Research Motivation

Currently, the price undertakings measures implemented by Taiwan's investigating authority including the subject merchandise of towel, certain footwear and cold-rolled stainless steels originating in China or Korea. With regard to the anti-dumping case on certain footwear, 82 Chinese producers or exporters offer the price undertakings and these requests are accepted by Taiwan’s investigating authorities. Conversely, in the anti-dumping case against Chinese certain footwear, the EU rejects the price undertakings offered by Chinese producers or exporters. The main reasons stated by the EU authorities for the rejection are as follows:

(1) A product like shoes which is continuously changing due to fashion, it would be practically impossible to set a non-discriminatory price level that equally eliminates injurious dumping for a huge variety of entirely different models.

(2) A combined duty would have led to an unjustified burden on cheap shoes against the favor of more expensive shoes. It would practically be impossible to identify adequate price categories for a product as diverse as the one under investigation to avoid such unjustified burden.¹⁷

The European Commission rejected the offer of price undertakings and imposed anti-dumping duty on imports of certain footwear originating in China, but Taiwan implemented price undertaking

17 Certain footwear with uppers of leather (China, Vietnam), 2006 O.J. (L275) Page 1, at recital 317, 320

measure on the similar product concerned. Even though the product concerned is alike, the different settlements are applied. Accordingly, this paper will examine Taiwan’s price undertaking measures through the anti-dumping case on certain footwear product originating in China.

Studies on the economic effects of price undertakings include the contributions by Vandenbuscche and Wauthy (2001), Wilfried Pauwels and Linda Springael (2002), Belderbos, Vandenbussche, and Veugelers (2004), Michael O. Moore (2005), Ishikawa and Miyagiwa (2007). Vandenbuscche and Wauthy (2001) show that price undertakings lead to low product quality in the domestic industries of the importing country. Wilfried Pauwels and Linda Springael (2002) note that from a welfare perspective, anti-dumping duties are always better than price-undertaking measures.

Belderbos, Vandenbussche, and Veugelers (2004) indicate that the investigating authorities of importing countries select price undertakings rather than anti-dumping duties for the sake of lowering the incentives of international firms in Foreign Direct Investment (FDI). Michael O. Moore (2005) suggests that the implementation of price undertakings can result in higher domestic prices and profits than that of VERs. Ishikawa and Miyagiwa (2007) further express the differences between price undertakings and VERs in affecting the incentives of FDI by foreign firms. Those studies are conducive to understand the welfare effects of price undertaking on different economic issues. It can be as the considerations in economic welfare regard when Taiwan’s investigating authorities decide whether or not to take the price undertaking measures.

The lesser duty rule is a “WTO-plus” requirement that goes beyond the WTO rules, and is something the EU, traditionally, has taken great pride in. The lesser duty rule has often been highlighted by the EU, in WTO negotiations as well as in various free trade agreements, as a positive element that is reducing trade distortions.¹⁸ Since the lesser duty rule is applied to price undertaking, this paper will study the rule and its impact on price undertaking measures through the practices of the EU.

18 National Board of Trade, Sweden (2013). Retrieved from http://www.kommers.se/TDI-brief.

The U.S. and the EU have respectively 32 and 281 anti-dumping cases whereas Taiwan has 8 cases settled by price undertakings measures. Comparing with the U.S. and the EU, Taiwan has less experience in dealing with price undertakings cases. Furthermore, the current provisions regarding undertakings in the Implementation Regulations are the general rules, there are still lacking of the concrete rules of the procedural and substantive respects.

In accordance with the GATT Anti-Dumping Agreement, the anti-dumping laws of the U.S. and the EU include provisions permitting foreign producers or exporters to offer undertakings in anti-dumping proceedings. However, the application of such provisions in the U.S. and the EU are significantly different. Most of anti-dumping cases are settled by using price undertaking measures in the EU, whereas the undertakings are rarely used by the U.S. investigating authorities. This paper focuses on the law and practice of the U.S. and the EU concerning price undertakings. No matter the procedural and substantive aspects, or the implementation of practices will be examined in detail, so as to provide a comprehensive review of the undertaking measures within the U.S. and the EU anti-dumping systems.¹⁹ The relevant analysis will be used as the reference for Taiwan’s investigating authorities to amend its Implementation Regulations and impose price undertaking measures.

The thesis is divided into six chapters. The first chapter is the introduction, including research background and motivation. The second chapter will provide background information on the GATT rules concerning price undertakings and the introduction of studies on the economic effects of price undertakings. The third, fourth and fifth chapters will elaborate respectively the undertaking provisions, practices of the U.S., the EU and Taiwan anti-dumping laws or regulations. The fifth chapter also offers a comparative analysis of the three jurisdictions as well. Finally, the paper will propose the conclusion and suggestion for the reference for Taiwan’s investigating authorities.

19 Francesco Perone(1995), Page 2-3