Comisión Nacional de Comercio Exterior

DESCRIPTION OF UNFAIR TRADE

Dumping and subsidization are considered unfair practices in international trade. They are included in the WTO agreements, and may be subject to compensation measures.

Dumping

A product is considered to be dumped when the export price is lower than the comparable price (normal value) of the same product or a like product in the domestic market of the country of origin.

Frequent reasons to sell dumped merchandize are:
- International price discrimination, that is to fix different prices according to the action determined for the different markets;
- Price promotion policies, in order to win a market by means of this incentive for consumers to adopt the product;
- Predatory price policies, that is the practice of selling at a loss for some time in order to move competitors out of the market.
- Export subsidies

Subsidy

The practice of making exports which receive a benefit from subsidies is considered unfair in international trade and may be responded with the application of countervailing duties.

A product is considered to be subsidized when the producer-exporter receives a benefit from “a financial contribution by a government or any public body”, or when “there is any form of income or price support” implying a benefit. These actions would allow the placement of the products in the Argentine market at a lower price. These subsidies should be “specific to an enterprise or industry or group of enterprises or industries” from which these products come.

Exemption of duties or taxes levied on the like product in favor of the exported product shall not be considered as a subsidy when the product is destined for domestic consumption, or when the rebate (refund) of these duties or taxes do not exceeds the total payable or paid.

A subsidy shall be deemed countervailable, that is to say, that a countervailing duty may be applied, if it is specific for certain firms or industries. The access to the benefit must me limited, by regulation or as a result of the start up, to certain firms within a geographic region. Subsidies that have as a requirement that the products be destined for export are also considered specific subsidies.

As a guiding rule, we can say that dumping begins in a decision among individuals, whereas a subsidy, irrespective of the form it takes, has its origin in a government decision.

Injury and Causality

The existence of dumping or subsidy is not enough to apply measures. In order to do this, it is necessary to determine the existence of injury to the domestic production and that this injury is caused by dumped or subsidized imports.

Injury to domestic production refers to both existing material injury and a threat thereof which is real and imminent, as well as material retardation of the establishment of an industry. An injury determination must be based on facts and objective information and not on mere conjectures or remote possibilities. Therefore a detailed exam of the following should be made:

- volume of dumped or subsidized imports and the impact on prices of a like product in the domestic market, and
- the resulting effect of those imports on domestic producers of the like product.

Measures that can be adopted in order to remedy the effects of dumping and subsidy practices are:

DUMPING -------> ANTIDUMPING DUTIES
SUBSIDIES -----> COUNTERVAILING DUTIES

RECIPIENTS OF PROTECTION AGAINST UNFAIR TRADE PRACTICES

An application for an investigation of unfair trade practices should be made by or on behalf of the domestic industry alleging injury caused by the imports mentioned. The terms national production, domestic production, national industry, and domestic industry, shall be use indistinctly, as referring to the group of domestic producers of the like products or to those whose joint production represents a significant part of the domestic production. An application submitted by a firm or group of firms shall be deemed by the authorities to be representative of the industry if it has a significant support by the other local producers of the industry.

Therefore, the agreement on implementation of article VI, approved by Law 24,425, provides that “the application shall be considered to have been made "by or on behalf of the domestic industry" if it is supported by those domestic producers whose collective output constitutes more than 50 per cent of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application. However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25 per cent of total production of the like product produced by the domestic industry”.

The procedure of an injury investigation is transparent and assures the defense of all interested parties (producers, importers, exporting country, exporters, foreign producers and final and intermediate consumers) who, once accredited as interested parties, may participate in the investigation submitting relevant evidence.

SEQUENCE OF AN INVESTIGATION

Application

Domestic producers affected by unfair traded imports may contact the Direction of Unfair Trade (in Spanish: DIRECCIÓN DE COMPETENCIA DESLEAL) at the Under Secretariat of Trade Policy and Management or the National Foreign Trade Commission (in Spanish: COMISIÓN NACIONAL DE COMERCIO EXTERIOR “CNCE”), which give information and advising about the application of an investigation on unfair trade practices and safeguard measures.

Contact details for these agencies are:
Direction of Unfair Trade (in Spanish: DIRECCIÓN DE COMPETENCIA DESLEAL), Diag. Julio A. Roca 651, floor 6º, City of Buenos Aires, C1067ABN. Phone: 00 54 11 4349-3949/3948.
National Foreign Trade Commission (in Spanish: COMISIÓN NACIONAL DE COMERCIO EXTERIOR “CNCE”), Ave. Paseo Colón 275, floor 7º, City of Buenos Aires, C1063ACC. Phone: 00 54 11 4348-1738/1720/1710/1784.
At an advisory meeting, technical staff from both agencies shall:

Explain all necessary requirements to proceed to the investigation, all information required to this effect, and the procedure of the investigation.

Cooperate in the searching of necessary information and assist the firm in the filling of the corresponding forms.

Facilitate the access of firms to the domestic market statistics and data for the country of origin or exporting country, necessary to the normal value determination.

Advisory Meetings:

It must be made prior to the formal application and it is a requirement for the application to be admitted.

In each Advisory Meeting a written record including observations noted by each agency to the application draft shall be made.

All necessary Advisory Meetings shall take place in order to remedy observations noted by the corresponding technical staff.

Once the draft is free from observations, a written record stating this situation shall be signed and, after this, the petitioner may make the formal submittal of the application, giving initiation to the calculation of time periods set forth in Decree Nº 1393/08, regulated by Resolution SICyPyME N° 293/2008.

The firm may initiate the procedure; it is not a requirement to contract legal assistance.

The assistance and cooperation shall continue during the whole investigation.

Petitions for an investigation shall be made in the name or on behalf of the domestic industry, accrediting legal capacity, and submitting sufficient evidence of dumping or subsidy and injury, as well as causality.

The application can also be made by Chambers, Federations and/or Associations, enclosing the corresponding supporting documents.

To see Forms >>

3.Once the corresponding form is filled in, the original and a copy, plus the corresponding magnetic media, must be submitted at the Front Desk of the Secretariat of Industry, Trade and of the Small and Medium sized Enterprises, at Ave. Julio A. Roca 651, Ground Floor, Sector 6. This document shall include the justification of the legal standing claimed, when possible, with a certification by the Association, Chamber, Federation or the corresponding representing trade body.
In the case that a piece of information requested from a firm may be considered strategic information and that its dissemination may cause injury, the firm can request confidential treatment. The firm shall justify the reason for this treatment and submit a non-confidential summary of the information in order to be included in the file. This confidential information will not be included in the file and will be accessed only by technical staff assigned to the investigation and by the Board of Directors of the Commission.

Upon receipt of the petition, the Secretariat on Industry, Trade and SME remits the original presentation and the magnetic media to the Under Secretariat, and a certified copy with the corresponding magnetic media to the Commission, within a term of 2 (two) working days, without extension.
Upon receipt of the petition, the Commission and the Under Secretariat have five (5) working days to inform about errors and omissions in the presentation, in order that the petitioner may correct deficiencies, if any.

When the petition does not show formal errors or omissions, or when these have been corrected, the Commission shall inform the Under Secretariat about the domestic like product, and on the legal standing of the petitioner, within a time period of ten (10) days.

The Under Secretariat shall inform within a period of two (2) working days the admission of the petition to the Commission and the Petitioner: But if the Commission report determines that the preceding requirements had not been fulfilled, the Under Secretariat shall inform both the Commission and the Petitioner the rejection of the application and the filing of proceedings.

If the petition is accepted, the Under Secretariat has ten (10) days to examine the evidence submitted on dumping or subsidies and to inform the decision to the Commission. At the same time, upon request of the previous report, the Commission has ten (10) days to submit its determination on injury to domestic industry and causal link between injury and dumping or subsidy, to the Secretariat of Industry, Trade and SME, and a copy to the Under Secretariat. The Under Secretariat shall submit to the Secretariat its recommendation on the initiation of the investigation within a term of three (3) working days. The Secretariat, upon receipt of this report, within a period of ten (10) working days, shall make a decision on whether the initiation of the investigation should be granted or denied within the following five (5) days. The decision will be published in the Official Bulletin.

Investigation

Once the decision of initiation is published in the Official Bulletin, the Commission and the Under Secretariat send, within the period of ten (10) days following the initiation, questionnaires to producers, exporters and importers. These questionnaires shall be returned to the Commission and to the Under Secretariat with the supporting information and magnetic copy within a period of thirty (30) days upon its reception.
With the information from questionnaires and available evidence, the Under Secretariat makes a Preliminary Report on Dumping or Subsidy, within a period of a hundred (100) days as of the initiation, whereas the Commission makes a Preliminary Determination on Injury and Causal Link, to be submitted within a period of one hundred and ten (110) days as of the initiation of the investigation. These preliminary determinations are submitted within a term of five (5) days by the Under Secretariat to the Secretary of Industry, Trade and SME. The Secretariat shall recommend to the Ministry of Production the imposition of provisional measures, if these are deemed necessary to avoid injury during the investigation.

Provisional measures may be in the form of a guarantee, and shall be in effect for a maximum of four (4) month period, which may be extended provided the conditions of the Agreements are fulfilled.

Before closing the investigation, members of the technical staff of the Commission may visit mills and offices in order to verify the information provided in the questionnaires. Therefore, it is recommended to keep all supporting papers and documents (invoices, production records, inventory books, etc.).

If deemed necessary, the Commission may call a hearing or a meeting of parties, in order to inquire the parties about questions arising from the procedure, to allow the parties to question or refute another party about the information, data and evidence submitted, and to question third parties regarding the issues under investigation.

Finally, the Under Secretariat, within a period of two hundred and twenty (220) working days after the initiation date, and the Commission, within a period of two hundred and fifty (250) working days after the initiation date, shall make their corresponding determination, on dumping or subsidy in the case of the Under Secretariat, and on injury and causal link in the case of the Commission. The Undersecretary submits to the Secretary its recommendation about dumping or countervailing duties to be imposed, and the Ministry of Production shall take the decision whether to impose such measures or not. The investigation shall be terminated within the period of ten (10) months after the date of initiation. This period may be extended under special circumstances and according to the maximum time periods set forth in the Agreement.

Measures

Once the investigation is closed, if the Under Secretariat determines the existence of dumping or subsidy, and the Commission determines the existence of injury to the domestic industry and the causal link between injury and dumping or subsidy, the Ministry of Production may impose dumping or countervailing duties.

Measures may have a maximum duration of five years, with annual reviews; and they may be imposed retroactively up to ninety (90) days from the date provisional measures were imposed, but they cannot exceed the date of initiation of the investigation. It is important to point out that although the determinations by the Commission and the Under Secretariat are the technical basis for the imposition of measures, an affirmative determination does not necessarily mean that the Ministry will decide to impose a measure, since in the final decision the Minister shall take into account other relevant elements, such us the general public interest or the interest of consumers and users of the subject product.