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Provisional anti-dumping measures in India – A misused provision

By T.D. Satish

An anti-dumping investigation normally stretches for a period of 12 months, which upon due cause shown may continue up to 18 months from the date of initiation of the investigation. In order to prevent injury being caused to the domestic industry during this period, it may be necessary to give some form of interim protection. In such cases, investigating authorities may make a preliminary determination and impose provisional measures.

Article 7 of Agreement on Anti-Dumping (“ADA”) regulates the imposition of provisional anti-dumping measures by member-countries. Rule 12 and Rule 13 of the Indian anti-dumping rules also adopt Article 7 and provide a mechanism for recommending provisional measures and implementing the same.

Preliminary finding issued recently by the Indian anti-dumping authority (“DGAD”) in the case of Cast Aluminum Wheels from Thailand, China, Korea and Taiwan [see end note 1] has opened up an issue of the time limits, if any, for issuing the preliminary findings.  In this regard, it is worth looking at Rule 12 and Rule 17 of the Indian AD rules:

“12. Preliminary findings. - (1) The designated authority shall proceed expeditiously with the conduct of the investigation and shall, in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping, and in respect of imports from specified countries….

17. Final findings. - (1) The designated authority shall, within one year from the date of initiation of an investigation, determine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding……

Provided that the Central Government may, [in its discretion in special circumstances], extend further the aforesaid period of one year by six months.” 

Among other things, Rule 12(1) requires DGAD to proceed expeditiously with the conduct of investigation and in appropriate cases, record a preliminary finding. On the other hand, Rule 17 requires DGAD to submit final finding to Central Government within one year from the date of initiation.

The questions

Thus, the first question that merits attention is whether the word ‘expeditiously’ holds any relevance under Rule 12? Secondly, can DGAD recommend imposition of provisional measures beyond the normal period of 12 months prescribed under the provisions for completing an investigation?

Understanding ‘expeditiously’

Rule 12 requires DGAD to proceed with the investigation expeditiously. The term ’expeditiously’ used in Rule 12 denotes ‘swiftness’ and ‘promptness’ required to conduct the investigation. In a prompt investigation conducted by DGAD, only if there is a need for interim protection to the domestic industry, , DGAD may make a preliminary determination. For application of Rule 12, duty has been cast on DGAD to be prompt in its investigation. Expeditious investigation requires DGAD not to linger the investigation unnecessarily beyond the normal prescribed period. However, when such an investigation extends beyond the prescribed period of one year, it automatically means that the investigation conducted by DGAD is not prompt. Thus, only if the investigation is prompt, DGAD may be justified in recommending provisional duties.

Another significance of the term ‘expeditiously’ appearing in Rule 12 specifically could be to direct DGAD to conduct preliminary examination promptly and determine whether there is a need to impose provisional anti-dumping duty. After all, the very purpose of a provisional measure is to give interim protection to the injured domestic industry party, where completion of investigation may take a longer time.

In the absence of any specific provision prescribing the upper limit for recommending or imposing a provisional measure, DGAD gets a wide discretion to recommend provisional measure any time before the final determination, which may even exceed normal one year prescribed under Rule 17. Such a delay in making preliminary determination may in turn lead to uncertainty in the market, which may distort the market conditions further.

Obviously, the very purpose of recommending a provisional measure is lost if such a recommendation is made at the fag end of the normal prescribed time limit and not somewhere in between. The term ‘expeditiously’ under Rule 12 has not been interpreted so far by any court.  The WTO Dispute Settlement Body also has not made any observation on the promptness with which any preliminary determination shall be issued. However, jurisprudence can be developed by examining the standards set by other members of WTO. European Union for example, has an express provision that no provisional anti-dumping measure can be imposed beyond 9 months from the date of initiation of investigation [see end note 2]. Thus, European Union has  prescribed a definite time frame within which preliminary findings shall be issued. Such time frame is absent in the Indian law.  However, one has to give a harmonious interpretation of Rule 12 and Rule 17.  This means the preliminary determination shall be made promptly by DGAD and in any case, before final determination, that is, one year from the date of initiation.

Preliminary findings after one year?

Second issue that crops up is whether DGAD is justified in recommending provisional duties even after the lapse of original time period granted under Rule 17. There is no time limit for issuance of preliminary findings under Rule 12. However, there is a definite time limit prescribed for issuing the final findings by DGAD under Rule 17 of anti-dumping rules, which clearly provides that DGAD has to come out with a final determination within one year from the date of initiation of investigation. Thus, by law, there is an upper limit prescribed for coming out with final findings.

It must be noted that Rule 17 governs issuance of final findings by DGAD and not the preliminary findings. Logically, if there is an upper limit prescribed for issuance of final findings, it should automatically apply to preliminary determination as well.

The ‘extra time’ of 6 months has been granted to DGAD to complete the investigation under the proviso to Rule 17.  The proviso will apply only with respect to the issue covered in the main provision.  Since Rule 17 deals with final determination, the proviso will be applicable only for issuing the final finding. The additional time granted under the proviso to Rule 17 for issuing final findings cannot be interpreted to provide additional time for issuing the preliminary finding under Rule 12.  The word ‘expeditiously’ appearing in Rule 12 cannot be interpreted to authorize the DGAD to issue preliminary findings in a non-expeditious manner.

Further, when the investigation is not completed within 12 months period, the Indian Government grants a specific extension of time for completing the investigation and issuing the final findings pursuant to the proviso to Rule 17.  Such permission is only with regard to issuing the final findings and not with regard to preliminary findings. Therefore, DGAD cannot use the extension of time granted by the Indian Government to issue a preliminary finding.

In Aluminum Wheels case, DGAD has been granted extension of 3 months, ending on 9th March 2014. DGAD made a preliminary determination on 13th January 2014, that is, 13 months after initiation and less than 2 months before the expiry of extended time period of time as well. This is not the first time DGAD has extended its discretionary arm beyond the normal period. Though DGAD does not normally recommend provisional measures after one year, however, in 6 investigations so far, DGAD has come out with a determination after one year and has made such belated determination only once in last 5 years. Though such belated provisional determinations may be rare, they still exist and reflect the extent of discretionary power vested with DGAD to use the provision in favor of the domestic industry. On the face of it, preliminary recommendation made by DGAD in this particular case seems to be incorrect.

To conclude

From the point when an anti-dumping investigation is initiated, the international trade with respect to such product gets distorted. Thus, prompt and expeditious investigation by DGAD becomes essential. Since the investigation invariably stretches beyond one year, the injured domestic industry may require some level of interim protection during that period when investigation is ongoing. However, recommending a provisional duty after investigation has already run its race beyond the normal period prescribed, may at one hand not provide any adequate protection to domestic industry, which already has suffered irreversible damage during the interim period and on the other hand, it will only cause further distortion in the market as buyers will be more averse to imported products, which may anytime be subjected to anti-dumping duty. Given the open ended and unclear legislation with respect to preliminary determination, which gives DGAD a chance to abuse its discretionary power, the only way out is to make a specific provision putting an upper limit for imposition of provisional measures. Until such time, the fate of exporters will remain in a limbo and may receive shock treatment at any moment with a provisional determination, even after expiry of normal time period prescribed.

[The author is a Senior Associate, International Trade Team, Lakshmikumaran & Sridharan, New Delhi]

End Notes
  1. Preliminary finding dated 13-Jan-2014 
  2. Article 7(1) of Council Regulation (EC) No 1225/2009
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