The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) plays an important role in dealing with anti-dumping issues, and the DSB, with the participation of all members, is specifically responsible for trade frictions and dispute settlement among member countries. In dealing with anti-dumping issues, the DSB makes rulings in accordance with the rules of the World Trade Organization, aiming to protect the fairness and order of international trade.

Specifically, the workflow of the DSB includes the following steps:

1. Receiving Complaints: When a member country believes that its trade interests have been harmed, it can file a complaint with the DSB. Complaints must comply with the rules and procedural requirements of the World Trade Organization. 2.

2. Establishment of a Panel of Experts: The DSB will form a panel of experts to investigate and evaluate the complaint. The Panel of Experts is usually composed of experts from different member countries with relevant expertise and experience.

3. Investigation and assessment: The Panel of Experts will investigate the complaint, collect relevant evidence, and assess whether there is dumping behavior and the damage caused by dumping to the complaining country. The Panel will write a report based on the results of the investigation and put forward corresponding recommendations and measures.

4. Dispute Settlement: The DSB will consider the report of the Panel of Experts and make a final decision. If DSB decides that there is dumping behavior, member countries can take corresponding measures to protect their trade interests, such as levying anti-dumping duties.

5. Supervision of implementation: The DSB will supervise the implementation of the ruling to ensure that the relevant measures are effectively implemented. If a member country is found to have failed to comply with the ruling, the DSB can take appropriate action.

The DSB is closely related to the interests of member countries in dealing with anti-dumping issues, so all parties attach great importance to the authority and impartiality of the dispute settlement body. At the same time, the DSB will continue to improve its working mechanism and enhance the efficiency of dispute settlement, so as to provide a strong guarantee for the fairness and order of international trade.

Anti-dumping actions

If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. Is this unfair competition? Opinions differ, but many governments take action against dumping in order to defend their domestic industries. The WTO agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping — it disciplines anti-dumping actions, and it is often called the “Anti-Dumping Agreement”. (This focus only on the reaction to dumping contrasts with the approach of the Subsidies and Countervailing Measures Agreement.)

The legal definitions are more precise, but broadly speaking the WTO agreement allows governments to act against dumping where there is genuine (“material”) injury to the competing domestic industry. In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is causing injury or threatening to do so.

GATT (Article 6) allows countries to take action against dumping. The Anti-Dumping Agreement clarifies and expands Article 6, and the two operate together. They allow countries to act in a way that would normally break the GATT principles of binding a tariff and not discriminating between trading partners — typically anti-dumping action means charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the “normal value” or to remove the injury to domestic industry in the importing country.

There are many different ways of calculating whether a particular product is being dumped heavily or only lightly. The agreement narrows down the range of possible options. It provides three methods to calculate a product’s “normal value”. The main one is based on the price in the exporter’s domestic market. When this cannot be used, two alternatives are available — the price charged by the exporter in another country, or a calculation based on the combination of the exporter’s production costs, other expenses and normal profit margins. And the agreement also specifies how a fair comparison can be made between the export price and what would be a normal price.

Calculating the extent of dumping on a product is not enough. Anti-dumping measures can only be applied if the dumping is hurting the industry in the importing country. Therefore, a detailed investigation has to be conducted according to specified rules first. The investigation must evaluate all relevant economic factors that have a bearing on the state of the industry in question. If the investigation shows dumping is taking place and domestic industry is being hurt, the exporting company can undertake to raise its price to an agreed level in order to avoid anti-dumping import duty.

Detailed procedures are set out on how anti-dumping cases are to be initiated, how the investigations are to be conducted, and the conditions for ensuring that all interested parties are given an opportunity to present evidence. Anti-dumping measures must expire five years after the date of imposition, unless an investigation shows that ending the measure would lead to injury.

Anti-dumping investigations are to end immediately in cases where the authorities determine that the margin of dumping is insignificantly small (defined as less than 2% of the export price of the product). Other conditions are also set. For example, the investigations also have to end if the volume of dumped imports is negligible (i.e. if the volume from one country is less than 3% of total imports of that product — although investigations can proceed if several countries, each supplying less than 3% of the imports, together account for 7% or more of total imports).

The agreement says member countries must inform the Committee on Anti-Dumping Practices about all preliminary and final anti-dumping actions, promptly and in detail. They must also report on all investigations twice a year. When differences arise, members are encouraged to consult each other. They can also use the WTO’s dispute settlement procedure.