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ECUADOR
Regulations to Prevent or Remedy Dumping or Subsidy Practices


REGISTRO OFICIAL NO. 780 OF THE GOVERNMENT OF ECUADOR
30 SEPTEMBER 1991

No. 2772 - A
Rodrigo Borja,

President of the Republic,

CONSIDERING:

That the new orientation of tariff policy requires the timely adoption of effective measures to remedy or prevent unfair international trade practices;

That Article 41 of the Tariff Law in effect authorizes the application of anti-dumping duties;

That the Commission of the Cartagena Agreement, in Decision 283, published in the supplement to Registro Oficial No. 682 of 13 May 1991, adopted rules to prevent or redress distortions in competition arising out of dumping or subsidy practices; and

By virtue of the power granted to him by the law;

DECREES THE FOLLOWING:

REGULATIONS TO PREVENT OR REMEDY DUMPING OR SUBSIDY PRACTICES

CHAPTER I

Object

Article 1. These Regulations indicate the requirements and procedures to be followed in applying preventive or remedial measures against dumping or subsidies.

These Regulations do not cover under-invoicing practices, which shall be determined and punished according to the rules on customs valuation contained in the Organic Customs Law and its implementing Regulations, the Criminal Code and other related legal provisions.

CHAPTER II

Dumping

Article 2. An import is dumped when the export price is less than the normal value for a like product when destined for consumption or use in the country of origin or of export in the ordinary course of trade.

Article 3. A like product is a product which is alike in all respects to the product subject to the practice or in the absence of such a product another product which has very similar characteristics, taking into consideration elements such as its nature, quality, use and function.

Article 4. The export price is the price actually paid or payable for the product sold for export to Ecuador.

In cases where there is no export price or where it appears to the competent bodies that the price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer. If the products are not resold to an independent buyer, or not resold in the condition as imported, the price may be constructed on such reasonable basis as the competent bodies or authorities referred to in Chapter IV of these Regulations may determine.

In calculating the export price, the necessary adjustment shall be made to allow for all costs incurred prior to resale, including all duties and taxes and a reasonable margin of profit. The adjustments shall also take into account inter alia the costs of transport, insurance, maintenance and unloading; import duties and other taxes payable after export from the country of origin; a reasonable margin of general, administrative and selling costs; a reasonable margin of profit, and any commission usually paid.

Article 5. For the purposes of these Regulations, "normal value" means the amount actually paid or payable for a like product by comparison with the product imported into Ecuador, when sold for consumption or use in the domestic market of the country of origin or of export, in the ordinary course of trade.

The ordinary course of trade shall mean transactions between associated parties or parties who are bound by a compensatory arrangement, provided that the prices and costs are comparable to those in sales between independent parties.

Where there are no sales of the like product in the ordinary course of trade in the domestic market of the country of origin or of export or where such sales do not permit a reliable determination of the normal value, it shall be determined:

(a) By considering the highest export price for the like product exported to a third country, provided it is representative;

(b) in the absence of such a price, by considering the constructed price of the like product based on the cost of production in the ordinary course of trade in the country of origin, plus a reasonable amount for administrative and selling costs and profit. The addition for profit shall not exceed the profit normally realized on sales of products in the same category in the domestic market of the country of origin;

(c) where there is no export price to a third country that is representative or the price of a like product cannot be constructed, the normal value may be calculated on a reasonable basis to be determined by the competent bodies or authorities.

In cases where products are not imported directly from the country of origin but from a third country, the price at which the products are sold from the country of export to Ecuador shall be compared with the comparable price in the country of export. However, comparison may be made with the price in the country of origin if, for example, the products are merely transshipped through the country of export, or such products are not produced in the country of export or there is no comparable price for them in the country of export.

Article 6. The margin of dumping is the amount by which the export price is less than the normal price. This margin shall be calculated per unit of product imported at the dumping price.

The export price and the normal value shall be examined on a comparable basis in respect of the physical characteristics of the product, the quantities and conditions of sale, taking into account differences in taxes and other criteria that might affect price comparison. The comparison shall be made at the same stage of the transaction, usually at the ex-factory level, and in respect of sales made at as nearly as possible the same time.

CHAPTER III

Subsidies

Article 7. An import has been subsidized when the production, manufacture, transport or export of the imported good or its raw materials or inputs has received directly or indirectly any bounty, aid, premium or subsidy in the country of origin or of export.

The existence of multiple currency practices relating to trade and financial transactions in the country of origin or of export may give rise to a subsidy and therefore be considered as such for the purposes of these Regulations.

Article 8. The amount of the subsidy shall be calculated, as appropriate, in monetary units or ad valorem per unit of the subsidized product imported.

In the case of multiple currency practices, the amount of the subsidy shall be determined on the basis of the rules established by the Cartagena Agreement within the framework of harmonization of exchange policies or in the absence of such rules, on the basis of the elements provided to the Central Bank of Ecuador in a mandatory report.

 

CHAPTER IV

Competent Bodies and Authorities

Article 9. The Minister for Finance and Public Credit is empowered to establish measures to prevent or remedy dumping or subsidy practices in accordance with the Agreement.

Prior to exercising this authority, the Minister shall seek the opinion of the Special Commission of the Tariff Committee or of the Tariff Committee itself.

In cases within the competence of the bodies of the Cartagena Agreement, the Minister shall not seek the opinion of the Special Commission in order to establish preventive or remedial measures and the authorization given in the corresponding Resolution shall suffice.

Article 10. The Special Commission shall be composed of the following members of the Tariff Committee:

(a) The Minister for Finance and Public Credit or his delegate, who shall chair the Commission;

(b) the Minister for Industry, Trade, Integration and Fisheries, or his delegate; and

(c) the Minister responsible for the sector producing the good affected by the unfair trade practice or his delegate.

Representatives of the Chambers of Industry, Trade and Agriculture shall provide the Tariff Committee with information according to the sectors involved in the particular investigation.

Where appropriate, representatives of other ministries, institutions or public enterprises or associations of producers, importers or exporters may participate as advisers.

Article 11. The Special Commission shall have the following functions:

(a) To make recommendations on the draft decisions of the Minister for Finance and Public Credit concerning the establishment of measures to prevent or remedy dumping or subsidy practices, except where a body of the Cartagena Agreement is competent;

(b) at the request of the interested party, to make recommendations regarding the applications submitted to the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries, in order to bring them to the attention of the competent body of the Cartagena Agreement if they have been rejected by the Directorate because it considered that there were no grounds for the investigation or the application of remedial measures; and

(c) to submit reports to any competent bodies or authorities requesting them on other investigations on such unfair trade practices; to make recommendations regarding the application of measures to prevent or remedy dumping and subsidy practices and, additionally, to provide information on the practices of domestic enterprises which cause or threaten to cause injury to domestic industry in a member State of the Cartagena Agreement.

In fulfilling its functions, the Special Commission shall receive reports and studies from the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries, which shall act as Secretariat of the Commission.

Article 12. Ecuadorian commercial attachés, diplomatic missions and other offices of the Ministry of Foreign Affairs accredited to foreign governments shall obtain from the country in which they are situated the information required by the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries or the Special Commission in relation to the relevant investigations, recommendations or studies.

At the request of the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries, the Central Bank of Ecuador shall provide information on the prices declared on import permits or other relevant information in the permits and accompanying documents, as well as on the exchange rates for foreign currency required in order to investigate specific cases.

Article 13. Where the information required for the investigation cannot be obtained through the offices mentioned in the preceding paragraph or the information is not provided within a reasonable period, the Ministry of Industry, Trade, Integration and Fisheries may reach agreement with legally constituted domestic or foreign specialized enterprises for the purpose of providing information on exchange rates and other factors related to trade transactions involving dumping or subsidization.

In such cases, the persons requesting the investigation shall bear the costs arising in connection with the provision of the information.

 

CHAPTER V

Procedure and Investigation

Article 14. An interested party which considers that it has been affected by imports of dumped or subsidized products may request the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries to carry out the corresponding investigation and apply the preventive or remedial measures provided for in these Regulations.

Such requests may also be submitted in the cases referred to in Article 2 of Decision 283 of the Commission of the Cartagena Agreement so that, where appropriate, the competent body of the Cartagena Agreement may carry out the relevant investigation and authorize the application of preventive or remedial measures.

The National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall also carry out the corresponding investigation at the written request of any member of the Tariff Committee who provides sufficient information to allow the presumption of the existence of injury or threat of injury to a specific industry.

Article 15. The application referred to in the preceding Article shall contain the following information:

(a) The nature of the practice and its duration;

(b) the characteristics of the products subject to the practice and their NANDINA classification;

(c) the enterprises involved, indicating their domicile;

(d) the offices, institutions or enterprises in the public sector granting the subsidy or the characteristics of the measure benefiting the producer or exporter of the product dumped or subsidized; and

(e) the level of the duties proposed or the characteristics of the other remedial measures provided for in these Regulations.

Article 16. Within five days from the date of receiving the application, the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall notify the complaint to the importer of the product subject to the practice, the representative or national distributor, or the embassy, consulate or commercial attachés's office in the country of origin of the product and, through them, shall request the information needed to investigate the producer, exporter or government, as appropriate.

The National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall also request other enterprises that might be affected by the practices to provide the information needed for the corresponding investigation.

Article 17. Competent bodies, authorities and officials shall not disclose the evidence and information received for the investigation when, in the opinion of persons requesting the investigation or providing information, it is confidential because it might cause injury or prejudice to them. Nevertheless, the said bodies or authorities may transmit summaries or analyses of this evidence and information.

Parties interested in the investigation referred to in the preceding Article may have access to general information and non-confidential documents, as well as to the summaries mentioned in the preceding paragraph.

Article 18. During the investigation, the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall give priority to convening meetings among parties interested in the investigation with a view to reaching a direct solution. No interested party shall be obliged to attend such a meeting and their absence shall not delay the proceedings.

On the basis of the report by the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries on the meeting among the parties, the Special Commission shall consider the undertaking by the producer or exporter to suspend price discrimination or withdraw the subsidies or the offer of the government concerned to suspend the granting of subsidies, and, if the proposal is accepted, the investigation shall be closed.

The corresponding decision shall specify the information which the producer or exporter or government concerned, as the case may be, must transmit to show that the undertakings entered into have been fulfilled. It shall also indicate the measures to be adopted if the undertakings are not fulfilled or the information requested is refused.

Article 19. The National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall carry out the investigation within a period not exceeding four months from the date of receiving the application and shall convene a meeting of the Special Commission within five working days.

The Special Commission may extend the investigation period by two months; in such cases, it may recommend the application of provisional or preventive measures on the basis of the information available until the Minister for Finance and Public Credit adopts definitive measures.

Where the injury or threat of injury caused by dumping or subsidies is sufficiently serious to require the adoption of provisional or preventive remedial measures, the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall carry out a prior investigation on the basis of the information available within a period not exceeding 20 days from the date of receiving the application, and in addition, through the chair of the Special Commission, shall convene the Commission within the following five working days in order to make a recommendation on the adoption of remedial measures.

Investigations carried out in accordance with these regulations shall under no circumstances obstruct or hinder customs clearance of the products concerned. Where provisional or preventive anti_dumping or countervailing duties are established, the customs authority shall authorize clearance of the goods subject to payment of the duties or lodging of the corresponding security.

Article 20. Where applications for an investigation concern the cases referred to in Article 2 of Decision 283, the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall carry out a preliminary investigation within 20 days from the date of receiving the application. Where the situation requires the adoption of immediate measures because the threat of injury or the injury is evident, the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries shall carry out a prior investigation within 10 days.

The purpose of the investigation is to verify whether the application should be submitted to the competent body of the Cartagena Agreement to substantiate the application with the information available, and if necessary with additional evidence, to initiate the collection of the information required, and, particularly, to determine the level of anti-dumping or countervailing duties adequate to prevent or remedy the unfair trade practices.

After conclusion of the investigation, the Under-Secretariat for Trade and Integration of the Ministry of Industry, Trade, Integration and Fisheries shall, where appropriate, request the competent body of the Cartagena Agreement to authorize the establishment of anti-dumping or countervailing duties in the amounts it considers appropriate to remedy the unfair trade practices.

Article 21. The National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration, and Fisheries, and the Special Commission, in their investigations and recommendations, shall take into account the dumping (sic) or the granting of a subsidy; and,

(a) The dumping or subsidization practices;

(b) the material injury or threat of material injury caused by dumping or the granting of a subsidy; and

(c) the causal relationship between the practices and the material injury or threat of material injury.

Article 22. A determination of material injury or the threat of material injury and the causal relationship with dumping or subsidies may be based inter alia on examination of the following:

(a) The volume of imports subject to such practices, in particular to determine whether there has been a significant increase in absolute terms or relative to production, consumption and imports in Ecuador;

(b) the prices of dumped or subsidized imports, in particular to determine whether they are significantly lower than prices for like products in the absence of unfair trade practices. It may also be determined whether the effect of such imports is to depress prices to a significant degree or likewise prevent price increases which otherwise would have occurred; and

(c) the effects on domestic industry estimated on the basis of actual or potential trends in the relevant economic factors, for example, production, domestic sales, market share, profits, productivity, return on investment, utilization of installed capacity, actual or potential negative effects on cash flow, inventories, employment, wages, growth, and investment capacity.

Article 23. For the purposes of determining injury or threat of injury, domestic industry means the domestic producers as a whole of the like products or those of them whose collective output of the products constitutes a major proportion of total domestic production. Nevertheless, where producers are related to the exporters or importers of the dumped or subsidized products, the term "domestic industry" may refer to the rest of the producers in Ecuador.

In exceptional circumstances, the domestic industry may be divided into two or more separate markets. The producers within each market may be regarded as a separate domestic industry if they sell most of their production of the product in question in that market and if the demand in that market is not to any substantial degree supplied by producers in the rest of the country.

In the cases referred to in the preceding paragraph, injury or threat of injury may be found to exist even where a major portion of domestic industry is not affected, provided there is a concentration of dumped or subsidized imports into such an isolated market and such imports are causing injury to the producers of all or almost all of the production within such market.

 

CHAPTER VI

Application of Measures

Article 24. In cases of dumping, anti-dumping duties shall be imposed on the dumped imports in an amount equal to the margin of dumping or less if the amount is adequate to remove the injury or threat of injury that has been found to exist.

Article 25. In cases of subsidies, countervailing duties shall be imposed on subsidized imports in an amount equal to the amount of the subsidy or less if the amount is sufficient to remove the injury or threat of injury that has been confirmed.

Article 26. Where the threat of injury or injury is evident or the period for the investigation has been extended provisional measures may be applied, which shall take the form of anti-dumping or countervailing duties, including in specific terms or minimum customs values, provided that the increased duties to be paid do not exceed the margin of dumping or subsidies.

Where the definitive duties are higher than the provisional duties paid or guaranteed, the amount in excess shall be payable. In the contrary case, the corresponding difference shall be refunded.

Article 27. Anti-dumping and countervailing duties may not be applied simultaneously to the same imported product.

Article 28. The decisions fixing anti-dumping or countervailing duties shall indicate their duration, which under no circumstances shall exceed two years. Where it is necessary to apply the measures for a period exceeding two years, the entrepreneur affected by the practice shall submit the necessary application to the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries in sufficient time to enable the corresponding investigation to be undertaken.

Article 29. The Minister for Finance and Public Credit may authorize payment of provisional or preventive anti-dumping or countervailing duties on imports released for consumption within 90 days prior to the entry into force of the corresponding decision.

Article 30. Subject to verification by the National Directorate of Foreign Trade of the Ministry of Industry, Trade, Integration and Fisheries and a decision by the Special Commission that the grounds for establishing anti-dumping or countervailing duties have been modified or ceased, the Minister for Finance and Public Credit, shall by a decision, suspend their application or reduce them to the equivalent of the new margin of the practice.

Article 31. The application of this Decree, which shall enter into effect the day following its publication in the Registro Oficial shall be the responsibility of the Ministers for Finance and Public Credit and for Industry, Trade, Integration and Fisheries.

Done at Quito on 13 September 1991.

(Signed) Rodrigo Borja, President of the Republic

Pablo R. Better, Minister for Finance and Public Credit

Juan Falconi Puig, Minister for Industry, Trade, Integration and Fisheries

Certified as an authentic copy:

(Signed) Gonzalo Ortiz Crespo, Secretary-General of Public Administration.