Following up on earlier posts about Australia's complaint and the panel composition in the China - Barley WTO dispute (DS598), Australia has now posted its first written submission in the case. The submission is dated November 1 and has over 300 pages of factual and legal arguments. In this piece, we look closely at one particular issue: MOFCOM's decision to assign the same dumping margin to all Australian companies.
As detailed in its submission, Australia's main claim on this issue was that MOFCOM failed to determine individual dumping margins, in violation of AD Agreement Article 6.10. (Also of relevance here may be the claim that MOFCOM acted inconsistently with AD Agreement Article 6.8 and Annex II in relation to its use of facts available.)
In its submission, Australia argued that, "by assigning the same dumping margin to all Australian companies, China acted inconsistently with its obligation under Article 6.10 of the Anti-Dumping Agreement to determine individual dumping margins for each known exporter and producer." In this regard, "[i]n the Final Determination, Group 1 producers were listed individually, but all assigned the same dumping margin," while "Group 2 and Group 3 traders were allocated an 'All Others' dumping margin," which "was the same as the margin allocated to the Group 1 producers."
Article 6.10 establishes a general rule that the investigating authorities shall determine an individual margin of dumping for each known exporter or producer, unless the number of exporters, producers, importers or types of products involved is so large as to make such a determination impracticable. It reads as follows:
The authorities shall, as a rule, determine an individual margin of dumping for each known exporter or producer concerned of the product under investigation. In cases where the number of exporters, producers, importers or types of products involved is so large as to make such a determination impracticable, the authorities may limit their examination either to a reasonable number of interested parties or products by using samples which are statistically valid on the basis of information available to the authorities at the time of the selection, or to the largest percentage of the volume of the exports from the country in question which can reasonably be investigated.
The Australian submission notes the brief explanations from MOFCOM as to why it did not calculate individual margins for each group of producers, but argues that the explanations are insufficient. For Group 1 producers, MOFCOM said:
The Investigating Authority believed that it had analyzed each of the above companies [the Group 1 producers] who had submitted the questionnaire in the ruling, gave a collective explanation with respect to the common problems in the ruling, and calculated the respective margins of dumping for the above four companies.
On this point, Australia responded by arguing that "it is not possible to reconcile MOFCOM's claim to have calculated 'respective' margins of dumping for these four producers with the fact that they were allocated a single, uniform dumping margin." Moreover, "it is clear from MOFCOM's determination of a single normal value and a single export price, both based on Australia-wide aggregate export data, that only a single dumping margin calculation was undertaken." The submission notes that the Final Disclosure relevantly provides:
Calculation process of dumping margin: The normal value was USD 392.81/ton, the export price was USD 216.83/ton, and the CIF price was USD 239.02/ton. After calculation, the final dumping margin was 73.6%.
Australia notes that the terms "normal value", "export price", "CIF price", "calculation" and "dumping margin" are "all in the singular, reinforcing the only possible conclusion, that a single dumping calculation was undertaken." Thus, by "imposing a single, uniform margin of dumping on all Group 1 producers, and in the absence of any permissible derogation, MOFCOM is in clear breach of the mandatory obligation in Article 6.10 to determine individual dumping margins for each known producer."
On this issue, it would be surprising if all four companies had the same figures for "normal value" and "export price" and "CIF price," so at first glance it is not clear how this single set of figures would apply to each of the companies. But China's submissions will likely address these issues in more detail.
For Group 2 and 3 producers, Australia's submission offers the following translations of MOFCOM's final determination on this point:
To sum up, as 12 traders including CBH Grain Pty. Ltd. provided incomplete questionnaires and information, causing the Investigating Authority to be unable to obtain the information necessary to calculate the margins of dumping, the Investigating Authority was unable to calculate separate margins of dumping for the above 12 traders. The Investigating Authority decided that the 12 traders including CBH Grain Pty. Ltd. would be subject to the margins of dumping of other Australian companies.
Louis Dreyfus Company Australia did not submit the questionnaire until after the submission deadline. Riordan Group Pty. Ltd. did not submit the electronic version of the questionnaire. As the questionnaires of these two companies did not meet the requirements, the Investigating Authority decided not to review them. In addition, after review, Quadra Commodities Pty. Ltd. did not export the Investigated Product to China during the Period of the Anti-Dumping Investigation. Accordingly, the Investigating Authority decided that the above-mentioned three companies were subject to the margins of dumping of other Australian companies
In response, Australia argued that MOFCOM "attempted to justify its failure to calculate individual dumping margins on its use of facts available." However, Australia said, "even if MOFCOM's recourse to facts available were found to be proper (which Australia maintains it was not), there is no basis in the text of the Anti-Dumping Agreement for such a justification." Rather, "following its decision to disregard information submitted by Australian companies, MOFCOM was required to use facts available to complete the data with regard to a particular exporter in order to determine an individual margin for that exporter." Instead, "MOFCOM assigned the same uniform dumping margin to Group 2 and 3 traders as it had to Group 1 producers," and in doing so, "MOFCOM was in breach of the obligation to calculate individual dumping margins, and its approach does not fall within a permissible derogation to that obligation."
According to Charles Zhan, a trade lawyer with Moulis Legal, the wording of Articles 6.8 and 6.10, and their interaction, is complicated and open to different interpretations. For example, it may be that an investigating authority can in fact undertake “sampling” without expressly saying that is what it is doing. He also notes that where the number of participants in an investigation is quite large, the investigating authority can limit its examination to the exporters with the largest percentage of the volume of exports that can reasonably be investigated. Thus, in circumstances where there is a facts available rate for investigated exporters, which is the same for each of them, that rate could be applied to all others. Mr Zhan said, “It presents an interesting question for a panel, parts of which might not be reached, depending on the panel’s approach. Facts available played a large part in MOFCOM's findings, thus the issue may be largely resolved as part of the Article 6.8 claims.”