Dumping in General. In general, there is “dumping” when a company is importing goods at a price lower than the domestic price at the country of origin. Specifically, there is dumping when a company imports its product into a market at a price lower than the domestic price (normal value) at which comparable goods are sold at in the country of export. Is this unfair competition? Within the framework of the WTO, action can only be taken when dumped imports cause or threaten to cause material injury.
Under the WTO Agreement on Dumping and RA 8752 (including its Implementing Rules and Regulations), goods are “dumped” if any product is “Éimported into the Philippines at an export price less than its normal value in the ordinary course of trade for the like product destined for consumption in the country of export or originÉ”.
WTO Agreement on Dumping. Part of the agreements under the WTO is that binding tariffs must be applied equitably to all trading partners who retain Most Favored Nation (MFN) status. In other words, tariff rates must uniformly apply to all importations regardless of origin. However, there are exceptions as follows: (a) actions against dumping; (b) special “countervailing duties” to offset subsidies; and (c) emergency measures to temporarily limit imports to “safeguard” domestic industries.
Article VI of GATT 1994 and the WTO Agreement on Dumping (implementing Article VI) contains the procedures by which countries may take action against dumping. To effectively implement the said agreements, the Philippine Government, in August 1999, approved the Republic Act No. 8752, otherwise known as “Anti-Dumping Act of 1999”. RA 8752 effectively amends Section 301 of the Tariff and Customs Code of the Philippines (TCCP).
Elements of Dumping. Under the new rules, dumping basically has four elements, namely: (a) like product, (b) margin of dumping/price difference, (c) material injury or threat thereof, and (d) causal link between dumping and the alleged injury. Under the IRR of RA 8752, “like product” refers “Éto a product which is identical or alike in all respects to the allegedly dumped product, or in the absence of the former, another product which, although not alike in all respects, has characteristics closely resembling those of the allegedly dumped product.
While dumping per se is not prohibited, it becomes an issue when the dumped product is causing or is threatening to cause material injury to a domestic industry producing a like product. Under RA 8752, there is an assumption of negligible injury when the estimated margin of dumping, as determined during the preliminary determination, is less than 2% of the export price, or when the volume of the alleged dumped products or injury is negligible.
The volume of the dumped imports from a particular country is considered negligible if it accounts for less than 3% of the total imports unless countries, which individually account for less than 3% of the total imports collectively account for more than 7% of said product.
Dumping Investigation. An anti-dumping case is initiated by the filing of a petition to the Department of Trade and Industry (DTI) in the case of non-agricultural products or the Department of Agriculture (DA) in the case of agricultural products. An investigation will not be initiated unless the application has been made “by or on behalf of the domestic industry”. DTI or DA may, under special circumstances, initiate the investigation on its own accord. If the DTI or DA find the application properly documented and sufficient, it shall initiate a preliminary inquiry into the need to impose a provisional anti-dumping duty.
Upon completion of the preliminary inquiry, DTI or DA will decide whether to dismiss the application or to issue an order for the imposition of a provisional anti-dumping duty. Upon receipt of the records (in case of affirmative findings), the Tariff Commission shall initiate a formal investigation, which shall be summary in nature. If the final determination is affirmative, the Tariff Commission shall recommend to the DA or DTI that anti-dumping duty be imposed.
Implications on the Domestic Industry. With the changes in anti-dumping law, a question confronting many in the business community is how effective these new rules will be in protecting domestic industry from unfair trading practices and ensuring a level playing field. In a positive move, RA 8752 has, in principle, provided a more transparent process for initiating and conducting an anti-dumping investigation as well as calculating and implementing anti-dumping measures.
In the last two years, we have seen several dumping actions filed against certain imported commodities (cement and ceramic tiles). These actions were later withdrawn and subsequently, separate actions under the Safeguards Measures Act (RA 8800) were filed.
Previously, domestic producers complained of the slow resolution of anti-dumping cases. Importers, on the other hand, complained of the holding of the alleged dumped importation without the benefit of being able to post a bond pending resolution of a prima facie case. To address some of these concerns, the present rules now provide that a formal investigation be conducted in a summary manner and that no dilatory tactics or unnecessary delays be allowed.
Further, the technical rules of evidence used in regular courts shall not be applied. More importantly, the withholding of shipments shall no longer be allowed. What is provided as a provisional remedy now is the imposition of a cash bond equal to the provisionally estimated margin of dumping on the alleged dumped product.
In principle, the passage of RA 8752 and its IRR should enable domestic industries a positive and transparent platform to take action against “unfair” trade practices and ensure that a level playing field prevails. For importers, dumping should be a recognized business consideration when planning and trading internationally.
The author is an international trade and customs lawyer, and a licensed customs broker. He is also a partner of the law firm of David Leabres Uvero Gaticales Sto. Tomas. For comments or inquiries, he may be contacted at firstname.lastname@example.org or at (632) 4002145 / 4050021.