Lesser Duty Rule Free Trade Agreements

Article 11 of the Agreement lays down rules on the duration of anti-dumping duties and requirements for a periodic review of the imposition of anti-dumping duties or price undertakings that may continue to be necessary. These requirements are consistent with some countries` concerns about the indefinite maintenance of anti-dumping duties. In accordance with the confiscation requirement, anti-dumping duties will normally be repealed no later than five years after their first request, unless a review prior to that date shows that dumping and injury are likely to continue or recur. This five-year provision also applies to price undertakings. The agreement obliges the authorities to examine, at the request of an interested party, whether the maintenance of a right is necessary. Anti-Dumping Agreement. Article 9 of the AD Agreement provides that “it is desirable that the introduction be permitted into the territory of all Members and that the duty be less than the margin where the lesser duty is sufficient to remove the injury suffered by the domestic industry”. In other words, the nature of the “lesser duty rule” set out in Article 9 is not an obligation, but an option, for WTO Members to transpose this rule into their national law in order to ensure fair competition by preventing so-called trade distortions; At the same time, however, this provision shows that it is desirable to adopt this principle. Therefore, the Anti-Dumping Agreement gives WTO Member States full discretion in the application and transposition of this issue into their national law. 4. Bernard O`Connor, “There is no lesser tariff in EU trade defence law”, www.lexology.com/library/detail.aspx?g=03c49e52-f5e8-4602-9ad7-5b779ec2d666 Article 7 of the Agreement contains rules for the imposition of provisional measures. This includes requiring the authorities to make a provisional affirmative determination of dumping, injury and causation prior to the imposition of provisional measures and provisional measures no earlier than 60 days after the initiation of an investigation.

Provisional measures may take the form of a provisional duty or, preferably, a guarantee in the form of a cash deposit or a guarantee equal to the margin of dumping provisionally established. The Agreement also sets time limits for the imposition of provisional measures, normally four months, which may be extended to six months at the request of exporters. Where, in the application of anti-dumping duties, a Member imposes duties below the margin of dumping where they are sufficient to remove injury, the period of provisional measures shall normally be six months, with the possibility of being extended to nine months at the request of exporters. Agreement Article 5 of the Agreement lays down the conditions for the initiation of investigations. The agreement stipulates that investigations must normally be initiated on the basis of a written complaint filed by or on behalf of a domestic industry. This standing requirement includes numerical limits on whether domestic producers provide sufficient support to conclude that the complaint is filed by or on behalf of the domestic industry and therefore warrants the initiation of the investigation. The Agreement requires evidence of dumping, injury and causation and other information concerning the product, industry, importers, exporters and other matters in written requests for anti-dumping facilitation and provides that, in exceptional circumstances, when the authorities initiate a written complaint from a domestic industry, they can only act if they have sufficient evidence of dumping, violation and causation. In order to ensure that unfounded investigations likely to distort legitimate trade are not pursued, Article 5(8) provides for the immediate termination of investigations where the volume of imports is negligible or the dumping margin is de minimis and sets numerical thresholds for such findings. In order to minimize the adverse impact of investigations on trade, Article 5.10 provides that investigations must be completed within one year and in no case more than 18 months after the initiation of the investigation.

Free trade policy is not very popular with the general public. Among the most important problems are unfair competition from countries where falling labour costs allow for price reductions and the loss of well-paying jobs to manufacturers abroad. Furthermore, in order to ensure the right of interested parties to defend themselves for or against the application of the lesser duty, the calculation of the damage should be made and duly taken into account. In other words, transparency/availability of these calculations to interested parties is required to some extent. Otherwise, the methodology used to calculate injury and the lack of transparency/openness with respect to this calculation method could overshadow the application of the “lesser duty rule”, which can ensure a fair balance between the interests of both parties and market economy rules. Prohibited subsidies: Subsidies that require recipients to reach certain export destinations or to use domestic products instead of imported products. They are prohibited because they are specifically aimed at distorting international trade and could therefore affect the trade of other countries. They can be challenged under the WTO dispute settlement procedure, where they will be dealt with on an accelerated schedule. If the dispute settlement procedure confirms that the subsidy is prohibited, it must be withdrawn immediately.

Otherwise, the requesting country may take countermeasures. Where domestic producers are adversely affected by imports of subsidized products, a countervailing duty may be imposed. The response to dumping and subsidies is often a special countervailing import tax (countervailing duty in the case of a subsidy). This tax is levied on products from certain countries and is therefore contrary to the GATT principles of tariff binding and equal treatment of trading partners (MFN). The agreements provide for a derogation clause, but both also stipulate that the importing country must conduct a detailed investigation before imposing a tariff, which duly demonstrates that the domestic industry is being injured. As can be seen, Turkish legislation applies the “lesser duty rule”, i.e. the amount of the anti-dumping duty may not exceed the dumping margin, but should be lower if the lesser duty is sufficient to remove the injury (threat). In contrast to the wording of the above-mentioned Article 9(4) of the EU Regulation, the relevant Article of Turkish law contains the expression “shall”. At the same time, the act also gives the department discretion by using the term “reasonable.” Therefore, the above provision appears to require the Department to impose anti-dumping duty lower than the margin of dumping calculated if the lesser duty is sufficient to remove the injury to the Canadian industry.