Since December 2015, U.S. steel producers have filed cases charging foreign competitors with dumping products, U. S. government has twice penalized foreign steel producers as a result. Likewise, the Taiwan based steel manufacture, Chinese Steel Corporation (“CSC”), has filed a petition to the competent authority of Taiwan.
The Ministry of Finance (“MOF”), received CSC's accusation that certain global competitors of unfair subsidies and other unlawful trade practices in February 2016. CSC alleged that its loss of 12% of domestic market share was the direct result of global rivals’ unfair pricing advantage stemming from the illegal dumping margin up to 61.94%, which if taken as true could lead to the anti-dumping duty to be imposed accordingly.
Dumping occurs when goods are sold for export below their market price at home or are sold below their full cost of production. In case the sale of the aforementioned goods is causing material injury to local producers of like products, a remedy in the form of anti-dumping duty may be applied. Complying with the established principle of the General Agreement of Tariffs and Trade 1994 (“GATT”), the Regulations Governing the Implementation of the Imposition of Countervailing and Anti-Dumping Duties provides that anti-dumping duty can only be imposed on imported goods by demonstrating a) dumping has taken place; b) the dumping has caused material injury or threatened to do so; and c) the causal link between the above two requirements.
Article 3 of the Regulations Governing the Implementation of the Imposition of Countervailing and Anti-Dumping Duties provides that MOF is the authority responsible for investigating whether the imported products are subsidized or dumped, whereas the Ministry of Economic Affairs (“MOEA”) is the authority responsible for investigating whether the aforementioned products cause injury to the domestic industry. Within 40 days from the next day of receipt of the application, MOF shall submit the proposal to the International Trade Commission (“ITC”) to decide whether there are sufficient evidences submitted to proceed with the investigation or to immediately terminate the investigation due to the dumping margin is deemed “de minimis” or ‘negligible”. In general, the final determination on whether to impose a countervailing duty or anti-dumping duty will be made within 260 days.
In practice, the significant challenge arises from determining the existence of “material injury”. Article 36 outlines the following three factors to be evaluated during the investigation: a). the increase of the imports in question; b). the effect of the imports in question on the market price of the domestic like product; and c). the impact of the imports in question on the domestic industry. The anti-dumping duty is imposed on exporter specific and country-specific basis and it shall not exceed the specific dumping margin. The dumping margin is the difference between the export price of the goods under complaint and the price the goods would sell for if it were being sold at a “normal value”. Article 68 of the Custom Act defines “normal value” as the comparable domestic selling price in the country of exportation or origin in the ordinary course of trade.
Aiming to refrain from misuse of anti-dumping duty, which might unfairly create trade barriers for exporters seeking entry to the domestic market, who possess reasonably lower yet legitimate price advantage, the EU legislator adopted the ‘Community Interest Clause”, which determines whether the overall interest of the Community provides a compelling reason for rejecting anti-dumping duty in a given proceeding where all other requirements are satisfied.
In Taiwan, Article 16 of the Regulations Governing the Implementation of the Imposition of Countervailing and Anti-Dumping Duties adopted similar “public interest clause” allowing the ITC to take not only the existence of a subsidy or dumping and the injury to the industry as its primary consideration, but also to make allowances for the influence of the case on the overall economic interests of the country. The application of such clause encourages foreign exporters with legitimate price advantage to enter Taiwanese market without concerning the risk of anti-dumping duty being imposed, as a result, it may facilitate the market competition and benefit the entirety of industries/consumers.
All in all, foreign exporters shall pay much more attention to any anti-dumping petitions occurred in Taiwan, avoiding any risk of losing benefits.
ABOUT THE AUTHOR: Chih-Chiao Chang
Chih-Chiao Chang, Counsel, Brain Trust International Law Firm
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
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