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The application of public interest tests by trade remedy authorities

The TRA has recently recommended that anti-dumping duties on rebar from China should be revoked on the grounds that maintaining them is not in the UK economic interest. This conclusion was made despite the fact that the TRA also found that imports are likely to be dumped and likely to cause injury. A separate blog post discusses the detail of this determination. This article considers the extent to which other countries use public interest tests and compares this to the economic interest and public interest provisions in the UK.

The analysis below focuses on anti-dumping duties. However, identical points apply in relation to countervailing duties and, at least to a large extent, to safeguard measures.

Does the WTO require a public interest test?

The WTO anti-dumping agreement has no specific requirements on any form of public interest analysis.

There is a provision that requires investigating authorities to provide opportunities for those that will be negatively affected by an anti-dumping duty (e.g. users and consumers) to provide information. Article 6.12 of the WTO anti-dumping agreement states:

The authorities shall provide opportunities for industrial users of the product under investigation, and for representative consumer organizations in cases where the product is commonly sold at the retail level, to provide information which is relevant to the investigation regarding dumping, injury and causality.

However, this is not really a public interest provision. Article 6.12 only envisages these parties providing information on dumping, injury and causality and not on the extent to which their interests would be damaged if anti-dumping measures were to be adopted.

Thus, a compulsory public interest test is one of several non-mandatory elements in UK legislation.

There are no WTO obligations to impose trade remedy measures, even if the necessary conditions are met

Article 9.1 of the WTO anti-dumping agreement establishes the fact that it is desirable that the imposition of anti-dumping measures in cases where all requirements have been fulfilled (i.e. dumping, injury, causal link), should be permissive. The WTO agreement is expressing the desirability of the final adoption of duties being optional and non-mandatory.

The decision whether or not to impose an anti dumping duty in cases where all requirements for the imposition have been fulfilled, and the decision whether the amount of the anti dumping duty to be imposed shall be the full margin of dumping or less, are decisions to be made by the authorities of the importing Member. It is desirable that the imposition be permissive in the territory of all Members, and that the duty be less than the margin if such lesser duty would be adequate to remove the injury to the domestic industry.

This means that, even if dumping, injury and causal link are established, there is no obligation to adopt measures at the level of the dumping margin, or indeed to adopt measures at all. A WTO member can decide not to impose measures purely on political or other policy grounds.

How other WTO members use public interest tests

Some members have automatic imposition of anti-dumping measures when dumping, injury and causal link have been established e.g. United States. In such cases, the adoption of duty is not permissive, it is automatic. There is no option under US law for a political decision to adopt measures at a level lower than the dumping margin, or to decide not to adopt measures.

Most WTO members have some form of explicit political provision added into their national anti-dumping legislation. In some cases, authority is given to the relevant minister to decide whether to adopt anti-dumping measures and at what level. Although there is no specific public interest test in these cases, the appropriate minister can decide not to apply measures.

The European Union is the WTO member that has the most explicit provisions regarding public interest. In the EU, it is mandatory that, before anti-dumping measures are adopted, the "Union interest" is assessed in relation to the interests of the economy as a whole.

The EU is the only trade regime in the world to use a public interest test systematically having invented the concept in the context of trade remedies in the face of particular circumstances. It can be argued that there are specific reasons why the EU has developed such a formal public interest test. Because the EU is made up of separate sovereign members, and that trade remedies may be adopted to provide relief from unfair trade for producers in specific member states, it was necessary to have a mechanism by which the interests of the whole of the EU could be considered (i.e. including the countries with no production interest). This function only applies in the case of a regional trade remedies system/customs union where several countries ‘pool’ their trade remedies function. It can be noted that hardly any cases are terminated on the grounds of measures not being in the Union interest. The Union interest test works as a form of ‘sanity check’. I once heard a Commission official describe it as ensuring that the EU is not ‘shooting itself in the foot’ by adopting measures that benefit only a tiny industry at a massive and disproportionate to industries using the product under investigation.

Canada is the other WTO member to have an explicit public interest provision. However, unlike the EU, it is not automatic and only is triggered by a petition. The request must include sufficient information as to whether the imposition of anti-dumping or countervailing duties would not or might be in the public interest. It gives a list of relevant factors that must be addressed in the request including the availability of imports not covered by the measure and the impact that the duty has had or is likely to have on competition in the domestic market. Also, in the case of Canada, any public interest determination only takes place after the imposition of duties.

In effect, the Canada public interest test also works a form of sanity check. It does not in any way hold up the adoption of measures but it provides an avenue for importers and users to request a public interest inquiry if they can provide evidence of an actual or potential negative impact of the measures.

Comparison of UK Economic Interest Provisions with those of other WTO members

Most WTO members using trade remedies do not have formal or systematic public interest tests. However, it is also the case that most other countries using trade remedies do have a politician deciding on whether to adopt measures or not at the end of the investigation. This means that, in effect, if there are public interest concerns, it may well be that the measure is not adopted.

Few other WTO members use a public interest test (PIT). Of those that do, the EU has the most systematic PIT which is accounted for by specific reasons as explained above.

The UK is unique in having a formal economic interest test (EIT) and a public interest test. As discussed in the separate blog post on the rebar transition review, there is perhaps a lack of clarity around what the PIT covers that is different than the EIT.

The UK is also relatively unique in having both a PIT/EIT and a mandatory application of the lesser duty rule. The US has neither, Canada has a PIT but not LDR and Australia an LDR but no PIT.

Although a number of the transitioned measures have passed the UK EIT, the recommended revocation of the rebar ADD on the grounds of economic interest perhaps highlights the fact that the UK EIT/PIT has the potential to be used in a more obstructive way than a mere sanity check.

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