Introduction:

Firstly, welcome to the African Trade Remedies page, blog, information resource and opinion platform. African Trade Remedies will deal with ‘all things African trade remedies’, as well as an introduction to the more general topic of ‘trade remedies’ itself.  So, let’s get stuck in. ‘Trade’, by common definition, is the voluntary exchange of goods or services between parties, who may also be referred to as ‘economic actors.’ A ‘remedy,’ by definition (albeit excluding the medicinal meaning), refers to a solution or rectification of some sorts. Together, trade remedies encapsulate the actions which may be taken in an effort to resolve the problems which may arise as a result of the multiplicity of transactions which are occurring across the globe.

In its, arguably, most basic form, the concept of trade remedies can be divided into an understanding of the rules which delineate unfair trade, and the safeguard measures which protect against the consequences of trade which may menace the market. Ultimately, these rules and measures translate into policy tools which may be implemented by governments in appropriate circumstances.

In short, the rules of unfair trade categorically constitute dumping and anti-dumping measures, as well as subsidies and countervailing measures. On the other hand, there also exists certain crucial safeguard measures.

The rules of unfair trade:

What exactly is unfair trade? Broadly, unfair trade refers to a trade practice which leads to injury being caused to a domestic industry (being that of the importing country). The element of unfairness, however, is generally distinguishable in the different categories of unfair trade.

Under the umbrella of antidumping and countervailing duties, for instance, outright ‘unfair trade practices’ (e.g., in relation to unfair pricing and government subsidies) are counteracted. Such practices only require that there is a material injury to the industry. In cases where safeguarding is the solution, the root of the problem is not unfairness. On the contrary, safeguarding measures are implemented in instances where there have been ‘fair trade practices’, but such practices have nonetheless resulted in serious injury to the domestic industry.

Dumping:

Dumping occurs when a product is brought into a market of a different country/customs territory at a price which is lower than the ordinary value of that product. In other words (particularly for my competition-law colleagues who may have already entered into a state of passive reading), dumping refers to instances of price discrimination between national markets. If the practice of dumping causes injury to the domestic producers of goods and/or services in the country of import, that country’s authorities have available to them and could impose the anti-dumping remedies to counter the consequences of dumping.

To be slightly more technical about these values, the ‘normal value’ means a price which is analogous in the ordinary course of trade for a like product when that product is intended for consumption in the country of export.

In terms of the General Agreement on Tariffs and Trade 1994 (together with the Anti-Dumping Agreement entered into for purposes of its implementation), there exist three primary anti-dumping measures:

• The first is ‘provisional measures’, in terms of which the relevant investigating authority comes to a preliminary affirmative conclusion that there has been dumping, with injury and adequate causation. The authority may only implement measures, such as requiring a cash deposit, within certain bounds and only if they are satisfied that the measure is necessary for the potential injury to be prevented.
• The second is ‘price undertakings’ which acts as an alternative remedy to the first, and by which the parties may offer and accept price undertakings instead of imposing anti-dumping duties. The entity exporting the product(s) would then enter into a price undertaking with the investigating authority.
• The third is ‘definitive anti-dumping duties’, which entails the domestic authorities imposing protectionist tariffs on foreign imports of products which it judges as being priced lower than fair market value.

Countervailing measures:

Countervailing measures are the measures relevant to cases where the investigating authority finds that the imported goods under consideration benefit from certain subsidies, and that this collectively results in injury to the domestic market. For the authority to find that a subsidy exists, in the most basic form there must be a financial contribution by a public/state body which confers a benefit on the recipient.

Although some subsidies may be countervailed, not all subsidies are countervailable. Subsidies must fall into one of the categories (e.g., prohibited subsidies) and must therefore be adequately specific, to be countervailable.

Countervailing measures can be narrowed down further into subsidies which are outright prohibited (e.g., import substitution subsidies), actionable subsidies (e.g., beneficial tax rates from the government tax structure) and non-actionable subsidies. It is clear from this categorization that not all subsidies are completely prohibited, but rather that some may be challenged on the adverseness of their effects.

Two sets of remedies exist for countervailing measures, and they run in either multilateral or unilateral form. The multilateral countervailing measures require a process of consultation and referral of the mater to a dispute settlement body, which imposes the appropriate remedy in relation to the subsidy (e.g., subsidy must be withdrawn, or the adverse effect of the subsidy must be removed). The unilateral route sees countervailing duties unilaterally imposed on the subsidized imports.

By definition, countervailing duties are special duties which may be levied with the objective of equalizing subsidies which have been bestowed (by direct or indirect means) on the production, manufacture of export of products. Like antidumping measures, countervailing measures may be provisional (e.g., guaranteed by bonds) or voluntary.

Safeguard measures:

Last but not least, we briefly consider ‘safeguarding measures.’ These measures act as emergency exceptions which are distinguishable from their antidumping and countervailing counterparts in the sense that no unfair trading practice is required, and that they may take the form of a quota.

For safeguard measures to be applicable, there must, however, be a finding of increased imports, a serious injury (or threat thereof) and the ever-present legal element of causation. A publicly notified investigation is conducted on this basis, which results in the production of a detailed report which delineates the findings of the investigating authority, whose conclusions must similarly be published for public knowledge.

Although the form of safeguard measures has not been precisely delineated in codified form, in practice, measures normally take the form of customs duties higher than that which is necessary and quantitative restrictions.

Alternatively, authorities could impose provisional safeguards because of a preliminary finding based on clear evidence, that imports have already caused, or a likely to cause a serious injury. Such measures typically take the form of tariff increases.

 Conclusion:

In our next edition, we delve deeper into this ‘engine of growth which creates jobs, reduces poverty and increases economic opportunity.’ In line with current global themes, we will consider international trade law in times of turbulence, which arguably lays a foundation for a world-state which Africa may use to its advantage.