China, EU and Anti-dumping – It’s showtime

[At Game of Trade, we are very happy to kick-start New Year 2017 with a guest post by Garima Prakash who is currently an LL.M. candidate at IELPO, University of Barcelona. In this post, Garima questions the WTO consistency of the recently proposed amendment to EU’s anti-dumping regulation. The post is both timely and relevant in the context of the controversy surrounding the expiry of paragraph 15 (a) (ii) of China’s Accession Protocol]

China recently filed a complaint in the WTO against the EU & the US over use of analogue country method in anti-dumping investigations. China’s complaint has come right after the expiry of paragraph 15 (a) (ii) in China’s Accession Protocol (hereinafter ‘Accession Protocol’) that allows China to be treated as a Non-Market Economy for antidumping investigations. While the implication which the expiry of paragraph 15 (a) (ii) would have on China’s market economy status is itself debatable, in another recent development the EU has proposed an amendment to its anti-dumping regulations which would allow Europe to continue using analogue country method to assess dumping irrespective of the market economy status of exporting countries. In this post, I argue that the proposed EU amendment regulation is inconsistent with WTO law.

The existing anti-dumping laws of EU in particular paragraph 7 (a) of Regulation (EU) 2016/1036 (hereinafter ‘basic EU AD law’) features China in the list of countries subject to analogous country method for calculating normal value in antidumping investigations. Meaning, China is treated as a non-market economy (hereinafter ‘NME’). The consequence of treating a particular country as an NME is that in conducting dumping investigations against NME countries, EU can disregard domestic prices in NMEs and use alternate methodologies such as analogue country method to construct the normal value of goods. Use of analogue country method leads to a higher constructed normal value (and consequently a higher dumping margin) which is why countries like China are disadvantaged in dumping investigations. In November 2016, the European Commission proposed an amendment to its anti-dumping law in response to over-capacity in industrial sectors due to NME practices and state intervention. EU’s proposed law, which amends inter alia paragraph 7 of the basic EU AD law and inserts a new paragraph 6a, is agnostic with respect to the market economy status of any country; in other words, EU’s proposed amendment regulation could potentially be applied to a country like China where significant distortions in domestic prices exist irrespective of the country’s market economy status. The proposed amendment will come into effect if and when it is passed by the European Council and European Parliament. However, the consistency of this proposed law (hereinafter ‘proposed amendment regulation’) with WTO law is questionable for the following reasons:

  1. Article 6a (a)

Article 6a (a) provides for the mechanism to construct normal value when it is not appropriate to use domestic costs and prices in the exporting country due to the existence of significant distortions. It says that, “the sources that may be used include undistorted international prices, costs, or benchmarks, or corresponding costs of production and sale in an appropriate representative country with a similar level of economic development as the exporting country, provided the relevant cost data are readily available” (emphasis supplied).

Article 6a (a) is inconsistent with WTO obligations arising under Article VI:1 (b) GATT 1994 and Article 2.2 Agreement on Implementation of Article VI of the GATT 1994 (Anti-Dumping Agreement or ADA), to the extent that it allows for use of ‘undistorted international price’ and ‘costs of production and sale in an appropriate representative country’ for the construction of normal value.

Article VI:1 (b) GATT 1994 read with Article 2.2 ADA allow for two methods that can be employed if domestic price in the exporting country is not appropriate or available to use in determining normal value: firstly, comparable price of a like product when exported to an appropriate third country, secondly, cost of production in the country of origin plus reasonable selling, governance and administrative costs. It does not allow for cost of production in a third country or the international prices of the product.

As noted by the Panel in EU – Biodiesel (paras 7.255-7.260), it is established that the use of international price instead of the domestic price of the exporting country in order to remove perceived price distortion is inconsistent with the aforementioned WTO provisions. The Appellate Body further clarified,

“When relying on any out-of-country information to determine the “cost of production in the country of origin” under Article 2.2, an investigating authority has to ensure that such information is used to arrive at the “cost of production in the country of origin”” (paragraph 6.82 of the Appellate Body report, EC-Biodiesel).

It is hard (almost impossible) to comprehend how the use of international price as the basis for constructing normal value will amount to a ‘cost prevailing in the country of origin in the construction of the normal value’; this makes Article 6a (a) of the proposed amendment regulation  inconsistent with the relevant GATT and ADA provisions. Also, using cost of production in an appropriate third country (as opposed to export prices to a third country), does not amount to arriving at ‘cost of production in the country of origin’.

  1. Article 6a (b)

Article 6a (b) provides the criteria for determining when ‘significant distortions’ will be said to exist. It says, “In considering whether or not significant distortions exist regard may be had, inter alia, to the potential impact of the following: the market in question is to a significant extent served by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country; state presence in firms allowing the state to interfere with respect to prices or costs; public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces; and access to finance granted by institutions implementing public policy objectives” (emphasis supplied).

Second Ad note to GATT Article VI: 1 provides that a comparison with domestic prices for construction of normal value may not be appropriate in cases of imports from countries which have a complete or substantially complete monopoly over its trade and where all domestic prices are fixed by the state. The situation of distortions to the extent that domestic costs and prices cannot be considered in determining normal value, has been stipulated by this second supplementary provision to Article VI:1.

It is clear that a very high threshold has been set by the drafters in allowing any derogation to be made from using domestic prices for determination of normal value. The standard laid down in the proposed EU AD law for derogation (from using domestic prices) seems to be fairly lower than that laid down in second Ad Note to GATT Article VI: 1. ‘Interference with respect to prices and costs’ and ‘policy supervision or guidance of state’ do not confer the same level of government involvement as in ‘all domestic prices are fixed by the state’. Therefore, it is inconsistent with the relevant WTO provisions.

At best, the criterion for significant distortions may be relied upon to establish that a particular market situation (as envisaged in Article 2.2. ADA and Article 2 (3) of the basic EU AD law) exists and thus domestic sales prices cannot be considered as normal value. However, even in such a case, either a constructed normal value based on domestic cost of production or prices of export to appropriate third country should be used to determine the normal value. Establishing a particular market situation will still not give legal basis to construct normal value based on international prices or cost of production in third country.

EU’s proposed amendment regulation & Article 15 of the Accession Protocol:

Article 15 of the Accession Protocol, as it currently stands, allows for WTO members to presume NME status for China. Under Article 15 (a), it is for the producers of the Chinese goods under investigation to show that market economy conditions prevail, in order to make it mandatory for a WTO member to use Chinese costs or prices for determining normal value. Under the basic EU AD law, EU treats China as a Non-Market Economy. With the repealing of Article 2 (7) (b) of the basic EU AD law (as per the proposed amendment regulation), it has been made clear that EU will no longer presume China to be an NME.

The proposed EU AD laws will bring EU’s anti-dumping laws in line with what is expected to be the law regarding treatment of China in anti-dumping cases after the expiration of Article 15 (a) (ii) of the Accession Protocol for the following reasons:

  1. Expiry of Article 15 (a) (ii) does not imply granting of an automatic Market Economy Status to China. Article 15(d) only sets an expiry date for paragraph (a) (ii). This means that paragraph (a) (i) and the chapeau to (a) will still continue to apply. Chapeau to Article 15(a) states that, “…the importing WTO Member shall use…a methodology that is not based on a strict comparison with domestic prices or costs in China if…” This clearly establishes the possibility of not using Chinese domestic prices in some situations (even after the expiry of paragraph (a) (ii)).
  2. It may also be argued that the expiry of (a) (ii) will change the burden of proof. Before expiry, the burden was on the Chinese producers to prove that market economy conditions prevailed in China. After expiry, it is the importing country which must prove the Chinese firms still operate under non-market economy conditions. However, it is my submission that the burden of proof will not shift after expiry because of the presence of paragraph (a) (i), which puts the burden on the Chinese producers to prove that market conditions prevail, by stating, “If the producers under investigation can clearly show that market economy conditions prevail in the industry producing the like product…”
  3. According to O’Connor, the expiry of paragraph a (ii) does not automatically confer on China a market economy status and should only be interpreted to mean that the specific comparison methodology listed in paragraph a (ii) would no longer apply. As noted by Laura Puccio, due to the presence of the phrase, ‘under the national law of the importing WTO Member’, in the first and third sentence of article 15(d), market conditions in China will need to be proved according to the domestic law of the importing country, i.e., article 6a (b) of the proposed EU amendment regulation to determine whether China should be treated as an NME in dumping investigations.

What remains to be seen is what will come out of the complaint by China (DS516) regarding the calculation methods used in anti-dumping proceedings. China had been waiting for just this moment to bring up this dispute, everything was prepared and thought of. Paragraph 15 (a) (ii) of the Accession Protocol expired on December 11, 2016. Notification for request for consultations with EU and US was sent right the next day. Some say that China had on many occasions signalled this upcoming dispute, and that the ‘consultations’ are a mere formality. This is going to be a landmark in the history of WTO dispute settlement as it involves the three most trade intensive countries of the world. Law, politics and tactics would each play their part. Is the WTO system designed to handle such intensity of pressure and politics?

[The author can be contacted at]

Call for Papers: Indian Journal of International Economic Law [Deadline: 10th Feb, 2017]

The Board of Editors of the Indian Journal of International Economic Law (IJIEL) is pleased to invite original and unpublished manuscripts for publication in Volume 9.

About the Journal

The IJIEL is a student-edited and peer-reviewed law journal published annually by National Law School of India University, Bangalore (NLSIU). The previous volume of the journal featured contributions by Prof. Raj Bhala (Rice Distinguished Professor, Associate Dean for International and Comparative Law, Kansas School of Law) and Rodrigo Polanco (Researcher, Lecturer and SNIS/SECO Project Coordinator at World Trade Institute) among several others. We have also published articles by luminaries in the field such as Faizel Ismail, Enrico Baffi, Lotta Viikari, Rafiqul Islam, G.R. Bhatia, Michelle Sanson, Jason R. Bonin Dr. Rafael Arcas & Colin Picker; and forewords by Prof. Jagdish Bhagwati and Prof. Stephen Hobe in the past. Further information may be obtained here.


The Journal is an endeavour to encourage scholarship in the field of international economic law. This includes (but is not necessarily limited to) research concerning the WTO, financial institutions, regulatory subjects such as taxation and competition policy, services sectors such as banking and brokerage and international commercial arbitration. Further, the Journal is oriented towards publishing academic work that considers the aforementioned issues from a comparative perspective and/or the perspective of the developing world.

Submission Categories

  1. Articles (5000 to 10000 words, exclusive of footnotes)- Papers that comprehensively analyse  a theme and engage with all the existing literature on it.
  2. Essays (3000 to 5000 words, exclusive of footnotes)- Papers that concisely analyse specific contemporary issues in international economic law.
  3. Case notes and/or Legislative Commentaries (2000 to 7000 words, exclusive of footnotes).

Guidelines for Submissions

  1. The Journal reviews submissions on a rolling basis. The deadline for sending submissions for the forthcoming volume is February 10, 2017.
  2. Submissions must be made in electronic form to under the subject heading ‘IJIEL Vol. 9 Submission: .
  3. All submissions must be in MS Word format (.doc) or (.docx), with Times New Roman font (Main text: 12, footnotes: 10) and double-spaced.
  4. All manuscripts must be accompanied by:

(a) A covering letter with the name(s) of the author(s), institution/affiliation, the title of the manuscript and contact information should be provided.

(b) An abstract of not more than 200 words should be provided.

  1. Co-authorship (upto 3 authors) is permitted.
  2. No biographical information or references, including the name(s) of the author (s), affiliation(s) and acknowledgements should be included in the text of the manuscript, file name or document properties. All such information may be incorporated in the covering letter accompanying the manuscripts.
  3. The IJIEL uses only footnotes (and not end-notes) as a method of citation. Submissions must conform to the Bluebook.

For any clarifications, please contact us at


To know more about the journal, visit this link.

Important Call for Papers (International Trade & Investment Law)

1. Trade Facilitation & the WTO, NLU Odisha:

Center for International Trade Law of National Law University Odisha (India) proposes to bring out an edited book comprising of papers reflecting the views of different authors on the issue of trade facilitation under WTO. The papers may critique the Agreement on Trade Facilitation or any aspect of the same or highlight developments / problems in various jurisdictions on the issue.

The book would be edited by Prof Jane Winn and Prof. Sheela Rai. Prof Jane Winn is a Professor of Law at the University of Washington School of Law, Seattle, Washington since 2002. She is a leading international authority on electronic commerce law as well as regulatory governance issues arising from technology innovation in global markets.

Prof. Sheela Rai is a Professor of Law at National Law University Odisha. Apart from papers in leading national and international journals she has authored three books; Recognition and Regulation of Antidumping Measures Under GATT/WTO(Eastern Book Company, 2004).

Deadline: 30/9/2016

Papers can be submitted at Papers should be within 6000 words, typed in Times New Roman. For footnoting OSCOLA citation style may be adopted. Papers should be accompanied by an abstract of 150 words.
2. International Law News, ABA Section of International Law
Theme: Trade Partnerships,mincluding the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP)

International Law News (ILN) publishes high-quality submissions on topics of interest to international law practitioners, researchers, and students. ILN editors are interested in articles addressing each issue’s theme, but articles on other topics are also appreciated.

To submit an article or ask questions about the process, e-mail Contract Editor Lori Lyons at

Please attach your article submission as a Word document and provide each author’s name and email address. ILN does not publish footnotes or endnotes; please embed important cites within your text. You may also refer to the ILN Author Guidelines.

  • Feature articles are typically 2,000–3,000 words in length; short “Briefly Noted” articles of about 400–650 words may also be submitted.
  • ILN editors are seeking interviews with notable contributors to the field of international law for our “ILN Interviews” column. If you would like to interview someone, please submit your idea for Editorial Board approval.
 Winter 2017 Issue Deadline: November 1, 2016


3. Call for Papers on Cultural Heritage (and Trade and Investment)

The Scientific Committee of the international Conference ‘UNESCO World Heritage Between Education and Economy – A Legal Analysis’ is calling for paper proposals on the following topics:

I) Cultural Heritage and its Meaning;

II) Cultural Heritage & Investment Law;

III) Cultural Heritage and World Trade Law;

IV) Education & Tourism.

The international Conference will be held in Ravenna, on October 27-28, 2016

Please email abstracts and CV to: ; ; ; ; before August 19, 2016.

The full call of papers is available at:

Should you need any further information please contact Maria Laura Marceddu:


IIFT’s Summer School in International Trade Law

This summer, I attended a four-week long summer school in international trade law because it seemed like a fun way to gain expertise in another area of law and a good getaway from the Chennai summer.

Every year, the Centre for WTO Studies (an independent think-tank on WTO law which is housed at the Indian Institute of Foreign Trade, Delhi) conducts a one month intensive academy on International Trade Law & Policy. The Academy is conducted by CWS jointly with the World Trade Institute in Berne, Switzerland.

This year the Academy was conducted from 23rd May to 17th June. What drew me to the course was the eclectic mix of modules on offer: Basic Principles of GATT/WTO; Agreement on Agriculture; SPS & TBT; Trade & IPR; Trade Remedies; Investment Law; and Trade in Services. The faculty that was reigned in for this module comprised international trade experts, policy-makers, lawyers, WTO staff and economists; many of the resource persons teach the Master of International Law & Economics  (MILE) programme and the International Economic Law & Policy (IELPO) programme at WTI and the University of Barcelona respectively; both these programmes are highly coveted among persons looking to specialize in International Trade.

The course accommodates 30 students and law professionals every year and the process for short-listing candidates is through an essay on a topic related to International Trade. The course fee is 10,000 for students and 25,000 for legal professionals. There were two modules offered every week (except for Week 3 which was solely devoted to Trade Remedies) from Monday to Friday, with each module covered in 2-3 days. Legal professionals had the option to choose which weeks they want to attend the course (depending on which module was of interest to them) and alternately pay 7000 per week instead of attending the full course. Radhika & I decided to attend the entire duration of the course.

 We arrived in Delhi a day before the course was to begin; participants who were not from Delhi were provided accommodation in the IIFT hostel on a twin/triplicate sharing basis on an additional payment of 5,000 per person. Radhika & I had a room to ourselves which was actually quite spacious with an en suite bathroom shared between two hostel rooms.

My first day was quite memorable…we arrived in Delhi on 22nd afternoon in the midst of infernal summer heat (it had actually been raining in Chennai a few days before we were to leave for Delhi) and I found myself wondering whether we had indeed made the right decision to take a month-long break from our work to attend the summer school.

When I look back, I think that my apprehension at that time stemmed from the change that those 30 days would prove to be in my life…this was another instance when I was moving out of my comfort zone to venture in the unknown…I didn’t know at the time that the summer school was the best thing that could have happened to me!

While in my hostel room, I already started feeling home-sick for Chennai and I missed the familiar warmth of my place in Chennai…it was then that I saw a poster which was stuck in my hostel room:

“When I am sad I stop being sad and be AWESOME instead” [Quote by one of the characters in ‘How I met your mother’]

Sometimes the right words at the right time can be very powerful. It struck me in that moment that I could choose to either continue feeling down, or I could use my time at IIFT to do something purposeful…

A few days before the Academy was to start, participants were given access to a ‘Virtual Classroom’ where the readings for each module had been hosted. Participants were expected to read and come to class (this is the teaching pedagogy which is adopted in most universities abroad, where students do compulsory readings before a topic is discussed in class). I spent the remaining day doing my readings for the class on 23rd…at night, the weather grew stormy and it rained…this really lifted my mood and things really started to look up.

When I got up the next morning, I went for a short walk in the IIFT campus. While the campus itself is quite small, it is quite green and there is a beautiful garden in IIFT. I was much more positive about the course and I looked forward to my first class that morning.

When I entered the hall where the classes were to be conducted, I was really amazed to see that it was nothing of the sort of classrooms that we are so accustomed to in college…the hall was more like a conference room arranged to seat course participants in two concentric semi-circles, facing the lectern. It made us feel even more important to see our name plates at our seat.

The Academy opened with the first module on ‘Basic Principles of GATT/WTO’. The resource person for the module was Mr. Jan Bohannes, who has worked previously at the WTO, and is currently a lawyer at the Advisory Centre on WTO Law in Geneva. Half way into the first class, I knew that I was going to enjoy my time in the summer school. Unlike the lecture method of teaching that we are used to in Indian universities, classes in the summer school were quite interactive. The participants were a diverse mix of law students & professionals…there were students from various law schools in India (while most were pursuing their undergraduate studies, there were also students who were pursing their Masters or M.Phil). The class also had two participants from Afghanistan and one from Poland, making it “international” in the true sense. For some people, their previous exposure to International Trade Law was quite elementary while there were others who were specializing in the subject after studying it at the Masters level or having done fairly well at international trade law moots like ELSA and GIMC.

The classes would normally begin at 9:30 in the morning, with four classes scheduled in a given day. There were tea breaks and lunch during the day, where we were served gourmet-style Indian dishes. The lunch was a grand affair and the participants ate with the resource persons…it was a wonderful experience to be taught by persons who are considered experts in their field; some have even directly negotiated at the WTO and are part of the ongoing negotiations for some of the free trade agreements. Classes would be over by 4:30 every day and on some days, trade talks would be scheduled after classes where resource persons would speak on a contemporary topic in International Trade.

We also had a Career Talk during the summer school where we learned about the different career options in India & abroad for those who interested in pursuing a career in International Trade Law.

I enjoyed every day of the summer school. The classes were quite intensive given that each module had to be covered over a short span of 2-3 days, and I would read for the next day’s class every night. The IIFT library was open on weekdays and weekends. The Centre for WTO Studies has a section to itself in the library and has arguably the best books available in WTO Law and International Trade Law.

I also have fond memories of going to Sanjay Van (an urban forest located right opposite IIFT) where I would run on weekends.

Time really flew and before I knew it, the summer school had come to a close. In that one month, I had learnt far more in International Trade Law than I ever had in college, and I was convinced after doing the course that International Economic Law is a field that I definitely want to explore further and maybe even specialize in some day.

I would highly recommend the course to anyone with an interest in International Trade Law. It is every bit worth your time and money. While we were given participation certificates on the last day itself, we were also given a take-home exam at the end of the course which we had to complete within a month’s time. The idea behind the exam is that if you perform well, your course fee would be refunded (subject to a minimum class attendance requirement).

I got to meet wonderful people through the course and personally too, the summer school was an experience of moving out of my comfort zone. While most people choose to travel to take a break from the stress of their working life, the summer school invigorated me in a way that no holiday could. It introduced me to the wide and exciting field of International Economic Law & gave me better sense of where I want to go in my career.

For more information about the CWS-WTI Joint Academy, click here.

US: The Big Brother Bully

This alliteration refers to the dreaded ‘Special 301’ report which was published by the United States recently, putting India on its ‘Priority Watch List’ (PWL) for the 22nd year in a row. The Special-301 is an annual review of the status of IPR protection and enforcement worldwide and categorizes countries according to the level of IPR protection which they offer. PWL is an honour that is bestowed upon a trading partner, which in the opinion of the US, has “serious intellectual property rights deficiencies” that require the attention of the United States Trade Representative (USTR).

The PWL countries stand the risk of being elevated to Priority Foreign Country (PFC) which refers to countries where the most egregious violations of IPR exist and which harm competition to the US market abroad. The Special 301 derives its name from Section 301 of the US Trade Act of 1974 which gives power to the US to impose unilateral trade sanctions on PFCs.

The Special 301 report has expressed much angst against India for its so-called weak IP protection laws such as compulsory licensing of patented drugs, pre-grant opposition to patent applications and section 3(d) of the Indian Patents Act (a provision to check ever-greening of pharmaceutical patents). India, which is currently a PWL country, stands the risk of being designated a PFC if it does not mend its IP laws in favour of stronger protection for rights holders.

The Special-301 has been criticized worldwide since it violates the WTO obligations of member countries to refrain from exercising unilateral trade sanctions. The proper recourse for the US to take against countries, which thwart US trade, is to file a WTO complaint. Section 301 of the Trade Act allows the US Congress to take action against a country even where the trading partner otherwise fulfils its obligations under the WTO.

While the US cannot impose trade sanctions on PWL countries, the PWL has served as an effective instrument to get countries to toe the line. In 1993 when Taiwan was designated a PWL country it quickly passed the Cable TV law to prosecute video piracy in order to avoid being listed a PFC.

India has maintained a cold response to the Special 301 so far and refused to negotiate with the US over its IP laws. However, the recent developments in patent law practices in India cause one to wonder whether India has indeed stuck to its guns. In March this year, there were allegations that India had privately assured the US against issuing compulsory licences over patented US drugs. These allegations were quickly brushed aside by the Indian government. On 9th May, the Indian Patent Office granted the patent application over Gilead’s blockbuster Hepatitis-C drug, Sovaldi, although it had in an earlier decision rejected the same application on the ground that it failed section 3(d) requirements under the Patents Act. The Sovaldi application has been the subject of much controversy in India due to the lack of transparency in the Sovaldi pre-grant opposition proceedings. India has also been toying with a draft IP policy which has been severely criticised as serving the interests of the US.

It appears that India is gradually caving in to the duress by Big Brother, US. The US approach of putting countries on the PWL can be likened to carrying a stick to have one’s way without actually using the stick. By putting countries on the PWL, the US warns its trading partners that it would ‘use the stick’ (i.e. impose unilateral sanctions by designating the countries as PFC) if they do not change their IP laws to favour the US.

The WTO Dispute Settlement Understanding prohibits not only unilateral trade sanctions but also determinations by member countries that a trading partner has violated its obligation under the WTO. Putting a country on the PWL constitutes a determination by the US that the trading partner does not provide for effective IP laws and such a determination can be challenged in the WTO. The PWL therefore is as illegitimate under the WTO as the PFC list.

The US might argue on a technical ground i.e. that it placed India on the PWL list not because India violated its TRIPS obligations but because of India’s weak IP laws (section 301 allows US to impose sanctions against countries even where they fulfil their TRIPS obligations). To me, this argument is fundamentally flawed because the purpose of having an institution like the WTO in place is to preclude countries from exercising unilateral trade sanctions unless countries have entered into free trade agreements (FTAs) allowing such an action.

India should consider challenging its PWL status under Special 301 in the WTO instead of waiting for the US to designate India a PFC. India’s unique IP laws are consistent with its minimum obligations under the WTO and India should not let the US bully it into changing its IP laws as this might harm access to medicines in India.

For an excellent analysis of arguments that India can use if it challenges the Special 301 in the WTO, read Suzanne Zhou’s article.