Trying to grant allowances for all such factors would mean embarking in a highly speculative exercise, with an unacceptable loss of certainty and predictability of anti-dumping proceedings.Ģ47. However, the method suggested by Brazil was inappropriate, because it would not account for important factors which impact on trade in the product under investigation. The EC argued that even if one accepted Brazil's contention regarding the so-called "exchange dumping" ( quod non), and thus recalculate the dumping using one of the methodologies suggested by Brazil, a substantial part of the dumping margin found by the EC would remain. This was above and beyond the obligations and requirements imposed by the Agreement, and therefore could not be a violation of the Agreement.Ģ46.
The EC's computation involved a weighing of the transactions, and therefore also of the exchange rates applied to such transactions, even where there was no dumping. As the Agreement was intended to regulate the application of legitimate trade legislations, the purpose of anti-dumping would be nullified if an exporter were allowed to offset sales at dumped prices by sales made above normal value. Hence, to establish dumping one had to first and foremost consider export transactions made at prices below normal value. The definition of dumping in the Agreement required that the export price be less than the comparable price of the like product destined for domestic consumption (Article 2:1). There was either dumping, calculated in conformity with the obligations imposed by the Agreement, or there was no dumping. The EC argued that, in reality, there was no such thing as "exchange dumping", or at least such a notion was not relevant under the provisions of both the Agreement and EC law applying and implementing the Agreement. Therefore, at the level of principle, the arguments of Brazil on this point should be rejected. The concept of "negative dumping" or "exchange dumping" appeared nowhere in the GATT or the Agreement, and there was no reference to sales made at or above normal value. The EC argued that the Agreement imposed no obligation upon the Parties to take into account the so-called "exchange rate dumping". the proportion of their export sales that were dumped and those that were not dumped.Ģ45. This method was fair to the exporters since it took account of their overall behaviour, i.e. The absolute volume of these transactions were included in the determination of the average weighted dumping margin for the exporter, with the dumping margin corresponding to these transactions being treated as zero. The EC argued that in its system, whenever export transactions of an exporter found to dump were shown to have been made at prices above normal value, those transactions were regarded as instances where no dumping occurred.
In the event that the EC's preliminary objections relating to "negative dumping" or "zeroing" were not accepted by the Panel, the EC requested the Panel to consider the following points. the need to avoid artificial dumping findings generated by exchange rate distortions, and the EC practice implicitly acknowledged the principle that exchange dumping should not lead to unnecessary protective measures.Ģ44. Hence, Brazil argued, the EC recognized the link between domestic inflation, exchange rates and the method of establishing normal value, i.e. For the same reason, in other cases, the EC had made the comparison between normal value and export price in the export currency. Brazil argued that in inflationary circumstances, it was the established practice of the EC to calculate monthly normal value and to use monthly average exchange rates (as it did in this case) in order to reduce the distortions which may arise. EC - IMPOSITION OF ANTI-DUMPING DUTIES ON COTTON YARN FROM BRAZIL (ADP/137)/FĮC - IMPOSITION OF ANTI-DUMPING DUTIES ONĢ43.