Transparency and confidentiality in AD investigation proceedings

Investigation process adopted by the Designated Authority in anti-dumping cases has recently been called into question before the Hon’ble Delhi High Court by the participating exporters. Proceeding has been challenged mainly on the ground that the Designated Authority failed to supply the information and data relied upon by it in the investigation (SanDisk International vs. Designated Authority [see end note 1]).

One of the basic requirements in an anti-dumping duty investigation is to establish the volume and value of the product under consideration. Product under consideration is the subject product which is imported and alleged to be dumped in India. The field formations or the department of customs in India receives information from the importers regarding the imports when the bills of entries are filed at the customs port. Such transaction-wise import data is received at various customs ports, airports and stations. The department of customs disseminates such information to various private agencies who in turn are entitled to provide such transaction by transaction data upon demand to various users of such data.

One of the government department under the Ministry of Commerce & Industries (i.e. the same Ministry under which the Designated Authority for anti-dumping duty functions) known as Directorate General of Commercial Intelligence and Statistics (DGCI&S) also receives the transaction-wise import and export data from the department of customs. The DGCI&S compiles such data received from different customs ports, airports and stations. The DGCI&S like other private agencies makes available the import/export statistics to various users of such transaction-wise data. Such data is provided based on the HS codes.

Applicants seeking imposition of anti-dumping duties and safeguard duties on various goods are one of the biggest users of such import statistics in India. The application of such trade remedy measures is based on import statistics indicating (i) the volume of imports; (ii) landed value of imports; (iii) ex-factory export price for the exporters/producers in foreign countries. Therefore, such data is relied upon to establish (a) the injury to the Domestic Industry; (b) the causal link between import and injury to the Domestic Industry; (c) the injury margin; (d) dumping margin by using the ex-factory export price.

There is delay in supply of such data by DGCI&S in comparison to the private agencies. Therefore, at the time of submission of application for trade remedy measures, data obtained from private agencies is used for above purposes and a copy of the transaction-wise import data along-with the methodology used to compile it is also provide with the application. Such transaction-wise data along-with the methodology to compile it is made available so that the Designated Authority as well as the other interested parties may comment upon the correctness of the transaction-wise import data as well as the methodology adopted to arrive at the precise product under consideration which is alleged to be dumped in India.

Subsequently, the transaction-wise import data is also provided by DGCI&S to such applicant Domestic Industry after authentication by the Designated Authority [see end note 2]. The domestic industry compiles the transaction-wise data and submits it to the Designated Authority who uses it finally in the investigation. In few instances, Designated Authority uses data from private agencies after considering the fact that the volume of import arrived at from the DGCI&S transaction-wise data is lower than that arrived from the transaction-wise import data received from private agencies. In other cases, the Designated Authority extensively uses the DGCI&S data in its final determinations i.e. final findings.

The Indian AD rules as well as the WTO Anti-dumping Agreement investigations require the Designated Authority to disclose to the interested parties the information which is used by it in the investigations. It may be noted that the submitter of the information may seek confidentiality over the information if it shows ‘good cause’ for the same. For example, a good cause can be said to exist, if it is shown that the disclosure of the information may give advantage to the competitors.

In the case of European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, DS/397, WTO Appellate Body in para. 537 held:

The requirement to show ‘good cause’ for confidential treatment applies to both information that is ‘by nature’ confidential and that which is provided to the authority "on a confidential basis". The "good cause" alleged must constitute a reason sufficient to justify the withholding of information from both the public and from the other parties interested in the investigation, who would otherwise have a right to view this information under Article 6 of the Anti-Dumping Agreement.

The transaction-wise import data pertains to exporters/importers and not the domestic industry. Therefore, the interested party who could be seen as legitimately entitled to claim confidentiality over such data are the exporters/importers of the subject product. The applicant domestic industry cannot be seen as the interested party who can have access to such data and also be allowed to claim confidentiality over such data.
Such transaction-wise import data is not considered as confidential by the DGCI&S. The DGCI&S policy’s stipulations with regards data dissemination is stated below [see end note 3]:

...Transaction wise import data, suppressing the identity of the importers are provided to different private users for anti-dumping investigations after proper authentication by the Directorate General of Anti-Dumping and Allied Duties (DGAD). The following particulars of transaction level data are provided to the users under the Right to Information Act, 2005:

Interestingly, the Designated Authority usually declines to share transaction by transaction import data relied upon by them with the exporters/importers by treating it as confidential. As stated above, this is despite the undisputed fact that information pertains to them and is used against them. The domestic industry has access to such information without any restrictions even though such information does not pertain to the domestic industry.

Further, for the purpose of sharing of the information submitted during the course of investigation, it is immaterial to determine the need for use of such information by the interested parties. The test is whether such information, used in the investigation by the Authority, is finally relied upon in the determination or not.

In the investigation concerning import of USB Flash Drives, the applicant domestic producer relied upon and submitted with the application the transaction-wise import statistics obtained from Cybex Exim Solutions (P) Ltd. (Cybex). After a year, the applicant domestic producer modified the data substantially and then again in the post hearing written submission further modified the data. The volume estimated by the applicant domestic producer from DGCI&S data was substantially lower than the volume estimated based on the same DGCI&S data by the Designated Authority in its final finding. Designated Authority refused to provide the relied upon transaction by transaction import statistics and the methodology used to refine the raw data to arrive at the volume and value of the product under consideration.

Also, during whole of the investigation proceedings, the interested parties made all submissions based on the import statistics provided by the domestic industry from Cybex. The participating exporters in the investigation challenged the final finding of the Designated Authority due to the failure to provide information relied upon by the Designated Authority which prejudiced their interest and right to effectively participate in the investigation process. Due to the violation of principles of natural justice in the investigation process, the Hon’ble High Court intervened under Article 226 of the Constitution and quashed the impugned recommendation, as a result of which, no anti-dumping duty was imposed on import of USB Flash Drives.

Union of India and domestic industry challenged the decision of the Hon’ble High Court in aforesaid case before the Hon’ble Supreme Court. Both, the Union of India and domestic industry are opposing the decision of the Hon’ble High Court which has essentially stressed upon the inveterate ‘fairness’ in the investigation process. Hon’ble Supreme Court has granted an interim stay on the decision of the Hon’ble High Court [see end note 4] while the matters are now pending before it. Relying on such interim stay, Government of India issued the anti-dumping duty notification implementing the recommendation of the Designated Authority which was originally quashed by the Hon’ble Delhi High Court [see end note 5].

Since the issue involved is systemic, the outcome of these appeals pending before Hon’ble Supreme Court will be critical to the method adopted by the Designated Authority in investigation proceedings in future. In conclusion, the outcome of these decisions is also critical owing to the export interest that exporters and other WTO member countries have in India. Careful scrutiny can be expected of this legal development by the outside world as it would determine the extent of their role and effective participation in future anti-dumping investigation.
     
[The author is a Joint Partner, Lakshmikumaran & Sridharan, New Delhi]
 
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