The Non-market Economy Treatment for Small Planned Economies

Zhang, Bin

doi:10.1007/978-981-13-0653-2_4

Bin Zhang²

229 Accesses

Abstract

The GATT-minus provisions, after their birth from the conflict between the U.S. on the one side and the Soviet Union and Czechoslovakia on the other, further developed in the late 1960s and the early 1970s when other Eastern European countries acceded to the GATT.

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Notes

1.
On November 11, 1945, the People’s Front led by the Communist Party of Yugoslavia won the first Yugoslav post-World War II election. On November 29, 1945, the Constituent Assembly of Yugoslavia formally abolished the monarchy and declared the state a republic. The country’s official name became the Federal People's Republic of Yugoslavia. On April 7, 1963, the 1963 Yugoslav Constitution came into effect, with the country’s name changed to the Socialist Federal Republic of Yugoslavia.
2.
Horvat (1971), p. 120.
3.
See Chap. 1.
4.
USGAO (1981), p. 1.
5.
See the AD/CVD case history statistics at the USDOC website.
6.
It was not until 1977 that the U.S. Treasury stated in the case Animal Glue and Inedible Gelatin from Yugoslavia that Yugoslavia did not have a state-controlled economy for the purposes of the Antidumping Act. See Cuneo and Manuel (1981), note 64, p. 289; Horlick and Shuman (1984), p. 809.
7.
GATT documents L/870 and SR.13/11.
8.
GATT document L/926.
9.
For the declaration, see GATT (1960), pp. 18–20. For the CONTRACTING PARTIES decision, see GATT (1960), p. 17. For the working party report, see GATT (1960), pp. 64–66.
10.
GATT document L/1106.
11.
GATT document L/1868.
12.
GATT document L/1868.
13.
For the declaration, see GATT (1963), pp. 50–52. For the CONTRACTING PARTIES decision, see GATT (1963), pp. 52–53. For the working party report, see GATT (1963), pp. 79–82.
14.
GATT (1963), p. 52.
15.
GATT (1966), p. 52.
16.
GATT (1966), p. 49.
17.
The Working Party comprised the following members: Australia, Fed, Rep. of Germany, Pakistan, Austria, Greece, Sweden, Belgium, India, Switzerland, Canada, Israel, United Kingdom, Czechoslovakia, Italy, United States, Denmark, Japan, Yugoslavia, France, and Netherlands.
18.
GATT (1966), p. 56.
19.
For the accession protocol, see GATT (1968), pp. 53–55. For the CONTRACTING PARTIES decision, see GATT (1968), p. 63. For the Working Party report, see GATT (1966), pp. 49–59.
20.
GATT document SR.12/1.
21.
GATT document L/967.
22.
GATT document W.14/19.
23.
Kostecki (1979), p. 27.
24.
GATT document L/1049.
25.
Evans (1971), pp. 262–263.
26.
GATT document W.14/19.
27.
GATT document SR.15/15.
28.
For the declaration, see GATT (1960), pp. 12–14. For the CONTRACTING PARTIES decision, see GATT (1960), pp. 11–12. For the working party report, see GATT (1960), pp. 61–62.
29.
GATT document L/1373.
30.
At the twentieth session of the GATT in November 1962, the U.S. Kennedy Administration proposed that the Contracting Parties be convened again in early 1963 to make plans for a negotiating conference in 1964. From May 16 to 21, 1963, this proposed ministerial meeting was held, which established a date one year later for the end of the preparatory phase and the opening of negotiations. See Evans (1971), p. 164 and p. 184.
31.
GATT document Spec (63)146.
32.
GATT document TN.64/SR.1.
33.
GATT document TN.64/SR.2.
34.
GATT document TN.64/SR.2. The first meeting of the Trade Negotiations Committee elected the Executive Secretary of the GATT, Mr. E. Wyndham White, chairman of the Committee and established four sub-committees: Sub-Committee on the Tariff Negotiating Plan, Sub-Committee on Non-Tariff Barriers and Other Special Problems, Sub-Committee on the Participation of Less-Developed Countries, and Committee on Agriculture.
35.
GATT document L/2724.
36.
GATT document Spec (63)146.
37.
Douglas (1972), p. 755. For the “minimum import commitments” proposed by Poland in the Dillon Round, see GATT document SR.15/15.
38.
GATT document TN.64/NTB/15.
39.
GATT documents TN.64/SR.7 and TN.64/30.
40.
GATT document TN.64/27.
41.
Laczkowski (1969), p. 87.
42.
Laczkowski (1969), p. 88.
43.
GATT document L/2724.
44.
GATT document L/2736. The Accession Working Party included Poland and the following 27 GATT members: Australia, Austria, Belgium, France, Federal Republic of Germany, Italy, Luxemburg, Netherlands, EEC, Brazil, Canada, Chile, Cuba, Czechoslovakia, Denmark, Finland, India, Israel, Japan, Nigeria, Pakistan, Sweden, Switzerland, Turkey, U. K., U.S., and Yugoslavia. See GATT documents L/2736/Rev.1 and L/2736/Rev.1/ Corr.1. The terms of reference of the Working Party took into account the Poland’s proposal that the working party should take fully into consideration the procedure for accession already established by the Council and presented to the CONTRACTING PARTIES at their twenty-second session in document W.22/6 of 12 March 1965. That document made the arrangements for proceeding with the examination of the applications from five governments, namely Argentina, Iceland, Tunisia, United Arab Republic, and Yugoslavia, which had indicated their desire to accede to the GATT, and which had been granted provisional accession.
45.
GATT documents SR.15/17 and L/1164.
46.
For the decision, see GATT (1961), pp. 26–28. For the working party report, see GATT (1961), pp. 106–110.
47.
GATT document TN.64/NTB/15.
48.
Haus (1992), p. 35.
49.
The final agreement would have to be signed before expiration of the U.S. president’s negotiating authority under the Trade Expansion Act of 1962, that is, the end of June, 1967. See Evans (1971), p. 235.
50.
GATT document TN.64/NTB/39.
51.
Evans (1971), p. 261.
52.
GATT (1968), pp. 24–35.
53.
Article 2 (d) of the Kennedy Round Antidumping Agreement provides that:
When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to any third country which may be the highest such export price but should be a representative price, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and any other costs and for profits. As a general rule, the addition for profit shall not exceed the profit normally realized on sales of products of the same general category in the domestic market of the country of origin.
54.
Article 2 (g) of the Kennedy Round Antidumping Agreement provides that: This Article is without prejudice to the second Supplementary Provision to paragraph 1 of Article VI in Annex I of the General Agreement.
55.
It is for this reason that some scholars think that Article 2 (d) of the Kennedy Round Antidumping Agreement was not designed for NME members. See, for example, Denton (1987), p. 206 and Snyder (2001), p. 388 and note 102.
56.
As of the Kennedy Round, the EC did not have a uniformed antidumping regulation.
57.
Laczkowski (1969), p. 91.
58.
GATT document C/M/41.
59.
For the protocol, see GATT (1968), pp. 46–52. For the working party report, see GATT (1968), pp. 109–112.
60.
GATT document SR.12/1.
61.
Kostecki (1979), p. 30.
62.
GATT document L/3050.
63.
For the protocol, see GATT (1972), pp. 5–10. For the working party report, see GATT (1972), pp. 94–97. For the decision, see GATT (1972), pp. 23–24.
64.
GATT document L/3601.
65.
Haus (1992), p. 37.
66.
GATT document Spec(69)110. It was until 1974 that the U.S. reached bilateral trade agreement with Romania and granted it MFN treatment in the following year (Table 2.6).
67.
GATT document Spec(69) 86.
68.
Haus (1992), pp. 39–40.
69.
GATT document Spec(69)86.
70.
Haus (1992), pp. 41–42.
71.
GATT document IC/W/82.
72.
Gregory and Stuart (1992), pp. 470–473; Nyerges (1989), p. 162.
73.
GATT document C/M/37.
74.
GATT document SR.24/1.
75.
GATT documents L/3228 and L/3238.
76.
GATT document C/M/56.
77.
For the protocol, see GATT (1974), pp. 3–8. For the working party report, see GATT (1974), pp. 34–38.
78.
GATT document C/M/56.
79.
GATT document Spec (70)83.
80.
GATT document Spec (71)17.
81.
Kostecki (1974), p. 406.
82.
Haus (1992), pp. 46–47.
83.
GATT document L/3637.
84.
GATT document L/3238.
85.
Nyerges (1989), p. 164.
86.
Nyerges (1989), p. 163; GATT document Spec (71)17.
87.
GATT document Spec (71)17.
88.
Kostecki (1974), pp. 412–413.
89.
GATT document Spec (71)17.
90.
GATT document Spec (71)17.
91.
GATT document C/M/41.
92.
GATT document SR.24/1.
93.
Dimitrov (2001), pp. 69–70.
94.
GATT document MTN/TAR/10.
95.
GATT document MTN/TAR/11.
96.
Breskovski (1993), p. 52.
97.
GATT document MTN/1. The Tokyo Round was open to all countries interested through a notification to the Director-General, irrespective of their status as to the GATT. See GATT document MIN(73)1.
98.
GATT (1980), p. 189.
99.
The Tokyo Round Trade Negotiations Committee decided in April 1979 that the agreements “will be open to accession by a government which is not a contracting party on terms related to the effective application of rights and obligations under the Agreement to be agreed between that government and the Parties to the Agreement.” See GATT document MTN/P/5.
100.
GATT document TBT/2.
101.
Breskovski (1993), p. 53.
102.
Haus (1992), p. 74.
103.
GATT document TBT/9.
104.
GATT documents TBT/M/10 and TBT/M/13.
105.
GATT document L/6023.
106.
GATT (1987), pp. 19–27.
107.
GATT document L/6023/Add.1.
108.
GATT document C/M/204.
109.
GATT documents C/M/202 and C/M/204.
110.
GATT document L/6364.
111.
Haus (1992), pp. 84–85; Breskovski (1993), pp. 56–57. The standard terms of reference of an accession working party are “to examine the application of the Government of … to accede to the General Agreement under Article XXXIII, and to submit to the Council recommendations which might include a draft Protocol of Accession.”
112.
GATT documents C/M/239 and L/6667.
113.
Breskovski (1993), p. 56.
114.
GATT document L/6867.
115.
Breskovski (1993), pp. 58–59.
116.
To speed up Central and Eastern European Countries’ social and economic transformation, the EEC/EU implemented a series of policies and measures in the late 1980s and the early 1990s. The first was to sign bilateral trade agreements and grant MFN treatments and created the program entitled “Poland and Hungary: Assistance for Restructuring their Economies” (PHARE) from 1988 to 1991. The second was to expand the coverage of the PHARE program in 1992. The third was to sign association agreements with Poland, Hungary, Czechoslovakia, Bulgaria, Romania, and Slovenia from 1991 to 1995 to promote comprehensive cooperation with those countries and make preparation for their integration into the EEC/EU.
117.
GATT document L/7244.
118.
GATT (1972), pp. 200–201.
119.
GATT (1972), p. 201.
120.
Since the sixth review under the Poland’s accession protocol, the contracting parties had noted that there had been a deterioration in Poland’s trade balance with them and an increase of foreign debts. For working party reports on trade with Poland from the sixth to the ninth reviews, see GATT (1974), pp. 209–217; GATT (1975), pp. 112–121; GATT (1976), pp. 63–73; GATT (1978), pp. 139–149.
121.
GATT (1974), p. 34.
122.
On July 1, 1977, at the request of the Hungarian government, the annex was modified by adding the Republic of Cuba to the list. See GATT (1978), p. 4.
123.
The working party of the third review under the Poland’s protocol met three times in July, November, and December 1970.
124.
GATT (1972), p. 196.
125.
GATT (1972), p. 197.
126.
GATT (1972), p. 209.
127.
GATT (1972), p. 210.
128.
GATT (1976), p. 55; GATT (1987), p. 142.
129.
GATT (1973), p. 119; GATT (1976), p. 58.
130.
According to the working party report on the seventh review under the Hungary’s accession protocol, by the end of 1989, the EC was the only contracting party that still maintained discriminatory quantitative restrictions on imports from Hungary.
131.
It was based on those agreements that the EC put forward the PHARE program.
132.
According to the working party report on the seventh review under the Hungary’s accession protocol, the EC undertook under the bilateral cooperation agreement to abolish quantitative restrictions on imports from Hungary in three phrases from September 1, 1988 to December 31, 1995. See GATT (1990a), p. 422. Later, the PHARE program advanced the deadline to January 1990 for the removal of quantitative restrictions on Poland and Hungary.
133.
GATT (1974), p. 224.
134.
GATT (1978), p. 150.
135.
GATT (1978), p. 153.
136.
GATT (1981), pp. 167–171.
137.
GATT (1984), p. 195.
138.
GATT (1990a), p. 431.
139.
GATT documents L/6554 and C/W/647.
140.
Section 402 of the Trade Act of 1974 used the term “nonmarket economy country”, while Section 406 used the term “communist country”. The Senate Finance Committee explained the purpose of the market disruption provisions as follows: The Committee recognizes that a communist country, through control of the distribution process and the price at which articles are sold, could disrupt the domestic markets of its trading partners and thereby injure producers in those countries. In particular, exports from communist countries could be directed so as to flood domestic markets within a shorter time period than could occur under free market conditions. In this regard, the Committee has taken into account the problems which East-West trade poses for certain sectors of the American economy. For example, the U.S. watch and clock industry is in a particularly vulnerable position because of East European countries’ capacity for penetrating markets with under priced clocks and watches. When Canada provided MFN status to communist-bloc countries in the 1960s, low-priced East European clock imports increased dramatically, to the point where sales of such imports surpassed those of domestic Canadian producers. In the face of such imports, traditional unfair trade remedies, such as under the Antidumping Act, have proved inappropriate or ineffective because of the difficulty in their application to products from State-controlled economies. See Clubb (1991), p. 806, note 3.
141.
All the bilateral trade agreements between the U.S. and NME countries except Poland have been signed after the Trade Act of 1974 entered into force on January 3, 1975. See Table 2.6.
142.
There have never been such investigations after 1994. See USITC (2010), Table 17 at p. 99.
143.
The original purpose of the new regulation was to conform to the provisions of the Kennedy Round antidumping agreement which entered into force on the same day. The U.S. was one of the 18 original signatories of the agreement. However, as the U.S. President had received no authorization from Congress to negotiate and enter into such an agreement, it was not approved and transplanted into domestic law. See Anthony (1969), pp. 178–182; Jackson and Davey (1986), pp. 670–673.
144.
See Chap. 3.
145.
Cuneo and Manuel (1981), p. 292.
146.
Certain Carbon Steel Plate From Poland: Determination of Sales at Less Than Fair Value, 44 FR 23511, 23614 (April 20, 1979).
147.
Holzman (1983), p. 138.
148.
Meuser (1979), p. 785.
149.
Electric Golf Cars from Poland: Determination of Sales at Less Than Fair Value, 40 FR 25429, 25497 (June 16, 1975).
150.
Meuser (1979), pp. 778–784.
151.
19 CFR §153.7 (amended on August 9, 1978).
152.
Pursuant to the Trade Agreements Act of 1979 and the Reorganization Plan No. 3 of the President, the administration of CVD and AD statutes was transferred to the Department of Commerce from the Treasury Department in January 1980. On January 2, 1980, the Department of Commerce created the International Trade Administration by combining most of the former Industry and Trade Administration with the commercial representation function transferred from the State Department’s Foreign Service and the AD and CVD programs transferred from the Treasury Department. Before that, Congress transferred, in 1954, from the Treasury Department to the Tariff Commission the injury determination function to be performed under the Antidumping Act. The Trade Act of 1974 changed the name from the Tariff Commission to the International Trade Commission, and the Trade Agreements Act of 1979 expanded its responsibilities to making the CVD injury determination. See Clubb (1991), p. 298, p. 311, and p. 313.
153.
Ehrenhaft et al. (1997), p. 24; Horlick and Schuman (1984), p. 813.
154.
GATT (1980a), pp. 171–188.
155.
GATT (1980a), pp. 56–83.
156.
Compare note 35 of the Tokyo Round Subsidies Code, Article 2(d) of the Kennedy Round Antidumping Code, and Article 2(4) of the Tokyo Round Antidumping Code. Moreover, the two antidumping codes do not explicitly use the term of “constructed value”.
157.
Horlick and Schuman (1984), p. 813.
158.
Horlick and Schuman (1984), p. 813.
159.
GATT document ADP/1/Add.3/Rev.2.
160.
GATT document ADP/1/Add.3/Rev.4.
161.
Snyder (2001), p. 396.
162.
OJ L 93, 17.4.1968, p. 1; GATT document L/3033.
163.
OJ L 196, 2.8.1979, p. 1.
164.
OJ L 306, 31.10.1978, p. 1.
165.
OJ L 131, 29.5.1979, p. 1.
166.
OJ L 339, 31.12.1979, p. 1.
167.
OJ L 201, 30.7.1984, p. 1.
168.
OJ L 167, 26.6.1987, p. 9.
169.
OJ L 209, 2.8.1988, p. 1.
170.
OJ L 349, 31.12.1994, p. 1.
171.
OJ L 56, 6.3.1996, p. 1.
172.
The second version is the Council Regulation (EC) No.1225/2009 of November 30, 2009, and the third version is the Regulation (EU) No. 1036/2016 of the European Parliament and of the Council of June 8, 2016.
173.
Annex 1 of the Council Regulation (EC) No. 519/94 listed 20 NME countries to which it applied. See OJ L 67, 10.3.1994, p. 97.
174.
As of January 1, 1990, Section 701 of the Tariff Act of 1930 applied to 42 countries or separate customs territories, of which there were no NME countries. See Clubb (1991), p. 455.
175.
Initiation of CVD Investigations: Textiles, Apparel, and Related Products from the People’s Republic of China, 48 FR 46,487, 46,600 (October 13, 1983).
176.
Cichanowicz (1983), p. 406.
177.
The text of Section 303 of the Tariff Act of 1930 was as follows:
whenever any country, dependency, colony, province, or other political subdivision of government, person, partnership, association, cartel, or corporation, shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacturer or production or export of any article or merchandise manufactured or produced in such country, dependency, colony, province, or other political subdivision of government, then upon importation of such article or merchandise into the country, whether the same shall be imported directly from the country of production or otherwise, and whether such article or merchandise imported in the same condition as when exported from the country of production or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases, in addition to any duties otherwise imposed, a duty equal to the net amount of such bounty or grant, however the same be paid or bestowed.
178.
Carbon Steel Wire Rod from Czechoslovakia: Final Negative Countervailing Duty Determination, 49 FR 19285, 19370 (May 7, 1984); Carbon Steel Wire Rod from Poland: Final Negative Countervailing Duty Determination, 49 FR 19285, 19374 (May 7, 1984).
179.
Potassium Chloride from the Soviet Union: Rescission of Initiation of Countervailing Duty Investigation and Dismissal of Petition and Potassium Chloride from the German Democratic Republic: Rescission of Initiation of Countervailing Duty Investigation and Dismissal of Petition, 49 FR 23331, 23428 (June 6, 1984).
180.
Continental Steel Corp. v. United States, 614 F. Supp. 548 (CIT 1985). For the case summary, see The American Journal of International Law, Vol. 80, No. 2 (April 1986), pp. 359–362.
181.
Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir. 1986). For the case summary, see The American Journal of International Law, Vol. 81, No. 1 (January 1987), pp. 212–214.
182.
The Court of Appeals only reviewed the merits of the CIT’s reversal of the DOC’s determination in the potash cases, and it instructed the CIT to dismiss the complaint in the Czechoslovakian and Polish wire rod cases for lack of jurisdiction because the complaint was not timely filed.
183.
Initiation of Antidumping Duty Investigations: Oscillating Fans and Ceiling Fans from China, 55 FR 49245, 49320 (November 27, 1990); Initiation of Antidumping Duty Investigation: Chrome-Plated Lug Nuts from China, 55 FR 49497, 49548 (November 29, 1990).
184.
Final Determination of Sales at Less Than Fair Value: Chrome-Plated Lug Nuts from China, 56 FR 46107, 46153 (September 10, 1991).
185.
Final Determination of Sales at Less Than Fair Value: Chrome-Plated Lug Nuts from China, 56 FR 46107, 46153 (September 10, 1991); Final Determinations of Sales at Less Than Fair Value: Oscillating Fans and Ceiling Fans from China, 56 FR 55195, 55271 (October 25, 1991).
186.
Consolidated International Automotive, Inc. v. United States.
187.
Initiation of Countervailing Duty Investigations: Oscillating Fans and Ceiling Fans from China, 56 FR 57573, 57616 (November 13, 1991); Initiation of Countervailing Duty Investigations: Chrome-Plated Lug Nuts and Wheel Locks from China, 57 FR 755, 877 (January 9, 1992).
188.
Amendment to Final Determination of Sales at Less Than Fair Value and Amendment to Antidumping Duty Order: Chrome-Plated Lug Nuts from China, 57 FR 15001, 15052 (April 24, 1992).
189.
Holmes Products Corp v. United States.
190.
Initiation of Countervailing Duty Investigations: Oscillating Fans and Ceiling Fans from China, 56 FR 57573, 57616 (November 13, 1991). The petitioner who filed a CVD case on chrome-plated lug nuts and wheel locks from China had a similar allegation that the lug nuts sector in China was sufficiently outside of government control that this sector was no longer within the scope of Georgetown Steel Corporation v. United States. See Initiation of Countervailing Duty Investigations: Chrome-Plated Lug Nuts and Wheel Locks from China, 57 FR 755, 877 (January 9, 1992).
191.
Preliminary Determination of Sales at Less Than Fair Value: Sulfanilic Acid from China, 57 FR 9381, 9409 (March 18, 1992).
192.
Preliminary Negative Countervailing Duty Determinations: Oscillating and Ceiling Fans from China, 57 FR 9973, 10011 (March 23, 1992).
193.
Final Negative Countervailing Duty Determinations: Oscillating and Ceiling Fans from China, 57 FR 23925, 24018 (June 5, 1992). For the three MOI test criteria, see Table 5.4.
194.
WTO (2004a), paragraphs 96–97.
195.
WTO (2004a), paragraph 103.
196.
WTO (2011a), paragraph 489.
197.
USGAO (2006), p. 26.
198.
OJ L 349, 31.12.1994, p. 22.
199.
Mayer, Brown, Rowe & Maw LLP (2005), Annex 6, p. 26.
200.
OJ L 288, 21.10.1997, p. 1.
201.
OJ L 305, 7.11.2002, p. 4.
202.
OJ L 77, 13.3.2004, p. 12.
203.
OJ L 188, 18.7.2009, p. 93.
204.
OJ L 176, 30.6.2016, p. 55.

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Zhang, B. (2018). The Non-market Economy Treatment for Small Planned Economies. In: The Evolution of the Non-market Economy Treatment in the Multilateral Trading System. Springer, Singapore. https://doi.org/10.1007/978-981-13-0653-2_4

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