Journal of International Economic Law, 2016, 19, 497–514
doi: 10.1093/jiel/jgw045
Advance Access Publication Date: 6 May 2016
Article
What’s Wrong with EU Anti-Circumvention
Rules and How to Fix it*
Arnoud R. Willems and Bregt Natens**
ABSTRACT
Where circumvention of anti-dumping duties is taking place, some countries’ antidumping laws allow the extension of the anti-dumping duty to imports of the like
product from a third country, or of a slightly modified product from a third country or
the country subject to the duty. The objective of anti-circumvention rules is to ensure
the effectiveness of the imposed anti-dumping duties, i.e. that no unfairly traded products are sold on the export market. However, most anti-circumvention rules do not require the investigating authorities to conduct a fully fledged anti-dumping investigation
in order to extend the anti-dumping duties. Taking EU anti-circumvention provisions
as an example, this article explains, first, that anti-circumvention provisions are imperfect in addressing circumvention practices from a substantive perspective; second, that
these provisions arguably are inconsistent with the World Trade Organization’s Antidumping Agreement; and, third, that the laudable objective behind such rules can be
achieved by using other legal tools.
I. I NT RO D UCTI ON : A NT I- CI R CU M VE NT IO N RU LE S IN
ANTI-DUMPING LAW
Dumping occurs when the sales price of a product in an export market is lower than
its sales price in the domestic market, or when sales are made below cost of production. Anti-dumping laws allow the importing country to impose anti-dumping measures on dumped products that are causing injury to the domestic producers. As antidumping measures add a cost to the exported product, exporting producers have an
incentive to evade or reduce the amount of anti-dumping duties they pay on their exports. To counter this, most countries generally employ anti-circumvention rules to
ensure that imports subject to an anti-dumping duty are actually subjected to the
* The views expressed in this article are exclusively those of the authors. This article has been prepared for
academic purpose only and does not constitute legal advice.
** Arnoud Willems and Bregt Natens are lawyers at Sidley Austin LLP in Brussels. Their e-mail addresses
are [email protected] and [email protected]. Julia Tiskowiec provided research assistance. Two anonymous peer reviewers and several of our colleagues provided helpful comments on an earlier draft. Any
errors or omissions are the authors’ own.
C The Author 2016. Published by Oxford University Press. All rights reserved.
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duty.1 Although not new, circumvention appears to be a persistent issue, and globalization has decreased the costs of engaging in circumvention practices.2 Concerned
by circumvention practices, the USA recently circulated a paper in the Informal
Group on Anti-Circumvention of the WTO Committee on Anti-Dumping Practices
(‘WTO Informal Group’) sharing its recent experiences. According to the USA,
some companies are openly soliciting business because they can circumvent antidumping duties.3 The US recently enacted the Trade Facilitation and Trade
Enforcement Act, which puts in place a new mechanism to target one form of circumvention practices, i.e. the evasion of anti-dumping measures by using materially
false import declarations.4 Similarly, the EU’s brand-new trade policy states that its
investigating authorities will ‘pay particular attention to . . . increasingly problematic
circumvention’.5
Regardless of the extent of the problem of circumvention, authorities disagree
about the need for anti-circumvention rules. For example, Japan—a vocal opponent
of anti-circumvention rules—considers that ‘it is essentially impossible to distinguish
between legitimate commercial activities and activities that should be deemed as circumvention’.6 Companies frequently change their commercial activities after antidumping duties are imposed, and Japan argues that these changes do not differ from
those made in response to other changing external conditions, and therefore should
not be considered to constitute circumvention.7 One may consider that there is a difference between illegal evasion of anti-dumping duties and legal avoidance of such
duties.8 The disagreement regarding the need for anti-circumvention rules also explains why there is no definition of circumvention of anti-dumping duties in the
World Trade Organization (WTO), let alone any disciplines that explicitly target circumvention. The Decision on Anti-Circumvention, adopted by the WTO Trade
Negotiations Committee, is the sole outcome of the Uruguay Round as concerns
anti-circumvention. Since the negotiators could not agree to a common approach,
the Decision merely notes that the ministers are mindful of the desirability of the applicability of uniform rules on anti-circumvention and refers the matter to the
1 This article does not address circumvention of countervailing measures, although the argumentation set
forth would appear to apply to this situation as well.
2 The first introduction of anti-circumvention provisions in EU law dates back to 1987. See Council
Regulation (EEC) No. 1761/87 amending Regulation (EEC) No. 2176/84 on protection against dumped
or subsidized imports from countries not members of the European Economic Community (OJ L 167, 26
June 1987, p 9).
3 G/ADP/IG/W/54, 17 March 2015, Committee on Anti-Dumping Practices – Informal Group on AntiCircumvention, Antidumping Duty ‘Evasion Services’ – Paper from the United States.
4 G/ADP/IG/W/55, 16 March 2016, Committee on Anti-Dumping Practices – Informal Group on AntiCircumvention, Procedures for Investigating Allegations of Evasion – Paper by the United States.
5 See European Commission, Trade for All: Towards a More Responsible Trade and Investment Policy, 2015,
p 16.
6 G/ADP/IG/W/15, 30 October 1998, Committee on Anti-Dumping Practices – Informal Group on AntiCircumvention, Topic 1 – What Constitutes Circumvention – Paper by Japan, p 1.
7 Ibid, p 1.
8 This article focuses on anti-dumping duties, but the argumentation set forth applies to equally to other
anti-dumping measures.
What’s Wrong with EU Anti-Circumvention Rules
499
Committee on Anti-Dumping practices. To date, this Committee has not resolved
this matter. The absence of multilateral rules has not prevented several WTO
Members, including the European Union, from developing and applying their own
anti-circumvention rules.9
This article is structured as follows. Section II sets out the practices that may be
considered to constitute circumvention. Section III puts forth the EU rules
on anti-circumvention. Section IV establishes that the EU anti-circumvention
rules, first, are problematic from the perspective of EU anti-dumping law and practice, and, second, that they are arguably inconsistent with WTO law. Finally,
Section V contains proposals on how to make anti-circumvention rules legal but
effective.
II . CI R CU M VE NT IO N PRACTI CES
There is no agreement on what practices constitute circumvention. In the widest
sense, and in line with the EU approach, circumvention practices cover three main
scenarios:
(i) Slight modification of the product. The product is modified to make it fall
under customs codes which are normally not subject to the previously
imposed anti-dumping duty (provided that the modification does not alter
the product’s essential characteristics).10 The modification can take place
in the country subject to the duties or in a third country. For example, disposable cigarette lighters subject to duties were fitted with a refill valve,
and in this way became refillable cigarette lighters that fell outside the
scope of the anti-dumping duties.11
(ii) Origin fraud. In these cases, there is transshipment of products via a third
country or repackaging of products in a third country, and the origin of this
9 E.g. the anti-dumping laws of Argentina, Australia, Colombia, Mexico, and the USA also contain anti-circumvention provisions. For a review of the first Australian anti-circumvention investigation, including on
the WTO consistency of the Australian anti-circumvention rules, see Weihuan Zhou, ‘Circumvention and
Anti-circumvention: Rising Protectionism in Australia’, 15 World Trade Review (2016 p 975), at 1007.
10 E.g. Council Regulation (EC) No. 2513/97 of 15 December 1997 extending the definitive anti-dumping
duty imposed by Regulation (EC) No. 1490/96 on polyester staple fibre originating in Belarus to imports
of polyester filament tow from Belarus and levying the extended duty on the latter imports as registered
under Commission Regulation (EC) No. 693/97 (OJ L 346, 17 December 1997, p 1); Council
Regulation (EC) No. 1623/2003 of 11 September 2003 extending the definitive anti-dumping duty
imposed by Regulation (EC) No. 408/2002 on imports of certain zinc oxides originating in the People’s
Republic of China to imports of certain zinc oxides consigned from Vietnam, whether declared as originating in Vietnam or not, and to imports of certain zinc oxides originating in the People’s Republic of
China and mixed with silica (OJ L 232, 18 September 2003, p 1).
11 Council Regulation (EC) No. 192/1999 of 25 January 1999 extending the definitive anti-dumping duty,
imposed by Regulation (EEC) No. 3433/91 on imports of gas-fuelled, non-refillable pocket flint lighters
originating in the People’s Republic of China to imports of certain disposable refillable pocket flint lighters originating in the People’s Republic of China or consigned from or originating in Taiwan and to imports of non-refillable lighters consigned from or originating in Taiwan, and terminating the proceeding
in respect of imports of non-refillable lighters consigned from Hong Kong and Macao (OJ L 22, 29
January 1999, p 1).
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What’s Wrong with EU Anti-Circumvention Rules
third country is claimed.12 The importation is done using fraudulent origin
declarations, thereby circumventing the anti-dumping duties. Alternatively,
there is a reorganization of sales through an exporting producer to which a
lower individual duty applies. The importation is done while claiming that
the product was manufactured by a different producer, thereby circumventing the higher duty of the actual producer.13
(iii) Displaced manufacturing. This involves the assembly of parts by an assembly
operation in the importing country or a third country (e.g. a so-called
screwdriver operation).14 The practices covered by these scenarios may reduce the effectiveness of anti-dumping duties. This article argues that anticircumvention provisions are neither an effective nor a legal way to address
them. By way of example, this article focuses on the relevant provisions of
EU anti-dumping law.
II I . E U AN T I - CI R C U M VE NT IO N P R O V I SI O N S A S A C AS E S T UD Y
EU anti-dumping law is one of the more developed anti-dumping legislations in the
world. Further, the anti-circumvention rules in the EU’s Basic Anti-dumping
Regulation (‘Basic Regulation’)15 are frequently used. So far, the EU has initiated
around 50 investigations into possible circumvention of anti-dumping duties, which,
more often than not, extended anti-dumping duties to imports from countries via
which circumvention was found to be taking place and/or to imports of the slightly
modified product.
In the EU, anti-circumvention is governed by Article 13 Basic Regulation, which
provides that when circumvention is taking place, anti-dumping duties may be extended to the imports of the like product or a slightly modified like product from
12 E.g. Council Regulation (EC) No. 1208/2004 of 28 June 2004 extending the definitive anti-dumping
measures imposed by Regulation (EC) No. 119/97 on imports of certain ring-binder mechanisms originating in the People’s Republic of China to imports of the same product consigned from the Socialist
Republic of Vietnam (OJ L 232, 1 July 2004, p 1); Council Regulation (EC) No. 2052/2004 of 22
November 2004 extending the definitive anti-dumping duty imposed by Regulation (EC) No. 964/2003
on imports of tube or pipe fittings, of iron or steel, originating in the People’s Republic of China to imports of tube or pipe fittings, of iron or steel, consigned from Indonesia, whether declared as originating
in Indonesia or not (OJ L 355, 1 December 2004, p 4).
13 This practice constitutes origin fraud because it results in importation under an incorrect customs code
(i.e. that of a specific company whose imports are subject to a lower duty).
14 E.g. Council Regulation (EEC) No. 3205/88 of 17 October 1988 extending the anti-dumping duty
imposed by Regulation (EEC) No. 535/87 to certain plain paper photocopiers assembled in the
Community (OJ L 284, 19 October 1988, p 36); Council Regulation (EC) No. 71/97 of 10 January
1997 extending the definitive anti-dumping duty imposed by Regulation (EEC) No. 2474/93 on bicycles
originating in the People’s Republic of China to imports of certain bicycle parts from the People’s
Republic of China, and levying the extended duty on such imports registered under Regulation (EC) No.
703/96 (OJ L 16, 18 January 1997, p 55).
15 Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports
from countries not members of the European Community (OJ L 343, 22 December 2009, p 51), as
amended.
What’s Wrong with EU Anti-Circumvention Rules
501
third countries, or to the imports of the slightly modified product from the country
subject to the original duty.16 The Basic Regulation gives a four-part cumulative definition of circumvention:17
(i) Where there is a change in the pattern of trade between third countries and the
EU after the imposition of the anti-dumping duties. The EU authorities look
at imports of (a slightly modified version of) the like product subject to the
original duty from a third country, and this condition is fulfilled where such
imports increase significantly or are substantial.
(ii) Where the change in the pattern of trade stems from a practice, process or
work for which there is insufficient due cause or economic justification other
than the imposition of the duty. The term ‘stems from’ must be interpreted
as requiring a causal link.18 The terms ‘practice, process or work’ include
the circumvention practices previously mentioned: the slight modification
of the product to make it fall under a customs classification that is normally not subject to the duty (provided that the modification does not
alter the product’s essential characteristics); the consignment of the product subject to the duty via third countries (i.e. transshipment); a reorganization of patterns and channels of sale to benefit from lower individual
duties; and the assembly of parts by an assembly operation in the EU or
a third country.
Article 13(2) contains more precise rules for assembly operations. Assembly
operations constitute circumvention where both the following apply:
(a) The assembly operation started or substantially increased since or just
prior to the initiation of the original anti-dumping investigation. This
condition reflects the condition that there is a changed pattern of
trade.
(b) The parts used in the assembly operation that originate in or are consigned from the country subject to the original duties constitute 60% or
more of the total value of the parts19 of the assembled product.
However, there is no circumvention if the value added to the parts
16 Article 23 of Council Regulation (EC) No. 597/2009 of 11 June 2009 on protection against subsidised
imports from countries not members of the European Community (OJ L 188, 18 July 2009, p 93) contains a very similar provision for countervailing duties. The arguments put forth in this article apply to
this provision as well.
17 For an in-depth analysis of the conditions to determine whether circumvention is taking place, see
Wolfgang Müller, Nicholas Khan and Tibor Scharf, EC and WTO Anti-Dumping Law: A Handbook, 2nd
ed. (Oxford University Press, 2009), at 571–98; Ivo Van Bael and Jean-François Bellis, EU Anti-Dumping
and Other Trade Defence Instruments, 5th ed. (Kluwer, 2011), at 629–50.
18 Müller, Khan and Scharf, ibid, at 580.
19 The total value of the parts equals the total value of the bill of materials.
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What’s Wrong with EU Anti-Circumvention Rules
brought in during the assembly or completion operation is greater
than 25% of the manufacturing cost.20
(iii) Where there is evidence of injury, or evidence that the remedial effects of
the original duty are being undermined in terms of the prices and/or
quantities of the (assembled) like product.21 This test inquires whether
the imports are ‘functionally equivalent’ to the dumped imports.22
There is no need to repeat the injury analysis; it suffices to establish
that (a) the export prices of the products which circumvent the original duty are equal to or lower than those of the injury determination (i.e. whether there is significant price undercutting or significant price depression) in the original investigation; and/or (b)
there is a substantial increase in imports of the product (although
not necessarily to the level of imports in the original anti-dumping
proceedings).23
(iv) Where there is evidence of dumping24 in relation to the normal values
established for the like (or, for assembly operations, like or similar)
products in the original investigation.25
The EU investigating authorities bear the burden of proof to demonstrate that
these conditions are fulfilled. If circumvention is found to be taking place, Article 13
Basic Regulation allows the anti-dumping duty imposed under the original antidumping investigation to be extended to all imports from the country from which circumvention is taking place. Under Article 13(4) Basic Regulation, individual producers/assemblers that do not engage in circumvention practices, and that are not
related to a producer subject to the anti-dumping duties, may request a certificate of
exemption from the extended duty.
IV . TH E WE AKN E SS E S OF TH E EU ’ S A N T I - C I R C U M V E N T I O N R UL E S
The EU’s anti-circumvention rules have both internal and external weaknesses.
Internally, problems of definition, duty level, and burden of proof allow complainants
to use the rules strategically, or even abuse them. Externally, the rules are potentially
inconsistent with WTO law.
20 The manufacturing cost equals the value of the parts at arm’s length, plus labour costs, plus overhead
costs, but excluding profit and selling, general and administrative expenses: Müller, Khan and Scharf,
above n 17, at 588.
21 For assembly operations, what matters is only the undermining of the remedial effects of the original
duty.
22 Müller, Khan and Scharf, above n 17, at 582.
23 Ibid, at 582; Van Bael and Bellis, above n 17, p 638.
24 Note that Article 13 Basic Regulation does not require a finding of ‘dumping’, but of ‘evidence of dumping’ based on a comparison between this normal value and the export price in the circumventing country.
25 Van Bael and Bellis, above n 17, pp 638–39. As explained below, no ‘dumping’ margin is calculated. A
duty for imports from the country where circumvention takes place applies because a duty from the original investigation is extended to imports from a country where circumvention is taking place.
What’s Wrong with EU Anti-Circumvention Rules
503
A. The internal dimension: problems of law and practice
From the perspective of EU anti-dumping law and its users, there are at least three
concerns with Article 13 Basic Regulation.
The first concern relates to definition. The definition of ‘circumvention’ in Articles
13(1)–13(2) Basic Regulation is broad, and the conditions set out by the definition
are easily fulfilled. As mentioned above, following the imposition of anti-dumping
duties, it is almost inevitable that there will be a change in the pattern of trade as
companies reassess their production options. Article 13 Basic Regulation mentions
that the change in the pattern of trade must result from a practice, process or work
for which there is insufficient due cause or economic justification other than the imposition of the anti-dumping duty. This element of the definition covers fraudulent
practices, but it also covers legitimate business decisions taken by both EU importers
and foreign exporters alike as a consequence of the anti-dumping duties. If an antidumping duty is imposed, the products’ costs increase. It is economic logic that importers, users and (third country) exporters will react to such a sudden and fundamental change. Defining all of these reactions as circumvention could be considered
to be incorrect.
The main issue with Article 13 Basic Regulation’s definition of circumvention
lies with the conditions of ‘dumping’ and ‘injury’. For anti-circumvention purposes, the ‘injury’ requirement in anti-dumping law is de facto fulfilled if there is
evidence that the remedial effects of the anti-dumping duties are undermined in
terms of prices and/or quantities. If there is a change in the pattern of trade,
the investigating authority can normally show changes in the quantity of the imports and fulfil this condition.26 If there is evidence of dumping in relation to
the normal value established in the original anti-dumping investigation, this
element of the definition of circumvention is also fulfilled. The ‘dumping’ condition therefore does not require that the companies allegedly circumventing the
anti-dumping duties are dumping their products. Taking the normal value previously established for companies found guilty of dumping creates a fiction to establish whether or not there is dumping from third countries. Disregarding the
normal value in the country of origin seems—aside from the case of fraudulent
practices—incompatible with one of the basic premises behind anti-dumping
rules. The normal value should be calculated in accordance with the rules as
laid down in Article 2(1)-(7) Basic Regulation.
26 This occurred in several anti-circumvention investigations: e.g. recitals (12) and (18) to Council
Regulation (EC) No. 2513/97 of 15 December 1997 extending the definitive anti-dumping duty imposed
by Regulation (EC) No. 1490/96 on polyester staple fibre originating in Belarus to imports of polyester
filament tow from Belarus and levying the extended duty on the latter imports as registered under
Commission Regulation (EC) No. 693/97 (OJ L 346, 17 December 1997, p 1); recital (26) to Council
Regulation (EC) No. 192/1999 of 25 January 1999 extending the definitive anti-dumping duty, imposed
by Regulation (EEC) No. 3433/91 on imports of gas-fuelled, non-refillable pocket flint lighters originating in the People’s Republic of China to imports of certain disposable refillable pocket flint lighters originating in the People’s Republic of China or consigned from or originating in Taiwan and to imports of
non-refillable lighters consigned from or originating in Taiwan, and terminating the proceeding in respect of imports of non-refillable lighters consigned from Hong Kong and Macao (OJ L 22, 29 January
1999, p 1).
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What’s Wrong with EU Anti-Circumvention Rules
Further, the normal value used to assess whether there is circumvention could
have been established on the basis of data taken anywhere between 18 months and 7
years earlier (i.e. prior to the 3-month administrative and 15-month investigation
periods, and up to 5 years before the expiry of the duties). This data may no longer
reflect the current commercial situation and is also not in line with the EU’s obligation under WTO law to use data regarding a period that ends as closely as possible
to the initiation of the investigation.27
The second concern relates to the level of the duty. In practice, the ‘punishment’
for circumvention is the extension of the highest (residual) anti-dumping duty
imposed in the original investigation. Aside from the situation where products are
mixed,28 there appear to be only two options for exporters in the country in which
circumvention is taking place: either they are exempted, or the residual duty (i.e. the
highest anti-dumping duty imposed following the original investigation) is levied on
their exports. However, the residual duty is based on calculations that bear no relationship to the circumventing exporter. All such exporters get the same duty rate and
cannot benefit from an individual duty rate. This applies regardless of different factual situations for these exporters and regardless of whether they are dumping or
not. Indeed, Article 13 Basic Regulation in fact merely determines whether an allegedly circumventing exporter is guilty or not. When guilty, the ‘maximum penalty’
automatically applies. The question is whether applying the highest duty level is reasonable and proportionate.
The third concern relates to the burden of proof. Anti-circumvention investigations reverse the burden of proof compared to normal anti-dumping investigations.
All companies in third countries are presumed guilty of circumventing the duties
unless they can prove they are not circumventing, in which case they can obtain a
so-called certificate of exemption. This requires a request for exemption. During
the investigation, the EU investigating authorities register all imports from the
country under investigation so that, except where certain exporting producers receive exemptions, the extended anti-dumping duty can be levied. This creates uncertainty in the market. EU importers are negatively affected by such an anticircumvention investigation and, specifically, by the registration of their imports.
This negative influence applies to all exporting producers, even if they are entirely
legitimate producers that are not circumventing. It could be a solution to allow
companies to obtain certainty of compliance and let them apply for certificates of
exemption if they consider this beneficial, regardless of anti-circumvention
procedures.
27 Panel Report, Mexico – Anti-Dumping Measures on Rice, para 7.63; Appellate Body Report, Mexico – AntiDumping Measures on Rice, paras 163–72.
28 Where a product on which anti-dumping duties are imposed is mixed with another product, the extension
may apply only in relation to the percentage of the product subject to duties in the mixed product. See recital (40) to Council Regulation (EC) No. 1623/2003 of 11 September 2003 extending the definitive
anti-dumping duty imposed by Regulation (EC) No. 408/2002 on imports of certain zinc oxides originating in the People’s Republic of China to imports of certain zinc oxides consigned from Vietnam, whether
declared as originating in Vietnam or not, and to imports of certain zinc oxides originating in the People’s
Republic of China and mixed with silica (OJ L 232, 18 September 2003, p 1).
What’s Wrong with EU Anti-Circumvention Rules
505
The three concerns above demonstrate that EU anti-circumvention rules can be
used strategically, or even abused, by complainants to ‘easily’ extend duties at a level
higher than what an actual investigation would result in. Consider the following example: Union producers complain that imports from China are dumped. After an investigation, the EU imposes a high residual duty rate (for instance because there is a
low level of cooperation by Chinese producers, or because market conditions do not
apply in this sector). As a result of the anti-dumping duties, imports from China are
displaced. This could be sufficient to initiate an anti-circumvention procedure concerning Malaysia for example, for which no dumping could be proven before. The result of the circumvention procedure, however, is that the high residual duty will
apply to all exports from Malaysia. If Malaysia had been subject to a normal antidumping investigation, the authorities may not have found any dumping, or only low
margins.
B. The external dimension: potential inconsistencies with WTO law
1. Anti-circumvention measures are anti-dumping measures
Article 13 Basic Regulation may be inconsistent with WTO law. The first step in
assessing this is determining whether anti-circumvention measures are anti-dumping measures. Article VI of the General Agreement on Tariffs and Trade 1994
(‘GATT 1994’) and the Anti-Dumping Agreement (‘ADA’) apply where an anticircumvention measure constitutes ‘specific action against dumping of exports
from another Member’ in the sense of Article 18.1 ADA. The relatively broad interpretation given to this provision in WTO case law indicates that anti-circumvention measures are ‘inextricably linked to, and strongly correlated with, a
determination of dumping’.29 Moreover, circumvention is addressed specifically in
the EU anti-dumping legislation, i.e. the Basic Regulation. Therefore, it is defensible to argue that Article 13 Basic Regulation constitutes specific action taken
under EU anti-dumping legislation.30 It should be pointed out that Article 13 Basic
Regulation could be challenged ‘as such’, i.e. without challenging a specific application of the rule.31
Anti-dumping duties normally violate a Member’s WTO obligations (e.g. Articles
I, II, and III GATT 1994) because they impose discriminatory import duties that
may be higher than the tariffs in a Member’s tariff ceiling.32 Article VI GATT 1994
and the ADA allow the imposition of measures that are otherwise inconsistent with
those obligations.
In terms of order of analysis, the Appellate Body has clarified that the consistency
of a measure with Article VI GATT 1994 and the ADA must be assessed before
29 Appellate Body Report, US – 1916 Act, para 130; Appellate Body Reports, US – Offset Act (Byrd
Amendment), paras 236–59; Panel Report, EC – Salmon (Norway), paras 7.414–7.418.
30 Similarly, see Laura Puccio, ‘20 Years After Marrakesh: Reconsidering the Effects of Preferential Rules of
Origin and Anti-Circumvention Rules on Trade in Inputs and Global Production Networks’, in
Christoph Herrmann, Markus Krajewski and Jörg Philipp Terhechte (eds), European Yearbook of
International Economic Law 2014 (New York: Springer, 2014), at 190.
31 Appellate Body Report, US – 1916 Act, paras 62–82; Appellate Body Report, US – Hot-Rolled Steel, para
129.
32 Appellate Body Report, EC – Fasteners (China), para 392.
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What’s Wrong with EU Anti-Circumvention Rules
evaluating the measure under other substantive obligations of the GATT 1994.33
This is in contrast with the approach taken by the GATT Panel in the adopted report in EEC — Parts and Components. The GATT Panel had to assess whether the
former European Economic Community’s (EEC) circumvention provisions were
consistent with the EEC’s obligations under the GATT 1947. These provisions prohibited circumvention of anti-dumping duties by way of assembly operations in the
EEC.34 The GATT Panel found a violation of Article III:2 GATT 1947 but, because
the EEC did not seek to justify the measure under Article VI GATT 1947, did not
consider whether the provisions were allowed because they complied with that provision.35 In light of the Appellate Body case law, it stands to reason that, when confronted with a similar question, a WTO panel would have to assess (i) whether the
measure is an anti-dumping measure, and if so, (ii) whether the measure complies
with Article VI GATT 1994 and the ADA. If this is not the case, that panel may continue by assessing (iii) whether the measure violates an obligation of the GATT
1994 (which would normally be the case), and (iv) whether an exception may justify
the measure.
This leads to the question whether, anti-circumvention measures could be justified under Article XX GATT 1994. In EEC – Parts and Components, the EEC indeed
did not attempt to justify the anti-circumvention provisions under Article VI GATT
1947, but only under Article XX(d) GATT 1947. The GATT Panel found that the
anti-circumvention provision was not designed to secure compliance with the EEC’s
anti-dumping regulations. A different situation was presented to the Appellate Body
in US – Shrimp (Thailand)/US – Customs Bond Directive. Having found that the
measure violated Article VI GATT 1994 and the ADA, the Appellate Body considered arguendo that the measure would be unnecessary as required by Article
XX(d) GATT 1994 if that defence were to be available to the USA. But the
Appellate Body ‘expressed no view’ on whether Article XX GATT 1994 actually
would be available as a defence for an anti-dumping measure,36 and this question remains unresolved. In any event, justifying a measure under the general exceptions of
the GATT 1994 would require meeting several legal standards. Aside from being necessary, the measure must be designed to secure compliance with a law or regulation
that itself is not WTO-inconsistent, and the application of the measure must satisfy
the conditions of the chapeau of Article XX GATT 1994.
Alternatively, even if anti-circumvention measures are not anti-dumping measures,
they are measures affecting trade in goods and thus come within the scope of the
GATT 1994. In such case, Article XX(d) GATT 1994 would be available to justify
the abovementioned likely violations of e.g. Articles I, II and III GATT 1994. But the
EU would face the same difficulties as those faced in EEC – Parts and Components to
demonstrate that the measures meet the requirements of Article XX(d) GATT 1994.
33 Ibid, para 392. The exception is the ‘safe harbor’ of Article II:1(b) GATT 1994. See Appellate Body
Report, US – Zeroing (Japan) (Article 21.5 – Japan), para 209.
34 Article 13(10) Basic Regulations 2176/84 and 2423/88.
35 GATT Panel Report, EEC – Parts and Components, paras 5.4–5.11.
36 Appellate Body Reports, US – Shrimp (Thailand) / US – Customs Bond Directive, paras 310, 316–317 and
319.
What’s Wrong with EU Anti-Circumvention Rules
507
Further, nothing in the Decision on Anti-Circumvention would exclude anti-circumvention measures from the scope of the GATT 1994 and/or the ADA.
That said, as explained, the conclusion is that an anti-circumvention measure is an
anti-dumping measure in the sense required by WTO law, and absent specific multilateral rules on anti-circumvention, Article 13 Basic Regulation must be assessed in the
light of Article VI GATT 1994 and the ADA. The substantive elements of a dumping
determination (dumping, injury and a causal link) and the procedural requirements of
the ADA must be respected by rules governing anti-circumvention. In sum, EU anticircumvention rules may run into legal arguments regarding their consistency with the
ADA because, as discussed below, Article 13 Basic Regulation is likely not to meet the
requirements of all three substantive elements of a finding of injurious dumping.
2. Determination of dumping
Article 13 Basic Regulation is likely to violate at least four aspects of Article 2 ADA.
Firstly, to determine whether circumvention is taking place, the normal value established in the original anti-dumping investigation is used to establish evidence of dumping. This is inconsistent with the three allowed ways of determining normal value in
Articles 2.1 and 2.2 ADA.37 Article 2.5 ADA may partially remedy this concern. This
provision allows determining normal value in the ‘country of origin’ rather than the
‘country of export’ if ‘for example, products are merely transshipped through the
country of export, or such products are not produced in the country of export’. The
‘alternative country’ rule of Article 2.5 ADA has not yet been interpreted in WTO
case law.38 Article 2.5 ADA would appear to apply to some of the practices addressed
by Article 13 Basic Regulation (e.g. in case of transshipment) but is unlikely to alleviate concerns in more complex cases (e.g. in case of assembly operations that may still
violate Article 13 Basic Regulation because they do not meet the abovementioned
60% test).
In EU anti-dumping investigations against a non-market economy country (NME),
the normal value is established on the basis of Article 2.7 Basic Regulation, i.e. using
domestic prices in a third country market economy (‘NME methodology’). Article 13
Basic Regulation allows the investigating authorities to establish ‘evidence of dumping’
of exports from the circumventing market economy country on the basis of the normal
value of the exported product in a third country market economy, because the latter
was used to determine the normal value in an NME in the original investigation. For
example, consider an anti-circumvention investigation against Taiwan of anti-dumping
duties imposed on China. If normal value in China was determined on the basis of domestic prices in the USA, evidence of dumping from Taiwan will be based on prices
on the US market of products produced in the USA.
Justifying the application of NME methodology to a market economy on the basis
of the alternative country rule in Article 2.5 ADA would lead to unfortunate consequences. Granting NME status is a unilateral decision of countries, allowed as a
37 Similarly, see Edwin Vermulst and Paul Waer, E.C. Anti-Dumping Law and Practice (London: Sweet &
Maxwell, 1996), at 388.
38 The Panel in EC – Salmon (Norway) addressed the provision in paras 7.175–7.178 but did not give much
guidance as to its meaning.
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result of paragraph 2 of the Ad Note to Article VI:1 GATT 1994.39 This provision
allows different treatment if a state has ‘a complete or substantially complete monopoly of its trade’ and that it fixes ‘all domestic prices’. These strict conditions elucidate
the extraordinary nature of NME methodology. In the case of China and Vietnam,
NME methodology can be applied on the basis of the commitments that result from
their accession to the WTO.40 Article 2.5 ADA cannot be used to extend the scope
of application of NME methodology to determine the normal value in market economies for anti-circumvention investigations.
Secondly, Article 13 Basic Regulation probably contravenes Article 2.4 ADA, according to which a fair comparison must be made between export prices and the normal value ‘at as nearly as possible the same time’. In anti-circumvention investigations,
the export price in the country in which circumvention is taking place is compared to
the normal value in the original anti-dumping investigation. Although Article 2.4 ADA
requires due allowances to be made for differences which affect price comparability as
close as possible in time,41 it is unlikely that the availability of these allowances can justify the difference in time between the establishment of the normal value in the original investigation and the establishment of the export value in the anti-circumvention
investigation (to determine ‘evidence of dumping’ per Article 13 Basic Regulation),
which in the EU investigating authorities’ practice is at least 18 months.
Thirdly, Article 13(1) Basic Regulation allows the extension of anti-dumping duties
to like products ‘whether slightly modified or not’. In assembly operations, Article
13(2) Basic Regulation allows extension of the anti-dumping duty to assembled products, whereas the original duty was imposed on a part of the product. This raises questions regarding the comparability of the products for calculation purposes and possibly
even the scope of the term ‘like product’ in Articles 2.1 and 2.6 ADA. The latter provision requires the like product to be ‘identical, i.e. alike in all respects to the product
under consideration’ or to be another product that ‘has characteristics closely resembling those of the product under consideration’. (The latter is the product allegedly
being dumped at the start of the anti-dumping investigation.42) It is clear from the
case law that the investigating authorities determine the scope of ‘the product under
consideration’. This scope can be wide.43 However, if the anti-dumping duties are subsequently extended to assembled products which merely contain the product under
consideration, there is ample room for situations where the product subject to
39 Incorporated into the ADA through Article 2.7 ADA.
40 In the case of China, the relevant provision is section 15 of WT/L/432, 23 November 2001, Accession of
the People’s Republic of China – Decision of 10 November 2001. For Vietnam, the relevant provision is
para 255 of WT/ACC/VNM/48, 27 October 2006, Accession of Vietnam – Report of the Working Party
on the Accession of Vietnam.
41 These adjustments are made in anti-circumvention investigations, in accordance with Article 2.10 Basic
Regulation. See e.g. recital (30) to Council Regulation (EC) No. 763/2000 of 10 April 2000 extending
the definitive anti-dumping duty, imposed by Regulation (EC) No. 584/96 on imports of certain tube
and pipe fittings, of iron or steel, originating in the People’s Republic of China to imports of certain tube
and pipe fittings, of iron or steel, consigned from Taiwan, whether declared as originating in Taiwan or
not, and terminating the investigation in respect of imports from three Taiwanese exporters (OJ L 94, 14
April 2000, p 1). Here, adjustments were made ‘in respect of transport, insurance and commissions’.
42 Panel Report, US – Softwood Lumber V, paras 7.148–7.152.
43 Ibid, para 7.153; Panel Report, EC – Salmon (Norway), paras 7.47–7.55 and 7.68; Panel Report, EC –
Fasteners (China), paras 7.267–7.268.
What’s Wrong with EU Anti-Circumvention Rules
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extended duties is not ‘like’ the product under consideration in the original investigations.44 Even if the assembled product is a like product, a discussion is needed regarding the comparability of the products and any necessary adjustments.
Fourthly, the compatibility of Article 13 Basic Regulation with Articles 2.4.2, 6.10
and 9 ADA is unclear. If there is circumvention, an anti-dumping duty imposed
under the anti-dumping investigation is extended. No anti-dumping duty is calculated
for imports from the country in which circumvention is taking place. Consequently,
Article 13 Basic Regulation is likely to be incompatible with the provisions of the
ADA governing the calculation of anti-dumping duties.
3. Injury determination
As noted, neither Article 13(1) nor 13(2) Basic Regulation require the establishment
of current injury. Under the article’s first paragraph, it suffices to show that there is
evidence of injury or that the remedial effects of the anti-dumping duty are being
undermined in prices or quantities of the like product. Under the second paragraph,
it suffices to show that the remedial effects of the anti-dumping duty are being undermined in terms of prices or quantities of the assembled like product. If there is a
change in the pattern of trade, it is likely that the remedial effects are undermined in
quantities.45 In other words, there is no genuine counterpart to the requirement in
Article 3 ADA that there be material injury to the domestic industry. If there is no
such material injury, dumping is not ‘condemned’ or remediable by Article VI GATT
1994.46
4. Causation
Even if one considered that the injury determination of the original anti-dumping investigation would suffice for an injury determination in anti-circumvention investigations, there is no requirement in Article 13 Basic Regulation that there be a causal
link between the injury and the circumvention.47 Arguably, establishing that the
44 Once it is defined, the scope of the ‘like product’ must remain the same. Panel Report, EC – Tube or Pipe
Fittings, paras 7.149 and 7.247.
45 E.g. recital (18) to Council Regulation (EC) No. 2513/97 of 15 December 1997 extending the definitive
anti-dumping duty imposed by Regulation (EC) No. 1490/96 on polyester staple fibre originating in
Belarus to imports of polyester filament tow from Belarus and levying the extended duty on the latter imports as registered under Commission Regulation (EC) No. 693/97 (OJ L 346, 17 December 1997, p 1).
46 Vermulst and Waer, above n 37, at 388.
47 The investigating authorities do not address causation in circumvention investigations. See, e.g. Council
Regulation (EC) No. 763/2000 of 10 April 2000 extending the definitive anti-dumping duty, imposed by
Regulation (EC) No. 584/96 on imports of certain tube and pipe fittings, of iron or steel, originating in
the People’s Republic of China to imports of certain tube and pipe fittings, of iron or steel, consigned
from Taiwan, whether declared as originating in Taiwan or not, and terminating the investigation in respect of imports from three Taiwanese exporters (OJ L 94, 14 April 2000, p 1); Council Implementing
Regulation (EU) No. 205/2013 of 7 March 2013 extending the definitive anti-dumping duty imposed by
Implementing Regulation (EU) No. 2/2012 on imports of certain stainless steel fasteners and parts
thereof originating in the People’s Republic of China to imports of certain stainless steel fasteners consigned from the Philippines, whether declared as originating in the Philippines or not and terminating the
investigation concerning possible circumvention of anti-dumping measures imposed by that regulation by
imports of certain stainless steel fasteners and parts thereof consigned from Malaysia and Thailand,
whether declared as originating in Malaysia and Thailand or not (OJ L 68, 12 March 2013, p 1).
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remedial effects of the anti-dumping duty are undermined suffices to establish causation. However, in that case, the impact of other factors that may be causing injury is
not assessed. Again, this is a basic requirement, as developed in Article 3.5 ADA, to
establish that the dumping is ‘condemned’ in the sense of Article VI GATT 1994.
5. Expiry and interim reviews
Finally, the anti-circumvention measures remain in place as long as the duties on the
original country continue, unless the Commission initiates an ‘interim’ review of the
anti-circumvention measure pursuant to Article 13(4) Basic Regulation. Anti-circumvention measures themselves thus do not automatically expire after five years.48 This
violates the rules laid down in Article 11.2 ADA.
V . T H E W A Y F O R W A R D — H O W TO M A K E TH E A N T I CI R C U MV E NT IO N R UL E S L E G A L BU T E F F EC T I VE
Article 13 Basic Regulation defines three circumvention scenarios. As demonstrated
earlier, it is imperfect in addressing circumvention from a substantive perspective.
Article 13 Basic Regulation is also likely to be considered an anti-dumping measure
in the sense of Article 18.1 ADA, whereas the provision is most likely at odds with
some of the EU’s core obligations under the ADA.
Moreover, the EU does not need these ‘imperfections’ in order to attain the objectives of anti-circumvention provisions. Indeed, there are other solutions to effectively address the three main scenarios of anti-circumvention.
A. The first scenario: slight modifications to the product
As stated in Section II, the first scenario of circumvention concerns the (slight)
modification of the product subject to anti-dumping duties. If the modification
takes place in the country subject to the duty,49 there is no need to address slight
modifications to the product subject to anti-dumping duties through specific anticircumvention provisions. At least two other effective ways exist to address such
practices.
Firstly, papers from the governments of Hong Kong and Japan submitted to the
Informal Group on Anti-Circumvention to the WTO Committee on Anti-Dumping
practices suggest that practices of slight modification can be addressed through a precise definition of the product concerned to include slightly altered products.50
48 E.g. Council Regulation (EC) No. 1205/2007 of 15 October 2007 imposing anti-dumping duties on imports of integrated electronic compact fluorescent lamps (CFL-i) originating in the People’s Republic of
China following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No. 384/96 and
extending to imports of the same product consigned from the Socialist Republic of Vietnam, the Islamic
Republic of Pakistan and the Republic of the Philippines (OJ L 272, 15 October 2007, p 1).
49 If the modification takes place in a third country, the same solutions as those for displaced manufacturing
apply.
50 G/ADP/IG/W/8, 28 April 1998, Committee on Anti-Dumping Practices – Informal Group on AntiCircumvention, Topic 1 – What Constitutes Circumvention – Paper by Hong Kong, China, para 11. G/
ADP/IG/W/9, 30 April 1998, Committee on Anti-Dumping Practices – Informal Group on AntiCircumvention, Topic 1 – What Constitutes Circumvention – Paper by Japan, pp 2–3. Edwin Vermulst and
Paul Waer, “Anti-Diversion Rules in Anti-Dumping Procedures: Interface or Short-Circuit for the
What’s Wrong with EU Anti-Circumvention Rules
511
This suggestion for addressing potential circumvention through slight modifications could be made operational by including a provision in the instrument imposing
the anti-dumping duties, along the lines of the following:51
Slight alterations of the product subject to the anti-dumping measures that do
not affect its end-use are subject to these measures. Imported product (parts)
with the same essential characteristics as the product subject to the anti-dumping measures are also subject to these measures.
This approach would allow the customs authorities to impose anti-dumping
duties on slightly modified products. It is important that a provision such as the one
suggested covers only slight alterations. This is the case because the dumping, injury,
causation and Union interest analyses should also apply to the covered altered
products.52
Secondly, although more difficult to obtain but probably a better solution, an allowance should be made for an expedited scope review procedure of the original
measure to address such modifications. Customs authorities would be the most logical entity to request such a review. The review should have only the customs
authorities, the anti-dumping investigating authorities, and the importing and exporting companies concerned as parties.
These suggestions appear to be at least as effective as an anti-circumvention procedure, and are much less intrusive for ‘innocent’ companies that happen to produce
in the country where circumvention is taking place. Moreover, past practice of the
EU investigating authorities illustrates that they sometimes modify the scope of
products subject to the anti-dumping measures in the course of proceedings.53 For
example, in one (factually very specific) case, the investigating authorities considered
that the duties were being avoided by slightly modifying the length of the product at
Management of Interdependence” in Edwin Vermulst and Folkert Graafsma (eds.) Customs and Trade
Laws as Tools of Protection: Selected Essays (Cameron May, London 2005), p. 433.
51 This reflects the principle behind Article 60(2) of Regulation (EU) No. 952/2013 of the European
Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (OJ L 269, 10
October 2013, p 1), and makes sure that duties are avoided by importing a product in parts. For instance,
if an importer imports all the parts of a bicycle or a piano, he is considered to be importing a bicycle or
piano.
52 This is in contrast with the Commission’s recent practice of defining the product concerned by the investigation in a broad manner to include finished goods, semi-finished goods, and raw materials. See recital
(26) to Council Implementing Regulation (EU) No. 1238/2013 of 2 December 2013 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of crystalline
silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the
People’s Republic of China (OJ L 325, 5 December 2013, p 1).
53 E.g. reciprocating compressor pumps were excluded from the scope of an investigation on reciprocating
compressors. The same occurred for unicycles in an investigation on bicycles. See recital (18) to Council
Regulation (EC) No. 261/2008 of 17 March 2008 imposing a definitive anti-dumping duty on imports of
certain compressors originating in China, OJ L 81, 20 March 2008, p 1; recital (25) to Council
Regulation (EC) No. 1095/2005 of 12 July 2005 imposing a definitive anti-dumping duty on imports of
bicycles originating in Vietnam, and amending Regulation (EC) No. 1524/2000 imposing a definitive
anti-dumping duty on imports of bicycles originating in the People’s Republic of China, OJ L 183, 14
July 2005, p 1.
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issue, and consequently initiated an interim review at its own motion to modify the
scope of the measures in force.54 There is no reason why this practice could not be
covered by the above suggestions.
B. The second scenario: fraudulent practices
The second and most frequent scenario of circumvention comprises origin fraud,
whereby products are presented to customs with a false certificate of origin.
Sometimes goods are merely transshipped (with or without repackaging) through a
third country. While such fraudulent practices constitute circumvention in the meaning of Article 13 Basic Regulation, there is no need to address this form of circumvention through anti-dumping legislation.55
Instead, these fraudulent practices should be combated by applying (existing) customs law. False origin declarations are a matter of customs law and should be (and
are) addressed by customs authorities.56 For reasons of clarity, it may help to provide
the non-preferential origin rule used for the product subject to duties in the instrument imposing anti-dumping duties.57 That would help alleviate any confusion that
may arise when the preferential and economic origin rules come to a different conclusion with respect to origin.58
Compared to circumvention investigations, there are at least four substantial advantages to using the customs rules for origin fraud:
i. No new anti-dumping or anti-circumvention investigation is required.
ii. Only companies that appear to violate the rules suffer from a customs investigation, not ‘innocent’ exporters that happen to produce in the country
where circumvention is taking place. In the EU, the European Anti-Fraud
Office (OLAF) can support investigations by national customs authorities.
This has led to positive results.59
54 E.g. steel strips were cut by exporters (and no longer by users) into smaller strips to avoid falling within
the scope of the anti-dumping duties. See recitals (17)–(22) to Council Regulation (EC) No. 1371/2005
of 19 August 2005 imposing a definitive anti-dumping duty on imports of grain oriented flat-rolled products of silicon-electrical steel originating in the USA and Russia and repealing Regulation (EC) No. 151/
2003 imposing a definitive anti-dumping duty on imports of certain grain oriented electrical sheets originating in Russia, OJ L 223, 27 August 2005, p 1.
55 For example, according to New Zealand, fraud and erroneous entry of goods does not constitute circumvention in the anti-dumping context. G/ADP/IG/W/49, 24 April 2003, Committee on Anti-Dumping
Practices – Informal Group on Anti-Circumvention, Circumvention – Paper from New Zealand, p 3.
56 See also the argument made in G/ADP/IG/W/8, above n 50, para 11.
57 Authorities may even consider developing specific origin provisions as provided in Article 14.3 Basic
Regulation. Such clarification in the instrument imposing anti-dumping measures could help, e.g. to clarify the relevance for origin determinations of the type of production process for the product subject to
duties, or the origin of the parts/components/materials used. The ADA is silent about this possibility.
58 Stefano Inama, Rules of Origin in International Trade (Cambridge: Cambridge University Press, 2011), at
126–30. Also see, Edwin Vermulst and Paul Waer, ‘Anti-Diversion Rules in Anti-Dumping Procedures:
Interface or Short-Circuit for the Management of Interdependence’ in Edwin Vermulst and Folkert
Graafsma (eds), Customs and Trade Laws as Tools of Protection: Selected Essays (London: Cameron May,
2005), at 436–43.
59 OLAF has for instance been involved in the circumvention of anti-dumping duties on car radios, televisions, and solar panels. On the role of OLAF, see also Van Bael and Bellis, above n 17, at 660–61.
What’s Wrong with EU Anti-Circumvention Rules
513
iii. Contrary to anti-circumvention measures, customs authorities can retroactively levy the anti-dumping duties, generally up to five years in case of
intended evasion or fraud.
iv. Fraudulent customs activities are covered by criminal law, which means
that offenders may face imprisonment; generally, the existence of criminal
sanctions is more effective than the mere economic sanction that anti-circumvention measures entail (albeit more for the importer than for the
exporter).60
C. The third scenario: displaced manufacturing
The third scenario of circumvention comprises assembly operations, either in the EU
or in a third country. Again, while such practices constitute circumvention in the
meaning of Article 13 Basic Regulation, there is no need to address displaced manufacturing through specific anti-circumvention provisions.
Circumvention through assembly operations in the EU basically means the importation of parts or (semi-) knock-down kits for assembly in the EU.61 The product
subject to anti-dumping duties is made with these parts, which are not subject to
anti-dumping duties. The solutions noted above in Section IV.A also address this
type of circumvention. In addition, one could imagine that this type of assembly
could only be allowed if customs or the anti-dumping investigating authorities have
provided a license. Such licensing could follow a procedure similar to that used for
customs licenses for processing of goods.
Circumvention with assembly operations in a third country is probably the most
difficult situation to address. Indeed, these practices cover both companies that have
taken legitimate and economically sound business decisions and companies that have
set up an operation only with the aim of avoiding anti-dumping duties.
As explained in Section III.B, applying Article 13 Basic Regulation to these situations is probably inconsistent with WTO rules. Thus, a new ‘test’ to establish circumvention should be devised in order to separate legitimate from illegal activities.
The starting point for such a test should be that if its conditions are fulfilled, a
new investigation is conducted against the third country in which circumvention is allegedly taking place. This is in line with what Japan and Korea argued in the WTO
Informal Group, i.e. that displaced manufacturing practices should be treated as a
separate dumping case for which a separate investigation should be conducted proving material injury caused by dumping from the country from which circumvention
is taking place.62 This alleviates the abovementioned weaknesses of anti-circumvention provisions.
Procedurally, the initiation requirements for such investigations could be lowered.
In case of displaced imports, one could consider that any interested party, including
60 See e.g. A. Mitchell Polinsky and Steven Shavell, ‘The Optimal Use of Fines and Imprisonment’, 24
Journal of Public Economics (1989, p 89), at 89–99.
61 Müller, Khan and Scharf, above n 17, at 579.
62 G/ADP/IG/W/9, above n 50, at 4; G/ADP/IG/W/17, 28 May 1999, Committee on Anti-Dumping
Practices – Informal Group on Anti-Circumvention, Topic 1 – What Constitutes Circumvention – Paper by
the Republic of Korea, p 3.
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the complainants, could request the Commission to initiate a new investigation exofficio based on possible circumvention as described in Article 13 Basic Regulation.
VI . C ON CL US I ON
Circumvention of anti-dumping duties is undoubtedly an important problem, and
appears to be high on the US and the EU’s political agendas. But the EU, at any rate,
is currently tackling the problem through ineffective and potentially illegal means.
This article argued that the three main categories of practices considered to be circumvention (slight modifications of the product subject to anti-dumping duties, origin fraud, and displaced manufacturing), should be addressed through alternative,
mostly existing legal mechanisms. The implementation of these proposed solutions
requires just three steps:
(i) Future instruments imposing anti-dumping measures should allow extending the scope of the measures to slightly modified products and importation of parts, and should clarify origin rules.
(ii) On a policy level, the anti-dumping investigating authorities should decide
to leave cases of origin fraud to the customs authorities.
(iii) In case of assembly operations, the anti-dumping investigating authorities
could upon request initiate an ex-officio new investigation.
This ensures fair—and at least equally effective—protection against the evasion
of anti-dumping duties for the domestic industries facing unfair competition, as well
as a more proportionate and fair procedure for exporters who are not circumventing.
At the same time, it would guarantee compliance with international legal rules.