What is Circumvention?
Dumping or export of subsidized trade among various nations, though the measures taken by the member countries through the imposition of duties to create an equal playing field between the national and international competitors. Circumvention of anti‐dumping or anti subsidy measures can be said as a trade strategy by the subject country exporters for exporting products which are either subject to duty or the investigation regarding the imposition of the duty is going on.
Circumvention as per dictionary of international trade is “avoiding quotas and other restrictions by altering the country of origin of a product; measures taken by exporters toevade anti‐dumping or countervailing duties”. India and other WTO members have inserted legal provisions to address the issue of circumvention of duties. To circumvent ADD & CVD imposed, three kinds of Circumvention practices are being followed whereby the importer can legitimately claim that the imported product is not subject to duty as‐
a. Circumvention in unassembled, unfinished or incomplete form (Product Circumvention)‐ When any article or product is subject to ADD and is being exported from the subject country in an unassembled, unfinished or incomplete form and is assembled, finished or completed in country doing investigation or in such country, such assembly, finishing or completion can be considered to circumvent the duty in force if the operation started or increased after, or just prior to the investigations and the parts and components are imported from the country of origin or country of export notified for purposes of levy of ADD/CVD.
b. Circumvention through minor alteration (Product Circumvention)‐ Where an article subject to ADD/CVD is imported from country of origin or country of export notified for the levy of ADD/CVD after being subjected to any process involving alteration of the description, name or composition of an article, such alteration can be considered as circumventing the duty in force if the alteration of the description or name or composition of the article subject to duty results in the article being altered in form or appearance even in minor forms regardless of the variation of tariff classification, if any.
c. Circumvention through transshipment (Country Circumvention)‐ Where an article subject to ADD/CVD is imported into India through exporters in country not subject to duty, such exports may be considered as circumventing duty earlier imposed in case it is established that the imports from such third country are not goods wholly produced in such third country, and in fact were goods substantially produced in the country attracting ADD/CVD. The goods may be exported from the country attracting duty to such new country, “processed” in such new country to “such an extent” that the same may be sufficient to declare this new country as the country of origin and thereafter the goods are exported to the country who has imposed the measure.
By the following ways a circumvention investigation may be initiated.
a. The Designated Authority may initiate an investigation to determine the existence and effect of any alleged circumvention of duty upon receipt of a written application by or on behalf of the domestic industry.
b. The domestic industry may file an application containing sufficient evidence as regards the existence of the circumstances to justify initiation of an anti‐circumvention investigation.
c. Even the Designated Authority may initiate an investigation suo‐motu if the Designated Authority is satisfied from the information received from the Commissioner of Customs or any other source that sufficient evidence exists as to the existence of the circumstances pointing to circumvention of duty in force.
d. The Designated Authority may initiate an investigation to determine the existence and effect of any alleged circumvention of duty in force where the Designated Authority is
satisfied that imports of the article circumventing ADD/CVD in force are found to be dumped.
Post initiation Procedure‐ The procedure after initiation and the provisions regarding evidence are same as a normal anti dumping investigation. Any such investigation is required to be concluded within 12 months and in no case more than 18 months of the date of initiation of investigation.
Determination of circumvention‐ Whether the action constitute circumvention of duty, it needs to be established that there has been a change in trade practice or pattern of trade by satisfying (a) absence of a justification, economic or otherwise, other than imposition of anti‐dumping duty; (b) evidence that the remedial effects of duties are undermined in terms of the price and/or the quality. The Designated Authority, upon determination that circumvention of duty is taking place, may recommend imposition of ADD/CVD to imports of articles found to be circumventing an existing anti dumping duty. In case the investigation has shown that the duty is being circumvented anti dumping duty can be extended to imports from such countries.
Review of circumvention‐ The Designated Authority can review the need for the continued imposition of the duty either on the basis of a written application or on own initiative of the Designated Authority.
Ms Richa Shukla
LAW ASSOCIATE, TPM Consultants