Trade Remedies

Trade remedies are tools used by WTO member countries to counteract unfair practices to trade caused by certain actions such as (i) dumping by a foreign entity causing injury to a domestic market, (ii) where a foreign entity receives subsidies which are non-WTO consistent that causes unfair trade to domestic companies who do not benefit from similar treatment, or (iii) to deal with a sudden influx of foreign goods into the market causing injury to the domestic market.

Dumping occurs when a foreign entity sells goods in a domestic market that is below the price that it sells in its home market, and this practice causes injury to businesses in the domestic market. In such scenario, domestic companies can petition the Government to launch an anti-dumping investigation to determine whether ‘dumping’ has occurred, to confirm that ‘injury’ has been suffered by the domestic industry selling like goods, and this was ‘caused’ by the act of dumping by the foreign entity.

Injury can be said to have been suffered if based on the investigation, there are facts to show that there is actual decline in a company’s output, sales, market share, profits, productivity and others. Investigation teams are also required to consider additional data in terms of the effects of the alleged dumping on the business said to have suffered injury in terms of cash flow, inventories, employment, wages, growth, etc. 

WTO member states are required to adhere to strict rules and procedures when investigating complaints, in accordance with disciplines set out under the WTO Anti-Dumping Agreement (or more formally known as the Agreement on the implementation of Article VI of the GATT).  If upon investigation, it is finally determined that dumping has occurred and injury has been suffered, then Governments are able to levy anti-dumping duties to the amount required to counteract the dumping (i.e. usually a duty similar to the margin enjoyed by the foreign entity via dumping). 

Conversely, unfair subsidies are dealt with by WTO member countries via countervailing duties as allowed under the Subsidies and Countervailing Measures Agreement (more commonly known as the SCM Agreement), and safeguard action allowed under the WTO Agreement on Safeguards (Article XIX of GATT).  Similar principles apply in that these agreements allow WTO member countries to impose measures to counteract unfair trade practices caused by a trading enterprise in a foreign state, or by the Government of the foreign state itself. 

At Deloitte, we provide the following assistance to companies who have suffered from an alleged unfair trade practice, or who have been alleged as participating in unfair trade practice and wishes to defend against such investigation:

•  Counselling companies on WTO and domestic rules surrounding dumping and injury;
• Data collation and analysis to determine whether dumping has occurred and injury has been sustained;
• National statistics review to determine other available factors required to be determined and considered by investigating authorities;
• Additional support and guidance required throughout the entire investigative process;
• Working together with company representatives and legal counsel towards effective representation.

For queries or assistance relating to trade remedy assistance, feel free to send us an email through the Get in Touch section below or via the online form on the link at the right.