Research Background

In addition to the imposition of duties, the WTO agreements permit the investigating authorities to suspend an anti-dumping investigation by accepting an undertaking (referred to in US Tariff Act of 1930 as a “Suspension Agreement”). Briefly, in the undertakings (a Suspension Agreement), the exporters and producers or the foreign government agree to revise their prices so as to eliminate dumping or the injury caused thereby. If the investigating authorities accept undertakings (a Suspension Agreement), they will “suspend” the investigation and thereafter will monitor in compliance with the undertakings (agreements).

(1) Overview of the U.S. Anti-Dumping Investigation

From 1995 to 2014, there were 345 cases imposed definitive anti-dumping duties by the U.S.

investigating authorities (See Table 2). In addition, there were 7 Suspension Agreements in force from 4 countries covering 6 products (See Table 3). “Suspension Agreement” is the American term for undertaking. Zanardi (2004) shows that between 1981 and 2001 about 4.92 percent of the U.S. anti-dumping cases were ended in price undertaking measures. From 2002 to 2014, the percentage of using price undertaking measures is 3.83 and the overall percentage of Year 1981 to 2014 is 4.63 (See Table 5). The frequency of taking price undertaking measures has remained around 4%.

Actually, the U.S. used voluntary export restraint (VER), a trade instrument for quantitative restriction, extensively in the 1980s and early 1990s to settle anti-dumping cases. Prusa (1992) notes that over one-third of U.S. anti-dumping cases between 1980 and 1985 were withdrawn by the petitioners, most of which were settled by using VER. Only a few cases were solved by the suspension agreements. The regulations of suspension agreements in the U.S. were laid down at 19 C.F.R. 351.208 describing the whole procedures of suspending anti-dumping investigation.

Table 2. Anti-dumping Measures : By Reporting Member 01/01/1995 - 31/12/2014

Reporting

Member 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total United

States 33 12 20 16 24 31 33 27 12 14 18 5 5 23 15 17 4 7 7 22 345 European

Union 15 23 23 28 18 41 13 25 2 10 20 12 12 15 9 5 11 3 12 1 298

Taiwan 1 5 1 1 2 1 1 2 1 2 17 Source: WTO Statistics on anti-dumping

Table 3. The U.S. Suspension Agreements

Source: United States Department of Commerce; http://enforcement.trade.gov/agreements/index.html

(2) Overview of the EU Anti-Dumping Investigation

Price undertaking plays an important role in the EU anti-dumping proceedings. In a certain period of time, price undertakings were frequently used to replace the imposition of anti-dumping duties. However, its role as an instrument to resolve anti-dumping cases in the EU practice has changed over time. The frequency of using price undertakings has decreased since 2005.

Zanardi (2004) indicates that between 1981 and 2001 approximately 40 percent of the EU anti-dumping cases were settled by taking price undertaking measures.¹¹ Table 4 illustrates the percentage of using price undertaking measures in the EU from 1981 to 2014. The percentage has fallen from an average of 40.66% between 1981 and 2001 to 25.14% during the period from 2002 to 2014. Year 2003 and 2004, price undertakings were still performed relatively frequent comparing with the overall percentage of Year 1981 to 2014 (average of 36.93%). Since 2005, price undertakings have been used less frequently and have declined sharply in recent years. In 2012 and 2014, there is no any anti-dumping case ended in price undertakings measures. Apparently, the recent decline would likely to be a more strict restriction regarding price undertakings by the European Commission.¹² Nevertheless, the EU is still the WTO member of using price undertaking most frequently. Thus, the EU has much more experience than any other WTO members.

Due to the absence of clear-cut rules for the possible acceptance or rejection of price undertakings, the EU administration has considerable discretion in this regard. The discretion held by the European Commission and the Council of Ministers makes it reasonable that a number of political economy considerations could play a role in the decisions.¹³

11 Zanardi (2004), Page 425, Table 5

12 Armin Steinbach (2014). Page 168,169

13 Estela Montado (2006), Page 4

Table 5. Use Price Undertakings to Settle Anti-dumping Cases in the EU, the US and Taiwan

Source: Figures of 2002-2014 are from the respective Statistics data of the US, the EU and Taiwan;

Figures for 1981-2001 are based on Table 5 of Zanardi (2004);

Table 4. Use Price Undertakings to Settle Anti-dumping Cases in the EU

Source: Figures for 2002-2014 are based on EU Statistic Covering Full Year 2002-2014 and WTO Statistics on anti-dumping

Figures for 1981-2001 are based on Table 5 of Zanardi (2004);

Armin Steinbach (2014). Page 169

(3) Overview of Taiwan’s Anti-Dumping Investigation

From 1981 to 2014, 23 cases were imposed definitive anti-dumping duties by Taiwan’s investigating authorities. Among which, 8 cases were taken price undertaking measures simultaneously (See Table 6). Table 5 shows that around 26.32 percent of Taiwan’s anti-dumping cases were settled by price undertaking measures between 1981 and 2001 (Zanardi 2004). From 2002 to 2014, the percentage of using price undertaking measure is 25.00 and the overall percentage of Year 1981 to 2014 is 25.81. Currently, Taiwan’s investigating authorities have been imposing the definitive anti-dumping duties on imports of towel, certain footwear, cement, cold–rolled stainless steel and one chemical product, originating in China or Korea. Among which, the subject products of towel, certain footwear and cold-rolled stainless steel have also been taken the price undertaking measures (See Table 7).

Table 6. Anti-Dumping Cases of Using Price Undertaking Measures, from 1989 to 2014 No. Date of

Application

Date of Determination

Affected

Countries Alleged Dumped Goods

1 1987.7 1989.4 USA Hepatitis B Test Kit

2 1990.4 1992.5

1993.12.24 South Africa Aluminum plates, sheets and strip

3 1990.9 1992.3 Korea

Galvanized Steel Coil, pre-painted galvanized steel coil

4 1992.8 1994.4 Brazil,

South Korea Steel plates

5 1996.7 1998.12

Australia, South Korea,

Poland, Russia

H-beam, hot-rolled, of iron or non-alloy steel

6 2006.3.01

2006.09.19 (Sunset Review

2011.12.19)

China Towel Products

7 2006.08.31

2007.07.12 (Sunset Review

2012.12.13)

China Certain Footwear

8 2012.07.17 2014.03.05 China, Korea

SUS 300 serious flat-rolled products of stainless steel, cold-rolled (cold-reduced)

Source: Customs Administration, Ministry of Finance

From Table 5, we could find the fact that no matter the U.S., the EU or Taiwan, the frequency of using price undertaking measures has declined in recent years. The U.S. declined from 4.92% to 3.83%, the EU decreased from 40.66% to 25.14%, and Taiwan fell from 26.32% to 25.00%. Since the EU is the frequent user of price undertakings, this paper will explore the reasons for the decrease of price undertakings in the EU.

Table 7. Cases of Imposing Anti-Dumping Duties and Taking Undertaking Measures No.

Date of

Application Date of Determination

Affected Countries

Alleged

Dumped Goods Final determination

1 2006.03.01

2006.09.19 (Sunset Review 2011.12.19)

China Towel Products

Imposition of anti-dumping duty at 204.1%, from

Imposition of anti-dumping duty at 43.46%, from December 13, 2012 to December 12, 2017 for 5 years. Price undertaking of 82 exporters was accepted on

Imposition of anti-dumping duty 4.73% and 59.7%, from

Imposition of anti-dumping duty 91.58%, from May 30, 2011 to May 29, 2016 for 5 years.

5 2012.07.17 2014.03.05 China, Korea

SUS 300 serious

Imposition of anti-dumping

duty at 26.53% ～ (Effective date: March 07, 2014).

Source: Customs Administration, Ministry of Finance

(4) Legal Basis of Price Undertakings for each jurisdiction

The U.S. anti-dumping law is addressed in Title 7 of the Tariff Act of 1930 (hereinafter “the Tariff Act”), as amended by the Trade Agreements Act of 1979, the Trade and Tariff Act of 1984, the Omnibus Trade and Competitiveness Act of 1988, and the Uruguay Round Agreements Act of 1995.¹⁴ The types of Suspension Agreements can be found in Section 734 of the Tariff Act. Definitions, procedures, and special rules can be found in the regulation of Department of Commerce (hereinafter “DOC”) under 19 CFR 351.208.

The European Commission’s approach towards offers of price undertakings is determined by the legal framework governing price undertakings. The rules are laid down in two distinct legal sources: The EU Basic Regulation¹⁵ and the WTO Anti-Dumping Agreement. The analytical basis for the Commission’s evaluation of a price undertaking is provided in Article 8 of the Basic Regulation, including procedures, continuation of investigation, submission of non-confidential version, breach or withdrawal, etc. The Basic Regulation is required to be in conformity with the WTO Anti-Dumping Agreement.

Taiwan’s anti-dumping rules are prescribed in “The Regulations Governing the Implementation of the Imposition of Countervailing and Anti-Dumping Duties” (hereinafter “Implementation Regulations”).¹⁶ The Implementation Regulations were promulgated in 1984 and prescribed in accordance with paragraph 4 of Article 69 of the Customs Act. The provisions of undertakings were regulated in Article 23 to Article 25 and Article 44 of the Implementation Regulations, prescribing the acceptance of undertakings, periodically providing information

14 Tariff Act of 1930, Sections 731-781, codified as amended at 19 U.S.C. 1673-1677 (1993).

15 Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community.

16 Promulgated on November 7, 1984, amended and promulgated on 1994, 2001, 2005 and 2016.

regarding undertakings (Article 23), suspending investigation and the provisional measures (Article 24), the continuous investigation when violating undertaking measures, the continuous investigation ex officio or at the request of the government of the exporting country or the foreign exporters (Article 25), and the procedures of Sunset Review regarding undertakings (Article 44).