Calculation of dumping margins: EU and US rules and practices in light of the debate on China's Market Economy Status

31-05-2016

Dumping margin is at the heart of findings by importing countries of the existence of dumping practices, as well as in setting the duty they may apply. This paper sets out the different methods of calculation in use as well as possible modifications that could be applied. It focuses on the case of China, in the context of the forthcoming decision on whether the country should gain market economy status. The calculation of the dumping margin is fundamental for two reasons in antidumping investigations: firstly it is a fundamental requirement for the introduction of an antidumping measure; in order to find dumping the dumping margin has to be greater than de minimis (i.e. less than 2%); secondly it defines the upper boundary of the antidumping duty if applied. The method for dumping margin calculations differs depending whether the country of export is considered a market economy or a non-market economy. This paper looks at the differences in the methods for calculation of dumping margin and in particular normal values in investigation against exporters in a market economy and against exporters in non-market economies. It also looks at the differences in the European Union and United States approaches towards non-market economies, and uses empirical analysis to see how different methodologies are used in investigations against China, before concluding on the policy options provided for in the framework of the 2016 amendment of section 15 to China's Protocol of Accession to the World Trade Organization. On this topic, see also other EPRS publications: Gisela Grieger, 'Major EU-China anti-dumping cases', May 2016; Laura Puccio, 'Granting Market Economy Status to China: An analysis of WTO law and of selected WTO members' policy', November 2015.

Dumping margin is at the heart of findings by importing countries of the existence of dumping practices, as well as in setting the duty they may apply. This paper sets out the different methods of calculation in use as well as possible modifications that could be applied. It focuses on the case of China, in the context of the forthcoming decision on whether the country should gain market economy status. The calculation of the dumping margin is fundamental for two reasons in antidumping investigations: firstly it is a fundamental requirement for the introduction of an antidumping measure; in order to find dumping the dumping margin has to be greater than de minimis (i.e. less than 2%); secondly it defines the upper boundary of the antidumping duty if applied. The method for dumping margin calculations differs depending whether the country of export is considered a market economy or a non-market economy. This paper looks at the differences in the methods for calculation of dumping margin and in particular normal values in investigation against exporters in a market economy and against exporters in non-market economies. It also looks at the differences in the European Union and United States approaches towards non-market economies, and uses empirical analysis to see how different methodologies are used in investigations against China, before concluding on the policy options provided for in the framework of the 2016 amendment of section 15 to China's Protocol of Accession to the World Trade Organization. On this topic, see also other EPRS publications: Gisela Grieger, 'Major EU-China anti-dumping cases', May 2016; Laura Puccio, 'Granting Market Economy Status to China: An analysis of WTO law and of selected WTO members' policy', November 2015.