Introduction

Unfair trade allegations fall into two categories: dumping and countervailable subsidies. The right of GATT signatory nations to collect antidumping duties and countervailing duties intended to “remedy” (i.e., offset the trade effects of) foreign unfair practices is set out in Article VI of the GATT, together with the Antidumping Code and the Subsidies Code.

Dumping is the practice of selling in an export market at prices that are below “fair value” (i.e., those charged in the producing firm's home market) or at prices that are less than production cost. Countervailable subsidies arise when export subsidies, or domestic production subsidies, encourage an expansion of exports.

Generally, antidumping (AD) or countervailable subsidy (CVD) investigations are initiated following receipt by the administering government authorities of a petition prepared by a domestic industry. The petition must contain the appropriate allegations and assertions of fact. Before the authorities may issue remedial orders, two findings must be reached:

• First, the alleged unfair practice, or others identified by the authorities, must be occurring, and the magnitude of the dumping margin or subsidy rate must not be de minimus.

• Second, the practice must be causing material injury to a domestic industry producing the product or products that are “like” the subject imports. The domestic industry must be determined to be “materially injured by reason of” the imports that are subject to investigation.