the brazilian trade remedies and the anti-dumping injury ... · the brazilian trade remedies and...

PRESENTATION TOPICSPRESENTATION TOPICS

1. Brazilian Trade Remedies Department Structure and Jurisdiction;

2. Brazilian Trade Remedies Measures;

3. The Antidumping Procedure;

4. The Domestic Industry Injury Analysis;

5. Brazilian Antidumping and Chinese Exporters; and

6. The New Brazilian Antidumping Regulation.

BRAZILIAN TRADE REMEDIES DEPARTMENT STRUCTURE AND BRAZILIAN TRADE REMEDIES DEPARTMENT STRUCTURE AND JURISDICTIONJURISDICTION

Structure:

› The Department of Trade Remedies is part of the Secretariat of Foreign Trade, of the Ministry of Development, Industry and Foreign Trade;

› It was founded in 1995;

› It counts with approximately 35 analysts, involved in Trade Remedies investigations; and

› Investigations are distributed among 2 Working Groups, depending on the product investigated. There’s also another group on rules, exporter support and negotiations.


Structure:

› RULES - Support to Brazilian Exporters, Rules and International Negotiations;

› CGAP - Agricultural and Husbandry Products; and› CGPI - Intermediary Products.

DECOM

RULES CGAP CGPI


Jurisdiction:

› Defense of the Brazilian domestic industry against unfair trade practices and import surges;

› Conducting investigations in Brazil;

› Support Brazilian exporter subjected to foreign investigations against unfair trade practices and import surges;

› Orientation and participation in investigations opened by third countries; and

› Preparation of studies in order to support the Brazilian international position on trade remedies.

BRAZILIAN TRADE REMEDIES MEASURES

Anti-Dumping

Countervailing

Safeguard

Chinese Transitional Safeguard

Mechanism of Competitive Adaptation - Argentina

Measures Extensions (Anti-Circumvention)


Anti-Dumping

Dumping:

› Dumping is, in general, a situation of international price discrimination, where the price of a product when sold to the importing country is lower than the normal value.

Anti-Dumping

› Measure imposed to imports made at dumped prices, with the exclusive purpose of neutralizing its damaging effects to the domestic industry.


Countervailing

Subsidy:

› The WTO definition contains three basic elements: (i) a financial contribution (ii) by a government or any public body within the territory of a Member (iii) which confers a benefit specifically provided to an enterprise or industry or group of enterprises or industries. All three of these elements must be satisfied in order for a subsidy be classified under the exist.

Countervailing:

› Measure imposed to imported products benefited by subsidies in order to neutralize its damaging effects to the domestic industry.


Safeguard

A Safeguard is a temporary limitation of imports of a product by means of lifting the import tax rate or establishing quotas to protect a specific domestic industry from an increase in imports of any product which is causing, or which is threatening to cause, serious injury to the industry.


Chinese Transitional Safeguard

Foreseen in the protocol of China accession to the WTO, the transitional safeguard measure applies only against Chinese exports, with the exclusive purpose to prevent or to remedy the market disruption, as follows:

›I - by imposing an additional tariff in the form of ad valorem, specific aliquot or a combination of both;

›II - by imposing a quantitative restriction, or

›III – by imposing the combination of the previous items.


Mechanism of Competitive Adaptation - Argentina

Foreseen in 34th Additional Protocol to the Economic Complementation Agreement - ACE # 14 of Mercosur, the mechanism of competitive adaptation (MAC) aims to repair the material injury or prevent the threat of material injury to the domestic industry caused by the substantial increase in imports and consists in applying:

›a) An annual quota with full preference for exports of the product concerned from the other State, and

›b) a tariff on exports of the product concerned from the other State that exceed the level of the annual tariff quota equal to the Common External Tariff with a preference of ten percent (10%).


Measures Extensions (Anti-Circumvention)

The extension of antidumping and countervailing measures on imports of products from third countries, as well as parts and components of the product subject to existing measures happens when proved the existence of circumvention practices that frustrates the application of the trade remedy.

This is an additional mechanism to protect the domestic industry, aiming to provide a greater effectiveness of the trade remedies in force.

THE ANTIDUMPING PROCEDURE

Bullet Points

Similar Product

Domestic Industry

Normal Value

Dumping, Injury and Causality

On Spot Verification

Provisional Measures

Retroactive Measures

Anti-Dumping Measures Kinds

Lesser Duty

Public Hearings

Internal Review Procedures

International Review Procedure

Application

Sending of Questionnaires to Interested Parties

Analysis of the Answers

On spotVerifications

Preliminary Determination

Petition ProperlyDocumented

End of the Investigation

Final TechnicalDetermination

Notification of all interested Parties

Final Decision


Investigation Flowchart

Essential facts under Consideration (Final hearing)

Complementary Information

Technical Determination

Chamber of Foreign Trade(CAMEX)

Technical Group for Analysis of Public Interest


Decision Flowchart

THE DOMESTIC INDUSTRY INJURY ANALYSIS

Injury Definition

Material Injury to the Domestic Industry;

Threat of Material Injury to the Domestic Industry; or

Material Retardation on the Establishment of a Domestic Industry.


Injury Analysis

Imports Data:

› Quantity and value by origin;

› Price; and

› Imports market share;


Injury Analysis

Domestic Industry Data:

› Sales and market share;

› Cost and Profit;

› Production and stock;

› Investments, production capacity and its level of occupation;

› Employment, wages and productivity;

› Domestic prices and sub quotation margin; and

› Balance sheet and income statement.


Case Study

Anti-dumping investigation against the Brazilian imports of flat-rolled coated from Australia, China, South Korea, India and Mexico.

› Noronha Advogados represented 6 Chinese Exporters;

› Noronha Advogados presented a non injury defense; and

› Investigation closed by the Circular SECEX n° 47 by lack of injury.


Case Study – Imports Data – Quantity by Origin in Metric Tons

Origin 2006 2007 2008 2009 2010 Australia 3,813.4 12,642.1 18,975.2 54,398.1 39,791.6 China 7,968.6 40,651.3 135,113.9 83,461.6 404,463.8 India 12,874.9 13,543.2 7,286.4 24,175.4 53,512.0 México 21.5 0.1 0.5 13,973.0 64,847.7 Investigated Imports 24,678.5 66,836.7 161,376.0 176,008.1 562,615.1 Non investigated Imports 49,851.9 61,242.4 190,527.6 194,922.7 509,782.2


Case Study – Imports Data – Quantity – Imports Market Share

Origin 2006 2007 2008 2009 2010 Australia 5.1 9.9 5.4 14.7 3.7 China 10.7 31.7 38.4 22.5 37.7 India 17.3 10.6 2.1 6.5 5.0 México 0.0 0.0 0.0 3.8 6.0 Investigated Imports 33.1 52.2 45.9 47.5 52.5 Non Investigated Imports 66.9 47.8 54.1 52.5 47.5 Total 100.0 100.0 100.0 100.0 100.0


Case Study – Imports Data – Average Price in USD – CIF/ Metric Ton. By Origin

Origin 2006 2007 2008 2009 2010 Australia 734.39 977.25 1,002.12 763.56 885.75 China 915.65 910.89 1,180.86 1,004.18 875.43 India 890.95 988.57 1,293.06 760.76 881.83 México * * * 610.73 858.44 Investigated Imports 875.74 939.23 1,164.95 865.14 874.81 Non Investigated Imports 806.78 984.85 1,203.01 978.61 980.31 Total 829.61 961.04 1,185.56 924.77 924.96


Case Study – Domestic Industry Data – Installed Capacity. Production. Level of Occupation.

Period Effective Installed Capacity (%)

Production (%) Level of Occupation(%)

2006 100 100 100

2007 101 105 104

2008 103 96 93

2009 87 84 97

2010 107 103 96


Case Study – Domestic Industry Data – Domestic Industry Sales (MT) and Share

Period Domestic Sales of Brazilian Industry (%)

Brazilian Market (%)

Domestic IndustryMarket Share (%)

2006 100 100 95.4

2007 111 114 93.1

2008 119 135 84.0

2009 103 121 81.2

2010 118 178 63.1


Case Study – Domestic Industry Data – Net Operating Income

Period Total Income (%) Domestic Market (%) Foreign Market (%)

2006 100 100 100

2007 111 119 79

2008 108 128 20

2009 84 98 21

2010 95 109 31


Case Study – Domestic Industry Data – Price, Cost and Gross Profit Margin

Period Price (%) Cost (%) Gross Profit Margin (%)

2006 100 100 100

2007 106 88 142

2008 108 87 169

2009 95 84 105

2010 92 84 136


Case Study – Causality

Other Imports;

Economic Crisis;

Market Downturn;

Exchange Rate;

Mismanagement; or

Any other.

BRAZILIAN ANTIDUMPING PRACTICE AND CHINESE EXPORTERS

China as a Market Economy

China's WTO Accession Protocol (2001).

Memorandum of Understanding (2004).

Brazil still do not grant China a market economy status.

China's WTO Full Accession (2016).


Normal Value Calculation Method to Non Market Economy Countries

Domestic Price on a Third Market Economy Country;

Export Price Practiced Between Two Market Economy Countries; or

Constructed Normal Value on a Third Market Economy Country.


Market Economy Treatment Request – General Information

Exchange rate;

Interest rates;

Salaries;

Prices;

Capital controls;

Stock Exchange;

Investment; and

How the inputs prices are formed


Market Economy Treatment Request – Specific Information

The degree of government control over the companies and on the means of production;

The level of state control over resource allocation, pricing and production decisions of companies;

The legislation on property, investment, taxation and bankruptcy;

The degree to which salaries are freely determined in negotiations between employers and employees;

The degree of persistence of distortions carried over from planned economy system related to, among other things, amortization of assets, other asset deductions, direct exchange of goods and payment by compensation of debts; and

The level of state interference on foreign exchange transactions.


Noronha Advogados – Chinese Leading Cases

2008. Polyvinyl Chloride (PVC-S) Anti-Dumping Investigation.

First Individual Dumping Margin Granted to a Chinese Company.

2011. Citric Acid Anti-Dumping Investigation.

First On Spot Verification on a Chinese Company.

2012. Citric Acid Anti-Dumping Investigation.

First Price Undertaking firmed with a Chinese Company.

THE NEW BRAZILIAN ANTIDUMPING REGULATION

Major Amendments

Into force in 2013;

Mandatory Preliminary Decision;

Public Interest Clause;

Lack of Changes Regarding the Injury Analysis;

Lesser duty. Public Interest; and

Market Economy Treatment. Requirements.

THANK YOU!

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