Among the most relevant provisions established by the Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade of 1994 (Anti-Dumping Agreement), the one referring to the “domestic production branch” stands out. Article 4.1 defines it as “the group of domestic producers of like products, or those among them whose combined production constitutes a major proportion of the total domestic production of such products…".
When the Agreement uses the expression "a major proportion" within the general conceptualization, the unavoidable question that comes to the reader's mind, and which we will try to answer through this work, is: what percentage of the total national production of a certain product/s should be represented by those producers who claim to be considered as a "national production branch" within the framework of the Antidumping Agreement?
It is clear that paragraph 1 of Article 4 of the Agreement does not establish a percentage that can satisfactorily answer the question raised and, consequently, serve as a basis for the enforcement authority to determine compliance with the Agreement. However, the absence of a specific figure does not mean that any percentage, regardless of its amount, can automatically be considered as a significant proportion. Indeed, if we further analyze the context of the expression in the general framework of the Anti-Dumping Agreement, it is correct to interpret it as referring to a relatively high proportion of the total national production of a product/s in a given country.
But then, why does this conceptualization denote so much importance?
The answer is simple. The reason is because the domestic industry will serve as a “base sample” on which the Enforcement Authority, through its technical bodies, will determine whether the dumped imports cause harm – or threaten to cause harm imminently – to domestic producers; a situation that will justify the application of antidumping measures.
Therefore, at the beginning of an investigation, it is extremely important that the Enforcement Authority be able to define with the greatest possible degree of certainty the amount - or percentage - of the national production branch. Success in this task will significantly reduce the margin of error, the possibility of skewing the economic data and, consequently, distorting the analysis of the state of the production branch under study.
On the contrary, the smaller the proportion appears to be, the more sensitive the investigating authority must be to ensure that the proportion used substantially reflects the total production of all producers and, in turn, to ensure that the domestic industry defined on this basis is able to provide ample data to ensure an accurate analysis of the alleged injury caused by the imports complained of.
Returning to the letter of the Anti-Dumping Agreement, it can be seen that it does not prescribe a particular method of analysis; thus, the final result of such analysis must be compatible with the obligation underlying the spirit of the Agreement regarding examining and evaluating all relevant factors that influence the state of the industry.
The higher the proportion, the more producers are included and the less likely it is that a distortion will occur in the injury determination made on this basis. The above interpretation is therefore also consistent with the requirement in Article 1 that an injury determination be based on the impact of dumped imports on domestic producers.
Considering everything stated here,What could be a satisfactory percentage to meet the domestic production branch requirement??
In this regard, it is worth highlighting that the panels of special groups and/or appellate bodies of the World Trade Organization (WTO) have indicated that it should be around 50%, and may be somewhat lower in cases of atomized production branches.
In summary, the fundamental idea behind national production is to promote economic growth and protect the interests of local industry. Encouraging national production generates employment, drives innovation, improves the trade balance and strengthens a country's industrial capacity. This is why WTO member countries have established clear rules and procedures for the application of anti-dumping measures, with the aim of avoiding the unjustified or discriminatory use of these trade measures, the points discussed here being clearly relevant.
Lawyer from the University of Buenos Aires (UBA). Specialization in State Law - Treasury Attorney of the Nation. Manager of Commercial Standards and Instructions of the National Commission of Foreign Trade (CNCE), a decentralized body within the Ministry of Economy. Professor of the Bachelor's Degree in International Trade, the Diploma in Customs Law and the Postgraduate Specialization in Global Business at CAECE University.