analytical.
The primary source for evaluation of injury and causation are international
treaties on trade remedies and various national legislations and executive orders
enforcing the trade remedy law. In fact, an evaluation of the legislations in the
United States starting from the U.S. Antidumping Act, 1916 are found to be
extremely useful in understanding the historical background and context for
developing trade remedy statutes. Likewise, the Basic Regulations and the suc-
cessive treaties that led to the formation of the European Union (EU) can provide
useful insights into the implementation of trade remedies in the EU. Furthermore,
several countries including Canada and South Africa had implemented trade rem-
edy measures, especially antidumping measures even before the establishment of
the GATT 1947. This study has traced the origin of trade remedies in various
domestic jurisdictions and how the current language on injury and causation in the
GATT/WTO was shaped and influenced by domestic legislations of some of the
major users.
More than one-third of the cases brought for WTO dispute settlement are trade
remedy cases.28 The vast body of WTO jurisprudence available in the field of trade
remedies is instructive in understanding the injury and causation provisions under
the GATT/WTO. A bulk of this study is based on the interpretative approach of the
WTO panels and the Appellate Body in reviewing trade remedy cases and, to this
extent, is doctrinal. The discussion of the WTO case law is to provide a systematic,
analytical and evaluative exposition of the WTO jurisprudence in injury and
causality. In this regard, a detailed analysis of the injury and causality arguments
involved in the WTO disputes during the last 20 years (1995–2014) and a few
GATT disputes (1947–1994) is attempted. In addition to the analysis of the reported
WTO cases, this analysis has also examined the various written submissions made
by WTO members in the WTO dispute settlement, to the extent that they are
available in the public domain.29 The study has also examined the negotiating
proposals of various WTO members submitted as part of the Rules Negotiations of
the Doha Round. All the negotiations proposals and submissions are available from
the Documents online portal of the WTO.30

28
WTO’s Dispute Settlement Gateway at http://www.wto.org/english/tratop_e/dispu_e/dispu_e.
htm.
29
Only a limited number of WTO members such the European Union and the United States
provide public access to their submissions to the dispute settlement body.
30
World Trade Organization, Documents online, available at https://docs.wto.org.
10 1 Injury and Causation in Trade Remedy Law …

In addition to doctrinal approach, this research study has also conducted a

qualitative assessment of injury and causation determination based on detailed case
studies of antidumping and safeguards investigations held in India. Case studies are
often seen as prime examples of qualitative research which adopts an interpretive
approach to data or practices.31 The purpose is to examine the process and type of
analysis adopted in conducting injury and causation in trade remedy cases. Nineteen
(19) cases were chosen in the field of antidumping and twelve (12) cases were
chosen in the field of safeguards. These cases have been selected from different time
periods in order to obtain a broadly representative understanding as well as to gather
a better appreciation of the shifts in the analytical approaches of the investigating
agencies over time. Since India has limited experience in conducting full-fledged
countervailing duty (CVD) or anti-subsidy investigation, such a case study was not
possible in the field of CVD actions. Furthermore, in order to understand the practice
of other key users, a review of the secondary literature, including scholarly works
and other articles published in professional journals was made.
The qualitative examination is based on a critical evaluation and observation of
the final findings of the Indian antidumping agency, namely the Directorate General
of Antidumping and Allied Duties (DGAD). India is one of the leading users of
antidumping actions and has completed more than 550 antidumping cases.
Therefore, in the case of antidumping investigations, the case studies are taken from
a pool of cases in which the findings of injury and causal link was a matter of
central enquiry in the investigation. In order to select the cases for detailed
observation analysis, a review of all antidumping cases between 1995 and 2013 was
initially undertaken to examine in how many of such cases injury and causality was
relevant.32 Since it is impossible to provide a qualitative analysis of the process,
methodologies and the nature of analysis on injury and causation involved in each
of these cases and also with a view to achieving precision, a list of nineteen
antidumping cases was drawn up based on the following criteria: (a) whether the
final findings contain a reasonable discussion on injury and causation, or
(b) whether any respondent/exporter had challenged the maintenance of investi-
gation for any alleged lack of injury/causation before the investigating authority or
before any appellate forums. This approach was chosen to ensure that the selection
of cases does not omit or disregard the significant or pertinent cases on injury and
causation. This approach was also necessitated by the fact that a number of parties,
especially foreign exporters or traders do not participate in the investigation and that
relevant arguments on injury and causation would not have been raised. The
findings in such cases are typically made on the basis of facts available.33

31
Jerry Wellington and Marcin Szcerbinski, RESEARCH METHODS FOR SOCIAL SCIENCES 91-92 (2008).
32
The injury and causation findings in all original findings have been compiled and documented
(on file with author).
33
See Article 6.8 and Annex II of the Antidumping Agreement. When interested parties do not
submit information within a reasonable period of time, the investigating authority is free to use the
best information available, which is also known as facts available.
D Methodology 11

Furthermore, in order to ensure that the case studies have included the relevant
cases, the details were further cross-checked with the Global Antidumping
Database maintained by Chad Bown of the World Bank.34 The Global
Antidumping Database maintains a detailed profile of antidumping cases conducted
by India and other WTO members. It also provides quantitative data on all aspects
of the investigation including dumping and injury. However, this database does not
provide details of how the decision was taken or why injury and causal link were
found to be existent or non-existent. However, during the analysis it was recon-
firmed that the nature or approaches to injury and causality analysis do not dras-
tically change from case to case although one could conclusively argue that there is
a trend towards a more thoroughgoing analysis of cases conducted after 2003.
Accordingly, the investigations were classified into two phases. Phase-I deals with
cases conducted between 1994 and 2003 and Phase-II dealing with cases examined
between 2004 and 2014. The cases were adopted on a broad longitudinal time-
frame, i.e., over a 20 year period in order to accurately capture the change in
antidumping practices and the nature of examination over time.
Furthermore, the case studies are chosen from diverse sectors of manufacture to
fully appreciate the approach and pattern in antidumping cases across products and
sectors. This methodology is expected to provide a better and comprehensive
understanding of the processes, methodology, reasoning and approach in
antidumping cases involving India. In addition, in order to understand the injury
and causation determination practices of other countries, a comparative analysis
based on a review of secondary literature such as published articles and case reports
was carried out. These countries account for more than 80 % of the world-wide
antidumping orders and can provide rich insights into the antidumping practices.
In the case of safeguards, choice of case studies for closer examination was
much easier. India had concluded only 30 odd safeguard cases. Out of these, 12
cases were chosen for careful study. In choosing the cases for detailed examination,
effort was made to choose cases spread across representative time frame, products
and sectors.
The case studies in antidumping and safeguards chosen for India systemically
examine whether the DGAD examined each of the material injury factors during the
injury investigation period. It also examines whether the DGAD conducted a
non-attribution analysis and how such an analysis was carried out. The pertinent
question was whether the authorities conducted a detailed examination of factors
other than imports in the causality determination. The case studies also enquire
whether the “other causes” were limited to the standard causes which are enlisted in
the Antidumping or the SCM Agreements or whether they were they based on a
case specific enquiry. Furthermore, in Appendix of Chap. 3, a detailed examination
of all the “other causes” identified by the WTO panels in all trade remedy

34
Chad P. Bown, Global Antidumping Database, The World Bank (2014), available at http://econ.
worldbank.org/ttbd/gad/.
12 1 Injury and Causation in Trade Remedy Law …

investigations brought to the WTO Dispute Settlement Body (DSB) between the
period 1995–2015 is provided.
The study has also used scholarly articles in exploring alternative conceptual
framework for causation in trade remedies. There is a rich body of literature
explicating the causation issues in the context of tort and contract law. These
general theories of law are not often referred to while suggesting reforms to injury
and causality in trade remedy law, although there have been a few recent attempts.35
The literature on causation in the general theory of causation is considered
instructive in the field of trade remedy law as well.
In addition to examining the primary documents, the study has been benefitted
by one to one exchanges with several practitioners, academicians and policy makers
in the field of trade remedy in India, EU and the United States.36 These interactions
helped the process of understanding the nature of injury and causation determi-
nation in several jurisdictions.

E Structure and Organization of the Book

The organization of this book is as follows: In order to understand the injury and
causation with respect to various trade remedy instruments, emphasis was laid on
identifying the role and function of each trade defense instrument under the
GATT/WTO. An important question was the following: how did the international
treaties on trade remedies adopt the current language? What was the rationale for
adopting a particular language for a specific trade remedy agreement? The political
economy considerations might have had a major influence in shaping a particular
causation language as opposed to various other alternatives. A review of
GATT/WTO treaty and their negotiating history is key to understanding the
objectives of the specific trade defense instruments and their role within the treaty
context. Chap. 2 of this book entitled Historical Evolution of Injury and Causation
in Trade Remedies under GATT/WTO is an attempt to discern the normative jus-
tifications as well as the political economy considerations that led the GATT
Contracting Parties to elect for a particular language in various trade remedy
agreements.
The decisions of dispute settlement bodies and other tribunals can throw immense
light on the application of causation provisions in the underlying domestic

35
Dukgeun Ahn & William J. Moon, Alternative Approach to Causation Analysis in Trade
Remedy Investigations” : ‘ Cost of Production’ Test, 44 (5) JOURNAL OF WORLD TRADE 1023,
1047-1051 (2010).
36
Interactions were conducted with Jennifer Hillman, Terence P. Stewart, Abhijit Das, Sharad
Bhansali, Sanjay Notani, Mukesh Bhatnagar, Mark Wu, Thomas Prusa, Nithya Nagarajan, Rajnish
Jaiswal, Peter Koenig, Jitendra Singh, Ashish Chandra, Jorge Miranda, Han Yong and several
other experts working in this field to understand the conduct of causality in several jurisdictions.
The concerned details of the interviews are mentioned at the relevant section.
E Structure and Organization of the Book 13

proceedings in various jurisdictions and how the reviewing courts would interpret and
evaluate the causation determination in such cases. Therefore as a logical second step,
this book undertakes a review of most of the GATT/WTO disputes (1947–2015)
which had some discussion on injury and causation in the fields of antidumping,
subsidies and countervailing measures, and safeguards. The disputes which are of
particular importance in this area include the decisions of the Appellate Body,
in US—Hot Rolled Steel (antidumping),37 EC—Pipe Fittings (antidumping),38
Mexico—Rice (antidumping),39 Argentina—Footwear (safeguards),40 US—Line
Pipe (safeguards),41 US—Lamb (safeguards),42 US—Wheat Gluten (safeguards),43
US—Steel (safeguards),44 etc. In addition to these landmark cases, this book will
examine the role of other panel decisions which have a jurisprudential significance. In
the above light, Chap. 3 of the book, which is entitled Injury and Causation in Trade
Remedy Law: An Analysis of the WTO Jurisprudence provides a critical analysis of the
WTO jurisprudence on injury and causation issues in trade remedy investigations.
As outlined above, one of the key research questions is whether the WTO
members are capable of performing the non-attribution requirement along the lines
of various panel and Appellate Body rulings. In the above context, it is necessary to
evaluate the substantive and procedural components of the non-attribution test.
Accordingly, this study undertakes an examination of the injury and causation
analysis in India by focusing on a select list of cases in the field of antidumping as
well as safeguards investigations. Chapters 4 and 5 of this book examine India’s
experience of conducting injury and causation in antidumping and safeguards
investigations respectively. In addition, Chaps. 4 and 5 include a secondary liter-
ature review of injury and causality determinations of other active users of
antidumping and safeguards instruments.
The ongoing Rules negotiations under the Doha Round is an appropriate
occasion to understand the views and reflections of the WTO members on injury
and causation. The views of the WTO members will be influenced by their

37
Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel
Products from Japan, WT/DS184/AB/R, adopted 23 August 2001.
38
Appellate Body Report, European Communities – Anti–Dumping Duties on Malleable Cast Iron
Tube or Pipe Fittings from Brazil, WT/DS219/AB/R (August 18, 2003).
39
Mexico – Definitive Anti-Dumping Measures on Beef and Rice, WT/DS295/AB/R (November
29, 2005).
40
Appellate Body Report, Argentina–Safeguard Measures on Imports of Footwear,
WT/DS121/AB/R (Jan.12, 2000).
41
Appellate Body Report, United States – Line Pipe.
42
Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, (May
16, 2001).
43
Appellate Body Report, United States – Wheat Gluten.
44
Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Certain
Steel Products, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R,
WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R (December 10, 2003).
14 1 Injury and Causation in Trade Remedy Law …

understanding of the domestic application of these remedies and the interpretations

accorded to these provisions by the WTO dispute settlement panels and the
Appellate Body. In the light of the developments made under the Rules negotia-
tions, this study explores whether the substantive proposals made by various
members are capable of addressing the injury and causation issues. Accordingly,
Chap. 6 examines the various negotiating proposals under Rules negotiations under
the Doha Round to examine some of the key proposals and the suggestions made in
the Chairman’s texts.
One of the points of enquiry in this study is the applicability of causation
standards in Common Law to trade remedy investigations. In order to provide a
conceptual framework for trade remedies, this book examines some of the dominant
writings on causation in Chap. 7. In particular, this book examines the work of H.
L. A. Hart and Tony Honoré,45 as well as Richard Wright.46 This study further
examines the suitability of the “Necessary Element of a Sufficient Set”, popularly
known as the NESS Test in providing a robust conceptual basis for the causal
relationship between the imports and the injury. According to the NESS test a
particular condition will be treated as a cause to a specific result only and only if it
was a necessary element of a set of actual conditions that was sufficient for the
occurrence a result. The NESS test has strong philosophic roots and can satisfac-
torily address a causal enquiry where multiple factors are involved. The book seeks
to examine the utility of the NESS test when compared to the “but-for” test or other
quantitative approaches involving economic or statistical tools.
Finally, this book examines if there is a need for the WTO Membership to
seriously consider the need to make clarifications or amendments to the treaty text
itself in order to reflect the current day practices, realities and exigencies that
underlie the use of various trade defense instruments. Chapter 8 summarizes some
of the key findings and observations.

F Limitations of the Study

This book addresses the issue of injury and causation from a legal perspective. As
Hart and Honoré said, causation need not be a legal issue, but law will have to
systematize the causal relationship.47 In relation to causation, there have been
several suggestions to use economic tools to evaluate the causal relationship in the
context of trade remedy proceedings.48 This research does not address arguments
either in favour of or against the use of economic tools. The focus of this research is

45
H L A HART & TONY HONORÉ, THE CAUSATION IN LAW (1959).
46
Richard Wright, Causation in Tort Law, 73 CALIFORNIA LAW REVIEW 1735 (1985).
47
HART & HONORÉ, supra note 45.
48
See for example A. Keck et al, A ‘Proababilistic Approach to Use of Econometric Modeling in
Sunset Reviews, 6(3) WORLD TRADE REVIEW 371 (2007).
F Limitations of the Study 15

on understanding the historical background and current application of injury and

causality provisions under the WTO trade remedy agreements and to suggest a
conceptual framework which could adequately answer the causation enquiry. The
practice of some of the key users such as India is also examined, but it is neither
logically desirable nor practically feasible to examine the practices of all major
users of trade remedies. The scope of the examination was to find out the
methodology applied by various jurisdictions including India in determining injury
and causation and to analyze how the key users are conducting the enquiry, what
analytical or economic tools are being used and how they comply with the
requirements imposed by the panels and the Appellate Body of the WTO. Having
said this, the clarification of causal concepts and the making of causal judgements
in trade remedy cases will be an unending journey; we can only seek to make the
journey a bit more stable, but not to predetermine the path itself.
Chapter 2
Historical Evolution of Injury
and Causation in Trade Remedies Under
GATT/WTO

Abstract This chapter traces the history of trade remedy legislations and the
evolution of various international instruments that were developed to discipline the
misuse and proliferation of trade remedy measures. In particular this chapter lists
out the key developments in the United States which emerged as a major user of
trade remedies. This chapter also examines the key developments that led to specific
trade remedy provisions under the various negotiating rounds of the GATT.

A Introduction

Trade remedy laws typically refer to national laws that impose import restrictions
against certain specific contingencies such as increased imports, or unfair imports.
Such remedies are often used by industries to seek protection from such fair or
unfair import competition. Establishing causal link in trade remedy investigations
between such unfair or fair imports and injury is an essential, but often problematic
part of all trade remedy investigations. The Antidumping Agreement as well as its
related trade contingency instruments, viz., safeguards and countervailing duty
investigations, provide a significant amount of discretion to the investigating
agencies as to how a causal link between injury and increased imports (or, dumped
imports in the case of the latter) has to be established.
At present, trade remedy investigations are governed at the multilateral level by
the World Trade Organization (WTO). A number of regional trade agreements and
economic partnership agreements also regulate trade remedy actions. However,
trade remedy actions are not anything new. Such actions have been maintained and
implemented by a number of countries, mainly industrialized countries, for well
over a century. However, most developing countries and emerging economies
started using it after mid-1990s.

© Springer Science+Business Media Singapore 2016 17

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_2
18 2 Historical Evolution of Injury and Causation …

At the multilateral level, trade remedy actions are subject to the WTO
Agreements which include, the Marrakesh Treaty Establishing the World Trade
Organization1 and other covered agreements under the WTO. These agreements
include the General Agreement on Tariffs and Trade (GATT) 1994, the Agreement
on the Implementation of Article VI of the GATT (the Antidumping Agreement, or
AD Agreement), the Agreement on Subsidies and Countervailing Measures
Agreement (SCM Agreement), and the Agreement on Safeguards (Safeguards
Agreement). The specific trade remedy agreements referred to above elaborate and
explain the treaty provisions of the GATT 1994.
Of the various trade policy instruments, antidumping is the oldest and perhaps,
the most commonly used trade remedy instrument.2 Antidumping measures are
invoked to counteract the injurious effects of dumping. In international trade law
parlance, dumping is often defined as international price discrimination.3 It occurs
when an exporter sells merchandise in the importing country at a price significantly
below that at which it sells like merchandise in its home country.4 Specific actions
against such price discriminations were taken unilaterally by the importing countries.
Unilateral enforcement of trade remedy measures created significant friction
among trading nations and several countries wanted to discipline the use of such
remedies. Antidumping or, for that matter, countervailing duties and safeguard
actions are no longer unregulated especially after the establishment of the WTO.
The original GATT 1947 had certain skeletal mechanism for regulating the use
of trade remedies. The Antidumping Agreement (ADA)5 and the Subsidies and
Countervailing Measures Agreement (SCMA),6 which have originated from the
Uruguay Round trade negotiations (1986–1994), unequivocally state that specific
action against dumping or subsidization can only be conducted within the frame-
work of these agreements. Efforts by WTO members to implement legislation that
are at variance with the AD Agreement and the SCM Agreement have been rejected
by the WTO panels and the Appellate Body in recent times.7

1
Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Apr.
15, 1994, THE LEGAL TEXTS: THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE
NEGOTIATIONS 2 (1999), 1867 U.N.T.S. 14, 33 I.L.M. 1143 (1994) [hereinafter Final Act].
2
Igne Nora Neufeld, Anti-Dumping and Countervailing Procedures – Use or Abuse? Implications
for Developing Countries, Policy Issues in International Trade and Commodities Study Series
No. 9, UNCTAD (2001), also available at: http://unctad.org/en/docs/itcdtab10_en.pdf.
3
Giancario Gandolfo, International Economics I: The Pure Theory of International Trade 131 (2d
ed. 1994).
4
Richard D. Boltuck, An Economic Analysis of Dumping, 21(5) JOURNAL OF WORLD TRADE 45
(1987).
5
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994,
April. 15, 1994, LT/UR/A-1A/3.
6
Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1A, THE LEGAL TEXTS: THE RESULTS OF THE
URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS 231 (1999), 1869 U.N.T.S. 14.
7
Panel Report, United States – Anti–Dumping Act of 1916, Complaint by Japan, WT/DS162/R and
Add.1 (September 26, 2000), upheld by Appellate Body Report WT/DS136/AB/R, WT/DS162/AB/R,
A Introduction 19

Trade remedy investigations differ from typical state actions. In principle, such
actions are regulated and governed by multilateral agreements, but each country
retains its own systems and procedures for conducting such actions. Although they
are adopted by importing countries, the actions are initiated at the level of private
actors. First, the domestic industry in the importing country must file a case with the
government petitioning for increased tariffs against a trading partner. A government
may also proactively begin investigating a case ex officio. Then, the case is adju-
dicated through domestic administrative proceedings. Provided certain conditions
are met, a country may impose unilateral tariffs against goods from a trading
partner.
Trade remedy instruments are generally considered as protectionist instruments.
Although the perceived purpose is to preserve a “level playing field” on which
domestic and foreign producers can compete on the basis of who makes the best
product at the lowest cost, such actions, to an extent, have come into the hands of
protectionist lobbies. Michael Finger, a World Bank Economist, referred to
antidumping as an “ordinary protection with a grand public relations program”.8
Generally, the trade-remedy measures administered through duties, tariffs, priced
based mechanisms such as price undertaking, or in certain cases, through quotas
have often a narrow goal. They seek to help provide the domestic industry a higher
market share, increase in production and better sales realization. In other words,
most trade remedy investigations seek to help the domestic industry claw back
profits and recover to pre-import situation. Many firms or petitioners of trade
remedy actions complain that without such protection, the industry would be forced
to close down or scale back production and employment. In essence, the
antidumping measures play a strategic role by creating an additional cost to the new
foreign entrant and have strong interfaces with strategic industrial policy.9 In other
words, antidumping actions can be an important component of certain multifaceted
strategic contests between rival firm to acquire greater shares of global markets.10
The purpose of this chapter is to provide an analysis of the historical evolution of
injury and causation provisions in trade remedies. A vast majority of the discussion
will focus on the developments in the United States and the European Union
(including its previous institutions). A bulk of the discussion examines how a
particular causation language was inserted in the first place in some of the domestic
legislation, and how such standards were grafted in international treaties. This

(Footnote 7 continued)
DSR 2000:X; see also Panel Report, United States – Customs Bond Directive for Merchandise
Subject to Anti–Dumping/Countervailing Duties, WT/DS345/R (August 1, 2008) as modified by
Appellate Body Report WT/DS343/AB/R/WT/DS345/AB/R, DSR 2008:VIII.
8
J.Michel Finger, Nellie T. Artis, The Origins and Evolution of Antidumping Regulation, in
ANTIDUMPING: HOW IT WORKS AND WHO GETS HURT 34 (J.M. Finger ed., 1991).
9
Michael O. Moore and Mark Wu, Antidumping and Strategic Industrial Policy: Tot-for-Tat Trade
Remedies and the China—X-Ray Equipment Dispute (Robert Schuman Centre for Advanced
Studies Global Governance Programme, 2014).
10
Ibid, at 33.
20 2 Historical Evolution of Injury and Causation …

chapter will also discuss the negotiating history of trade remedy sections in various
international treaties concluding with the Uruguay Round of trade negotiations.
An analysis of the historical evolution of injury and causation in trade remedy
cases could provide a perspective on the domestic compulsions, negotiating com-
promises, and the balance struck by some of the key users and proponents of the
trade remedy instruments. Traversing the history and evolution of injury and cau-
sation provisions will help gain a better understanding of why a particular causation
provision or terminology was chosen in the first place. A perusal of the various
iterations of the negotiating texts in the past negotiating rounds can also be
instructive in understanding the evolution of the injury and causation language.
This chapter is organized as follows. Sections B, C and D provide an evolution
of antidumping laws and examine how various particularities in the U.S.
antidumping statute, including the language on injury and causation provisions
made their way into the GATT/WTO; Section E examines the origin and evolution
of injury and causation provisions under the Tokyo Subsidies Code and the SCM
Agreement; Section F deals with the genesis and evolution of injury and causation
provisions under the Safeguards Agreement. Section G provides a summary of
developments on injury and causation at the end of the Uruguay Round trade
negotiations. Section H concludes.

B Genesis of Antidumping Law

Trade remedy legislations have a history of over 100 years. Within the discipline of
trade remedy measures, antidumping measures have a history longer than any other
trade remedy measures. Among the industrialized countries, Canada enacted the
first antidumping law in 1904.11 According to Jacob Viner, a neoclassical Canadian
economist, the 1904 legislation was a response to the U.S. Steel Corporation’s
practice of selling its exports at prices significantly lower than its domestic prices.12
It was, however, the U.S. that began implementing the antidumping measures with
a definite purpose and regularity.13

11
An Act to Amend the Customs Tariff Act, 1897, 4 Edw. 7, ch 11 & 19. See J. Viner, infra note
10. The 1904 Canadian Act, as amended in 1907, provided that any imported product, of a class or
kind manufactured in Canada, would be assessed as additional duty (subject to a cap), whenever
the price charged for the product in Canada, less the cost of the shipment, was less than the price in
the exporter’s home market.
12
J.A. Viner, DUMPING: A PROBLEM IN INTERNATIONAL TRADE 86 (1923).
13
Douglas A. Irwin, The Rise of U.S. Antidumping Activity in Historical Perspective, 28(5) THE
WORLD ECONOMY, 651–668 (2005) (noting that the number of antidumping activities conducted in
the 1930 and 1950 s have been surprisingly large).
B Genesis of Antidumping Law 21

The genesis of the U.S. antidumping regulation derives from anti-trust concerns
rather than from the protection of the domestic industries from foreign imports.14
Influenced by the antitrust sentiments in the late 19th century, which led to the
enactment of the Sherman Act of 1890,15 the first U.S. antidumping statute namely,
the Antidumping Act of 1916,16 required the existence of “predatory intent” to
punish foreign dumping, and also imposed criminal liability for violation.
The 1916 Act made it illegal to sell imported products at prices substantially
lower than the market value in the exporting country “with the intent of destroying or
injuring an industry in the United States, or of restraining or monopolizing any part
of trade and commerce in such articles in the United States”.17 The 1916 Act was an
antitrust law that extended to foreign commerce the anti-price discrimination of the
1914 Clayton Act.18 In other words, before the passing of the Antidumping Act of
1916, there was no remedy against a foreign company that practiced international
price discrimination or predatory pricing, whereas a domestic company that prac-
ticed similar pricing policies was subject to the domestic antitrust statutes.
The U.S. Antidumping Act, 192119 (the 1921 Act) superseded the 1916
Antidumping Act.20 However, the 1916 Act remained on the statute book without
demonstrating any effective use until recently.21 The 1921 Act only required that
there be “injuries” to the domestic industry allegedly caused by foreign dumping
without a separate requirement of predatory intent. In economic terms, the effect of
dumping is to cause an outward shift in foreign supplies (imports), which implies
that consumers would shift towards the imports as against the domestic products.
This shift in demand is demonstrated as injury to the domestic industry. The 1921
Act, unlike the 1916 legislation, introduced the concept of “special dumping duty”
in the place of monetary fines or jail sentences to combat unfair dumping. The 1921
Act also introduced the notion of “fair value”, which was a departure from the idea
that antidumping measures were meant strictly to protect markets and consumers

14
§§ 12-26, §§ 12-27 Clayton Antitrust Act, 29 U.S.C. (1914).
15
§§ 1-7 Sherman Antitrust Act, 15 U.S.C. (2006).
16
Title VIII of the Revenue Act of 1916, 39 Stat. 756 (1916); 15 U.S.C. § 72.
17
See Finger, supra note 8.
18
The Clayton Act of 1914 made price discrimination an illegal practice if it reduced competition
or tended to create monopoly.
19
§ 1305(a) 19 U.S.C. § 1305(a).
20
19 U.S.C 1673.
21
The Antidumping Act of 1916 was held to be in violation of the WTO Antidumping Agreement
by a WTO panel, and later by the Appellate Body. The violation was established on the condition
that GATT Article VI (2) limits the remedy of dumping to antidumping duties or price under-
takings as prescribed by the Antidumping Agreement. Criminal penalties and treble damages
which were stipulated by the 1916 Act were found as impermissible remedies. The European
Union filed a dispute against the United States in 1998 since the U.S. Antidumping Act of 1916
existed in parallel with the Tariff Act of 1930 and Court actions were pending against European
parties as on the date of seeking consultation. In 2000, the WTO Appellate Body affirmed the
panel finding against the United States in this matter.
22 2 Historical Evolution of Injury and Causation …

from the effects of anticompetitive practices.22 The 1921 Act also authorized the
Tariff Commission, the U.S. domestic investigating agency, to determine whether a
domestic industry was being injured by reason of sales at less than fair value.23 The
use of “by reason of” language introduced the requirement of causal connection
between dumping and injury.
In many ways, the 1921 Act ushered in flexibility which enabled the government
to manage trade policies in the interests of domestic industries, and in tune with the
protectionist climate.24 As mentioned earlier, the only remedy available under the
1921 Act was the imposition of duties equivalent to the magnitude of dumping. In
other words, the antidumping measure was in the nature of a higher import duty.
At the same time, the 1921 Act introduced the basic confusion between antitrust
and protectionist purposes into the U.S. law—a confusion that sustains until date.
The objective of the 1921 Act was to prevent “domestic industries from being
destroyed in a price war, after which the foreign producer, then unopposed, would
increase his prices and recoup losses”.25 The 1921 Act was consistently justified as
combatting an unfair practice, namely predatory dumping. Furthermore, the 1921
Act contained all the elements of what we now recognize as antidumping: that
duties may be imposed if the exporter’s sales price is less than the foreign market
value; that foreign costs of production may be calculated if the foreign market value
is not ascertainable; that the dumping must be related to injury suffered by the
domestic industry, and; that higher import duties are the appropriate remedy, etc.26
Put simply, the 1921 Act was the prototype of future antidumping legislations.
The operative language of the 1921 Act assailed any dumping that injured the
domestic producers, not just predatory dumping. More importantly, any mention
of antitrust criteria—conspiracy, combination, or restraint of competition—was
eliminated.27 Although the legislative history of the 1921 Act, including the
Congressional reports and floor debates made reference to predatory dumping, it is
more than evident that the 1921 Act had broader objectives.28 There were also many
who spoke for and understood that some of the key features of the 1921 Act—
namely, converting criminal penalty to a duty remedy, eliminating the need of
any proof of predatory intent, and incorporating a mere ‘injury to industry’ test—lent

22
Gregory Mankiw and Philip L. Swagel, Antidumping: The Third Rail of Trade Policy, FOREIGN
AFFAIRS 107, 111 (2005).
23
Committee on Finance, United States Senate, The Antidumping Act 1921 and the International
Dumping Code (July 5, 1968) available at: http://www.finance.senate.gov/library/prints/.
24
See Finger, supra note 8, at 12, 13.
25
H. R. Rep. No. 1, 67th Cong., 1st Sess. 23-24 (1921).
26
Under the 1921 Antidumping Act, the Treasury Department was responsible for determining
whether the sales were made at less than fair value and the Tariff Commission was tasked with the
determination of injury.
27
See Finger, supra note 8, at 22.
28
See H. R. Rep. No. 1, 67th Cong. 1st Session, 23 (1921) (“the legislation will protect and our
industries and labor against a now common species of commercial warfare of dumping goods on
our markets at less than cost or home value if necessary until our industries are destroyed”).
B Genesis of Antidumping Law 23

Table 1 U.S. statutes on unfair trade and injury to industry

Name of legislation Disciplines on injury
Sherman Act, 1890 Antirust statute; Injury not required
Wilson Tariff Act, 1894 Antitrust statute; injury not required; focus on intent to restrain
trade
Antidumping Act, 1916 Offense to sell imports below actual market value of imports;
requires intent to restrain competition
Antidumping Act, 1921 Importing below market value; injury to the U.S. domestic
industry required
Fordney—McCumber Effect or tendency to destroy or substantially injure
Tariff Act, 1911
Smoot Hawley Tariff Act, Title VII inserted in 1979. Section 731 requires USITC to
1930 determine whether a U.S. industry is materially injured or
threatened with material injury.
Tariff Act, 1974 Expanded the definition of dumping to include home market
sales below the average cost of production
Trade Agreement Act of Amended the 1930 Tariff Act to insert Title VII to the Tariff Act
1979 of 1930
Trade and Tariff Act of U.S. International Trade Commission to cumulate the imports of
1984 all countries subject to an antidumping investigation when
making an injury determination

this pioneering legislation significant protectionist potential. In other words, the

purpose of the 1921 Act was to lessen the rigours of the 1916 Act and to mollify the
domestic manufactures who could not receive tariff protection (Table 1).
In addition to the U.S., four other countries had enacted antidumping legislations
by 1921. These countries included the United Kingdom, South Africa, Australia
and New Zealand. Of these countries, the United Kingdom and Australia made
some form of injury a prerequisite for imposition of duties as well. The British
Safeguarding of Industries Act 192129 provided that employment in a United
Kingdom industry had to be or likely to be seriously affected by foreign articles sold
below cost of production. The Australian Industries Preservation Act30 included the
requirement that detriment might result to an Australian industry by reason of
dumped imports.31 The New Zealand antidumping law did not require an injury
standard.32 The South African antidumping legislation,33 which dates back to 1914,
imposed the first antidumping duty in 1921.

29
British Safeguarding of Industries Act, 1921 (11 & 12 Geo. V c. 47).
30
Australian Act of 1916, Act No. 9 (1906).
31
Id. at §§ 18(1).
32
A. Pangratis & E. Vermulst, Injury in Anti-Dumping Proceedings: The Need to Look Beyond the
Uruguay Round Results, 28(5) JOURNAL OF WORLD TRADE 61, 63 (1994).
33
Customs Tariff Act 1914, Statutes of the Union of South Africa (1914).
24 2 Historical Evolution of Injury and Causation …

1 Economic Rationale of Antidumping Laws

(a) Viner on Dumping

A vast majority of economic literature in the field of antidumping builds on the

work of Jacob Viner who attempted to provide an economic rationale for
antidumping laws.34 Viner placed great emphasis on the length of time one could
expect dumping prices to endure. Accordingly, he classified dumping as:
• “sporadic”; dumping,
• “short-run” dumping, and
• “permanent” dumping.
In the case of sporadic dumping, one or two shipments of dumped imports may
take place within a short span of time; in the case of intermittent or short run dumping,
dumping may last for several months or perhaps even a year; in the case of permanent
or long-run dumping, the dumping takes place for an indefinite period of time.
Viner was concerned about dumping by foreign companies based on his
assumption that dumping was transitory. In other words, Viner considered only
short run dumping as objectionable and required some remedial action. This con-
clusion was based on two premises: (a) the low price will be temporary, and; (b) a
temporary low price will be injurious to domestic producers.35 According to him,
short lived consumer benefits in the form of lower prices could not offset serious
injury to domestic producers in the form of reduced output/sales.
Viner’s arguments against dumping, although not restricted to predatory situa-
tions, was at least predicated on the existence of substantial injury to the domestic
manufacturers. The “substantiality” requirement presumably aimed to offset the loss
of consumer benefits, and also discounted the possibility that unobjectionable
long-run dumping be involved in any given dumping case.36
Viner accepted that trade remedy laws can coexist with free trade. Free trade
theories have certain demonstrable welfare gains. However, departure from free
trade principles may be required in situations where the domestic industry in the
importing countries face import competition. Tariff barriers provided adequate relief
to various economies, at least until the 1970s. The establishment of the GATT and
the various preferential trade agreements, however, constrained the freedom which
countries had generally enjoyed in maintaining high tariffs.
In that context, the general thrust of trade remedy laws is to allow withdrawal of
negotiated tariff concessions where a trade agreement results in such an influx of
imports as to cause serious injury to domestic industry producing the same or

34
See Viner, supra note 12, at 1-30.
35
See Viner, supra note 12, at 139-140; see also for a discussion on Viner’s theory, Alan O. Sykes,
Countervailing Duty Law: An Economic Perspective, 89(2) COLUMBIA LAW REVIEW 199 (1989).
36
John J. Barceló III, Antidumping Laws as Barriers to Trade - The United States and the
International Antidumping Code, 57(4) CORNELL LAW REVIEW 491, 515 (1972).
B Genesis of Antidumping Law 25

competitive product. Anecdotal evidence suggests that the ability to impose

antidumping duties has served as a quid pro quo for trade liberalization in negotia-
tions for some of the most ambitious trade agreements the world has seen so far.37
According to Viner, the 1921 Act was a “model of draftsmanship” and was
indeed superior to the Canadian law. Viner observed:
The limitation of antidumping duties to a product which injures or is likely to injure an
American industry leaves it open to a wise customs administration to refrain from inter-
ference with all dumping whose benefit to the American consumer is not clearly offset in
part at least by an injury, actual or prospective, to American industry.38

As noted by Horlick and Shea, several developed countries started using

antidumping as a tool of “back-door” industrial policy as well as “escape-valve” for
protectionist pressures.39 Especially in the late 1970s, there was an effort to justify
the antidumping measures as a short term exception to the free trade principles that
allowed certain sectors of a national economy to face the challenges and vigour of
import competition.40
The protectionist features of antidumping laws were also highlighted by Michael
Finger. Finger explains how the 1921 Act became a harbinger of contingent protection:
[U]nder the softer standards of interpretation and proof, administration of the law could
follow changing political pressures for protection much more quickly than a more rigorous,
rule-of-law standard would allow. Thus, it prepared the way for eventual emergence of
anti-dumping as the main vehicle for import-competing interest to press for protection- and
for governments to respond to those pressures.41

Although domestic producers were able to use trade laws to obtain protection
from foreign competition, antidumping duties were rarely imposed between the 1930
and the 1960s.42 Despite the relatively steady number of antidumping cases filed in
the 1950s and 1960s, actual determinations of injuries were occasional during this
period. The reasons for this trend could be partly attributed to the presence of tariff
barriers which provided effective protection against import competition.
Growth in antidumping actions occurred remarkably in the 1980s.43 Between
1980 and 1995, the US, Canada, Australia, and the EC were responsible for 95 % of

37
Wentong Sheng, Reforming Trade Remedies, 34 MICHIGAN JOURNAL OF INTERNATIONAL LAW 151,
166(2012).
38
Viner, supra note 12, at 262.
39
Gary Horlick & E.C. Shea, The World Trade Organization Anti-Dumping Agreement, 29
JOURNAL OF WORLD TRADE 5, 6-7 (1995).
40
Douglas Irwin, The Rise of U.S. Antidumping Activity in Historical Perspective, 28 THE WORLD
ECONOMY 651, 654 (2005).
41
See FINGER, supra note 8, at 35.
42
The Fordney-McCumber Tariff pushed the U.S. tariffs rates back or up to the rates that had been
force at the end of the 19th Century.
43
Douglas A Irwin, Sam Laird, Julio Nogues, Trade Policy and Debt Crisis 18 (World Bank WPS
No. 99, Sept. 1988) (noting that the number of antidumping actions after the 1980s have been
alarming). See also Horlick and Shea, supra note 39, at 6.
26 2 Historical Evolution of Injury and Causation …

all dumping cases worldwide.44 During the decade of the 1980s, more than 1,000
antidumping actions were taken collectively by these jurisdictions.45 In addition to
the traditional users, other developed countries such as Japan, Switzerland, Norway,
Sweden and Finland incorporated antidumping laws on their statute books.46 In
short, antidumping became a key policy instrument for industry seeking protection
from import competition.

2 Movement from Predatory Intent to Injury Standards

As is common knowledge now, the purpose of the trade remedy laws was to help the
domestic industry get back to profitable levels by addressing the injurious effects of
unfair trade or increased imports. In this context, the 1916 Act did not adequately
address injury to the domestic industry. The 1921 Act47 on the other hand, required that
the injury to the domestic industry be caused “by reason of” dumped merchandise. As
stated by Raj Bhala, the 1930 Tariff Act did not require the domestic industry or the
investigating agency to show that the class or kind of merchandise subject to investi-
gation is the direct, immediate, proximate or even the substantial cause of injury.48
The developments until the 1960s also indicated that antidumping agencies
started to make injury determination on objective factors and with limited focus on
predatory intent. The U.S., in 1954, decided to divide the administration of U.S.
antidumping law between the Treasury Department, which continued to determine
whether less than fair value sales occurred, and the Tariff Commission (now called
the International Trade Commission or USITC).
Despite the administrative change, predatory intent, an important relic of the U.S.
antitrust statutes remained a key component of the U.S. antidumping investigations.
Until the 1960s, the Tariff Commission (USITC’s predecessor) often based its injury
finding on the existence of predatory intent. During this period (i.e., 1920–1960), the
Tariff Commission often arrived at a negative finding on injury in the absence of
predatory intent.49 As predatory intent requirement has taken back seat over the years,
leading users of antidumping substituted the predatory intent requirement with the

44
Raj Bhala, Rethinking Antidumping Law, 29(1) GEORGE WASHINGTON JOURNAL OF INTERNATIONAL
LAW & ECONOMY 4 (1995); See also, Archive of European Integration (AEI), The First
Commission Report on Antidumping and Anti-subsidy Activities, Information Memo P-87/83
(1983), available at http://aei.pitt.edu/31453/1/P_87_83.pdf.
45
Christian Conrad, Dumping and Antidumping Measures from a Competition and
Allocation Perspective, 36(3) JOURNAL OF WORLD TRADE 563(2002).
46
Edwin Vermulst, Adopting and Implementing Antidumping Laws: Some Suggestions for
Developing Countries, 31(2) JOURNAL OF WORLD TRADE 5 (1997).
47
This statute initially was enacted as part of the Tariff Act of 1930 and is sometimes called the
Smoot- Hawley Tariff Act. Tariff Act of 1930, Pub L. No. 71-361, 46 Stat. 590 (1930).
48
Raj Bhala, Rethinking Antidumping Law, supra note 44, at 51.
49
See e.g., Bicycles from Czech, 25 Fed. Reg. 9782 (1960); Carbon Steel Bars & Shapes from
Canada, 29 Fed. Reg. 12599 (1964).
B Genesis of Antidumping Law 27

“injury” test.50 As a consequence, an antidumping petition would fail if certain imports,

no matter how fair or unfair they may be, do not cause injury to the domestic industry.
An important shift also occurred with the passage of the Trade Agreement Act
1979.51 The most significant change introduced by this Act was the adoption of the
“material injury” test which provided a means to measure the harm suffered by the
domestic industry.52 The Senate Finance Committee Report53 to the 1979 Trade
Agreements Act also clearly stated that the new legislation did not limit the reach of
the antidumping laws to predatory pricing situations. The Report, in fact, did not
define dumping as “unfair” price discrimination, but rather as selling in another
country’s market at prices less than fair price. The Senate Finance Committee stated:
[T]he Act is primarily concerned with the situation in which the margin of dumping
contributes to underselling the U.S. product in the domestic market, resulting in injury or
likelihood of injury to a domestic industry…When clear indication of injury, or likelihood
of injury exists, there would be reason for making affirmative determination.54

The “rule of reason” analysis, when applied to the antidumping duty, has a per se
element. The purpose of antidumping laws is to remedy the injury caused or
threatened to be caused by dumped imports to a domestic industry. Price dis-
crimination which causes material injury or threat thereof is per se “unfair” and
therefore must be proscribed.55 But if dumped imports do not result in injury, such
price discrimination should be permitted. Based on this logic, only a few dumping
practices were challenged.
In other words, the evolution of antidumping laws can be best explained by the
public choice theory. It helps the administrative branch to remain answerable to the
concerns of the domestic producers. Especially when things go wrong, or when the
domestic market finds a surge of imports during phases of economic instability,
there is a great tendency or even insistent demand from both labour and business to
claim import relief. In that context, trade remedies allow governments to address
future developments or critical circumstances that are highly unpredictable.56

50
There are strong theoretical reasons and empirical evidence suggesting that predatory pricing
and, in particular, international predation, will be a very improbable occurrence. See
Michael J. Trebilcock & Thomas M. Boddez, The Case for Liberalizing North American Trade
Remedy Laws, 4(1) MINNESSOTA JOURNAL OF GLOBAL TRADE 1, (1995).
51
S.Rep.No.1298, 93rd Congress, 2nd Session (1974) reprinted in 1974 U.S.C.C.A.N. 7186, 7316.
52
Diana Jean Carloni, An Analysis of Material Injury under the 1979 Trade Agreements Act, 4
LOYALA LOS ANGELES INTERNATIONAL AND COMPARATIVE LAW 181 (1981).
53
REPORT ON THE TRADE AGREEMENT ACT OF 1979, SENATE FINANCE COMMITTEE REPORT, S. Rep
No. 249, 96th Session. 1.st Sess. 75 (1979).
54
Id.
55
William DeGrandis, Proving Causation in Antidumping Cases, 20 INTERNATIONAL LAWYER 563
(1986).
56
See Dani Rodrik, ONE ECONOMICS, MANY RECIPES: GLOBALIZATION, INSTITUTIONS AND ECONOMIC
GROWTH 213–36 (2008). (“Countries may legitimately wish to restrict trade or suspend existing
WTO obligations… for reasons going beyond competitive threats to their industries ….
28 2 Historical Evolution of Injury and Causation …

Despite this reality, antidumping proceedings and legal proceedings will have
limited legitimacy without a sound and rational legal framework.
The following discussion will track the development of injury and causation
requirements in multilateral bodies such as the GATT especially in the context of
country practices in some of the key jurisdictions.

C Injury and Causation in Antidumping

Under GATT 1947

In 1946, the United Nations Economic and Social Council (ECOSOC) established
preparatory committee to prepare an agenda for a United Nations Conference on
Trade and Employment. During the first session of the Committee in London, the U.
S. submitted a suggested Charter for International Trade Organization (ITO) of the
United Nations. Article 11 of the Charter dealt with antidumping duties.
It is observed that exceptions for trade remedies were included in the GATT in
1947 because some countries including the U.S. would not have agreed for trade
liberalization without such a recourse. According to Professor John H. Jackson,
Article VI of the GATT 1947 recognizes the legitimacy of certain policy objectives,
but at the same time has established conditions that may be imposed to secure the
attainment of those objectives.57
The 1947 GATT provisions on trade remedies were significantly influenced by
the United States. In many ways, several substantive and procedural aspects of the
current antidumping law have been adopted from the 1921 Act and its successor
legislations.58 Article VI of the GATT which contains the general principles relating
to the application of antidumping as well as countervailing duties read as hereunder:
GATT 1947: Article VI (1)
The contracting parties recognize that dumping, by which products of one country are
introduced into the commerce of another country at less than the normal value of the
products, is to be condemned if it causes or threatens material injury to an established
industry in the territory of a contracting party or materially retards the establishment of a
domestic industry….In order to offset or prevent dumping, a contracting party may levy on
any dumped product an antidumping duty not greater in amount than the margin of dumping.

According to Article VI (2) of the GATT 1947, the remedy for dumping lies
exclusively with the importing country in the nature of imposition of antidumping

(Footnote 56 continued)
Developmental priorities are among such reasons, as are distributional concerns or conflicts with
domestic norms or social arrangements in the industrial countries”.)
57
John Jackson, THE WORLD TRADING SYSTEM: THE LAW AND POLICY OF INTERNATIONAL ECONOMIC
RELATIONS 236–242 (1997).
58
Douglas A. Irwin, supra note 13 (noting that the 1921 Act formed the textual basis for Article VI
of the GATT).
C Injury and Causation in Antidumping Under GATT 1947 29

duties. Article VI of the GATT 1947 lays down the key requirements for imposition of
antidumping duties, which has remained fairly unchanged until this date. The essential
requirement under the GATT 1947 is that there should be dumping; it should cause
material injury or threat thereof; and that there should be causation between the two. In
other words, the injury caused by dumped imports should be affecting those domestic
industries that produce “like products” of the dumped imports.
In many ways, Article VI of the GATT 1947 closely followed the requirements under
the 1921 Act.59 The 1921 Act used the phrase “by reasons of importation of such
merchandise into the U.S.” However, Article VI of the GATT 1947 had certain glaring
omissions which included the absence of a definition of key terms such as “material
injury” and “domestic industry”.60 These ambiguities persisted for several decades, until
the Trade Agreement of 1979 (amending the 1930 Tariff Act) defined “material injury”
to mean “harm which is not inconsequential, immaterial, or unimportant”.61 Strangely,
there is still no definition of the term “material injury” under the GATT/WTO.
Interestingly, this tautological definition which was supplemented by a list of
statutory factors appears more vague and unclear.62 Within the U.S., the USITC has
held in certain cases that “material injury” as per Section 421 represented a lesser
degree of injury than “serious injury” under Section 202 of the U.S. Trade Act of
1974 (1974 Act).63 Further, the GATT 1947 had not even provided a list of
illustrative factors that could be used to determine injury. More importantly, the
nature of causal link required to be established between dumping and material
injury remained unclear and vague under the GATT.
On the positive side, GATT 1947 was the first international trade agreement to
set forth among other concepts, an injury standard for antidumping.

1 Antidumping Under Kennedy Round

As stated earlier, the antidumping provisions in GATT 1947 had borrowed heavily from
the 1921 Act to develop core disciplines. During this period, the function of the

59
Id.
60
M. Matsushita et al., THE WORLD TRADE ORGANIZATION: LAW, PRACTICE AND POLICY, 418 (2nd edn,
2006).
61
Pub. L. No. 96-39, Section 101 (codified at 19 U.S.C Section 1677 (7) (A)].
62
See Wentong Sheng, Reforming Trade Remedies, 34 MICHIGAN JOURNAL OF INTERNATIONAL LAW,
151, 175 (2012) (noting that under S. 1677 (7) (B) of the Tariff Act, the factors that should be
considered in making material injury determination include the volume of imports of the subject
merchandise, the effects of imports of that merchandise on prices in the United States for domestic
like products, … the impact of imports of such merchandise on domestic producers of domestic
like products … [and] such other economic factors as are relevant to the determination regarding
whether there is material injury by reason of imports.).
63
See, e.g.,Circular Welded Non-Alloy Steel Pipe from China, Investigation No. TA-421–6, 3807
(United States International Trade Commission, October 2005).
30 2 Historical Evolution of Injury and Causation …

antidumping laws, especially in the context of the U.S., was to preserve the openness of
the domestic market rather than restrict foreign imports. According to some statistics,
from 1921 till 1967, the U.S. government had conducted more than 700 antidumping
cases. Out of this, all but 75 actions resulted in a negative injury determination.64
In making a causal link between dumping and injury, the U.S. Tariff
Commission and later the USITC insisted that the successful penetration of imports
was directly attributed to the less than fair imports (dumped imports), and not
merely the availability of goods.65 Further, more countries, including a number of
European countries, had started implementing antidumping legislations.66 The U.S.
was keen on ensuring that such laws were not used in an overly protectionist
manner given the export interests of U.S. industries.67 Concerns were also raised
about the possible abuse of antidumping laws. But the abuse was thought of in ways
similar to abuse of a safeguard law—too frequent resort to duties in the absence of
real price discrimination or import related material injury. Thus, negotiators focused
their attention on defining price discrimination and limiting the antidumping duty to
the margin of dumping. During this round, the U.S. officials also wanted to ensure
that exports accused of dumping had access to all non-confidential information on
their case, and had opportunity to present evidence and provide rebuttal.
At the end of the Kennedy Round of GATT negotiations from 1963–1967, the
Kennedy Anti-dumping Code (the Kennedy Antidumping Code) was signed on 30
June 1967 by eighteen Contracting Parties (see Appendix 1 of this chapter).68 The
Kennedy Code was created as a separate document from the GATT, and the
Contracting Parties remained free to sign the Code or refrain from doing so. The
negotiators were concerned with three general problems: (1) the lack of an injury test
in third country antidumping laws (especially the Canadian law)69; (2) the possibility
of a revised antidumping mechanism through weak tests on substantive aspects such
as definition of material injury, industry and causation, and (3) the elimination of
procedural delays, uncertainties and arbitrariness.70 The problem relating to Canadian

64
Michael Finger & Tracy Murray, Antidumping Duty Enforcement in the United States, in
ANTIDUMPING: HOW IT WORKS AND WHO GETS HURT 34 (J.Michael Finger ed.,1991).
65
Unites States International Trade Commission Publication, Washington, D.C. (1981).
66
Michael Finger, The Origins and Evolution of Antidumping Regulation, 26 (World Bank
Working Papers, 783, October 1991).
67
Robert E. Baldwin, Imposing Multilateral Discipline on Administered Protection, in THE WTO
AS AN INTERNATIONAL ORGANIZATION 303 (Anne O. Krueger ed., 1998).
68
Sub-Committee on Non-Tariff Barriers Group on Anti-Dumping Policies, Draft Report on the
Group on Anti-Dumping Policies, TN.64/NTB/W/19 (April 24, 1967) available at http://www.
wto.org/gatt_docs/English/SULPDF/91890175.pdf (last visited May 26, 2015).
69
Canada did not have a material injury provision in their antidumping law.
70
John J. Barcelo III, A History of GATT Unfair Trade Law—A Confusion of Purposes, 14(3) THE
WORLD ECONOMY 311, 324 (1991)[hereafter BarceloIII, A History of GATT Unfair Trade Law].
C Injury and Causation in Antidumping Under GATT 1947 31

law was resolved in the Kennedy Round through Canada’s adherence to the
Antidumping Code and the amendments of its domestic law by adding an injury test.71
One of the important changes introduced by the Kennedy Code was the new
“causation” standard in antidumping. The Code stated that in order to impose
antidumping duties, the authorities must determine that the dumped imports are the
“principal cause” of injury to the domestic industry. The concerned provision is
reproduced below:
Article 3: Determination of Injury
A determination of injury shall be made only when the authorities concerned are satisfied
that the dumped imports are demonstrably the principal cause of material injury or of
threat of material injury to a domestic industry or the principal cause of material retar-
dation of the establishment of such an industry. In reaching their decision the authorities
shall weigh, on one hand, the effect of the dumping and, on the other hand, all other factors
taken together which may be adversely affecting the industry. The determination shall in all
cases be based on positive findings and not on mere allegations or hypothetical possibilities.
In the case of retarding the establishment of a new industry in the country of importation,
convincing evidence of the forthcoming establishment of an industry must be shown, for
example that the plans for a new industry have reached a fairly advanced stage, a factory is
being constructed or machinery has been ordered. (emphasis added).
___________
Footnote 1: When in this Code the term “injury” is used, it shall, unless otherwise specified,
be interpreted as covering cause of material injury to a domestic industry, threat of material
injury to a domestic industry or material retardation of the establishment of such an
industry.

The purpose of this language was to ensure that if dumping had a minimal effect
upon the industry as opposed to other economic factors, then no finding of causal
link between dumping and injury could be made.72 According to Robert Hudec, the
“principal injury” was a very close normative statement—that domestic industry is
not deserving of relief from import competition if most of its troubles are on
account of factors other than dumped imports.73
The Kennedy Code, by itself, did not define material injury, but required an
examination of all factors relevant to determining the state of the domestic industry
in question. The Kennedy Code provided for the “evaluation of effects of dumped
imports on the industry”. Article 3(b) of the Kennedy Code listed out factors that
should be considered by an investigating agency in the evaluation of the state of the
domestic industry.

71
The amended Canadian Antidumping Act directs the Tribunal to determine whether “the
dumping of the goods… has caused, is causing or is likely to cause material
injury…”Antidumping Act, CANADA REVISED STATUTES, A-15, amended by Ch.1, 10 (2nd
Supp. 1970-71).
72
Diana Jean Carloni, An Analysis of Material Injury under the 1979 Trade Agreements Act,
LOYALA LOS ANGELES INTERNATIONAL & COMPARATIVE LAW REVIEW 87, 91 (1981).
73
Robert Hudec, Antidumping and Countervailing Duties, in ANTI-DUMPING LAW AND PRACTICE: A
COMPARATIVE STUDY (John Jackson & Edwin Vermulst eds. 1989).
32 2 Historical Evolution of Injury and Causation …

The factors included the following:

• Development and prospects with regard to turn over
• Market share
• Profits
• Prices
• Export performance
• Employment
• Volume of dumped import and other imports
• Utilization of capacity of domestic industry
• Productivity
• Restrictive trade practices
The Kennedy Code also introduced the concept of non-attribution, albeit indi-
rectly. An additional requirement of weighing and comparing the role of other
factors “individually or in combination” was for the first time introduced in the
Kennedy Code. Article 3 (c) of the Kennedy Code which deals with weighing the
role of other causal factors reads as follows:
Kennedy Code: Article 3(c)
In order to establish whether dumped imports have caused injury, all other factors which,
individually or in combination, may be adversely affecting the industry shall be examined,
for example: the volume and prices of undumped imports of the product in question,
competition between the domestic producers themselves, contraction in demand due to
substitution of other products or to changes in consumer tastes.

On the injury and causation standard, the Kennedy Code was at variance with
the U.S. domestic law. As stated earlier, the U.S. statute merely stated that the
USITC must find that the U.S. domestic industry has been “injured by reason of”
dumped imports (see Table 2).
The Kennedy Code was fully implemented, at least in a formal sense, only in
Europe. The new European Economic Community (EEC) Antidumping Regulation
of 1968 (1968 law) conformed faithfully to the language of the Kennedy Code.74
There was stiff resistance to the injury language of the Kennedy Code (Article 3)
within the United States. Although the objective of the Kennedy Code was to limit
the use restrictive antidumping measures among the signatories to the GATT, the

74
Angelika Eymann & Ludger Schuknecht, Antidumping Enforcement in the European
Community, in ANTIDUMPING: HOW IT WORKS AND WHO GETS HURT 221-238 (J.M. Fingers ed.,
1991). The Common Trade Policy was set out in Articles 110 to 116 of the EEC Treaty (Treaty
establishing the European Economic Community) which entered into force on January 1, 1958.
The transitional period of 12 years ended 31 December 1969 (Article 8 of the EEC Treaty). The
initial EEC Anti-Dumping Regulation 459/68 entitled Protection against Dumping or the
Granting of Bounties or Subsidies by the Countries which are not Members of the European
Economic Community was adopted on April 5, 1968 (Reg. 459/68, [1968] O.J. L93/80).
C Injury and Causation in Antidumping Under GATT 1947 33

Table 2 Key differences between the US antidumping legislation and the Kennedy code
The 1921 U.S. antidumping act The Kennedy antidumping code
Major differences
The Act requires that the Commission shall The Code states that before dumping duties
determine whether an industry in the United can be imposed it must be found that the
States is being, or is likely to be, injured *** dumped merchandise is demonstrably the
by reason of the importation of such principal cause of material injury or threat of
merchandise material injury to a domestic industry (Art. 3
(a)) and that the authorities shall weigh, on
the one hand, the effect of the dumping and,
on the other hand, all other factors taken
together which may be adversely affecting the
industry

U.S. did not ratify the Code because it thought that it would undermine the pro-
tection available to manufacturers, producers, wholesalers and retailers.75
Urged on by the opponents of the Kennedy Code, the U.S. Congress enacted a law
in 1968 instructing the U.S. Tariff Commission not to be constrained by the elements
of the Kennedy Code while implementing the Antidumping Act of 1921.76 The 1968
law did not, in principle, prevent the U.S. Tariff Commission from interpreting the
implementing legislation to conform to the apparently higher injury thresholds of the
Kennedy Code, but in practice the Tariff Commission applied a less rigorous injury
and causation standard and frequently found injury in several cases.77
In fact, during the Senate Finance Committee hearing in this matter, the lawyers
for the administration took the position that the term “demonstrably the principal
cause of material injury” was designed to result in the same interpretation—a
determination of injury when dumped imports caused injury to the domestic
industry in any degree higher than de minimis—which the Tariff Commission had
given in the past. For example, the majority of the Tariff Commission reasoned in
Whole Dried Eggs from Holland78 that as opposed to the material injury test of the
1967 Kennedy Code, a showing of anything more than a trivial and consequential
effect on the domestic industry was sufficient to trigger antidumping duties.
Similarly, in Ferrite Cores from Japan, the Tariff Commission also rejected the
principal cause language of the Kennedy Code and accepted a very weak test based
on the injury being ‘attributable in part’ to the alleged dumping.79 Following this

75
Eugenia S. Pintos & Patricia J. Murphy, Congress Dumps the International Antidumping Code,
18 CATHOLIC UNIVERSITY LAW REVIEW 180, 190-191 (1969).
76
Id. at 188.
77
Barcelo III, A History of GATT Unfair Trade Law, supra note 70, at 318.
78
35 Fed. Reg. 12500, 12501 (1970).
79
United States Tariff Commission, 36 Fed. Reg. 1934 (1971) (The Tariff Commission noted, “[w]
e agree that if injury is attributable solely to factors other than LTFV, an affirmative finding should
not be made. However, if injury is attributable in part to the LTFV sales… and such injury is more
than de minimis, we must make an affirmative determination.” A negative determination on
causation between dumping and injury was recorded by Commissioners Leonard and Young).
34 2 Historical Evolution of Injury and Causation …

trend, the majority of the Commissioners noted in Pig Iron from Canada, Finland
and West Germany that it was not necessary to show that imports were the sole
cause or even the major cause of injury as long as the facts show that less than fair
value (LTFV) imports were more than a de minimis factor in causing injury. The
overall approach of the ITC was supported by the views of the Senate Committee
on Finance which noted as follows:
“In short, the Committee does not view injury caused by unfair competition, such as
dumping, to require as strong a causation link to imports.”

The Kennedy Code also introduced other operational difficulties in conducting

the injury analysis. The Kennedy Code acknowledged that injury could be caused
on account of several factors. Article 3(c) of the Kennedy Code provided that “in
order to establish whether dumped imports have caused injury, all other factors
which, individually or in combination, may be adversely affecting the industry shall
be examined”. Similarly, Article 3(a) of the Kennedy Code provided that “the
authorities shall weigh, on one hand, the effect of the dumping and, on the other
hand, all other factors taken together which may be adversely affecting the
industry”. The manner of interpretation by leading users of antidumping such as the
U.S. posed certain questions. For example, the Senate Finance Committee in its
Report 1974 noted that injury due to other causes was immaterial to the injury test
under the U.S. law.
The key issue was whether the injury attributable to dumping should be more
than ‘inconsequential’ or ‘immaterial’. According to this view, the test mandated
under the U.S. law required isolation of the economic harm caused by dumping and
finding out whether injury caused by the harm was more than immaterial. This can
be better explained with the help of a hypothetical. Assume that five factors A, B,
C, D and E are the known causes of injury to the domestic industry seeking
antidumping relief. According to the economic isolation test, the economic harm
caused by dumping will have to be assessed. If the extent of harm can be identified
and the nature of the harm is considered as more than immaterial, then causality is
determined. Following this logic, even a relatively low injury contribution (as-
suming that factor E represents dumping) could be classified as not immaterial and
as causally sufficient.
According to another view, which had significant supporters, the USITC should
assess the overall injury, measure the causative influence of dumping on that overall
injury, and determine whether dumping has enough significance to be called a
‘cause’ of this larger condition.80 According to this view, the share of dumping in
causing injury will have to be determined. In the hypothetical provided in Fig. 1,
only Factor A, which contributes to 60 % of the material injury could be considered
as a principal cause. It is a cause which is greater than all other causes combined
(i.e., A > (B + C + D + E)); further A is a cause which is greater than any other

80
United States International Trade Commission, Portland Hydraulic Cement from Mexico,
AA1921–161, 795 (1976).
C Injury and Causation in Antidumping Under GATT 1947 35

Fig. 1 Antidumping enquiry and multiple causal factors

cause (i.e. A > B, or A > C, or A > D, or A > E). Based on this reasoning, if factor
A were dumping, it could easily meet the injury and causation requirement.
However, the concept of weighing and comparing the effects of dumping and other
causes was considered to be an exceptionally onerous procedural burden.
The Kennedy Code also introduced provisions for the simultaneous investigation
of both dumping and injury. Article 5 (b) and (c) of the Code clearly established
that evidence of both dumping and injury should be considered simultaneously in
the decision regarding initiation of the investigation, and thereafter, during the
course of the investigation.

2 Antidumping Under the Tokyo Round Code

The Tokyo Round trade negotiations took place between 1974 and 1979. By the
mid-1970s, a number of industrialized countries had started the use of antidumping
actions. The leading users of antidumping, in addition to the U.S., included
Australia and Canada. The U.S. had been facing competition from Japan and other
industrialized countries, and considered the trade remedy provisions as a means to
guard against fair and unfair imports.
There was an increased awareness of the uses of the antidumping instruments and
several GATT Contracting Parties considered that antidumping laws would confer
some inherent rights—rights that should be “improved” by making relief more readily
available. For example, the U.S. pressed for the elimination of below cost sales in
normal value calculation in international antidumping law. Accordingly, the
Contracting Parties agreed to a new antidumping code that reproduced most of the
Kennedy Code’s provisions with some important amendments.
36 2 Historical Evolution of Injury and Causation …

As discussed earlier, the changes introduced in the Kennedy Code were not palatable
to the U.S.81 The U.S. understood the rigorous threshold requirements of injury and
causation and took the initiative to dilute the substantive standards. There was an
overwhelming feeling that the “principal cause” language could be met only where no
other economic, social or political factors could have affected the domestic industry.82
Furthermore, there was empirical evidence that only a few antidumping investigations
reached affirmative stage during the implementation of the Kennedy Code. As observed
by John H. Jackson, the U.S. Congress was very reluctant to change the existing “injury”
test under U.S. law to “material injury” to comply with the Code, fearing that this would
make it more difficult for U.S. industries to obtain relief.83
The 1979 Tokyo Round Antidumping Code (the Tokyo Code or the Tokyo
Antidumping Code) also made other significant changes in the causation standards
in the Kennedy Code. The “principal cause” standard was expressly weakened in
the Tokyo Code. The deletion of the principal cause standard was to make
antidumping remedies more flexible and available for use when dumping is no
longer the main cause of injury. The explicit requirement to weigh the role of
dumped imports compared to a combination of all other factors in the Kennedy
Code was also deleted in the Tokyo Code. Further, the language on causation
requiring all other factors to be assessed individually or in combination was deleted
in the Tokyo Code. More importantly, the list of “other factors”, which was orig-
inally stipulated in the main text of the Kennedy Code was relegated to the foot-
notes. Professor Barcelo considered the reformed Tokyo Antidumping Code as an
alternate safeguard law, which could be triggered by per se price discrimination,
based on weakened injury standards, and applied on a selective basis.84
Article 3.4: Tokyo Antidumping Code
“It must be demonstrated that the dumped imports are through the effects4 of dumping,
causing injury within the meaning of this Code. There may be other factors5 which at the
same time are injuring the industry, and the injury caused by other factors must not be
attributed to the dumped imports”. (emphasis added).
_________________
Footnote 4: As set forth in paragraphs 2 and 3 of this Article.
Footnote 5: Such factors include, inter alia, the volume and prices of imports not sold at
dumping prices, 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.

81
Eugenia S. Pintos & Patricia J. Murphy, Congress Dumps the International Antidumping Code,
18 CATHOLIC UNIVERSITY LAW REVIEW 180, 190-191 (1969).
82
Diana Jean Carloni, An Analysis of Material Injury under the 1979 Trade Agreements Act, 4
LOYOLA LOS ANGLES INTERNATIONAL & COMPARATIVE LAW REVIEW 87, 91 (1981).
83
John Jackson, supra note 57.
84
Barcelo III, A History of GATT Unfair Trade Law, supra note 70, at 313.
C Injury and Causation in Antidumping Under GATT 1947 37

Non-attribution language was a significant contribution of the Tokyo Antidumping

Code although it was not considered as a bright line test for causation determination at
the time of its introduction.85 One of the objectives of this non-attribution requirement
was the need to avoid attributing causation of injury to dumped imports, when in
reality, some other factors were assumed to be responsible.86 Beseler and Williams
analyzed the causation standard contained in the revised Agreement on
Implementation of Article VI of the General Agreement (1979) as follows:
The new Code provides more realistic criteria in that the initial requirements that the
dumped imports should be ‘demonstrably the principal cause’ of the injury suffered by the
domestic industry, outweighing all other factors combined, is now replaced by a require-
ment to segregate the injury caused by dumping from the injuries caused by other factors
and then to make an assessment of injury caused by dumping alone.87

In the years since the adoption of the Tokyo Code, the principal users of the
antidumping remedy were the U.S., Canada, the EEC, and Australia. Japan had not
had an active antidumping policy. Beseler and Williams have noted that despite the
tough injury standards, EEC’s resort to antidumping remedies rose dramatically
after the 1977–78 recession.88 Within the U.S., there was a move for the zealous
enforcement of AD/CVD laws post conclusion of the Tokyo Round fueling a
criticism that such laws have been used for protectionist purposes.89

3 Injury and Causation in Antidumping Under Uruguay

Round

The Uruguay Round Agreements were formally completed on 15 August 1994 with
the signing of the Marrakesh Declaration, and entered into force with effect from 1
January 1995. In a way, the Uruguay Round brought about the most significant
reform of the world’s trading system since GATT was created. It covered more
issues and involved more countries than any previous trade round. All areas of trade
remedies including Antidumping was one of the covered agreements under the
WTO Treaty.
The Uruguay Round negotiations under the GATT achieved across the board
reductions in industrial tariffs. The average tariff in the developed countries
plummeted from roughly 40 % in 1947 to approximately 3.9 % at the end of the

85
Jorge Miranda, Causal Link as interpreted in WTO Trade Remedy Disputes, 44 (4) JOURNAL OF
WORLD TRADE 730 (2010).
86
RAJ BHALA, MODERN GATT LAW 796 (2005).
87
BESELER AND WILLIAMS, ANTIDUMPING AND ANTI-SUBSIDY LAW: THE EUROPEAN COMMUNITIES 167
(1986).
88
Id.
89
Douglas A. Irwin, The Rise of U.S. Antidumping Activity in Historical Perspective, supra note
13.
38 2 Historical Evolution of Injury and Causation …

implementation period of the Uruguay Round.90 The reduction in tariff levels had
compelled some scholars to argue that “[t]ariffs no longer matter in international
trade law”.91
Most developed countries that had brought down their tariffs, increasingly
resorted to antidumping measures in the early 1990s. This was especially true for
the U.S. which, by that time, was at a high point in using antidumping as a tool for
“back door” industrial policy as well as an “escape valve” for protectionist pres-
sures.92 Apart from the U.S., other industrialized countries too were not very keen
for specific changes in the field of antidumping. It is also observed that a limited
number of GATT contracting parties—approximately only 22 signatories to the
Antidumping Code of the GATT had antidumping laws in force as of October
1990.93 It is therefore not surprising that the GATT Ministerial decision which
launched the Uruguay Round did not mention anything about antidumping.94
There was a well-ingrained belief at this time that antidumping investigations
were private matters concerning private companies.95 On the other hand, subsidies
were considered as a more pernicious protection being handed out by governments.
However, during the Uruguay Round of negotiations, countries including Korea,
Japan, Nordic countries and India submitted various proposals which sought to
address the way antidumping investigations were conducted. Most of the proposals
centered around issues such as dumping margin calculation, anti-circumvention,
transparency, etc.96 Although there was resistance on the part of the U.S. and the
European Community (EC) to introduce key changes to the fundamental issues, a
special Informal Group was established under Charles Carlisle, the Deputy Director
General of the GATT.97 The Informal Group was instrumental in fleshing out the
details of the reforms in this field. The Informal Group considered various pro-
posals, including certain proposals on injury and causation.

4 Antidumping, Injury and the Overarching Obligations

Article 3 of the AD Agreement became the cornerstone of injury and causation

determination in antidumping investigations. Article 3 elaborated a number of

90
See Raj Bhala, supra note 86, at 3.
91
Id.
92
See Gary Horlick & E.C. Shea, supra note 39, at 6.
93
TERENCE STEWART ET AL., THE GATT URUGUAY ROUND: A NEGOTIATING HISTORY (1986-1992).
94
See Gary Horlick & E.C. Shea, supra note 39.
95
See Roger P. Alford, Why A Private Right of Action against Dumping Would Violate GATT?, 66
NEW YORK UNIVERSITY LAW REVIEW 696 (1996).
96
Chin Lim & Margaret Liang, ECONOMIC DIPLOMACY, ESSAYS AND REFLECTIONS BY SINGAPORE’S
NEGOTIATORS (World Scientific 2011).
97
Margaret Liang, Antidumping negotiations in the Uruguay Round, in ECONOMIC DIPLOMACY,
ESSAYS AND REFLECTIONS BY SINGAPORE’S NEGOTIATORS (Chin L. Lim & Magaret Liang eds., 2010).
C Injury and Causation in Antidumping Under GATT 1947 39

concepts included in the Tokyo Code. The key provisions in Article 3 which deal
with injury and causation determination are Articles 3.1, 3.2, 3.3, 3.4, 3.5 and 3.7.
Article 3.1 is an overarching provision that establishes a WTO Member’s fun-
damental, substantive obligation in injury and causation determination.
Anti-dumping Agreement: Article 3.1
A determination of injury for purposes of Article VI of GATT 1994 shall be based on
positive evidence and involve an objective examination of both (a) the volume of the
dumped imports and the effect of the dumped imports on prices in the domestic market for
like products, and (b) the consequent impact of these imports on domestic producers of
such products.

The rest of this provision explains in detail what precisely needs to be done in
order to establish injury and causation. Article 3.1 incorporates the core require-
ments of “positive evidence” and “objective examination”. In other words, an
objective examination is hinged on positive evidence. Generally speaking, positive
evidence is concerned with the quality of the evidence that authorities may rely
upon in making a determination.
The incorporation of the term “positive evidence” has significance for injury and
causation determination, as authorities cannot enter such findings based on “alle-
gation, conjecture or remote possibility”. The Appellate Body in Mexico—Rice
noted, “… we would expect an investigating authority to substantiate the reason-
ableness and credibility of particular assumption”.98 Especially since the conditions
to impose an antidumping duty are to be assessed with respect to a current situation,
the determination of whether injury exists should be based on data that provide
indications of the situation prevailing when the investigation takes place. In short,
the requirement of positive evidence requires an unbiased and objective
assessment.99
The volume of dumped imports and their price effects play a crucial role in
injury and causation analysis. One of the critical issues is whether an increase in
imports (relative or absolute) is an additional requirement—an independent ana-
lytical tool in the assessment of causation? There is a view that an investigating
agency can still impose duties even if there is no absolute or relative increase in
dumped imports.100 Article 3.2 of the ADA, which deals with volume and price
effects reads as follows:
Anti-Dumping Agreement: Article 3.2
With regard to the volume of the dumped imports, the investigating authorities shall
consider whether there has been a significant increase in dumped imports, either in absolute
terms or relative to production or consumption in the importing Member. With regard to the

98
Appellate Body Report, Mexico- Definitive Anti-Dumping Measures on Beef and Rice, fn. 228,
WT/DS295/AB/R (November 29, 2005) [hereinafter Appellate Body Report, Mexico- Rice].
99
Appellate Body Report, Mexico—Rice, ¶ 7.86.
100
PETROS C. MAVROIDIS ET AL., THE LAW AND ECONOMICS OF CONTINGENT PROTECTION IN THE WTO
100 (2010).
40 2 Historical Evolution of Injury and Causation …

effect of the dumped imports on prices, the investigating authorities shall consider whether
there has been a significant price undercutting by the dumped imports as compared with the
price of a like product of the importing Member, 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. No one or several of these factors
can necessarily give decisive guidance.

Article 3.2 of the Antidumping Agreement does not require an investigating

authority to analyze the price and volume effect of dumped imports on a
country-by-country basis. However, the Antidumping Agreement has introduced
the concept of cumulation. Cumulation implies that if “like” imports from two or
more countries are subject to the antidumping investigation, and if such imports
compete with one another and the “like” domestic product, then the investigating
agency must cumulate the volume and effect of such imports to determine material
injury. This was a novel concept, as prior practices of leading investigating agencies
indicated that small or insignificant share of imports was generally considered as
inadequate to establish a finding of injury.101 The provision on cumulation provides
as under:
Anti-Dumping Agreement: Article 3.3
Where imports of a product from more than one country are simultaneously subject to
anti-dumping investigations, the investigating authorities may cumulatively assess the
effects of such imports only if they determine that (a) the margin of dumping established in
relation to the imports from each country is more than de minimis as defined in paragraph 8
of Article 5 and the volume of imports from each country is not negligible and (b) a
cumulative assessment of the effects of the imports is appropriate in light of the conditions
of competition between the imported products and conditions of competition between the
imported product and the like domestic product.

The cumulative analysis is logically premised on the ground that the domestic
industry may face the impact of dumped imports as a whole. As the WTO Appellate
Body mentioned in EC—Tube and Fittings, “…the negotiators appear to have
recognized that a domestic industry confronted with dumped imports originating
from several countries may be injured by the cumulative effect of those imports, and
that those effects may not be adequately taken into account in a country specific
analysis of the injurious effects of dumped imports”.102 The cumulation require-
ment introduced during the Uruguay Round specifically addressed this particular
problem.
In sum, Articles 3.2 and 3.3 spell out the essential conditions for treating imports
as cause of injury.

101
Gary Horlick, History of the One/Three Formula for Antidumping, 8(1) GLOBAL TRADE AND
CUSTOMS JOURNAL 25-26 (2013) (noting that the US Tariff Commission and the International Trade
Commission had hardly found injury from import sources with less than 3 percent import before
the introduction of the cumulation language in the domestic legislation).
102
Appellate Body Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron
Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, ¶116 (July 22, 2003).
D Material Injury and Non-attribution … 41

D Material Injury and Non-attribution in Antidumping

Investigations

One of the crucial aspects of an antidumping investigation is whether injury has

been caused to the domestic industry on account of imports. Article 4 of the
Antidumping Agreement defines “domestic industry” as a major proportion of the
domestic producers of the “like products”. Articles 2.1 and 2.6 clarify that “like
product” refers to products that are either identical or closely resembling the pro-
duct that is alleged to have been dumped. When examining the existence and extent
of injury to the domestic industry, authorities may initially determine which of the
following categories is relevant: “material injury to domestic industry”; “threat of
material injury to domestic industry”; or, “material retardation to the establishment
of domestic industry”103 Among these categories of injury, the most commonly
invoked category is the material injury to the domestic industry.
Article 3.4 of the AD Agreement provides a non-exhaustive list of items used to
gauge the impact of dumped imports on the domestic industry.
Anti-Dumping Agreement: Article 3.4
The examination of the impact of the dumped imports on the domestic industry concerned
shall include an evaluation of all relevant economic factors and indices having a bearing on
the state of the industry, including 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. This list is not exhaustive, nor can one or several of these factors
necessarily give decisive guidance.

1 Causation and Non-Attribution: Insights from Uruguay

Round Negotiating Texts

Injuries caused by dumping are an essential element of all antidumping investi-

gations.104 While Article 3.4 explains how material injury to the domestic industry
can be established, Article 3.5 provides the all-important language on causation.
Although the core idea behind non-attribution was included even in the Tokyo
Code, the softer language “there may be” was replaced with a stricter “shall…
examine” formulation during the Uruguay Round.105 According to Beseler and
Williams, this language imposed an obligation to isolate the injuries caused by each

103
Prakash Narayan, Injury Investigations in “Material Retardation” Antidumping Cases, 25(1)
NORTH WESTERN JOURNAL OF INTERNATIONAL LAW AND BUSINESS 37, 41 (2004).
104
Sungjoon Cho, Anticompetitive Trade Remedies: How Antidumping Measures Obstruct Market
Competition, 87(2) NORTH CAROLINA LAW REVIEW 357, 377(2009).
105
Terence Stewart et al., supra note 93.
42 2 Historical Evolution of Injury and Causation …

of the other factors including dumping and to treat each as a separate injury.106 The
objective of this language was to require that the effect of the dumped imports was
such as to cause injury.
Injury can be caused by a number of factors, most of which may not be familiar
even to the parties or the investigators. Some of the common examples of injury
include the evolution of market conditions such as demand for diversification,
competitive advantage of the foreign companies in price, quality, organization and
such other factors which can be considered as part of acceptable competition. Injury
can also be self-inflicted through, for example, wrong commercial strategies, bad
management policies, rise or escalation in production costs, poor investment
decisions, production inefficiencies, etc. Last not but the least, injury can also be
caused by dumping.
The proposals on incorporating a non-attribution language were particularly
contentious during the Uruguay Round as it was during the Tokyo Round. The
following discussion traces the negotiating history of non-attribution under the
Uruguay Round Antidumping Agreement.
Carlisle, the acting Chairman of the informal group submitted on his responsi-
bility a draft text to reform the antidumping code. The draft contained no brackets
and was considered only as a starting point for discussion. The Carlisle I107 Draft on
Injury and Causation reads as follows:
Carlisle I Draft: Article 3.5
It must be demonstrated that the dumped imports are, through the effects3 of dumping,
causing injury within the meaning of this Code. The demonstration of the existence of
causal relationship between the dumped imports and the injury to the domestic industry
shall be based on positive evidence and not on mere assumption. There may be The
authorities shall consider whether there are other factors4 which at the same time are
causing injuring the industry, and the injuries caused by other factors must not be attributed
to the dumped imports. Determinations of injury shall contain explanations of how such
factors have been considered.
_______
Footnote 3: As set forth on paragraphs 2 and 4 of this Article
Footnote 4: Such factors include, inter alia, the volume and prices of imports not sold at
dumped prices regardless of their origin, including from an exporting country subject to
investigation, contraction in demand or changes in the pattern of consumption, trade
restrictive practices, the nature and extent of and competition in the domestic market among
domestic producers in the country as a whole and between the foreign and domestic
producers, changes or development in technology and the export performance and pro-
ductivity of the domestic industry.

106
Beseler and Williams, supra note 87.
107
General Agreement on Tariffs and Trade, Communication from the Delegation of Hong Kong,
MTN.GNG/NG8/W/51/Add. 1, at 3 (December 22, 1989).
D Material Injury and Non-attribution … 43

Carlisle I draft was opposed by most of the negotiating countries on the ground that
the text was unbalanced. Carlisle prepared a second draft which included alternate
(bracketed) proposals. The Carlisle II108 draft was released on August 14, 1990.
Carlisle II Draft: Article 3.5
[It must be demonstrated that the dumped imports are, through the effects of dumping,
causing injury within the meaning of this Code.] [The demonstration of the existence of a
causal relationship between dumped imports and injury to the domestic industry shall
should be based on positive evidence and not on mere assumption.] [The authorities shall
consider whether there are] [There may be] other factors6 which at the same time are
injuring the industry, and the injuries caused by other factors must not be attributed to
dumped imports. Determinations of injury shall contain explanations of how such factors
have been considered.
—————————————————
Footnote 5: As set forth in paragraphs 2 and 4 of this Article
Footnote 6: Such factors include, inter alia, the volume and prices of imports not sold at
dumping prices [regardless of their origin, including from an exporting country subject to
investigation], contraction in demand or changes in the patterns of consumption, [the nature
and extent of competition in the domestic market among domestic producers in the market
as a whole] [the price behavior of domestic producers] and competition between the foreign
and domestic producers, changes or developments in technology and the export perfor-
mance and productivity of the domestic industry.

As explained earlier in the discussion on Tokyo Code, if together with dumped

imports, other low-priced non-dumped imports had entered the market, one would
ask whether it was possible to distinguish between the effects of dumped imports
and other non-dumped imports. According to the non-attribution language, the
causation of the material injury from factors other than dumping had to be evident
and direct if the investigators were to conclude that those factors had caused the
material injury, and thus declare dumping non-injurious. The U.S. delegation
“roundly criticized” the Carlisle II draft stating that it was not an improvement over
Carlisle I draft since the use of a number of bracketed texts left too many issues
unresolved.109
These differences left the causation language under the ADA not substantively
different from the language under the Tokyo Antidumping Code. Article 3.5 of the
ADA reiterates the requirement under the Tokyo Code that there must exist a causal
relationship between dumped imports and injury to the domestic industry.
Anti-Dumping Agreement: Article 3.5
It must be demonstrated that the dumped imports are, through the effects of dumping as set
forth in paragraphs 2 and 4 of this Agreement, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the dumped imports and

108
Terence Stewart et al., supra note 93, at 1518. See also J. Croome, RESHAPING THE WORLD
TRADING SYSTEM: A HISTORY OF THE URUGUAY ROUND 180-181 (1999).
109
Lijuan Xing, Behind the Multilateral Trading System: Legal Indigenization and the WTO in
Comparative Perspective, fn 619 (SJD Dissertation, 2012) (unpublished).
44 2 Historical Evolution of Injury and Causation …

the injury to the domestic industry shall be based on an examination of all relevant evidence
before the authorities. The authorities shall also examine any known factors other than
dumped imports which at the same time are injuring the domestic industry, and the injuries
caused by these other factors must not be attributed to the dumped imports. Factors which
may be relevant in this respect include, inter alia, the volume and prices of imports not sold
at dumped prices, contraction in demand or changes in the patterns of consumption, trade
restrictive practices of and competition between the foreign and domestic producers,
development in the technology and the export performance and productivity of the
domestic industry.

As noted by Miranda, a conceptually and intellectually challenging aspect of the

causation requirement under the AD Agreement is the reference to the term “through
the effects of dumping” mentioned in the first sentence of Article 3.5 of AD
Agreement.110 This provision closely resembles the U.S. antidumping law. The first
critical factor examined by the USITC in an injury examination is whether the
volume of imports was “significant” or not. The USITC determines ‘significance’ as
an absolute amount and in terms of market share percentage. The USITC also
examines the timing of the increase in volumes of less than fair value (LTFV) imports
in relation to domestic production, sales and consumption. The second criterion is
whether the dumped imports depressed prices of “like” domestic products or pre-
vented price increases that would have occurred but for the dumped imports.
In order to gather information for its investigation, antidumping agencies send
questionnaires to the respondents to elicit data and detailed information on the cost
of production, sales, profit, net revenues, wholesale and retail prices, and other data
related to the article in question. The agencies also seek information to determine
whether factors unrelated to dumping influence the purchaser’s decision. If such
other factors causing injury exist, then the task of an agency is difficult. As the
USITC 1979 Report observed, the USITC does not have to determine that the
dumped imports are a principal, substantial and significant cause of injury.111 It was
sufficient under the U.S. law that “imports are a cause of material injury”.112 The
position was adopted even in the EC at the time of the conclusion of the Uruguay
Round. In sum, it is more than evident that the U.S. and EC antidumping practices
have substantially influenced the language of injury and causation even under the
WTO Antidumping Agreement. This language reiterated that dumping need not be
a substantial cause of injury, but a cause; further, there was no categorical
requirement to separately examine and weigh the role of each possible causal factor.
The negotiating history of the AD Agreement only reconfirms that dumping was
treated as just a cause and not as a significant or substantial cause for the purpose of
antidumping actions. A detailed examination of the non-attribution language with
respect to GATT/WTO disputes is provided in Chap. 3.

110
Jorge Miranda, supra note 85, at 732-735.
111
United States International Trade Commission, ANNUAL REPORT (1979), available at http://
www.usitc.gov/publications/annualreport/pub982.pdf.
112
William D. DeGrandis, Proving Causation in Anti-dumping Cases, 20(2) THE INTERNATIONAL
LAWYER 563, 568-569 (1986).
D Material Injury and Non-attribution … 45

2 Causation in Sunset and Interim Reviews

Article VI of the GATT did not envisage sunset reviews. Under the previous Tokyo
Code, an antidumping measure could remain in force only as long as, and to the
extent necessary, to counteract dumping which is causing injury. There was a
provision under the Tokyo Code to review the continued imposition of antidumping
duties, which could be initiated suo motu by the investigating authority or at the
request of an interested party. However, there was no guidance under the Tokyo
Code to set a limit on the maximum duration of an antidumping measure.113 The
sunset provision was included in the AD Agreement based on the proposals of
Korea,114 Japan,115 and other Nordic countries.116 Article 11.2 of the ADA deals
with interim reviews and Article 11.3 deals with sunset or expiry reviews of
antidumping measures.
Anti-Dumping Agreement: Article 11.2
The authorities shall review the need for the continued imposition of the duty, where
warranted, on their own initiative or, provided that a reasonable period of time has elapsed
since the imposition of the definitive anti-dumping duty, upon request by any interested
party which submits positive information substantiating the need for a review. Interested
parties shall have the right to request the authorities to examine whether the continued
imposition of the duty is necessary to offset dumping, whether the injury would be likely to
continue or recur if the duty were removed or varied, or both. If, as a result of the review
under this paragraph, the authorities determine that the anti-dumping duty is no longer
warranted, it shall be terminated immediately.
Anti-Dumping Agreement: Article 11.3
Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty
shall be terminated on a date not later than five years from its imposition (or from the date
of the most recent review under paragraph 2 if that review has covered both dumping and
injury, or under this paragraph), unless the authorities determine, in a review initiated
before that date on their own initiative or upon a duly substantiated request made by or on
behalf of the domestic industry within a reasonable period of time prior to that date, that the
expiry of the duty would be likely to lead to continuation or recurrence of dumping and
injury. The duty may remain in force pending the outcome of such a review.

According to Article 11.3 of the AD Agreement, initiation of sunset reviews can

be done in two ways: either on an application by the domestic industry or by the
concerned authority itself. However, there is an obligation on the authorities to
determine whether the expiry of the duty would be likely to lead to continuation or

113
Abhijit Das & Meghna Sharafudeen, Sunset Reviews: Important Provisions Made Irrelevant? 5
(1) JINDAL GLOBAL LAW REVIEW 79, 82 (2014).
114
Communication from the Republic of Korea, Negotiating Group on MTN Agreements and
Arrangements, at 5 MTN.GNG/NG8/W/3 (May 20, 1987).
115
Communication from Japan, Negotiating Group on MTN Agreements and Arrangements, at
3-4, MTN.GNG/NG8/W/11 (September 28, 1987).
116
Submission of Nordic Countries, Negotiating Group on MTN Agreements and Arrangements,
at MTN.GNG/NG 8/W/15 (November 16, 1987), at 4.
46 2 Historical Evolution of Injury and Causation …

recurrence of dumping and injury. The non-existence of dumping or injury during

the period of investigation is not dispositive of the probability of dumping or injury
recurring in the future. Sunset reviews take place subsequent to the application of
the antidumping measures, which one would expect to have neutralized the injury
caused by the investigated imports.117 A sunset review may, therefore, justify the
continuation of the measure even after the dumping and injury have ceased. This is
especially the case in situations where the exporters assume price undertaking,
leading to increase in the import prices. This would not constitute current injury.
Another key issue is the applicability of the key disciplines of the Antidumping
Agreement, such as Articles 2 (provision on dumping) and 3 (provision on injury
and causation) of the ADA to the interim and sunset review proceedings. There is
no explicit reference in Articles 11 of the Antidumping Agreement to Article 2 and
3. A WTO panel in United States—Corrosion Resistant Steel Sunset Review
examined the issue whether the determination of likelihood of continuation or
recurrence of dumping in a sunset review must be based on the determination of a
dumping margin calculated in conformity with Article 2.4.118
The Panel noted that the substantive disciplines of Articles 2 and 3 did not apply
in determining the likelihood of continuation or recurrence of dumping under
Article 11. The Appellate Body, on the other hand, held that if the likelihood of
injury determination is based upon the likelihood of dumping determination, then
the dumping determination must be WTO-consistent. This implies that the sub-
stantive principles of Articles 2 and 3 could still apply in a sunset proceeding. The
Appellate Body clarified the position as follows:
Our conclusion that the establishment of a causal link between likely dumping and likely
injury is not required in a sunset review determination does not imply that the causal link
between dumping and injury envisaged by Article VI of the GATT 1994 and the
Antidumping Agreement is severed in a sunset review. It only means that re-establishing
such a link is not required, as a matter of legal obligation, in a sunset review.119

The above finding of the Appellate Body reaffirms that in a sunset review what is
more important is the establishment of nexus between the “expiry of the duty” and
the likelihood of “continuation or recurrence of dumping and injury”.
Reestablishing causal link in a sunset review is unnecessary according to the current
thinking on this matter.
The foregoing paragraphs examined the evolution of injury and causation pro-
vision and examined the history and evolution of causal link in antidumping pro-
ceeding. The discussion also revealed how the protectionist concerns in
antidumping laws influenced the injury and causation standards.

117
Jorge Miranda, supra note 85, at 735.
118
Panel Report, United States – Sunset Review of Anti–Dumping Duties on Corrosion–Resistant
Carbon Steel Flat Products from Japan, WT/DS244/R (August 14, 2003).
119
Appellate Body Report, US –Corrosion-Resistant Steel Sunset Review, WT/DS244/AB/R, ¶124
(December 15, 2003) [hereinafter Appellate Body Report, US- Corrosion Resistant Steel (Sunset
Review)].
D Material Injury and Non-attribution … 47

Section E of this book shall examine the injury and causation language in respect
of subsidies and countervailing measures.

E Injury and Causation in Subsidies and Countervailing

Investigations

Subsidies and countervailing measures, which form the second pillar of trade
remedy law remain one of the complex trade remedy instruments. Like
antidumping, countervailing duties are trade remedy measures adopted to rectify
what is seen as an unfair trade practice.
A subsidy is generally the bestowal of goods or services by a government upon
the manufacture, production, or exportation of a product on terms that are prefer-
ential or inconsistent with commercial considerations. Subsidies have been
addressed right from the days of GATT 1947, and several countries have adopted
country specific legislations. Subsidies are offset through countervailing duty pro-
ceedings and are administered through tariffs pursuant to lengthy investigation
proceedings.
The GATT 1947 did not mention any distinction between export and domestic
subsidies. It only referred to a “bounty or subsidy bestowed, directly or indirectly,
upon the manufacture, production or export of any merchandise”.120 However, the
Tokyo Subsidies Code which was introduced in 1979 contained an outright pro-
hibition on export subsidies to manufactured and mineral items. The Tokyo Code
also contained an illustrative list of prohibited subsidies, all of which condition the
subsidy in some manner on export or export performance.121
The first countervailing duty laws were enacted by the United States in 1890 and
Belgium in 1892.122 These laws were aimed at offsetting bounties paid by
Continental European countries primarily on the export of sugar products, but also
on other products such as flour and alcoholic beverages.123 Viner suggested that
these bounties on exports were not originally intended to promote export, but
resulted from complex, clumsy tariff and excise tax laws—that is, rebates and
drawbacks greater than the taxes or duties actually paid. Despite the fairly long

120
General Agreement on Tariffs and Trade, art.VI:3, Oct. 30, 1947, 61 State. A-11, 55 U.N.T.S.
1994 [hereinafter GATT]. (this definition seems to be derived from the U.S. Tariff Act of 1930
which provides for the imposition of countervailing duties to offset any “bounty or grant” paid or
bestowed upon the imports under investigation, although nowhere is the phrase “bounty or grant”
defined.)
121
Group “Non-Tariff Measures” Sub-Group “Technical Barriers to Trade”, Agreement on
Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs
and Trade, MTN/NTM/W/226 [hereinafter referred to as the Tokyo Subsidies Code].
122
Tariff Act of 1890, Chapter 1244, Sect. 237, 26 Stat. 584, as cited in G Bryan, TAXING UNFAIR
INTERNATIONAL TRADE PRACTICES 250 (1980).
123
Jacob Viner, supra note 12, at 90-91.
48 2 Historical Evolution of Injury and Causation …

history of countervailing duty laws, such duties were not used to a significant extent
by nations other than the United States.
Subsidies were disciplined for the first time at the multilateral level under GATT
1947.124 As compared to the antidumping, GATT 1947 had fairly lenient provi-
sions with respect to subsidies. Contracting Parties whose industry was injured by
subsidized imports were allowed to impose countervailing duties up to the amount
of subsidies. This was permitted by GATT Article VI (3). However, a GATT
Contracting Party was required to establish that the domestic industry in the
importing country had suffered material injury or threatened with material injury or
was such as to materially retard the establishment of the domestic industry.
The GATT Article VI provisions on countervailing duties closely mirror the
provisions on antidumping. Apparently, the drafting countries readily agreed to
include countervailing duties along with antidumping duties under the rubric of
Article VI despite the obvious differences between the two regimes. It appears that
the controversy was limited to the need for an injury test in the application of
countervailing duties. The U.S. did not have the injury requirement for counter-
vailing duties in its domestic law. Nonetheless, the use of Protocol of Provisional
Application (PPA)125 to bring Part II of GATT 1947 had the effect of allowing the
U.S. to continue to enforce its countervailing duty without the application of the
injury test.126 Although the conduct of CVD actions without an injury test was a
clear departure from the GATT requirements in view of the limited CVD actions
during 1948–1980, countervailing duties did not receive serious attention during
this period.127 However, as a consequence of the Tokyo Round, the U.S. accepted
the “material injury” clause in its CVD law by inserting a new Title VII to the Tariff
Act of 1930.128 One of the most important changes made by the 1979 Act was the
requirement of an injury test in all CVD cases involving imports from “countries
under the Agreement”.129 However, the 1979 Act defined material injury as “harm
which is not inconsequential, immaterial, or unimportant”, which was undoubtedly
soft injury standard.130

124
See e.g., Ronald Steenblik, Previous Multilateral Efforts to Discipline Subsidies to Natural
Resource Based Industries, available at 2 (1999), http://www.oecd.org/greengrowth/fisheries/
1918086.pdf.
125
The Protocol of Provisional Application of the General Agreement on Tariffs and Trade,
October 30, 1947, 61 Stat. A2051 (1947), 55 UNTS 308 (1950).
126
Id.
127
John J. Barcelo III, A History of GATT Unfair Trade Law, supra note 70.
128
Trade Agreement Act of 1979, Sect. 101, 19 U.S.C.A §§ 1671–1671 f (West 1980) (adding
new §§ 701–707 to the Tariff Act of 1930. In the 1979 Trade Agreement Act of 1979, the AD/
CVD laws were introduced as a new section, namely Title VII of the Tariff Act of 1930).
129
Countries which were signatories to the Tokyo Subsidies Code or had assumed substantially
similar obligations to those under the Code.
130
John J. Barcelo III, Subsidies, Countervailing Duties and Antidumping After the Tokyo Round,
13(2) CORNELL INTERNATIONAL LAW JOURNAL 257, 271 (1980).
E Injury and Causation in Subsidies … 49

Notwithstanding the importance of maintaining various types of subsidy pro-

grammes, not enough work was made in developing disciplines on this topic.
The U.S. was the only major industrial power that had an active countervailing duty
programme.131 Countervailing duties were never authorized within the internal
market in EEC, and only a few countries had a functional regime for the imple-
mentation of this implementation of this remedy. It is reported that in addition to the
U.S. and the European Union, only a few GATT signatories such as Australia,
Canada, Chile and Japan, had implemented such measures earlier.132 The EEC
Treaty, on the other hand, sought direct regulation of impermissible subsidy
practices through treaty related practices and rules such as State-aid.133
Establishing subsidy in the context of the GATT was fairly straight-forward,
although the GATT disciplines were not fully developed. The framework provided
under the GATT for determination on injury was even sketchier. Article VI of
GATT 1947 provided that determination of injury shall be based on positive evi-
dence and an objective examination of (a) the volume of the subsidized imports and
the effect of the subsidized imports on prices in the domestic market for like
products, and (b) the consequent impact of these imports on the domestic producers
of such products.
Article VI: 3 of the GATT explicitly permits the application of countervailing
measures to subsidized imports.134 Article VI, paragraph 6(a), of the GATT pro-
vides in relevant part:
Article VI: 6(a) of GATT
No contracting party shall levy any antidumping or countervailing duty on the importation
of any product of the territory of another contracting party unless it determines that the
effect of the dumping on subsidization, as the case may be, is such as to cause or threaten
material injury to an established domestic industry, or is such as to retard materially the
establishment of a domestic industry.

In the following section, I shall discuss the key changes introduced in Tokyo
Subsidies Code.

1 Injury and Causation in Tokyo Subsidies Code

The Tokyo Round negotiations on subsidies and countervailing measures took

place under the auspices of the GATT. Twenty four countries ratified the Tokyo
Subsidies code formally known as Agreement on Interpretation and Application of

131
Id.
132
John J. Barcelo III, supra note 130, at 279.
133
Art. 91(1), Treaty Establishing the European Economic Community (Treaty of Rome) 298
UNTS 11 (Adopted on March 25, 1957); See also, Beseler and Williams, supra note 78, at 32-33.
134
Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R
Page 11 (February 21, 1997).
50 2 Historical Evolution of Injury and Causation …

Articles VI, XVI and XXIII of the General Agreement. The Tokyo Subsidies Code
entered into force on 1 January 1980.135 Negotiations on developing disciplines for
a Subsidies Code took place in tandem with the negotiations on reforming the
Antidumping Code. The following is a reproduction of the injury and causality
provisions under the Tokyo Subsidies Code.
Tokyo Subsidies Code: Article 6
1. A determination of injury17 for purposes of Article VI of the General Agreement shall
involve an objective examination of both (a) the volume of subsidized imports and their
effect on prices in the domestic market for like products18 and (b) the consequent impact of
these imports on domestic producers of such products.
2. With regard to volume of subsidized imports the investigating authorities shall consider
whether there has been a significant increase in subsidized imports, either in absolute terms
or relative to production or consumption in the importing signatory. With regard to the
effect of the subsidized imports on prices, the investigating authorities shall consider
whether there has been a significant price undercutting by the subsidized imports as
compared with the price of a like product of the importing signatory, 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. No one or several
of these factors can necessarily give decisive guidance.
3. The examination of the impact on the domestic industry concerned shall include an
evaluation of all relevant economic factors and indices having a bearing on the state of the
industry such as actual and potential decline in output, sales, market share, profits, pro-
ductivity, return on investments, or utilization of capacity; factors affecting domestic prices;
actual and potential negative effects on cash flow, inventories, employment, wages, growth,
ability to raise capital or investment and, in the case of agriculture, whether there has been
an increased burden on Government support programmes. This list is not exhaustive, nor
can one or several of these factors necessarily give decisive guidance.
4. It must be demonstrated that the subsidized imports are, through the effects19 of the
subsidy, causing injury within the meaning of this Agreement. There may be other factors20
which at the same time are injuring the domestic industry, and the injuries caused by other
factors must not be attributed to the subsidized imports.”
¬¬¬¬¬____________
Footnote 17: Determinations of injury under the criteria set forth in this Article shall be
based on positive evidence. In determining threat of injury the investigating authorities, in
examining the factors listed in this Article, may take into account the evidence on the nature
of the subsidy in question and the trade effects likely to arise therefrom.
Footnote 18: Omitted.
Footnote 19: As set forth in paragraphs 2 and 3 of this Article.
Footnote 20: Such factors can include inter alia, the volume and prices of non-subsidized
imports of the product in question, contraction in demand or changes in the pattern of
consumption, trade restrictive practices of and competition between the foreign and

135
Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General
Agreement on Tariffs and Trade, GATT BISD 56-83 (26th Supp. 1980) [hereinafter Subsidies
Code].
E Injury and Causation in Subsidies … 51

domestic producers, developments in technology and the export performance and pro-
ductivity of the domestic industry.

The Tokyo Subsidies Code reiterated the material injury requirement of GATT
Article VI.136 More importantly, it did not contain a grandfather clause like the
Tokyo Antidumping Code.137 Consequently, the U.S. law was amended by the
1979 Trade Agreement Act to incorporate material injury in all antidumping
investigations, and to require material injury in all countervailing duty investiga-
tions against countries that were part of the Subsidies Code.138
One of the contentious issues in the Tokyo Code was the interpretation of
Footnote 19139 to the SCM Agreement. The issue was whether the terms “through
the effects of the subsidy” implied a meaning that was similar to the phrase
“through the effects of imports”? According to David Palmeter, the Tokyo Code
manifestly required the level of subsidy along with the imports to constitute the
effects.140 As will be discussed later in Chap. 3, the meaning of “through the
effects” still continues to be ambiguous in the context of both AD and
Countervailing Duties (CVD) investigations.
It must be noted that the Tokyo Subsidies Code, unlike the Kennedy
Antidumping Code, did not contain a language on the degree of causality. However,
one of the draft arrangements discussed during the Tokyo Round negotiations
contained the following language: “[t]he subsidized products must be [an important
contributing factor in causing or threatening] [the cause of] injury. All other relevant
factors adversely affecting the industry shall be considered in reaching a determi-
nation.”141 However, this language was not incorporated in the final agreement. In
other words, after the Tokyo Round, the degree of causality required in CVD
investigations is almost identical to the language in AD investigations.

136
Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General
Agreement on Tariffs and Trade, LT/TR/A/3 (adopted on November 28, 1979).
137
JAGDEEP S. BHANDARI & ALAN SYKES, ECONOMIC DIMENSIONS OF INTERNATIONAL LAW:
COMPARATIVE AND EMPIRICAL PERSPECTIVES 87(1997).
138
John H. Jackson, supra note 57, at 236–242.
139
SCM Agreement, footnote 19 read as follows: “In the event that the request relates to a subsidy
deemed to result in serious prejudice in terms of paragraph 1 of Article 6, the available evidence
of serious prejudice may be limited to the available evidence as to whether the conditions of
paragraph 1 of Article 6 have been met or not”.
140
David Palmeter, Countervailing Subsidized Imports: The International Trade Commission Goes
Astray, 2(1-2) UCLA PACIFIC BASIN LAW JOURNAL 21(1983).
141
GENERAL AGREEMENT IN TARIFFS AND TRADE, Multilateral Trade Negotiations Group “Non-Tariff
Measures” Sub-Group “Subsidies and Countervailing Duties”, MTN.NTM/W/168 (July 10,
1978).
52 2 Historical Evolution of Injury and Causation …

2 Uruguay Round Agreement on Subsidies

and Countervailing Measures

The Uruguay Round SCM Agreement expanded and developed the procedural and
substantive rules on the use of countervailing measures developed under the Tokyo
Subsidies Code. Under the Tokyo Subsidies Code, the only effective remedy
against foreign subsidization was application of the domestic countervailing duty
law. While that law was somewhat effective in addressing the effects of subsidized
merchandise in the importing country market, it was not designed to address the
effects of subsidies in other markets. The Uruguay Round SCM Agreement,
together with the new WTO dispute settlement procedures, provide a more sub-
stantive and detailed procedural tools for addressing distortions caused by subsidies
anywhere in the world.142
As regards injury and causality, the SCM Agreement did not make substantive
changes to the Tokyo Subsidies Code. Part V of the SCM Agreement “… permit[s]
WTO Members to levy countervailing duties on imported products to offset the
benefits of specific subsidies bestowed on the manufacture, production or export of
those goods”. However, Part V also conditions the right to apply such duties on the
demonstrated existence of three substantive conditions (subsidization, injury, and a
causal link between the two) and on compliance with its procedural and substantive
rules, notably the requirement that the countervailing duty cannot exceed the
amount of the subsidy.
The key provisions with respect to injury and causality were consolidated under
Article 15 of the SCM Agreement. Article 15.5 of the SCM Agreement remains the
single most important provision on injury and causation determination, but it refers
to Articles 15.2 and 15.4.
Similar to Article 3.1 of the AD Agreement, Article 15.1 of the SCM Agreement
introduces the requirement of positive evidence and the need to conduct an
objective examination of volumetric and price effects of the subsidized imports.
SCM Agreement: Article 15.1
A determination of injury… shall be based on positive evidence and involve an objective
examination of both (a) the volume of the subsidized imports and the effect of the subsi-
dized imports on prices in the domestic market for like products and (b) the consequent
impact of these imports on the domestic producers of such products.
SCM Agreement: Article 15.2
With regard to the volume of the subsidized imports, the investigating authorities shall
consider whether there has been a significant increase in subsidized imports, either in
absolute terms or relative to production or consumption in the importing Member.

142
Article 5 of SCMA which deals with “Adverse effects” is aimed at addressing the distortions
caused by certain subsidies in third country markets.
E Injury and Causation in Subsidies … 53

With regard to the effect of subsidized imports on the price of similar products, it
is specified that:
The investigating authorities shall consider whether there has been significant price
undercutting by the subsidized imports as compared with the prices of a like product…, or
whether the effects of such imports is otherwise to depress or suppress to a significant
degree or to prevent price increases, which otherwise would have occurred, to a significant
degree.
SCM Agreement Article 15.4
The examination of the impact of the 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 domestic industry, including actual and potential decline in output, sales, market
share, profits, productivity, return on investments, or utilization of capacity; factors
affecting domestic prices, actual and potential negative effects on cash flow, inventories,
employment, wages, growth, ability to raise capital or investments and, in the case of
agriculture, whether there has been an increased burden on government support pro-
grammes. This list is nor exhaustive, nor can one or several of these factors necessarily give
decisive guidance.

A combined reading of Article 15, clauses (1), (2) and (4) indicates that the
assessment of injury is linked to the effects of subsidy. A combined reading cap-
tures the four key steps involved in a CVD investigation: (1) Is there a significant
increase in imports?; (2) Is there a significant price undercutting by subsidized
imports? (3) Whether the effects of these imports were to depress prices to a
significant degree or to prevent price increases to a significant degree?, and
(4) whether the imports in view of these factors have caused material injury to the
domestic industry? It is instructive to examine Article 15.5 of the SCM Agreement
which is very similar to the AD Agreement in relation to causation.
SCM Agreement Article 15.5
It must be demonstrated that the subsidized imports are, through the effects47 of subsidies,
causing injury within the meaning of this Agreement. The demonstration of a causal rela-
tionship between the subsidized imports and the injury to the domestic industry shall be
based on an examination of all relevant evidence before the authorities. The authorities shall
also examine any known factors other than the subsidized imports which at the same time are
injuring the domestic industry, and the injuries caused by these other factors must not be
attributed to the subsidized imports. Factors which may be relevant in this respect include,
inter alia, the volume and prices of non-subsidized imports of the products in question,
contraction in demand or the change in the pattern of consumption, trade restrictive practices
of an competition between the foreign and domestic producers, developments in technology
and the export performance and productivity of the domestic industry.
________________
47
as set forth in paragraphs 2 and 4.

The first paragraph of Article 15.5 of the SCM Agreement is almost a repro-
duction of the first paragraph of Article 6.4 of the Tokyo Code. Article 15.5 of the
SCM Agreement also includes a requirement to examine “known factors other than
subsidized imports” and that the injuries caused by these other factors must not be
attributed to subsidized imports. Although the Tokyo Code had a reference to
54 2 Historical Evolution of Injury and Causation …

“known factors” in the footnote to Article 6(4), such an examination was omitted or
overlooked in the CVD investigations conducted all along. None of the CVD
disputes conducted during 1980–1994 in the U.S. or in the EU had a clear dis-
cussion on the role of known factors in the assessment of injury and causality.143

3 Similarities of SCM Agreement and AD Agreement

This chapter examined the material injury and causation standards in AD and
CVD investigations under the GATT/WTO. As exhaustively outlined in this
chapter, a CVD case may be filed against exporters benefiting from a government
subsidy, while an AD case may be filed against an exporter dumping a product
into an import market. In effect, both AD and CVD duties are imposed against
products of foreign companies, rather than against foreign governments. The
material injury and causation standards are nearly the same for both AD and CVD
investigations.144
The non-attribution requirement is also common to both the AD and SCM
Agreements. The Panel in EC- DRAM noted that the non-attribution requirement in
AD investigations has been addressed by the Appellate Body in several relevant
cases.145 The same logic and reasoning should apply in CVD cases. Furthermore,
the WTO Ministerial Decision calls for a consistent resolution of disputes arising
from antidumping and countervailing duty measures.146 In conclusion, despite their
almost separate and wholly unconnected evolution and existence, the injury and
causality requirements of antidumping and CVD investigations have nearly merged
and look almost indistinguishable now.

F Injury and Causation in Safeguard Investigations

Safeguards, the third element in this troika, are generally in the nature of import
restrictions imposed in the event of import surges. This is to prevent serious injury
to the domestic industry, as well to make positive adjustments to import compe-
tition.147 Such duties or protection are expected to help the concerned industries and
workmen from business disruption, dislocation and economic extinction. In other

143
MARC BENITAH, THE LAW OF SUBSIDIES UNDER THE GATT/WTO SYSTEM 14 (2001).
144
John J. Barcelo III, supra note 70, at 285.
145
Panel Report, EC—Countervailing Measures on DRAM Chips, ¶ 7.404, WT/DS299 (June 17,
2005).
146
As provided by the Ministerial Declaration on Dispute Settlement Pursuant to the Agreement on
Implementation of Article VI of the GATT 1994 and Part V of the Agreement on Subsidies and
Countervailing Measures.
147
Sheng, supra note 62, at 153.
F Injury and Causation in Safeguard Investigations 55

Number of trade remedy investigations (1995-2015)

400
Antidumping Initiations
350 Subsidies and Countervailing Duties Initiations
Safeguard Initiations
300

250

200

150

100

50

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Fig. 2 Number of trade remedy investigations (1995–2015). Source WTO notifications

words, safeguard duties are applied to give domestic producers some breathing
space for adjustment against foreign competition148—competition that is perfectly
fair but that nevertheless causes serious injury to domestic producers. In practice,
the number of safeguard investigations conducted in a year is much less when
compared to the antidumping actions. For example, while more than 4,900
antidumping actions are initiated since the establishment of the WTO, only less than
300 safeguard actions are initiated (Fig. 2).149
According to Cottier and Oesch safeguard measures inherently accompany the
process of liberalization and of structural adjustment that go along with enhancing
market access for imported products.150 Moreover, the instrument is politically
necessary in order to undertake liberalization in the first place and to find the
necessary majorities to do so at home.151 This view is significantly supported by
scholarly writings. Kenneth Dam also suggests that the availability of safeguard
remedies has encouraged countries to enter into a greater number of tariff bindings

148
Negotiating Group on Safeguards, Communication from Australia, Hong Kong, Korea, New
Zealand and Singapore, MTN/ GNG/NG9/W/8 (October 5, 1987).
149
World Trade Organization, WTO Trade Remedies Gateway, http://www.wto.org/english/
tratop_e/adp_e/adp_e.htm (last visited on July 31, 2016).
150
According to Section 201 of the U.S. Trade Act of 1974 if an industry exhibits the conditions of
injury contemplated by Article XIX, the President shall take “appropriate and feasible” action that
could “facilitate efforts by the domestic industry to make positive adjustment to import compe-
tition”. The Preamble to the Agreement on Safeguards also refers to the importance of “structural
adjustment”.
151
THOMAS COTTIER AND MATTIAS OESCH, INTERNATIONAL TRADE REGULATION, LAW AND POLICY
IN THE WTO, THE EUROPEAN UNION AND SWITZERLAND: CASES, MATERIALS AND COMMENTS 486
(2005).
56 2 Historical Evolution of Injury and Causation …

than would otherwise be the case.152 Hoekman and Kostecki argue that “[s]afe-
guard provisions are often critical to the existence and operation of
trade-liberalizing agreements, as they function as both insurance mechanisms and
safety valves. They provide governments with the means to renege on specific
liberalization commitments—subject to certain conditions—should the need for this
arise (as a safety valve). Without them governments may refrain from signing an
agreement that reduces protection substantially (i.e. as an insurance motive).153
This proposition is also supported by Bagwell and Staiger who argue that the
function of safeguard mechanism is to legalize behavior that might otherwise be
treated as “cheating”.154
Safeguard remedies are to be imposed against all imports regardless of their
source under the WTO provisions, i.e. on an MFN basis. In that way, safeguard
actions are different from AD and CVD investigations. AD and CVD actions can be
taken only against those countries which are found to be engaged in unfair dumping
and consequently causing injury to the domestic industry. However, safeguard
actions are to be applied irrespective of the source, subject to certain flexibilities
available for developing countries.
Compared to antidumping actions, safeguard actions came in several years later.
The trade agreement that the U.S. signed with Mexico in 1943 was the first
agreement that is known to have introduced the “escape clause”.155 When intro-
ducing the proposed safeguards mechanism, the U.S. delegate stated the purpose of
the mechanism as follows:
The purpose of this Article, generally speaking, is to give some flexibility to the com-
mitments undertaken in Chapter IV [of US–Mexico Agreement].Some provisions of this
kind seems necessary in order that countries will not find themselves in such a rigid position
that they could not deal with situations of an emergency character. Therefore, the Article
would provide for a modification of commitments to meet such temporary situations.156

Formally in 1951, the U.S. Congress empowered the Tariff Commission to

conduct an “escape clause” or the safeguards investigation upon the application
filed by a representative of the injured industry.157 In other words, it had to be

152
KENNETH W. DAM, THE GATT: LAW AND INTERNATIONAL ECONOMIC ORGANIZATION 99 (1970).
153
BERNARD HOEKMAN & MARTIN KOSTECKI, THE POLITICAL ECONOMY OF THE WORLD TRADING
SYSTEM: THE WTO AND BEYOND 413 (2nd edn., 2001).
154
KEITH BAGWELL & ROBERT W. STAIGER, THE ECONOMICS OF THE WORLD TRADING SYSTEM (2002).
155
Reciprocal Trade Agreement with Mexico, December 23, 1943, 57 Stat. 833 (1943).
156
United Nations Economic and Social Council, Preparatory Committee of the International
Conference on Trade and Employment, Verbatim Report of the Seventh Meeting of Committee of
the International Conference on Trade and Employment, II, E/PC/T/C.II/PV/7 (1946), at 3.
157
See generally, G. Bronz, The Tariff Commission as a Regulatory Agency, 61(3) COLUMBIA LAW
REVIEW, 463 (1961).
F Injury and Causation in Safeguard Investigations 57

demonstrated that the concession engendered imports had played a substantial part
in causing injury to the petitioner. Under the 1962 Act, however, a petitioning
industry must sustain the double burden of proving that the increased imports were
caused “in major part” by trade agreement concessions, and that the increased
imports were “the major factor” in causing the industry’s serious injury.
A preponderant causal connection between trade-agreement concessions and
increased imports must be proved.158 In practice, the Tariff Commission in the U.S.
determined that before an affirmative finding could be made under the new Act, a
petitioning industry must prove that the increased imports were caused, by
trade-agreement concessions, in major parts; and that the imports were the major
factor in causing serious injury to the petitioner’s industry. If the petitioner failed to
sustain its burden with respect to either element, the Commission said that it could
not make an affirmative finding.
It will be instructive to notice that the authority to apply “escape clause” or
safeguard action was tied to the Presidential authority to negotiate reciprocal tariff
concessions, at least in the U.S. For example, the U.S. President had no authority to
negotiate tariff concessions between 1967 and 1974 (i.e., after the conclusion of the
Kennedy Round and the commencement of the Tokyo Round), and when the
President was granted authority by virtue of the 1974 Trade Act, a corresponding
power was granted under Title II of the Act under the category Relief from Injury
Caused by Import Competition. Title II of the 1974 Trade Act has continued until
date as the basis for safeguard investigations under the U.S. legislation.159
Safeguards actions were recognized in the GATT 1947160 treaty itself although
there is no evidence to indicate that any Contracting Party other than the United
States had such a mechanism. Article II of the GATT 1947 provided for reciprocal
reduction of tariff rates among the Contracting Parties which resulted in negotiated
ceilings or tariff bindings. The drafters of GATT 1947 anticipated that tariff con-
cessions could become unduly burdensome. In such a context, safeguard actions
allowed a Contracting Party to undo a previously granted concession to protect
domestic industry from import competition. In view of the concerns expressed by
the negotiating parties to the GATT 1947, the drafters provided for “emergency
action on imports of particular products” in Article XIX of GATT 1947.

158
A “substantial cause” is one that is important and not less important than any other cause.
Section 2251 (b) (4).
159
K. Grybowski, V. Rud & G. Steppanyenko, Towards Integrated Management of International
Trade—The U.S. Trade Act of 1974, 9 INTERNATIONAL AND COMPARATIVE LAW QUARTERLY 285
(1979).
160
GATT, at Art. XIX.
58 2 Historical Evolution of Injury and Causation …

Article XIX (1) of GATT, 1947

If, as a result of unforeseen developments and of the effect of obligations incurred by a
contracting party under this Agreement, including tariff concessions, any product is being
imported into the territory of that contracting party in such increased quantities and under
such conditions as to cause or threaten serious injury to the domestic producers in that
territory of like or directly competitive products, the contracting party shall be free, in
respect of such product, and to the extent and for such time as may be necessary to prevent
or remedy such injury, to suspend the obligations in whole or in part or to withdraw or
modify the concession.

It is clear from the text of Article XIX that a Contracting Party desiring to apply
safeguard measures must have experienced “increased quantities” of a “like” or
“directly competitive” product manufactured by the domestic industry. Although
the term “increased quantities” is not explained in Article XIX of GATT 1947, a
GATT Working Party had concluded that this term would refer to an increase in
import quantities either in absolute terms or relative terms.161 The absence of any
reference to a baseline for evaluating the surge in imports was considered to be
major shortcoming of Article XIX of GATT 1947.162 The lack of jurisprudence on
the application and interpretation led to the persistence of ambiguity in Article XIX
of the GATT 1947.163
Under Article XIX of the GATT 1947, a signatory cannot impose trade
restrictions under the “escape clause” without compensating adversely affected
members of GATT 1947 if the restrictions impair the value to them of a prior
GATT concession. In particular, paragraphs 2 and 3 of Article XIX of GATT 1947
provide that a party invoking its right to suspend or modify concessions must
negotiate with adversely affected parties and provide compensation in the form of
alternative trade concessions. As a general rule, compensation is required from the
Member applying the safeguard measures to the exporting Members.
The WTO Safeguards Agreement specifies that if no agreement on compensation
is reached within 30 days of consultations required under the Safeguards
Agreement, the affected exporting Members are free, within a 90 day period after
the imposition of the safeguard measure, to suspend the application of “substan-
tially equivalent concessions” (i.e., Article 8. 2 of the Agreement on Safeguards).
The right of suspension is not to be exercised for the first 3 years that a safeguard
measure is in effect, provided that the safeguard measure has been taken as a result

161
Report of the Intersessional Working Party on the Complaint of Czechoslovakia Concerning the
Withdrawal by the United States of a Tariff Concession under Article XIX of the GATT (Hatters’
Fur), GATT/CP/106 (Oct. 22, 1951). [hereinafter, Working party report, Hatter’s Fur].
162
ALAN O. SYKES, THE WTO AGREEMENT ON SAFEGUARDS: A COMMENTARY 9 (2006); see also
Alan O. Sykes, A Safeguard Mess: A Critique of WTO Jurisprudence, 2(3) WORLD TRADE REVIEW
261, 268-269 (2003) [hereinafter Sykes, A Safeguard Mess].
163
The only written dispute report pertaining to safeguard measures during the GATT was the
Hatter’s Case released in 1951.
F Injury and Causation in Safeguard Investigations 59

of an absolute increase in imports and that such a measure conforms to the pro-
visions of the Safeguard Agreement.164
One of the key interpretative issues in the application of safeguard measures was
the meaning of the terms “unforeseen developments”, along with the term, “the
obligations incurred by a contracting party”. The first clause of Paragraph 1 of
Article XIX of GATT 1947 was formulated in the context of an agreement that was
expected to be short-lived and a provisional arrangement.165 However, one of
assumptions of incurring tariff obligations was that the concessions would be
suspended in the event of an unforeseen development which may have an adverse
impact on the domestic industry.
It appears from the provisions of GATT that it was not enough that an
unforeseen import surge has resulted from a tariff concession. There is an additional
requirement that the import surge has caused or is threatening to cause injury to
domestic production.166 One of the earliest cases in the GATT dealing with
unforeseen development is the Hatter’s Fur case.167 The U.S. withdrew a conces-
sion that it had negotiated in 1947 with respect to women’s hat bodies. The U.S.
argued that an unexpected surge in imports had resulted from its 1947 concession
due to an unforeseen change that benefited imports over domestic producers.
Members of the Working Party in that case, in 1951, stated168:
…“unforeseen developments” should be interpreted to mean developments occurring after
the negotiation of the relevant tariff concession which it would not be reasonable to expect
that the negotiators of the country making the concession could and should have foreseen at
the time when the concession was negotiated.”

It is possible that the requirement of “unforeseen developments” was conceiv-

able and comprehensible in the early days of the GATT. When new tariff con-
cessions were given, there arose a possibility that such concessions could result in
unanticipated import surge. According to Professor Sykes, Article XIX of GATT
1947 was designed to address such unforeseen and politically inconvenient con-
sequences of tariff liberalization under the GATT.169 The requirement that increase
in imports must be the result of “unforeseen developments” has been progressively
liberalized in several jurisdictions.170 However, in some of the earlier WTO

164
Art. 8(3) Agreement on Safeguards, 15 April 1994, LT/UR/A-1A/8 [hereinafter Safeguards
Agreement.].
165
Sykes, A Safeguard Mess, supra note 162, at 261.
166
Id. at 255.
167
Working Party Report, Hatter’s Fur, supra note 161.
168
Id. at ¶ 9. This interpretation was proposed by the representative of Czechoslovakia, and was
accepted by all the Members of the Working Party, with the exception of the United States.
169
ALAN O. SYKES, THE WTO AGREEMENT ON SAFEGUARDS: A COMMENTARY 17 (2006).
170
Alan O. Sykes, The Persistent Puzzles of Safeguards: Lessons from the Steel Dispute, 7(3)
JOURNAL OF INTERNATIONAL ECONOMIC LAW 523 (2004); MICHAEL J. TREBILCOCK, UNDERSTANDING
TRADE LAW 93-94 (2011).
60 2 Historical Evolution of Injury and Causation …

decisions such as Argentina—Footwear171 and Korea—Dairy,172 the Appellate

Body had held that Article XIX of the GATT and the Agreement on Safeguards
should not be read as to exclude the requirement of establishing unforeseen
developments. According to Argentina—Footwear, an unforeseen development is
one that was not expected by trade negotiators at the time when such concessions
were negotiated.173 In view of this requirement, all safeguard investigations are
required to provide a finding on “unforeseen developments”. In other words, the
requirement of unforeseen development is not merely an “explanatory verbiage”.174
This interpretation affirmed the continuing vitality of Article XIX of the GATT in
respect of safeguards investigations.
The objective of the Safeguards Agreement was also to prohibit various grey
area measures and to clarify and reinforce the disciplines of the GATT. Grey area
measures referred to “voluntary restraint agreements”, “voluntary export restraints”
and “orderly marketing arrangements” which amounted to quantitative export
limitations.175 Article 2 of the Safeguards Agreement sets forth the conditions (i.e.,
serious injury and threat thereof) under which safeguard measures may be imposed.
The causation requirement is set forth in Articles 2.1 and 4.2 (b).
Safeguards Agreement: Article 2.1
A Member (footnote omitted) may apply a safeguard measure to a product only if that
Member has determined, pursuant to the provisions set out below, that such a product is
being imported into its territory in such increased quantities, absolute or relative to domestic
production, and under such conditions as to cause or threaten to cause serious injury to the
domestic industry that produce like or directly competitive products.

Even the new Safeguards Agreement did not include other conditions for its
application. For example, it was not entirely clear whether the imports of the
product under examination should increase suddenly, sharply or unexpectedly. The
negotiating history indicates that the Pacific- Rim countries (Australia, New
Zealand, Hong Kong, Korea and Singapore) were in favour of tough disciplines.176
The proposal of the Pacific- Rim countries suggested that the determination of
serious injury or threat thereof shall depend on the establishment of a direct causal
link between increased imports and an overall decline in the condition of domestic
producers. Brazil also proposed that a precise definition of “serious injury” and a
clear causal link between “unforeseen sudden and substantial increase in imports”

171
Appellate Body Report, Argentina- Safeguard Measures on Imports of Footwear,
WT/DS121/AB/R (December 14, 1999) [hereinafter “Appellate Body, Argentina- Footwear].
172
Appellate Body report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy
Products, WT/DS 98/AB/R ¶ 97 (December 14, 1999).
173
Appellate Body Report, Argentina- Footwear, ¶ 93.
174
Appellate Body Report, Korea—Diary, ¶ 43.
175
JAGDISH BHAGWATI, PROTECTIONISM (1988) (arguing that safeguard measures are known as “grey
area measures”, because they were neither authorized nor condemned by GATT.).
176
Croome, supra note 108, at 55.
F Injury and Causation in Safeguard Investigations 61

and “serious injury” would have to be established in order for a contracting party to
be in a position to resort to safeguards measures.177
The only guidance to the meaning of the term “serious injury” and the appro-
priate standard of causation is provided by Article 4 of the Safeguards Agreement.
Safeguards Agreement: Article 4.1
“For purposes of this Agreement:
(a) “serious injury” shall be understood to mean significant overall impairment in the
position of the domestic industry

It is generally considered that the concept of “serious injury” is much higher than
other forms of injury. The terms “significant overall impairment” which are used to
qualify serious injury themselves are ambiguous. In Argentina—Footwear, the
Appellate Body highlighted the need to look at the “overall picture” of the industry
while assessing “significant overall impairment”.178 The Appellate Body in US-
Lamb, noted that the concept of serious injury under the Safeguards Agreement is a
high standard.179 The Appellate Body noted that the word “serious” connoted a
higher standard than the word “material” which is mentioned in the AD and SCM
Agreements.180 Again, in US—Wheat Gluten, the Appellate Body referred to the
standard of “serious injury” determination as “exacting”.181 However, how an
investigating authority can differentiate between the two standards was not clearly
spelt out. In many ways, it appears that distinctions in injury and causation stan-
dards that originated in the use of such instruments in some of the jurisdictions such
as that of the United States were carried forward even in the interpretation of the
WTO Safeguards Agreement.182
In regard to causation, the Safeguards Agreement provides as below:
Safeguards Agreement: Article 4.2
(a). In the investigation to determine whether increased imports have caused or are
threatening to cause serious injury to a domestic industry… the competent authorities shall
evaluate all relevant factors of an objective and quantifiable nature having a bearing on the
situation of the domestic industry, in particular, the rate and amount of the increase of
imports of the product concerned in absolute and relative terms, the share of the domestic
industry taken by increased imports, changes in the level of sales, production, productivity,
capacity utilization, profit and losses, and employment.

177
Negotiating Group on Safeguards, Communication from Brazil, Elements for a Comprehensive
Understanding of Safeguards, ¶. 3, MTN.GNG. NG9/W/3 (May 25, 1987).
178
Appellate Body Report, Argentina- Footwear, ¶ 139.
179
Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, ¶ 124
(May 16, 2001) [hereinafter Appellate Body Report, US- Lamb].
180
Appellate Body Report, US—Lamb, ¶. 124.
181
Appellate Body Report, US—Wheat Gluten, ¶. 149.
182
ALAN SYKES, THE WTO AGREEMENT ON SAFEGUARDS (2006).
62 2 Historical Evolution of Injury and Causation …

(b). The determination [of whether increased imports cause or threaten to cause serious
injury] shall be made unless this investigation demonstrates, on the basis of objective
evidence, the existence of the causal link between increased imports of the product con-
cerned and serious injury or threat thereof. When factors other than increased imports are
causing injury to the domestic industry at the same time, such injury shall not be attributed
to increased imports.

It is important to note that unlike the AD as well as the SCM Agreement, the
Safeguards Agreement does not provide a list of other factors. Nonetheless, Article
4.2 includes a non-attribution requirement. However, the absence of an illustrative
list of factors–as the discussion in Chap. 3 indicates–does not appear to have
affected the performance of the non-attribution requirement.
Besides Article XIX of the GATT and the Safeguards Agreement, certain tran-
sitional product specific safeguard mechanisms are also provided in the WTO.183
For instance, Article 16 of China’s Protocol of Accession184 authorized a WTO
Member to take certain product specific safeguards if the increased imports caused
or threatened to cause market disruption. Article 16(4) of the Protocol considered
market disruption to take place when imports are found to be ‘increasingly rapidly’
so as to be a significant cause of material injury. It is noteworthy that the transitional
product specific safeguard mechanism has used the material injury standard (as seen
in AD and SCM Agreements) instead of the serious injury standard. Furthermore,
the transitional safeguard mechanism has used the ‘significant cause’ requirement.
In US—Tyres (China), China argued that the U.S. violated its commitments under
the Accession Protocol since the increased imports were not a ‘significant cause of
injury’. However, the panel ruled that rapidly increasing imports would properly
constitute a significant cause of market disruption even though their causal role is
not as significant as other factors.185 This was an important clarification that a mere
choice of causal adjectives will not substantially influence the causation analysis.
Article 5.1 requires that a safeguard be imposed not only to the extent necessary
to prevent or remedy serious injury, but also to facilitate the adjustment. In US—
Line Pipe, the Appellate Body has also made the link between the Article 5.1
“extent necessary” requirement and the non-attribution requirement under Article
4.2(b), second sentence. The Appellate Body had noted that it would not be logical
to require a Member to conduct the non-attribution analysis while, at the same time,
permit that Member to apply a safeguard measure addressing injury caused by all
factors.186 Thus, it found that a violation of the non-attribution requirement (in that

183
This study does not focus on the product specific safeguards actions provided under the
Agreement on Textiles and Clothing (ATC).
184
The China specific transitional product specific safeguard mechanism expired in 2013, i.e. after
12 years after the date of accession to the WTO.
185
Panel Report, United States – Measures Affecting Imports of Certain Passenger Vehicle and
Light Truck Tyres from China, ¶ 7.158, WT/DS399/R (October 5, 2011).
186
Appellate Body Report, US- Definitive Safeguard Measures on Import of Circular Welded
Carbon Quality Line Pipe from Korea, ¶ 252, WT/DS202/AB/R (February 15, 2002) [hereinafter
Appellate Body Report, US- Line Pipe].
F Injury and Causation in Safeguard Investigations 63

injury caused by factors other than imports has been attributed to imports) entailed a
prima facie demonstration that the safeguard measure had not been applied “to the
extent necessary” to prevent or remedy serious injury, and to facilitate the adjust-
ment.187 A safeguard measure that imposes a burden on imports beyond the effects
that should be attributed to imports, limits competition and runs counter to the
objective of the escape clause protection. As the Panel in US—Steel stated, there is
a “need to maintain a balance between market access and safeguards rights and
obligations”.188
Safeguard investigations or the so-called “escape clause” actions do not involve
a test of the fairness of import competition, but only an injury test. As can be seen
from the foregoing discussion, the standards for relief under antidumping and
subsidies and countervailing measures are considerably lower when compared to
that of safeguards. The contingent trade protection available under Article XIX of
the GATT 1947 and the Safeguard Agreement is temporary. In many jurisdictions,
seeking such a relief is often discretionary. However, there are various similari-
ties in the methodologies for conducting injury and causation, especially the
non-attribution analysis.

G Injury and Causation Provisions at the End

of the Uruguay Round

The purpose of the trade remedy laws was to allow relief to domestic producers
who were affected by fair and unfair imports. The existence of such laws was
considered essential to encourage countries to undertake trade liberalization and, at
the same time, retain policy flexibility to provide timely and appropriate protection
against the disruptive effect of such imports. The Uruguay Round tried to establish
an effective balance between these two policy objectives. The Uruguay Round
introduced tougher and stricter standards for the conduct of trade remedy investi-
gations. Especially with respect to injury determination, the Uruguay Round
agreements put more weight than the previous codes, or even the GATT, in
ensuring that imports (fair or unfair) which were causing difficulties of the domestic
industry needed to be properly addressed. The Uruguay Round Agreements, by
themselves, did not introduce stand-alone obligations and cannot be read in iso-
lation from GATT 1994. Each agreement has to be read in conjunction with the
corresponding GATT Articles. For example, the AD Agreement has to be read in
conjunction with Article VI of the GATT; the SCM Agreement to be read in
conjunction with Article VI and VII of GATT, and, the Agreement on Safeguards to
be read in conjunction with Article XIX of the GATT.

Appellate Body Report, US- Line Pipe, ¶ 261.

187

Panel Report, United States – Definitive Safeguard Measures on Imports of Certain Steel
188

Products, ¶ 10.13, WT/DS252/R (July 11, 2003).

64 2 Historical Evolution of Injury and Causation …

It was a significant achievement for the GATT negotiating countries to develop

separate agreements for the three common forms of trade contingent protection.
However, the development of separate agreements did not resolve all the ambi-
guities. In certain areas, such as double remedies, zeroing, etc., the existing pro-
visions did not provide significant improvements. Establishing injury and causation
is yet another area where the Uruguay Round failed to introduce the desired level of
clarity.
In the matter of injury and causation, the Uruguay Round trade remedy agree-
ments have left ambiguity in certain key areas. An examination of the evolution of
trade remedy agreements clearly indicates that these agreements were significantly
influenced by the U.S. practice. The U.S. practice assigned a tougher injury and
causality standard in escape clause or safeguard investigations.189 Some authors
prefer to call this a “first-level” injury.190 The Safeguards Agreement has opted for
the term “serious injury”. The USITC implied this standard as the proxy for a
first-level injury.
On the other hand, the U.S. statute defined the injury standard in the
antidumping and subsidies and countervailing investigations as “material injury”
which was interpreted as an injury which was not “inconsequential, unimportant or
insignificant”. Within the U.S., this injury standard was likened to a “second-level”
injury.191 The Uruguay Round agreements have not fully adapted the U.S. standard,
although the U.S. tend to believe that their injury and causality standard in
antidumping, subsidies and safeguard are by and large close to the WTO standards.
Certain key provisions of the Uruguay Round agreements on trade remedies
expressly retain this ambiguity. For example, terms such as “serious injury”,
“material injury” and “material retardation” are extremely vague. As Vermulst
argues, despite the improvements made in the Uruguay Round, the injury part of
AD Agreement and SCM Agreement remains far less developed that the dumping
and subsidy side.192 The concept of “non-attribution” is mentioned in all the
agreements, but how this test has to be performed in these agreements is not clearly
spelt out.193 Lack of clear understanding on some of the concepts has resulted
incoherent interpretations by WTO panels and the Appellate Body. Some of these
issues will be examined in greater detail in Chap. 3.

189
PETROS.C. MAVROIDIS, GEORGE A. BERMANN & MARK WU, THE LAW OF THE WORLD TRADE
ORGANIZATION (WTO) DOCUMENTS, CASES & ANALYSIS 628, 643-645 (WEST 2010).
190
Barcelo III, supra note 130, at 257, 279 (arguing that countervailing duties in the United States
under the 1979 laws have triggered a weak second level injury).
191
Barcelo III, supra note 130, at 279.
192
Angelos Pangratis and Edwin Vermulst, Injury in Anti-Dumping Proceedings—The Need to
Look Beyond the Uruguay Round Results, 28(5) JOURNAL OF WORLD TRADE 61–96 (1994).
193
Robert S. Pindyck, and Julio J. Rotemberg, Are Imports to Blame? Attribution of Injury under
the 1974 Trade Act, 30, JOURNAL OF LAW AND ECONOMICS, 101, 122 (1987).
H Conclusion 65

H Conclusion

Trade remedy measures are policy instruments that seek to help the domestic
industry facing import competition. Each of the three trade instruments, namely
antidumping, countervailing duty, and safeguard investigations have specific
threshold requirements and specific objectives. The motivation for the existence of
each agreement is different. Antidumping had its genesis in predatory pricing
practices, whereas countervailing duty arose from a desire to a create level playing
fields in sectors and products distorted by government intervention; safeguard
actions sought to create a balance between trade liberalization and compensating
affected sectors for certain temporary periods.
Trade remedy instruments are highly political in nature. Treating factors such as
dumped/subsidized imports themselves as causal factors for injury is a policy
consideration in itself. In a world without trade remedies, it is quite unlikely that
factors such as imports would be treated as a real cause of injury to domestic
businesses and enterprises. Therefore, a pure scientific approach to injury and
causation determination is not often possible, and even if possible, not wholly
desirable. Had it been possible, a uniform approach and methodology could have
been prescribed. Like in the case of antidumping, injury and causation provisions of
various trade agreements were influenced by domestic policy considerations in
some of the jurisdictions such as the U.S., Canada and the EU. While causation is a
legal requirement, it will be necessary to understand the context in which such trade
remedy agreements became popular. Without an understanding of their historical
origin and evolution, it will be difficult to appreciate the role of trade remedies and
the reasons for their existence. While negotiators and dispute settlement panels
argue that the injury and causation standards in all three agreements are of different
degrees, at an objective level, the various indicators identified for injury and cau-
sation are the same. On a reading of the treaty texts, one can argue that threshold for
all these actions are different, with the safeguard actions calling for the strongest
relationship between injury and imports. However, at a fundamental level, no
investigating authority can say that the circumstances present in a case would
qualify for material injury under antidumping or subsidies, but not for serious injury
under safeguards. The purpose of this chapter is to postulate that injury and cau-
sation standard in a trade agreement often serves as a justification for an otherwise
breach of the agreement; safeguard actions are not expected to be used often and,
therefore, has a higher injury and causation threshold. Antidumping and CVD
actions have an additional requirement of identifying dumping or subsidy and, thus,
possess a lower injury and causation threshold. Material injury indicators and
non-attribution language further act as side constraints, but, in essence, proving
causation on the basis of one or several of these factors will be difficult.
66 2 Historical Evolution of Injury and Causation …

In the above light, this chapter sought to trace and map the history and cir-
cumstances that led to the choice of a particular language on injury and causality in
the treaty text. This history should inform and guide how the injury and causality
determination shall be made. The historical developments in jurisdictions such as
the U.S. and EU are, to an extent, unavoidable and should inform the debate on
injury and causation in trade remedies.
At a time when several negotiating proposals have been submitted in the Doha
Round Rules Negotiations on reforming and improving the trade remedy agree-
ments, a comprehensive understanding of the history and negotiating proposals
would be helpful to appreciate how some of the leading trade remedy jurisdictions
addressed the injury and causality issues. The subsequent chapters provide specific
discussions in the context of WTO dispute settlement, domestic practices and the
ongoing treaty negotiations in the field of injury and causation.
Appendix 1 67

Appendix 1

Signatories of Kennedy Round Antidumping Code

Kennedy Round negotiations were concluded by the end of 1967. According to

information by the GATT secretariat as on 14 May, 1968, the following countries
began the implementation of the tariff reductions resulting from the Kennedy
Round on 1 January 1968:

Signatories as on 14 The following countries began the implementation on 1 July 1968

May, 1968
1. Australia 1. Czechoslovakia
2. New Zealand 2. Israel
3. South Africa 3. Sweden
4. Austria 4. Denmark
5. Peru 5. Japan
6. Switzerland 6. Trinidad and Tobago
7. Canada 7. European Economic Community (Belgium, France, Germany,
Italy, Luxembourg, Netherlands, Korea, United Kingdom,
Finland, Norway, Greece, Spain)
8. Poland (import
commitment)
9. Turkey
10. Ireland
11. Portugal
12. United States
Source GATT
68 2 Historical Evolution of Injury and Causation …

Appendix 2

Signatories of Tokyo Antidumping and Subsidies Codes

Multilateral instruments negotiated in the Tokyo Round came into force on 1st
January, 1980. 12 parties have signed and accepted the agreement on
Anti-dumping and 14 parties for the agreement on Subsidies and Countervailing
Measures, as on 6th October, 1980.

Anti-dumping code Subsidies code

1 Austria 1 Austria
2 Canada 2 Brazil
3 Czechoslovakia 3 Canada
4 European Economic Community 4 European Economic Community
1. Belgium 1. Belgium
2. Denmark 2. Denmark
3. France 3. France
4. Germany 4. Germany
5. Ireland 5. Ireland
6. Italy 6. Italy
7. Luxembourg 7. Luxembourg
8. Netherlands 8. Netherlands
9. United Kingdom 9. United Kingdom
5 Finland 5 Finland
6 Hungary 6 India
7 Japan 7 Japan
8 Norway 8 Korea
9 Romania 9 Norway
10 Sweden 10 Pakistan
11 Switzerland 11 Sweden
12 United States 12 Switzerland
13 United States
14 Uruguay
Source GATT
Chapter 3
Injury and Causation in Trade Remedy
Investigations: An Analysis of the WTO
Jurisprudence

Abstract This chapter provides a comprehensive examination of the injury and

causation standards developed by the WTO panels and the Appellate Body in trade
remedy disputes. The chapter, in particular, examines the utility of the trends
analysis and the non-attribution test. The chapter examines whether the investi-
gating agencies are required to adopt quantitative tools as opposed to qualitative
tools in the causation determination. This chapter also explores the role of factors
other than imports in the causation enquiry and stresses the role of a meaningful
identification of all known factors, as opposed to only examining the statutory list
of other causes which are causing injury to the domestic industry.

A Introduction

Chapter 2 examined the historical evolution and the political economy surrounding
the concept of injury and causal link in trade remedy investigations. Chapter 2 also
traced the role of policy considerations in shaping the injury and causation provisions
under various trade agreements and how they underwent significant changes over
time. It was instructive to know how the degree of causation in various trade remedy
agreements represented the interests of domestic lobbying and negotiating strategies
adopted by some of the powerful trading nations. Having understood the consider-
ations behind certain specific language in injury and causation provisions, this
chapter examines the WTO jurisprudence on injury and causation in trade remedies
and how a constructive interpretation of the relevant provisions could be undertaken
to ensure that trade remedy instruments do not relapse into logical incoherence and
possible disuse over time. By drawing on the WTO jurisprudence, this chapter
examines the analytical tools employed in trade remedies for establishing injury and
causation. A major focus of this chapter is on the conduct of the so called
“non-attribution” test which is an essential part of the injury and causation analysis.

© Springer Science+Business Media Singapore 2016 69

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_3
70 3 Injury and Causation in Trade Remedy Investigations …

The use of sophisticated analysis or quantitative tools is a sensitive issue in

injury and causation determination. As H. L. A. Hart and Tony Honoré note, causal
judgments are not specifically legal, although the law may have to systematize
them.1 The recent advances in economic theory and analytical techniques in the
field of quantitative analysis have made it possible to simulate the impact of various
factors including trade effects with remarkable rigor and consistency.2 Causation
enquiries increasingly make use of complex econometric modeling and simulation
in other fields of law and economics. As such, nothing in the Safeguards or the
Antidumping/SCM Agreement discourages the use of quantitative tools by the
concerned investigating agencies. Yet, intuitive judgments and common sense
approaches have their rightful place. This chapter will also touch up on the role of
qualitative and quantitative tools in assessing injury and causation.
Administrative agencies have a heavy burden in establishing that fair (increased)
or unfair (dumped or subsidized) imports are the cause of injury. The interested
parties constituting the domestic industry in the importing country would
undoubtedly allege that the foreign imports have hurt their industry. They would
array facts and figures on lost volume, lost market share, declining prices, lost
profits, lack of profitability, unused capacities, dwindling return on investment and
many other details.3 Further, the domestic industry applicant would, in all likeli-
hood, assert that most of the problems suffered by the domestic industry are
attributable to imports. That is a common characteristic of all trade contingency
remedies. The responding parties in all cases would probably argue that imports
have nothing to do with the poor condition of the domestic industry, assuming that
the allegation on injury has been conceded. The attempt would then be to shift the
blame from imports to possible adverse shifts in market demand or domestic
supply. In this context, establishing the causal connection between the imports and
injury to the industry will be a crucial issue in trade remedy cases.
As discussed in Chap. 2, antidumping laws originated from antitrust concerns
involving private business, but eventually settled down to deal with international
price discrimination involving firms or enterprises. Initially, the intent to injure,
destroy, or prevent the establishment of an industry or restrain competition became
the leitmotif of the antidumping legislation.4 Export or domestic subsidies, on the
other hand, can create market distortions and was addressed mainly through
countervailing duty actions, and through direct actions at the GATT/WTO. By
contrast, safeguard actions do not require any unfair trade practice. Unexpected
surge in imports as a result of certain unforeseen developments is the focus of
enquiry in most safeguard investigations.

1
H.L.A HART & TONY HONORE, CAUSATION IN LAW lv (2ND EDN. 1985).
2
Roberta Piermartini & Robert Teh, The Demystifying Modeling Methods for Trade Policy (WTO
Secretariat Discussion paper No. 10, available at https://www.wto.org/english/res_e/booksp_e/
discussion_papers10_e.pdf.
3
For instance, factors listed under Article 3 of the Safeguards Agreement.
4
J. Michael Finger, The Origins and Evolution of Antidumping Regulation 12- 13 (1991) in
ANTIDUMPING: HOW IT WORKS AND WHO GETS HURT 34 (J.M. Finger eds., 1991).
A Introduction 71

This chapter is organized as follows. Section B examines the reasons for following
a common approach in determining injury and causation in all trade remedy agree-
ments; Section C examines the importance of traditional tools such as the trends
analysis. Section C also examines the WTO jurisprudence on injury and causation
under the above three categories of trade remedies. Section D is devoted for an
examination of the non-attribution requirement. This part also provides a discussion
on the use of quantitative tools in this determination and on the utility of the “but-for”
test. Section E concludes the key arguments and findings of this chapter.

B Causal Link in Trade Remedy Investigations: Issues

and Challenges in Implementation

1 Concept of Causal Link in WTO Trade Remedy

Agreements

The common law has long depended upon the legal metaphor of a “chain of
causation”. Chain of causation is defined in Black Law Dictionary as: (1) a series of
events each caused by previous one, and; (2) the causal connection between cause
and effect.5 The verb “cause” is defined in Merriam Webster’s Dictionary as, “to
make (something) happen or exist: to be the cause of (something). According to the
Shorter Oxford Dictionary, word “the cause” means “that which produces an effect
or consequence; an antecedent or antecedents followed by a certain phenomenon”;
it “indicates a condition or circumstance or combination of conditions and cir-
cumstances that effectively and inevitably calls forth an issue, effect or result or that
materially aids in that calling forth.”6 The common dictionary meaning was relied
upon by the WTO panel in US–Steel Safeguards, noting that “if a number of factors
have caused serious injury, a causal link may be demonstrated if the increased
imports have, in some way, contributed to ‘bringing about’, ‘producing’ or
‘inducing’ the serious injury”.7
The chain of causation is a useful metaphor in understanding causation (See
Fig. 1). Distractions of “new causes”, “superseding events” or other “intervening
forces” need not affect the causal chain. However, if the background completely
shifts, thereby introducing news events and causal themes, the chain can be said to

5
BLACK LAW DICTIONARY (6th edn).
6
WEBSTER’S NEW INTERNATIONAL DICTIONARY, 355-356 (3rd edn, 1981).
7
Panel Report, United States – Definitive Safeguard Measures on Imports of Certain Steel
Products, ¶10.290–293, WT/DS248/R/WT/DS249/R/WT/DS251/R/WT/DS252/R/WT/DS253/R/
WT/DS254/R/WT/DS258/R/WT/DS259/R/and Corr.1, (December 10, 2003); See also Appellate
Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the
European Communities, ¶ 70 WT/DS166/AB/R (December 22, 2000).
72 3 Injury and Causation in Trade Remedy Investigations …

Chain of Causation

“Known” causes other than Imports

(intervening or superseding causes)
Increased
Imports

Injury to
Dumped the
Imports domestic
industry

Subsidized
Imports

Fig. 1 The metaphor of “chain of causation” in Trade Remedy Law

be broken.8 As the following pictorial representation depicts, each independent

event (i.e., dumped imports/subsidized imports or increased imports) could be
capable of forming a causal link, unless there is a supervening event to break the
chain of causation. The common law has adopted various tests such as the
“proximate cause”, “immediate cause”, “probable cause”, etc., to visualize the
concept of a chain of causation. A more detailed discussion of Common Law
concepts of causation is provided in Chap. 7 of this book.

2 Injury and Causation: Why a Common Approach is

Desirable for All Trade Remedy Actions?

The previous chapter had examined the similarities and differences in the injury and
causality provisions of the AD Agreement, SCM Agreement and the Safeguards
Agreement. The previous chapter also identified several similarities between these
agreements that could call for a unified approach in injury and causal link. More
specifically, Article 3.5 of the AD Agreement, Article 15.5 of the SCM Agreement and
Article 4.2(b) of the Safeguards Agreement have many things in common, as they
provide in detail the need to establish a causal relationship between the alleged
increased/dumped or subsidized imports and the injury caused to the domestic industry.
The problematic issue, however, is the methodology and the manner of examination by
investigating authority as to whether a causal link that was established earlier had

8
The Panel in EC–Fasteners noted that the investigating agencies have a duty to examine whether
causes other than the statutory causes break the causal link, see WT/DS 397/ R, ¶. 7.429.
B Causal Link in Trade Remedy Investigations … 73

snapped at any time. An unbroken chain of causation between increased imports and
injury is considered as a necessary condition for the invocation of a trade remedy. While
the Safeguards Agreement talks about “serious injury”, the Antidumping as well the
SCM Agreement requires “material injury”.9 Notably, the difference between the two
terms is subtle. Serious injury is supposed to be at a level higher than the material
injury.10 While Article 4.2(b) of the Safeguards Agreement is an entirely new addition,
the elements of Article 3.5 cannot be termed as something entirely new. The Tokyo
Code on Antidumping had almost a similar provision. Interestingly, even the Kennedy
Antidumping Code11 contained specific provisions on injury and causality.
The treaty history of the injury and causation provisions of the AD
Agreement/SCM Agreement may be a helpful reference in interpreting the causality
provision in the Safeguards Agreement, considering the broad similarity in their
current textual forms. As mentioned in Chap. 2, the Kennedy Code had required
that dumped imports should be “demonstrably the principal cause of injury”,
whereas the Tokyo Code and the current AD Agreement had abandoned this test.
Therefore, by analogy, one could argue that the drafters of the Safeguards
Agreement had expressly avoided the “principal cause” requirement from the
causation analysis. As is apparent, “principal cause” is a harsher standard than “a
cause”. But as this study examined in the previous chapter, there is no legislative
definition of “material injury”, nor is there any jurisprudential guidance on the exact
scope of “serious injury”.12 The existence of a higher injury threshold under the
Safeguards Agreement, in itself, does not explain why the causation analysis under
both the agreements should be substantively different.13
Furthermore, a number previous WTO panels and the Appellate Body have
made cross references to the corresponding provisions of the other trade remedy
agreements and their existing jurisprudence. The panel in US—Lamb noted that the
causation approach under the Safeguards Agreement is consistent with the reports
of various GATT and WTO panels under the AD Agreement and SCM
Agreement.14 More specifically, the panel in US—Lamb made explicit reference to
the reasoning of the reports of the Panels on US—Atlantic Salmon which was
decided under the Tokyo Round Subsidies and Antidumping Codes.15 As a matter

9
Art. 3.4 of the Antidumping Agreement enlists the factors to be examined for assessing material.
10
Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia, ¶ 124, WT/DS177/AB/R, WT/DS178/AB/R,
(May 1, 2001).
11
Negotiated in 1967 by GATT Contracting Parties.
12
Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear,
¶ 139, WT/DS121/AB/R, (December 14, 1999). [hereinafter Appellate Body, Argentina—
Footwear].
13
PETROS. C. MAVROIDIS ET AL., THE LAW AND ECONOMICS OF CONTINGENT PROTECTION IN THE WTO,
479 (2008).
14
Panel Report, United States- Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb
Meat from New Zealand and Australia, ¶. 7.246, WT/DS 177, 178/ R, (December 21, 2000).
15
Panel Report, US—Lamb, at ¶ 7.246.
74 3 Injury and Causation in Trade Remedy Investigations …

of practice, most of the WTO panels have referred to the decision of the Appellate
Body report in US—Hot Rolled Steel while explaining the meaning of the
non-attribution clause in the SCM and the Safeguard Agreements.16
The similarities between the injury and causation provisions in the AD and CVD
agreements are more evident. The provisions of Article 3.5 of the AD Agreement
are almost similar to that of Article 15.5 of the SCM Agreement. Case law in WTO
clearly reveals that the panels and the Appellate Body consider that interpretations
given under AD Agreement could be equally valid for other trade remedy cases.17
As the Panel in US—DRAM noted, there is a need for a consistent resolution of
disputes on topics such as non-attribution in the injury and causation analysis.18
In order to provide a conceptual basis for injury and causality determination, this
study provides a brief discussion of the economic rationale and the evidentiary tools
used in order to establish injury and causal link in trade remedy investigations.

3 Injury and Causation Under the WTO: A Comparison

Beyond broadly incorporating the requirements of injury and causation, the current
provisions of the Antidumping, Subsidies and Safeguards treaties do not explicitly
clarify the methodology for carrying out such an examination. In the absence of
clear guidelines, different jurisdictions interpret the injury and causation provisions
differently and employ varying analytical tools. Under both the AD and the SCM
Agreements, the investigating agencies are required to conduct an objective
examination and provide positive evidence of dumped or subsidized imports and
the consequent injury to the domestic industry. A similar requirement is present
even under the Safeguards Agreement. In other words, investigating authorities are
required to provide objective and verifiable information on the trend of imports and
the prices at which they enter the importing country. Article 3.2 of the AD
Agreement and 15.2 of the SCM Agreement require an investigating agency to
consider whether there has been a significant increase in dumped or subsidized
imports, either in absolute terms or relative to production and consumption in the
importing country, and their price effects. A similar language is present in the
Safeguards Agreement as well. Under Article 2.1 of the Safeguards Agreement, a
Member may apply a safeguard measure on an article if “such product is being
imported into its territory in such large quantities, absolute or relative to domestic

16
See Panel Report, US- Steel, at ¶10.329; Appellate Body Report, US—Line Pipe, at ¶¶212-214.
17
Panel Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant
Carbon Steel Flat Products from Japan, ¶. 7.75, WT/DS244/R, (August 14, 2003).
18
Panel Report, United States – Countervailing Duty Investigation on Dynamic Random Access
Memory Semiconductors (DRAMS) from Korea, WT/DS296/R (20 July 2005). The Panel made
reference to the Appellate Body's elaborate discussion on the non-attribution requirement in
paragraphs 188-189 of EC - Pipe Fittings, an antidumping dispute.
B Causal Link in Trade Remedy Investigations … 75

Table 1 Comparison of injury indicators in trade remedy agreements under the WTO
Components of Domestic Safeguards agreement SCM agreement Antidumping agreement
Industry Evaluation

Sales Sales Sales Sales

Market share Market share Market share

Production & Operations Production Production Production

Productivity Productivity Productivity

NA Inventories Inventories

Employment Employment Employment

NA Wages Wages

Capacity utilization Capacity utilization Capacity utilization

Investing NA Return on investment Return on investment

NA Ability to raise capital or Ability to raise capital or

investment investment

Financing Profits and losses Profits Profits

General NA Growth Growth

NA Cash flows Cash flows

Residual factors Rate and amount of Magnitude of subsidies Magnitude of the

increase in imports margin dumping margin

NA Factors affecting prices Factors affecting prices

Source Own compilation. The author acknowledges Fernando Pierrola’s clear exposition of this
relationship between the injury factors in his book. See Fernando Pierola, THE CHALLENGE OF
SAFEGUARDS IN THE WTO (2014)
NA means ‘not available’ or ‘not included’

production, and under such conditions as to cause or threaten to cause serious injury
to the domestic industry that produces like or directly competitive products.”
Once the volume and price trends are examined, the investigating authority shall
undertake to examine various economic and other factors such as actual and
potential decline in output, sales, market share, profits, productivity, return on
investment, capacity utilization of the industry, effects on cash flow, employment,
wages, etc. Broadly, these factors can be broken down in terms of operating,
investing or financing activity (see Table 1). These factors vary in the case of
various trade remedy instruments. While the Antidumping and the SCM
Agreements provide a more comprehensive list of injury indicators for evaluation,
the Safeguards Agreement has a slightly narrower category of factors. For example,
factors affecting prices is not a listed factor in Article 4 (2) of the Safeguards
Agreement, although price related injury has a specific meaning under the other two
agreements. A number of panels and the Appellate Body have held in several
disputes that all the factors enlisted in the concerned agreements must be addressed
in an investigation to provide a holistic analysis.19

19
See Panel Report, Egypt – Definitive Anti–Dumping Measures on Steel Rebar from Turkey,
¶. 7.36, WT/DS211/R, (October 1, 2002); Panel Report, European Communities – Anti-Dumping
Duties on Imports of Cotton-type Bed Linen from India, WT/DS141/R, ¶. 6.159; see also Panel
76 3 Injury and Causation in Trade Remedy Investigations …

The factors indicated above are a priori considered to be relevant and infor-
mative of the situation of the domestic industry. This proposition was laid out by a
WTO panel in Korea–Diary. According to the panel, a consideration of the factors
listed is always relevant and unavoidable, even though the authority may later
dismiss some of them as not having a bearing on the situation of that industry.20
Although the injury factors enlisted in the various trade remedy agreements are
indicative and demonstrative of the state of the domestic industry, investigating
authorities ascribe different weightage to certain injury factors even for causation
determination. Oftentimes, a relative change in the market share is considered as a
vital parameter, which could result from: (i) changes in total consumption, or
(ii) changes in domestic sales of the product concerned. If total consumption
remains the same or nearly constant, any relative changes in the share of the
domestic producers could be attributed to import competition. In such a scenario,
the imports are assumed to have caused market displacement. Trade remedy
authorities give special emphasis to demand or market growth/loss in the context of
the injury and causality determination. If the exporter gains market share at the
expense of the domestic producers, it may be an indication that the exporter is
gaining an advantage through price competition or through unfair means.
Profit and profitability of the domestic industry have special significance in the
context of injury and causation examination. Profits and losses are the result of
changes in the total sales revenue, costs and/or other expenses. At least three injury
parameters enlisted in the trade remedy agreements have direct reference to prof-
its.21 These parameters include profitability, return on capital employed (ROCE)
and cash flow. Gross profit is the amount a firm makes after deducting the cost of
goods sold from its net sales; once the company deducts the selling, general and
administrative expenses, it arrives at the operating profit. A company arrives at its
net profit after deducting various interest and finance expenses. Profitability gives
an indication of profits after depreciation and interest. ROCE is the profits after
making adjustments for depreciation, but before interest. Cash flow is profits before
depreciation but after interest. These financial parameters have special relevance in
the context of injury and causal link.
Investigating authorities often look at the profit levels of the domestic industry
and other factors such as sales, market share, return on investment, etc. in deter-
mining injury. One factor which is often examined by investigating authorities is
lost sales. However, it is not a listed factor in any of these agreements although it

(Footnote 19 continued)
Report, Mexico – Anti–Dumping Investigation of High Fructose Corn Syrup (HFCS) from the
United States, ¶. 7. 128, WT/DS132/R, (February 24, 2000); Panel Report, European Communities
– Anti-Dumping Duties on Malleable Cast Iron Tue or Pipe Fittings from Brazil, ¶.7.304,
WT/DS219/R, (March 7, 2003).
20
Panel Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products,
WT/DS98/R and Corr.1, ¶. 7.55 (January 12, 2000).
21
V. Lakshmi Kumaran, The 10 Major Problems with the Antidumping Instrument in India, 39(1)
JOURNAL OF WORLD TRADE 115, 122 (2005).
B Causal Link in Trade Remedy Investigations … 77

Productivity
Employment

Growth
Market Share Wages
Sales
Inventories
Injury
Factors and
Output
their Capacity
Interaction Utilization
Production
Cash flow
Investment

Ability to raise capital Profits

Return on Investment

Fig. 2 Interplay of injury factors. Source Own compilation

may have certain overlapping with market share. It is often seen that the various
financial/non-financial factors can have cascading effects on each other as most of
these injury factors are directly linked to each other (see Fig. 2).

C Role of Trends Analysis

In the absence of clear guidelines or evidentiary tool in the conduct of injury and
causation analysis, most investigating authorities depend on anecdotal evidence of
domestic industry developments and simple correlation among import levels,
domestic production and shipments. Certain jurisdictions, such as the U.S. have
incorporated the trends analysis in their so-called “bifurcated analysis”.22 This
approach first enquires whether the domestic industry has suffered the injury and
second, whether the alleged imports have contributed to the injury. If the volume of
fair or unfair imports increases, while the condition of the domestic industry
declines in its various dimensions, causation will be typically inferred. This
approach looks at the trends over a representative period of time, which is

22
K.H. Kelly & M.E. Mokre, One Lump or Two: Unitary Versus Bifurcated Measures of Injury at
the USITC, (Federal Trade Commission Working Paper No. 282, 2006).
78 3 Injury and Causation in Trade Remedy Investigations …

commonly referred to as the injury investigation period. Several domestic author-

ities collect data over a fairly long period of time—generally a five-year window
period—while evaluating injury and causation factors.23 The bifurcated approach at
a basic level equates correlation with causation.24 At a disaggregated level, the
analysis involves the following examination:
• Trends analysis (qualitative and uncontrolled comparison of industry perfor-
mance and import penetration)
• Underselling analysis (i.e. a comparison of average prices of domestic goods
and imports)
• Lost sales analysis (i.e., based on the claims of domestic producers)
The following discussion examines the various aspects of the trends analysis.

1 Volume Effects

What is the importance of “significant increase” in dumped or subsidized imports or

imports in such “large quantities”? The term “significant” implies something
“important, notable or consequential”.25 In EC—DRAM, a dispute that involved a
CVD measure, the Panel noted that the term “significant” implies something more
than just a nominal or marginal movement.26 Recent trends in imports are important
in the context of all trade remedy investigations and especially vital in the case of
safeguard actions. As the Appellate Body noted in Argentina—Footwear, one of
the earliest safeguards disputes at the WTO, the competent authorities are required
to look at trends in imports over the period of investigation and that the “increase in
imports must have been sudden enough, sharp enough, and significant enough… to
cause or threaten to cause ‘serious injury’”27
As examined in the previous chapter, the negotiating history of these agreements
does not explain the importance of terms such as “significant increase” and “large
quantities”, in the injury and causation analysis. According to Miranda, it is at best
doubtful whether this provision was meant to be part of the injury analysis.28 Based
on this reasoning, if there is a pronounced drop in the imports just before the
initiation of the investigations, will an antidumping or CVD action be dropped on
the ground that there is no injury? The alternative view is that the volume of

23
Sykes, infra note 126 at 135; see also Appellate Body Report, Argentina—Footwear, ¶ 131.
24
MICHAEL J. TREBILCOCK, UNDERSTANDING TRADE LAW 68 (2011).
25
Panel Report, United States—Subsidies on Upland Cotton, ¶ 7.1326, WT/DS267/R, (March 21,
2005).
26
Panel Report, European Communities—Countervailing Measures on DRAM Chips, ¶ 7.307,
WT/DS299/R, (June 17, 2005) [hereinafter Panel Report EC-DRAM].
27
Appellate Body Report, Argentina—Footwear, ¶131.
28
Jorge Miranda, Causal Link and Non-attribution as Interpreted in WTO Trade Remedy Disputes,
44 (4) JOURNAL OF WORLD TRADE 729, 736 (2010).
C Role of Trends Analysis 79

dumped or subsidized imports could be more appropriate in the context of a cau-

sation analysis.29 In other words, findings on volume and price effects identified
under Article 3.2 of the AD Agreement and 15.2 of the SCM Agreement will have
to be expressly linked to Article 3.5 and Article 15.5 of the AD Agreement and
SCM Agreement respectively. This proposition was supported by the Panel deci-
sion in EC—DRAM.30 The Panel noted that the causal link requirement under the
AD Agreement can be met by showing a coincidence in time between the adverse
price effects of the dumped imports and the decline in indicators reflecting the
performance of the domestic industry.31 In the case of the Safeguards Agreement,
the coincidence-in-time or temporal analysis of imports is a distinct requirement,
although it could be subsumed within the causality determination. Further, in the
case of AD and SCM Agreements, the trend analysis is a key element of the
causality determination, although it could be argued that it is part of a separate and
distinct element.
How could a coincidence in time provide insightful information? According to
Douglas Irvin, WTO Panels seem to agree that the coincidence of an increased level
of imports and a lower level of domestic industry activity usually indicates that
imports have caused injury.32 To provide an example, if there is an absolute
increase in the volume of imports accompanied by a declining trend in the per-
formance of the domestic industry, the simultaneous occurrence of these factors
could be a strong indicator of not only injury, but also causation. As is evident,
some injury factors are linked to import-related movements. An immediate example
is the rate and amount of imports and the share of consumption captured by imports.
It is axiomatic that when the domestic demand remains constant, any increase in
imports will result in a reduction in market share of the domestic industry. In
Argentina—Footwear, the Panel had an opportunity to comment on the trend
analysis in this type of scenarios. The Panel noted that the market share by volume
and value “largely track the data on the absolute volumes and values of imports”.33
In the opinion of the Panel, “an upward trend in import volume, coinciding with a
downward trend in the indicators portraying the condition of the domestic industry
could be probative of causation.”34 The Panel noted:
In practical terms, we believe therefore that this provision means that if causation is present,
an increase in imports normally should coincide with a decline in the relevant injury factors.
While such a coincidence by itself cannot prove causation (because, inter alia, Article 3
requires an explanation – i.e., “findings and reasoned conclusions”), its absence would

29
PETROS C. MAVROIDIS ET AL., THE LAW OF THE WORLD TRADE ORGANIZATION (WTO): DOCUMENTS,
CASES & ANALYSIS 470 (2010).
30
Panel Report, EC—DRAM, at ff. 277.
31
Id.
32
Douglas A. Irvin, Causing Problems: The WTO Review of Causation and Injury Attribution in
US Section 201 Cases, 2(3) WORLD TRADE REView 297, 301 (2003).
33
Panel Report, Argentina –Safeguard Measures on Imports of Footwear, ¶. 8.242, WT/DS121/R,
(June 25, 1999)[hereinafter Panel Report, Argentina—Footwear].
34
Panel Report, Argentina—Footwear, ¶ 8.229.
80 3 Injury and Causation in Trade Remedy Investigations …

create serious doubts as to the existence of a causal link, and would require a very com-
pelling analysis of why causation still is present.35

This key observation of the Panel, which was subsequently upheld by the
Appellate Body, posits that the movement in imports and the movement in injury
factors should be in tandem.36 The Appellate Body also came out with a resounding
affirmation of the trends analysis in this dispute. The Appellate Body introduced the
postulation that “if causation is present, an increase in imports normally should
coincide with a decline in the relevant injury factors.”37 The Appellate Body agreed
with the panel, which had noted:
In making our assessment of the causation analysis and finding, we note in the first
instance, that Article 4.2(a) requires the authority to consider the ‘rate’ (i.e., the direction
and speed) and “amount” of increase in imports and the share of the market then taken by
imports as well as changes in injury factors (sales, production, productivity, capacity uti-
lization, profit and losses and employment) in reaching a conclusion as to injury and
causation. As noted above, we consider that this language means that the trends—in both
injury factors and imports—matter as much their absolute levels. In the particular context of
causation analysis, we also believe that this provision means that it is the relationship
between the movements in imports and injury factors that must be central to a causation
analysis and determination.38

Conversely, if the trend analysis show contradictory movements, it may be pos-

sible to disprove the existence of causation. As the Panel in Argentina–Footwear
noted, lack of coincidence would create serious doubts as to the existence of causal
link.39 In other words, a negative correlation may be an indication of lack of causation.
The coincidence analysis is in practice the first step to demonstrate a causal link
between imports and injury to the domestic industry. However, further analysis may
be required if there are special conditions of competition that may cast doubt on this
coincidence, for example, the fact that imported and domestic goods are not
price-sensitive. Furthermore, an increase in imports may not have a direct and
immediate impact on injury parameters such as sales, output, production, produc-
tivity, profits and losses, capacity utilization and employment. If there is a temporal
lag between the surge of imports and the manifestation of the injurious effects, can
it be said that there is still a relevant coincidence? The Panel in US—Steel has noted
that these indicators are expected “to reach shortly after an increase in imports”.40
However, the Panel admitted the possibility there might be temporal lags between
increase in imports and injury.41 In US—Steel, the WTO Panel reviewed product

35
Panel Report, Argentina Footwear, 8.237-8.238; See also Panel Report, United States –
Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS252/R, ¶. 10.320
(July 11, 2003). [hereinafter Panel Report, US-Steel].
36
Appellate Body Report, Argentina – Footwear, ¶. 144.
37
Id.
38
Panel Report, Argentina—Footwear, ¶¶.8.237–8.238.
39
Appellate Body Report, Argentina—Footwear ¶7.398.
40
Panel Report, US – Steel Safeguards, ¶ 10.375.
41
Id, ¶10.310.
C Role of Trends Analysis 81

specific findings of the USITC to examine whether there had been

coincidence-in-time between the upward trend in import volume and in the
downward trend of several economic parameters of the domestic industry. In regard
to three products, namely, certain carbon flat-rolled steel (CCFRS), fittings, flanges
and tool joints (FFTJ), and stainless steel bar (SSB), the Panel examined the trends
in various domestic industry indicators such as (1) volume of production; (2) the
volume of sales; (3) the operating margin; (4) employment; and (5) the productivity
in terms of man power. The Panel noted:
… there may be instances in which injury may be suffered by an industry at the same point
in time as the influx of increased imports. However, the injury that is caused at that point in
time may not become apparent until some later point in time. In other words, there may be a
lag between the influx of imports and the manifestation of the injurious effects on the
domestic industry of such an influx.42

Furthermore, the Panel in US—Steel, agreed with the approach followed by

another WTO Panel in Egypt—Steel Rebar,43 an antidumping dispute. In Egypt–Steel
Rebar, the Panel rejected the argument made by the complainant Turkey that there
must be a strict temporal connection between the increased imports and any injury
being suffered by the industry.44 The Panel in Egypt—Rebar acknowledged that there
could be transaction costs that might impede an immediate reflection of price changes
in the situation of the domestic industry. The Egypt—Rebar Panel noted:
[R]este[d] on the quite artificial assumption that the market instantly absorbs, and reacts to,
imports the moment they enter the territory of the importing company. Such an assumption
implicitly rests on the existence of so-called “perfect information” in the market (i.e., that
all actors in the market are instantly aware of all market signals.)45In the case of lag in
imports and the manifestation of effects on injury parameters, various WTO panels have
emphasised on the obligation of the investigating authority to explain this factor with
objective data.46

The US—Steel Panel drew strength from the reasoning of the WTO Panel in
Egypt—Steel Rebar. The US—Steel Panel noted:
[W]hile lags may be expected in relation to some factors (for example, employment), lags
in the manifestation of effects are less likely to exist in relation to other injury factors such
as production, inventories and capacity utilization, which, ordinarily, would react relatively
quickly to changes taking place in the market, such as an influx of imports if increased
imports are causing serious injury. If the competent authority does rely upon a lag as
between the increased imports and the injury factors, we consider that such a lag must be
fully explained by the competent authority on the basis of objective data.47

42
Panel Report, US – Steel Safeguards, ¶. 10.310.
43
Panel Report, Egypt – Definitive Anti–Dumping Measures on Steel Rebar from Turkey,
WT/DS211/R, (October 1, 2002)[ hereinafter, Panel Report, Egypt Steel Rebar].
44
Panel Report, US – Steel Safeguards, ¶. 10.310.
45
Panel Report, US – Steel Safeguards, ¶. 7. 129.
46
Panel Report, Egypt – Steel Rebar, ¶.7.129.
47
Panel Report, US – Steel Safeguards, ¶. 10.312.
82 3 Injury and Causation in Trade Remedy Investigations …

The above discussion indicates that the question of delay or time lags is one of
the most significant considerations in the coincidence analysis. The length of time
lags, jointly with the homogeneity of the products as well as their likeness or direct
competitiveness, sheds light on how competitive a market is. It appears that long
lags jointly with rather heterogeneous or directly competitive products would call
for an analysis of conditions of competition in that market. The ‘conditions of
competition’ analysis generally looks at price related factors.
Whilst a temporal correlation has been considered as central to injury and cau-
sation analysis in the context of the Safeguard Agreement, its role in the context of AD
Agreement and SCM Agreement has been somewhat uncertain. In the context of AD
and SCM Agreements, some complainant members have argued that in the absence of
a temporal correlation between dumping/subsidization and the decline in the per-
formance of the domestic industry, the panel should rule that no causal link was
established.48 According to the Panel in EC—DRAM, an investigation authority has
considerable latitude in determining whether a significant increase, either in absolute
terms or relative to production or consumption, has taken place.49 The EC—DRAM
Panel suggested that countervailing measures may be imposed even in the absence of
a significant increase in the volume of subsidized imports, provided that the price
effects exist. The Panel was persuaded by a language in Article 15.2 of the SCM
Agreement (last sentence of Art. 15.2 of SCM Agreement) that “[n]o one or several of
these [volume and price effect] factors can necessarily give decisive guidance”.50 The
EC—DRAM Panel preferred to concur with the observation of another WTO Panel in
US—DRAM, which noted that there was no generalized requirement to establish a
temporal correlation between increased imports and injury to the domestic industry.51
The US—DRAM panel noted that the absence of a temporal correlation certainly
raises a flag, but it is not an absolute barrier to finding of injury.52
In conclusion, the volume and direction of imports is an essential element of an
injury and causation analysis although the degree of its importance could vary.
Especially in the case of the Safeguards Agreement, the requirement of increased or
recent surge in imports is a matter of central focus and a separate threshold; it is also
an indicator in the coincidence-in-time or correlation analysis. Likewise, the AD
and the SCM Agreements too lay emphasis in the movement in imports as a key
step in the causation analysis.

48
Panel Report, United States – Countervailing Duty Investigation on Dynamic Random Access
Memory Semiconductors (DRAMS) from Korea, ¶ 7.318, WT/DS296/R (July 20, 2005) [here-
inafter Panel Report, US- DRAM].
49
Panel Report, US- DRAM, ¶ 7.308.
50
Panel Report, US- DRAM, at fn. 277.
51
Panel Report, US- DRAM, ¶. 7.320.
52
Panel Report, US- DRAM, ¶. 7.320.
C Role of Trends Analysis 83

2 Price Effects: Concept of Price Undercutting

and Underselling Analysis

The Panel in Egypt—Steel Rebar stated that an investigating authority must in

every case include a price analysis of the type mentioned in Articles 3.1 and 3.2 of
the AD Agreement.53 The price effects also constitute a part of the trends or
coincidence-in-time analysis. A failure to conduct an analysis of the price effects
could be a violation of the AD Agreement or the SCM Agreement.
The scope of price analysis in the Safeguard Agreement is slightly unclear.
While a price analysis is explicitly required under the AD and SCM Agreements,
there is a glaring omission of this concept under the Safeguard Agreement.54
Importantly, Article XIX of the GATT as well as Article 2 of the Safeguard
Agreement refers to the phrase “and under such conditions”. The Panel, in US—
Wheat Gluten, noted that although price is not mentioned as a relevant factor that
needs to be examined, it will have a role in a causation analysis as part of the
conditions of competition between the imported and domestic product.55 In US—
Wheat Gluten, the Appellate Body noted that “conditions of competition” related to
the “prevailing ‘conditions’ in the market place”.56 This approach was also sup-
ported by the WTO panel in US–Steel.57 In short, the role of price effect analysis is
not ruled out in safeguards investigations.
In most antidumping and CVD investigations, the investigating authority will
enquire whether the dumped or subsidized imports had either depressed or sup-
pressed prices in the import market. In particular, an investigating authority should
examine whether the dumped or subsidized imports have resulted in:
(a) Price undercutting; or
(b) Price suppression; or
(c) Price depression
The investigating authorities traditionally examine the nexus between the import
penetration, import selling prices and the domestic selling price. The authorities may
also look at factors such as market share and lost sales. However, the traditionally

53
Panel Report, Egypt- Steel Rebar, ¶. 7.73.
54
Panel Report, Korea- Definitive Safeguard Measure on Imports of Certain Dairy Products, ¶¶
7.51–52, WT/DS98/R (June 21, 1999) [hereinafter Panel Report, Korea—Diary].
55
Panel Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from
the European Communities, ¶ 8.109, WT/DS/166/R, (July 31, 2000) [hereinafter “Panel report,
US-Wheat Gluten”]; see also Panel Report, Argentina-Footwear, at ¶ 8.250-51. The European
Communities argued that the phrase “under such conditions” require a price comparison, but the
panel did not explain what this analysis requires. The panel, however, noted that products may
compete with each other along a variety of dimensions.
56
Appellate Body Report, US—Wheat Gluten, ¶ 78.
57
Panel Report, US— Steel Safeguards, ¶ 10.516.
84 3 Injury and Causation in Trade Remedy Investigations …

Fig. 3 Price Undercutting illustration

used analytical tool is the “margin analysis”.58 Margin analysis corresponds to a

kind of common sense understanding of dumping/subsidy and its effects. But the
margin analysis is not limited to dumping/subsidy aspects only; it can also measure
the impact on domestic industry prices and is widely known as “injury margin”
analysis. The price/injury margin analysis is analogous to the dumping margin
analysis; the only difference is that instead of taking the exporters’ home market
price, it takes the domestic industry net selling price or, if that price unreliable, a
constructed non-injurious price, and compares it with the landed value of imports.
Injury margin or price effects analysis is done in almost all antidumping inves-
tigations and in a number of safeguard investigations in different jurisdictions.59
Margin analyses are generally conducted through price undercutting analysis and
price underselling analysis. The price undercutting margin measures (in percentage
terms) the degree to which the landed price of imports is lower than the selling prices
of comparable domestic like product during the injury investigation period. The
price undercutting analysis assumes that under competitive conditions, imported
product should be sold at higher prices than the domestic product.60 The term price
undercutting was interpreted by a Panel in EC—Pipe Fittings as referring to a
situation where the imported products were priced below the domestic products.61
(For an illustration, see Fig. 3). Price underselling on the other hand measures in
percentage terms the degree to which the landed price of imports is lower than
the target price or the non-injurious price of the comparable domestic like product.

58
The author would like to clarify that the term margin analysis is different from the ‘margin
analysis’ used in jurisdictions such as the United States which traditionally use dumping or subsidy
margins. The author is grateful to Nithya Nagarajan for bringing explanation to his attention.
59
JUDITH CZACKO et al., A HANDBOOK ON ANTIDUMPING INVESTIGATIONS 339 (2003).
60
A. Pangratis and E. Vermulst, Injury in Antidumping Proceedings: The Need to Look Beyond the
Uruguay Round Results, 28(5) JOURNAL OF WORLD TRADE 61, 90 (1994).
61
Panel Report, EC— Pipe Fittings, ¶. 7.268.
C Role of Trends Analysis 85

In other words, the margin analysis compute the extent to which the imports have led
to either price depression (in the case of price undercutting) or price suppression (in
the case of price underselling).
An understanding of the concept of price suppression and price depression is
important in appreciating the role of price effects. In Korea—Commercial Vessels,
the WTO panel referred to price suppression and price depression as including a
certain built-in concept of causation in the sense that the extent of price suppression
or depression could be reflective of the effects of the unfair imports on injury
factors.62 Neither Article 3.2 of the AD Agreement nor Article 15.2 of the SCM
Agreement provides any particular methodology for conducting a price analysis.
The Panel and the Appellate Body in US—Upland Cotton expressly referred to the
meaning of these terms.63 The Panel interpreted “price suppression” as referring to
a situation where the prices are either prevented or inhibited from rising (i.e., they
do not increase when they otherwise would have) or they do actually increase, but
the increase is less than it otherwise would have been.64 On the other hand, the
Panel interpreted “price depression” as referring to a scenario where the prices are
pressed down or reduced.65 Although these are distinct concepts, the above inter-
pretation would imply that both price suppression and depression could overlap in
certain ways, especially in scenarios where prices are pressed down.66 To explain,
the Panel and the Appellate Body appeared to agree with the interpretation that
price suppression would envisage scenarios where there is an actual decline in the
domestic prices (which otherwise would not have declined and, therefore, implying
price depression) as well as a less than desirable increase in prices (which would
have otherwise increased to a much greater degree).67
Price undercutting analysis is quite helpful in establishing a presumption of
causal connection. For instance, if the average domestic unit price of a product is
declining, matched with declining average unit price of imports and resulting in a
higher share of imports, one could conclude that there is a strong correlation
between the decline in the domestic prices and imports. Pervasive undercutting is
often an indication of price related injury if the import prices fall below the
domestic selling price. A producer will generally reduce the selling price only if the
costs of sales are correspondingly getting reduced. Otherwise, it could impact the
profitability of the business. Again, a domestic industry could still sell without

62
Panel Report, Korea – Measures Affecting Trade in Commercial Vessels, ¶ 7.534 WT/DS273/R
(April 11, 2005). [hereinafter Panel Report, Korea- Commercial Vessels].
63
Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R, Corr.1, and Add.1 to
Add.3 (March 21, 2005) as modified by Appellate Body Report, WT/DS267/AB/R (March 3,
2005).
64
Id., ¶ 1388.
65
This is interpretation is also in line with the interpretation in Panel Report in Korea- Commercial
Vessels, ¶ 7.537.
66
Appellate Body Report, US—Upland Cotton, ¶ 424.
67
Appellate Body Report, US—Upland Cotton, ¶ 423; See also Panel Report, US- Upland Cotton,
¶ 7.1277.
86 3 Injury and Causation in Trade Remedy Investigations …

Table 2 Categories of HP SST

Grade A Least expensive and the lowest grade
Grade B Middle grade
Grade C Most expensive and the highest grade

reducing average unit prices, but the market share and capacity utilization may get
affected. Therefore, price undercutting analysis in conjunction with the performance
of other financial parameters of the industry in most straightforward cases could
give some inference on whether injury is attributable to imports or not.
One should add a caveat here. The relevance of a price undercutting analysis
depends on obtaining accurate price levels of both the imports and the domestic
industry like products. Furthermore, the results of price undercutting analysis would
also differ based on the methodologies adopted and the comparison levels. For
example, issues such as the level of trade, choice of comparison period, whether such
comparison should be made at a transaction-to-transaction level or on a weighted
average basis, etc., remain inconclusive.68 It is important to recall the finding of the
Appellate Body in China—GOES case wherein it was held that “when a price com-
parison is made for the purposes of an undercutting analysis under Article 3.2 …, it is
necessary to ensure that the prices being considered are actually comparable.”69
A similar issue arose in China—X-Ray Equipment70 as well as in in China—HP-
SST (Japan) and China- HP-SST (EU).71 Both these cases touched upon the
methodology to be applied in a price undercutting finding in an injury analysis. In
the China—X-Ray Equipment case, the MOFCOM, China’s government agency,
examined the price effects of the product (including both high energy and low
energy scanners meant for different purposes) without ensuring model-to-model
price comparison—an approach which was disapproved by the WTO panel. The
Panel held that MOFCOM failed to fulfill its obligations under Article 3.2 of the
AD Agreement while conducting the price effects analysis.72 In China—HP-SST
(Japan), there were three categories of high-performance stainless steel in the
underlying antidumping investigation. These categories were Grade-A, Grade-B,
and Grade-C (Table 2).

68
See PETROS C. MAVROIDIS ET AL., THE LAW OF THE WORLD TRADE ORGANIZATION
(WTO) DOCUMENTS, CASES & ANALYSIS 470 (2010).
69
Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented
Flat-Rolled Electrical Steel from the United States, WT/DS414/AB/R (Nov.16, 2012) [hereinafter
Appellate Body Report, China- GOES].
70
Panel Report, China-Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment
from the European Union, WT/DS425/R, (April 24, 2013) [hereinafter Panel Report, China – X-
Ray Equipment].
71
Appellate Body Report, China - Measures Imposing Anti-Dumping Duties on High-Performance
Stainless Steel Seamless Tubes (“HP-SSST”) from Japan, ¶. 5.519, WT/DS454/AB/R, (Oct. 14,
2015) [hereinafter Appellate Body Report, China - HP-SSST (Japan)].
72
Panel Report, China – X-Ray Equipment, ¶. 7.65-7.68.
C Role of Trends Analysis 87

The European Union argued in this case that the majority of the domestic (Chinese)
production is in Grade A products and that the MOFCOM should not have made a
finding of price undercutting for Grades B and C (the majority of imported product
types) on a comparison to the domestic prices for the like products as a whole including
domestic Grade A HP-SST. More specifically, while the market share held by the
imported Grade A product types comprised less than 2 % of the market share, the share
of imported Grade B and C product types comprised more than 90 % of the respective
market segments. The MOFCOM, however, concluded that the dumped HP-SST
imports had an effect on the domestic industry as a whole.
The Appellate Body observed that an objective examination of price undercutting
should have taken into account the relevant market shares of the respective product
types.73 Appellate Body also noted that the price undercutting analysis should not be
based on a “static” examination, but should involve a “dynamic assessment” of prices
and trends.74 This examination, according to the Appellate Body, “includes assessing
whether import and domestic prices are moving in the same or contrary directions,
and whether there has been a sudden and sharp increase in the domestic prices”.75
Price undercutting comparisons are generally more difficult in the case of
safeguards when compared to antidumping or CVD investigation since the product
scope is much wider in the case of the former and the reported import prices may
vary substantially due to product differences. Furthermore, detailed product
matching based on product control numbers (PCNs) or CONNUMs are not usually
done in the case of safeguard investigations as done in the case of antidumping or
CVD investigations. Generally, such calculations would be based on import data
which are generally quite inaccurate and unspecific. Further, there could be other
factors which may affect purchasing decisions. Notwithstanding these limitations,
undercutting trends could provide an overall picture of the trend of import prices
and the impact it may have on domestic prices.
Price underselling analysis is also a useful indicator of injury and the existence
of causal connection with imports. The premise behind the price underselling
analysis is that in view of the low landed value of imports, the domestic industry is
unable to pass on the higher costs such as fixed costs, variable costs and other
selling expenses by way of higher product prices. Inability to pass on the higher
costs to the consumers may result in operating losses and consequent injury.
Existence of a “cost/price squeeze” is often an evidence of injury attributable to
imports. For an illustration see Fig. 4.
In order to estimate the price suppression, the investigating agencies may have to
calculate a ratio of the weighted average cost of goods sold (“COGS”) to the net sales
value during the investigation period. The most practical difficulty with price
underselling analysis is that the investigating agency will have to compile the cost and
sales data for a period of at least 3–5 years (depending the type of trade remedy

73
Appellate Body Report, China-HPSST (Japan) ¶. 5.180.
74
Ibid, ¶. 5. 181.
75
Ibid, ¶. 5. 159.
88 3 Injury and Causation in Trade Remedy Investigations …

Fig. 4 Price suppression illustration

involved) which is too cumbersome for any agency and the participating domestic
producers.
It is seen in practice that price underselling analysis which is determined on the
basis of target or non-injurious prices would be a more effective and scientific tool
for measuring the impact of imports on domestic prices. The reasons are obvious. In
certain cases, if the domestic prices are already depressed the undercutting margin
would not adequately reflect the extent of injury. Again, the domestic industry
might have adopted a low pricing policy to ward off domestic competition and in
such a case, attributing the injury to dumped or subsidized imports may not be
appropriate. Furthermore, price suppression is assessed on the basis of data per-
taining to the domestic like product only and does not involve a comparison with
the price of the imported product. It will not be necessary for the investigating
authority to make complex adjustments for price comparison purposes.76
In conclusion, one could say that in practice the price effects or margin analysis
has high evidentiary value in establishing injury and causation, but they are not
conclusive evidence of injury and causal link. As the maxim goes, correlation is not
causation. The Appellate Body ruling in China—GOES emphasizes that the price
effects analysis can help the investigating agencies examine whether the subject
imports can provide an explanatory force for the occurrence of significant depression
or suppression of domestic prices.77 As the Appellate Body notes, such an analysis
can provide a “meaningful basis” in the injury and causation determination.78

76
Panel Report, China – Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment
from the European Union, ¶ 7.52–54, WT/DS425/R and Add.1 (April 24, 2013). [hereinafter
Panel report, China-X-Ray].
77
Appellate Body Report, China—GOES, ¶ ¶152,154.
78
Appellate Body Report, China—GOES, ¶ 154.
C Role of Trends Analysis 89

A review of WTO trade remedy law and country practices suggest that the price
effect or price margin analyses—even in its crude form—remain perhaps the only
analytical tool applicable to a vast number of WTO Members to conduct the cor-
relation analysis in the causation enquiry. The details of the application of margin
analysis among various WTO members will be examined in the next chapter.

3 Trends Analysis and Conceptualizing the Requirement

of “Through the Effects”

An examination of WTO trade remedy disputes reveals that in most jurisdictions

the traditional analysis of causation has been driven by anecdotal evidence of
domestic industry developments and simple correlation among import levels,
domestic production and shipments. At a fundamental level, the analysis involves
the trends or the correlation examination.
Under the trends analysis, if market penetration of imports has occurred when
domestic industry profits, domestic prices and output have declined, it is a kind of
“evidence” that imports have been causing problems. Unless there is a compelling
qualitative evidence to force a disconnect in this simple analysis, import volumes
and prices are considered to be the cause of injury to the domestic industry.
Article 3.5 of the AD Agreement as well as Article 15.5 of the SCM Agreement
provides that dumped/subsidized imports must be shown to have caused injury to
the domestic industry “through the effects of dumping” or “through the effects of
subsidy” as the case may be. One of the central issues regarding this term was
whether it was sufficient for the investigating agency to establishment a finding of
injury purely on volume and price effects if there were other factors, perhaps more
significant factors, causing injury.79 Legal scholars such as John H. Jackson
highlighted the importance of the effects of dumping or subsidy margin, which
could have caused the injury to the domestic industry. In other words, it was desired
that the scope of antidumping or CVD remedies would be available only when the
magnitude of dumping or subsidies were to cause certain effects. According to this
view, a de minimis level of dumping or subsidy could not have caused injury.
Professor Jackson noted as follows:
The GATT Subsidies Code explicitly states, ‘It must be demonstrated that the subsidized
imports are, through the effects of the subsidy, causing injury within the meaning of this
Agreement’. This would seem to establish an international obligation to pursue a causal
connection that would relate to the actual subsidization - i.e., the margin. A similar clause
exists in the Anti-Dumping Code. Moreover, this interpretation was consistent with the
object and purpose of the Agreement. The Agreement sought to prevent unjustified
impediments to the flow of international trade. Consequently, the Agreement required a
strong showing that the injury to be prevented was caused by the effects of dumping and
thus, that the remedy (the anti-dumping measures) would, in fact offset this material injury.

79
IVO VAN BAEL, JEAN-FRANÇOIS BELLIS, EU ANTI-DUMPING AND OTHER TRADE DEFENCE INSTRUMENTS
700 (2011).
90 3 Injury and Causation in Trade Remedy Investigations …

If the injury were to be caused by other factors, the anti-dumping measures would not offset
the injury and would impede trade to no lawful purpose.80

In the US—Atlantic Salmon dispute, both Norway and the U.S. made exhaustive
arguments on the meaning of these terms.81 According to the interpretation advanced
by Norway, the Agreement required an analysis in each case of whether and how the
effects of the imports under Articles 3.2 and 3.3 of the Tokyo Code were the “effects
of dumping”. This interpretation required some focus on the “margin of
dumping/subsidy”. Norway argued that if Article 3.4 of Tokyo Code required only
an analysis of the effects of imports (i.e., volume and price effects) under Articles 3.2
and 3.3 (of the Tokyo Code), there would be no distinction between the determi-
nation of the existence of material injury and the determination of the cause of injury.
Norway argued that the principle of effective treaty interpretation ruled out an
interpretation which could render the phrase “through the effects of dumping”
superfluous. The United States, on the other hand, argued that in order to give effect
to the phrase “through the effects of dumping”, it was not necessary to analyse any
factors other than the effects of the imports as mentioned in Articles 3.2 and 3.3
[Tokyo AD Code] which did not incidentally include the margin of dumping. The
United States also argued that the effects of the imports under Articles 3.2 and 3.3
were by definition the “effects of dumping”.82 The GATT Panel accepted the above
proposition advanced by the United States. According to the Panel, what was needed
to be demonstrated under the concerned provision was that “the dumped imports are
causing injury within the meaning of this Agreement”.83 The GATT panel inter-
preted that the effects mentioned in Article 3. 2 and 3.3 of the Tokyo Code were not
mere indicators of material injury, but provided great precision in the manner in
which causal relationship was to be established.84
The meaning of this phrase “through the effects” has been less clear in the context
of the Uruguay Round AD Agreement and SCM Agreement. There was a move to
discredit the finding of the US– Atlantic Salmon on the ground that the finding of the
GATT panel on the large issue of causation dispute was rejected by the Appellate
Body in US—Hot-rolled Steel.85 The terms “through the effects of dumping” and
“through the effects of subsidies” are retained in Article 3.5 of the AD Agreement
and Article 15.5 of the SCM Agreement respectively. However, a closer look would
establish that the Appellate Body was only examining the non-attribution provision

80
John H. Jackson, THE WORLD TRADING SYSTEM 242 (1969); see also N.D. Palmeter, Dumping
Margins and Material Injury: The USITC is Free to Choose, 21(4) JOURNAL OF WORLD TRADE
173–175 (1987).
81
Panel Report, US—Atlantic Salmon, ¶ 304.
82
Id, ¶ 300.
83
Id, ¶ 569.
84
Id, ¶ 571.
85
Appellate Body Report, United States—Anti–Dumping Measures on Certain Hot–Rolled Steel
Products from Japan, WT/DS184/AB/R (August 23, 2001) [hereinafter Appellate Body Report,
US- Hot-rolled Steel].
C Role of Trends Analysis 91

in the AD Agreement in US—Hot-rolled Steel and that the scope of the term
“through the effects of dumping” was not a matter of contention in that dispute.
However, the Panel and Appellate Body had an occasion to examine this phrase in
greater detail in Japan—DRAM, a subsequent WTO dispute.86
A closer reading of Japan—DRAM would indicate that the Appellate Body has
apparently blurred the distinction between “injury through the effects of
dumping/subsidies” and “injury caused by dumped/subsidized imports”.87 Strictly
speaking, these terms have different meanings. The Appellate Body chose to rec-
oncile the terms “the effect of … subsidization” found in Article VI: 6(a) of the
GATT and “through the effects of subsidies” incorporated in Article 15.5 of the
SCM Agreement. In making this reconciliation, the Appellate Body chose to
interpret the terms “through the effects of subsidies” to mean “through the effects of
subsidized imports”—an approach that could take the primary focus of the cau-
sation enquiry from the margin of dumping or subsidies to the effects of
dumping/subsidies on the domestic industry.88
In sum, the extent of subsidy or dumping margin could be a useful indicator in
assessing the effects of dumped or subsidized imports on the domestic industry.
A relatively small subsidy or dumping margin is expected to have far less impact as
compared to a higher margin. However, the magnitude of dumping/subsidy is
included as a factor in the consideration of the material injury to the domestic
industry. There is a criticism that if the terms “through the effects of dumping/
subsidy” required only an analysis of the effects of imports under Articles 3.2 and
3.4 of the AD Agreement or Articles 15.2 and 15.4 of the SCM Agreement, there
would be no distinction between the determination of the existence of material
injury and the determination of the cause of injury.89 This view has some clear
merits, but it appears that this magnitude of dumping/subsidy has been subsumed
within the trends analysis, which undertakes an examination of the price and vol-
ume trends in conjunction with the injury effects on the domestic industry. In other
words, the terms “through the effects of dumping/subsidies” have been used to
highlight the role of trend analysis not only in material injury but also in causation
analysis. The magnitude of dumping/subsidies could have been an independent
factor in the causation analysis, but the reasoning adopted by the GATT panel in
US-Atlantic Salmon, continues till date as the permissible reading of the treaty.
The trends analysis is, however, not complete in itself. The major weakness of
trend analysis is that it does not often take into account the degree of causality
required for import relief. The following discussion examines the utility of the trend
analysis in various scenarios.

86
Appellate Body Report, Japan—Countervailing Duties on Dynamic Random Access Memories
from Korea, ¶ 269, WT/DS336/AB/R (November 28, 2007) [hereinafter Appellate Body Report,
Japan – DRAM].
87
Jorge Miranda, Causal Link and Non-attribution as Interpreted in WTO Trade Remedy Disputes,
44 (4) JOURNAL OF WORLD TRADE 729, 734 (2010).
88
Appellate Body Report, Japan—DRAM, ¶ 269-270.
89
Norway’s arguments, US—Atlantic Salmon.
92 3 Injury and Causation in Trade Remedy Investigations …

4 Summary on Trends Analysis

The trends analysis or the correlation analysis is one of the most used analytical
tools in the injury and causation determination. It is fairly simple to implement and
relies on descriptive explanations. The WTO panels and the Appellate Body have
reiterated the importance of trends analysis. The following scenarios are presented
to highlight some of its practical advantages and drawbacks of the trends analysis.
Scenario I: Material injury is entirely caused by factors other than
dumped/subsidized imports, i.e., dumping or subsidization has not caused material
injury. For instance, the injury could have been caused by fair imports, or other
macroeconomic or industry specific factors. A trends analysis which examines the
correlation between imports and the movement of injury parameters may not be
probative of the effects of dumping or subsidization.
Scenario II: No factors other than dumped or subsidized imports have been
identified as a cause of material injury. In this scenario a trends or correlation
analysis may be helpful in establishing causation. It is possible that injury may be
caused by factors which were not identifiable or hidden at the time of the inves-
tigation; however, in the absence of any contrary evidence the causal link presumed
to be established between dumped/subsidized or increased imports could be
assumed to remain intact.
Scenario III: The material injury is at least partially caused by factors other than
dumped imports. In this scenario, the dumped imports could have contributed to the
injury or might have triggered the injury which was aggravated by other factors. This
is a highly common situation. According to a study conducted by Hansen and
Prusa,90 imports had very small or usually statistically insignificant role on prices.
Hansen and Prusa also found that other factors mattered more than imports in driving
down domestic prices. In such a situation, the trends analysis will not be helpful in
establishing whether the injury is on account of dumped or subsidized imports.
In antidumping there is no pro rata scaling down of an antidumping margin to
account for injury caused by factors other than LTFV imports. Instead, if the
investigating authority is not satisfied that such causal link exists, it will reach a
negative injury determination which will result in the termination of the
antidumping proceedings.91

90
William Hansen & Thomas Prusa, Economics and Politics: An Empirical Analysis of ITC
Decision Making, 5 REVIEW OF INTERNATIONAL ECONOMICS 230-245(1997).
91
Under the comparative negligence theory in tort law, damages would be apportioned between
parties at fault. Such a concept does not exist in trade law.
D Examination of the GATT/WTO … 93

D Examination of the GATT/WTO Jurisprudence:

The “Non-attribution” Test

As discussed earlier, there is no legal requirement under the provisions of the

present trade remedy agreements that imports shall be the sole cause of injury.92
The treaty provisions acknowledge the possibility of factors other than increased
imports causing injury to the domestic industry, but no method or order as to how
the demonstration of causal link between increased imports and injury to the
domestic industry shall be made is spelt out. However, Article 3.5 of the AD
Agreement and 15.5 of the SCM Agreement require the investigating authorities to
examine any “known factors” other than dumped or increased imports which are at
the same time injuring the domestic industry, and that the injuries caused by the
other factors must not be attributed to increased imports. This is formally known as
the “non-attribution” test. The AD and SCM Agreements have given a list of
indicative factors, which include the following:
• The volume and price of non-dumped or non-subsidized imports
• Contraction in demand or changes in patterns of consumption
• Trade restrictive practices of and competition between the foreign and domestic
producers
• Developments in technology
• Export performance and the productivity of the domestic industry
The requirement to segregate and analyze the injuries caused on account of other
factors has often been the subject matter of a number of disputes under the
GATT/WTO (see Appendix). Some of these disputes are under the AD Agreement
while a vast majority of the disputes are under the Safeguards Agreement. There have
been a few cases under the SCM Agreement as well. The Appellate Body observed in
US—Wheat Gluten, one of the earlier cases under the Safeguards Agreement:
Logically, the final determination of the injurious effects caused by increased imports must
follow a prior separation of the injurious effects of the different causal factors. If the effects
of the different factors are not separated and distinguished from the effects of increased
imports, there can be no proper assessment of the injury caused by the single and decisive
factor. As we also indicated, the final determination about ‘causal link’ between increased
imports and serious injury can only be made after the effects of increased imports have been
properly assessed, and this assessment, in turn, follows the separation of effects caused by
all different causal factors.93

In US—Lamb, the Appellate Body, while interpreting Article 4.2(b) of the

Safeguards Agreement, stated that a conclusion based exclusively on an assessment
of only one of the factors, namely “increased imports” in the Safeguards
Agreement, would rest on an uncertain foundation, because it assumed that the
other causal factors were not causing injury which had been ascribed to increased

92
Appellate Body Report, US—Lamb, ¶ 170.
93
Appellate Body Report, US—Wheat Gluten, ¶ 69.
94 3 Injury and Causation in Trade Remedy Investigations …

imports.94 According to the Appellate Body, the non-attribution language in Article

4.2(b) required a satisfactory explanation of the “nature and extent” of the injurious
effects of other “known factors”, as distinguished from the injurious effects of the
increased imports.
US—Hot-rolled Steel,95 an antidumping dispute, is perhaps the most important
decision in the context of “non-attribution” analysis. Japan, the complainant, had
argued that the USITC failed to adequately analyze “other factors” affecting the
U.S. industry, for example, the increase in capacity of mini-mills and the ensuing
expansion of U.S. steel supply, the strike at General Motors, declining demand for
hot-rolled steel from the pipe and tube industry and the prices of non-dumped
imports. Secondly, Japan claimed that the USITC had “failed to ensure that injury
caused by these other factors was not attributed to the dumped imports.” This was
one of the earlier cases in which the scope of non-attribution was put to test before a
WTO panel. During the GATT period, only a few disputes had examined the role of
non-attribution and there was no requirement to conduct this enquiry as an ana-
lytical step. For example, in US—Atlantic Salmon,96 a GATT panel analyzed the
role and scope of the non-attribution clause under the Tokyo AD/Subsidy Codes.
Norway, the complainant in that case, argued that investigating authorities, namely
the USITC should have carried out a thorough examination as opposed to a mere
consideration of all possible causes of material injury to the domestic industry and
should have isolated and excluded the effects of such other possible causes of injury
from the effects of imports.97 The Panel noted that, in addition to examining the
effects of the imports under Articles 3.1, 3.2 and 3.3 of the Tokyo Antidumping
Code, the USITC was not required to identify the extent of injury caused by these
other factors. According to the panel, there was no obligation to isolate the injury
caused by these factors from the injury caused by the imports from Norway.98
In US—Hot-rolled Steel, Japan also argued that the addition of the explicit
requirement to “examine any known factors other than the dumped imports” under
the WTO AD Agreement as opposed to the recognition of the possibility that other
factors are injuring the domestic industry, constituted “a significant substantive
change in the underlying treaty text [which] renders United States—Atlantic Salmon
totally inapposite”.99 While deciding on the non-attribution language, the WTO
Panel noted that responsibility of the investigating agency was to “examine and
ensure that these other factors do not break the causal link that appeared to exist
between dumped imports and the material injury on the basis of an examination of

94
Appellate Body Report, US—Lamb, ¶179.
95
Panel report, United States–Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184//R (August 23, 2001).
96
Panel Report, US—Atlantic Salmon, ¶ 555.
97
Id ¶ 545.
98
Id ¶ 555.
99
Second Submission of Japan to the Panel Proceedings in United States—Anti-Dumping
Measures on Certain Hot-Rolled Steel Products from Japan, Annex C-1, ¶ 256.
D Examination of the GATT/WTO … 95

the volume and effects of dumped imports under Articles 3.2 and 3.4 of the AD
Agreement”.100 What the GATT panel implicitly said was that there was no need to
quantify the injury.101 In the appeal, the Appellate Body promptly dismissed
the Panel’s view and held that the requirement of separating and distinguishing the
injurious effects of other known factors is essential to concluding whether the
dumped imports are indeed causing injury.102 The Appellate Body noted as follows:
The non-attribution language in Article 3.5… applies solely in situations where the dumped
imports and other known factors are causing injury at the same time. In order that inves-
tigating authorities are … able to ensure that the injurious effects of other known factors are
“attributed” to dumped imports, they must appropriately assess the injurious effects of those
factors. Logically, such an assessment must involve separating and distinguishing the
injurious effects of other factors from the injurious effects of the dumped imports.103

According to the Appellate Body, if the injurious effects of dumped imports and
other known factors remain lumped together and indistinguishable, there was
simply no means of knowing whether injury ascribed to dumped imports was, in
reality, caused by other factors.104 This concern was reiterated by the Appellate
Body in US—Line Pipe too. The Appellate Body stated in US—Line Pipe:
The non-attribution language in Article 4.2(b) has two objectives. First, it seeks in situa-
tions where several factors are causing injury at the same time, to prevent investigating
authorities from inferring required ‘causal link’ between increased imports and threat
thereof on the basis of the injurious factors caused by factors other than increased imports.
Second, it is a benchmark for ensuring that only an appropriate share of overall injury is
attributed to increased imports.”105(emphasis added)

In principle, the Appellate Body ruling on ‘non-attribution’ has certain intuitive

appeal as it seeks to locate the injury attributable to the alleged imports. However,
the challenge lies in its execution. It will be instructive to examine the efficacy of
this test in a real trade remedy dispute. Hot-rolled bar was one of the products
involved in the US—Steel dispute. The respondents (exporters facing safeguard
action) argued that the injury to the U.S. domestic industry was on account of rising
input costs or cost of goods sold (COGS). The USITC had admitted the occurrence
of rising COGS but emphasized that import competition had prevented the domestic
firms from passing the cost to costumers. In a way, import competition could be a
reason why the domestic firms were unable to recover their costs, but how prac-
tically feasible will it be for an investigating authority to establish that the injury on
account of rising COGS is not attributed to increased imports? To take another
example, exchange rate fluctuations may be a cause for injury to the domestic
industry, but they could also be a reason for dumping or increased imports to take

100
Panel Report, US—Hot-Rolled Steel, ¶ 7.253.
101
Id. ¶ ¶ 7.260–61.
102
Appellate Body Report, US—Hot-Rolled Steel, ¶ 7.217.
103
Id. ¶ ¶ 222–223.
104
Id. ¶ 228.
105
Appellate Body Report, US—Line Pipe, ¶ 252.
96 3 Injury and Causation in Trade Remedy Investigations …

place.106 In such cases, there is an interplay of various economic factors, which

cannot be properly segregated and separated for the purpose of non-attribution.
In light of the above discussion, the non-attribution analysis poses certain
questions. Does it mean that all investigating agencies should quantify and elimi-
nate the role of other known factors? Or, does it only mean that an investigating
agency should provide a reasoned and adequate explanation of the injurious effects
of other known factors? These two aspects are separate and distinct. There are
views that an investigating authority cannot segregate the extent and nature of
injurious effects except by using some mathematical computation or economic
science.107 On the other hand, if this requirement is all about providing some
explanation without a through economic justification, this exercise may be a purely
qualitative test–a mere procedural requirement. It appears from some of the recent
cases that the Appellate Body realized the folly in imposing a standard which no
one clearly understood and not many WTO Members had the capacity or ability to
accomplish.108 This study examines the persisting lack of clarity among WTO
members in the use of non-attribution in the next two chapters of this book, namely,
Chaps. 4 and 5 which deal with the country specific practices in the causation
determination in the field of antidumping and safeguard investigations.
It is interesting that in a well-known safeguards dispute, US—Line Pipe, the
Appellate Body while interpreting the pertinent provision of the Safeguards
Agreement settled for a segregation test which was nothing more than qualitative.
The Appellate Body noted:
[T]o fulfill the requirement of Article 4.2(b), last sentence, the competent authorities must
establish explicitly, through a reasoned and adequate explanation, that injury caused by
factors other than increased imports is not attributed to increased imports. The explanation
must be clear and unambiguous. It must not merely imply or suggest an explanation. It must
be straightforward in express terms.109

Likewise, in cases such as US—DRAM110 and Mexico—Oilve Oil,111 the WTO

panels have upheld the non-attribution analysis without extensively examining the
methodology used for isolating and distinguishing the effects of the ‘other factor’.
In Mexico—Olive Oil, the panel stated that Economia, the Mexican CVD investi-
gating authority, had “carefully examined, separated and distinguished the effects of

106
GATT Panel Report, EC—Imposition of Antidumping Duties on Imports of Cotton Yarn from
Brazil, ADP/137 (April 4, 1995). Brazil noted that temporary exchange rate fluctuations were the
reasons for dumping and had to be adjusted, see ¶ 125.
107
PETROS MAVROIDIS ET AL., THE LAW OF THE WORLD TRADE ORGANIZATION (WTO), fn.18, at 657
(2010).
108
Appellate Body Report, EC—Pipe Fittings, ¶ 188.
109
Id. ¶. 217.
110
Panel Report, United States—Countervailing Duty Investigation on Dynamic Random Access
Memory Semiconductors (DRAMS) from Korea, WT/DS296/R (July 20, 2005).
111
Panel Report, Mexico—Definitive Countervailing Measures on Olive Oil from the European
Communities, ¶ 7. 317 WT/DS341/R (October 21, 2008) [hereinafter Panel Report Mexico-Olive
Oil].
D Examination of the GATT/WTO … 97

each factor from the effects of subsidized imports, and reasonably concluded that
these factors were not contributing to the injury suffered by Fortuny [the Mexican
Olive Oil producer]”.112 In a way the panel examined whether Economia had
examined a particular known factor and supported its finding. During the panel
process, the panel requested Mexico to identify the paragraphs in the Preliminary
and Final Resolutions that referred to the other injury factors.113 Based on a perusal
of the information submitted, the panel gave deference to the finding of the
Mexican investigating authority and was not prepared to second-guess whether the
investigating authority’s analysis was quantitatively precise or not.114 This panel
finding supports the proposition that once an investigating authority has identified
and listed a causal factor, and supported its non-attribution analysis with a certain
reasoned explanation, the WTO panels and Appellate Body would be unwilling to
disturb the finding. The panel in US—DRAM also followed a similar reasoning.115
One could argue that in terms of the “non-attribution” analysis, what the
Appellate Body sought to clarify in US—Line Pipe116 was still an improvement on
the status quo. Moreover, the qualitative non-attribution analysis upheld by the
WTO panel in Mexico—Olive Oil is an acceptance of the practical difficulty in
performing this test. It is only appropriate to add that an economic analysis con-
ducted by Chad Bown and Niall Meagher by using the facts of this case notes that
the Mexican Authority had failed to properly isolate and segregate the effects of
other factors of injury.117 It was a common practice to ascribe causal link to imports
in several trade remedy investigations without even acknowledging the role of other
causally significant factors.118 In such a context, an objective explanation—even a
defective one at that—could eliminate the elements of arbitrariness from such
investigation to an appreciable extent. As the Appellate Body noted in US—Lamb,
if the investigating authorities fully address the nature and complexities of the data
and respond adequately to the plausible interpretation of the data, the reviewing
panels are unlikely to overturn the findings.119 This observation was reconfirmed
even in the EC—DRAM case as well where the panel said that a “satisfactory
explanation” which could include even a “thorough qualitative examination” could
be sufficient to meet the obligations of separating and distinguishing the injurious
effect of ‘other factors’.120

112
Panel Report, Mexico—Olive Oil, ¶ 7. 317.
113
Id. ¶ 7. 309.
114
Id. ¶ 7.317.
115
Panel Report, US—DRAM, ¶ 7. 369.
116
Appellate Body Report, US—Line Pipe, ¶ 217.
117
Chad Bown & Niall oMeagher, Mexico- Olive Oil: Remedy Without a Cause, 9(1) WORLD
TRADE REVIEW 85-116 (2010) (noting that the panel had not fully addressed causal factors such as
Fortuny's loss of its distribution network, its loss of the right to use a Spanish brand name (Ybarra),
and its high costs in the non-attribution analysis).
118
See Argentina–Footwear; US—Lamb, US—Wheat Gluten, etc.
119
Appellate Body Report, US—Lamb, ¶ 106.
120
Panel Report, EC—DRAM, ¶ 7.420.
98 3 Injury and Causation in Trade Remedy Investigations …

1 Identifying and Separating Other “Known Factors”:

Who Bears the Burden?

Under the AD and SCM Agreements, the investigating authorities are required to
examine the impact of all known factors other than dumped or subsidized imports
which at the same time are causing injury to the domestic industry, and to ensure that
the injury caused by such factors is not attributed to dumped or subsidized imports. In
accordance with Article 3.1 of the AD Agreement and 15.1 of the SCM Agreement, the
investigating authority is required to base all its determinations of injury on positive
evidence and objective evaluation. In order for an evaluation to be “objective”, an
investigating authority has the obligation to examine the potential effects of “known
factors” other than dumped or subsidized imports that might be causing injury.
The Appellate Body in EC—Pipe and Fittings,121 examined the role of other
‘known factors’ as follows:
Critical to the effective operation of the non-attribution obligation, and indeed the entire
causality analysis, is the requirement of Article 3.5 to “examine any known factors other
than the dumped imports which at the same time are injuring the domestic industry”, for it
is the “injuries” of those known factors that must not be attributed to dumped imports. In
order for this obligation to be triggered, Article 3.5 requires that the factor at issue:
(a) be “known” to the investigating authority
(b) be a factor “other than dumped imports”; and
(c) be injuring the domestic industry at the same time as the dumped imports.

One of the pertinent issues in non-attribution analysis is the task of identifying

the ‘other factors’ which may be causing injury to the domestic industry. The Panel
in Thailand—H Beams stated:
The text of Article 3.5 …. does not make clear how factors are ‘known’ or are become
‘known’ to the investigating authorities. We consider that other ‘known’ factors would
include those factors that are clearly raised by the interested parties before the investigating
authorities in the course of an AD investigation. We are of the view that there is no express
requirement in Article 3.5 that investigating authorities seek out and examine in each case
on their own initiative the effects of all possible factors other than imports that may be
causing injury to the domestic industry under investigation.122

It can be implied from the findings of the Panel that the general burden on raising
the known factor is on other interested parties, or preferably on the exporter. The
Panel in Thailand—H Beams clearly spelt out this general position of law.123
Furthermore, once an investigating agency acknowledges the presence of an injury
factor, a failure to evaluate such a factor is a breach of the non-attribution

121
Appellate Body Report, EC—Pipe Fittings, ¶ 175.
122
Panel Report, Thailand—Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-
Alloy Steel and H-Beams from Poland, ¶ 7.273, WT/DSS122/R (September 28, 2000) [hereinafter
Panel Report, Thailand—H Beams].
123
Panel Report, Thailand—H Beams, ¶ 273.
D Examination of the GATT/WTO … 99

requirement.124 The ruling of the panel in EC—Salmon suggests that if the

investigating agency has gained certain understanding of the causal factors based on
prior knowledge of a product, industry or market, or common knowledge, such
information and understanding “play a part” in the non-attribution analysis.125
Certain ambiguities also persist as to the evidentiary standards applicable to qualify
a causal factor as a known factor. There could be several possible causes for the
alleged condition of the domestic industry. Should each such factor be acknowl-
edged and followed up with a separate analysis? Does the investigating authority
have the freedom to disregard certain factors as too irrelevant, remote or causally
inconsequential? These issues beg questions. For example, in a majority of cases it
is seen that the investigating authorities, or even the WTO Panels, simply accept at
face value the “other factors” pointed out by the exporters or the respondent country
without considering whether they are appropriate or inappropriate, relevant or
irrelevant or significant to the causal enquiry.126 The lack of clarity on these aspects
is yet to be addressed through dispute settlement panels or any authoritative
decisions by the WTO members.
However, on certain other aspects, the WTO Panels and the Appellate Body
have filled some of the gaps in treaty language. One particular concern was whether
there was any temporal limitation on raising or bringing to the notice of the
authority the existence of any known factors. In EC—Pipe Fittings, the Appellate
Body noted that there is no specific stage for raising the presence of other factors
that may be causing injury to the domestic industry. The Appellate Body clarified
that it is irrelevant if any interested party has raised a factor at one particular stage
and not consistently throughout the investigation. The second question related to
the process in which a known factor has to be dealt with. The panel in EC-DRAM
noted that it does not suffice for an investigating authority to merely “check the
box”.127 According to the Panel, an investigating authority must do more than
simply list other known factors, and then dismiss their role with bare qualitative
assertions. The Panel provided an illustration of qualitative comments. In certain
cases, investigating authority may dismiss certain possible known factor along the
following lines: “this factor did not contribute in any significant manner to the
injury”; “this factor did not break the causal link between the subsidized imports
and material injury”, etc. According to the Panel in EC—DRAM, a more robust
discussion of the known factor(s) is required for examining its role. As the Panel
further noted, the non-attribution language in the AD Agreement/SCM Agreement
requires an investigating authority to provide a satisfactory explanation of the

124
Panel Report, United States—Investigation of the International Trade Commission in Softwood
Lumber from Canada, ¶7.137, WT/DS277/R (March 22, 2004) [hereinafter Panel Report, US—
Softwood Lumber IV].
125
Panel Report, European Communities, Antidumping Duties on Farmed Salmon from Norway, ¶
7.667, WT/DS 377/R (November 16, 2007) [hereinafter Panel Report, EC—Salmon].
126
Alan Sykes, THE WTO AgREEMENT ON SAFEGUARDS 188 (2006).
127
Panel Report, EC—DRAM, ¶ 7.405.
100 3 Injury and Causation in Trade Remedy Investigations …

nature and extent of the injurious effects of the other factors, as distinguished from
the injurious effects of the subsidized imports.128
In Appellate Body in US—Hot rolled Steel recognized that there may be a
number of different causal factors interacting and affecting the domestic industry at
the same time and that “their effects may well be inter-related, such that they
produce a combined effect on the domestic industry.”129 The Appellate Body went
on to state that “we recognize that there may be cases where, because of the specific
factual circumstances therein, the failure to undertake an examination of the col-
lective impact of other causal factors would result in the investigating authority
improperly attributing the effects of other causal factors to dumped imports.”130
The purpose of a “known factor” is not just to fill in the requirements of
non-attribution. The purpose is to locate the possible causal factors whose existence
would be otherwise hidden. The causal effects of statutory causes such as
dumping/subsidy or increased imports cannot be assessed unless the existence of
other causes is identified or examined. That is why the Appellate Body has intro-
duced the concept of non-attribution even when the treaty text is silent on a strict
segregation of factors. In other words, this is an acceptance by the Appellate Body
of the fact that any causal enquiry would entail the identification of the existence of
other causal factors. For example, the WTO panels and the Appellate Body
imported the concept of non-attribution while dealing with “serious prejudice”
claims under Articles 5 and 6.3 of the SCM Agreement131 and Paragraph 16.4 of
China’s Protocol of Accession.132 However, there is no express language on
non-attribution in these treaty provisions.
In this respect, it is often seen from the disputes raised in the WTO that each
trade remedy case will have its own set of relevant factors. An analysis of the cases
indicate that the list of illustrative factors mentioned in Article 3.5 of the AD
Agreement and Article 15.5 of the SCM Agreement often do not have much role in
the causation analysis (see Appendix of this chapter). However, an analysis of the
non-attribution findings of various WTO panels in the field of trade remedies
indicate that there are certain factors which may have a greater influence on the
performance of the domestic industry. As could be seen from the analysis, a
common reason for poor profitability of the industry is the increase in the raw
materials or utility costs, referred to as rise in cost of goods sold (COGS). Second,
non-tariff barriers and exchange rate fluctuations play a key role. Again, domestic
industry constituents could be subject to one or another form of trade remedy action
in other markets, or could be facing multiple or simultaneous trade remedy actions

128
See also Appellate Body Report, United States – Definitive Safeguard Measures on Imports of
Certain Steel Products, ¶ 304, WT/DS252/AB/R (November 10, 2003).
129
Appellate Body Report, US—Hot Rolled Steel, ¶ 227-228.
130
Appellate Body Report, US—Hot Rolled Steel, ¶ 228.
131
Panel Report, US—Cotton, ¶ 7.1343.
132
Panel Report, United States—Measures Affecting Imports of Certain Passenger Vehicle and
Light Truck Tyres from China, ¶ 7.176, WT/DS399/R, (October 5, 2011), upheld by Appellate
Body Report WT/DS399/AB/R.
D Examination of the GATT/WTO … 101

or anticipating such actions in other jurisdictions. Domestic competition is yet

another factor. The effects of any other remedial measures currently applied to the
sector or the product may also have to be viewed in perspective. Third, the fall in
productivity of the domestic industry could be a common cause of injury. The
chilling effect of these factors will have to be adequately taken into account.
Although the role of “other factors” will have to be examined and analyzed on a
case-by-case basis, it will be instructive to have a more comprehensive list of
illustrative factors which an authority should examine while deciding injury and
causation. Some of the factors such as rise in raw material costs, domestic com-
petition, currency exchange rate fluctuations and role of labor or management
decisions merit mandatory discussion in most trade remedy cases.133
Having looked at the general contours of the “non-attribution” test, it would be
helpful to understand the complexities of the non-attribution test in the light of the
experience of the United States, which was required to defend several of its findings
on injury and causality in various safeguard investigations at the WTO.

2 Non-attribution: Examination of the U.S. Methodology

in Trade Remedy Investigations

The trade remedy practices in the United States have had a profound influence in
shaping the application of this mechanism at the multilateral level. The obvious
question was how come a country with more than nine decades of experience in
injury determination lose virtually all its injury determinations in safeguards and a
few antidumping cases at the WTO? For the broader WTO community, the question
was how could the “non-attribution” test be carried out in a WTO compatible way?
This question has evoked intense debate within and outside the U.S.134 On a plain
reading of Article 4.2(b) of the Safeguards Agreement, it is more or less clear that
the competent authorities have the discretion to craft appropriate methodologies.135
But then, it is surprising that each attempt made by the U.S. to comply with the
injury and causation determination especially in the context of safeguard investi-
gations was found lacking and falling short of the WTO standards in one respect or
another.136
Section 201 of the US Trade Act of 1974, as amended, is the applicable legis-
lation for safeguard investigations in the U.S.. Section 201 mandates the USITC to

133
See Infra Appendix of this chapter.
134
Douglas A. Irwin, Causing Problems: The WTO Review of Causation and Injury in Section 201
Cases, 2(3) WORLD TRADE REVIEW 297, 298 (2003). See also Chad P. Bown, Why Are Safeguard
Measures under the WTO So Unpopular, 1 WORLD TRADE REVIEW 47 (2002).
135
Appellate Body Report, US—Lamb, ¶ 181.
136
Alan Sykes, The Safeguard Mess: A Critique of WTO Jurisprudence, 2(3) WORLD TRADE
REVIEW 261 (2003).
102 3 Injury and Causation in Trade Remedy Investigations …

determine “whether an article is being imported into the U.S. in such increased
quantities as to be a substantial cause of serious injury, or the threat thereof, to the
domestic industry producing an article like or directly competitive with the
imported article”.137 Although Section 201 refers to “increased imports”, it omits
the terms “under such conditions” which is mentioned in Article 2.1 of the WTO
Safeguards Agreement.
The practice of USITC was to assess the injury caused to the domestic industry
on account of increased imports and compare it with other factors.138 Then the
USITC took each of the other factors one at a time and examined its relative causal
importance with respect to the serious injury it had previously established to exist.
The USITC, under this methodology, weighed each factor individually against
imports to determine whether such factor was a “more important cause of injury”
and then excluded that factor as a “cause of injury” when that factor alone did not
satisfy that standard.139 The U.S statute implied that the various sources of injury
should be rank ordered and that “increased imports” should be no less important
factor than any other factor. In the underlying investigation on US—Lamb, the
USITC concluded that each four of the six “other factors” was relatively less
important cause than increased imports.140 This was an implicit acknowledgement
that these other factors were actually causing injury than increased imports. In US—
Lamb, the Appellate Body ruled on the consistency of the causation test as applied
by the USITC as follows:
[B]y examining the relative causal importance of the different causal factors, the USITC
clearly engaged in some kind of process to separate out, and identify the effect of different
factors, including increased imports. Although an examination of the relative causal
importance of the different causal factors may satisfy the requirements of the United States
law, such an examination does not, for that reason, satisfy the requirements of the
Agreement on Safeguards. On the record before the Panel in this case, a review of whether
the United States complied with the non-attribution language in the second sentence of
Article 4.2(b) can only be made in light of the explanation given by the USITC for its
conclusions on the relative causal importance of the increased imports, as distinguished
from the injurious effects of other causal factors.141

The WTO Panel in US—Lamb, (part of the finding which was later upheld) also
noted that serious injury examination in that case was “polluted” by the injurious
effects of the remaining factors.142 The Panel noted that in this case, the U.S.
assessed the injurious effects of the other factor at issue against the injurious effects
of increased imports and the remaining factors. The determinations were not made

137
19 U.S.C. para 2252(b)(1)(B).
138
Panel Report, US—Wheat Gluten, ¶ 134.
139
Section 202 (b) (1) (b) of the U.S Trade Act explains that the term “substantial cause” means ‘a
cause which is important and not less than any other cause’.
140
Import Lamb Meat, No. TA- 201-68 (United States International trade Commission, April
1999), USITC Publication 3176.
141
Appellate Body Report, US-Lamb, ¶ 184.
142
Panel Report, US-Line Pipe, ¶ 7.289.
D Examination of the GATT/WTO … 103

with any explicit method, but based on a loose assessment of the relative weights of
each factor. Furthermore, the Panel pointed out that there was no effort to separate
and distinguish the injurious effects of the increased imports from the injurious
effects of other factors. This approach, according to the Panel, was not in confor-
mity with the requirements of the Safeguards Agreement, which requires an
examination as to whether there is “a genuine and substantial relationship of cause
and effect” between the serious injury and the increased imports.143
The injury analysis in US—Line Pipe also highlights how an investigating
agency can fail the non-attribution standard despite the existence of evidence on
strong causal link between imports and the resultant injury.144 In the investigation
USITC examined six factors other than increased imports that were possibly
causing injury to the domestic industry (see Appendix for details). The USITC
found that the declining demand in the oil and gas industry was a factor, but held
that increased imports were important than any other factor. According to the
Appellate Body, the USITC recognized that the decline in oil and gas drilling and
production, but did not explain the nature and extent of the injurious effects of this
factor. It appears that the USITC was unable to defend its non-attribution analysis
since it failed to provide a reasoned and adequate examination of the effects of this
factor. In other words, a mere assertion is not enough.145 In the view of the
Appellate Body the descriptive part of the injury and causation determination
should explicitly incorporate such an analysis.146
The postulations of the Appellate Body and the Panels may sound abstract, but
the conceptual and practical difficulties with some of the existing approaches on
non-attribution could be explained with the help of a simple example. Consider a
hypothetical involving high fructose corn syrup (HFCS), a product which is subject
matter of several trade remedy actions. The HFCS industry in country A, files an
application for a safeguard investigation where the major supplying countries are
W, X, Y and Z. Further, assume that six different causes of injury are existing,
which include (a) inefficient management of the state-owned HFCS industry;
(b) growing preference for sugar based sweeteners as against corn based sweet-
eners; (c) high input costs of corn in country A; (d) employees’ strike in the major
HFCS producing company in country A, and; (e) appreciation of the local currency
in country ‘A’ and the consequent poor export performance of the domestic HFCS
industry, and finally (f) surge in imports from countries W, X, Y and Z. These are
the available known factors. Imagine a situation where the investigating agency
starts to rank order items (a) through (f) with reference to the increased import,
namely item (f). In some of the safeguard investigations involving the United States
which were challenged before the WTO, it was found that the USITC, the injury

143
Panel Report, US-Line Pipe, ¶ 169; see also Appellate Body Report, US- Wheat Gluten, ¶. 69.
144
Appellate Body Report, US- Line Pipe, ¶ 220-222.
145
Raj Bhala & David Ganz, WTO Case Review of 2001, 20 (2) ARIZONA JOURNAL OF
INTERNATIONAL AND COMPARATIVE LAW 178, 194(2003).
146
Appellate Body Report, US- Line Pipe, ¶ 223-262.
104 3 Injury and Causation in Trade Remedy Investigations …

determination agency, sought to assign weight based on the relative importance of

each of the identified factors against increased imports which it established initially.
This was an exercising of decomposing, comparing and then rank ordering of
various causal factors as against imports which did not satisfy the non-attribution
requirement espoused by the Appellate Body.147
Further, what do the Panels and Appellate Body require when they insist that the
national agencies should perform a “non-attribution” in trade remedy investiga-
tions? In the hypothetical just discussed, in addition to imports, there are five other
factors causing injury simultaneously. Assume that the input prices of corn were
unusually high in a year, but if the capacity utilization, sales realization and prof-
itability are the highest during this time, it could be concluded that the rise in corn
prices (input costs) is not affecting the causal link between increased imports and
the serious injury earlier established. If higher input costs were affecting the
domestic industry, it should have been reflected in any or most of the financial
parameters under examination. On the other hand, if higher input prices have indeed
an effect on injury, the non-attribution test requires the authority to separate and
disentangle (i.e., separate and distinguish) the effects of rising input costs. Although
a proper non-attribution is only possible through quantification, the recent rulings of
some of the panels discussed above indicate that WTO members could comply with
this requirement through an explicit and reasoned qualitative analysis provided
there is identification of all factors causing injury. There should be proper identi-
fication of all factors and an examination as to how the various factors affect the
domestic industry should be evident on the records. In the hypothetical above, such
an analysis has to be conducted for all the five factors listed from (a) through
(e) above. In other words, the non-attribution should at least be procedurally
demonstrated.
The WTO jurisprudence is unambiguous on the need for non-attribution.148 In
this context, it is necessary to ask: what was the mistake that the United States
committed in a long line of safeguards and certain antidumping disputes?
The USITC invariably took the default position that a rise in import trends is bound
to “cause” changes in domestic prices and output. A commensurate deterioration in
financial and non-financial parameters such as production, market share, price,
profitability and a host of similar factors with rising imports were almost assumed
as conclusive of causal link. Instead of comparing the relative role of each causal
factor, the USITC should have discussed and explained away how the injury
alleged on account of other factors is not breaking the causal link. According to the

147
Panel Report, United States – Definitive Safeguard Measures on Imports of Circular Welded
Carbon Quality Line Pipe from Korea, ¶ 7.288, WT/DS202/R (October 29, 2001); see also
Douglas Irwin, Causing Problems, supra note 134, 304.
148
See for example, Appellate Body Report, US—Gluten, ¶ 69.
D Examination of the GATT/WTO … 105

Appellate Body, the USITC’s focus was on “substantial cause”, and not on
“non-attribution”.149
It is important to recall that the safeguard measures adopted by the United States
were found inconsistent with WTO provisions, not because they were bereft of
causal sufficiency, but primarily in view of the USITC’s adherence to the domestic
statutory requirement. As examined in Chap. 2, the U.S. safeguard legislation has a
different language from the WTO Safeguards Agreement.150 It may look para-
doxical that the United States lost the cases despite having a far stricter standard—a
standard based on the “substantial cause” criterion as against the “a cause” criterion
adopted by other leading users of safeguard actions. This fact underlies the con-
clusion that the degree of causal significance by itself is not a significant factor in
WTO jurisprudence.

3 Non-attribution Analysis and Its Discontents:

The Application of the ‘but for’ Test

The foregoing discussion indicated the shortcoming of the coincidence–in-time or

correlation test in establishing causation between imports and injury to the domestic
industry. Nonetheless, a number of WTO panels and even the Appellate Body have
emphasized the need for establishing “a genuine and substantial relationship of
cause and effect”.151 The key question is how this requirement could be fleshed out
in terms of a sound legal construct, and employed in real practice in conformity
with the jurisprudence of the panel and the Appellate Body rulings. The “but-for”
test is a regularly used legal construct for identifying/establishing the causal link in
domestic proceedings. Even in trade remedy setting, the ‘but for’ test is suggested
as a useful legal construct.152 In the context of antidumping/safeguard investiga-
tions one could ask as follows: “but for the dumped/increased imports, would the
injury have occurred?” This expression is in a counterfactual form and requires an
examination of what would have been the state of the domestic industry, had the
increased imports not taken place? This analysis does not ask the straightforward
question of what caused the injury to the domestic industry being considered. In

149
Appellate Body, US—Line Pipe, ¶ 219.
150
Christy Ledet, Causation of Injury in Safeguard Cases: Why the U.S Can’t Win, 34(3) LAW AND
POLICY IN INTERNATIONAL BUSINESS, 713, 717(2003); also see SYKES: THE WTO AGREEMENT ON
SAFEGUARDS 174 (2006).
151
Appellate Body Report, United States – Final Countervailing Duty Determination with respect
to certain Softwood Lumber from Canada, (Article 21.5 – Canada), ¶ 132, WT/DS257/R; see also
Appellate Body Report, United States – Wheat Gluten, ¶ 69.
152
Prakash Narayan, Injury Investigation in “Material Retardation” in Antidumping Cases, 25(1)
NORTHWESTERN JOURNAL OF INTERNATIONAL LAW AND BUSINESS 37, 53 (2004). See also Panel Report,
Korea- Commercial Vehicles ¶ 7.613; Panel Report, Indonesia- Report of the Panel, Indonesia—
certain Measures Affecting the Automobile Industry, ¶ 5.103, WT/DS54/R (July 2, 1998).
106 3 Injury and Causation in Trade Remedy Investigations …

practice, the “but-for” test is established on the basis of balance of probabilities: if it

is more likely than not that an event was the cause, it is treated as if it were the
cause. In the context of trade remedy investigations, the but-for test is helpful where
increased imports/dumped or subsidized imports are the likeliest or the most
probable cause of injury. To explain, the underlying presumption in such a case
would be that the alleged increased imports, by virtue of volume, price and other
trends, are the likeliest cause of injury and the purpose of this test is to reaffirm to
what extent such a presumption is true or untrue.
In the context of antidumping and safeguard investigations, the but-for test is
generally conducted through econometric models such as the partial equilibrium
models. Normally the causal analysis is done by holding the levels of imports
constant or through allocation of quotas while using actual industry values for all
other variables, and then by comparing this output to the actual output. Essentially,
such a comparison would attempt to approximate what the condition of the
domestic industry would be in the absence of imports.153 In jurisdictions such as the
U.S., such a counterfactual test is conducted through the so-called unitary analysis.
The unitary approach compares the actual performance of a domestic industry with
a simulation of what its performance would have been had it had to compete with
fair or unfair imports. COMPAS154 (the currently existing model), which is gen-
erally used in the case of antidumping and subsidies, employs three key inputs and
six parameters (elasticities) to determine the price and volume of effects of
dumping.155 The COMPAS model is designed to calculate the effect of dumping at
specified margins on the domestic prices, the volume of domestic shipments and the
overall sales revenue. The principal parameters are the following: (i) dumping
margin percentage; (ii) domestic producers’ market share; (iii) subject import’s
market share; (iv) aggregate elasticity of demand for the product under investiga-
tion; (v) domestic producer’s supply elasticity; (vi) fairly traded import supply
elasticity; (vii) domestic product/subject imports elasticity of substitution; (viii)
domestic product/fairly traded imports elasticity of substitution; and (ix) subject
imports/fairly traded imports elasticity of substitution. These elasticities are based
on assumptions and are, therefore, “educated guesses” or “guestimates”.156
The WTO trade remedy agreements do not stand in the way of using such advanced

153
Alexander Keck et al., A Proababilistic Approach to Use of Econometric Modeling in Sunset
Reviews, 6(3) WORLD TRADE REVIEW 371 (2007).
154
COMPAS is an Armington partial equilibrium simulation model that quantifies the effects of
dumping in a simple supply-demand framework.
155
James P. Durling & Matthew P. McCullough, Teaching Old Laws New Tricks: The Legal
Obligation of Non-Attribution and the Need for Economic Rigor in Injury Analyses Under US
Trade Law, in HANDBOOK OF INTERNATIONAL TRADE (E. Kwan Choi & James Hartigan eds., 2004)
[hereinafter Durling & McCullough, Teaching Old Laws New Tricks].
156
Thomas Prusa & David C.Sharp, Simultaneous Equations in Antidumping Investigations, 14(1)
JOURNAL OF FORENSIC ECONOMICS 63–78(2001) (noting that the COMPAS results often reflect the
analyst’s assumptions and judgments regarding the causal relationship between the imports and the
domestically produced product).
D Examination of the GATT/WTO … 107

statistical/econometric modeling and even the WTO dispute settlement panels have
used such techniques as a matter of routine practice, at least in arbitration
proceedings.157
While revisiting the but-for test there has been significant literature on the utility
of this test in the causation enquiry.158 One major flaw of the but-for test is that it
does not seek to search for the causes of injury at least if there are multiple causes.
Let’s take an example involving a struggling industry. Assume that the industry is
operating with outmoded technology, lack of skilled manpower, high capital costs,
lack of diversified portfolio and falling investor confidence. However, the company
had trusted customers who were willing to purchase their products at competitive
prices. However, when imports started coming in, the customers shifted their
purchases to imports. In a trade remedy enquiry, the natural question is: but-for
imports, could this domestic industry have suffered injury”. The domestic industry
can possibly seek antidumping protection, but the real reasons for the poor per-
formance of the domestic industry are something else. To that extent, the but-for
test does not enquire the factual reasons of an event taking place. As Fumerton and
Kress argue, the but-for test seems to work well in ‘garden-variety’ examples of
causation and not necessarily in complicated investigations that involve multiple or
unknown causes and long periods of enquiry.159 The application of but-for test in
trade remedy cases varies dramatically from other personal injury or tort cases.
These issues are more exhaustively dealt with in Chap. 7.
It is important to keep in mind that the but-for test is not the same as the
correlation test, although both could look confusingly similar. The background
assumption for the application of both tests is that dumped/subsidized or increased
imports constitute the overwhelming reason for injury, but the “correlation” test
assumes the default position that if two things happen at the same place, one could
be the reason of the other. The but-for test does not assume such a position. Rather,
it works in an “all or nothing” fashion, i.e. either something is a cause or not a
cause.
It is easy to explain this problem with a simple hypothetical. Imagine a case
where someone is called upon to quantify the impact of various factors on the
performance of an industry. One may assume that the role of each factor is perfectly
quantifiable in economic terms in this scenario. Imports from subject countries were
quantified as contributing to 30 % of the overall injury and there are two additional
factors causing injury. Further assume that these factors are causing injury to the

157
See Decision by the Arbitrator, United States – Continued Dumping and Subsidy Offset Act of
2000, Original Complaint by Brazil – Recourse to Arbitration by the United States under
Article 22.6 of the DSU, WT/DS217/ARB/BRA (August 31, 2004).
158
John D. Rue, Returning to the Roots of the Bramble Bush: The ‘But for’ Regains Primacy in
Causation Analysis in the American Law Institute’s Proposed Restatement (Third) of Torts, 71
(6) FORDHAM LAW REVIEW 1744 (1985); James J. Nedumpara, Causation in Trade Remedy Law:
Problems with the ‘But for’ Test, 10 (11&12) GLOBAL TRADE AND CUSTOMS JOURNAL 402 (2015).
159
Richard Fumerton, Causation and the Law: Preemption, Lawful Sufficiency, and Causal
Sufficiency, 64 (4) LAW AND CONTEMPORARY PROBLEMS 83, 95 (2001).
108 3 Injury and Causation in Trade Remedy Investigations …

extent of 35 % each. The simple enquiry is whether a trade remedy investigation

can be successfully conducted by employing the but-for test?
In the above hypothetical scenario, the other two factors, which cumulatively
account for 70 % of the injury, are the dominant causes of injury. One could argue
that even without the imports, the domestic industry might have suffered injury. In
such a case, the alleged imports cannot be treated as a cause of injury in the
ordinary sense. In other words, application of the but-for test would fail to establish
any link between the imports and the injury alleged. One of the major disadvantages
of the but-for test is that it only accommodates a limited number of factors as
causative agents. Then, one may ponder: is the 30 % contribution to injury
insignificant or inconsequential? On the face of it, it is not. But can it cause injury
by itself and on its own? It depends, but certainly the imports can contribute to the
injury. Given this situation, how should an investigating authority proceed? One
could draw a conclusion that the but-for analysis may be helpful when a limited
number of factors present themselves, but when the factors are too many, it would
be preferable to avoid this test. One could therefore conclude that the but-for test
cannot account for the causality determination when plurality of causes is involved.
But, as stated earlier, when imports are the obvious cause of injury, the but-for test
could be an effective test.
The use of economic analysis is a bone of contention in injury and causation
determination. The general opinion seems to be that quantification may be desir-
able, as far as possible. As the WTO Panel in US—Steel said, “[e]ven the most
simplistic of quantitative analyses may yield useful insights … into the nature and
extent of injury being caused by factors other than increased imports to the
domestic industry”160 Regression analysis is used to estimate the relationship
between various economic variables. A particular regression technique used in
similar estimations is the Granger causality analysis. But as Josling and Sapir argue,
Granger causality models can be demanding in terms of data requirements.
Economic models such as COMPAS, as used by the USITC, will have some utility
in measuring the magnitude of impact imports on the domestic market. Again, as
Durling and MacCullough suggest, these models may not be very appropriate in
distinguishing the relative impact of different factors that might have simultane-
ously caused injury to the domestic industry.161 Again, as Rodrik puts it, the
conclusions in economic models are true only to extent their critical assumptions
approximate reality.162 It is also argued that given the narrow product lines chosen
in antidumping and CVD cases, it will not be easy to gather reliable data for
econometric analysis.163 It is therefore not surprising that COMPAS results are

160
Panel Report, US – Steel Safeguards, ¶ 10.341.
161
Durling & McCullough, Teaching Old Laws New Tricks, supra note 155.
162
DANI RODRIK, ECONOMICS RULES 18 (2015).
163
Alan O. Sykes, The Economics of Injury in Antidumping and Countervailing Duty Cases, 16(5)
INTERNATIONAL REVIEW OF LAW AND ECONOMICS, 5, 10 (1996).
D Examination of the GATT/WTO … 109

generally attached to the back of staff reports that accompany the USITC decisions
but need not be a basis for decision in most cases.164
A challenge for most trade remedy authorities could be in performing
non-attribution when multiple factors are causing injury to the domestic industry.
The foregoing discussion touched upon the but-for test and econometric models
such as COMPAS which have been reported to be useful when dumping/increased
imports could be the most obvious candidates for injury.165 However, such models
can have limitations when multiple causes are involved. Considering these limi-
tations, economists have used simultaneous equations models such as the
“two-stage least squares” model to estimate supply-demand in the product being
investigated.166 For example, Professor Thomas Prusa’s two-stage least square
estimate was embraced by the USITC in the Investigation on Cold-Rolled Steel
(2000).167 However, these models require reliable set of time series data and are
recommended only in few cases which meet the rigorous data requirements.
In sum, all approaches to causation determination and non-attribution that are in
vogue, both in the U.S. and E.U. and elsewhere,168 have significant shortcomings.
A vast majority of cases examined in this chapter are based on pro-forma or
checklist templates. In fact, any court or authority second guessing the determi-
nation of injury and causality could find some flaws in the approach. It is therefore
no wonder that Alan Sykes remarked that no country could perhaps conduct a
safeguard investigation without being challenged or the causation findings being
unsettled.169 Despite this reality, not all findings of injury and causation can be
challenged successfully at the WTO, if the investigating agencies have provided a
reasonable and sufficient explanation of various causal factors. According to the
standard of review prevailing in trade remedy investigations, especially in
antidumping, the panels and the Appellate Body are required to uphold the con-
clusions of an investigating authority if such findings could have been reached by
an objective and unbiased investigating authority on the basis of the evidence
available on record.170 Investigating authorities while anchoring on the traditional

164
Durling & McCullough, supra note 155, at 80-81.
165
Id, at 81.
166
David C. Sharp & Kenneth Zantow, Attribution of Injury in the shrimp antidumping case: A
simultaneous Equations Model, 6(5) ECONOMIC BULLETIN 1 (2005).
167
United States International Trade Commission, Investigation on Cold-Rolled Steel Products
from Argentina, et al., Inv. Nos. 731-TA-829-40 (Final), Jan, 2000; see also T.J. Prusa and D.C.
Sharp, Simultaneous Equations in Antidumping Investigations, 14(1) JOURNAL OF FORENSIC
ECONOMICS 63 (2001). Prusa and Sharp’s model of the cold-rolled steel industry was prepared for
the US antidumping investigation of that industry during 1999 and 2000.
168
Other major users of trade remedy instruments include India, Argentina, Mexico, Brazil, etc.
A detailed discussion of the injury and causality determination of the key users of trade remedy
instruments is provided in Chapters IV and V of this book.
169
SYKES, supra note 126, at 252.
170
The standard of review applicable to antidumping measures is set forth in Art. 17.6 of the
Antidumping Agreement. See Panel Report, Egypt- Steel Rebar, ¶ 116; see also Appellate Body
Report, US – Softwood Lumber VI (Article 21.5 – Canada), ¶ 17.
110 3 Injury and Causation in Trade Remedy Investigations …

trends analysis could also seek the help of economic models in isolating and
examining the role of a known factor as far as possible.

E Conclusion

As the foregoing discussions indicate, the WTO provisions on trade remedy

instruments do not clearly specify the methods and approaches by which the WTO
Members may carry out the injury and causality analysis. Even the degree of
causation required or the process of separating and distinguishing the injurious
effects of other known factors is not uniform. However, various WTO members
have been using traditional techniques such as the coincidence-in-trends or corre-
lation analysis in determining injury and causation. Although the trends or the
correlation analysis occupy a central position in injury and causation examination,
various panels and the Appellate Body have also said that such analysis alone
cannot prove causality.171
The standard set by the WTO Appellate Body does not require that increased
imports or dumped imports be a ‘sole’, ‘substantive’ or ‘predominant’ cause of
injury. The focus of various WTO Panels and the Appellate Body was to establish
an unbroken chain of causation. However, it needs to be stated that the rulings made
by the WTO Appellate Body to establish a chain of causation in the nature of a
“genuine and substantial relationship of cause and effect” was by itself not very
illuminating. The WTO Appellate Body also noted that the investigating authorities
must establish explicitly, through a reasoned and adequate explanation that the
injury caused by factors other than increased imports/dumped imports is not
attributed to such imports–a requirement popularly known as the “non-attribution”
analysis.
While the non-attribution analysis has certain appeal, the task of separating and
distinguishing the impact of various injury factors is considerably more burden-
some than anticipated. There is an overwhelming view that the non-attribution
analysis can only be done by way of a quantitative examination. However, this view
is contentious and a generally acceptable methodology for conducting
non-attribution analysis is yet to be identified. The WTO case law on this aspect is
still developing. In addition, the reliability of economic models will depend on the
robustness of assumptions made and the accuracy of the data. This chapter dis-
cussed how certain types of simultaneous equation models such as the two-stage
least square estimates were taken into consideration by the USITC in certain cases.
However, the larger issue is that use of sophisticated econometric models has its
own political repercussions in addition to its inherent limitations. Even assuming
that econometric models are robust and useful, the regressions results can be quite
difficult for non-statisticians or policy makers or judges to interpret. Therefore, such

171
Panel Report, Argentina- Footwear, ¶. 142.
E Conclusion 111

requirements should not be imposed on all users of trade remedy mechanisms under
the WTO. In view of the uncertainty over the methodology in undertaking proper
isolation or separation of the role of other causal factors, this study argues that a
strict non-attribution test advocated by the Appellate Body is neither necessary nor
warranted.
This study has already found that there is clear movement towards the use of
qualitative methods for the conduct of the non-attribution test, although the
Appellate Body is yet to give an affirmative opinion on such methodologies. Based
on an examination of some of the recent rulings of the panels in cases such as US—
DRAM, Mexico—Oil, Egypt—Rebar, and Mexico—Pipe and Fittings this study
finds that the evolving thinking on injury and causation in WTO jurisprudence is
not to opt for a strictly scientific or quantitative test, but a cogent test which should
respect the underlying purpose and objectives of such trade remedy instruments. In
other words, the non-attribution analysis is now being widely considered as an
obligation to identify various causes of injury and demonstrate the consideration of
such factors through an explicit and well-documented analysis. So long as the
analysis is reasoned and logical, a reviewing panel is unlikely to overturn the injury
and causation findings. In other words, if the injury and causation findings meet
certain ‘minimum standard of substantive rationality’,172 it should be considered as
acceptable.
While acknowledging the difficulties of conducting quantitative methods, this
study highlighted the emerging importance of qualitative methods. The qualitative
test could subsume a two tier test, which comprises: (1) a correlation analysis, and
(b) a non-attribution analysis. The correlation analysis can be conducted through the
coincidence-in-time (trends analysis) and the price undercutting or underselling
analysis (price effects analysis). Although correlation is not the same thing as
causation, it is perhaps the best evidence of it. Therefore, all investigation agencies
should routinely conduct such analysis to establish injury and causation. However,
the second tier of examination, namely the non-attribution can be satisfied through a
proper discovery of all causes causing injury and a proper evaluation of such causes
even through descriptive means. A scrutiny of WTO disputes (listed in Appendix)
clearly indicates that a strictly scientific or economic “isolation” or “separation” of
the effects of other causal factors as advocated by certain panels or Appellate Body
decisions is neither essential nor practically feasible for all WTO members. Barring
the United States, none of the respondents in the WTO cases had availed econo-
metric models for determining causation in some of the domestic investigations
which were under challenge. In this context, it is up to the WTO members to choose
a desirable approach.
This study has also examined the utility of the much talked about ‘but-for’ test as
an alternative test in injury and causation. The but-for test which is widely used in
common law jurisdictions is undeniably a good option in causal determination in

172
Andrew T. Guzman, Determining the Appropriate Standard of Review in WTO Disputes, 42
(1) CORNELL INTERNATIONAL LAW JOURNAL 45 (2009).
112 3 Injury and Causation in Trade Remedy Investigations …

certain specific circumstances. However, it may have shortcomings where there are
multiple causes. Furthermore, even the but-for test may require quantitative analysis
if it has to be properly administered in practice. The but-for test has already been
incorporated in the Unitary analysis in some of the established users of trade
remedies such as the United States. But the overwhelming view is that the but-for
test is more useful where there are only a limited causes of injury, or more accu-
rately, where the imports are the obvious cause of injury. Furthermore, the but-for
test may not be highly appropriate, especially if the imports are treated just as a
“cause” and not the necessary cause of injury.
This chapter also examined the presence of other known causes of injury in the
non-attribution analysis. It is important to identify all known causes in addition to
the causes enlisted in Article 3.5 of the AD Agreement or Article 15.5 of the SCM
Agreement. One of the ways of improving the non-attribution analysis is to require
a clarification of the obligations with respect to discharging the burden of proof
requirements on raising known factors/other factors in the Antidumping, Subsidies,
and Safeguards Agreements. Dumping, subsidy or increased imports occupy cen-
trality in injury and causality only because such factors are statutory causes. Yet
there is a need to identify the non-apparent or non-obvious causes. WTO members
can also include separate sections in their antidumping/subsidies/safeguard ques-
tionnaire to gather information on the existence of various non-listed causal factors.
Calling expert witnesses is another way of seeking information on the reasons for
injury to the domestic industry and their possible impacts. Identification and
explanation of the various known causal factors by in itself could be a good
insurance against the abusive use of trade remedy instruments. However, a long
lasting solution could be found only if more relaxed standards of causation are
introduced, the details of which will be further examined in the upcoming chapters.
Appendix 113

Appendix

Dispute Dispute No. Discussion of listed and unlisted known factors in

WTO disputes
Antidumping agreement
1. Thailand—H-Beam (Panel) 122 Art. 3.5 Known factors
• Increase in imports from Poland (the complainant)
• Actual and potential decline in productivity
• Obsolete technological development
Other known factors (7.268)
• World-wide demand for H-Beams (including export
markets);
• Consumption patterns (including the general
economic environment and local demand);
• Potential trade restrictive practices of and
competition b/w domestic and foreign producers;
• Influence of non-Polish imports;
• Nature of Siam Yamato Steel Co. Ltd. (“SYS”) (the
sole Thai producer of H-beams) entry into the
H-Beam Market
2. EC—Bed Linen, (Panel) 141 Art. 3.5 Known factors
Imports from non-subject countries (Para. 100, First
Submission of India)
Other known factors (Paras. 102–108, First
Submission of India)
• Increase in raw cotton prices
• Developments in Community Consumption and
demand
• Competition from non-complainant producers in
the Community
3. EC—Bed Linen, Article 141 Art. 3.5 Known factors
21.5 (Panel) Increase in imports from third countries (6.229)
Other known factors (6.218)
• Prices of Bed Linen were not able to keep pace with
inflation in prices of consumer goods
• An increase in the cost of raw cotton. (6.223)
4. U.S.—Hot-Rolled Steel 184 Other known factors (7.237–7.257)
from Japan (Panel) • An increase in the capacity of the mini-mills in the
U.S. (7.240);
• The effects of a strike at General Motors (7.242);
• The decline in demand for hot-rolled steel from the
pipe industry (7.245); and
• The effects of prices of non-dumped imports
(7.247)
(continued)
114 3 Injury and Causation in Trade Remedy Investigations …

(continued)
Dispute Dispute No. Discussion of listed and unlisted known factors in
WTO disputes
5. Egypt—Rebar (Panel) 211 Other known factors (7.108)
• The dramatic capacity expansion at the two major
Egyptian rebar producers and its likely temporary
effects on their cost structures;
• Effects of intra-industry competition;
• Alleged sharp contraction in demand for raw
material (Falling prices for steel scrap, the primary
raw material input at Al Ezz);
• A sharp contraction in demand in January 1999, the
very month in which the prices of the rebar fell, and
• The effect of comparably prices, fairly traded
imports
6. EC—Pipe Fittings (Panel) 219 Other known factors (7.350)
• EC producers’ poor export performance;
• Imports from the countries not subject to the
investigation;
• Outsourcing;
• Rationalization efforts (restructuring efforts of the
industry in 1995);
• Substitution of the product concerned; and
• The difference in the cost of production and the
market perception between the two variants of the
product concerned
7. Mexico—Steel Pipes and 331 Art 3.5 known factors (7.215)
Tubes AD Duties (Panel) • Volume and prices of imports not sold at dumping
prices;
• Contraction in demand or changes in the patter of
consumption;
• Trade restrictive practices of and competition
between the foreign and domestic producers;
• Developments in technology by the domestic
industry;
• Export performance and productivity of domestic
industry.
• Decline in exports
Other Known factors (7.351)
• Increase in operating costs
8. Japan—DRAMS 336 • Did not raise any factor
9. EC—Salmon AD Measure 337 Other Known factors (7.647)
(Panel) • EC producers’ increased cost of production
• Imports of Salmon from the United States and
Canada
10. EC—Fasteners (Panel) 397 Art 3..5 known factors (7.433)
• Export performance of the domestic industry
Other known factors
• Increased raw material prices (7.430)
(continued)
Appendix 115

(continued)
Dispute Dispute No. Discussion of listed and unlisted known factors in
WTO disputes
11. EU—Footwear (China) 405 Art 3.5 Known Factors (7.492)
(Panel) • Export performance of the EU industry;
Other known factors (7.538)
• Imports from other third country;
• Lifting of the quota;
• Structural inefficiencies of the EU industry and high
labour costs;
• Outsourcing.
• Non-tariff barriers
• Exchange rate fluctuations;
12. China—GOES (Panel) 414 Other known factors (7.263)
• Domestic industry’s capacity and production; and
• Low demand and increase in inventories more than
the subject imports.
• Value and volume of non-subject imports
• excess capacity
13. China—X-Ray 425 Other known factors
Equipment (Panel) • Global Economic Crisis 2008 (7.268);
• Nuctech’s start-up situation (7.292);
• Nuctech’s aggressive pricing policy (7.287);
• Nuctech’s aggressive business expansion (7.281);
and
• Fair competition b/w Nuctech and other producers
(7.272)
14. China—Autos 440 Other known factors
(US) (Panel) • Decline in apparent consumption in China (7.347);
• Increase in average wages coupled with decline in
industry productivity (7.352); and
• Increase in sales tax (7.358)
15. China—HP-SST (Japan) 454 Other known factors
(Panel) • Decline in domestic demand (7.173);
• Expansion of domestic production
16. China—HP-SST (EU) 460 Other Known factors (7.169, 7.196, 7.205)
• Decline in apparent consumption
• Increase in domestic production capacity
Subsidies and countervailing measures agreement
17. U.S.—Lumber ITC 277 Other known factors (7.128)
Investigation (Panel) • Increase in non-subject imports;
• Other substitutes for lumber; and
• Cyclical demand and housing construction cycle
18. U.S.—Lumber ITC 277 Other known factors (5.13)
Investigation (21.5 Panel) • Excess supply from the domestic industry
• Third country or non-subject imports
• Integration of North American Softwood Lumber
Industry
• Importation relative to demand
• Engineered wood products and other substitute
products
• Insufficient timber supplies
(continued)
116 3 Injury and Causation in Trade Remedy Investigations …

(continued)
Dispute Dispute No. Discussion of listed and unlisted known factors in
WTO disputes
19. U.S.—DRAMS CVD 296 Other known factors (7.355)
Investigation (Panel) • Increase in non-subject imports;
• Capacity increases by other suppliers; and
• Decline in demand and technological and
production difficulties admitted by Micron
20. EC—DRAMS (Panel) 299 Other known factors (7.436)
• Economic downturn in EC market;
• Overcapacity; and
• Increase in non-subsidized imports.
21. Mexico—Olive Oil CVD 341 Other known factors (7.307)
(Panel) • Loss of the previous distribution network;
• Loss of the ability to use a leading Spanish brand
name on its olive oil;
• Loss of the guaranty of supply that the market
demanded;
• Lack of a guaranty of a product of the quality
demanded by purchasers of olive oil;
• Status prior to 2002, of the relationship between
Fortuny’s predecessor and its distributor which was
importing increasing amounts from the European
Communities; and
• High level of Fortuny’s costs
22. U.S.—Carbon Steel 436 Other known factors (7.368)
(India) (Panel) • Effect of non-subsidized dumped imports;
• Reduced demand for line pipe as a result of reduced
oil and gas drilling;
• Competition among domestic producers of line
pipe;
• A decline in demand in export markets;
• Shift from oil country tubular goods production to
line pipe production; and
• Decline in raw material costs
Safeguards agreement
23. Korea—Dairy Safeguards 98 Other known factors
(Panel) • Import price of basic materials for cheese (7.62);
• Low production of cheese affecting the production
and consumption pattern of raw milk in Korea;
(7.94)
• Domestic regulation affecting the sales of raw milk.
(7.95)
• Increased imports (7.63);
• High inventory (7.64);
• Market share captured by third country imports
(7.65);
• Increase in the level of dairy sales (7.66);
• Decrease in production of the domestic dairy
products (7.67);
(continued)
Appendix 117

(continued)
Dispute Dispute No. Discussion of listed and unlisted known factors in
WTO disputes
24. Argentina—Footwear 121 Other known factors (8.265)
Safeguards (Panel) • The tequila effect i.e. the domestic recession in
Argentina brought on by the collapse of the Mexico
peso;
• Imports under the Industrial Specialization regime;
and
• Imports from Mercosur countries
25. U.S.—Wheat Gluten 166 Other known factors (8.119)
Safeguards (Panel) • The effect of wheat protein premiums on the wheat
protein price in the US market;
• Co-product markets;
• Increased domestic capacity;
• Increase in input prices; and
• Imports by US producers and capacity utilization
26. U.S.—Line Pipe 202 Other known factors (7.283)
Safeguards (Panel) • Decline in line pipe demand resulting from reduced
oil and natural gas drilling and production
activities;
• Competition among domestic producers;
• A decline in export markets in 1998 and 1999;
• A shift from OCTG production to line pipe
production; and
• A decline in raw material costs
27. Chile- Agricultural 207 Other known factors (6.39)
Products • Chilean wheat industry was heavily affected by
drought
28. Argentina—Peach 238 Other known factors (7.97)
Safeguards (Panel) • Capacity utilization of the domestic industry;
• Productivity of the domestic industry; and
• Increase in employment situation in the domestic
industry
29. U.S.—Cotton Subsidies, 267 Other known factors (7.50)
Article 21.5 (Panel) • Substantial proportionate influence of the US on the
world market for upland cotton;
• Mandatory and price contingent nature and revenue
stabilizing effect of marketing loan;
• Counter-cyclical payments;
• The order of magnitude of the marketing loan;
• Counter-cyclical subsidies; and
• Significant gap between the total costs of
production of the US upland cotton producers and
their market revenue
(continued)
118 3 Injury and Causation in Trade Remedy Investigations …

(continued)
Dispute Dispute No. Discussion of listed and unlisted known factors in
WTO disputes
30. U.S.—Lamb Safeguards 177, 178 Other known factors (7.263)
(Panel) • The termination of US- Wool Act payments;
• Competition from other meat products;
• Increased input costs;
• Overfeeding of lambs; and
• Alleged concentration in the packer segment of the
industry, etc.
31. U.S.—Steel Safeguards 248, 249, 251, Other known factors (10.561)
(Panel) 252, 253, 254, • Increases in energy costs;
258, 259 • Declining domestic demand;
• Competition among domestic producers;
• Domestic capacity increases;
32. US- Tyres (Panel) 399 Other known factors (7.3)
• Domestic industry’s business strategy
• Voluntary plant closures by U.S. producers as part
of long terms strategy
• Changes in demand
• Subject imports by U.S. producers
• 2008 recession
33. Dominican Republic— 415, 416, 417, 418 Other known factors (7.311)
Bag and Fabric Safeguards • Changes in the levels of sales;
(Panel) • Productivity of the domestic industry;
• Increase in domestic capacity;
• Increase in Capacity utilization; and
• Favourable employment in the domestic industry
Chapter 4
Injury and Causation in Antidumping
Investigations: Experience of India
and Other Jurisdictions

Abstract This chapter provides a detailed examination of the practices of the key
users of antidumping instruments in conducting injury and causation by treating
India as the prototype of a major developing country user. Central to this enquiry is
the need for an analysis of the key practices and developments among the tradi-
tional and new users of antidumping. This chapter enquires whether the injury and
causation assessment among the major users is carried out in accordance with the
requirements established by the WTO rules and the observations of the panels and
the Appellate Body. In addition, the following analysis has attempted to find out
whether any of the key users is resorting to sophisticated economics or quantitative
tools while assessing injury and causation.

A Introduction

The previous chapters examined how trade remedy practices of industrialized

nations have evolved over time. Chapter 2, in specific, evaluated the role of trade
remedies as an adjunct to industrial policy and how the domestic legislations of
some of the traditional users retained trade remedy as a flexible policy tool. It may
be pertinent to recall that until the launch of the Uruguay Round, just four juris-
dictions—the United States, European Union, Canada, and Australia—had imple-
mented more than 90 percent of antidumping actions.1 However, the number of
trade remedy actions has increased manifold in the last few decades, especially after
the establishment of the World Trade Organization (WTO) in 1995. The United
States is no longer the leader in antidumping investigations, and the European
Union does not figure in the list of the top three users. Emerging economies such as
Brazil, China and India occupy the leading positions in using trade remedies now.
Even other developing countries such as Argentina, Mexico and Turkey have
catapulted themselves as some of the new top users.

1
Maurizio Zanardi, Antidumping: What are the Numbers to Discuss at Doha? 27 (3) THE WORLD
ECONOMY 403 (2003).

© Springer Science+Business Media Singapore 2016 119

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_4
120 4 Injury and Causation in Antidumping Investigations …

The challenges of trade remedy disputes at the WTO, however, present a dif-
ferent picture. The trade remedy practices of the United States and the European
Union have been the subject of several WTO disputes in the last two decades. The
United States was involved in more than sixty WTO disputes, whereas the
European Union (formerly EC) was involved in nearly 30 disputes. The injury and
causation findings by both these jurisdictions have been challenged in several
disputes and the WTO panels and the Appellate Body had occasion to comment on
the trade remedy practices and the methodologies applied by these jurisdictions.
The details of these WTO challenges have already been exhaustively examined in
Chap. 3. However, the trade remedy practices of developing countries and
emerging economies are yet to be seriously tested. Among the developing countries
only Argentina, Mexico and China have been involved in WTO trade remedy
disputes on multiple occasions. While 7 cases were filed against Argentina, 5 cases
were filed against Mexico and 11 cases against China.2 Some of the disputes against
Mexico have risen in the context of trade liberalization under NAFTA whereas the
trade remedy disputes under Argentina have been initiated in the context of the
MERCOSUR.3 In other words, those disputes were bi-national disputes centered on
the regional trade agreement (RTA), but brought to the WTO under the WTO
Dispute Settlement Understanding (DSU). The trade remedy investigations against
China have been mounted in the context of China’s rising export competitiveness
and its status as the world’s largest merchandise exporter. Otherwise, there have
been relatively few challenges to the trade remedy practices of developing and
emerging economies.
India’s recent use of anti-dumping mechanism has received some attraction from
developed country scholars.4 As of 2014, India is one of the largest users of
antidumping actions in the world. From the inception of the WTO until December
2014, India accounted for 740 of the 4757 anti-dumping initiations adopted by
Members, i.e., 15.6 % of the total.5 Measured by the number of anti-dumping
measures implemented between 1995 and 2014, India ranks first at 740 and China
ranks eighth at 218—ahead of all other countries, developed or developing.6 It is
evident that India used antidumping to slow down or limit the adverse impact of
globalization on Indian corporations (Table 1).

2
World Trade Organization, Dispute settlement Gateway, http://www.wto.org/english/tratop_e/
dispu_e/dispu_e.htm (last visited on October 12., 2014).
3
Common Market of the Southern Hemisphere.
4
See M. Wu, Antidumping in Asia’s Emerging Giants, 53(1) HARVARD INTERNATIONAL LAW
JOURNAL 102 (2012).
5
World Trade Organization, Anti-Dumping Initiations: By Exporting Country 01/01/1995–
31/12/2013, http://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByExpCty.pdf.
6
World Trade Organization, Anti-Dumping Initiations: By Reporting Member 01/01/1995–
31/12/2013, http://www.wto.org/english/tratop_e/adp_e/AD_InitiationsByRepMem.pdf.
A Introduction 121

Table 1 Antidumping Year Antidumping Final measures

Actions by India between
1995–2014 1995 6 7
1996 21 2
1997 13 8
1998 28 22
1999 64 23
2000 41 55
2001 79 38
2002 81 64
2003 46 52
2004 21 29
2005 28 18
2006 31 16
2007 47 24
2008 55 31
2009 31 30
2010 41 32
2011 19 26
2012 21 30
2013 29 12
2014 38 15
Total 740 534
Source WTO

In the light of India’s status as the leading anti-dumping user among the WTO
members in the last decade-and-half, this chapter seeks to examine India’s injury
and causation determination process and investigative methodologies. The larger
objective is to examine the issues faced by one of the leading developing country
users of trade remedy instruments. By looking at a sample of cases decided in the
last two decades, this chapter examines whether India has been able to implement
and domestically enforce the exacting WTO standards in injury and causation
determination. As the WTO AD Agreement will have to carefully balance the
concerns of members that are at varying levels of development, imposition of
rigorous standards will have too little political appeal. At the same time, there is a
need to ensure that such mechanisms are not used to derive undue protection in a
global trading regime. In the above context, Sect. B of this chapter examines the
rise in Indian antidumping actions; Sects. C and D provide a detailed analysis of the
Indian antidumping practices on injury and causation. Section E provides a brief
analysis of the injury and causation practices of the European Union, Australia,
Brazil, China, Argentina, Mexico and South Africa and the United States. Section F
summarises the conclusions and findings..
122 4 Injury and Causation in Antidumping Investigations …

B Rise of Antidumping in India: Legal Framework

and Institutions

1 India, Antidumping and the Uruguay Round

As a founding Member of the GATT, India was indeed exposed to the complexities
and the political economy considerations of using trade remedy measures. However,
India did not introduce a formal legislation authorizing the use of trade remedies until
several decades later. The Indian economy remained a relatively closed market for
foreign products following its independence in 1947. During the post-independence
period, domestic manufacturers continued to benefit from the licensing regime, high
tariffs, and foreign exchange policies that impaired competition. India maintained
quantitative restrictions on imports of nearly one-third of its tariff lines during the
1980s and 1990s citing balance of payment reasons. At the time of the 1991 eco-
nomic reforms, the Indian import-weighted average tariff was 87 %; the simple
average was 128 %, and some tariffs were in excess of 300 %. There were massive
reductions in tariffs in the post-1991 reform period, but the import duties still
remained very high. In view of the high protection that the Indian industry received,
there was hardly any need for import relief laws in India. Furthermore, to quote
Arvind Panagariya, there was a “benign neglect” of trade policy during this period.7
More than three decades after assuming various tariff obligations under the
GATT, India finally incorporated legislative provisions in 1982 in the Customs
Tariff Act, 1975. The legal framework for conduct of trade remedy investigations
was established in 1982 through an amendment to the Customs Tariff Act of 1975.
Sections 9A, 9AA, 9B and 9C were inserted in the Customs Tariff Act to govern
various aspects of antidumping, countervailing duties and safeguard actions. Even
after enactment of these legislative provisions, the law languished in the statute
book for another decade. When India signed the Marrakesh Agreement establishing
the WTO, India undertook further amendments to the Customs Tariff Act to
incorporate the obligations under the Uruguay Round. In 1995, India also intro-
duced the Customs Tariff (Identification, Assessment and Collection of
Antidumping Duty on Dumped Articles and for Determination of Injury) Rules,
1995 for implementing the WTO Antidumping Agreement.
The rise of antidumping actions in India was rather unexpected considering
India’s slow embrace of this instrument in the context of the GATT. However,
some studies indicate that antidumping remedies came into the center stage partly in
response to the large tariff cuts undertaken in certain sectors of the economy. For
example, Bown and Tovar find that the products that sought antidumping protection
in the post reform period appeared to have received, on an average, larger tariff cuts
during decade of the 1990s.8

7
ARVIND PANAGARIYA, INDIA: THE EMERGING GIANT, 29 (2008).
8
Chad P. Bown and P. Tovar, Trade Liberalization, Antidumping and Safeguards: Evidence from
India’s Tariff Reform, 96(1) JOURNAL OF DEVELOPMENT ECONOMICS 115, 117(2011).
B Rise of Antidumping in India … 123

Fig. 1 Trends in India’s Antidumping Actions. Source WTO

Antidumping measures, despite attracting a protectionist tag in other developed

countries did not suffer from any such public policy opposition in India. For
example, the Supreme Court stated in Reliance Industries v. Designated
Authorities9 that antidumping was one of the mechanisms for advancing fair
competition in India. As the Supreme Court of India noted, “[t]he industries which
had been built up after independence with great difficulties must not be allowed to
be destroyed by unfair competition”.10 The High Court of Madras also expressed
the view that antidumping law being an economic legislation should be construed
with the intention of developing the domestic industry.11
The sentiments echoed in the above appellate court decisions were apparently the
leitmotif of the Indian antidumping enforcement. The antidumping actions were filed
when the traditional forms of protection slowly waned. India initiated its first
antidumping investigation in 1992 against the imports of Polyvinyl Chloride
(PVC) in 1992.12 The investigation was launched against imports from Brazil,
Mexico, Korea and the United States. After a slow start, the number of actions
peaked in the late 1990s/early 2000s [see Fig. 1]. A bulk of the actions has been
concentrated in the chemicals and petrochemicals, pharmaceuticals, steel and the
textiles sectors.13 India’s antidumping actions are increasingly against countries such
as China, Republic of Korea (South Korea), Malaysia, Taiwan and other ASEAN

9
2006 (10) SCC 368.
10
Id.
11
Nirma Limited v. Saint Gobain Glass India Limited, 2012 (281) ELT 321 (CESTAT, Madras).
12
V. Lakshmi Kumaran, The 10 Major Problems with the Antidumping Instrument in India, 39
(1) JOURNAL OF WORLD TRADE 115 (2005).
13
See Wu, Antidumping in Asia’s Emerging Giants, supra note 4, at 32, 79.
124 4 Injury and Causation in Antidumping Investigations …

countries.14 The number of antidumping actions against developed countries such as

the United States and the European Union has declined in the last few years.

2 Role of the DGAD and Its Functioning

An understanding of the anti-dumping mechanism will not be complete without an

explanation of the institutional framework available for conducting such actions.
The anti-dumping actions in India are conducted by the Directorate General of
Antidumping and Allied Duties (DGAD) in the Department of Commerce.
The DGAD is also vested with the powers of initiating and conducting CVD
investigations. India’s anti-dumping process has a single track determination of
injury and dumping quite similar to the EU system. The DGAD, however, does not
directly administer or implement the anti-dumping measures. The DGAD recom-
mends anti-dumping measures including the rate at which the duties have to be
imposed. Based on the recommendations of the DGAD, the measures are imple-
mented by the Department of Revenue in the Ministry of Finance. The Department
of Revenue has certain discretion in not giving effect to the recommendations of the
DGAD.15 In many ways, the functioning of the DGAD is modelled along the lines
of the DG Trade in the European Commission.16
The conventional and the widely accepted basis for initiation of anti-dumping
investigation in India is through domestic industry applications. The DGAD initiates
anti-dumping investigations upon written application by or on behalf of domestic
industry. In certain cases, the DGAD initiates actions suo motu provided there is a
justification to launch an investigation. The applications received from the domestic
industry are scrutinized by the DGAD to ensure that they are adequately documented
and provide sufficient and accurate information on dumping, injury and causal link.
If the evidence is not adequate, the DGAD can issue a “deficiency letter”.
For successful initiation of investigations, the domestic industry applicants must
meet the domestic industry standing requirements. Rule 24(2)(i) of the Indian
Antidumping Rules stipulates that the domestic industry complainants must account
for at least 25 % of total domestic production of the like product or article. In
addition, the domestic producers expressly supporting the petition must account for
more than 50 % of the total production of the like article by those expressly

14
Computations based on the WTO statistics. See World Trade Organization, Anti-dumping
Measures: Reporting Member vs. Exporting Country 01/01/1995–31/12/2010 [hereinafter WTO
Statistics on AD Measures by Reporting Member v. Exporting Country] (last visited on November
1, 2014).
15
For example, the Ministry of Finance took a decision not to implement the final measures as by
the Department of Commerce.
16
All antidumping complaints in the EU are investigated by a single entity, the Directorate General
Trade (“DG Trade”) in the European Commission. For more information about its handling of
antidumping complaints, http://ec.europa.eu/trade/.
B Rise of Antidumping in India … 125

supporting and opposing the application. In line with the WTO Antidumping
Agreement, dumping alone is not sufficient to claim relief. In addition to dumping,
injury in the sense of material injury or material retardation in the setting up of the
domestic industry will also have to be established.
For a petition to proceed, the DGAD must verify the accuracy and adequacy of
the evidence provided with respect to dumping, injury, and a causal link. In
addition, other injury causes have to be investigated so that they are not attributed to
dumping. As dumping practices happen outside the country, collection of reliable
and verifiable data regarding the three key elements of an anti-dumping investi-
gation is not often easy. Perforce, the quality of evidence available to the DGAD at
the time of initiation of the investigation with respect to these three elements can
never match the quality of data that subsequently flows in. Nonetheless, there is an
obligation on the domestic industry petitioners to provide all ‘reasonably available’
information at the time of the investigation. For example, while reviewing an
anti-dumping investigation, the High Court of Rajasthan quoted a WTO panel in
Guatemala-Cements II in support of the evidentiary thresholds.17 The WTO panel
in Guatemala-Cement II has set the widely quoted standard:
An antidumping investigation is a process where certainty on the existence of all the
elements necessary in order to adopt a measure is reached gradually as the investigations
moves forward. However, the evidence must be such that an unbiased and objective
investigating authority could determine that there was sufficient evidence of dumping… to
justify an investigation.18

Before examining the legal framework and the conduct of investigations, it may
be useful to examine the timelines involved in the conduct of an anti-dumping
investigation in India. The initiation of anti-dumping investigations is made through
public notices issued in the public gazettes. The DGAD informs the government of
the exporting country, and issues a public notice with details of the initiation and
the time-limits for interested parties to provide comments.
In an antidumping investigation, each exporter or producer can request for a
separate margin of dumping. Under the Indian law, the Government is obliged to
restrict the anti-dumping duty to the lower of the margin of dumping or the margin
of injury, the details of which will be discussed later. Anti-dumping duties may
remain in place for 5 years unless revoked earlier or extended by the DGAD.
A number of antidumping investigations do not reach final finding and are
terminated. An investigation may be terminated by the DGAD, inter alia, on
grounds of lack of injury or causal link. Cases with very little evidence of injury and
causal link may not last their entire course and could be terminated, even based on
the request of the domestic industry.

17
Rajasthan Textiles Mills Association v. Designated Authority. 2002 (149) E.L.T. 45 (High Court
of Rajasthan).
18
Panel Report, Guatemala – Definitive Anti-Dumping Measure on Grey Portland Cement from
Mexico, ¶ 8.35 WT/DS156/R (October 24, 2000).
126 4 Injury and Causation in Antidumping Investigations …

In terms of Section 9C of India’s Customs Tariff Act, 1975 as amended, appeals

against the decisions of the DGAD (also referred to as “Designated Authority’)
regarding the existence, degree and effect of any dumping of an article, lies with the
Customs, Excise and Service Tax Appellate Tribunal (CESTAT; known as CEGAT
earlier) in the first instance. Only the final findings and reviews thereof, and the
notification of the Department of Revenue imposing definitive duties can be
appealed by an interested party before the CESTAT.19 The CESTAT can examine
all substantive and procedural issues including determination of domestic industry,
standing, like article, normal value, export price, dumping margin, material injury,
injury margin, causal link, etc. The CESTAT decision may be appealed to the
Supreme Court under Article 136 of the Constitution of India.

C Empirics of Injury and Causation Examination in India

The principles for determination of injury are provided under Annexure II of the
Indian Antidumping Rules. The word “injury” defined in the operative part of
Annexure II would include injury and threat of material injury to the domestic
industry as well as material retardation of the establishment of such industry.
Annexure II has listed most of the injury factors enumerated in Article 3.4 of the
WTO Anti-Dumping Agreement. The factors include: natural20 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, and the ability to raise capital investments.
The injury is determined in accordance with Rule 11 of India’s Antidumping
Rules and the applicable principles are laid down in Annexure II of the Customs
Tariff (Antidumping Duty) Rules 1995.
The Designated Authority while determining the injury or threat of material injury to
domestic industry or material retardation of the establishment of such an industry here-
inafter referred to as “injury” and casual link between dumped imports and such injury,
shall inter alia, take following principles under consideration:
(i) A determination of injury shall involve an objective examination of both (a) the volume
of the dumped imports and the effect of the dumped imports on prices in the domestic
market for the like article and (b) the consequent impact of these imports on domestic
producers of such products.
(ii) While examining the volume of dumped imports, the said authority shall consider
whether there has been a significant increase in the dumped imports, either in absolute
terms or relative to production or consumption in India. With regard to the effect of the

19
An interested party would include an importer or exporter or domestic industry or any interested
person who had submitted representation to the Designated Authority in the course of
investigation.
20
The language used in the ADA is ‘actual’. It is not entirely certain what the term ‘natural’ means.
C Empirics of Injury and Causation Examination in India 127

dumped imports, on prices as referred to in Sub-rule (2) of Rule 18 the Designated

Authority shall consider whether there has been a significant price undercutting by the
dumped imports as compared with the price of like product in India, or whether the effect of
such imports is otherwise to depress prices to a significant degree or prevent price increase
which otherwise would have occurred, to a significant degree.21

Neither the Indian Antidumping legislation nor the WTO Anti-Dumping

Agreement provides guidance on the period to be selected for injury examination.
A recommendation of the WTO Committee on Anti-Dumping Practices provides
that injury should be preferably be analyzed over a period of at least 3 years in order
to detect the trends in volume, market shares and other economic factors.22 The
purpose is to examine the trends rather than the differences between the beginning
and the end of the investigation period for a comprehensive injury examination.

1 Examination of Volume and Price Effects

According to the practice adopted by the DGAD, the injury is specifically analyzed
in terms of the ‘volume effect’ and ‘price effect’ of the dumped imports. As
examined in Chap. 3 and this chapter of this study, Article 3.2 of the Anti-Dumping
Agreement (as also Article 15.2 of the Subsidies and Countervailing Measures
Agreement) places an obligation on the investigating authorities to consider whe-
ther there is a significant increase in the volume of dumped imports either in
absolute terms or relative to domestic production or consumption.
According to the practice followed in India, the DGAD focuses on the quantity
of dumped imports and the effect it has on the market share of the domestic
industry. The price effect, on the other hand, examines the domestic sales realiza-
tion of the petitioning industry and the import prices. The price effect undertakes a
temporal correlation between the trends in import prices and the trends in the
indicators reflecting the conduct of the domestic industry. The volume and price
effects have high probative value in establishing causal link in India.23
The DGAD conducts an enquiry regarding the effect of dumped imports on
prices through the traditional price depression and price suppression analysis. First,
the DGAD examines whether there has been a significant price undercutting by the
dumped imports as compared with the price of the like domestic product in India.

21
Customs Tariff (Identification, Assessment, and Collection of Antidumping Duty on Dumped
Articles and for Determination of Injury) Rules, 1995, Gazette of India, section II(3)(i) (January 1,
1995) [hereinafter Indian Antidumping Rules].
22
World Trade Organization, ADP Committee, Recommendations for Data Collection for
Antidumping Investigations, ¶ 7.287 G/ADP/6 (May 16, 2000). A number of panels have referred
to this recommendation, see Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry
from Brazil (April 22, 2003).
23
FAQ on Agreement on Antidumping, Centre for WTO Studies (CWS) Indian Institute of Foreign
Trade (2011) available at http://wtocentre.iift.ac.in/FAQ/english/Anti-dumping.pdf.
128 4 Injury and Causation in Antidumping Investigations …

Second, the DGAD examines whether the effects of such imports are otherwise to
depress prices to a significant degree or to prevent price increases. Price depression
is stated to take place under the Indian practice when the domestic industry’s price
levels are lower than the price levels during the previous period. Price suppression
takes place when the increase in cost to make and sell the product is more than the
increase in selling price of the domestic industry like product. Chapter 3 of this
study examined the details of price undercutting and price underselling analysis in
the context of WTO dispute settlement.
In order to conduct the price undercutting analysis, the DGAD computes the net
sales realization. Net sales realization (NSR) is the selling price excluding taxes,
duties, rebates, commission, etc. A price comparison for the product concerned is
made between the landed value of imported product from subject countries and the
NSR of the domestic industry. Landed value of imports is the assessable value of
imports under the Customs Act and the applicable customs duties.24 Further, a 1
percent handling charge is added to the landed value.
The DGAD also routinely uses the price underselling analysis in the injury and
causation analysis. ‘Underselling’ is a term used in jurisdictions such as India and
the E.U. to refer to the amount by which the dumped imports are at prices below the
level necessary to eliminate injury. In India, the difference between fair selling price
or the non-injurious price (NIP) and the landed value of imports is called the price
underselling margin.25 Price underselling can lead to price suppression. Price
suppression takes place, when the increase in cost to make and sell is more than the
increase in selling price of the domestic industry. In India, the NIP is determined on
the basis of the weighted average cost of production of the domestic industry for the
period of investigation (POI).26
The DGAD also takes into account the normated consumption norms and the raw
material and utilities cost, actual expenses relating to overheads, capacity utilization,
etc., to determine the cost of production. In addition, the DGAD makes provision for
a certain amount for the return on capital employed (ROCE). The NIP is the price
which the domestic industry would have charged under normal circumstances in the
market during the period of investigation, or stated in other words, would have been
the price at which the domestic industry would have been able to sell the product
unaffected by the dumped imports. At the NIP level the domestic industry would be
able to recover the cost of production, and a reasonable return on the capital
employed after taking into account the consumption norms and practices of the
domestic industry, the cost of raw materials, utilities and capacity utilization. NIP is
often a useful benchmark for constructing the counterfactual price, i.e., a price which
is not affected by dumped imports. NIP in certain other jurisdictions such as

24
“Landed value” is the assessable value as determined under the Customs Act, 1962 (52 of 1962)
and includes all duties of customs except duties levied under sections 3, 8B, 9 and 9A of the
Customs Tariff Act.
25
See infra Section C. 2 on Lesser Duty Rule for a detailed discussion.
26
See infra Section C.2 on Lesser Duty Rule for more details.
C Empirics of Injury and Causation Examination in India 129

Australia is referred to as the unsuppressed selling price, which as the name suggests,
allows the domestic industry to operate as if dumping had not taken place.
The DGAD also cumulates the imports from more than one country if it is
determined that (a) the margin of dumping established in relation to imports from
each country is more than 2 % expressed as percentage of export price and the
volume of the imports from each country is 3 % of the imports of like article, and
(b) a cumulative assessment of the effect of imports is appropriate in light of the
conditions of competition between the imported article and the like domestic
article.27

2 Lesser Duty Rule in India

According to the WTO Anti-Dumping Agreement, once dumping and injury are
established, an anti-dumping duty equal to the margin of dumping can be imposed.
However, certain jurisdictions such as India, the European Union and Australia
apply the lesser duty rule. According to the lesser duty rule, the antidumping duty is
to be imposed in a lesser amount if such amount is sufficient to remove the injury to
the domestic industry. Interestingly, the WTO Anti-Dumping Agreement has pro-
vided a choice between the two approaches.28 The lesser duty rule is applied
individually for each cooperating exporter.
The DGAD also calculates the NIP for the purpose of application of the lesser
duty rule. The lesser duty rule operationalizes Article 9.1 of the Anti-Dumping
Agreement. In practice, the lesser duty rule is based on the injury margin which is
the difference between the ex-factory NIP and the landed value of the imported
goods. In such a scenario, the calculation of the NIP serves the dual purpose of
examining the price suppression or depression as well as the applicable
antidumping duties.
The calculation of non-injurious price has a direct bearing in a number of
anti-dumping investigations held in India. For example in the case of the anti-dumping
proceedings on imports of purified terephthalic acid (PTA I) from Spain, Japan and
Malaysia, no anti-dumping duty was recommended in respect of imports from Japan
and Malaysia on the ground that the imports from these countries were above the
non-injurious price. The Designated Authority at the same time had arrived at the
margins of dumping for the manufacturers/exporters from Japan between 29 % and
34.26 %; for Malaysia at 68 %, and for Spain at 15 %. However, the Designated
Authority held that there was no causal link between the imports from Japan and
Malaysia. The Authority noted in the disclosure statement as follows:

27
Antidumping Rules, Para III of Annexure II.
28
WTO Antidumping Agreement, Art. 9.1. The text says that it is ‘desirable that the duty be less
than the margin of dumping, if such lesser duty would be adequate to remove the injury to the
domestic industry.
130 4 Injury and Causation in Antidumping Investigations …

In the present proceedings the Authority does establish injury to the domestic industry on
account of decline in the sales realization and profitability. However, its causal link with
dumped imports is not established because the landed price of imports is found to be higher
than the non-injurious price resulting in negative injury margin and the selling-price of the
petitioner is found to be lower than the landed price. Since the landed prices of the imports
are found to be higher than the sales realization there is no evidence of price undercutting or
price depression resulting from the dumped imports.

Based on the finding, the Designated Authority imposed antidumping duties

only against Spain.
The computation of the non-injurious price in India has been a highly contentious
issue as the domestic industry would seek a higher non-injurious price and the
exporters and importers would contest the basis for such a determination. For
example, in the PTA-I case, one of the issues was whether the Designated Authority
should use the actual price of raw material, utilities, etc., for the determination of the
non-injurious price or whether such determination should be based on market price.
For a backward integrated producer, the use of actual cost of transfer, i.e., the chain
cost would be disadvantageous. The Appellant argued that it had drawn electricity
from the power grid and had also utilized power from its captive power plants.
In PTA-I, the Designated Authority had worked out the cost of electricity taking
into account the actual cost. In the Appeal, the CESTAT held that the Designated
Authority was justified in using the actual cost of raw materials and utilities and
observed that the actual cost is a more reliable basis for injury analysis. The
Designated Authority also took the optimum capacity utilization (which is in excess
of 100 %) in a block of 3 years for the apportionment of the fixed expenses per unit.
The decision of CESTAT in PTA-I, was appealed before the Supreme Court of
India. The Supreme Court rejected the approach of the Designated Authority in
using the optimal level of capacity utilization of the domestic industry. The
Supreme Court noted, the “special advantages and disadvantages…domestic pro-
ducers may have as a result of captive production should be ignored….”.29 This
decision was considered to help the domestic industry in seeking a higher NIP and
consequently a higher level of protection.
The use of 22 % return capital employed for calculating the NIP is not free from
controversy. One of the widely held criticisms is that the 22 % is unusually high for
certain industries and creates an artificial risk free return to capital. It is also felt that
the ROCE would vary from industry to industry.30 In 2011, the Government of
India further amended the Custom Tariff (Identification, Assessment and Collection
of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules,
1995 to make a new set of rules of calculation of NIP. The new rules incorporated
in Annexure III are entitled Customs Tariff (Identification, Assessment and
Collection of Anti-dumping Duty on Dumped Articles and for Determination of
injury) Amendment Rules, 2011 (for short, NIP Price Rules 2011). The amendment

Reliance Industries v. Designated Authority, 2006 (10) SCC 368, ¶. 32.

29

30
Indian Spinners Association v. Designated Authority, 2004(170) E.L.T 144 (Tri- Delhi).
C Empirics of Injury and Causation Examination in India 131

has modified to some extent the law laid down by the Supreme Court of India in
Reliance Industries v. Designated Authority.31
According to the NIP Rules 2011, the cost of production has to be calculated on
the basis of:
• Cost of production based on the best utilization of raw materials by the con-
stituents of domestic industry;
• The best utilization of utilities by the constituents of domestic industry, over the
past three years period and the period of investigation;
• The best utilization of production capacities, over the past 3 years period and the
period of investigation.
The NIP Rules 2011 also provide for the calculation of a reasonable return
(pre-tax) on average capital employed for the product and includes allowances for
recovery of interest, corporate tax and profit. According to Rule 4 (ix) the average
capital employed is the sum of “net fixed assets and net working capital” which
shall be taken on the basis of average of the same as on the beginning and at the end
of the period of investigation.

(a) Comparison Benchmarks for Price Effect Analysis

Price comparisons and the level of trade used in such comparisons play a crucial
role in price effect and analysis and consequently causation analysis. In the
antidumping investigation on Poly Iso Butylene, the DGAD imposed antidumping
duties on all subject countries except the European Union (EU) although the
imports from the EU were found to be dumped. The DGAD did not establish causal
link in view of the fact that weighted average landed value of imports from the EU
was higher that the NIP for the domestic industry.32 The EU exporter contended
before the CESTAT that significant quantities of imports had entered the market
below the NIP which could have price effects. The question was whether the
DGAD should adopt a weighted average price for all the imports or should it be on
the basis of comparison between selective transactions. The Tribunal held:
Para. 18. We are unable to accept the contention that weighted average is the only per-
missible or prudent method of analysis. We may first consider the position under the Rules.
Separate Appendix lay down “Principles governing determination of normal value, export
price and margin of dumping” (Appendix I) and “Principle for determination of injury
(Appendix II). If the Rules allowed only the same principles to govern both, there would
have been no requirement for separate Appendix. The first Appendix is about the ‘deter-
mination’ of certain prices and working out of margins (dumping and injury margins)…
Appendix II deals with the determination of injury and causal link. These are assessments

31
Reliance Industries v. Designated Authority, 2006 (10) SCC 368.
32
The average landed value of imports from the EU was US $ 1000.94/MT whereas the NIP was
determined to be higher than this amount. See Kothari Sugars and Chemicals Ltd. v. Designated
Authority, 2005 (187) E.L.T 185 (CESTAT, Delhi).
132 4 Injury and Causation in Antidumping Investigations …

and, for that very reason, in the realm of opinion forming. Forming an opinion by its very
nature cannot be reduced to a mechanical process of calculations, because it involves
appreciation of data and forming of opinion based on such appreciation.33

The CESTAT rejected the contention of the DGAD and held that price effect
analysis need not be conducted on a weighted average basis. This finding reiterates
that the comparison methodologies that apply to dumping margin calculations need
not apply to price effect analysis.

D Survey of Injury and Causation in Indian Antidumping

Cases

Chapters 2 and 3 of this study examined the political economy dynamics of trade
remedies. Chapter 2 in particular examined how the public choice theory played its
role in determining the injury and causation language of antidumping and other
trade remedy legislations.
The objective of this chapter is to lay out the standards and approaches used by
the Indian antidumping agency in establishing injury and causation. As Patrick Low
noted, dumping and injury are always at the discretion of the domestic investigating
authorities.34 Especially, injury and causation findings provide a greater leeway to
trade remedy investigating agency than any other substantive aspect of the inves-
tigation. Frequent findings of injury and causal link, have often lead to the criticism
that such mechanisms are abused. For example, the Annual Economic Survey of
India of 2012, published the Department of Economic Affairs echoed this view, “[t]
hough India’s anti-dumping policy has been directed to checking genuine cases of
dumping, there is a need for some fine-tuning of its strategy to avoid unnecessary
international criticism”.35
The DGAD (including its predecessor) has initiated almost 700 antidumping cases,
out of which nearly 535 have resulted in the imposition offinal measures in the last two
decades.36 Given the volume and complexity of cases, it may not be possible to
examine the injury and causation analysis in all the investigations. Furthermore, there
is a possibility that some of the exporters might not have cooperated with the inves-
tigations. In the absence of adequate cooperation from the exporters, the investigating
authority would not have been provided with alternative and rival arguments about the
existence of other causes which may be causing injury to the domestic industry. In
light of this difficulty, this study has identified 19 cases which span the last two

33
Kothari Sugars and Chemicals Ltd. v. Designated Authority, 2005 (187) E.L.T 185 (CESTAT,
Delhi).
34
PATRICK LOW, THE GATT AND US TRADE POLICY 86 (1993).
35
INTERNATIONAL TRADE, in ANNUAL ECONOMIC SURVEY- GOVERNMENT OF INDIA 271 (2012).
36
Ministry of Commerce and Industry- India, Data on Anti-Dumping Investigations, http://
commerce.nic.in/traderemedies/Data_Anti_dumping_investigations.pdf?id=25.
D Survey of Injury and Causation in Indian Antidumping Cases 133

decades of antidumping activity (1994–2013). These cases also represent some of the
key sectors that have traditionally petitioned for antidumping protection. These cases
were categorized in two phases—Phase I and Phase II.
Phase I pertains to the 1994–2003 period, whereas Phase II pertains to the 2004–
2013 period. The criterion for the selection of these cases was whether injury or
causal link was one of the issues highlighted by at least one of the parties to the
case. In order to identify the cases, the antidumping database prepared by Chad
Brown was also consulted. In all the identified cases a finding of injury and causal
link was a bone of contention and was contested by one of the parties, particularly
by an affected exporter before the CEGAT/CESTAT or other appellate courts such
as the High Courts and the Supreme Court of India.
Again, the years 2003–2004 mark an inflection point in the history of Indian
anti-dumping enforcement. In December 2003, the European Communities (later
the European Union) challenged India’s imposition of antidumping duties on
roughly 27 products.37 Later, in January 2004, Bangladesh challenged India’s
imposition of anti-dumping duties on Lead acid batteries,38 and in October 2004
Chinese Taipei (Taiwan) challenged certain antidumping measures.39 These chal-
lenges were deftly handled by India and the WTO consultations did not culminate
in the establishment of dispute settlement panels. However, the challenges resulted
in tightening of procedural and substantive aspects of the proceedings. Therefore,
the selection of these phases is not artificial, but could provide a vantage point to
compare and contrast the methodologies used by the DGAD in the injury and
causation determination.

1 Survey of Selected Indian Antidumping Cases

The following section seeks to understand the practice of injury and causation
examination in India by evaluating the analysis undertaken in the following
antidumping investigations. The antidumping investigations examined in this
chapter are the following (Table 2):
An evaluation of the injury and causation analysis of the above listed cases
reveals certain important trends. In the initial years of implementation of trade
remedy laws, India employed antidumping actions as a ‘safety-valve’ in the wake of
lowered tariffs. The safety valve theory postulates that when the domestic industry
is severely affected by increased foreign competition resulting from the lowered

37
WTO, Dispute Settlement: India—Anti-Dumping Measures on Imports of Certain products from
the European Communities, WT/DS304, available at https://www.wto.org/english/tratop_e/dispu_
e/cases_e/ds304_e.htm (last visited May 26, 2015).
38
Requesting for Consultations, India- Antidumping Measures on Batteries from Bangladesh,
WT/DS 306 (February 2, 2004).
39
WTO, Dispute Settlement: India – Anti-Dumping Measures on Certain Products from the
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, WT/DS318 (Oct. 28, 2004).
134 4 Injury and Causation in Antidumping Investigations …

Table 2 List of Indian AD investigations in the qualitative analysis

tariff, it will enforce antidumping laws that will temporarily raise tariffs, which
could minimize or eliminate the tariff concession.40 In the case of India, the autarkic
policies adopted by the government for more than three decades after independence
shielded the industry from any import competition. In 1991, when India was
negotiating the Uruguay Round Agreements, the maximum tariff was 355 % and
the simple average applied tariff rate was 125 %. In addition to the high tariffs,
quantitative restrictions (QR) were placed on one-third of the tariff lines. The QRs
remained perhaps the most visible form of protection for the Indian industry. These
restrictions took various forms such as non-automatic licenses, imports through
canalized agencies, special import licenses (SIL), and actual user criteria. The
government imposed these restrictions on the grounds that India had unfavorable
balance of payment (BoP) conditions.41
Some of the above mentioned quantitative restrictions were not fully phased out
until April, 2001. Several studies conducted on Indian antidumping practices indicate

40
According to this theory, antidumping increases a country’s ex ante willingness to lower tariffs
and enter trade negotiations.
41
Rajesh Mehta, Removal of QRs and Impact of India’s Import, 35(19) ECONOMIC & POLITICAL
WEEKLY, 1667 (May 6, 2000).
D Survey of Injury and Causation in Indian Antidumping Cases 135

that antidumping petitions enjoyed a very high “success rate” in India during 1994–
2003.42 This finding supports the criticism that virtually any industry that considered
itself affected by foreign competition and presented a competently assembled petition
had a good chance of claiming import relief during this time.43 According to an
analysis conducted by Aradhna Aggarwal of roughly 350 antidumping cases initiated
during this period, the DGAD found justification for the imposition of antidumping
duty in all except 12 cases.44 The high success rate of antidumping actions during this
period is attributed to the use of generally ambiguous provisions in the anti-dumping
rules, which includes injury and causation.
Aggarwal found specifically three elements which resulted in the mushrooming
of antidumping actions: the indiscriminate use of constructed normal value
(CNV) methodology for calculating normal value; use of surrogate country
methodology in the cases of non-market economies (NME) such as China, Ukraine
and the former USSR countries, and; the asymmetrical dumping and injury margin
comparisons. It is also noted that the benchmarks for determination of material
injury and causation determination were extremely ambiguous, unguided and
undefined. In addition, the DGAD suo motu initiated antidumping investigations.
Such suo motu initiated cases augmented the cases which it had initiated on the
basis of properly constituted applications. To provide a few illustrations, the DGAD
initiated suo motu actions against imports of Bisphenol-A from the United States,45
sports shoes and toys from China,46 and dry batteries from China.47 The DGAD
was also perhaps one of the few anti-dumping agencies to have used the concept of
“material retardation” to impose antidumping duties.48

42
Prakash Narayanan, Anti-dumping in India—Present State and Future Prospects, 40(6) JOURNAL
OF WORLD TRADE 1081, 1088–89 (2006).
43
PATRIK LOW, TRADING FREE: THE GATT AND US TRADE POLICY 86 (1993).
44
Aradhana Aggarwal, Antidumping Law and Practice: An Indian Perspective 3 (Indian Council
for Research on International Economic Relations Working Paper No. 85, 2002).
45
Imports of Bisphenol-A from the United States of America, No. 37/ADD/IW/95 (Ministry of
Commerce, November 20, 1995) available at http://commerce.nic.in/adint_bisphenol_a_usa.htm
(notice of initiation of antidumping).
46
Imports of sport shoes (both branded and un-branded) originating in or exported from China,
No. 56/1/2000-DGAD (Ministry of Commerce and Industry, November 20, 2000) (notice of
initiation of antidumping).
47
Imports of dry batteries originating in or exported from China, No. 53/1/2000- DGAD (Ministry
of Commerce and Industry, November 11, 2000) (notice of initiation of antidumping).
48
Imports of D (-) Para Hydroxy Phenyl Glycine Methyl potassium Dane Salt (PHPG Dane
Salt originating in or exported from the China PR and Singapore ( Ministry of Commerce and
Industry, June, 2003 (final findings); Imports of D (-) Para Hydroxy Phenyl Glycine Base (PHPG
Base) originating in or exported from the European Union (Ministry of Commerce and Industry,
March, 2003) (final findings); Imports of D (-) Para Hydroxy Phenyl Glycine Methyl potassium
Dane Salt (PHPG Dane Salt originating in or exported from China and Singapore,
No. 14/23/2002 (Ministry of Commerce, June 24, 2003) (final findings); Imports of fused mag-
nesia from China PR-Final Findings (Ministry of Commerce and Industry, February, 1999) (final
Findings).
136 4 Injury and Causation in Antidumping Investigations …

Table 3 Antidumping cases terminated on the request of the Domestic Industry

S. No. Case name Initiation date Reasons for termination
1 Vinyl Acetate from Singapore and Iran 15 February Withdrawn by domestic
2002 industry
2 Butter oil from New Zealand 26 November Withdrawn by domestic
2002 industry
3 Gypsum Plaster Board originating in or 2 September Withdrawn by domestic
exported from Indonesia and Thailand. 2003 industry
4 Metallurgical Coke from Japan 14 June 2004 Withdrawn by domestic
industry
5 Compressors from China and Malaysia 13 July 2005 Withdrawn by domestic
industry
6 Vitamin B12 from China, Hong Kong and 29 October Withdrawn by domestic
Japan 2007 industry in view of changed
circumstances
7 Potassium Carbonate from US, Thailand and 23 January Withdrawn by domestic
Russia 2009 industry
8 Penicillin-G originating in or exported from 22 May 2009 Withdrawn by domestic
China industry
9 Power Steering Gear System originating in 5 June 2009 Withdrawn by domestic
or exported from China industry
10 Hot Rolled Steel products from China, 11 August Withdrawn by domestic
Indonesia, Iran, Japan, Kazakhstan, 2009 industry
Malaysia, Philippines, Romania, Russia,
South Africa, Saudi Arabia, Korea, Thailand
and Turkey
11 Electrical Insulators originating in or 9 April 2012 Withdrawn by domestic
exported from China industry
Source DGAD

2 Injury and Causation: Discussion of Phase I Cases

During Phase I, a large number of antidumping actions were filed even if such
actions were not well supported by evidence of material injury and causal link. For
example, the antidumping investigation on Butter Oil from New Zealand was ter-
minated in the absence of any concrete evidence on injury or causal link based on
the domestic industry request itself.49 A more detailed list of terminated cases is
given in Tables 3 and 4.
It is not easy to find out whether the elements of injury and causation have been met
merely by checking the data and the reasoning provided in any final antidumping
order. However, one could examine the processes, methodologies and the reasoning
provided by agencies to arrive at the finding of injury and causal link. A strong
probative evidence of material injury to the domestic industry is the evidence of

49
V.Lakshmi Kumaran, The 10 Major Problems with the Antidumping Instrument in India, 39
(1) JOURNAL OF WORLD TRADE 115, 177(2005).
D Survey of Injury and Causation in Indian Antidumping Cases 137

Table 4 Antidumping cases terminated for insufficient injury and causal link
S. No. Case name Initiation date Reasons for termination
1 Purified Terephthalic Acid 22 April 1999 Terminated against Japan,
Malaysia and Taiwan
2 Carbon Black used in rubber 26 December Terminated against Malaysia as
applications originating in or exported 2008 the import price was above NIP
from Australia, China, Iran, Malaysia,
Russia and Thailand
3 Polyester Staple Fiber (PSF) from 25 June 2001 Terminated against Indonesia
Indonesia, Taiwan, Korea and Thailand and Thailand
4 SBR from Japan, Korea, Turkey, 7 April 1998 Terminated against Germany and
Chinese Taipei, US, Germany and France, since the import price
France from these countries were above
the reasonable selling price of the
domestic industry
5 Certain Phosphorus based chemical 13 February Terminated against European
compounds originating in or exported 2009 Union
from China & EU
Source DGAD

adverse effects on the 15 injury factors provided under Article 3.4 of the Anti-dumping
agreement. These 15 parameters have been incorporated in Appendix II of the Indian
Antidumping Rules. Together with volume and price effects, it is possible to evaluate
whether there is a reasonable correlation between dumping and material injury. While
examining the Indian Antidumping cases included in Appendix I, this study has used
the tick mark (✓) to indicate whether a particular injury factor was examined by the
DGAD or not. If there is no indication of consideration of the concerned injury factor
in the final finding, the terms ‘Not Mentioned’ or ‘NM’ are used to reflect this fact. As
stated earlier, the purpose of this examination is to find out whether there is a quali-
tative methodology in the examination of injury and causation.
In the AD investigation on Hot-Rolled Coils/Sheets/Plates/Strips from Russia,
Ukraine and Kazakhstan50[Case# 14/1/97], the Designated Authority collected
information on injury parameters of the domestic industry only for the previous year.
Furthermore, of the 15 injury parameters examined, only 6 injury factors supported a
finding of injury. Some of the key factors such as the productivity, cash flow, output,
wages and employment remained unchanged in comparison with previous years.
Although injury and causation were established in the final finding, such examination
was not based on a trends analysis over a fairly long injury investigation period.
Acrylic fiber is one product which has been subject to multiple antidumping
investigations in India. In Acrylic yarn from Turkey, Hungary and the European
Union51 [Case # 34/1/1998], the Designated Authority found increase in volume of
the products from the subject countries and especially from Turkey. However, the

50
Imports of Hot Rolled Coils, Sheets, plates and Strips from Russia, Khazakstan and Ukraine,
No. 14/1/1997 (Ministry of Commerce and Industry, November 18, 1998) (Final Findings).
51
Imports of Acrylic Fiber from Turkey, Hungary, and the European Union, No.34/1/1998
(Ministry of Commerce and Industry, March 24, 2000) (Final Finding).
138 4 Injury and Causation in Antidumping Investigations …

Designated Authority did not examine injury trends over a long representative period.
Among the trends examined, a finding of worsening of injury factors were found in
respect of market share, price suppression, employment, profits and stocks. It is also
noteworthy, that there is no reference to 5 out of the 15 parameters in the final finding.
The Designated Authority had also calculated the non-injurious price and determined
price suppression. However, the extent of decline in injury parameters was not clearly
indicated in the final finding. A non-confidential index of the injury parameters was
also not provided in the final finding. The final finding includes an assertion that the
“[a]uthority has taken into account all indices regarding injury…. viz, the volume of
dumped imports, their effect on prices in the domestic market, and its effect on the
production, capacity utilization, sales, profits, market share of the domestic industry.”
While discussing causal link, the Authority made the following observation:
In establishing that the material injury has been caused by the imports from the subject
country, the Authority holds that the increase in market share of imports from Turkey resulted
in decline in the market share of the petitioner. These imports undercut the prices of the
domestic product forcing the domestic industry to seek at unremunerative prices. Resultantly,
the domestic industry was, therefore, caused by dumped imports from the said country.52

In other words, findings on price depression and suppression were used to

establish a finding of injury and causal link. The causal influence of other factors
was not taken into account, at least in the final findings.
In the antidumping investigation on Pure Terephthalic Acid from Japan, Spain,
Malaysia and Taiwan53 [Case # 27/1/98] referred to as PTA-I earlier in this chapter,
the Designated Authority found that most of the industry parameters had shown an
improvement during the POI. The Designated Authority, however, noted that
decreasing sales realization and increase in losses are sufficient to constitute
material injury to the domestic industry. It is also pertinent that the Designated
Authority did not provide any discussion of a number of injury parameters in the
final finding. The Designated Authority had indicated that the other injury
parameters were examined in the provisional findings; however, the tenets of
‘objective examination’ enshrined in Article 3.1 and 3.4 of the ADA may require an
investigating authority to recapitulate all the injury factors in the final finding to
provide a holistic picture of the condition of the domestic industry.54
In the antidumping investigation on Lead Acid Batteries from Japan, China,
Korea and Bangladesh55 [Case # 67/1/2000-DGAD], only 11 of the 15 injury
parameters during the POI supported a claim of material injury. It is also pertinent

52
Imports of Acrylic Fiber from Turkey, Hungary and the European Union, No. 34/1/1998- DGAD
(Ministry of Commerce and Industry, March 24, 2000) (Final Findings).
53
Imports of Pure Tephthalic Acid from Japan, Spain, Malaysia, and Taiwan, No.27/1/98 (Ministry
of Commerce and Industry, April 20, 2000) (Final Findings).
54
See Appellate Body Report, Mexico – Definitive Anti–Dumping Measures on Beef and Rice,
Complaint with Respect to Rice, ¶.180, WT/DS295/AB/R (December 20, 2005).
55
Imports of Lead Acid Batteries from Japan, China, Korea, and Bangladesh, 67/1/2000-DGAD
(Ministry of Commerce and Industry) (Final Findings).
D Survey of Injury and Causation in Indian Antidumping Cases 139

that the data was collected only for one previous year. Although one could say that
the condition of the domestic industry had declined during the period of investi-
gation, it was not clear whether the industry had performed relatively well in
comparison with the previous years.
In the antidumping investigation on Citric Acid from China56 [Case #
14/6/2011-DGAD], only 10 out of the 15 injury parameters supported a finding of
injury. Factors such as capacity utilization and inventories showed significant
improvement while profits came down. The final findings disclosed an analysis of
only 5 or 6 of the listed 15 factors. Some of the remaining factors have been
discussed in the preliminary findings. Furthermore, only a limited number of factors
during the previous years were examined in detail and some of the key information
such as trends on profitability were kept confidential. The Designated Authority
arrived at a finding of material injury and causal link on the premise that not all
economic parameters relating to domestic industry need to indicate injury.
In the antidumping investigation on Polyester Staple Fibre from Korea R.P,
Indonesia, Thailand, Taiwan57 [Case # 29/1/98] the Designated Authority found
that the domestic industry had performed poorly in comparison with the previous
years only in respect of domestic sales realization and profitability. In fact, the final
finding indicated improvement in various other indicators although most of the
injury parameters were not specifically listed in the final finding. Yet the Designated
Authority had concluded that the domestic industry had suffered material injury.
The antidumping investigation on certain types of Acyclic alcohols from
Singapore, Romania, Malaysia and South Africa58 [Case # 63/1/2001] was initiated
in the year 1999. The findings in this dispute were contested by the domestic
industry, exporters and the importers before various judicial forums. The exami-
nation of the injury factors revealed that at least 5 out of the 15 factors had remained
positive for the domestic industry. For example, capacity, capacity utilization,
production, sales, market share, inventories, etc., had improved whereas the other
factors such as employment and wages remained stable. However, the Designated
Authority found that in view of the volume of dumped imports and the price effects,
the domestic industry had suffered material injury. The Designated Authority
placed emphasis on the profitability of the domestic industry. The Designated
Authority acknowledged the improvement in several injury factors, but justified the
finding the material injury on the ground that the improvement could be attributed
to the imposition of antidumping duties on imports from other sources.59

56
Import of Citric Acid from Peoples’ Republic of China, No. 29/1/1997 (Ministry of Commerce
and Industry, March 15, 1999) (Final Findings).
57
Imports of Certain Polyester Staple Fibres (PSF) originating or exported from Korea, Thailand,
Taiwan and Indonesia, No. 29/1/1998 (Ministry of Commerce and Industry, January 21, 2000)
(Final Findings).
58
Imports of Acyclic Alcohols originating in or exported from Singapore, Brazil, Romania,
Malaysia and South Africa, No. 63/1/2001 (Ministry of Commerce and Industry, July 29, 20003)
(Final Findings) [herein after AD Investigation on Acyclic Alcohol].
59
Id., ¶ 47.
140 4 Injury and Causation in Antidumping Investigations …

Bisphenol-A is a chemical product that has been the subject matter of

anti-dumping investigations for a long time. In the AD action on Bisphenol A from
European Union and Chinese Taipei60 [Case# 47/1/99-DGAD], the Designated
Authority examined several injury parameters during the POI. In comparison with
the previously examined cases during Phase I in this study, the Bisphenol A
investigation provides relatively comprehensive data. The sales of the domestic
industry improved during the POI and the previous 2 years; domestic output and
market share also improved; capacity utilization exceeded 100 % during 1998–
1999 and was 106 % in the POI; the closing stocks of domestic industry were the
lowest during 12 months of the 18-month POI. In a growing market with high
domestic demand, the domestic industry stepped up capacity and the licensed
capacity was expected to increase during 1999–2000, which included six months of
the POI. The argument of the domestic industry was that it suffered substantial
losses during 1998–1999 and the POI. Despite the significant increase in imports
from the subject countries, the Designated Authority noted that the landed value of
Bisphenol-A from both the EU and Taiwan had been significantly higher than the
selling price of the domestic industry. According to the DGAD, there was no price
undercutting attributable to the imports. Although it appears that the Designated
Authority had calculated the NIP for the domestic industry, it is not clear from the
final finding whether there was any price suppression or not. According to the
Designated Authority, as the landed value of Bisphenol-A from the European
Union and Taiwan were above the net selling price of the domestic industry, the
material injury established in the case of the domestic industry was not attributable
to dumped imports. Bisphenol-A is one of the few cases where the Designated
Authority arrived at a negative determination on injury and causal link.
An examination of the cases during Phase I indicates that the Designated
Authority conducted the injury and causation analysis primarily based on the
information provided during the Period of Investigation. The trends recorded during
the entire injury investigation period were not given adequate consideration during
this phase. All the 15 injury parameters were not included in the final findings,
although some of such factors could have been discussed under the provisional
finding. As the Appellate Body noted in China—GOES, an authority’s consider-
ation of price effects “must be reflected in the relevant documentation, so as to
allow an interested party to verify whether the authority indeed considered such
factors”.61 On the whole, the final findings were brief and a well-reasoned analysis
was not very common at least during Phase I.

60
Imports of Bisphenol-A originating in or exported from the European Union and Taiwan,
47/1/1999- DGAD (Ministry of Commerce and Industry, December 6, 2000) (Final Findings).
61
Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented
Flat-Rolled Electrical Steel from the United States, ¶131, WT/DS414/AB/R (November 16, 2012)
[hereinafter Appellate Body China- GOES].
D Survey of Injury and Causation in Indian Antidumping Cases 141

3 Injury and Causation: Discussion of Phase-II Cases

For the purpose of this study, ten representative cases decided during the 2004–
2013 period have been considered. These cases represent some of the key sectors
subject to antidumping action in India.
In the anti-dumping investigation on Coated paper boards of 80 GSM from
European Union and Indonesia62 [Case #14/7/2003], the DGAD has provided a
brief analysis of all statutory factors under the Antidumping Rules. As compared to
the cases filed during Phase I, the final finding has provided an analysis of the 15
injury factors and certain factors such as loss of sales, and other threat of injury
factors. The final finding disclosed a positive movement in sales, output, inventories
as percentage of sale/production, productivity, wages, etc., while other factors such
as capacity utilization, ability to raise capital, cash flow, growth, etc., did not show
any adverse effect.
On the other hand, factors such as market share, profitability, return on invest-
ment and wages declined during the POI when compared to the previous year. This
case is noteworthy in as much as the DGAD did not conclude that the domestic
industry suffered material injury based on an assessment of factors such as domestic
industry’s reduced market share, profitability and return on investment which have
been traditionally relied upon by the Authority. The margin of dumping from the
subject countries was also rather significant. The volume effects of the dumped
imports on the domestic industry injury parameters were also appreciable.
The DGAD, however, paid particular attention to price effects. The DGAD noted an
absence of price undercutting vis-à-vis imports from EU while price undercutting
was marginally positive in respect of Indonesia. In other words, according to the
DGAD, the prices of the dumped imports were higher than those of the domestic
industry during the period of investigation. While the DGAD noted some reduction
in the selling price of the domestic industry product, it could not find price
underselling as the cost of production of the domestic product marginally
declined.63 Consequently, the DGAD held that the domestic industry did not suffer
material injury during the period of investigation.
In the antidumping investigation on Ball Bearing64 [Case #14/30/2002], the
economic performance of the domestic industry was relatively unchanged when
compared to the previous years. At least 6 injury parameters showed a decline,
although several injury factors also showed an improvement. The DGAD in this
case provided data for at least 3 years prior to the period of investigation.
The DGAD also found that there was a significant increase in the volume of imports
(especially from China) and a decline in market share, return on investment and

62
Imports of Coated Paper Boards of 80 GSM from European Union and Indonesia, No. 14/7/2003
(Ministry of Commerce and Industry, December 15, 2004) (Final Findings).
63
Id, ¶ 52.
64
Imports of Ball Bearing from China, Russia, Poland and Romania, No. 14/30/2002-DGAD
(Ministry of Commerce and Industry, March 19, 2004) (final findings).
142 4 Injury and Causation in Antidumping Investigations …

employment for the domestic industry, but found improvements in regard to pro-
ductivity, profits, inventories, output and capacity utilization. The DGAD, however,
did not find evidence for material injury. This decision also highlights the reliance
of the investigating authority on operating statistics. It is also seen from the rea-
soning that the absence of price underselling and price undercutting were some of
the factors relied upon even for a negative finding on material injury.65
The antidumping investigation on Acetone from European Union, Chinese
Taipei, Singapore, South Africa and USA66 [Case #14/4/2006] discloses a quali-
tative improvement in the assessment of injury factors. There is a proper exami-
nation of all the 15 injury factors over a longer time horizon. The period of
investigation in this case is July 2005 to June 2006. However, information on
various macroeconomic and microeconomic factors is provided for the periods
2003–04, 2004–05, and 2005–06. Examination of data for three preceding years is
helpful to understand how various injury factors have performed in comparison
with the base year, although there is some improvement in the year immediately
preceding the POI. In particular, financial parameters such as return on investment
and ROCE showed significant improvement in the previous year and were healthy
during the POI. A number of other factors such as employment, wages, sales,
production, etc., improved during the POI. However, based on price depression and
price suppression analysis the DGAD entered a finding on causation.
In the antidumping investigation on Melamine from European Union, Iran,
Indonesia and Japan67 [Case # 14/35/2010], the DGAD noticed negative move-
ment in injury on a number of factors. The domestic industry was suffering losses
during the POI. However, parameters such as capacity utilization, productivity,
employment and wages remained relatively better during this period. Although the
domestic sales during the POI had declined relative to the previous year, there was
no marked trend indicating a decline during the injury investigation period. The
Designated Authority concluded that the domestic industry has suffered material
injury and that injury has been caused significantly by price and volume effects of
dumped imports from the subject countries. Consistent with its earlier practice, the
DGAD placed emphasis on price and volume effects for its conclusion for material
injury and causation. The DGAD, based on its normal practice, placed emphasis on
price undercutting and price suppression for reaching a finding on causal link.68
In the antidumping investigation on Digital Plate from China and Japan69 [Case
#14/7/2011], the DGAD’s findings disclose that the injury parameters of the
domestic industry were performing better when compared to the previous years. In

65
Id, at 42 (i).
66
Imports of Acetone from European Union, Chinese Taipei, Singapore, South Africa, and USA,
No. 14/4/2006-DGAD (Ministry of Commerce and Industry, January 4, 2008) (Final Findings).
67
Imports of Melamine from European Union, Iran, Indonesia and Japan, No. 14/35/2010-DGAD
(Ministry of Commerce and Industry, June 1, 2012) (Final Findings).
68
Id, ¶¶ 58-61.
69
Imports of Digital Offset Printing Plates from China PR and Japan, No.14/7/2011-DGAD
(Ministry of Commerce and Industry, October 3, 2012) (Final Findings).
D Survey of Injury and Causation in Indian Antidumping Cases 143

fact, there was negative finding on 11 out of the 15 injury parameters. Even the
market share of the domestic industry went up when the imports from the subject
countries started increasing. In fact, the subject imports took the market share of
other non-subject countries, while the domestic industry’s market share remained
unaffected. It is seen in this case that the DGAD based its finding of injury primarily
on the basis of three financial parameters, namely, profitability, cash flow and return
on investments. It is also seen that those factors which reflect the operating per-
formance of the domestic industry tend to get greater weightage. However, a rea-
soned and adequate examination of how these parameters would outweigh the other
positive factors was not discernible at least from the final finding. In respect of
causation, the DGAD did not find any price undercutting margin with respect to
Japan. The DGAD also did not establish any price underselling margin for Japan. In
view of the negative price underselling and price undercutting margin, the DGAD
terminated the action against Japan finding that there was no causation attributable
to imports from Japan. Such finding was in line with the tradition of the DGAD to
infer a break in causal link when the price undercutting and underselling margins
are found to be negative.
In a recent antidumping investigation on Di-sodium Carbonate originating from
Russia and Turkey70 [Case #13/3/2011], the final finding of which was released in
2013, the DGAD examined the injury and causation factor in substantial detail.
There was an existing antidumping order on the same product originating or
exporting from Kenya, USA, etc. In this investigation, the DGAD provided an
examination of all 15 injury factors. In order to establish the trends in injury factors,
the data for the period of investigation and three preceding years were used. During
the annualized POI, only 3 injury factors out of 15 showed a clear injury to the
domestic industry; at least 8 injury factors out of 15 showed an improvement or
marginal improvement, while 5 injury factors remained almost unchanged.
The DGAD found injury and causal link primarily on the basis of price under-
selling, price suppression and price depression. The DGAD also noted that the cash
profits, profitability and return on capital employed declined during the injury
investigation period. The financial data indicated that the financial indicators had
improved during the POI although they might have declined when compared to the
base period. The correlation in the rise in imports from the subject countries and a
decline in the profitability of the domestic industry was considered sufficient to
establish injury and causation.
As a matter of policy, the DGAD is very likely to conclude that there is injury
and causal link if there is underselling by the imports as was borne out by the
investigation on PTA-I and Soda Ash investigations; conversely, like what hap-
pened in the investigation on Digital plates and Ball Bearings, the DGAD is likely
to conclude that there is no causal connection if there is price overselling by the
imports. To put it differently, if the DGAD finds that the landed value of imports

70
Imports of Soda Ash originating in Russia and Turkey, No. 14/3/2011-DGAD (Ministry of
Commerce and Industry) (Final Findings) [hereinafter soda ash investigation].
144 4 Injury and Causation in Antidumping Investigations …

exceed the non-injurious price of the domestic industry, it will be reluctant to

attribute the material injury to dumped imports. In addition to the price and volume
effects, the DGAD pays particular attention to the question whether the domestic
industry has lost market share at a time when the domestic demand for the product
had risen. Furthermore, if the domestic sales quantity declines resulting in lesser
capacity utilization during times of growing domestic demand like in the case of
Melamine, it could be treated as a direct effect of dumped imports. Causation could
be inferred in such cases.
In a number of investigations, the DGAD compares the injury factors in the POI
with the base period, and not necessarily with the previous year. As an illustration,
in the Bias Tyres [Case # 14/9/2005] as well as the Circular Weaving Machine
[Case # 14/25/2008] investigations, the DGAD noted that certain injury factors
have fared significantly worse when compared to the base period. Comparison with
the base period may indicate a decline in injury parameters although the domestic
industry would have performed significantly better during the POI when compared
to the previous year. Specifically in the context of safeguard investigations, the
WTO panels and the Appellate Body have held that such end point-to-end point
comparisons are inappropriate in a trend analysis.71
An evaluation of the Indian antidumping practice in the selected cases does not
indicate a uniform practice. As a WTO panel in Thailand—H Beams72 noted, an
investigating authority has to provide a thorough and persuasive explanation as to
how positive movements in the evolution of certain injury factors were outweighed
by certain other factors. However, when compared to Phase I, during the Phase II
period, the DGAD has been enlisting most of the injury factors in its analysis. It
may be noted that during Phase I, not more than 10 factors out of the 15, on an
average, were enlisted at least in the final finding. Furthermore, the provisional and
final findings in the Phase II period have provided more complete data on the
evolution of various injury factors. At least in form, the injury analysis has
improved. However, one should add that the DGAD still relies on qualitative
analysis for injury determination.
It is also seen from the analysis of the limited cases that the assessment of
material injury can be challenging. In most of the cases examined, some of the
injury parameters had indicated positive trends, while a few others had showed
negative trends. In certain cases, 10 or more injury factors had indicated a decline,
while in certain others only 3 or 4 factors showed a decline. But the final findings
invariably disclose that there was injury in all such cases. The focus of investigation
seems to be limited to price suppression and depression. Significant emphasis is
given on factors such as profits/profitability, ROCE and cash flow, which are
always related. To certain extent, capacity utilization or inventories are also given

71
Panel Report, Report, Argentina – Safeguard Measures on Imports of Footwear,
¶ 8.157, WT/DS121/AB/R (June 25, 1999).
72
Appellate Body Report, Thailand – Anti–Dumping Duties on Angles, Shapes and Sections of
Iron or Non–Alloy Steel and H–Beams from Poland, WT/DS122/AB/R, ¶ 128 (April 5, 2001).
D Survey of Injury and Causation in Indian Antidumping Cases 145

some weightage. However, on the whole, an analysis that is rooted purely on price
undercutting and price underselling margins will have its defects. Price undercut-
ting need not be always on account of dumped imports, while price underselling is
almost inevitable when the non-injurious price is decided on a hypothetical basis.
The key issue is how material injury and causation could be established in such
cases. In other words, what is the role of factors such as employment, wages, sales,
etc., which are hardly addressed in detail in most cases?
An examination of the India’s antidumping findings would indicate that there are
persisting difficulties with the assessment of certain injury factors. Out of the 15
injury parameters, trends on at least 10 or so injury parameters are clear and
unambiguous. However, certain parameters are elusive and unclear. Examples
would include growth, ability to raise capital and factors affecting domestic prices.
It is unclear whether growth should be viewed in respect of production, domestic
sales or capacity utilization. Ability to raise capital can be interpreted in many ways.
The DGAD examines the profitability of the domestic industry whereas the
Antidumping Agreement refers to the term ‘profits’.73 These two terms have sep-
arate meanings. Although the dumping is a factor in the material injury examina-
tion, the role of injury margin is less clear. Especially since India calculates injury
margin in all cases, injury margin may have a role in assessing injury. As it
happened in the case of PTA-I and Digital plates investigations, a negative injury
margin has resulted in a finding of lack of causation vis-à-vis that exporting
country.

4 Non-attribution Analysis in Indian Antidumping

Investigations

As examined in Chap. 3, the non-attribution analysis is a key requirement in injury

and causation analysis. The WTO panels and the Appellate Body have ruled against
several trade remedy investigations in the absence of satisfactory non-attribution
analysis. In terms of the existing WTO jurisprudence, investigating authorities are
required to separate and distinguish the injury caused by factors other than
dumping, subsidy or increased imports. Although the non-attribution obligation has
been existing in the concerned WTO Agreements since 1995, this requirement
attained significance only after the US—Hot rolled Steel74 (Japan) ruling in 2001.
In the Indian antidumping investigations examined during Phase I, it is evident
that the Designated Authority had hardly examined the existence of other factors
causing injury to the domestic industry. Most of the cases examined during Phase I,

73
While profit is an absolute number, profitability is a relative measure of the success or failure of a
business. See https://edis.ifas.ufl.edu/fe939 (last visited on December 23, 2014).
74
Appellate Body Report, United States – Anti–Dumping Measures on Certain Hot–Rolled Steel
Products from Japan, ¶ 224, WT/DS184/AB/R (August 23, 2001).
146 4 Injury and Causation in Antidumping Investigations …

did not even include a heading called “non-attribution” or “injury from other fac-
tors” or “other known factors”. For example in the investigation on Acrylic fibre
[Case # 4/1/98], there was enough evidence that the industry had suffered losses
over the years since the raw material was not locally available and had to be
imported. It was also known that Acrylic yarn was imported to India free of import
duty under the Indo-Nepal Treaty, whereas Indian domestic industry had to pay
import duty on the imported raw material.75 Secondly, even when other causal
factors were mentioned, it was in connection with the discussion on whether the
domestic industry had suffered material injury or not and not in the context of
causation. For example, the Designated Authority would have referred to con-
traction of demand, constraints of the domestic industry to increase capacity or
productivity in the context of discussion of the listed 15 factors and not necessarily
in the context of non-attribution.
During Phase I, the Designated Authority referred to only some of the listed
known factors and not to most or all of them. Interestingly, even when the
Authority referred to some of the listed known factors, the importance of such
factors was summarily dismissed. For example, in the antidumping investigation on
Acyclic Alcohols [Case # 63/1/2001], the Designated Authority summarily dis-
missed two of the listed known factors as follows: “contraction in demand is not
apparent and no technological development in the industry or any such factor
which could have resulted in injury to the domestic industry has been noticed”.76
There was no further discussion on the causative significance of such factors.
In Phase II, one could observe a qualitative difference in the discussion of other
known factors. For example, in Coated Paper Case [Case #14/7/2003], the
Authority had discussed most of the listed known factors, except the volume and
prices of the imports not sold at dumping prices. In the Digital Plates antidumping
investigation [Case #14/7/2011-DGAD], the DGAD examined the various listed
known factors. The discussion was very brief. The DGAD also noted in its final
finding an observation from the Appellate Body report in EC-Tube and Fittings,
which said: “… previous panel and Appellate Body reports make it clear that while
an investigating authority is required to consider the effects of other factors known
to the investigating authority which may be causing injury to the domestic industry,
there is no required basis for analysis in undertaking this analysis.”77
In the Digital plate investigation, the DGAD examined other known factors such as
the increase in raw material cost pursuant to imposition of safeguard duties on one of the
inputs, namely, aluminium, additional investment by the domestic industry and the fact
that the net sales realization (NSR) of the domestic industry was much higher than the

75
VED PRAKASH, ANTIDUMPING, COUNTERVAILING DUTIES AND SAFEGUARD MEASURES IN MULTILATERAL
TRADE REGIME 35 (2005).
76
AD Investigation on Acyclic Alcohol, supra note 58, ¶ 52.
77
Appellate Body, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or
Pipe Fittings from Brazil, ¶ 176, WT/DS219/ABR (July 22, 2003).
D Survey of Injury and Causation in Indian Antidumping Cases 147

NIP. The DGAD found injury and causal link primarily on the basis that volume of
imports from the subject countries had increased during the injury investigation period,
and that the lower priced imports had caused price depression which had adversely
affected the operating performance of the domestic industry. The DGAD relied on the
decline in the profits and return on investments to establish its finding on injury and
causal link. It is also evident from a perusal of the recent investigations including the
Digital plate investigation that, unlike in the past, the DGAD has been examining all
listed known factors and certain other known factors in performing the non-attribution
analysis. However, each of these factors is introduced and summarily dismissed.
In the antidumping investigation on Bias Retreaded Tyres from China and
Thailand78 [Case #14/9/2005-DGAD], the interested parties had argued that the
alleged injury to the domestic industry was on account of domestic competition,
non-availability of raw material and rapid increase in its price, export of natural
rubber by domestic producers and imposition of antidumping duties on the major
raw material imported by the domestic industry. There was an oversupply in the
market which might have caused alleged injury.79 Admittedly this was a known
factor whose injurious effect should have been properly examined and separated.
This case illustrates the reluctance of the investigating agencies to go beyond the
listed known factors in performing the non-attribution test.
In the anti-dumping investigation on Soda ash [Case #14/3/2011], the DGAD
also performed a non-attribution analysis. Each of the listed known factors was
briefly introduced. While examining the listed known factors, the DGAD notes that
the injury to the domestic industry is on account of excess capacity, but concluded
that listed known factors do not cause injury to the domestic industry. This was yet
again a summary conclusion.
It appears that the non-attribution analysis is conducted in most of these cases on
a pro forma basis without a detailed discussion or deliberation. It is often difficult to
understand the injurious effects of some of the factors and whether they will have
some impact on the causation already determined. It will be useful to have a
detailed analysis of the complex facts and economic arguments in the consideration
of “other factors”. In this regard, it may be pertinent to refer to the observation of a
WTO panel in EC—DRAM, although the observation was made in the context of
the injury and causation under the SCM Agreement. The panel noted:
It does not suffice for an investigating authority to merely to ‘check the box’. An inves-
tigating authority must do more than simply list other known factors, and dismiss their role
with bare qualitative assertions, such as ‘the factor did not contribute in any significant way
to the injury’, or ‘the factor did not break the causal link between subsidized imports and
material injury.’ In our view, an investigating authority must take a better effort to quantify
the impact of other known factors, relative to subsidized imports, preferably using ele-
mentary constructs or models. At the very least, the non-attribution language of Article 15.5
requires an investigating authority a satisfactory explanation of the nature and extent of the

78
Imports of Bias Tyres originating in or exported from China PR and Thailand,
No. 14/9/2005-DGAD (Ministry of Commerce and Industry, June 29, 2007) (final findings).
79
Id., sub-¶ (e).
148 4 Injury and Causation in Antidumping Investigations …

injurious effects of the other factors, as distinguished from the injurious effects of the
subsidized imports.80 (Italics original)

One may admit that as opposed to the Phase I period, during Phase II, there is at
least a greater reference to most of the injury factors. Some data and figures are
indeed mentioned in the final finding, although it will be a far cry from the rigorous
standard outlined in WTO cases such as US—Hot Rolled Steel. There is a need to
examine how the various causal factors interacted to analyse the impact and the
proximity of such factors with the injury suffered. The sample cases selected during
this time do not devote more than one or two sentences to discuss the role and
impact of such factors. To quote Sapir and Trachtman, this type of an examination
may not appear as an “assessment of the facts, but a guess at the facts”.81 It is also
noted that, in addition to the seven listed other factors, the Indian antidumping cases
do not routinely examine the role of other unlisted known factors which at the same
time are causing injury to the domestic industry. The alternate causes were not
examined probably on account of the failure of the parties to highlight such
alternate causes at the appropriate time. However, a failure to take into account the
other factors gives an impression that there were no other causal factors other than
dumped imports. This is impliedly equating the dumped imports as the substantial
cause of injury and assuming that no other causes could have caused injury to the
domestic industry. Typically, industries alleging material injury could be suffering
on account of factors such as increasing cost of capital, raw material, macroeco-
nomic factors, global economic conditions, management decisions, et al. This list
could be literally endless. But a summary rejection or disregard of the role of other
factors is tantamount to treating correlation as causation, which is not what the
WTO agreements require. In contrast, most of the WTO disputes that have been
examined in Appendix I of this chapter had provided an examination of multiple
known factors which could have caused injury. It is striking that the Indian
Antidumping findings have limited their examination to only the listed factors, and
that too even in the post-2003 period.
It is also evident from the examination of the investigations conducted in
Phase II that the DGAD has not used regression analysis or statistical tools such as
granger causality analysis for the purpose of isolating or quantifying the injuries to
domestic industry. A review of the selected cases does not indicate the use of any
such quantitative tools. However, on the positive side, during Phase II, the DGAD
has started examining the trend over a 4 year period which includes the POI and
three preceding years as well as a mandatory listing of other known causal factors
mentioned in Articles 3.5 and 15.5 of the AD and SCM Agreements respectively.

80
Panel Report, European Communities – Countervailing Measures on Dynamic Random Access
Memory Chips from Korea, ¶ 7.405, WT/DS299/R (June 17, 2005).
81
ANDRE SAPIR AND JOEL P. TRACHTMAN, SUBSIDIZATION, PRICE SUPPRESSION, AND EXPERTISE:
CAUSATION AND PRECISION IN US- UPLAND COTTON, 21 (2011).
D Survey of Injury and Causation in Indian Antidumping Cases 149

5 Appellate Review of Injury and Causation in India

Section 9C of the Customs Tariff Act, 1975 (as amended) provides an avenue for
appealing a notification issued by the Ministry of Finance (MoF) implementing the
findings of the DGAD. Accordingly, CESTAT is the statutory tribunal that could
hear appeals on the DGAD’s findings of dumping, injury and causal link. However,
there is a view that if the MoF has terminated an action based on a finding of
absence of dumping, injury and causal link, only a writ petition under Article 226 or
227 of the Constitution of India could lie to the High Court.
The constitutional courts such as the High Courts and the Supreme Court of India
have given a significant amount of deference to the findings of the Designated
Authority. Even appellate tribunals such as the CESTAT give considerable defer-
ence to findings of injury and causal link. For example, in Urals Heavy Machine
Building Plant v. Designated Authority82 which examined the AD proceedings on
imports of induction hardened forged steel rolls, the CESTAT affirmed the findings
of the DGAD.83 In the underlying investigation, the DGAD had noted that a number
of injury parameters such as sales, production, profits, inventories, and capacity of
the domestic industry had improved. While the CESTAT acknowledged that these
developments had taken place, it supported the finding of the DGAD that injury had
occurred especially in view of the unremunerated prices. This case clearly demon-
strates that evidence on price undercutting and price underselling have over-
whelming influence in terms of establishing material injury and causal link.
Only in a limited number of cases have the appellate courts intervened in the
matter of establishing causal link. In Indian Refractory Makers Association v.
Designated Authority,84 the CEGAT held that if dumped imports of an article do
not or are not capable of causing injury to the domestic industry, imposition of
antidumping duties is not warranted. In that case, it was found that dead burnt
magnesite (DBM) of less than 4 % silica imported by the Indian domestic user was
quite different from the DBM produced in India. Likewise, in the antidumping
investigation concerning the importation of strontium carbonate, in granular form
imported from China, CEGAT held that the importation of this product did not
cause material injury to the domestic industry that was manufacturing Strontium
Carbonate in the powder form.85 The CEGAT, therefore, overturned the findings of
the DGAD.
In Agfa Gevaert A.G. v. Designated Authority,86 the CEGAT examined a plea by
the exporters that the antidumping duty was imposed on the subject goods, namely,

82
2005 (187) E LT 194 (CESTAT, Delhi).; see also, Automotive Tyre Manufacturer’s Ass’n v.
Designated Authority, 2013 (294) ELT 482 (CESTAT, New Delhi).
83
Imports of Induction Hardened Forged Steel Rolls from Russia, Ukraine and Korea RP,
No. 14/3/2002-DGAD (Ministry of Commerce and Industry, June 3, 2003) (final findings).
84
2000 (119) ELT 319 (Tribunal).
85
Videocon Narmada Glass v. Designated Authority, 2003 (151) ELT 80 (Tribunal Delhi).
86
2001 (130) ELT 741 (Tribunal- Delhi).
150 4 Injury and Causation in Antidumping Investigations …

black and white photographic paper without establishing causal link. There were
only two industries out of which one industry was a new player while the other was
an inefficient producer. The Designated Authority excluded the new player and
assessed injury based on the data of the inefficient producer. However, the CESTAT
found that the Designated Authority had used the data of the excluded producer for
the calculation of the non-injurious price. The CESTAT held that causal link was
not established because the only domestic producer had turned “sick” even before
the imports had increased.
In the AD investigation on PSF, the petitioners challenged the finding of injury
and causal link found by the DGAD on account of dumped imports from the subject
countries. The High Court of Rajasthan observed, “[o]n independent consideration
of the entire material and careful consideration of the contentions raised by the
learned Counsel, …., the finding of fact recorded by the Designated Authority does
not call for interference by us, in exercise of powers under Articles 226 and 227 of
the Constitution of India”.87 Similarly in Sasol-Solvents case, the CESTAT ruled
that it is not appropriate to impeach the finding of the DGAD without cogent
evidence. According to CESTAT, when price undercutting and price underselling
are properly calculated, there is no reason to interfere with the findings of the
Designated Authority.88

E Injury and Causation Determination: Practice of Other

WTO Members

The experience of WTO members in conducting injury and causation was exam-
ined, to some extent, in Chap. 3 while examining the evolving WTO jurisprudence
on injury and causation. Although it is desirable to examine the injury and causation
methodologies in other key jurisdictions, it is not practically feasible given the
scope of this study. Treating India as a prototype, this study examined the factors
and methodologies that determine injury and causation in trade remedy investiga-
tions. Furthermore, an attempt is made to examine the injury and causation deter-
mination in anti-dumping proceedings in other jurisdictions based on secondary
materials, especially journal articles and other internet resources to understand how
various anti-dumping users are grappling with this important topic. Efforts were
also made to understand the practice of other WTO members by searching on the
websites of the concerned investigating authorities. The purpose is to examine
whether these jurisdictions use practices which are more sophisticated than cur-
rently employed by India and to what extent such practices meet the causation
standards espoused by the WTO panels and the Appellate Body.

87
2002 (149) ELT 45.
88
Sasol solvents v. Union of India, MANU/CUST/0057/2008 (CESTAT, Delhi).
E Injury and Causation Determination … 151

1 Traditional Users

(a) United States

The U.S. practices on establishing injury and causation in antidumping and

CVD investigations have been extensively studied in Chaps. 2 and 3 of this study.
The U.S. is one of the few jurisdictions that has used economic models to support
its legal analysis in injury and causation determination.89 In the U.S., the
Commercial Policy Analysis System (COMPAS) model has been used widely by
the USITC and participating parties in evaluating the impact of imports on local
industries in AD/CVD proceedings.
The decision of the U.S. Court of Appeals for the Federal Circuit (USAFC) in
Bratsk Aluminum Smelter v. United States90 (hereinafter Bratsk) raises the question
of the extent to which the USITC is required to examine the role and impact of
imports not subject to investigation on the domestic industry. Although the subject
imports might have undersold or depressed domestic prices and would have been
eligible for import relief, according to the USAFC, the USITC was required to
establish whether non-subject imports which were available in the domestic market
would have replaced the subject imports.91 This is widely known as the
“replacement/benefit” test and was discussed for the first time in Gerald Metals Inc
v. United States.92 According to this test, the USITC must explain whether imports
not subject to the antidumping petition would have replaced the imports from the
subject countries without creating any beneficial effects on the domestic industry.
There could be situations in which the subject imports might have undersold the
domestic like product in significant quantities. However, the concern of the Bratsk
court appears to be that fairly traded non-subject imports (a separate causal factor)
were not given adequate examination by the USITC in the underlying investiga-
tion.93 Admittedly, the Bratsk ruling is a separate domestic requirement in the U.S.
and is not obviously influenced by the jurisprudence of any of the WTO disputes.

89
A. Keck et al., A ‘Proababilistic Approach to Use of Econometric Modeling in Sunset Reviews, 6
(3) WORLD TRADE REVIEW 371 (2007).
90
444 F. 3d 1369 (Fed. Cir. 2006).
91
There is a view that the Bratsk ruling spoke on the potential effectiveness of an order. But
subsequent decisions have clarified this position. See Mittal Steel Point Lisa Ltd. v. United States,
Slip Op. 2007-1552 (Fed. Cir. Sep. 18, 2008) (holding that the USITC need to have “evidence in
the record ‘to show that the harm occurred ‘by reason of’ the LTFV imports,’” and requires that
the USITC must not attribute injury from non-subject imports or other identified factors to subject
imports).
92
Gerald Metals Inc. v. United States 132 F. 3d716 ( U.S. Federal Circuit, 1997 (holding that the
USITC has to explain why – despite the presence and significance of the non-subject imports – it
concluded that the subject imports had caused material injury to the U.S. industry).
93
E.P. Salonen, The Bratsk Decision and Its Implications for Injury and Causation Analysis Under
The Antidumping and Countervailing Duty Laws, (2008) available at http://www.stewartlaw.com/
Article/PublicationsByPracticeArea?PracAreaID=5 (last visited on May 26, 2015).
152 4 Injury and Causation in Antidumping Investigations …

But in practice, this ruling could prevent the USITC from giving the benefit of
antidumping protection, if non-dumped, non-subject, price-sensitive imports could
have replaced the subject imports. In such a scenario, the dumped imports from the
subject imports are not the real cause of injury, but something else. This may
require an assessment of the competitive effects of other factors. Therefore, the
Bratsk ruling entails disaggregation of the economic effects of causal factors other
than dumped imports and may require sophisticated economic analysis.
Although the U.S. has been using the COMPAS model, according to Durling
and McCullough, the USITC has developed only primitive tools in trade remedy
cases.94 It should be pointed out that although various panels and the Appellate
Body have overturned the U.S. causation analysis, no WTO dispute settlement
panel has per se questioned the use of any economic models.

(b) European Union

Secondary literature on the EU antidumping practices reveals that the EU institu-

tions enjoy a wide discretion in establishing injury and causation.95 Generally,
courts such as the European Court of Justice (ECJ) are reluctant in holding that the
EU authorities are manifestly wrong in their assessment of injury.96 The EU
Antidumping and Anti-subsidy Regulations have adopted the language fairly
similar to the WTO provisions. The only exception is the inclusion of an additional
known factor in the non-attribution analysis which requires the Commission to
examine “whether the industry is still in the process of recovering from the effects
of past dumping or subsidisation”.97 Although this factor is assessed in the material
injury determination, it appears that the purpose of this additional factor is to make
sure that the weakened condition of the domestic industry in itself is not a reason for
denying trade contingency relief.
The EU practice is to examine injury data for a period of three or four years
preceding the period of investigation. The purpose is to examine the trends in
volume, market share, and financial indicators such as profits, cash flow and ROCE.
According to the EU practice, microeconomic data will often play a more crucial
role than macroeconomic indicators. European Courts have held that even if certain

94
James P. Durling & Matthew P. McCullough, Teaching Old Laws New Tricks: The Legal
Obligation of Non-Attribution and the Need for Economic Rigor in Injury Analyses Under US
Trade Law, in HANDBOOK OF INTERNATIONAL TRADE (E. Kwan Choi & James Hartigan eds., 2004).
95
Nakajima v. Council [1991] ECR I-2069, ¶ 86.
96
P. Bentley & A. Silberston, ANTi-DUMPING AND COUNTERVAILING ACTION: LIMITS IMPOSED BY
ECONOMIC AND LEGAL THEORY 39 (2007). For an exception see, Aluminium Silicon Mill Product
Gmbh v. Council of the European Union (Court of First Instance (March 14, 2007) (holding that
the Regulation was vitiated by a manifest error of judgement by wrongly attributing injury to
imports from Russia whereas disregarding other factors such as the contraction in demand in the
EU).
97
Council Regulation No. 1225/ 2009 (Nov. 30, 2009), art 3(5).
E Injury and Causation Determination … 153

criteria do not show injury, such findings will not discredit an affirmative finding.98
Sale prices, profits and profitability could impact the industry’s financial position
and, therefore, occupy a central position in the material injury and causation
analysis. Furthermore, the price undercutting and price underselling analysis are
used to evaluate material injury as well as causation.
The EU has no single specific criterion for determining causation. In the
anti-dumping investigation on Styrene-butadiene-styrene thermoplastic rubber
originating in Korea, the Commission held that the dumped imports taken in iso-
lation did not cause material injury.99 The general practice seems to be that dumped
imports ‘if taken in isolation’ could have injured the domestic industry, such a
conclusion will not be affected by the existence of other factors.
The EU does not use quantitative methods for isolating and segregating the role of
other factors on the domestic industry. The EU generally uses a mix of data reports,
trends analysis and summary statistical tools, but use of complex regression models
is not yet reported.100 In 2005, a WTO panel condemned an EU countervailing duty
measure for lack of sophistication in its causation analysis.101 The EC-DRAM panel
said that the EC’s record is “devoid of even elementary quantitative analysis” of
certain economic factors.102 In respect of injury and causation, several studies have
concluded that finding of ‘no injury’ are generally uncommon, although they may
occur during expiry, interim and partial interim review proceedings.103

(c) Canada

The Special Import Measures Act 1984 (SIMA) regulates the antidumping and
subsidy countervailing duty imposition in Canada. The language on injury and
causation under SIMA is substantially similar to the requirements under the
Antidumping Agreement. An antidumping case under SIMA requires two separate
sets of legal proceedings in order for a Canadian industry to obtain special tariff
protection against dumped imports from another country. These legal proceedings
comprise of the dumping investigation by the Canadian Border Service Agency and
the injury investigation by the Canadian International Trade Tribunal (CITT).
It is for the CITT to find out whether material injury has occurred to the domestic
industry and whether such injury is on account of dumped imports. CITT in practice
focuses on certain financial and production related aspects which could give an

98
See Miwon v. Council, ECR- II, 1841, ¶ 94 (Court of First Instance) (March 30, 2000); see also
Sinochem v. Council ECR II- 85 (January 29, 1998).
99
Council Regulation (EC) 1372/ 2005 (August 19, 2005).
100
Thomas Prusa & Edwin Vermulst, China countervailing and antidumping duties on Grain
Oriented Flat-rolled Electrical Steel from the United States: exporting US AD/CVD methodologies
through WTO dispute settlement, 13 (2) WORLD TRADE REVIEW 229, 260-269 (2014).
101
Panel Report, EC- DRAM, ¶ 7.434.
102
Panel Report, EC- DRAM, ¶¶ 7.413, 7. 420, 7.427.
103
EDMOND MCGOVERN, EC ANTIDUMPING LAW AND PRACTICE 41:4 (2013).
154 4 Injury and Causation in Antidumping Investigations …

indication of injury. A number of considerations are taken into account by the CITT
on a case-by-case basis. Typically, the CITT takes into account: (i) price erosion;
(ii) lost sales and market sales; (iii) decline in production and under-utilization of
capacity; (iv) reduced employment; (v) reduced investment; and (vi) declining gross
or net profitability. It is not necessary to find that injury is exclusively due to
dumping or subsidization, but rather that the latter are a cause of injury.
CITT has used quantitative economic estimates for assessing the effects of
dumped and subsidized imports on the domestic industry. In some cases such
estimates are prepared using the Commercial Policy Analysis System (COMPAS)
partial equilibrium models. However, the use of such quantitative estimations has
often been contested by interested parties in the investigations.104

(d) Australia

Section 269TAE of the Australian Customs Act, 1901 (Act No. 6 of 1901 as amended)
implements Article VI of the Agreement on Antidumping in Australia.
Section 269 TAE does not provide a definition of what is meant by material injury.
Such determinations are made by having regard to a range of factors mentioned under
Article 3.4 of the AD Agreement. Australia specifically examines the price effects
through price undercutting and price suppression analysis. As none of the antidumping
measures imposed by Australia is subject matter of a WTO dispute, the WTO com-
patibility of Australia’s injury and causation methodology is yet to be seriously tested.
Australia adopted a Ministerial Decision on Material Injury in 2012.105 According to
the Ministerial Decision, the Commissioner should, inter alia, use the following criteria
in dumping or CVD investigation: (i) that the injury caused by dumping or subsidis-
ation is material in degree; (ii) that material injury must be greater than that likely to
occur in the normal ebb and flow of business, and (iii) that dumping and subsidisation
need not be the sole cause of injury to the domestic industry. The Ministerial Decision
reconfirms that factors such as profit forgone and a loss of market share (of the domestic
industry) in an expanding market are relevant injury considerations.
The new principles adopted in the 2012 Ministerial Declaration are in a way a
reiteration of the WTO AD/SCM Agreements as well as the well-settled jurisprudence
in trade remedy law. However, Australia still depends on the qualitative assessment of
injury and causation and is yet to introduce sophisticated economic tools.106

104
Refined Sugar from the United States, Denmark, Germany, the Netherlands and the United
Kingdom, Inquiry No. NQ-95-002 (Canadian International Trade Tribunal, November 6 and 21,
1995) (Findings and Reasons).
105
Antidumping Commission, Australian Customs Dumping Notice No. 2012/24, New Ministerial
Decision on Material Injury, available at http://www.adcommission.gov.au/notices/Documents/
2012/XXACDN-StreamliningAustraliasAngti-DumpingSystem-
MinisterialDirectiononMaterialInjury-FI_000.pdf.
106
Weihuan Zhou, Assessment of ‘Material Injury’ and ‘Causation’, 9(10) GLOBAL TRADE AND
CUSTOMS JOURNAL 282, 290 (2015).
E Injury and Causation Determination … 155

2 Injury and Causation Practices of ‘New Users’

There have been some studies on the antidumping practices of the new users of
such instruments such as Argentina, Brazil, China and South Africa. The
anti-dumping legislations of most of these countries are, by and large, based on the
WTO AD Agreement.

(a) Mexico

Mexico’s anti-dumping as well as countervailing duty laws are similar in various

aspects to the unfair trade laws of its North American Free Trade Agreement
(NAFTA) partners.107 Mexico has a single investigating authority to make both
dumping and subsidy determination as well as material injury determinations.108
This agency is known as the Secretariat of the Economy (Secretarı´a de Economı´a,
or, for short, SECOFI). It is responsible for resolving investigations of unfair trade
practices in international trade, as well as determining the compensatory tariffs
resulting from said investigations. Within SECOFI, investigations are the respon-
sibility of the Unidad de Pra´cticas Comerciales Internacionales (UPCI).109
The UPCI is further divided into subdivisions for anti-dumping and countervailing,
safeguards and international trade litigation.110
Under the Foreign Trade Law of Mexico, ‘injury’ is defined in Article 39 as
including material injury, threat of injury or material retardation of the domestic
industry. The concepts are the same as in the WTO AD/SCM Agreements, as
indicated in SECOFI’s regulations.111
The injury test is offered only to countries that provide an injury test on a
reciprocal basis to Mexican exporters, presumably all other WTO members.
Otherwise, compensatory duties can be imposed without the injury test. Mexico, in
practice applies anti-dumping duties more frequently than countervailing duties.112
In the AD/CVD investigation, it must be established that dumped or subsidized
imports are causing injury to the domestic industry, in accordance with the law.113
Effects on the domestic industry caused by factors other than dumped imports are

107
G.W. Bowman et al., Antidumping and Countervailing Duty Law and Practice: The Mexican
Experience, Arizona Legal Studies Discussion Paper No. 10-10, 272 (2010).
108
Id.
109
Id.
110
Id.
111
Id. at 273.
112
Id.
113
Id. at 276.
156 4 Injury and Causation in Antidumping Investigations …

required by the statute not to be attributed by the authority to such imports. In a

proceeding initiated in the early 1990s, SECOFI determined that Canadian origin
imports of hot-rolled steel sheet constituting only 6 % of total imports and 1.4 % of
total consumption were sufficient to justify an injury finding.114 This case implies
that antidumping investigation can be launched even when dumped imports are not
the predominant cause of injury.
Like many other WTO members, the Foreign Trade Law requires the Secretary
to consider the volume of dumped imports, whether there has been a significant
increase in absolute or relative terms, the effect on Mexican prices of the dumped or
subsidized imports, and if the imports are sold at lower prices, whether they
decrease Mexican prices or impede price increases that otherwise would have
occurred.115 In determining causation of injury to the Mexican industry, Foreign
Trade Law places significant emphasis on factors such as actual or potential
reduction of sales, production volume, market share, and capacity utilization; fac-
tors affecting local prices, including the magnitude of dumping margins, effects on
investment and capital flows, employment and salaries, etc.116 The coincidence in
time analysis is used in several cases to establish a finding of causation.117
In the antidumping investigation on Bovine Carcasses (2000), the binational
panel affirmed the right of the Secretary to make an affirmative injury finding
although the determination had not found positive evidence of injury on the other
injury factors. From an examination of the Mexican practice, it does not appear that
the Foreign Trade Law recommends econometric models in the injury and causa-
tion determination. As is the case with many other WTO members, Mexico depends
on the traditional trends analysis. In the anti-dumping investigation on Rice from
the United States, the Ministry concluded that the investigated authorities had
determined that dumped imports had caused injury, merely because dumping
occurred at the same time as the domestic economic indicators had deteriorated.118
This is a reconfirmation of the qualitative approach to injury and causation followed
by Mexico in antidumping cases. While the parties to the antidumping practices
have the option to submit statistical/econometric studies to the authorities, the use
of such studies is not a pervasive practice.119

114
Binational Panel, Hot Rolled Steel Sheet Originating in or Exported from Canada (Dumping)
(June 16, 1997), MEX-96-1904-03, 33-36.
115
Id., at 277.
116
Id.
117
B. Leycegui and L. Torre, The 10 Major Problems with the Antidumping Instrument in Mexico,
39(1) JOURNAL OF WORLD TRADE 137, 141 (2005).
118
K. Ito, Mexico, in ANTI-DUMPING LAWS AND THE PRACTICES OF THE NEW USERS 272 (Junji
Nakagawa ed., 2007). See also Appellate Body Report, Mexico—Definitive Anti Dumping
Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R (December 20,
2005)
119
I am grateful to Jorge Miranda for pointing out this fact.
E Injury and Causation Determination … 157

(b) Argentina

Unlike Brazil, India and Mexico, Argentina has adopted a binary system for the
implementation of the dumping and the injury investigations. Dirección de
Competencia Desleal (“DCD” or the Directorate of Unfair Trade) is the agency
responsible for dumping determination, whereas Comisión Nacional de Comercio
Exterior (“CNCE” or the National Foreign Trade Commission) is the agency
responsible for injury determination. Although Argentina has adopted the WTO AD
Agreement, its conduct of investigations has been challenged in several instances.
For example, in Argentina—Poultry a WTO panel found that Argentina had vio-
lated its commitments by failing to provide an objective examination of material
injury factors.120 The panel found that the National Foreign Trade Commission did
not assess (1) the magnitude of the margin of dumping, and (2) any actual or
potential negative effects of the alleged dumping on cash flow, ability to raise
capital or investment and, therefore, violated Article 3.4 of the Anti-Dumping
Agreement. The injury and causation finding in a few other domestic antidumping
proceedings have also been challenged before the WTO.121
A perusal of the WTO disputes outlined above indicates that CNCE is not using
any quantitative models for evaluating and separating the role of various causal
factors.

(c) Brazil

In order to establish material injury, the Brazilian authorities take into account a
totality of factors. DECOM, the anti-dumping agency in Brazil conducts the injury
margin analysis. The injury margin is based on the price undercutting method
which is the difference between the average price of the domestic industry like
product with the average CIF landed price of the imports. In certain cases DECOM
also disregards the domestic price on the assumption that the domestic prices are
suppressed and constructs the price for the domestic like product, the cost calcu-
lation of which may be confidential.122 Like in most jurisdictions, the injury and
causation determination is based on volume and price effects.123
In regard to non-attribution analysis, the Brazilian authorities take into account
the known factors enlisted in Article 3.5 of the Anti-Dumping Agreement. In
addition to these factors, the Brazilian legislation requires the authorities to exclude

120
Panel Report, Argentina– Definitive Anti–Dumping Duties on Poultry from Brazil, ¶ 7.327,
WT/DS241/R (May 19, 2003).
121
See Panel Report, Argentina – Definitive Anti–Dumping Measures on Imports of Ceramic Floor
Tiles from Italy, WT/DS189/R (November 5, 2001). The European Communities did not challenge
the injury findings of CNCE in this dispute.
122
A. Caetano, The 10 Major Problems with the Antidumping Instrument in Brazil, 39(1) JOURNAL
OF WORLD TRADE 87, 87-88 (2005).
123
Id.
158 4 Injury and Causation in Antidumping Investigations …

(i) the impact of the process of liberalization on domestic prices, (ii) captive con-
sumption; and (iii) imports or resale of the imported product by the domestic
industry.124 There is no evidence that Brazil uses statistical or other quantitative
models for assessing the extent and impact of various causal factors.125

(d) China

As of 2015, China accounts for nearly 16 percent of global trade and has been a
major target as well as a user of trade remedies. Specifically in regard to China’s use
of antidumping mechanism, it is seen that Ministry of Commerce (MOFCOM)126 is
relying heavily on volume and price effects in assessing injury and causation.
However, the use of traditional techniques such as price undercutting and price
selling analysis in establishing price effects is still not firmly established. For
example, in a recent WTO dispute, namely China–GOES, the panel and the
Appellate Body found that China sought to establish price depression and price
suppression without conducting explicit price undercutting or price underselling
analysis.127 In the China–GOES dispute, the panel and the Appellate Body found
lack of an objective examination in its price analysis. Likewise, another WTO panel
in China–X-Ray Equipment ruled that China failed to ensure price comparability in
its price effect analysis.128 This dispute involved an antidumping investigation on
non-medical x-ray scanning equipment. The Chinese dumping initiation covered
scanning systems using more than 100 keV. However, the European exports
(Smiths’ scanners) were concentrated in low-energy scanning equipment whereas
the Chinese sales (Nuctech’s scanners) were of high-energy scanners.129 This
distinction was important in the injury analysis. In this investigation, MOFCOM
made a determination of price undercutting and price suppression by comparing the
weighted average unit price of all imported products with the annual weighted

124
Marco Fonesca, Injury and Causation Determination in Brazil, Address at the International
Conference on Trade Remedies organized by the Centre for WTO Studies, Indian Institute of
Foreign Trade on April 9, 2015 in New Delhi (presentation on file with author).
125
Id.
126
Injury is assessed by Bureau of Industry Injury which is part of Ministry of Commerce.
127
Appellate Body Report, China—GOES, at ¶.131.
128
Panel Report, China—Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment
from the European Union, ¶ 7.67, WT/DS425/R and Add.1 (April 24, 2013).
129
It was stated that Nuctechs’ scanners were used in cargo scanning such as railways and trucks
whereas Smiths ‘scanners were used for security scanning of airport luggage.
E Injury and Causation Determination … 159

average unit prices of all domestic sales irrespective of the product types.130 No
model-to-model comparison was made. The Panel concluded that the MOFCOM’s
“price undercutting and price suppression analyses were not based on an objective
examination.”131
There is a criticism that there is insufficient disclosure of the basis of the
determination of injury and causal link.132 Article 8 of the Antidumping Regulations
of the People’s Republic of China 2004133 lists the other known factors that need to
be examined in the non-attribution analysis. However, Chinese implementing laws
offer significant discretion in determining whether material injury had occurred and
whether dumped imports had caused such injury. The legislation also does not
contain detailed methodologies on how the impact of other known factors could be
established. Secondary literature also confirms that the Ministry of Commerce does
not use any quantitative tools in its injury and causation analysis. For example,
while commenting on China’s loss in China—GOES, Prusa and Vermulst suggest
that China should look at “large body of statistical and econometric literature for
guidance” for conducting its analysis in a rigorous way.134 There is no evidence as
of now that China has started using complex quantitative or statistical methods for
determining injury and causation.

(e) South Africa

In South Africa, the antidumping investigations are currently undertaken under the
International Trade Administration Act, 71 of 2002 and the Antidumping
Regulations (ADR). The Antidumping investigations are conducted by the
Directorates (Trade Remedies I and II).
Article 13.2 of the ADR lists the factors that are to be considered for the
assessment of material injury. Article 13.2 does not list the traditional factors such
as import volumes, price undercutting, margin of dumping and factors affecting
domestic prices in the material injury examinations. These factors are considered in
the context of Article 16 of the ADR which specifically deals with the determi-
nation of causation. It is reported that the International Trade Administration
Commission (ITAC) finds causation when there is a combination of increased

130
China–X-Ray Equipment, ¶7.34.
131
Id. ¶7.97.
132
X. Wu, ANTI-DUMPING LAW AND PRACTICE IN CHINA 417 (2009).
133
PRC Trade Remedy Laws, Regulations and Rules, http://enforcement.trade.gov/trcs/downloads/
documents/china/ (last visited on October 12, 2014).
134
Thomas Prusa & Edwin Vermulst, supra note 100, at 261.
160 4 Injury and Causation in Antidumping Investigations …

imports and price undercutting by dumped imports.135 However, in a few inves-

tigations the ITAC has terminated the investigations citing lack of causal link136
when the volume of dumped imports had been insignificant, or when the margin of
dumping or the degree of price undercutting was low. The ITAC, however, is not
reported to be employing quantitative or econometric tools for conducting causation
analysis.

F Conclusion

The adoption of the appropriate injury and causation standards in the domestic trade
remedy proceedings has been one of the greatest challenges of trade remedy
enforcement. This chapter in particular examined the injury and causation standards
in antidumping proceedings in India, one of the leading users of antidumping
mechanisms. In order to examine and understand the pattern and empirics of
antidumping, this chapter examined 19 cases spread across the last two decades of
antidumping enforcement in India. In addition, this chapter looked at the injury and
causation standards prevailing in other key users of antidumping remedies to
examine how these WTO Members have been conducting injury and causation and,
in particular, the non-attribution requirement. The study also examined whether the
WTO members are using plain qualitative techniques or whether they are using
statistical tools such as granger causality regression or other econometric tools.
A review of the select cases in India indicates that injury and causation analysis
was lax in the early phase, i.e., between 1994 and 2003. The final findings dis-
cussed only a few injury parameters. However, there is a qualitative improvement
in the conduct of antidumping Investigation in India in the recent times. The DGAD
provides a mandatory examination of all 15 injury parameters in the recent
investigations. Adoption of tougher injury and causation standards could have
crippled the domestic industry in India in the initial years in which the industry was
facing global competition.
Causation determination is primarily based on an assessment of the volume and
price effects. If there is price undercutting and price underselling by the subject
imports accompanied by an increase in imports, causation is presumed. This trend
continues even in the recent investigations. A proper assessment on the interaction

135
Gustav Brink, Antidumping in South Africa (TRALAC Working Paper No. D12WP07, 2012),
available at http://www.tralac.org/files/2012/07/D12WP072012-Brink-Anti-Dumping-in-SA-
20120725final.pdf. See also G. Brink, The 10 Major Problems with the Antidumping
Instrument in South Africa, 39(1) JOURNAL OF WORLD TRADE 147, 156 (2005).
136
Polyethylene Terephthalate (originating in India, China, Indonesia, Korea, Chinese Taipei,
Thailand) (Report 154); Stainless Steel Tubes and Pipes (originating in India, China and Malaysia
(Report 160); Lysine (originating in United States) (Report 193); Toughened Glass (originating in
China) (Report 184); Steel Wheel Rims (originating in Brazil, China, Chinese Taipei and Turkey)
(Report 125).
F Conclusion 161

between price effects and other industry parameters is still not observed in the injury
and causation analysis across jurisdictions. As has been clarified by the Appellate
Body in cases such as Thailand—H Beams, Mexico—HFCS a mere listing of data
does not amount to evaluation. In that sense, an absence of a clear explanation of
the interaction between various injury factors is a deficiency which India and other
countries will have to address.
There are some interesting findings with respect to non-attribution analysis in
India. During 1994–2003, the DGAD did not examine the role of other known
factors as a mandatory requirement. Most of the final findings did not even mention
the role of other listed known factors. However, in Phase II (2004–2013), the
DGAD has provided a routine mention of the role of other factors. It is seen of late
that the discussion on other known factors contains certain data and factual
description of the role of other factors. Nonetheless, it does not appear that the
findings contain the type of rigour expected in the various Appellate Body decisions
on the need for “isolating and separating” the role of other factors. It is also noticed
that most of the antidumping cases in India provide an examination of only the
listed known factors and other additional factors which are known to the investi-
gating authority during the proceedings are hardly addressed. There is very limited
improvement in this regard even during the more recent phase, i.e. during
2004–2014.
While the injury and causation analysis in antidumping investigations in India
has shown improvement in the last few years, it may still be falling short of the
WTO requirement, especially in the matter of performing the non-attribution
analysis. In this regard, an examination of the comparative practices in other WTO
members was considered instructive. An analysis based on secondary literature
indicates that most WTO members follow the approach currently implemented in
India with a focus on volume and price effects. Price depression and suppression
analysis remain central to antidumping investigations among all the major users.
However, the use of constructed fair-selling or non-injurious prices increases the
possibility of providing unwarranted protection to the domestic industry in certain
cases.
One of the critical issues in causation is the use of quantitative tools. Except
United States and Canada, no country examined in this chapter has been using
quantitative tools on a consistent basis. Even in the United States, there is scepti-
cism in the use of quantitative tools in trade remedy investigations and the use of
such tools has been limited. In that context, the only acceptable tool for causation
determination remains the volume and price analysis subsumed in the so-called
trends analysis. In respect of non-attribution, most jurisdictions provide a
descriptive assessment as opposed to a mathematical segregation. It is noticed that
even the focus on the descriptive approach is a fairly recent trend. A review of
causation methodologies of the major users of antidumping only goes to emphasise
the practical difficulty in using quantitative methods, keeping aside the logical
redundancy of such methods in the context of trade remedy investigations.
162 4 Injury and Causation in Antidumping Investigations …

Appendix

Case 14/1/1997 # Anti-dumping Investigation Concerning Import of Hot

Rolled Coils/Sheets/Plates/Strips from Russia, Kazakhstan and Ukraine

Petitioners: M/s Steel Authority of India Ltd. SAIL & M/s Essar Steel Ltd.
Period of Investigation: 1996–1997
Final Finding: November 18, 1998

Material Injury—Consideration of 15 Injury Factors

1995–96 1996–97 (POI) Compared to previous
Compared to previous year 1994–95 year 1995–96
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (+)
1 Sales ✓
2 Profits ✓ ✓
3 Output NM ✓
4 Market share ✓
5 Productivity ✓ ✓
6 Return on ✓
Investments
7 Utilization of ✓ ✓
Capacity
8 Factors NM ✓
affecting
domestic
prices
9 Dumping –
Margin
10 Cash flow ✓
11 Inventories NM ✓
12 Employment NM ✓
13 Wages NM ✓
14 Growth ✓ ✓
15 Ability to raise ✓
capital or
Investment
NM means ‘not mentioned’
Appendix 163

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of No
consumption
4 Trade-restrictive practices of and competition between foreign No
and domestic producers
5 Developments in technology No
6 The export performance No
7 Productivity of the domestic industry None

Case 29/1/1997 # Anti-dumping Investigation Concerning Import of Citric

Acid from People Republic of China

Petitioner: M/s. Citurgia Bio-chemicals Ltd

Period of Investigation (POI)—April 1996 to July 1997
Final Finding: March 15, 1999

Material Injury—Consideration of 15 Injury Factors

1995–96 Compared to previous year 1996–97 (POI) Compared to previous
1994–95 year 1995–96
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (+)
1 Sales ✓ ✓
2 Profits NM ✓
3 Output ✓ ✓
4 Market share ✓ ✓
5 Productivity NM ✓
6 Return on NM ✓
Investments
7 Utilization of ✓ ✓
Capacity
8 Factors NM ✓
affecting
domestic
prices
9 Dumping
Margin
10 Cash flow NM ✓
11 Inventories ✓ ✓
12 Employment NM NM
13 Wages NM NM
(continued)
164 4 Injury and Causation in Antidumping Investigations …

(continued)
1995–96 Compared to previous year 1996–97 (POI) Compared to previous
1994–95 year 1995–96
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (+)
14 Growth ✓ NM
15 Ability to raise NM NM
capital or
Investment
NM means ‘not mentioned’

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of No
consumption
4 Trade-restrictive practices of and competition between foreign No
and domestic producers
5 Developments in technology No
6 The export performance No
7 Productivity of the domestic industry No
8 Other known factors None

Case 27/1/98 # Antidumping Investigation on Pure Terephthalic Acid from

Japan, Malaysia, Spain and Taiwan

Petitioner: Reliance Industries Ltd.

Date of Final Finding: April 20, 2000

Material Injury—Consideration of 15 Injury Factors

1997–98 April 1998-Dec. 1998 (POI) Compared to
previous year
S. No. Factors Worsened Improved Unchanged/NM Worsened Improved Unchanged/NM
(−) (+) (−) (+)
1 Sales NM ✓
2 Profits NM ✓
3 Output NM NM
4 Market share NM NM
5 Productivity NM NM
6 Return on NM NM
Investments
(continued)
Appendix 165

(continued)
1997–98 April 1998-Dec. 1998 (POI) Compared to
previous year
S. No. Factors Worsened Improved Unchanged/NM Worsened Improved Unchanged/NM
(−) (+) (−) (+)
7 Utilization of NM NM
Capacity
8 Factors NM ✓
affecting
domestic
prices
9 Dumping ✓
Margin
10 Cash flow NM NM
11 Inventories NM NM
12 Employment NM NM
13 Wages NM NM
14 Growth NM NM
15 Ability to NM NM
raise capital or
Investment
NM means ‘not mentioned’

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of No
consumption
4 Trade-restrictive practices of and competition between foreign No
and domestic producers
5 Developments in technology No
6 The export performance No
7 Productivity of the domestic industry No
8 Other known factors None

Case 34/1/1998 # Antidumping Investigation on Import of Acrylic Fiber from

Turkey, Hungary and the European Union

Petitioner: M/s Indian Acrylics Ltd., Chandigarh, Pasupati Acylon Ltd., New Delhi
and Consolidated Fibre and Chemicals Ltd., Calcutta
Period of Investigation: April 1998–December 1998
Date of Final Finding: March 24, 2000
166 4 Injury and Causation in Antidumping Investigations …

Material Injury—Consideration of 15 Injury Factors

During 1997–98 Compared to During (POI) 1998–1999 Compared to
previous year previous year
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (+)
1 Sales NM ✓
2 Profits ✓ ✓
3 Output ✓ ✓
4 Market share ✓ ✓
5 Productivity NM
6 Return on ✓ ✓
Investments
7 Utilization of NM NM
Capacity
8 Factors ✓
affecting
domestic
prices
9 Dumping ✓
Margin
10 Cash flow NM NM
11 Inventories ✓ ✓
12 Employment NM ✓
13 Wages NM NM
14 Growth NM ✓
15 Ability to raise NM ✓
capital or
Investment
NM means ‘not mentioned’

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of No
consumption
4 Trade-restrictive practices of and competition between foreign No
and domestic producers
5 Developments in technology No
6 The export performance No
7 Productivity of the domestic industry No
8 Other known factors None
Appendix 167

Case 24/1/99 # Anti-dumping Investigations Concerning Import of Optical

Fibre from Korea R.P

Petitioner: M/s. Sterlite Industries Ltd.

Period of Investigation (POI)—April 1998 to February 1999
Date of Provisional Finding: 5 November 1999

Material Injury—Consideration of 15 Injury Factors

1997–98 Compared to Previous year 1998–99 (POI) Compared to previous
year 1997–98
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (+)
1 Sales ✓ ✓
2 Profitability ✓ ✓
3 Output NM ✓
4 Market share ✓ ✓
5 Productivity NM ✓
6 Return on NM NM
Investments
7 Utilization of ✓ ✓
Capacity
8 Factors affecting NM ✓
domestic prices
9 Dumping ✓
Margin
10 Cash flow NM NM
11 Inventories NM ✓
12 Employment NM NM
13 Wages NM NM
14 Growth ✓ NM
15 Ability to raise NM NM
capital or
Investment
NM means ‘not mentioned’

Non-attribution analysis
S. No. Factors Whether discussed or
not
1 The volume and prices of the imports not sold at dumping prices No
2 Contraction in demand or changes in the pattern of consumption No
4 Trade-restrictive practices of and competition between foreign and No
domestic producers
5 Developments in technology No
(continued)
168 4 Injury and Causation in Antidumping Investigations …

(continued)
Non-attribution analysis
S. No. Factors Whether discussed or
not
6 The export performance No
7 Productivity of the domestic industry No
8 Other unlisted known factors None

Case 67/1/2000 # Anti-dumping Investigation Concerning Import of Lead Acid

Batteries Originating in or Exported from Japan, Korea, China and
Bangladesh

Petitioner: M/s Excide Industries Limited & M/s Amara Raja Batteries Ltd
Period of Investigation: January 2001–September 2001
Final Findings: 2001

Material Injury—Consideration of 15 Injury Factors

1998–99 2000 (POI) Compared to previous year
1998–99
S. No. Factors Decline Improvement Unchanged Decline Improvement Unchanged
(−) (+) (−) (+)
1 Sales ✓ ✓
2 Profits ✓ ✓
3 Output ✓ ✓
4 Market share NM ✓
5 Productivity ✓ ✓
6 Return on NM ✓
Investments
7 Utilization of NM ✓
Capacity
8 Factors NM ✓
affecting
domestic
prices
9 Dumping ✓
Margin
10 Cash flow NM NM
11 Inventories NM ✓
(continued)
Appendix 169

(continued)
1998–99 2000 (POI) Compared to previous year
1998–99
S. No. Factors Decline Improvement Unchanged Decline Improvement Unchanged
(−) (+) (−) (+)
12 Employment NM ✓
13 Wages NM NM
14 Growth NM ✓
15 Ability to NM ✓
raise capital or
Investment
NM means ‘not mentioned’

Non-attribution analysis
S. No. Factors Whether discussed
or not
1 The volume and prices of the imports not sold at dumping prices Yes
2 Contraction in demand or changes in the pattern of consumption Yes
3 Trade-restrictive practices of and competition between foreign and No
domestic producers
4 Developments in technology No
5 The export performance No
6 Productivity of the domestic industry No
Other known factors
7 Domestic companies introduced voluntary retirement scheme for its employees and reduced
employment

Case 47/1/99-DGAD # AD Investigation on Bisphenol-A Originating in or

Exported from the European Union and Taiwan

Petitioner: M/s Kesar Petro Products

Period of Investigation: April 1998–September 1998
Date of Final Finding: December 6, 2000
 170

Material Injury—Consideration of 15 Injury Factors

1997–1998 Compared to 1997–98 1998–1999 Compared to 1998–1999 1 April, 1998–30 Sep 1999
(POI) Compared to 1998–99
S. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
No. (−) (−) (−)
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share NM ✓ ✓
5 Productivity NM ✓ ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity NM ✓ ✓
8 Domestic prices ✓ ✓ ✓
9 Dumping Margin – – ✓
10 Cash flow NM NM NM
11 Inventories ✓ ✓ ✓
12 Employment NM
13 Wages NM NM
14 Growth NM NM ✓
15 Ability to raise capital or NM
Investment
NM means ‘Not mentioned’
4 Injury and Causation in Antidumping Investigations …
Appendix 171

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of No
consumption
3 Trade-restrictive practices of and competition between foreign No
and domestic producers
4 Developments in technology No
5 The export performance No
6 Productivity of the domestic industry No
7 Other unlisted known factors None

Case 64/1/2000 # AD Investigation on Hardened Forged Steel Rolls from

Russia, Ukraine and Korea

Petitioner: M/s Gontermann-Piper India Ltd.

Period of Investigation: April 2001–June 2002
Date of Final Finding: July 3, 2003
 172

Material Injury—Consideration of 15 Injury Factors

1998–1999 Compared to 1997–1998 Compared to 1999–2000 1 April, 2001–30 June 2002
(POI) Compared to 2000–2001
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (+) (−) (+)
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share NM ✓ ✓
5 Productivity NM ✓ ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity NM ✓
8 Domestic prices ✓ ✓ ✓
9 Dumping Margin – ✓
10 Cash flow NM NM ✓
11 Inventories ✓ ✓ ✓
12 Employment NM
13 Wages
14 Growth NM NM
15 Ability to raise capital or ✓
Investment
NM means ‘Not mentioned’
4 Injury and Causation in Antidumping Investigations …
Appendix 173

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of No
consumption
3 Trade-restrictive practices of and competition between foreign No
and domestic producers
4 Developments in technology No
5 The export performance No
6 Productivity of the domestic industry No
7 Other unlisted known factors None

Case 63/1/2001 #: Antidumping Investigation on Acyclic Alcohols Originating

in or Exported from Singapore, Brazil, Romania, Malaysia and South Africa

Petitioner: M/s National Organic Chemicals Industries Ltd (NOCIL)

Period of Investigation: April 2000–June 2001
Date of Final Finding: July 29, 2003

Material Injury—Consideration of 15 Injury Factors

1999–2000 Compared to previous year 2000–2001(POI) Compared to
1998–1999 previous year 1999–2000
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (−) (+)
1 Sales ✓ NM ✓
2 Profits NM ✓
3 Output NM ✓
4 Market share ✓ ✓
5 Productivity NM ✓
6 Return on NM ✓
Investments
7 Utilization of ✓ ✓
Capacity
8 Domestic NM ✓
prices
9 Dumping ✓
Margin
10 Cash flow ✓ ✓
11 Inventories ✓ ✓
(continued)
174 4 Injury and Causation in Antidumping Investigations …

(continued)
1999–2000 Compared to previous year 2000–2001(POI) Compared to
1998–1999 previous year 1999–2000
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (−) (+)
12 Employment ✓ ✓
13 Wages ✓ ✓
14 Growth NM NM
15 Ability to NM ✓
raise capital
or Investment
NM means ‘Not mentioned’

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
4 Trade-restrictive practices of and competition between foreign No
and domestic producers
5 Developments in technology Yes
6 The export performance No
7 Productivity of the domestic industry No
8 Other unlisted known factors None

Case 14/30/2002 #: Antidumping Investigation on Ball Bearing from China,

Russia, Poland and Romania

Petitioner: Ball and Roller Bearing Manufacturers Association of India, New Delhi
Period of Investigation: January 2001–March 2002
Date of Final Finding: March 19, 2004
 Appendix

Material Injury—Consideration of 15 injury factors

1999–2000 Compared to previous 2000–2001 Compared to previous January 2001–March 2002
year 1998–1999 year 1999–2000 (POI) Compared to previous year
2000–2001
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (+) (−) (+)
1 Sales ✓ ✓ ✓
2 Profits ✓ NM ✓
3 Output NM ✓
4 Market share NM NM ✓
5 Productivity NM NM ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity ✓ ✓ ✓
8 Domestic prices NM NM ✓ ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓ ✓
11 Inventories ✓ ✓ ✓ ✓
12 Employment ✓ ✓ ✓
13 Wages ✓ ✓ ✓
14 Growth ✓ ✓ ✓
15 Ability to raise capital NM NM NM
or Investment
NM means ‘Not mentioned’
175
176 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of No
consumption
4 Trade-restrictive practices of and competition between foreign No
and domestic producers
5 Developments in technology No
6 The export performance No
7 Productivity of the domestic industry No
8 Other unlisted known factors None

Case 14/7/2003 #: Antidumping Investigation on Coated Paper of 80 GSM

Exported from European Union and Indonesia

Petitioner: BILT Graphics Papers

Period of Investigation: January 2002–December 2002
Date of Final Finding: December 15, 2004
 Appendix

Material Injury—Consideration of 15 Injury Factors

Compared to previous year 1999– Compared to previous year 2000– 2002 (POI) Compared to previous
2000 2001 year 2001–2002
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (−) (−)
1 Sales NM ✓ ✓
2 Profits NM ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity NM ✓ ✓
6 Return on Investments ✓ ✓
7 Utilization of Capacity NM ✓ ✓
8 Domestic prices ✓ ✓ ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓
11 Inventories ✓ ✓ ✓
12 Employment NM ✓ ✓
13 Wages NM ✓ ✓
14 Growth NM NM ✓
15 Ability to raise capital or NM NM NM
Investment
NM means ‘Not mentioned’
177
178 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping No
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
4 Trade-restrictive practices of and competition between foreign Yes
and domestic producers
5 Developments in technology Yes
6 The export performance Yes
7 Productivity of the domestic industry Yes
8 Other unlisted known factors None

Case 14/9/2005 # Antidumping Investigation on Bias Tyres Originating in

China PR and Thailand

Petitioner: Automotive Tyre Manufacturer Association (ATMA)

Date of Final Finding: June 29, 2007
 Appendix

Material Injury—Consideration of 15 Injury Factors

Compared to previous year Compared to previous year 2002 (POI) Compared to previous
year
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (+) (−) (−) (+) (−) (−) (+)
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Return on ✓ ✓ ✓
Investments
7 Utilization of ✓ ✓ ✓
Capacity
8 Domestic prices ✓ ✓ ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓
11 Inventories ✓ ✓ ✓
12 Employment ✓ ✓ ✓
13 Wages ✓ ✓ ✓
14 Growth ✓ ✓
15 Ability to raise −NM NM NM
capital or Investment
NM means ‘Not mentioned’
179
180 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping Yes
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
4 Trade-restrictive practices of and competition between foreign No
and domestic producers
5 Developments in technology Yes
6 The export performance Yes
7 Productivity of the domestic industry Yes
8 Other unlisted known factors None

Case 14/4/2006 # Antidumping Investigation on Acetone Originating in or

Exported from EU, Chinese Taipei, Singapore, South Africa and USA

Petitioner: M/s Hindustan Organic Chemicals Ltd., Mumbai and M/s Schenectady
Herdillia Ltd.
Date of Final Finding: January 4, 2008
 Appendix

Material Injury—Consideration of 15 Injury Factors

2003–04 Compared to previous year 2004–05 Compared to previous year 2005 (July)–2006 (June) (POI);
Compared to previous year
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (−) (−)
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity ✓ ✓ ✓
8 Domestic prices NM NM ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓
11 Inventories ✓ ✓ ✓
12 Employment ✓ ✓ ✓
13 Wages ✓ ✓ ✓
14 Growth ✓ ✓ ✓
15 Ability to raise ✓ ✓ ✓
capital/Invest
NM means ‘Not mentioned’
181
182 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping Yes
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
4 Trade-restrictive practices of and competition between foreign Yes
and domestic producers
5 Developments in technology Yes
6 The export performance Yes
7 Productivity of the domestic industry Yes
8 Other unlisted known factors None

Case 14/6/2006 # Anti-dumping Investigation on Imports of Pre-sensitized

Positive Offset Aluminum Plates (PS Plates) from Bulgaria, China PR,
Malaysia, Singapore and South Korea

Petitioner: M/s Technova Imaging Systems (P) Ltd., and M/s. Stovec Industries
Ltd.
Period of Investigation: April 2005–March 2006
Date of Final Finding: August 23, 2007
 Appendix

Material Injury—Consideration of 15 Injury Factors

2003–04 Compared to previous year 2004–05 (POI) Compared to previous 2005–2006(POI) Compared to previous
2002–03 year 2003–04 year 2004–05
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (−) (−)
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity ✓ ✓ ✓
8 Domestic prices ✓ ✓ ✓ ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓
11 Inventories ✓ ✓ ✓
12 Employment ✓ ✓ ✓
13 Wages ✓ ✓ ✓
14 Growth ✓ ✓ ✓
15 Ability to raise ✓ ✓ ✓
capitaI/Invest
NC means “not clear”. NM means “not mentioned”.
183
184 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether discussed or
not
1 Change in the pattern of consumption Yes
2 Technological differences between product at issue and its Yes
substitutes
3 Trade restrictive practices and domestic competition Yes
4 Contraction of demand Yes
5 Export performance Yes
6 Imports from third countries Yes
7 Productivity of the domestic producers Yes
8 Other unlisted known factors Yes
a. Rising prices of aluminum

Case 14/6/2009 # Anti-dumping Investigation on Imports of Viscose Staple

Fibre Excluding Bamboo Fibre Originating in or Exported from China PR
and Indonesia

Petitioners: Association of Man Made Fibre Industry of India (AMFII)

Period of Investigation: 2007–08
Date of Final Findings: May 17, 2010
 Appendix

Material Injury—Consideration of 15 Injury Factors

2006–07 Compared to previous year 2005–06 2007–08 (POI) Compared to previous year
2006–07
S. No. Factors Worsened (−) Improved Unchanged Worsened (−) Improved Unchanged
1 Sales ✓ ✓
2 Profits ✓ ✓
3 Output ✓ ✓
4 Market share ✓ ✓
5 Productivity ✓ ✓
6 Return on Investments ✓ ✓
7 Utilization of Capacity ✓ ✓
8 Domestic prices ✓ ✓
9 Dumping Margin – ✓
10 Cash flow ✓ ✓
11 Inventories ✓ ✓
12 Employment ✓ ✓
13 Wages ✓ ✓
14 Growth ✓ ✓
15 Ability to raise capitaI/Invest ✓ ✓
185
186 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether discussed or
not
1 Imports from third countries Yes
2 Contraction in demand & Change in pattern of Yes
consumption
3 Conditions of competition Yes
4 Development in technology Yes
5 Export performance of the domestic industry Yes
6 Other unlisted known factors Yes
a. Global Downward Trend
b. Weakening of Indian Rupee
c. Rise in input costs

Case 14/25/2008 # Antidumping Investigation on Circular Weaving Machines

Having Six or More Shuttles for Weaving PP/HDPE Fabrics Originating in or
Exported from China PR

Petitioner: M/s Lohia Starlinger Ltd.

Period of Investigation: April 2008–December 2008
Date of Final Finding: November 16, 2010
 Appendix

Material Injury—Consideration of 15 Injury Factors

2006–07 Compared to previous year 2007–08 Compared to previous year Compared to previous year April
2008–Dec. 2008
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (−) (−)
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity ✓ ✓ ✓
8 Domestic prices NM NM ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓
11 Inventories NM NM NM
12 Employment ✓ ✓ ✓
13 Wages ✓ ✓ ✓
14 Growth NM NM NM
15 Ability to raise ✓ ✓ ✓
capital/Invest
NM means ‘Not mentioned’
187
188 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping Yes
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
3 Trade-restrictive practices of and competition between foreign Yes
and domestic producers
4 Developments in technology Yes
5 The export performance Yes
6 Productivity of the domestic industry Yes
7 Other unlisted known factors None

Case 14/7/2011 # Antidumping Investigation on Digital Offset Printing Plates

Originating in or Exported from China PR and Japan

Petitioner: M/s Technova

Date of Final Finding: October 3, 2012
 Appendix

Material Injury—Consideration of 15 Injury Factors

2008–09 Compared to previous year 2009–10 Compared to previous year 2010–2011(POI) Compared to
2007–08 2008–09 previous year 2009–10
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
(−) (−) (−)
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Return on Investments ✓
7 Utilization of Capacity ✓ ✓ ✓
8 Domestic prices ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓
11 Inventories ✓ ✓ ✓
12 Employment ✓ ✓ ✓ ✓
13 Wages ✓ ✓ ✓ ✓
14 Growth NC NC NC
15 Ability to raise ✓
capitaI/Invest
NC means “not clear”. The industry had volume growth, but suffered financial decline
189
190 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping Yes
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
3 Trade-restrictive practices of and competition between foreign Yes
and domestic producers
4 Developments in technology Yes
5 The export performance Yes
6 Productivity of the domestic industry Yes
7 Other unlisted known factors Yes
a. safeguard duties on aluminum from China PR and the
increase in raw material cost
b. NIP lower than NSR
c. Additional investment by domestic industry

Case 14/35/2010 # Antidumping Investigation on Melamine Originating in or

Exported from European Union, Iran, Indonesia and Japan—Final Findings

Petitioner: M/s. Gujarat State Fertilizers & Chemicals Ltd.

Period of Investigation: April 2009–June 2010
Date of Final Finding: June 1, 2012
 Appendix

Material Injury—Consideration of 15 Injury Factors

2007–08 Compared to previous year 2008–09 Compared to previous year April 2009–June 2010 (POI
2006–07 2007–08 annualized)
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
1 Sales
2 Profits ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity ✓ ✓ ✓
8 Domestic prices ✓ ✓ ✓
9 Dumping Margin – – ✓
10 Cash flow ✓ ✓ ✓
11 Inventories ✓ ✓ ✓
12 Employment ✓ ✓ ✓
13 Wages ✓ ✓ ✓
14 Growth ✓ ✓ ✓
15 Ability to raise capital or NM NM ✓
Investment
NM means ‘Not mentioned’
191
192 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping Yes
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
3 Trade-restrictive practices of and competition between foreign Yes
and domestic producers
4 Developments in technology Yes
5 The export performance Yes
6 Productivity of the domestic industry Yes
7 Other unlisted known factors No

Case 14/3/2011 # Antidumping Investigation on Soda Ash Originating in

Russia and Turkey

Petitioner: Alkali Manufacturer’s Association of India

Date of Final Finding: February 9, 2013
 Appendix

Material Injury—Consideration of 15 Injury Factors

2009–10 Compared to previous year 2010–11 Compared to previous year 2011–2012(POI annualized)
2007–08 2008–09 Compared to previous year 2009–10
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged Worsened Improved Unchanged
1 Sales ✓ ✓ ✓
2 Profits ✓ ✓ ✓ ✓
3 Output ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Return on Investments ✓ ✓ ✓
7 Utilization of Capacity ✓ ✓ ✓
8 Domestic prices ✓
9 Dumping Margin ✓
10 Cash flow ✓ ✓ ✓
11 Inventories ✓ ✓ ✓
12 Employment ✓ ✓ ✓
13 Wages ✓ ✓ ✓
14 Growth ✓
15 Ability to raise capital or NM NM ✓
Investment
NM means ‘Not Mentioned’
193
194 4 Injury and Causation in Antidumping Investigations …

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 The volume and prices of the imports not sold at dumping Yes
prices
2 Contraction in demand or changes in the pattern of Yes
consumption
3 Trade-restrictive practices of and competition between foreign Yes
and domestic producers
4 Developments in technology Yes
5 The export performance Yes
6 Productivity of the domestic industry Yes
7 Other unlisted known factors None
Chapter 5
Injury and Causation in Safeguard
Investigations: Experience of India
and Other WTO Members

Abstract While the developed Members within the WTO have slowed down their
recourse to safeguard measures, a number of developing countries such as India,
Indonesia, Argentina and Turkey have become active users of such remedies. This
chapter examines the practices and the tools developed by these emerging users in
safeguards investigations. In particular this chapter seeks to examine whether the
new users are conducting the injury and causation tests in conformity with the
thresholds laid down by the WTO agreements and the jurisprudence developed by
the panels and the Appellate Body.

A Introduction

Safeguard investigations are relatively infrequent when compared to antidumping

investigations and, therefore, attract limited publicity. Especially after the global
safeguard investigations on steel by the Bush Administration in 2001, this mech-
anism has almost fallen into disuse among the traditional users.1 The adverse
rulings given by the WTO panels in some of safeguard investigations in the late
1990s and early 2000 too might have contributed to the falling popularity of
safeguard instruments.2 Nonetheless, following the 2008–09 economic crisis there
was a worldwide upsurge in safeguard actions (see Fig. 1).
India has been a fairly active user of safeguards, although India’s safeguard
activity is significantly less when compared to its antidumping activity. India had
initiated 36 safeguard actions during 1995–2014 which is by far the heaviest use of
safeguard actions. Other leading users include Indonesia and Turkey, while there
has been significant fall in the safeguard actions initiated by the traditional users
such as the United States and European Union.

1
The United States imposed special safeguard action passenger truck tyres from China under
Section 421 of the U.S. Trade Act of 1974. The matter was later challenged by China at the WTO.
2
SHEELA RAI, RECOGNITION AND REGULATION OF SAFEGUARD MEASURES UNDER GATT/WTO (2011).

© Springer Science+Business Media Singapore 2016 195

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_5
196 5 Injury and Causation in Safeguards Investigations …

Fig. 1 Trends in safeguards initiation by the WTO members. Source WTO

The legislative framework of safeguard investigations in India is provided by the

Sections 8B and 8C of the Customs Tariff Act 1975. Section 8B deals with global
safeguards while Section 8C relates to the transitional safeguard measures applied
to imports from China. In addition, the Customs Tariff (Identification and
Assessment of Safeguard Duty) Rules 1997, and the Customs Tariff (Transitional
Products Specific Safeguard Duty) Rules 2002, describe the detailed procedures for
the application of safeguard measures.
Unlike AD/CVDs, safeguard duties can be levied only for shorter periods of time
which is necessary to prevent or remedy serious injury and to facilitate positive
adjustment. Safeguard actions generally apply for short periods of time such as one
or 2 years. There is an additional requirement that a safeguard measure in place for
more than 1 year must be liberalized progressively at regular intervals. In rare
circumstances, they may be applied for 4 years, but are scheduled to expire at the
end of this period. However, the Central Government can extend the period of
imposition upto a maximum of 10 years from first imposition of the duty if it is of
the opinion that the domestic industry has taken measures to adjust to the injury or
threat thereof and that the safeguard duty remains necessary. The safeguard mea-
sures are generally in the nature of customs tariffs, but the Foreign Trade
(Development and Regulation) Amendment Act 2010 (No. 25 of 2010) also allows
the use of quantitative restrictions as remedial measures.
In line with the previous chapter, this chapter seeks to examine India’s conduct
of injury and causation in safeguard investigations to find out the thrust, focus and
the methodology of injury and causality analysis. A detailed analysis of the case
studies is provided in the Appendix to this chapter. Like in the case of antidumping,
the eight parameters provided in Article 4 of the Safeguards Agreement are anal-
ysed to find out how the DG Safeguards p has performed the injury analysis in
various investigations. Tick marks ( ) have been used to indicate whether a par-
ticular injury factor was examined by the DG Safeguards or not. Furthermore, given
A Introduction 197

the limited amount of safeguard activity, the focus of this study will be primarily on
India, but will also consider the experience of some other WTO Members as well.
India has adopted almost the WTO treaty language in its safeguard legislation and
rules and requires the domestic agency, namely, Director General of Safeguards
(for short, “DG Safeguards”) to establish that the subject goods are imported into
India in such increased quantities and under such conditions as to cause or threaten to
cause serious injury to the domestic industry. However, India’s safeguard legislation
or rules do not contain key provisions such as the requirement of “unforeseen
development”3
It is also seen that several products which were subject to antidumping actions in
India were also subject matter of safeguard investigations.4 The objective may be to
receive double remedies on nearly same or similar cause of injury, or perhaps to
receive longer periods of protection especially after the elapse of one form of
protection, or in some rare cases to receive import relief when the request for
remedy under antidumping had failed or expired. The motivation for filing parallel
or back-to-back investigations may have some bearing on injury and causation
standards, but it is left out for the purposes of the present enquiry.
In order to conduct a qualitative research on injury and causation analysis in
safeguard investigations, this study examined in depth twelve (12) safeguard
investigations conducted over the last decade and a half. These cases represent
nearly one-third of all safeguard investigations conducted by India. The purpose
was to examine the injury parameters considered by the DG Safeguards in the
causation analysis and whether the authority had conducted any non-attribution
analysis as required under the WTO. The study also examined whether the DG
Safeguards had applied any quantitative economic tools in this analysis.

3
However, the DG Safeguards in India applies such requirements in practice. See also, Tarun Bhatti,
Unforeseen development under safeguard investigations: International standard and Indian practices,
http://www.lakshmisri.com/News-and-Publications/Publications/Articles/Tax/unforeseen-develop-
ments-under-safeguard-investigations# (last visited July 10, 205).
4
The products that were subject to both antidumping and safeguards investigations include:
Acetone, Bisphenol-A, Carbon Black, Caustic Soda, Certain Rubber Chemicals, Coated Paper and
Paper Board, Electrical Insulators, Flexible Slabstock Polyol, Front Axle Beam and Steering
Knuckle, Hot Rolled Flat Products of Stainless Steel, Hot Rolled Coils/Plates/Sheets and Strips,
Phthalic Anhydride, Sodium Citrate, Sodium Nitrate, etc. Most of these actions were not parallel
proceedings, but were filed by generally the same set of producers or associations. See DG
Safeguards, http://dgsafeguards.gov.in (last visited October 5, 2014).
198 5 Injury and Causation in Safeguards Investigations …

B Assessment of Injury and Causation in India’s

Safeguard Investigations

The volume and rate of increase in imports is the centre of enquiry in safeguard
investigations. Although the safeguard investigation refers to serious injury, which
is a higher form of injury, the injury parameters required for establishing serious
injury are fewer when compared to antidumping or countervailing duty investiga-
tions. While the Antidumping Agreement has listed fifteen (15) injury parameters,
the Safeguards Agreement has listed only eight (8) parameters. There is no period
of investigation per se in safeguard investigations, but there is a reference period for
the examination of the data. The purpose of the reference period is to examine the
volume of imports and the rate at which imports have entered the country.
In the investigation on Flexible Slabstock Polyol5 [Case #1], the DG Safeguards
paid particular attention to the volume of imports and the price effects caused to the
domestic industry. The investigation also examined the data for 3 years. However,
the finding of serious injury and causation was determined more on the basis of
price undercutting especially on the fact that imports increased when the domestic
demand also increased. The exporters alleged factors such as inefficiency of
domestic producers, differences in quality and technical support available to the
imported and domestic product, and the monopoly status of the domestic producers.
The other factors were treated as significant, but there was no particular effort in
segregating and separating the role of such factors. Accordingly, the safeguard duty
was imposed in this case for a period of 18 months.
In the safeguard investigation on Hard board (high density fiber board)6 [Case
#2] the DG Safeguards used a 3 year reference period for examining injury. Serious
injury was established on the ground that the imports had increased at a time when
the domestic sales and price levels had declined. Although price effects are not
given statutory significance, the DG safeguards attached specific importance to
price undercutting. The authority also noted that there were other factors which
might have caused injury to the domestic industry. For example, it was alleged that
the domestic consumers had experienced short supply when buying the product
from the domestic producers and had therefore shifted to imports. However, the
final findings did not disclose how the injury on account of these factors was not
attributed to increased imports.

5
Imports of Flexible Slabstock Polyol from Singapore and Japan, No. SG/V/4/97, (DG Safeguards,
Ministry of Finance, October 12, 1998) (final findings) [hereinafter Flexible Slabstock Polyol].
6
Imports of Hard Board (High Density Fiber Board) from Thailand, South Africa, etc, (DG
Safeguards, Ministry of Finance, November 12, 1998) (final findings).
B Assessment of Injury and Causation in India’s … 199

While the trend analysis remains the focus of enquiry in a safeguard investi-
gation, the reference period to be chosen for such comparison remains ambiguous.
In the initial years of safeguard actions in India, the DG Safeguards used the trends
analysis only for shorter periods which typically was a 3 year period. However,
after 2001–02, it is seen that the DG Safeguards has started using a longer reference
period for the injury analysis. For example, in the safeguard investigation on
Epichlorohydrin from Japan, United States, Belgium and Korea7 [Case #5] the
investigating authority used a 5-year reference period. Furthermore, it is noticed
that the investigating authority sought information on imports and domestic
industry statistics on the most recent period. Even the information gathered
post-initiation of the investigation is also considered in the final analysis.8 It may be
incidental that a series of safeguard investigations challenged in the WTO during
the late 1990s and early 2000s pronounced that injury should be recent enough,
sudden enough, sharp enough, significant enough, etc. It is apparent that the WTO
rulings in some of the safeguard disputes had impacted the Indian safeguard
practices during this time.
The rising share of imports in domestic consumption especially in the context of
robust domestic demand is often given considerable weight in the injury and
causation analysis. In the safeguard Investigation on Bisphenol-A [Case # 6] the
Designated Authority noted that if imports occupy a higher market share and dis-
place domestic production in a growing market, the injury so caused is “un-
doubtedly attributable to increased imports”.9 The correlation between the rise in
imports and the declining market share was inferred as an evidence of a causal link
between increased imports and serious injury. In this case, no additional analytical
tool was used to establish causal link.
A linear growth in imports was not considered to be sufficient to constitute a
‘sudden surge’ in imports in certain circumstances. In the safeguard investigation on
Linear Alkyl Benzene (LAB)10 [Case # 10] the domestic industry alleged serious
injury attributable to imports from Qatar, Iran and Saudi Arabia. The DG Safeguards
found that the rate of increase of imports in the most recent period of the investi-
gation, i.e. 2008–09 was 61.08 % as against 111.95 % during 2007–08, and 340.77
percent during 2006–07. The DG Safeguards also found that India was a net exporter
of LAB and that the domestic industry lost market share primarily in view of the
entry of another domestic producer and the loss in exports sales. In a rare finding, the

7
Imports of Epichlorohydrin Japan, United States, Belgium and Korea, No. SG/INV/1/2002 (DG
Safeguards, Ministry of Finance, June 25, 2002) (final findings).
8
DG Safeguards referred to the WTO Panel and AB reports in Argentina- Footwear (EC) or its
reliance on post-initiation data, See DG Safeguards, Final Findings, Safeguard Duty investigation
against imports of Coated Paper and Paper Board into India (Nov. 13, 2009).
9
Imports of Bisphenol - A from China, Germany, US, Singapore, Taiwan, Korea and Japan,
No. SG/INV/1/2003, ¶.6(b) (DG Safeguards, Ministry of Finance, October 27, 2003) (final
findings).
10
Imports of Linear Alkyl Benzene from Iran, Saudi Arabia, Qatar and Switzerland,
No. 2011/23/2008 (DG Safeguards, Ministry of Finance, November 18, 2009) (final findings).
200 5 Injury and Causation in Safeguards Investigations …

DG Safeguards held that the export oriented design of the domestic industry and
combination of domestic factors were more significant causes of injury to the
domestic industry. The DG Safeguards did not find any causal link in this matter.
In addition to serious injury claims, applications based on threat of serious injury
have also been filed before the DG Safeguards. In the safeguard investigation on
Phenol [Case #3], the DG Safeguards found threat of serious injury mainly on the
basis of increase in the share of imports in domestic consumption. A number of
injury factors such as stocks and market share of the domestic industry showed
improvement during reference period. This case indicates that the serious injury
standard was met fairly easily on the basis of a coincidence in time analysis.
An examination of the select safeguard investigations indicates that the standards
of serious injury and causation are not significantly higher in safeguard investi-
gations when compared to antidumping proceedings, although serious injury is
considered to be at a level higher than material injury. Serious injury in the
Safeguards Agreement refers to the term “significant overall impairment” of the
domestic industry. The exact meaning of this term is uncertain in the context of
Indian safeguard investigations. For example, in Coated paper and Paper Board11
[Case #12], the profitability and the market share of the domestic industry declined
during the reference period. However, the DG Safeguards noted that a profit making
domestic industry, which had high production, sales, capacity utilization and was
undertaking capacity expansion during the entire period of consideration, could not
be said to be in the position of significant overall impairment.
The key focus in the safeguard investigations is on the volume and rate of
increase in imports and the market share ceded by the domestic industry to imports.
For example, in the investigation on Uncoated Paper and Copy paper12 [case # 11],
the DG Safeguards held that if the increased imports are unable to take the market
share of the domestic industry, it should be concluded that imports had no adverse
effects on the domestic industry. The investigating authority, therefore, did not
reach a finding of injury and causation. While profitability, return of capital
employed (ROCE) and cash flow are given decisive importance in antidumping
cases, such parameters are not often assessed on a consistent basis in India in
safeguard investigations. It is striking to note that the DG Safeguards noted in the
investigation on Flexible Slabstock Polyol [Case # 1] that ROCE is one of the
reflections of the profit and losses made by the domestic industry and should be
taken into account in the consideration of serious injury.13 The recent safeguard
investigations provide greater amount of data on profitability, ROCE and other
factors in comparison with the earlier cases, but still an analysis of the financial
parameters is not given the same weightage as is given in antidumping cases.

11
Imports of Coated Paper and Paper Board from 22011/25/2009, (DG Safeguards, Ministry of
Finance, April 24, 2009) (final findings).
12
Imports of Uncoated Paper and Copy Paper from Indonesia, Thailand, Finland, China, Hong
Kong, Japan, Singapore and the United States No. 22011/27/2009 (Ministry of Finance,
November. 5, 2009) (final findings).
13
Flexible Slabstock Polyol, ¶. 50.
B Assessment of Injury and Causation in India’s … 201

The Safeguards Agreement requires the investigating authority to evaluate all

other objective and quantifiable factors that are important to the situation of the
domestic industry. The Indian safeguard investigations examined in this study
indicate that not even the eight listed factors are examined in all cases. In a number
of investigations the information pertaining to employment, productivity, etc. is
missing. Domestic industry inventory (stocks) is also not examined in every case.

C Non-attribution Analysis in India’s Safeguard

Investigations

Unlike the AD and SCM Agreements, the Safeguards Agreement does not provide a
list of indicative factors that should be taken into account in the causation analysis.
Nonetheless, a series of WTO panel and Appellate Body decisions have reiterated
the importance of non-attribution analysis in safeguard investigations.14 The
Appellate Body noted in US—Lamb that the causal link between increased imports
and serious injury can only be made after the effects of increased imports have been
assessed, followed up by a separation of the effects by all different causal factors. In
short, the non-attribution language casts an obligation on the investigating authority
not to attribute the injury caused by other factors to increased imports.
The Indian safeguard investigations examined in this chapter clearly indicate that
non-attribution in some form was conducted by the DG Safeguards even before this
requirement became almost an unavoidable element of all trade remedy investiga-
tions. The other causal factors were not examined in any particular order or under
any separate category of analysis in the final findings. An examination of the final
findings also indicates that the other causal factors were often raised by the exporters
in question and not necessarily discovered by the investigating authority on its own
initiative. In the majority of cases examined, the DG Safeguards examined the role of
product and quality differences and the export performance of the domestic industry.
In certain other cases, factors such as the rise in raw material costs, utility costs or
loss of productivity were examined. But the analysis, at best, is limited to only two or
three other factors in that investigation. It will be instructive to examine the safe-
guard investigation on Starch, Manioc (Cassava, Tapioco) based Sago and Modified
Starches15 [Case # 7] which made a departure in analyzing the role of other factors.
Unlike other safeguard investigations, the DG Safeguards had enumerated at least a
dozen possible causal factors. Beyond listing these factors, however, there was no
effort, either qualitative or quantitative, in separating the effects of these factors. It

14
Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, ¶.
168 (May 16, 2001).
15
Imports of Manioc (Cassava, Tapioca) based sugar modified starches, No. SG/INV/1/2004 (DG
Safeguards, Ministry of Finance, February 16, 2005) (final findings).
202 5 Injury and Causation in Safeguards Investigations …

appears that the various causal factors were raised by some of the interested parties
not necessarily to disprove causation, but to argue why a higher import protection of
safeguard duty is not called for. However, one could easily conclude that the
requirement of separating the injurious effects of other factors, in the way the WTO
panels and the Appellate Body had mandated, has remained almost an elusive
concept in the context of Indian safeguard investigations.

D Injury and Causation Determination: Experience

of Other WTO Members

There has been a general slowdown in safeguard actions in the recent times. The
traditional users are no longer invoking this mechanism. Among the developing
countries India, Indonesia, Argentina and Turkey have been major users. The fol-
lowing section does not seek to provide an analysis of the injury and causation
practices of all major users but only of a few representative jurisdictions.

1 Argentina

Argentina is one of the active users of safeguard investigations and had conducted
several such investigations in the wake of joining the WTO. The developments
during the pre-Peso crisis period (1995–2001) and the intra-regional trade liberal-
ization initiated with the signing of the MERCOSUR treaty led to a growth in
imports in certain categories of goods and consequently to trade remedy mea-
sures.16 Argentina initiated safeguard investigations on preserved peaches, foot-
wear, toys, mopeds and motor cycles, to name a few products, during this period.
Argentina’s safeguard investigation on footwear was one of the first disputes to be
challenged under the provisions of Article XIX of the GATT and the Agreement on
Safeguards.17 This case clarified the jurisprudence on several WTO issues and is
frequently referred to in subsequent WTO cases. In this dispute the Appellate Body
concluded that Argentina was not able to establish an increase in imports as well as
injury and causation. The Appellate Body also concluded that the legality of
safeguard measures depend upon the existence of “unforeseen developments”, an
expression which is mentioned only in Article XIX of the GATT.
Comisión Nacional de Comercio Exterior (CNCE) is the authority responsible
for the analysis, investigation and regulation in the determination of injury to
domestic production. Prior to the decision in Argentina—Footwear, the CNCE did

16
The antidumping activity declined after the devaluation of peso which made the imports costlier.
17
Appellate Body Report, Argentina—Safeguard Measures on Imports of Footwear,
WT/DS121/AB/R(1999).
D Injury and Causation Determination: Experience … 203

not separately establish the existence of unforeseen developments. As some of the

disputes during the pre-Peso crisis period indicate, it was alleged that the competent
authorities did not make any a priori finding nor demonstrate in their report the
existence of unforeseen developments.18 However, Argentina has apparently rec-
tified this deficiency in its implementing legislation.

2 Indonesia

In recent times, Indonesia has been the most active user of safeguard instruments.
The safeguard actions are initiated by the Komite Pengamanan Perdagangan
Indonesia (KPPI or Committee on Trade Defense of Indonesia) under the legisla-
tion entitled “Safeguard of the Domestic Industry Against the Impact of Increased
Imports”. Indonesia generally takes into account the price and volume trends as the
key indicators in the injury analysis. In order to conduct the volume trends,
Indonesia generally takes into account 3 years as the injury investigation period.
While conducting the price trends analysis, comparisons are based on the
average ex-works prices of the domestic producers with the landed price of imports.
The landed price of imports is based on the CIF price along with the applicable
customs duties and other ancillary costs.
Indonesia carries out the non-attribution analysis based on consideration of a
standard set of factors. Checklist factors such as technology used by the domestic
industry are often taken into account. This is apparently to make sure that the
increase in imports is the major contributing factor to serious injury.19 However the
investigating authority does not generally consider factors other than the routinely
considered causal events such as contraction in demand, export performance of the
domestic industry, technology and domestic competition.
Indonesia’s safeguard actions have been challenged by other WTO Members in
recent times. For example, in a recent request for the establishment of panel by
Chinese Taipei against Indonesia in respect of certain iron or steel products, the
complainant has alleged that Indonesia had failed to provide a proper analysis of the
unforeseen developments and a reasoned and adequate explanation of serious injury
and causation.20 In the meantime, Vietnam has raised concerns regarding the
determination of unforeseen developments, serious injury and causal link in respect
of flat-rolled products of iron or non-alloy steel.21

18
See Panel Report, Argentina—Peaches, ¶. 7.35.
19
Page 4 of the Notifications G/SG/N/10/IDN/2 G/SG/N/11/IDN/2 9 October 2009.
20
World Trade Organization, Request for the Establishment of a Panel by the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu, Indonesia- Safeguard Action or Certain Iron or
Steel Products, WT/DS 490/2 (August 21, 2015).
21
World Trade Organization, Committee of Safeguards, Minutes of the Regular Meeting,
G/SG/M/46, March 24, 2015 [hereinafter Minutes of the Committee of Safeguards].
204 5 Injury and Causation in Safeguards Investigations …

3 Turkey

Turkey is another jurisdiction that has frequently used safeguard measures in recent
times. During 1995—2015 period, Turkey initiated 21 safeguard actions and was
the third largest initiator among the WTO members.22
In Turkey, the authority to propose, apply and monitor safeguards measures is
vested with the Ministry of Economy. The safeguard investigation is conducted by
the Undersecretariat of Foreign Trade.23
Some concerns have been expressed by WTO Members regarding the safeguard
practices of Turkey. One of the concerns was that Turkey had extended all its
safeguard measures beyond their original term.24 The objection was on the ground
that the measures were not warranted because the share of imports had decreased
and the production of the domestic industry had increased during the implemen-
tation of the measure.25 India too had challenged the extension of safeguard
measures on cotton yarn in 2012 and the matter was settled.26 In regard to the
investigation on printing, writing and copying paper, the European Union alleged
that Turkey had imposed the measure without demonstrating ‘recent, sudden or
sharp increase in imports”.27 But none of these concerns has culminated in a
completed WTO panel process.

E Conclusion

Whilst the WTO treaty and dispute settlement jurisprudence on injury and causation
in safeguard investigations present tough procedural and substantive standards,
meeting such thresholds hitherto has not been that difficult in the context of Indian
safeguard investigations. An overall coincidence of the upward trend in increased
imports and the negative trend in injury factors over the reference period was
considered sufficient enough for safeguards relief. In particular, a decline in the
domestic industry’s market share in periods of rising domestic demand was often
considered as indicative of causation. Other causal factors were explored in the
investigations, but the non-attribution analysis is often not conducted at depth or
could be completely missing in some investigations. It is also not possible to find

22
World Trade Organization, Trade Policy Review Body, Trade Policy Review: Report by the
Secretariat: Turkey, WTO Doc. no. WT/TPR/S/331 (Feb. 9, 2016), at 69, ¶ 3.64.
23
İthalatta Korunma Önlemlerine İlişkin Tebliğ (Tebliğ No: 2004/1).
24
World Trade Organization, Committee of Safeguards, Minutes of the Regular Meeting,
G/SG/M/46, (March 24, 2015).
25
Id. ¶ 83.
26
Request for Consultations by India, Turkey — Safeguard measures on imports of cotton yarn
(other than sewing thread), WT/DS428/1 (Feb. 15, 2012).
27
Minutes of the Committee of Safeguards, supra note 24, ¶ 85.
E Conclusion 205

out any explicit methodology for separating the effects of other causal factors. It is
also evident that the DG Safeguards does not use any quantitative tools in the
causation determination. The available evidence demonstrates that the
non-attribution in safeguards investigations is not significantly different from
antidumping investigations conducted in India and is carried out purely on quali-
tative means. The analysis in this chapter has also demonstrated that the analytical
tools employed by most of the recent users such as India, Indonesia, Argentina and
Turkey look similar. Most of these jurisdictions have also experienced certain
difficulty in assessing ‘unforeseen development’ as this requirement is not specif-
ically incorporated in their domestic legal framework and are rather perfunctorily
carried out.
206 5 Injury and Causation in Safeguards Investigations …

Appendix

Case 1 # SG/IV/4/97: Safeguard Investigation Concerning Imports of Flexible

Slabstock Polyol of Molecular Weight 3000–4000 Used in the Manufacture of
Slabstock Foams and Polyurethane Foam Mattresses from Singapore and
Japan

Petitioners: M/s Manali Petrochemicals Ltd. Chennai and M/s SPIC Organics Ltd.,
Chennai.
Date of Final Findings: September 17, 1998

Consideration of Injury Parameters

1995–96 1996–97 1997–98
S. No. Factors W/D I U W/D I U W I U
1 Increased imports ✓ ✓ Imports
in absolute or Increased
relative terms
2 Production ✓ ✓ ✓
3 Domestic sales ✓ ✓ ✓
4 Market share ✓ ✓ ✓
5 Stocks NM NM ✓
6 Capacity NM NM ✓
utilization
7 Profits and losses (stated to have declined over a period of time)
8 Employment NM NM ✓
9 Productivity NM NM ✓
NM Not mentioned; W/D Worsened/Declined; I Improved/Increased; U Unchanged

Non-attribution analysis
S. No. Other unlisted factors Whether discussed or not
1 Superior quality Yes
2 Technical support Yes
3 Inefficiency of domestic producers Yes
4 Monopoly status of domestic producers Yes
Appendix 207

Case 2# SG-REP/4/98: Safeguard Investigation Concerning Imports of Hard

Board (High Density Fibre Board) from Thailand, South Africa, Malaysia,
Italy and Pakistan

Petitioners: All India Fibre Board Manufacturers Association.

Date of Final Findings: November 12, 1998.

Consideration of Injury Parameters

1995–96 1996–97 1997–98
S. No. Factors W I U W I U W I U
1 Increased imports in NM Volume Volume
absolute or relative Increased Increased
terms
2 Share of domestic NM ✓ ✓
market taken by
increased imports
3 Domestic sales NM ✓ ✓
4 Production NM ✓ ✓
5 Stocks NM ✓ ✓
6 Capacity utilization NM ✓ ✓
7 Profits and losses NM NM NM
8 Employment NM NM NM
9 Domestic NM NM NM
consumption
NM Not mentioned; W/D Worsened/Declined; I Improved; U Unchanged

Non-attribution analysis
S. No. Other unlisted factors Whether discussed or
not
1 Import price of off-cut Hard board lower than that of Yes
standard size
2 Decline in domestic selling price Yes
3 Quality Yes
4 Differences in the end use of the imported and domestic Yes
products
5 Individual performance of the three domestic producers Yes
208 5 Injury and Causation in Safeguards Investigations …

Case 3 #SG/INV/2/98: Safeguard Investigation Concerning Imports of Phenol

from Germany, Italy, US, Tokyo, Korea, Taiwan, South Africa and
Switzerland

Petitioners: Hindustan Organic Chemicals Ltd. (HOC, Mumbai; Herdilia Chemicals

Ltd. (HCL), Mumbai and Neyveli Lignite Corporation, Tamil Nadu.
Date of Final Findings: May 12, 1999

Consideration of Injury Parameters

1995–96 1996–97 1997–98 1998–99
S. No. Factors W I U W I U W I U W I U
1 increased Imports in ✓ ✓ ✓ Volume
absolute or relative Increased
terms
2 Production ✓ ✓ ✓ ✓
3 Capacity utilization NM NM ✓ ✓
4 Sales ✓ ✓ ✓ ✓
5 Stocks NM ✓ ✓ ✓
6 Employment ✓ ✓ ✓ ✓
7 Profits and losses NM NM NM NM
8 Market share ✓ ✓ ✓ ✓
NM Not mentioned; W/D Worsened/Declined; I Improved; U Unchanged

Non-attribution analysis
S. No. Other unlisted factors Whether discussed or
not
1 Export performance of the domestic industry Yes
2 Quality differences Yes
3 Dumping of phenol in the Indian market Yes
4 Captive consumption of phenol by the domestic Yes
industry
5. Monopoly/Duopoly by domestic producers Yes
6. Global chemical industry recession Yes
7. Shut down of operations for 15–40 days during 1998– Yes
99
8. Productivity of the domestic industry Yes
Appendix 209

Case 4# SG/INV/2/2000: Safeguard Investigation Concerning Imports of

Methylene Chloride from Taiwan and Hungary

Petitioners: Gujarat Alkalies and Chemicals Ltd. (GACL), Gujarat; Chemplast

Sanmar Limited, Chennai and SRF Ltd., New Delhi.
Date of Final Findings: December 15, 2000

Consideration of Injury Parameters

1996–97 1997–98 1998–99 1999–2000
S. No. Factors W/D I U W/D I U W I U W I U
1 Increased imports in Imports Imports Imports Imports
absolute or relative Increased Declined declined declined
terms
2 Share of domestic NM NM NM NM
market taken by
increased imports
3 Domestic sales ✓ ✓ ✓ ✓
4 Production ✓ ✓ ✓ ✓
5 Productivity ✓ ✓ ✓ ✓
6 Capacity utilization ✓ ✓ ✓ ✓
7 Profits and losses NM NM ✓ ✓
8 Employment ✓ ✓ ✓ ✓
9 Domestic consumption ✓ ✓ ✓ ✓
10 Stocks ✓ ✓ ✓ ✓
NM Not mentioned; W/D Worsened/Declined; I Improved; U Unchanged

Non-attribution analysis
S. No. Other factors Whether discussed or not
1 Other unlisted known factors No
210 5 Injury and Causation in Safeguards Investigations …

Case 5# F. No. SG/INV/1/2002: Safeguard Investigation Concerning Imports

Epichlorohydrin from Japan, US, Belgium and Korea

Petitioners: Tamil Nadu Petroproducts Limited (TPL) Chennai.

Date of Final Findings: June 25, 2002

Consideration of injury parameters

1997–98 1998–99 1999–2000 2000–01 2001–02
S. No. Factors W I U W I U W I U W I U W I U
1 Increased imports in Imports consistently increased
absolute or relative
terms
2 Share of domestic ✓ ✓ ✓ ✓ ✓
market taken by
increased imports
3 Domestic sales ✓ ✓ ✓ ✓ ✓
4 Production ✓ ✓ ✓ ✓ ✓
5 Productivity ✓ ✓ ✓ ✓ ✓
6 Capacity utilization ✓ ✓ ✓ ✓ ✓
7 Profits and losses ✓ ✓ ✓ ✓ ✓
8 Employment ✓ ✓ ✓ ✓ ✓
9 Stocks ✓ ✓ ✓ ✓ ✓
NM Not mentioned; W/D Worsened/Declined; I Improved; U Unchanged

Non-attribution analysis
S. No. Other unlisted factors Whether discussed or not
1 Export performance of the domestic industry Yes
2 Quality difference Yes
Appendix 211

Case # 6: SG/INV/1/2003: Safeguard Investigation Concerning Imports of

Bisphenol-A from China, Germany, US, Singapore, Taiwan, Korea and
Japan

Petitioners: Kesar Petrochemicals Limited, Mumbai.

Final finding: October 27, 2003

Consideration of Injury Parameters

1998–99 1999–2000 2000–01 2001–02 2002–03
S. No. Factors W/D I U W/D I U W I U W/D I U W I U
1 Increased ✓ ✓ ✓ ✓ ✓
imports—
absolute or
relative
2 Share of ✓ ✓ ✓ ✓ ✓
domestic
producers
3 Domestic ✓ ✓ ✓ ✓ ✓
sales
4 Production ✓ ✓ ✓ ✓ ✓
5 Productivity NM NM NM NM NM
6 Capacity NM ✓ NM ✓ ✓
utilization
7 Profits and NM NM NM NM NM
losses
8 Employment NM NM NM NM NM
9 Domestic ✓ ✓ ✓ ✓ ✓
consumption
NM Not mentioned; W/D Worsened/Declined; I Improved; U Unchanged

Non-attribution analysis
S. No. Other unlisted factors Whether discussed or not
1 Expansion of capacity by the domestic producers Yes
2 Injury due to export performance Yes
3 Demand- supply gap Yes
4 Increase in raw material prices Yes
5 Difference in quality and technical support Yes
6 Inefficiency of domestic producers Yes
212 5 Injury and Causation in Safeguards Investigations …

Case # 7: Safeguard Investigation Concerning Imports of Starch; Manioc

(Cassava, Tapioca) Based Sago and Modified Starches

Petitioners: A representation filed by the Farmers and Farmers Association of

Tamil Nadu and Tamil Nadu Sago and Starch Manufacturers Welfare Association
(TASSMA).
Date of final finding: February 16, 2005

Consideration of Injury Parameters

2002–2003 2003–2004
S. No. Factors W/D I U W/D I U
1 Increased imports in absolute or relative terms ✓ ✓
2 Share of domestic market taken by increased imports ✓ ✓
3 Domestic sales ✓ ✓
4 Production ✓ ✓
5 Productivity NM ✓
6 Capacity utilization ✓ ✓
7 Profits and losses ✓ ✓
8 Employment ✓ ✓
NM Not mentioned; W/D Worsened/Declined; I Improved; U Unchanged

Non-attribution analysis
S. No. Factors Whether
discussed or not
1 Dumping of starch in the domestic market of India Yes
2 Decline in export market share of the domestic industry Yes
3 Captive consumption of starch must have been excluded from Yes
the investigation
4 Inefficiency of domestic producers Yes
5 Self-inflicted injury by the domestic producers Yes
6 Prices of raw materials Yes
7 Ground water depletion Yes
8 Increase in the cost of energy Yes
9 Inability of small scale units to compete with large scale units Yes
10 Withdrawal of preferential treatment in respect of Excise duty Yes
to small scale units vis-à-vis medium units
Appendix 213

Case # 8: D-22011/07/2009: Safeguard Investigation Concerning Imports of

Dimethoate Technical from China

Petitioners: M/s Shivalik Rasayan Limited

Date of Final Findings: May 14, 2009

Consideration of Injury Parameters

2006–2007 2007–2008 2008–2009
S. No. Factors W I U W I U W I U
1 Increased imports in absolute or relative terms ✓ ✓ ✓
2 Share of domestic market taken by increased ✓ ✓ ✓
imports
3 Domestic sales ✓ ✓ ✓
4 Production ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Capacity utilization ✓ ✓ ✓
7 Profits and losses ✓ ✓ ✓
8 Employment ✓ ✓ ✓
NM Not mentioned; W/D Worsened/Declined; I Improved; U Unchanged

Non-attribution analysis
S. No. Factors Whether discussed or not
1 Other unlisted factors No
214 5 Injury and Causation in Safeguards Investigations …

Case # 9: D-22011/32/2008-Safeguard Investigation Concerning Imports of

Phthalic Anhydrite from Korea, Pakistan, Taiwan, Indonesia and Iran

Petitioners: M/s Thriumalai Chemicals Ltd.; M/s IG Petrochemicals Ltd.; M/s

Mysore Petrochemicals Ltd.; M/s SI Group India Ltd.
Date of Final Findings: May 28, 2009

Consideration of Injury Parameters

2005–06 2006–2007 2007–2008 2008–2009
S. No. Factors W I U W I U W I U W I U
1 Increased imports in absolute or NM ✓ ✓ ✓
relative terms
2 Market share of the domestic NM ✓ ✓ ✓
producers
3 Domestic sales NM ✓ ✓ ✓
4 Production NM ✓ ✓ ✓
5 Productivity NM ✓ ✓ ✓
6 Capacity utilization NM ✓ ✓ ✓
7 Profits and losses ✓ ✓ ✓ ✓
8 Employment NM ✓ ✓ ✓
9 Stocks NM ✓ ✓ ✓
NM Not mentioned; W Worsened; I: Improved; U Unchanged

Non-attribution analysis
S. No. Factors Whether discussed
or not
1 Deterioration of export performance of the domestic industry Yes
2 Losses suffered by the petrochemical industry due to the Yes
2008 global recession
Appendix 215

Case # 10 (F. No. D-22011/23/2008): Safeguard Investigation Concerning

Imports of Linear Alkyl Benzene into India from Iran, Saudi Arabia, Qatar
and Switzerland

Petitioners: M/s. Reliance Industries Ltd., Mumbai; M/s Tamil Nadu Petroproducts
Ltd., Chennai; M/s Nirma Ltd., Ahmedabad and M/s Indian Oil Corporation Ltd.,
New Delhi.
Date of Final Findings: November 18, 2009

Consideration of Injury Parameters

2006–2007 2007–2008 2008–2009
S. No. Factors W I U W I U W I U
1 Increased imports in ✓ ✓ ✓
absolute or relative
terms
2 Share of domestic ✓ ✓ ✓
market
3 Domestic sales ✓ ✓ ✓
4 Production ✓ ✓ ✓
5 Productivity ✓ ✓ ✓
6 Capacity utilization ✓ ✓ ✓
7 Profits and losses ✓ ✓ ✓
8 Employment ✓ ✓ ✓
9 Stocks NM NM NM
M Not mentioned; W Worsened; I Improved; U Unchanged

Non-attribution analysis
S. No. Other factors Whether discussed or not
1 Improvement in domestic prices Yes
2 Decline in domestic exports Yes
4 Inter unit dynamics among producers in India Yes
5 Overall position of the domestic industry Yes
6 Export oriented design of the domestic producers Yes
216 5 Injury and Causation in Safeguards Investigations …

Case # 11: D-22011/27/2009: Safeguard Investigation Concerning Imports of

Uncoated paper and copy Paper from Indonesia, Thailand, Finland, China,
Hong Kong, Japan, Singapore and the US

Petitioners: ITC Limited—Paperboards and Specialty Papers Division; Ballarpur

Industries Limited; JK Paper Limited; M/s The Andhra Paper Mills Ltd; M/s Tamil
Nadu Newsprint and Papers Limited; Abhishek Industries Ltd.; Century Pulp and
Paper; Emami Paper Mills Ltd.; Hindustan Paper Corporation Ltd.; Khanna Paper
Mills Ltd.; The Mysore Paper Mills Ltd.; Orient Paper and Industries Ltd.;
Pudumjee Pulp and Paper Mills Ltd.; Rama Newsprint and Papers Ltd.; Seshasayee
paper and paper Board Ltd.; The Sirpur Paper Mills Ltd.; Star Paper Mills Ltd., The
West Coast Paper Mills Ltd. and Yash Paper Mills Ltd.
Date of final findings: November 5, 2009

Consideration of Injury Parameters

2007–2008 2008–2009
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
1 Increased imports ✓ ✓
in absolute or
relative terms
2 Share of domestic ✓ ✓
market taken by
increased imports
3 Domestic sales ✓ ✓
4 Production ✓ ✓
5 Productivity NM NM
6 Capacity ✓ ✓
utilization
7 Profits and losses ✓ ✓
8 Employment NM NM
NM Not mentioned

Non-attribution analysis
S. No. Factors Whether discussed or not
1 Other unlisted known factors No
Appendix 217

Case #12: D-22011/25/2009: Safeguard Investigation Concerning Imports of

Coated Paper and Paper Board from China, Singapore, Japan, Hong Kong,
Korea and Finland

Petitioners: ITC Limited—Paper Boards and Specialty Papers Dimension;

Ballarpur Industries Limited and JK Paper Limited.
Date of Final Findings: November 13, 2009

Consideration of Injury Parameters

2007–2008 2008–2009
S. No. Factors Worsened Improved Unchanged Worsened Improved Unchanged
1 Increased ✓ ✓
imports in
absolute or
relative
terms
2 Share of ✓ ✓
domestic
market taken
by increased
imports
3 Domestic ✓ ✓
sales
4 Production ✓ ✓
5 Productivity ND ND
6 Capacity ✓ ✓
utilization
7 Profits and ✓ ✓
losses
8 Employment ND ND
ND No data for analysis; W Worsened; I Improved; U Unchanged

Non-attribution analysis
S. No. Factors Whether discussed or not
1 Other unlisted known factors No
Chapter 6
Injury and Causation in Trade Remedies:
Developments Under the Doha Round

Abstract This chapter examines the various proposals concerning the improve-
ment to the treaty language on injury and causation under the Rules negotiations of
the Doha Round. The proposals are made specifically in relation to the
Antidumping as well as the Subsidies and Countervailing Measures Agreement.
This chapter analyses the key proposals by the negotiating countries and whether
there is any convergence of views among the WTO Members on any of the out-
standing topics of injury and causation.

A Introduction

The Doha Round of trade negotiations that were launched in November 2001 had
an ambitious agenda. In the Doha Ministerial Declaration, WTO Members agreed
to undertake “negotiations aimed at clarifying and improving disciplines under the
Agreements on Implementation of Article VI of the GATT 1994 and on Subsidies
and Countervailing Measures, while preserving the basic concepts, principles and
effectiveness of these Agreements and their instruments and objectives, and taking
into account the needs of developing and least-developed participants.”1 Reforming
the trade remedy agreements was considered to be particularly important in the light
of the increasing use of trade remedies in multiple jurisdictions. Negotiations on
trade remedy instruments such as antidumping, subsidies and countervailing mea-
sures (including fisheries subsidies and RTAs, collectively known as Rules nego-
tiations) turned out be one of the key areas of discussion under the Doha Round.
Several proposals were made during 2002–2007, the initial and perhaps the most
active phase of the Doha Round to reform or clarify the existing provisions of the
Antidumping Agreement and the Subsidies and Countervailing Measures
Agreement. Several proposals were initiated for clarifying the treaty provisions on
injury and causality in these agreements as well. It is noteworthy that a similar
exercise was not undertaken in the case of the Agreement on Safeguards.

1
World Trade Organization, Ministerial Declaration of 14 November, 2001, WT/MIN (01)/DEC/1,
41 I.L.M. 746 (2002) (hereinafter Doha Declaration).

© Springer Science+Business Media Singapore 2016 219

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_6
220 6 Injury and Causation in Trade Remedies …

In December, 2005 at the WTO Ministerial Conference in Hong Kong, the

Negotiating Group on Rules was directed “to intensify and accelerate the negoti-
ating process” and also mandated the Chairman to prepare consolidated texts of the
Anti-Dumping and Subsidies Agreements “that shall be the basis for the final stage
of the negotiations.” On the basis of the Ministerial Conference decision, the Chair
of the Negotiating Group on Rules, Ambassador Guillermo Valles Galmés of
Uruguay circulated to members on November 30, 2007 his first draft of consoli-
dated texts on anti-dumping, subsidies and countervailing measures, including
fisheries subsidies. The Chair’s texts proposed a number of changes in the
Anti-Dumping Agreement. The Chair of the Negotiating Group on Rules
(NGR) subsequently issued a Chairman’s text in 2011.
This chapter summarizes the various proposals submitted by the WTO members
and analyses whether these proposals make substantial progress in elucidating the
framework on injury and causation. By examining this issue, this chapter seeks to
address the question whether there is consensus among the WTO members in using
quantitative tools for establishing causation.

B Rules Negotiations and Members’ Proposals

By early 2002, various WTO panels and the Appellate Body (AB) had issued
several landmark decisions in the field of injury and causation. The WTO panel and
Appellate Body decisions, which I had examined exhaustively in Chap. 3, had
already been issued and set the standard for the conduct of non-attribution analysis.
The WTO panels and AB decisions in EC—Bed Linen,2 and the panel’s decision in
Thailand—H Beams3 had set important principles in the assessment of injury
factors for determination of material injury and the assessment of other known
factors which cause injury to the domestic industry at the same time as the dumped
or subsidized imports. In the field of safeguard investigations, the WTO panels and
the Appellate Body had clarified the scope of non-attribution analysis in cases such
as the Argentina—footwear,4 US—Wheat Gluten,5 US—Lamb,6 US—Line

2
Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-
Type Bed Linens from India, WT/DS141/AB/R/W (April 24, 2003).
3
Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron
or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R (April 5, 2001).
4
Appellate Body Report, Argentina—Safeguard Measures on Imports of Footwear,
WT/DS121/AB/R (January 12, 2000).
5
Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat
Gluten from the European Communities, WT/DS166/AB/R (January 19, 2001).
6
Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R
(May16, 2001).
B Rules Negotiations and Members’ Proposals 221

Pipe7 and US—Tyres.8 These cases not only provided significant clarification in the
conduct of the causation test, but also introduced standards which were generally
non-existent or unheard of at the time of the conclusion of the Uruguay Round.
Immediately after the launch of the Doha Round, a group of countries including
Brazil, Chile, Colombia, Costa Rica, Hong Kong, China, Israel, Japan, Korea,
Mexico, Norway, Singapore, Switzerland, Thailand and Turkey submitted a series
of proposals.9 These set of countries known in the negotiating circles as the
“Friends of Antidumping” (for short, “Friends Group” or “FAN”) represent
exporting countries that are often targeted in antidumping proceedings in major
importing markets. The United States and European Union were also active in
negotiations. The United States, in particular, was interested in improving the
strength and effectiveness of the Antidumping Agreement.10
The following discussion focuses on some of the specific proposals in the field
of causation under the Rules negotiations.

C Relationship Between Material Injury and Causation

Under Article 3.1 of the ADA, an antidumping authority is to engage in an “objective

examination” of “the volume of dumped imports”, “the effect of dumped imports on
prices in the domestic market for like products”, and the consequent impact of dumped
imports. Articles 3.2 and 3.4 of the ADA elaborate on these obligations, as does
Article 3.7 of the ADA with respect to threat of injury determinations.
On November 22, 2002, the Friends Group made a proposal seeking to clarify
the relationship between Articles 3.4 and other provisions of Article 3 to establish a
more meaningful guidance for injury determination.11 The Friends Group proposal
noted that WTO dispute settlement panels and the Appellate Body have confirmed
that the authorities must consider all elements as listed in Articles 3.1, 3.2 and 3.4
and all other known elements as listed in Article 3.5 in determining the existence of
injury to domestic industry through the effects of dumping.
The Friends Group proposal referred to the WTO panel ruling in Thailand—H
Beams12 that the injury analysis must contain “a persuasive explanation as to how

7
Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Circular
Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R (March 8, 2002).
8
Appellate Body Report, United States – Measures Affecting Imports of Certain Passenger Vehicle
and Light Truck Tyres from China, WT/DS399/AB/R (October 5, 2011).
9
See William Kerr and Laura Loppacher, Anti-dumping in the Doha Negotiations: Fairy Tales at
the World Trade Organization, 38(2) JOURNAL OF WORLD TRADE 211, 216 (2004).
10
Id. at 216.
11
Negotiating Group on Rules, Paper by Friends of Antidumping, Antidumping: Illustrative Major
Issues, TN/RL/W/6 (April 26, 2002).
12
Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-
Alloy Steel and H-Beams from Poland, WT/DS122/R ¶ 8.3(b) (April 5, 2001) as modified by the
Appellate Body.
222 6 Injury and Causation in Trade Remedies …

the evaluation of relevant factors led to the determination of injury.” The proposal
noted that the scope of review by panels and the Appellate Body on individual
injury determinations were limited because Article 3 provides little guidance on
how the authorities should analyze these factors in determining injury.
FAN paper on interaction between Articles 3.1, 3.2, 3.4 and 3.5 of ADA.
It is our view that Members should make substantial progress in clarifying a fair, reasonable
and rigorous approach to the various injury factors as listed in Article 3.4, and to other factors
set out in provisions of Articles 3.1 through 3.5. According to Article 3.1, injury determination
involves, inter alia, an objective examination of both (a) the volume of the dumped imports
and the effect of the dumped imports prices in the domestic market for the like product, and
(b) the impact of those imports on domestic producers. These elements are further elaborated
in Articles 3.2 and Article 3.4. Article 3.5 spells out the requirement for demonstration of a
causal relationship leading to injury through the effects of dumping as set forth in Articles 3.2
and 3.4. Article 3.5 further provides guidance with respect to which factors other than the
effects of dumped imports that shall be examined in determining such a causal relationship. It
is therefore necessary to clarify the relationship between Article 3.4 and other provisions of
Article 3 to establish more meaningful guidance for injury determination.

Friends Group made an additional submission seeking clarification of Article

3.4.13 The proposal sought to elucidate the concept of ‘material injury’. The FAN
proposal included an amendment of footnote 9 of the ADA in order to clarify the
definition of material injury:
FAN Proposal: Article 3.4 of ADA
The term ‘material injury to a domestic industry’ means the state of the domestic industry as
demonstrated by an important and measurable deterioration in the operating performance of
the domestic industry, based on an overall assessment of all relevant economic factors and
indices having a bearing on the state of the domestic industry including those enumerated in
Article 3.4.

The Friends Group proposal also noted that Article 3.4 of the current AD
Agreement lists factors that must be considered when injury is determined, but does
not provide adequate guidance to evaluate those factors. The United States too felt
that the scope of the authority’s obligation to examine “relevant factors and indices”
other than the ones explicitly listed in Article 3.4 of the ADA and Article 15.4 of
the ASCM is less clear. However, other members such as Australia had doubts
about the additional need to clarify the examination of injury factors included in
Article 3.4 of the ADA and its relationship with other provisions of Article 3 such
as Article 3.1 and 3.2 and 3.5.
Australia’s questions on FAN proposals on Article 3.4 Injury parameters
1. Do the proponents consider that this is an area where agreement could be reached on
criteria used to evaluate injury factors?
2. Do the proponents consider that the ADA must specify all circumstances in relation to
the factors outlined in Article 3.4? As Article 3.4 state in the last sentence, “this list is

13
Negotiating Group on Rules, Paper from Friends of Antidumping, Second Submission of Proposals
on the Determination of Injury, Negotiating Group on Rules, TN/RL/W/38 (March 23, 2005).
C Relationship Between Material Injury and Causation 223

not exhaustive, nor can one or several of these factors necessarily give decisive
guidance.”
3. Could the proponents elaborate on what is meant by clarifying the relationship between
Article 3.4 and other provisions of Article 3?

Brazil’s response to Australia’s queries

We have now had more than two decades of experience, with dozens of different countries
and legal systems applying these factors to a wide variety of industries. Although we do not
believe we can or should devise rigid mathematical formulas, we believe that the Members
could make substantial progress in clarifying a fair, reasonable and rigorous approach to the
various injury factors.
We do not consider that all circumstances must be specified in the ADA. However, the fact
that we need not (indeed, could not) specify all circumstances is not a reason to avoid any
and all efforts at clarification. There are many areas where clarification can and should be
made, even if the list itself continues to be non-exhaustive.

On the other hand, certain other WTO Members such as Egypt observed that the
various panel and Appellate Body reports have provided sufficient guidance on the
obligations imposed on investigating authorities in injury determinations and that
the case specific analysis of the injury factors should be left to the discretion of the
investigating authorities.14
In regard to the relationship between Articles 3.1, 3.2, 3.4 and 3.5 of the ADA,
the United States made a proposal in June 2003.15 As is evident from the discus-
sions in Chaps. 3 and 4 of this book, the volume of dumped imports is crucial in
determining the volume effect in the injury and causation determination. The
Appellate Body in the EC—Bed Linen,16 observed that Articles 3.1 and 3.2 of
the ADA “do not set out a specific methodology that investigating authorities are
required to follow when calculating the volume of dumped imports”. The Appellate
Body also acknowledged that, in the light of ADA Article 6.10 (and under the cir-
cumstances described in the second sentence therein), these provisions must be
interpreted in a way that does not require investigating authorities to investigate
each producer or importer individually for the purposes of assigning a dumping
margin. While the Appellate Body concluded that the EC’s particular method of
calculating the volume of “dumped imports” did not satisfy the requirements of
Articles 3.1 and 3.2, it stated that there may be several possible ways of making
such calculations that did satisfy these provisions. Members should consider whe-
ther the ADA should be clarified to specify methods that investigating authorities
can readily implement in the injury investigation to calculate the volume of dumped
imports for the purposes of Articles 3.1 and 3.2 especially when the investigating
authorities may not be examining each individual producer or importer.

14
Negotiating Group on Rules, Communication from Egypt, TN/RL/ W/56 (Feb. 10, 2003).
15
Negotiating Group on Rules, Communication from the United States, TN/RL/W/130 (June 20,
2003).
16
Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-
Type Bed Linens from India, WT/DS141/AB/R/W (April 24, 2003).
224 6 Injury and Causation in Trade Remedies …

1 Degree of Causal Relationship

According to the paper submitted by the Friends of Antidumping, the AD

Agreement does not sufficiently describe the methodologies for establishing causal
link between dumping and injury.17 The FAN paper also noted that in practice
authorities too often impose AD measures even when factors other than dumping
are the substantial causes of the injury being experienced by the domestic industry.
According to the Friends Group, in order to justify the imposition of AD measures,
it is not sufficient that dumped imports merely have “contributed” to the material
injury to some extent.18 The FAN submission on causation noted as follows:
FAN submission on causation
“The obligations set forth in Article 3.5 should be rigorously observed. Moreover doesn’t
Article 3.5 merit further elaboration? In order to improve and clarify the Agreement, isn’t it
important to develop the procedures and criteria utilized to analyze the causal relationship,
with a view to ensure that, even in the presence of other factors, a causal relationship will be
found only when there is clear and substantial link between the dumped imports and the
injury?”

In short, a key element of the paper was the need to introduce a substantial
causal relationship between dumped imports and material injury to the domestic
industry. In other words, if the cause of injury to the domestic industry is some
other causal factor, then antidumping remedy should not be provided.
A similar proposal was made by China in 2003.19 The proposal made by China
imputed that the present framework of causation in the ADA/SCMA is inadequate.
China stated that Article 3.5 should be clarified to ensure that a causal link could
only be established when the dumped import is the “substantial reason” for the
injury to the domestic industry. In the NGR, Australia specifically asked a question
whether the use of the “substantial cause” standard would undermine the scope of
the antidumping.20 China however asserted that Article 3.5 of the ADA, as it stands,
fails to provide a methodology of defining the causal relationship between dumping
and injury. China also expressed the desire that WTO Members could distinguish
the injury caused by dumped imports from the injury caused by other factors and
that antidumping measures could be taken only when the dumped imports are the
major cause of the injury.21

17
WTO Negotiating Group on Rules, Proposal of the People’s Republic of China on the
Negotiation on Antidumping, TN/RL/W/66 (March 6, 2003).
18
Id.
19
Id.
20
WTO Negotiating Group on Rules, Communication of Australia, Paper by Australia: Comments
on Document TN/RL/W/6, TN/RL/W/22(October 15, 2002).
21
WTO Negotiating Group on Rules, Submission from the People's Republic of China, Replies to
the Questions and Comments of the WTO Members Concerning the Proposal of China,
TN/RL/W/94 (May 5, 2003).
C Relationship Between Material Injury and Causation 225

The Friends of Antidumping submitted a second proposal in 2005 in which they

called for an amendment to Article 3.5 of the ADA.
FAN proposal on the sufficiency of causal relationship
“It must be demonstrated that the dumped imports in and of themselves are, through the
effects of dumping, as set forth in paragraph 2 and 4, causing injury within the meaning of
this agreement. (emphasis not original)”

D Non-attribution Language

Article 3.5 of the ADA requires the establishment of a causal relationship between
dumped imports and injury to the domestic industry. The investigating authorities
are also required to examine any known factors other than the dumped imports
which at the same time are injuring the domestic industry and the injuries caused by
these other factors must not be attributed to dumped imports.
India also made a proposal on need for clarifying the “non-attribution” language
in October 2002.22 The ‘non-attribution clause’ i.e. requirement for segregating
injury caused by factors other than dumped imports was particularly controversial
in view of the Appellate Body decision in US—Hot rolled steel.23 According to the
Appellate Body, investigating authorities when conducting causation analysis
should ensure that the injurious effects of the other known factors are not attributed
to dumped imports. As the Appellate Body stated, this analysis requires the
investigating authorities to appropriately assess the injurious effects of those other
factors; such an assessment must involve separating and distinguishing the injurious
effects of the other factors from the injurious effects of the dumped imports.
India acknowledged that separating and distinguishing the injurious effects from
the different causal factors could be a difficult exercise. However, India stressed that
for invoking anti-dumping measures, there is a need to specify an appropriate
standard for establishing causality between dumped imports and material injury.
While refraining from prescribing any standard, India proposed that there is a need
to elaborate Article 3.5 so as to provide appropriate guidance to investigating
authorities while separating and distinguishing the injurious effects of other factors
from the injurious effects caused by the dumped imports.
Around the same time in October, 2002, Australia made a proposal, which
opposed drastic changes to the injury and causation provisions. According to
Australia, there was no lack of clarity in Article 3.5 of the ADA; Australia noted

22
WTO Negotiating Group on Rules, Second Submission of India: Antidumping Agreement,
TN/RL/W/26 (October 17, 2002).
23
Appellate Body Report, US- Hot rolled Steel, ¶¶ 225-228.
226 6 Injury and Causation in Trade Remedies …

that Article 3.5 only required adequate regard to other injury factors. Australia
noted in its submission.24
Australia’s position on Article 3.5
The question of causal link has been the subject of several recent WTO dispute settlement
cases relating to anti-dumping and safeguards measures. The Thailand Steel case empha-
sized that although Article 3.5 requires that regard must be given by authorities to known
factors other than dumped imports which are causing injury, this did not mean that there
was an express requirement for an authority to examine these factors on their own initiative.
However, they could choose to do so.

South Africa made a proposal in 2006 which reiterated the views expressed by
Members such as the Friends of Antidumping, China and India.25 South Africa
acknowledged that it may not be possible to quantify exactly to what degree each
factor is contributing to the injury affecting the domestic industry under investi-
gation. However, according to South Africa, any inability at quantification of injury
factors should not be a reason in granting import relief when other known factors
contribute to a larger degree in the injury caused. In other words, according to
South Africa, the injury caused by dumped imports must be at least as significant as
the other known factors, individually or collectively. The extent of contribution
should be borne out by the non-attribution, in South Africa's view.
As elaborately discussed in Chaps. 3 and 4 of this book, the most complex issue
arising out of the implementation of the non-attribution analysis is the separation or
isolation of the nature and extent of other known factors which may be causing
injury to the domestic industry at the same time as the imports. While most of the
WTO members agreed on the importance of this separation and segregation of
effects, most of the proposals provided very little guidance on this issue. For
example, Australia posed a couple of questions to China on the methodology for
separation of the role of other known factors.
Australia’s questions to China
Question: How does China envisage that these criteria of substantial reason can be made
operational? Quantitative or qualitative assessment or should be even both examining
causal link, and what should be done in practicable terms?
China’s answer to Australia’s question
Answer: As a common practice now, the causal relationship may be established if the
investigating authorities determine that the dumped imports constitute one cause to the
injury of the domestic industry in an antidumping investigation. Such loose provision
leaves room for investigating authorities to discretionarily take measures to a great extent.
The purpose of the AD Agreement is to punish unfair trade practices, i.e. those measures
which cause injury to the domestic industries of other Members through dumping. Article
3.5 of the AD Agreement provides that the investigating authorities shall also examine any

24
WTO Negotiating Group on Rules, Communication of Australia, Paper by Australia: Comments
on Document TN/RL/W/6, TN/RL/W/22 (October 15, 2002).
25
Negotiating Group on Rules, Communication of South Africa (2006).
D Non-attribution Language 227

known factors other than the dumped imports which at the same time are injuring the
domestic industry, and the injuries caused by those other factors must not be attributed to
the dumped imports. However, this Article fails to provide the methodology of defining the
causal relationship between dumping and injury, which leads to the fact that, the investi-
gating authorities in practice always neglect those other factors and take it for granted that
the injuries are attributed to the dumping. China holds that in order to determine the causal
relationship in a correct manner, the Agreement should provide that the investigating
authorities shall separate and distinguish the injuries caused by other factors not attributed
to the dumped imports from all the injuries, and should specify the method to separate and
distinguish such injuries.
As for the standard of assessment as well as the way of operation in practice, China is
willing to discuss with other Members in a bid to establish an objective and operative
standard.

In short, China did not specify any method for performing the non-attribution
requirement. As Chaps. 3 and 4 of this book have examined, most users of
antidumping have been using qualitative approaches for conducting non-attribution.
It is revealing that most jurisdictions, including developed country Members such
as the EU and Australia are not using quantitative tools in such examination. In
several jurisdictions such as India, Brazil, Argentina, Turkey, Mexico and several
other countries, the final antidumping proceedings have been at best qualitative and,
in most cases, are based on a checklist approach. A particular known factor is raised
only to be rejected as not being a cause. The possible causes of injury to the
domestic industry could be several factors, but the findings, more often than not, do
not discuss such factors. It is interesting to note that even a 2005 FAN proposal
conceded the difficulty in separating and distinguishing the injurious effects of
dumped imports from the injurious effect of other known factors.26 It is pertinent to
quote the FAN statement: “[i]t might be difficult, in most cases, to quantify pre-
cisely the degree to which dumped imports have contributed to the injury being
experienced by the domestic industry relative to the effects of other factors”.27
The FAN Group proposal also suggests that such a separation of the injurious
effects could be based on a qualitative information or less than perfect quantitative
information or estimates based on such information. The FAN Group proposes that
the purpose of any examination is to find out whether the dumped imports in and of
themselves are causing material injury and as to what type of evidence was ana-
lyzed in reaching the conclusion.28
It is appropriate to mention in this regard that the United States had made two
proposals in seeking to clarify the causation provision under Article 3.5 of the AD
Agreement and Article 15.5 of the SCM Agreement. In the first paper, the United
States proposed that any clarification should ensure “that any affirmative obligations

26
WTO Negotiating Group on Rules, Paper from Friends of Antidumping, Second Submission of
Proposals on the Determination of Injury, Negotiating Group on Rules, TN/RL/W/38 (March 23,
2005).
27
Id. at 7.
28
Id.
228 6 Injury and Causation in Trade Remedies …

are clearly set forth in the Agreement and are workable for authorities to imple-
ment”29 In the second paper, the United States also expressed the two key principles
that any revision to the injury and causation provisions should embody (i) that an
authority is not required to determine that dumped or subsidized imports are the
sole cause of injury to the domestic industry.30 This would confirm Members’
current understandings and practice; and (ii) when authorities assess the effects of
known factors other than dumped or subsidized imports, they should not be
required to quantify the effects of these factors. The United States further noted that
they were not aware of any reliable methodology.31 Considering the fact that the
United States was one of the very few jurisdictions that had used econometric
models to quantify the extent of injury, this was an important statement. It is also
pertinent to note that the US Court of Appeals for the Federal Circuit (USAFC) has
insisted in Bratsk Aluminum Smelter v. United States,32 that the U.S. International
Trade Commission should provide quantitative explanation based on trade data in
the injury determination.
In the subsequent paper, which was submitted in July 2005 and discussed at the
September 2005 session of the Negotiating Group on Rules (NGR), the United
States provided a further explanation of why clarification of the causation obliga-
tion established by Article 3.5 of the AD Agreement and Article 15.5 of the SCM
Agreement would be useful. The United States also explained and suggested sev-
eral specific ways in which the obligation should be clarified. In light of the above,
the text proposed by the United States on causation included a modification of Art
3.5 of the ADA and the insertion of a new Article, namely Article 3.5.1. The United
States also proposed a similar revision to the concerned provision under the SCM
Agreement. It may be noted that the proposed deletions are struck through, while
the proposed additions are underlined.
Article 3.5 of the AD Agreement: U.S. Proposal
“It must be demonstrated that the dumped imports are, through the effects of dumping, as
set forth in paragraphs 2 and 4, causing injury within the meaning of this Agreement. The
demonstration of a causal relationship between the dumped imports and the injury to the
domestic industry shall be based on an examination of all relevant evidence before the
authorities. The authorities shall also examine any known factors other than the dumped
imports which at the same time are injuring the domestic industry. As described in sub-
paragraph 5.1, the authorities must not attribute to the dumped imports and the injuries
caused by these other factors must not be attributed to the dumped imports. Factors which
may be relevant in this respect include, inter alia, the volume and prices of imports not sold

29
Communication from the United States, Identification of Additional Issues Under the Anti-
Dumping and Subsidies Agreements, TN/RL/W/98 (May 6, 2003).
30
Communication from the United States, Causation (ADA Article 3.5; ASCM Article 15.5),
TN/RL/GEN/59 (July 13, 2005).
31
Id. fn. 7.
32
444 F.3d 1369 (Fed.Cir. 2006) (noting that the ITC will have to determine whether imposing the
duties would benefit the domestic industry given the possibility of non-subject imports replacing
the subject imports).
D Non-attribution Language 229

at dumping prices, 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.”
Article 3.5.1 of the ADA: US Proposal
“To make an affirmative determination that dumped imports are causing injury, the
authorities must determine that the effects of the dumped imports are injurious notwith-
standing the effects of the other known factors. The authorities need not isolate or quantify
the effects of either the dumped imports or the other known factors, either individually or
collectively. They also need not evaluate whether the effects of the dumped imports are
more important than the effects of the other known factors, either individually or
collectively”

On 30 November 2007, the Chair of the Negotiating Group on Rules issued a

Draft Consolidated Chair Texts of the AD and SCM Agreements.33 As the
Chairman clarified, the draft texts on antidumping and subsidies/countervailing
duties reflected a “bottom up” approach, identifying the most contentious issues
contained in brackets with no legal text provided. The Chairman also noted that this
was an interim step, pending the tabling of a revised text.
Chairman’s Text of the 2007 Working Document
“Article 3.5: It must be demonstrated that the dumped imports are, through the effects of
dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the dumped imports and
the injury to the domestic industry shall be based on an examination of all relevant evidence
before the authorities. The authorities shall also examine any known factors other than the
dumped imports which at the same time are injuring the domestic industry, and the injuries
ous effects of caused by these other factors must not be attributed to the dumped imports.12
The examination required by this paragraph may be based on a qualitative analysis of
evidence concerning, inter alia, the nature, extent, geographic concentration, and timing of
such injurious effects. While the authorities should seek to separate and distinguish the
injurious effects of such other factors from the injurious effects of dumped imports, they
need not quantify the injurious effects attributable to dumped imports and to other factors,
nor weigh the injurious effects of dumped imports against those of other factors. Factors
which may be relevant in this respect include, inter alia, the volume and prices of imports
not sold at dumping prices, contraction in demand or changes in the patterns of con-
sumption, 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.
—————
12
Factors which may be relevant in this respect include, inter alia, the volume and prices of
imports not sold at dumping prices, 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 pro-
ductivity of the domestic industry.

33
Negotiating Group on Rules, Draft Consolidated Chair Texts of the AD and SCM Agreements,
TN/RL/W/213 (November 30, 2007).
230 6 Injury and Causation in Trade Remedies …

The draft calls upon “the authorities [to] seek to separate and distinguish the
injurious effects of such other factors from the injurious effects of dumped imports”.
One of the changes suggested in the 2007 Chairman’s Text was that the
non-attribution analysis may be based on qualitative assessment, rather than a
quantitative assessment which was a significant development from the general tenor
of discussions that prevailed in the early phase of the Doha Round. The delegations
of Hong Kong, China, Japan, Korea R P, Norway, Switzerland, and the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu submitted a paper which,
inter alia, proposed certain amendments to the Chair’s Text. The proposal in
essence argues that “to the extent that a quantitative analysis is impracticable, the
examination required by this paragraph may be based on a qualitative analysis of
evidence”.34 This proposal indicates the differences among delegations in choosing
an analytical tool in the causation analysis.
Subsequently, on May 8, 2008, the Chairman of the Negotiating Group on Rules
issued a working document regarding negotiations on rules.35 The document, which
included a cover note and three Appendices relating to anti-dumping, horizontal
subsidies and fisheries subsidies, sought to capture the full spectrum of issues and
the reactions of delegations to the Chair’s 2007 draft. The Chairman issued another
Text on Rules on December 19, 2008. The 2008 Chairman’s text included the
following observation on causation.
Chairman’s Text on causation in 2008
[CAUSATION OF INJURY: Delegations maintain a wide range of views on such ques-
tions as whether it should be mandatory to separate and distinguish the effects of dumped
imports and other factors, the extent to which authorities should be required to conduct a
quantitative (as opposed to qualitative) analysis of non-attribution, and the extent to which
authorities should be required to weigh the injurious effects of dumped imports against the
effects of other factors.]36

On April 21, 2011, the Chairman of the Negotiating Group on Rules issued a
new legal text on Antidumping.37 The objective of preparing the Chairman’s text is
to “capture” the current situation in the Rules negotiations. The Chairman’s Text
indicates that the language on causation is still bracketed, which indicates that there
is no agreement or convergence of views on this important issue.

34
Negotiating Group on Rules, Hong Kong, China; Japan; Korea, Rep. of; Norway; Switzerland;
and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, TN/RL/W/233
(March 12, 2008).
35
Negotiating Group on Rules, Working Document from the Chairman, TN/RL/W/232(May 28,
2008).
36
Negotiating Group on Rules, New Draft Consolidated Chair Texts for AD and SCM Agreements,
TN/RL/W/236 (December 19, 2008).
37
Negotiating Group on Rules, Communication from the Chairman, Agreement on the
Implementation of Article VI of the General Agreement on Tariffs and Trade, TN/RL/W/254 (April
11, 2011).
D Non-attribution Language 231

Chairman’s Text on Causation in 2011

[CAUSATION OF INJURY: Delegations continue to hold widely diverging views on
issues relating to causation of injury. Recent discussions have focused on two issues:
whether it should be mandatory to separate and distinguish the effects of dumped imports
and other factors, and the extent to which authorities should be required to conduct a
quantitative (as opposed to qualitative) analysis of non-attribution. Although there seems to
be a shared view that authorities should carefully consider the effects of factors other than
dumped imports, and ensure they are not attributed to dumped imports, there are substantial
gaps regarding the degree of precision that can or should be required.]

The Chairman’s text on Article 3.5 of the Antidumping Agreement reflect the
lack of consensus and understanding in identifying an acceptable standard on injury
and causality (causation) in antidumping proceedings.

E Negotiations on Subsidies and Countervailing Measures

Although there have been fewer proposals on subsidies than on anti-dumping, a

wide range of proposals have nevertheless been submitted regarding prohibited
subsidies, actionable subsidies and export credits. In the SCMA negotiations, the
Friends Group or other developing countries were not as active as they were in
reformulating the language of injury and causation in antidumping proceedings.
The United States made, perhaps the only substantive proposal in the negotiations
on Agreement on Subsidies and Countervailing Measures.
U.S. Proposal on Causation in SCMA
“15.5 It must be demonstrated that the subsidized imports are, through the effects [footnote]
of subsidies, causing injury within the meaning of this Agreement. The demonstration of a
causal relationship between the subsidized imports and the injury to the domestic industry
shall be based on an examination of all relevant evidence before the authorities. The
authorities shall also examine any known factors other than the subsidized imports which at
the same time are injuring the domestic industry; As described in subparagraph 5.1, the
authorities must not attribute to the subsidized imports and the injuries caused by these
other factors must not be attributed to the subsidized imports. Factors which may be
relevant in this respect include, inter alia, the volume and prices of non-subsidized imports
of the product in question, contraction in demand or changes in the patterns of con-
sumption, 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.
15.5.1 To make an affirmative determination that subsidized imports are causing injury, the
authorities must determine that the effects of the subsidized imports are injurious
notwithstanding the effects of the other known factors. The authorities need not isolate or
quantify the effects of either the subsidized imports or the other known factors, either
individually or collectively. They also need not evaluate whether the effects of the subsi-
dized imports are more important than the effects of the other known factors, either indi-
vidually or collectively.”
232 6 Injury and Causation in Trade Remedies …

Notwithstanding the few submissions that were made in clarifying and elabo-
rating the injury and causation provisions, the 2008 Chairman’s Text did not
include any suggested changes to Article 15 of the SCMA. It is also noteworthy that
the Chairman of the Negotiating Group on Rules did not release any text in 2011.

F Conclusion

As the Chairman’s text indicates, consensus on a widely acceptable language on

injury and causal link in the context of Rules Negotiations has turned out to be
almost elusive and extremely difficult in the WTO. Although most WTO members
are in favour of rigorous assessment of injury and causation assessment, there is
very little unanimity in the methodologies to be used. A bone of contention is
whether the WTO members should necessarily segregate and isolate the injurious
effects of other known factors as opposed to the injurious effects of dumped or
subsidized imports. While a number of new users such as China, India and the FAN
Group have suggested the importance of non-attribution analysis, they are yet to
suggest concrete methodologies or analytical tools for carrying out the “segregation
or separation” of effects of other factors. The new users are yet to endorse the use of
econometric or statistical tools, whereas traditional users such as the United States
that have developed sophisticated economic models are not in support of recom-
mending such models. These contrasting positions call into question whether
non-attribution in its strict sense is ever possible in trade remedies. Although the
Rules negotiations have produced some serious discussion on causation, the debate
on the use of quantitative as opposed to qualitative assessment is still inconclusive.
In other words, the discussion on injury and causation in trade remedy instruments
reflects the deeply divisive role of trade contingent protection among various WTO
members. It also reaffirms the hypothesis of this study that trade remedies are
inherently political instruments and that achieving scientific precision in injury and
causation should neither be the goal nor the short term objective of trade remedy
investigations.
Chapter 7
General Principles of Law on Causation:
Application in the Field of Trade Remedy
Investigations

Abstract This chapter explores the possibility of formulating the causation stan-
dard in trade law based upon the general theories of causation in law. In particular,
this chapter also explores the suitability of the “necessary element of a sufficient
set” (NESS) test which incorporates a weak necessity and strong sufficiency ele-
ment. The chapter also compares the efficacy of the NESS test vis-à-vis the
“but-for” test in the context of trade remedy investigations.

A Introduction

As the previous chapters of this book have indicated, identifying the language of
causation is perhaps the most difficult and politically contentious part of trade
remedy investigations. Industries that wanted import relief have always lobbied for
flexible causation standards while sectors that were targeted in antidumping wanted
rigorous causation standards to render its use rare and infrequent. The negotiations
on injury and causation under the WTO Rules Negotiations typify the controversial
character of this debate.1 As some of the submissions under the WTO Rules
negotiations indicate, a number of delegations including China and the FAN Group
would like to include a strong causation language in trade remedies. Some of these
submissions, in particular, point to the “substantial cause” language. At the same
time, Members such as Australia consider that the current language is appropriate
and does not require drastic changes.2
While the WTO treaty language of causation is fairly broad and open-ended, a
number of dispute settlement panels have examined the dictionary meaning of the
term “cause”.3 While the dictionaries can provide tautological definitions, there has
been very little effort to understand some of the dominant philosophical theories on

1
For a discussion on the negotiating proposals, see Chap. 6 of this study, supra section titled
“Degree of Causal Relationship”.
2
Id.
3
Panel Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from
the European Communities, WT/DS166/R (January 19, 2001).

© Springer Science+Business Media Singapore 2016 233

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_7
234 7 General Principles of Law on Causation …

causation. The purpose of this chapter is to examine some of the commonly referred
to theories of causation in law, and restate how the causation analysis in WTO trade
remedies can be rendered logically coherent and fit well with the established
notions of causation. Furthermore, instead of assuming the causal significance of
factors, as is generally done in trade remedy investigations, it is necessary to make
an intuitively plausible legal framework for causal determination which is consis-
tent with the dominant theories of causation.

B The Concept of Causation: From Hume to Hart

and Honoré

This study examined the dictionary meaning of the term “cause” in Chap. 3.
However, in order to fully explicate the meaning of this term, it is essential to revisit
the philosophical debates on causation. In a way, the modern genealogy of cau-
sation starts with David Hume, the renowned Scottish Philosopher. Hume was of
the opinion that generalizations or causal laws constituted the idea of causation in
its entirety.4 Causation for Hume had a certain universal application. Hume also
believed that there was a truth that every event had to have a cause.5
Hume’s concept of causation was revised by John Stuart Mill.6 Mill did not
reject the principle that there are certain general causes for events. On the other
hand, Mill argues that there are broad generalizations that are at play regarding
causation and that there are multiple conditions that are integrally related to the
occurrence of an event. Stated differently, Mill argues that in certain scenarios there
could be specific anomalies that could be the cause of an event.7
Legal Philosopher H.L.A. Hart and his colleague Tony Honoré revisited this
topic in the late 1950s. They were of the opinion that causation could only be
understood with reference to specific acts. For Hart and Honoré, the answer to the
question ‘what caused the event?’ could not be answered by an empirical gener-
alization of cause and effect, but they argued that the question could be answered by
analyzing the circumstances of a specific case.8 Hart and Honoré observe that these

4
David Hume, A TREATISE OF HUMAN NATURE 14-15(A Selby-Biggee and P. Nidditch eds., 2nd
edn., 1978).
5
Id.
6
JOHN S. MILL, A SYSTEM OF LOGIC RATIOCINATIVE AND INDUCTIVE (8th edition, London, 1886).
7
Jane Stapleton, Unpacking Causation, in RELATING TO RESPONSIBILITY: ESSAYS FOR TONY HONORE
ON HIS EIGHTIETH BIRTHDAY 145, 145-46 (Peter Cane & John Gardner eds, Hart Publishing, 2001).
Hart and Honore use the analogy of a railway accident to clarify Mil’s point. If the speed of a train,
the nature of the track, a bent rail and other externalities are all required for a particular accident to
happen, all the factors being equally relevant and important to cause the accident, Mill is of the
opinion that the bent rail, being the most recent act is the cause. Though Mill notes the arbitrary
nature of this, he seems to think that the answer lies in principles of common sense.
8
HART AND HONORÉ, CAUSATION IN LAW 35-36 (2ND ED. 1985).
B The Concept of Causation: From Hume to Hart and Honoré 235

generalizations are based on common sense and logic and need not refer to any
particular scientific theory. In their view, causal knowledge can be based on rea-
soning by analogy from empirical observations or can be acquired through edu-
cation or even from imagination.
According to Hart and Honoré, a ‘cause’ of an event is a distinct idea from mere
‘conditions’ that enable an event to happen. A cause is to be treated at a higher level
than a mere condition. This classification that Hart and Honoré have created
responds to Mill’s assertion that every condition in a causal chain is as important as
any other condition; thus picking a cause is an arbitrary exercise which invariably
ends in the most recent condition being picked.9 Hart and Honoré explained this
difference through a facile illustration. A fire can never happen without Oxygen.
Oxygen is essential to the starting of a fire, but it is not an anomaly; it is a mere
condition10 and not a cause. But, the throwing of a matchstick can be the cause of
fire as it is an anomaly that does not constantly happen. Hart and Honoré have
succinctly elaborated the difference using another set of illustration.
The cause of a great famine in India may be identified by the Indian peasant as the drought,
but the World Food Authority may identify the Indian government’s failure to build up
reserves as the cause and the drought as mere condition. A woman married to a man who
suffers from ulcerated condition of the stomach might identify eating parsnips as the cause
of indigestion: a doctor might identify the ulcerated condition of his stomach as the cause
and the meal as a mere condition.11

According to Hart and Honoré, a contributing factor is a “cause” rather than a

“mere condition” if it satisfies two requirements. The first requirement is that it must
be (a) a voluntary human intervention that was intended to produce the consequence
—for example, deliberately shooting someone, or (b) an abnormal action, event, or
condition in the particular context—for example, a freak storm or driving carelessly,
and (2) it must be the last intervention or independent abnormal occurrence.12
In a legal proceeding, not every contributing condition or reason for an outcome
can be treated as a “cause”. In principle, all contributing conditions are causes, but
only one or two such conditions are treated as cause(s) based on a notion that such a
condition or factor could be the most significant or relevant in the context of the
causal enquiry. For example, if a train collides with a bus crossing an unmanned level
crossing, the presence of the unmanned level crossing itself could be considered as
the relevant cause although the bus driver might have missed the train’s whistle or
driven the vehicle at an excessive speed so as to disregard the incoming train.
Maintaining an unmanned level crossing itself would be regarded as the abnormal
condition, or more appropriately, the causally relevant factor for the accident.
Likewise, in the case of trade remedy law, the petitioning domestic industry might be
suffering business loss and injury on account of a plethora of factors, but the causally

9
Id.
10
See the discussions in Chapter I entitled Philosophical Preliminaries, at 9–25.
11
HART AND HONORÉ, CAUSATION IN LAW, at 35–36.
12
Id.
236 7 General Principles of Law on Causation …

relevant factor in the underlying investigation is whether the industry has suffered
injury on account of fair or unfair imports. In both the examples given above, a
particular act or condition is treated as a statutory cause and is assumed to have
certain causal significance. In other words, all trade remedy investigations assume
that the subject imports are a cause or a potential cause of injury, and the purpose of
the causation enquiry is either to reaffirm or reject this assumption.

C Addressing a Plurality of Causes in a Trade Remedy

Setting

The ‘but-for’ concept of causation acquired a fair amount of attention in trade

remedy law and practice and was discussed briefly in Chap. 3.13 Under the but-for
test, X is a causally relevant factor for the occurrence of Y when Y would not have
occurred but for the occurrence of X. In a vast majority of cases, the but-for test
works quite well as a test of causation. But in situations involving complex facts
matrix, it results in a finding of no causation, even though it is clear that the act in
question contributed to the injury. In a way, the but-for test makes the necessary
condition almost the exclusive criterion for causal contribution. The but-for test also
reflects a deeply rooted belief that a condition cannot be a cause of some event
unless it is, in some sense, necessary for the occurrence of the event. As is
demonstrated in Chap. 3 of this book, the but-for test is singularly inapplicable in
cases of over-determination. The cases of over-determined causation include the
following at a minimum: cases in which a factor other than the specified act would
have been sufficient to produce the injury, but its effects either (1) were preempted
by the more immediately operative effects of the specified act, or (2) combined with
or duplicated those of the specified act to jointly produce the injury.
In the context of trade remedies, dumping or subsidization of export sales is not a
single act performed at a particular moment in time similar to activities like pulling a
gun trigger, feeding a spoonful of poison, dealing a physical blow, or lighting a fire.
It is a recurrent and sustained activity, conducted over a period of several weeks and
months, if not years, the cumulative effects of which might have caused an injury to
the domestic industry. Domestic and export transactions examined in the case of
trade remedies deal with hundreds and thousands of shipments involving multitude
of sellers, exporters, importers and other intermediaries. The industry itself would
have passed through several phases of business cycles during this time. In such a
situation requiring that fair or unfair imports themselves should have caused injury is
essentially an implausible requirement. In essence, any causation in the context of
trade remedies should be an inclusive test, with the possibility of accommodating
multiple causes as causally relevant factors.

13
Dukgeun Ahn & William J. Moon, Alternative Approach to Causation Analysis in Trade Remedy
Investigations: ‘Cost of Production’ Test, 44(5) JOURNAL OF WORLD TRADE 1023-1052 (2010).
C Addressing a Plurality of Causes in a Trade Remedy Setting 237

According to Mackie, a proponent of the but-for test, attempts to define cau-

sation in terms of the most obvious conceptual tools—necessary conditions, suf-
ficient conditions, or necessary and sufficient conditions—have all failed to provide
a comprehensive and satisfactory framework.14 Accordingly, Mackie developed the
Insufficient but Necessary part of an Unnecessary but Sufficient set (INUS test)—a
test which treats a condition as cause if it is an insufficient but non-redundant part of
a condition which is itself unnecessary. For example, the damage to a shipping
vessel from a fire that occurred due to oil spillage in a wharf where certain welding
and repair work too was carried out, cannot be attributed to the fire sparks in a
normal setting. The fire sparks are insufficient to cause the damage by themselves,
but the damage would not have caused without the fire sparks. The fire sparks could
constitute an INUS cause. However, the INUS test requires strong necessity and can
be characterized as a modified version of but-for test, which this study has rejected
as inappropriate in a trade remedy setting. However, scholarly writings point out
that some of the recent frameworks provide intelligible and plausible framework for
explaining causal judgments when plurality of causes are involved. The following
paragraphs will examine the relevance of the NESS test suggested by Hart and
Honoré.

D A Causation Framework for Trade Remedies:

Necessity Test

Hart and Honoré recognize that there may be a plurality of causes in a particular
instance. Hart and Honoré noted in their landmark book entitled Causation in Law
that the “necessary element of a sufficient set” (NESS) test of causal contribution
follows directly from the dominant “regularity” account of the meaning of causation
initially developed by David Hume and elaborated by John Stuart Mill. According
to Hume, singular causal judgments are not based on direct perception of causal
qualities.15 Causal judgments are based on the belief that certain succession of
events instantiates one or more causal laws.16 The essence of causation under this
philosophic account is that a particular condition was a cause of (condition con-
tributing to) a specific consequence if and only if it was a necessary element of set
of antecedent actual conditions that was sufficient for the occurrence of the con-
sequence.17 However, in order to avoid including causally irrelevant conditions in

14
John Mackie, Causes and Conditions, 4 (2) AMERICAN PHILOSOPHICAL QUARTERLY, 245, 245-255
(1965) (arguing that the INUS test, i.e. Insufficient but Necessary part of an Unnecessary but
Sufficient set, could explicate the causal relationship)
15
DAVID HUME, A TREATISE OF HUMAN NATURE 14-15 (A Selby-Biggee ed., rev’d P. Nidditch 1978).
16
Richard Wright, Causation, Responsibility, Risk, Probability, Naked Statistics, and Proof:
Pruning the Bramble Bush by Clarifying the Concepts, 73 IOWA LAW REVIEW 1001, 1788-91
(1988) (hereinafter Bramble Bush).
17
Id.
238 7 General Principles of Law on Causation …

this sufficient set, the antecedent conditions must be limited to those that are nec-
essary for the sufficiency of the set.18
The NESS is also in harmony with the dominant philosophic literature on
causation. The literature continues to be characterized by arguments based on
necessary conditions, sufficient conditions, or necessary and sufficient conditions.
The following formulations are based on the various degrees of necessity or suf-
ficiency and both.
• Stringent & strong necessity test: Dumping (D) be necessary for the occurrence
of Injury (I), whenever (I) occurs.
• Less stringent & strong necessity test: Dumping (D) have been necessary for the
occurrence of Injury (I) on that particular occasion.
• Least stringent, weak necessity test: Dumping (D) have been a necessary ele-
ment of some set of actual conditions that was sufficient for the occurrence of
Injury (I).
• Stringent sufficiency test: Dumping (D) be sufficient by itself for the occurrence
of the Injury (I).
• Less stringent, strong sufficiency test: Dumping (D) be a necessary element
of some set of existing conditions that was sufficient for the occurrence of
Injury (I).
• Least stringent, weak sufficiency test: Dumping (D) be a part of some of the
existing conditions that was sufficient for the occurrence of Injury (I).
Legal philosophers have described the NESS test as a test of weak necessity or
strong sufficiency. The sufficiency can be stated as follows: when ‘D’ happens, ‘I’
also happens. A causal inference of ‘I’ is drawn whenever ‘D’ takes place. It may be
possible to point out here that dumping (or, subsidy or increased imports as the case
may be) itself is an arbitrary causal choice. As Tony Honoré points out in his book
Responsibility and Cause, it is the breach of responsibility that determines an
otherwise arbitrary choice as a relevant causal choice.19 Dumping, being part of a
set causing a certain harm is picked as the cause because dumping results in the
breach of a legal obligation as and when it causes an injury to the industry. In other
words, the dumping is a statutory cause as provided under the trade remedy statute
and cannot be treated as an arbitrary causal choice in NESS set.
In the above scenarios, the strict necessity and strict sufficiency tests are too strict
and rigid. Both the strict necessity and strict sufficient test could be considered
appropriate to test the counterfactual enquiry. As stated earlier, the stringent and
strong necessity test can be practically implemented through the but-for test without
much difficulty. However, as this study examined in Chap. 3, the but-for test is not
an inclusive test and does not admit the possibility of any other factor causing
injury to the domestic industry. Likewise, few, if any, conditions are sufficient by

18
Id. See also Wright, Causation in Tort Law, 73 CALIFORNIA LAW REVIEW 1735, 1788-91 (1985).
19
See generally, TONY HONORÉ, RESPONSIBILITY AND FAULT 14-32 (1999).
D A Causation Framework for Trade Remedies: Necessity Test 239

themselves for the occurrence of any result.20 Accordingly, this study pointed out
the infirmities of the but-for test as a causative tool in a trade remedy scenario.
The element of strong sufficiency in the NESS test does not appear inconsistent
with the limited WTO jurisprudence. In some of the safeguard investigations, the
WTO panels have suggested a language that increased imports shall “in and of
themselves”, or “per se” cause injury to the domestic industry.21 Although the
rigour of this language has been whittled down by the WTO Appellate Body,22 the
element of strong sufficiency still appears to be guiding such investigations.
The FAN Group also made a proposal suggesting a similar language in the context
of Article 3.5 of the Antidumping Agreement.23 While the but-for test cannot
clearly accommodate a ‘weak necessity and strong sufficiency’ standard, it needs to
be still examined whether the requirement of non-attribution could fit well within
the contours of the NESS test.
It is important to revisit Hart and Honoré’s initial formulation of the NESS to
answer this query. Hart and Honoré do not require that each of the causal factors
has been actively operating, but they seem to require that each has been sufficient
by itself for the occurrence of the injury. For example, in the burnt house example,
Hart and Honoré assume that each fire would have been sufficient by itself for the
destruction of the plaintiff’s house. The NESS test then confirms causal contribu-
tion by each fire. Each fire was necessary for the sufficiency of a set of actual
antecedent conditions that did not include the other fire. The requirement that each
factor has been sufficient by itself (when combined with the background conditions)
is too restrictive and is not part of the basic concept of causation that is reflected in
the NESS test.
The next enquiry is whether each of the statutory causes such as dumping,
subsidized imports or increased imports should be independently sufficient to
constitute the injury. Hart and Honoré apparently require that a duplicative cause be
independently sufficient—in the NESS sense of sufficiency—for the cause.
A condition can be a cause under the NESS test, even if it was neither necessary nor
independently sufficient. The question is whether a particular set of conditions
identified in a set is sufficient to produce a particular result.
The independent sufficiency is not always followed by courts. Richard Wright
has demonstrated this aspect eloquently. In an illustration that he has provided, five
units of pollution was necessary and sufficient for a particular environmental harm
and seven defendants released one unit of pollution.24 Each unit of pollution in
itself was neither necessary nor independently sufficient for the environmental

20
T. Beauchamp & A. Rosenberg, HUME AND THE PROBLEM OF CAUSATION 23, 88-91 (1981).
21
Panel Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from
the European Communities, ¶ 8.140 WT/DS166/R (January 19, 2001), as modified by Appellate
Body Report WT/DS166/AB/R;
22
Appellate Body, US—Wheat Gluten, ¶ 66.
23
For a discussion on the negotiating proposals, see Chap. 6 of this study, supra section titled
“Degree of Causal Relationship”.
24
Richard Wright, Bramble Bush, supra note 16, at 1035.
240 7 General Principles of Law on Causation …

harm, but each unit of pollution was a NESS cause. To restate this scenario in the
context of the NESS test, each unit of pollution was necessary for the sufficiency of
an actual set that included four other units of pollution, and the sufficiency of each
set was not affected by the presence of two other duplicate causes of causation. The
hallmark of the NESS test is that there should be a set of causal factors that is
adequate in itself to cause an injury.
In two duplicative causation cases involving merged fires and noisy motor
vehicles, the courts did not require the plaintiff to prove the independent sufficiency
of each contributing factor, but rather required the plaintiff to prove only that each
factor contributed to the injury. The following example will explain this aspect
better: If any two or three fires were sufficient for the injury, but none by itself was
sufficient, each was a cause of the injury since each was necessary for the suffi-
ciency of a set of antecedent conditions that included only one of the other fires.
The same causal connection exists even if there were only two fires, one of which
was independently sufficient and the other of which was not. The first was clearly a
cause, since it was independently sufficient. But the second fire was also a cause. It
was necessary for the sufficiency of a set of actual antecedent conditions which
included another fire (the first) that was at least large enough to be sufficient for the
injury if it merged with a fire the size of the second fire.
As Richard Wright argues, in certain conditions the NESS test for a causally
relevant factor is superior to the alternative but-for test.25 A reference may be made
to an example used by Richard Wright (with minor modifications) to illustrate the
utility of NESS in the non-attribution analysis in trade remedies. Assume a situation
where fire X and fire Y, both having nearly the same intensity and proportions
broke out in a congested housing locality. Fire X reached a bit early, while fire Y
reached after the house had already been destroyed. There was only one actually
sufficient set—a set that contains fire X but not fire Y. There is also a probable set
that includes fire Y. However, the earlier arrival of fire X preempted the sufficient
set that included fire Y, making it causally neither necessary nor sufficient. In this
scenario fire Y was neither a but-for cause nor a NESS cause, but only a preempted
condition. Even fire X is also not a but-for cause, because Fire Y could have done
the same damage had it not been preempted by fire X. However, understanding the
factors that could possibly establish multiple set of conditions is essential to
understanding the concept of causation.
It is necessary to revisit the non-attribution analysis in the WTO trade remedies
in the light of the above understanding. The non-attribution language requires that
the injury to the domestic industry or producers on account of other factors shall not
be attributed to imports. The non-attribution analysis requires the parties and the
investigating authorities to identify the ‘causes’ which affect the domestic industry.
Assume a scenario where the anticompetitive practices in the domestic industry are
a known cause of injury. The investigating authority conducts a counterfactual
analysis and determines that in the absence of anticompetitive practices within the

25
Richard Wight, Bramble Bush, supra note 16.
D A Causation Framework for Trade Remedies: Necessity Test 241

domestic industry, the alleged injury would not have happened. Assuming that
dumped imports also played a contributing role, should the investigating agency
terminate the investigation on the ground that there is no causal link? Such a
conclusion does not appear from a reading of the text of antidumping or other trade
remedy agreements such as SCM Agreement or Safeguards Agreement. The injury
and causation standards in all the three agreements admit the possibility of plurality
of causes and no causal factor can be treated as rival candidates. One could
therefore argue that the non-attribution language does not require a but-for analysis
in considering the degree of contribution of other factors. However, the investi-
gating agency can consider whether the role of dumped/subsidized imports have
been preempted by any other known factor. Only if the evidence of this preemption
is so overwhelming and clear, is there is a need for an investigating authority to
terminate the trade remedy action for want of causal link.
This study would argue that the NESS test would be more appropriate even
when there is a plurality of causes. Mackie, a preeminent philosopher of causation,
also suggests that when multiples causes can be pointed out for the eventual out-
come and when none of the causes in itself is sufficient to bring out the concerned
result, an aggregate but-for test can be used. In one of Mackie’s examples, a man
dies when two bullets, each of which by itself would have been immediately fatal,
enter the victim’s heart simultaneously. A detailed causal enquiry could not
determine whether as to which among the two bullets was necessary to cause the
death. Mackie suggests that death would not have caused without the volley, which
includes the aggregate effect of the two bullets. Mackie offers the aggregate but-for
test as the best possible formulation when we cannot precisely know which item in
the cluster caused the result.
Richard Wright has provided a comprehensive response to Mackie’s aggregated
but—for test and in arguing why the NESS test would have none of these philo-
sophic or pragmatic objections. According to Wright, problems associated with
examples given by Mackie can be correctly addressed by the NESS test. While
reverting to illustration dealing with the hypothetical discussing the death caused by
the volley of bullets, the NESS test could treat each bullet as necessary for the
sufficiency of a set of actual antecedent conditions which do not include the second
bullet. Furthermore, the sufficiency of each set is not affected by the simultaneous
existence of the alternative set. If one causal factor gets triggered and the result
(victim’s death) occurs before the arrival of the second, the NESS test would treat
the first causal factor as the cause of the outcome and the second one as the
preempted condition. In this scenario, the first factor would be necessary for the
sufficiency of a set of antecedent conditions that does not include the second factor.
In this scenario, the second factor was not necessary for the sufficiency of any set of
actual antecedent conditions. Based on this characterization, there is no conceivable
weaker necessity test than the NESS test.
The non-attribution test suggested in the WTO dispute settlement jurisprudence
need not find it difficult to embrace the NESS test. The WTO language only insists
that the injury attributable to dumped/subsidized or increased imports should not be
242 7 General Principles of Law on Causation …

“polluted” by the injurious effects of the remaining factors.26 The causal effects can
be polluted only if a cluster of causes is aggregated so as to constitute a “single
cause”. It can happen in a causal enquiry comprising the aggregate but-for scenario.
The aggregated but-for test could include both causally relevant factors, causally
irrelevant factors and pre-empted conditions and examines whether injury could
have taken place in the absence of the aggregated factors. Such an analysis does not
seek to distinguish actual causes from the irrelevant causes or preempted condi-
tions. The Appellate Body came down strongly against such aggregation of such
causes in US—Hot rolled Steel when it ruled that “… if the injurious effects of
dumped imports and other known factors remain lumped together and indistin-
guishable, there was simply no means of knowing whether injury ascribed to
dumped imports was, in reality, caused by other factors.”27

E Conclusion

The foregoing discussions indicate that in trade remedy law there is a need to
formulate a causation standard which is not based on the strong necessity linked
but-for test. The NESS test admits the possibility of accommodating more than one
cause in a set of causally relevant factors which could be sufficient to cause the
alleged injury to the domestic industry. The NESS test will also be appropriate in
eliminating the role of causally irrelevant factors which may cloud the aggregate
but-for situation or in performing the non-attribution. This study has also demon-
strated that the NESS test is intuitively superior to the popular but-for test which is
seen to be inadequate while dealing with plurality of causes that may be identified
as injuring the domestic industry in the context of trade remedy law.

26
Panel Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb
Meat from New Zealand and Australia, ¶ 224 WT/DS177/AB/R (March 16, 2001).
27
Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel
Products from Japan, ¶ ¶. 224, 228 WT/DS184/AB/R (Aug. 23, 2001).
Chapter 8
Findings and Conclusions

Abstract This book explored the evolution of injury and causation standards in
trade remedy investigations covering a time span of almost a century. While there is
no exact science on the choice of the appropriate standard for injury and causation
in trade remedies, the historical evolution and negotiating history emphasise the
policy dependent character of such remedies. While quantitative tools may be
desirable in estimating injury and causation, this study makes a finding that in
addition to the trends analysis, a well-reasoned descriptive analysis of the effects
and role of other causal factors could satisfy the applicable injury and causation
standards uder the existing WTO rules. In addition, the book highlights the utility of
the “necessary element of a sufficient set” (NESS) test which incorporates a weak
necessity and strong sufficiency element in making the injury and causation stan-
dards more robust and reliable.

The average tariff protection among most members of the WTO has come down
significantly in the post-WTO phase. When tariff protection has declined, trade
remedy measures have served as some form of proxy protection. Importantly, most
trade remedy measures are implemented as tariff measures and serve to protect the
domestic industry for reasonably long periods of time.
One of the assumptions addressed in this study is that injury and causality in
trade remedy investigations is a highly policy dependent standard. The chapter on
the historical evolution of trade remedies, especially antidumping, indicates how
antidumping evolved from antitrust which provided protection to competition from
predatory pricing practices. In a way, antidumping had its roots in international
price discrimination but tied this principle to a verifiable requirement of injury to
domestic industry which was affected by import competition. This study also traced
how inextricably the concepts of antidumping and antitrust were originally con-
nected at least in the context of the United States—one of the first countries to
implement these laws in a major scale. The study also examined how the injury and
causality standards in the United States influenced the respective provisions in
multilateral trade treaties such as GATT 1947, the Kennedy and Tokyo
Antidumping Codes. The policy dependent nature of the causation standards were

© Springer Science+Business Media Singapore 2016 243

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8_8
244 8 Findings and Conclusions

clearly demonstrated while tracing the negotiating history of the Kennedy Code
which introduced the concept of “principal cause” in antidumping investigations
and later removed this requirement owing to domestic compulsions. The devel-
opments in the Tokyo and Uruguay Rounds only reaffirmed the policy significance
of injury and causation provisions, as the active users of antidumping pushed for
flexible and easy-to-meet standards whereas the targets of antidumping bargained
for tougher and stringent injury and causation standards. This trend continued even
in the negotiations on Rules under the ongoing Doha Round trade negotiations
where a number of Members, especially the Friends of Antidumping (FAN) Group
proposed a series of proposals on the injury and causation standards in antidumping
and countervailing duty provisions.
While the history of antidumping and other trade remedy agreements indicated a
relaxation of causation standards, the WTO panels and the Appellate Body
attempted to render the injury and causality standards more scientific and precise.
The decision of the Appellate Body in US—Hot-rolled Steel1 is a clear example of
this trend. A review of the WTO panel and Appellate Body decisions indicates that
the degree and role of dumped/subsidized or increased imports in effecting the
alleged injury to the domestic industry has been significantly altered through dis-
pute settlement decisions. While tools such as coincidence-in-time or trends anal-
ysis have remained the traditional tools, the creation of an artificial construct called
the “non-attribution” requirement has posed significant interpretative ambiguity and
operational difficulty. As the analysis in Appendix of Chap. 3 demonstrates, there is
no certainty on the types of causes whose presence have to be identified and
separated. Some of the listed causes may not be relevant for a particular industry
while a number of known causes may not be brought to the notice of the investi-
gating agencies at the time of the investigation. There could be other hidden causes,
whose effects or roles the investigating authority or other interested parties may not
be aware of. In certain other cases, some of the perceived causes need not be causes,
but mere conditions for another cause to operate or an event to take place. In the
above context—as the review of WTO jurisprudence indicated–the non-attribution
test is not serving the purpose of isolating and distinguishing the role of causal
factors other than dumping, subsidy or increased imports and making sure that the
remedy is given only when the cause is well established.
As this study demonstrates in Chaps. 3 and 4, a proper non-attribution, i.e.,
separating and distinguishing the role of other factors can be properly undertaken
only through a quantitative or econometric approach. Given this difficulty, some of
the WTO panels have been more pragmatic. The Mexico–Olive Oil panel approved
even a qualitative approach; the EC–DRAM panel suggested that some data analysis
would suffice. However, some other panels are still emphasizing the need for
“disentangling” (i.e., separating and distinguishing) the role of other causal factors.
The panel in China–GOES is one such example. While there are indications that the

1
Appellate Body Report, United States – Anti–Dumping Measures on Certain Hot-Rolled Steel
Products from Japan, WT/DS184/AB/R ( August 23, 2001).
8 Findings and Conclusions 245

non-attribution test is here to stay in trade remedies, the Appellate Body has not
revisited this issue in recent times and clarified its approach. Ideally, the Appellate
Body should restate and clarify its position in future disputes.
Having analyzed the jurisprudence on injury, causality and the non-attribution
test, this study enquired in Chaps. 4 and 5 regarding the methodologies followed by
key users of trade remedies. This study also examined how some of the frequent
users are establishing injury and what tools they are using for conducting the
non-attribution test. The study also examined India as a prototype given its role as
the leading user of antidumping and safeguards measures. The examination of the
antidumping practices in India and other key users clearly indicates that the
non-attribution analysis is carried out in a perfunctory manner. It was also found
that most investigating agencies generally provide only an examination of the listed
known factors and the other additional factors were seldom taken into consideration
in the ultimate analysis. The analysis indicates that the non-attribution analyses are
not made with any explicit method but are generally done on a pro forma basis.
Again, the use of a checklist approach for performing non-attribution analysis was
also noticed while examining the safeguard cases involving India. This was amply
clear from the analysis in Chap. 5. In other words, a study of injury and causation
practices of India and other WTO members do not indicate that the rigorous
standards of segregating and separating the role of other factors, in terms of the
strict requirements imposed by the WTO Appellate Body are scrupulously
followed.
A review of the WTO disputes examining the injury and causality determination
of domestic authorities in Chaps. 2 and 3 and a separate analysis of the country
practices in Chaps. 4 and 5 reveal that the most commonly used tool for injury and
causality is the coincidence-in-time or the trends analysis. The practices in India and
other jurisdictions demonstrated the probative force of the price undercutting and
price underselling analysis. This view was also fortified by the recent Appellate
Body ruling in a series of cases involving China. Illustrative cases include the China-
GOES,2 China—X–ray3 and China—Broiler products.4 These cases emphasize the
inestimable role of price effects analysis both in establishing injury and causal link.
In the light of the limitations in finding a generally acceptable methodology for
conducting injury and causation, the trends analysis is becoming perhaps the most
reliable tool in establishing injury and causality. This is demonstrated from a review
of the WTO jurisprudence and the country practices undertaken in Chaps. 3, 4 and
5 of this study. In addition to the trends analysis, a well-reasoned descriptive
analysis on the effect and role of other causal factors can satisfy the requirements of

2
Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented
Flat-Rolled Electrical Steel from the United States, ¶ 131 WT/DS414/AB/R (November 16, 2012).
3
Panel Report, China – Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment
from the European Union, ¶ 7.67 WT/DS425/R and Add.1 (April 24, 2013).
4
Panel Report, China – Anti-Dumping and Countervailing Duty Measures on Broiler Products
from the United States, WT/DS427/R and Add. 1 (September 25, 2013).
246 8 Findings and Conclusions

most of the trade remedy agreements. The decisions of the WTO panel in Mexico-
Olive Oil and EC-DRAM indicate this possibility.5 While the WTO members are
divided on the issue of use of sophisticated statistical or quantitative tools, this
study argues that quantitative tools could, in certain cases, augment qualitative
tools. It is not a matter of preference, but a matter of reinforcement or reaffirmation
of injury and causation findings, subject to the financial and manpower resources an
investigating authority may have.
This study has also identified a few areas where improvement could be made in
the conduct of the non-attribution test. This is in regard to raising other known or
knowable causes of injury. The analysis of WTO cases examined in Chap. 3
indicated that in addition to the listed causes there are several other factors which
may be contributing to injury. Some of the commonly cited factors include the rise
in input costs, currency fluctuation, and changing consumer habits. It is suggested
that these factors could be included in the illustrative list of ‘known factors’. In
addition, there is a need to recast the burden of proof requirements to elicit the
parties who are in possession of certain facts or information to share it with the
authority during the investigation to make sure that such known causes are also
taken into account. Such causes can be identified by including separate interested
party questionnaires and inviting industry experts to testify before the investigating
authorities.
Based on a review of WTO cases and country practices, this study recommends
that there is a need to strengthen the injury and causality determination in most
jurisdictions. It was also found that in most jurisdictions, in the absence of a clear
non-attribution analysis, the causation is determined on an assessment of the vol-
ume and price effects which falls within the realm of the trends analysis. In other
words, if price undercutting and price underselling are observed, causation is pre-
sumed. While the trends analysis remains a useful and probabilistic tool for
determining causation, this study has identified certain deficiencies in its imple-
mentation in various jurisdictions and has recommended certain ways of improving
this examination. It is observed that a proper assessment of the interaction between
price effects and industry parameters is missing in most investigations. An overall
assessment of even the domestic industry injury parameters is also non-existent.
Part of the reason for this inadequate assessment is that at least four or five indi-
cators of material injury determination are themselves vague or undefined under
AD and SCM Agreements. Factors such as growth, ability to raise capital or
investment and factors affecting domestic production are a few illustrations. This
study recommends that a rigorous analysis of the price effects and the movement in
domestic industry injury parameters can strengthen the trends or correlation anal-
ysis and could result in improved qualitative approaches to causation determination.
In addition to this, investigating authorities could also give certain emphasis on the
margin of dumping or subsidy in making affirmative findings, although most

5
Panel Report, Mexico – Definitive Countervailing Measures on Olive Oil from the European
Communities, WT/DS341/R (October 21, 2008).
8 Findings and Conclusions 247

jurisdictions do not provide weightage to the dumping or subsidy margin in the

causality determination.
This study also examined the reform proposals submitted in the Rules
Negotiations of the ongoing Doha Round of trade negotiations. Several proposals
submitted in the Doha Round have suggested the need for a tougher injury and
causality test. But as is established in Chap. 6 of this book, most WTO members are
currently using soft injury and causality standards based on a qualitative assessment
of injury and causal link. Given this reality, a number of proposals in the Doha
Round are suggesting the reintroduction of injury and causality provisions like
“substantial cause”, “genuine and substantial means of cause and effect”, dumping
and subsidy “in and of themselves”, etc. Those terms have been specifically rejected
by the GATT Contracting Parties in the past during the Kennedy, Tokyo and
Uruguay Rounds of trade negotiations and are unlikely to gather support among key
users of trade remedy instruments. Furthermore, most WTO members, even the
traditional users, have not developed adequate tools for weighing and grading the
role of causal factors. In fact, based on an analysis of WTO cases and country
practices, this research argues against the incorporation of various degrees or tiers
of causal relationships such as “substantial cause”, “principal cause”, “major
cause”, “genuine and substantial means of cause and effect”, “a cause on its own”,
etc. As the negotiating history indicates, such terms were clearly rejected in various
iterations of trade negotiations, and there is no need to resuscitate them through
either judicial reasoning or future negotiations.
Finally, this book addressed the question whether or not it is possible to reframe
the causation determination in trade remedy investigations in accordance with
extant Common law tests. In Chaps. 3 and 7, this study argued why a
strong-necessity based ‘but-for’ test is inappropriate in the case of causation
determination in trade remedies especially in view of the plurality of causes of
injury. In the alternative, the “Necessary Element of a Sufficient Set” (NESS)
analysis which incorporates a weak necessity and strong sufficiency test was sug-
gested. The NESS test admits the possibility of accommodating more than one
cause in a set of causally relevant factors which could be sufficient to cause the
alleged injury to the domestic industry. The NESS test will also be appropriate in
eliminating the role of causally irrelevant factors which may cloud the aggregate
but-for situation or in performing the non-attribution.
Overall, on the basis of an understanding of the negotiating history, existing
dispute settlement jurisprudence in the WTO, and the trade remedy practices of
individual Member countries, this study concludes that injury and causation
determination has always been a policy dependent concept in trade remedy
investigations. The overwhelming evidence of negotiating history and country
practices indicate that trade remedy measures were designed as adjustment or
response tools to relieve an industry from the pains of trade liberalization and
import competition. While it might be possible to quantify the exact role of imports
in the injury caused to the industry considering the developments in econometrics
and mathematics, it may not be advisable to provide or deny import relief based on
scientific or mathematical tests alone. Such an approach will defeat the very
248 8 Findings and Conclusions

purpose of trade remedies. Any negotiation (especially the Doha Round negotia-
tions or any subsequent initiative) on reforming injury and causation in trade
remedies should steer clear of this danger. On the other hand, it may be possible to
discipline the process requirements of satisfying injury and causation. For example,
explaining the exact meaning of the 15 parameters of injury in antidumping (or 8
injury parameters in the case of safeguards) or detailing the procedural and burden
of proof requirements especially in identifying the other ‘known factors’ in the
non-attribution analysis could introduce rigour and a systemic method in the injury
and causality determination. Furthermore, framing the injury and the causality
analysis in terms of the NESS test could bring a much needed conceptual clarity to
this debate.
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Index

A Ministerial Decision on Material injury,

Accession Protocol (China), 62, 100 2012, 154
Acetone, 142 ASEAN (Association of South –East Asian
Acrylic yarn, 137, 146 Nations), 123
Acyclic alcohol, 139, 146 Appellate Body, WTO, 110, 237
Agreement on Antidumping Argentina, 8, 13, 59, 61, 78, 120, 155, 157,
interpretation, 33, 34 202, 218
standard of review, 109
Agreement on Safeguards, 18, 59, 63, 102, 217 B
Agreement on Subsidies and Countervailing Ball bearing, 141, 143
Measures, 18, 229 Bangladesh, 133
ADP Committee Recommendations/Guidelines lead acid batteries, 133, 138
period of investigation, 126–127 Balance of Payments, 134
Alan Sykes, 4, 109 Belgium, 48, 198
Antidumping duties Bias tyres, 144
Ad valorem Bisphenol-A, 135, 140, 199
anti-circumvention, 38 Brazil, 157–158
dumping margin, 38, 84, 91, 126, 132, 156, DECOM, 157
221 But-for test, 8, 14, 71, 105–109, 111, 234, 240,
lesser duty rule, 129 245
provisional measures, 9, 13, 18, 20, 21, 25, Butter oil from New Zealand, 136
33, 38, 45, 46, 154
definitive duties, 126 C
Anti-Dumping Agreement, 39, 40, 41, 44, 46, Canada
126, 129, 137, 145, 153, 157, 218 Canadian International Trade Tribunal
Anti-Dumping Measures, 9, 13, 18, 20, 21, 25, (CITT), 153
33, 38, 45, 46, 154 Special Import Measures Act (SIMA), 153
cumulation, 40, 41 Calculation of costs
Antidumping Investigations below cost of production, 23
accuracy and adequacy of evidence, 125 finance costs, 34, 76
disclosure, 129, 159 fixed costs, 87
interested parties, 98, 125, 147, 154, 201, variable costs, 87
242 selling, general and administrative
Antitrust, 20–23, 26, 70, 241 expenses, 76
Aradhna Aggarwal, 135 total cost of production, 117
Arvind Panagariya, 122 Causality/causation, 1–6, 9–15, 34, 50, 64, 72,
Australia, 23, 25, 37, 49, 60, 119, 129, 154, 76, 91, 108–111, 148, 169, 195, 218,
220–225, 231 242

© Springer Science+Business Media Singapore 2016 257

J.J. Nedumpara, Injury and Causation in Trade Remedy Law,
DOI 10.1007/978-981-10-2197-8
258 Index

Causal link, 10, 29, 30, 47, 52, 60, 72, 80, 92, Directorate General of Antidumping and Allied
105, 124, 132, 138, 149, 159, 199, 222, Duties (DGAD), 10, 124
243 Director General of Safeguards, 197
Causal relationship, 1–3, 14, 43, 72, 90, 106, Di-sodium carbonate, 143
220, 245 Disputes, GATT/WTO, 9, 13, 45, 54, 74–75,
Cause/threaten to cause, 1, 60, 74, 78 78, 89, 93, 100, 120, 151, 152, 199,
‘No less important than’ 242–243
De minimis factor, 34 Argentina—Footwear, 60, 61, 78–80, 83,
INUS cause, 235 202, 218
immediate cause, 72 Argentina—Peaches, 203
known cause, 107, 112, 238, 242 Argentina—Poultry, 157
major cause, 34, 222, 245 China—GOES, 86, 88, 115, 140, 158,
other cause(s), 235 242
predominant cause, 7, 110, 156 China— HP-SSST, 86
principal cause, 6, 31, 34–37, 73, 242 China—X-Ray Equipment, 86, 158
proximate cause, 72 EC—Bed Linen, 218, 221
sole cause, 93, 154, 226 EC—DRAM, 54, 78, 82, 97, 99, 147, 153,
statutory cause, 100, 112, 234, 236 242, 244
substantial cause, 7, 26, 45, 57, 102, 148, EC—Pipe and Fittings, 98
222, 231, 245 Egypt—Steel Rebar, 81, 83
Chad Bown, 11, 97 Guatemala—Cements II, 125
China, People’s Republic of, 159 Japan—DRAM, 91
MOFCOM, 86, 159 Korea- Commercial Vehicles, 105–106
Chinese Taipei, 133, 140, 180, 203 Korea—Diary, 76, 83
Circular weaving machine, 144, 186 Mexico—HFCS, 161
Citric acid, 139 Mexico—Olive Oil, 96–97, 242
Coated paper board of 80 GSM, 141, 146, 147, Thailand—H-Beams, 98, 113, 144, 218
200, 214–215 US—Atlantic Salmon/Salmon, 73, 90–91,
Confidentiality, 30, 139, 157 94
Cost US—DRAM, 74, 82, 96–97
normated consumption, 128 US—Hatter’s fur, 59
depreciation, 76 US—Hot-rolled Steel, 4, 90, 94, 156, 242
Counterfactual test, 106 US—Lamb, 13, 73, 93, 97, 102, 201, 218
Countervailing Duty (CVD), 1, 10 US—Line Pipe, 4, 13, 62, 95–97, 103, 217
Country(ies) US—Steel, 13, 63, 71, 80, 81, 83, 95, 108
subject country(ies), 142 US—Tyres, 62, 219
Pacific-Rim countries, 60 US—Upland Cotton (Cotton), 85
Currency Exchange rates, 101 US—Wheat Gluten, 4, 13, 61, 83, 93, 218
Customs Tariff Act, 1975, 122 Dispute Settlement Body, 12
Customs Tariff (Antidumping duty) Rules (DSU) Understanding on Rules and Procedures
1995, 122, 126, 128 Governing the Settlement of Disputes,
1994), 107, 120
D on standards of review, 6
David Hume, 232, 235 treaty interpretation, 90
Determination of Injury, 31, 33, 39, 50, 53, Doha Negotiations, 219
109, 122, 130, 220 Doha Round, 7–9, 13, 14, 217, 219, 228,
on causation/ causal link/ causal link, 5, 245–246
10–11, 37, 47, 52, 60, 69, 71–72, 76, Rules Negotiations, 7–9, 13, 14, 66,
80, 95, 103–105, 124, 143, 146, 149, 217–219, 228, 231
160, 199, 222, 230, 243 Domestic industry, 6–8, 19–22, 31–33, 36, 51,
positive evidence, 39, 43, 51, 98 72, 79, 89–91, 98–101, 124–132, 194,
Developing countries, 17, 56, 119, 229 198–201, 218–220, 222, 236, 242
Digital plate, 142, 145, 146–147 Double Remedies, 64, 197
Dimethoate technical, 210 Douglas Irwin, 4, 20, 25, 28, 37
Index 259

Dumping, 106, 109, 124, 129, 131, 132, 135, H

145, 153, 156, 190, 234, 242, 244 Hart and Honoré, 14, 232, 233, 235, 237
less than fair value, 22, 26, 44 HLA Hart, 7, 14, 70, 232
intermittent dumping, 24 Hansen and Prusa, 92
permanent dumping, 24 Hard board (high density fiber board), 198
sporadic dumping, 24 Hong Kong, 60, 218, 219, 228
Dumping Margin, calculation, 38, 84, 91, 126, Hot-Rolled Coils/Sheets/Plates/Strips, 137
156, 221
margin of dumping, 27, 90, 125, 131, 157, I
244 India
ordinary course of trade, 2 Annual Economic Survey, 132
selling, general and administrative Customs Tariff Act (as amended), 1975,
expenses, 76 122, 126, 149, 196
sampled/non-sampled producers Customs Tariff (Identification and
profits, 19, 32, 41, 51, 53, 70, 80, 126, 138 Assessment of Safeguard Duty) Rules
Durling and McCollough, 108, 152 1997, 196
Customs Tariff (Transitional Products
E Specific Safeguard Duty) Rules 2002,
Economic models, 108, 151, 230 196
COMPAS, 106, 108, 151, 154 Foreign Trade (Development and
economic analysis, 8, 18, 97, 152 Regulation) Amendment Act, 2010,
Granger analysis, 108, 148, 160 196
partial equilibrium models, 154 Indonesia, 139, 141, 142, 195, 202–203
regression analysis, 108, 148 Increased imports
two-stage least square estimate, 109 ‘Sudden surge’, 199
Epichlorohydrin, 198, 209 ‘Sudden enough, sharp enough, and
European Communities (EC), 13, 37, 71, 83, significant enough’, 78
99, 133 Interim Review, 45, 153
European Economic Community (EEC), 32, Injury
66, 67 material injury, 1, 3, 11, 27, 29–31, 36, 41,
European Union (EU), 9, 19, 86, 119, 121, 49, 64, 73, 92, 219, 220
124, 131, 140, 152, 158, 195, 204, 219, serious injury, 1, 3, 24, 29, 60, 64, 78, 199
243 ability to raise capital, 51, 53, 75, 126, 141,
European Court of Justice, 152 157, 244
capacity utilization, 75, 77, 86, 104, 130,
F 138–142, 145, 156, 200
Flexible slabstock polyol, 198, 200 cash flow, 51, 75, 76, 126, 141, 157, 200
France, 66, 137 change in pattern in consumption, 186
Friends of Antidumping (FAN), 219, 222–224, contraction in demand, 32, 37, 44, 93, 203
242 employment, 5, 19, 23, 32, 51, 53, 75, 80,
126, 137, 139, 142
G export performance, 32, 48, 93, 201
GATT (General Agreement on Tariffs and growth, 126, 145
Trade, 1947), 18 inventories, 53, 81, 126, 139, 141, 142
Article VI, 18, 28, 37, 45, 50, 63, 91, 154 market share, 32, 76, 106, 126, 138, 141,
Article XVI, 50 143, 199, 200
Article XIX, 57–58, 83, 202 output, 80, 89, 104, 106, 126, 137, 140–142
Article XXIII, 50 productivity, 32, 37, 44, 61, 75, 77, 126,
contracting parties, 12, 28, 36, 48, 57, 73, 137
245 profits, 32, 70, 126, 142, 145, 147
dispute settlement, 6, 65, 99, 107, 120, 128, return on investment, 53, 70, 75, 77, 141,
133, 152, 219, 224, 231, 239, 245 142, 147
Germany, 34, 207, 210 return on capital employed (roce), 76, 128,
Grey area measures, 60 143
260 Index

Injury (cont.) N
sales, 75, 76, 80, 85, 104, 106, 130, 139, National Laws/legislatures, 17
141, 142, 149, 154 Necessary
sales realization, 19, 104, 127, 130, 139 necessary and sufficient, 235–237
wages, 53, 75, 77, 137, 141, 142, 145 strong necessity, 235, 236, 240, 245
Injury margin Necessary Element of a Sufficient Set (NESS),
Non-injurious price (NIP), 84, 88, 128–130, 14, 235, 245
138, 144, 145, 150, 161 Richard Wright, 14, 237–239
NIP Rules 2011, 131 Negotiations
Imports chairman’s text, 218, 227–230
increased imports, 3–4, 6, 17, 26, 57, 61, Negotiating Group on Rules (NGR), 218,
81, 82, 102–106, 237, 242 219, 226–228, 230
Iran, 142, 199 rules negotiations, 8, 9, 14, 217–219, 228,
230, 231
J Non-Attribution
Jackson, John H., 28, 36, 89 known factors, 3, 44, 54, 93–96, 98, 99,
Japan, 34, 37, 49, 86, 90, 94, 138, 143, 198, 146–148, 161, 223–227, 229, 246
219, 228 other factors, 3, 34, 42, 94, 97–102, 147,
Josling and Sapir, 108 225, 239, 244
Judicial Review US—Hot-rolled Steel, 4, 90, 94, 242
Supreme Court of India, 123, 131, 133, 149 Normal Value
High Courts, 133, 149 Constructed Normal Value, 135
Central Excise and Service Tax Appellate Non-Market Economy (NME), 135
Tribunal (CESTAT), 126, 130–132,
149, 150 O
Optical Fibre, 167
K
Kazakhstan, 136, 137 P
Kennedy Code, 30–36, 73, 242 Pakistan, 206, 212
Period of Investigation, 46, 78, 128, 131, 141,
L 143, 152
Landed value of imports, 84, 87, 128, 131, 143 Phthalic Anhydride, 197
Linear Alkyl Benzene, 199 Phenol, 199
Poly Iso Butylene, 131
M Predatory Pricing, 21, 27, 241
Malaysia, 123, 129, 136, 138, 139 Price
Marrakesh Agreement, see WTO Agreement net sales realization, 128, 146
Members (of WTO), 2, 6, 9, 11, 13, 14, 18, 52, Price effects
89, 96, 104, 150, 156, 160, 195, 202, price undercutting, 50, 53, 83–87, 127, 140,
217–218, 224, 243 143, 145, 157–160, 243, 244
Merriam-Webster, 71 price depression, 83–85, 127, 138, 142,
Methylene Chloride, 208 143, 158, 161
Mill, J.S., 232, 235 price suppression, 83, 85, 87–88, 127–128,
Ministry of Commerce and Industry, India, 132 138, 140, 142–144, 154, 158
Ministry of Finance, India, 149 price underselling, 84, 87, 88, 128,
Ministerial Conference, WTO, 218 141–143, 145, 149, 150, 153, 158, 160,
Most Favoured Nation (MFN), 56 244
Mackie, John, 235, 239 Preferential Tariffs
Material Injury, 1, 3, 27–29, 31, 41, 49, 64, 73, Price Undertaking, 19, 46
92, 219, 220 Product
Material Retardation, 41, 64, 126, 135, 155 CONNUM, 87
Melamine, 142, 144 Like product, 29, 41, 50, 84, 86, 88, 124,
Mexico 127, 157, 219
SECOFI, 155–156 Product Control Numbers (PCN), 87
Index 261

Product under investigation (PUC), 106 Styrene- Butadiene, 153

Profit Subsidies Code, 20, 48, 50–52
gross profit, 76 Subsidies, 7, 8, 13, 18, 47–54, 64, 65, 70, 73,
net profit, 76, 154 74, 91, 106, 217, 229–230
Protectionism, 19, 22, 25, 30, 38, 47 serious prejudice, 100
Protocol of Provisional Application (PPA), Sufficiency, 8, 105, 223, 236–239
48–49 strong sufficiency, 236, 237, 245
Pre-sensitized Positive Offset Aluminum Plates weak sufficiency, 236
Polyester Staple Fibre, 139 Sunset review/Expiry review, 45–47
Public Notice, 125 likelihood of recurrence of injury, 46, 47
Public Policy, 123
T
Q Tariff
Questionnaire(s), 44, 112, 244 Customs Tariff Act, 1975, 122, 126, 149,
Quantitative Restrictions, 122, 134 196
special import license, 134 Thailand, 139, 147, 219
Thomas Prusa, 109
R Tokyo Round, 3, 36, 37, 49, 50, 52, 57
Raj Bhala, 26 Tokyo Antidumping Code, 44, 51
Raw material(s), 146, 147 Tokyo Subsidies Code, 20, 48, 50–52
raw material costs, 101, 128, 130, 201 Trachtman, Joel, 148
Regional Trade Agreements, 17 Trends analysis, 77, 89, 91–92, 111, 137, 153,
MERCOSUR, 120, 202 156, 242–244
Reliance Industries Ltd.v Designated Authority, bifurcated analysis, 77
123, 130 margin analysis, 84, 88, 157
Purified Terephthalic Acid (PTA), 129, 137 price undercutting, 40, 50, 53, 83–87, 127,
Russia, 137, 143 140, 141–143, 149, 153, 158–160, 243,
244
S price underselling, 111, 128, 141, 142, 143,
Safeguards/Transitional Safeguards 145, 150, 153, 158, 160, 244
conditions of competition, 41, 80, 82, 83, temporal correlation, 82, 127
129 Turkey, 81, 119, 137, 138, 192, 203–204, 219,
escape clause, 56–58, 63, 64 225
notification, 35, 126 Through the effects of dumping/subsidy, 90, 91
‘substantially equivalent concessions’
‘to the extent necessary’, 62 U
unforeseen developments, 58–60, 202–203 Ukraine, 135, 137
working party, 58, 59 Uncoated paper, 200
Sasol-Solvents case, 150 Underselling, 27, 78, 83, 84, 87, 111, 128, 143,
Saudi Arabia, 199 145, 149, 243, 244
SCM (Subsidies and Countervailing Measures) United Nations (UN)
Agreement (1994), 18, 51, 52–55, 62, ECOSOC, 28
64, 72–75, 82, 93, 154, 155, 217, 227, United States
229, 244 Tariff Commission, 22, 26, 33, 34, 56, 57
Secretariat (of GATT/WTO), 155 Senate Finance Committee, 27, 33, 34
Shorter Oxford Dictionary, 71 United States Court of International Trade
Soda ash, 143, 147 (CIT)
South Korea (Korea), 123 United States Department of Commerce
South Africa, 9, 23, 142, 159–160, 224 (USDOC), 124
International Trade Administration Act, United States Court of Appeals for the Federal
2002, 159 Circuit, 151, 226
International Trade Administration Bratsk ruling, 151, 152
Commission, 159–160 United State International Trade Commission
Starch, Manioc (Cassava, Tapioco), 201 (USITC), 26, 226
262 Index

United States Antidumping Act of 1916, 9, 20, Viscose Staple Fibre, 184
21, 23 Vermulst, Edwin, 64, 159
United States Antidumping Act of 1921, 22, Volume of Imports, 40, 44, 79, 141, 147, 198
23, 33 Volumetric, 53
United States Tariff Act of 1930 Voluntary Export Restraints, 60
(“Smoot-Hawley Tariff Act, 1930”), 23 Voluntary Restraint Agreements, 60
United States Trade Act of 1974, 101–102
United States Trade Agreement Act of 1979, W
23 White Cement
Uruguay Round, 18, 20, 38, 39, 41, 42, 52, World Bank, 11, 19
63–64, 122, 134, 245 Global Antidumping Database, 11
Carlisle Draft, 39 World Trade Organization (WTO), 1, 17, 119
Carlisle I, 42–44 developing-country provisions
Carlisle II, 43–44 dispute settlement, 6, 9, 14, 52, 65, 99, 120,
GATT Ministerial Decision, 38 128, 133, 152, 219, 224, 239
UNCTAD, 28
Z
V Zeroing, 63
Viner, Jacob, 20, 24