Federal Law No. 1 of 2017
Cabinet Decision No. 8 of 2018 on the Implementing Regulations of Federal Law No. 1 of 2017.
Federal Law No. 1 of 2017 (the Law) on Anti-Dumping and Countervailing & Preventive Measures is one of the series of laws adopted by the UAE to comply with the rules of the World Trade Organization. The importance of this Law is that it provides the legal framework for the protection of the UAE industries, while keeping in line with the rules of the World Trade Organization.
The Law was promulgated on 16 April 2017 and published in the Official Gazette on 27 April 2017. As per article 22, the Law takes effect as of the day following the day of its publication in the Official Gazette. Although the Law was in force as of 27 April 2017, the tools to implement the Law were still missing until the adoption of the implementing regulations thereof through Cabinet Decision No. 8 of 2018 (the Implementing Regulations). The Implementing Regulations were published in the Official Gazette on 29 March 2018 and came into force on 30 March 2018.
An important feature of the Law that attracts special attention is that the Law is not unique to the UAE but rather relevant to other GCC countries as well. The Supreme Council of the Cooperation Council for the Arab States of the Gulf adopted in its 24th session held in December 2003 the unified law on anti-dumping and countervailing and preventive measures as an obligatory law as of 1st January 2004. As per the GCC Cooperation Council Charter, one of the key objectives is to formulate similar regulations in various fields. Hence, the Supreme Council adopts certain legislations as either obligatory legislations or consultative legislations. Be it obligatory or consultative, such legislations need to be adopted by each GCC country in accordance with its own legal system in order for such legislation to be enforceable within the territory of the relevant country. The unified legislations adopted by the Supreme Council have to be amended to the extent necessary to make it fit with the legal system of the respective GCC country.
The GCC unified law on anti-dumping and countervailing and preventive measures was adopted by the UAE government by virtue of Federal Decree No. 7 of 2005. However, it was only in 2017 when the UAE government customised the GCC unified law on anti-dumping and countervailing and preventive measures to make fit within the legal system of the UAE and hence, promulgated the Law.
This objective of this analysis it to focus on the key areas of the Law and Implementing Regulations rather than dealing with all the provisions of both pieces of legislation.
Harmful practices in international trade
The objective of the Law is to combat the harmful practices in international trade. Article 1 of the Law defines the harmful practices in international trade as the practices of dumping, specialised subsidy and increase of imports. Each of such harmful practices is defined in article 1 of the Law. Dumping means, as defined in article 1 of the Law, exporting a product to the UAE at an export price that is less than the normal value of the like product in the export country in the normal course of trade.
It is worth noting that while the definition of harmful practices in the international trade lists specialised subsidy as one of such practices, article 1 of the Law contains two separate definitions for the subsidy and the specialised subsidy. The subsidy is defined as any financial contribution, or any other form of support provided by the government or any public institution of the country of origin, which operates to support the income or prices in accordance with the definition set forth in article 16 of the General Agreement on Tariffs and Trade (GATT) of 1994 and results in the recipient of such subsidy realising a benefit. Such definition refers to article 16 of the GATT in respect of defining the exact meaning of subsidy. However, article 16 of the GATT does not, and in fact is not meant to, define the subsidy but rather sets forth the obligations of the contracting parties to the GATT in case any subsidisation is made by one contracting party. The cases of subsidy mentioned in article 16 of the GATT are meant only to give examples of the different forms of subsidy. In my opinion, the reference of article 16 of the GATT is not required and does not add any value to the definition of subsidy under article 1 of the Law. The definition of subsidy contained in article 1 is of itself sufficient and properly defines subsidy without any need for reference to the GATT. Moreover, article 1 defines the specialised subsidy as the subsidy that results in taking countervailing measures. It is evident that such definition is not helpful, as it does not in fact define what a specialised subsidy really means.
Article 1 of the Law defines the increase of imports as the importation of product in excessive quantities in absolute or relative terms to the production of the national or GCC industry, which under the circumstances operates to cause, or threatens to cause, material injury to the national or GCC industry. Article 1 of the Law defines the national industry as the total number of producers in the UAE or the producers whose total production of the like products represents a large portion of the total national production of the like products in the case of investigations of dumping or subsidy. In the case of prevention investigations, the national industry means the total number of producers in the UAE of the like products or directly competing products or the producers whose total production of the like or directly competing products represents a large portion of the total national production of such products. It is evident that the definition of the GCC industry under article 1 of the Law is similar to that of the national industry except that in the case of the GCC industry, the reference is made to the total number of producers in the GCC countries.
Scope of application of the Law
Article 2 of the Law provides that the Law applies to the harmful practices in international trade by any country other than the GCC countries. This provision means that if harmful practices in international trade are conducted by any of the GCC countries, such harmful practices will not be subject to the Law. This raises a question about the law that would apply to any harmful practices conducted by another GCC country and which action the national industry in the UAE can take to protect itself from such practices.
Complaint and Investigation Procedures
(a) Submission of Complaint
The Implementing Regulations contain detailed provisions in respect of the complaint by the national industry and how the investigations will be conducted under the Law. Article 2 of Cabinet Decision No. 8 of 2018 provides that the complaint in "cases of dumping, subsidy, or increase of imports shall be submitted to the Department". It is worth noting that the wording of article 2 of Cabinet Decision No. 8 of 2018 refers to the subsidy in general while the subsidy prohibited under the Law is the specialised subsidy and not the mere subsidy in itself. The concerned department of the Ministry of Economy (MOE) is the department of combating harmful practices (the Department), which has been created by the MOE to be in charge of enforcement of the Law.
The complaint has to be accompanied by a summary of non-confidential information as well as the proof that: (1) a dumping, specialised subsidy, or increase of imports exists, (2) the national industry suffered material injury as result of such practices and the proof that a causality link exists between the practices and the injury suffered by the national industry. Where confidential information is to be submitted along with the complaint, the summary of the non-confidential information should be so detailed that the essence of the confidential information can be understood.
Article 2 of Cabinet Decision No. 8 of 2018 identifies who has the right to file the complaint with the Department. The said Article provides that the complaint must be submitted by the national industry, the representative of the national industry, the chambers of commerce and industry of the UAE, or producers' unions. It is worth noting while article 2 refers to the producers' unions; the concept of producers' unions is not well recognised in the UAE.
Although the initiation of investigations requires that a complaint be submitted as noted above, article 2(4) of Cabinet Decision No. 8 of 2018 allows the Minister of Economy (Minister) or any person authorised by the Minister in exceptional cases to initiate investigations in the absence of a complaint by the national industry. The Minister can initiate investigation either upon his own initiative or upon a recommendation by the consultative committee for combating harmful practices in internal trade (the Consultative Committee) in case there is available evidence that warrants the initiation of investigation. It is worth nothing that article 2(3) of Cabinet Decision No. 8 of 2018 fails to define the exceptional cases referred to in such paragraph.
The Consultative Committee is formed in accordance with article 8 of the Law. It is composed of representatives of federal and local agencies that are concerned with the trade in the UAE. The Consultative Committee reviews the results of the investigation conducted by the Department and submits recommendations to the Minister and can recommend the initiation of investigation in the absence of a complaint by the national industry as set out above.
The Department has to review the complaint and supporting documents within 30 business days from the business day following the date of submission of the complaint and decide whether or not the evidence submitted is sufficient to initiate investigation. Following such review, the Department submits an initial report to the Consultative Committee containing its recommendation to either reject the complaint or initiate investigation. Then, the Consultative Committee has to review the report of the Department and submit a recommendation to the Minister. The Minister or any person authorised by the Minister will take a decision on the complaint taking into consideration the recommendation of the Consultative Committee within 15 business days from the receipt of the initial report of the Department and recommendation of the Consultative Committee. The Minister's decision should be either: (1) the acceptance of the complaint and referral of same to the Department to initiate investigation if it appears from the information and documents that there is an initial evidence that warrants an investigation; or (2) the rejection of the complaint due to submission of inaccurate or incorrect information, or such information being insufficient to warrant an investigation. Then, the Department will inform the complainant of the Minister's decision within 7 business days from the date of such decision.
As per Article 6 of Cabinet Decision No. 8 of 2018, the Minister or any person authorised by the Minister can take a decision to initiate investigation in cases of dumping or subsidy only if the complaint is supported by local producers whose total production exceeds 50% of the total production of the producers who supported, or expressed objections, to the complaint provided that in all cases that the production of the producers supporting the complaint should not be less than 25% of the total national production of the like product.
The like product is defined as the product that is identical or similar to the product subject of investigation in all respects or, in case of absence of such product, any other product whose specifications are closely similar to the specifications or features of the product subject of investigation.
When assessing the percentage of representation of the national industry, the Minister may exclude the producers who are related to the exporters or importers or who are themselves importers of the product subject of investigation. Article 6(3) of Cabinet Decision No. 8 of 2018 sets forth the cases where the producer can be considered related to the exporter or importer. The producer shall be considered related to the exporter or importer in the following cases: (a) either of them is directly or indirectly under the control of the other, (b) both are directly or indirectly controlled by a third party, or (c) both control directly or indirectly a third party provided that there are reasons to believe that such relationship causes the producer to act in a manner that is different from other producers who have no connection with the exporter or importer. One party will be considered in control of the other if such party has legal authority to control the other or is in a position to do so.
The Department has to notify the concerned country or countries before commencing the investigation that it received and accepted the complaint. In respect of investigating a specialised subsidy, the Department should take the necessary measures to invite the countries that export the subsidised products to engage them in discussions with a view to seeking clarifications about the facts and evidence submitted and trying to reach solutions agreeable to the parties. Such discussions will not prevent or hinder the investigation process; prevent taking preliminary or final decisions, or taking interim or definitive measures in accordance with the Law and Implementing Regulations.
The Implementing Regulations define the "Related Parties" as follows: "the exporter, foreign producer, importer of the product subject of the investigation, the producers who use the product subject of investigation as one of their industrial inputs; the governmental or private entities representing consumers, or protecting their interest; government of the exporting country, or any other national or international parties who have interest in the product subject of the investigation."
The Department has to announce the commencement of investigation by way of publication in the Official Gazette and two of the most widely distributed daily newspapers. Such publication must be made within 10 business days from the date on which the Minister or the person duly authorised by the Minister takes a decision to initiate investigation. The date of such publication shall be considered the commencement date of the investigation. The publication must contain a minimum information as set out in article 9 of Cabinet Decision No. 8 of 2018, which are as follows:
(1) Description of the product subject of investigation including the technical characteristics and usages as well as the HS code of the product;
(2) Description of the domestic like or directly competing products including their technical characteristics and usages;
(3) Name and address of the complainant and other known producers of the domestic like or directly competing products;
(4) Country or countries of origin or export of the product subject of investigation;
(5) Summary of the factors which form the basis of the claims of material, or serious injury or the threat thereof as well as the practices subject of investigation;
(6) Date of commencement of investigation; and
(7) The timetable for conducting the investigation with the following information:
- The grace period within which the Related Parties must inform the Department in writing of their desire to participate in the investigation;
- The deadlines for the Related Parties to submit their arguments or written information;
- The grace period for the Related Parties to express their written views when required;
- The period during which a hearing must be requested, if necessary; and
- The address of the Department, the name, address and phone number of the head of the Department or the entity to which responses should be addressed.
In case of investigation on prevention, the publication mentioned above suffices. However, in case of investigating dumping or subsidy practices, the Department must, in addition to the publication mentioned above, inform the Related Parties as well as the representatives of the exporting countries, with a copy of non-confidential part of the complaint and the publication relating to commencement of investigation. Where the number of concerned exporters is very large, the Department may only send a copy of the non-confidential part of the complaint to the concerned authorities in the exporting countries.
The next step in case of investigating dumping and subsidy practices is for the Department to send questionnaires to the Related Parties to obtain the necessary information and data. In the case of prevention investigation, the Department will send the questionnaires only to the parties that expressed their desire to participate and requested the questionnaire. In which case, questionnaires can be sent to the exporting country or countries through diplomatic channels i.e. the embassies of such countries. The Related Parties shall reply and send back the questionnaire with the required information and data in clear and complete manner within 40 days from the date of dispatch of the questionnaire to them or through the diplomatic channels to the country of export. Such period may be extended by an additional 10 days upon a reasoned request submitted to the Department and such extension shall count from the expiry date of the original grace period. Any responses received by the Department after the elapse of the original period or any extension thereof may be disregarded by the Department. This also applies in case the information and data provided are inaccurate or erroneous.
There are cases where the number of exporters, importers, producers, or the number of products may be so large to the extent that it may affect the efficiency of the investigation. In such cases the Department can limit the investigation to a representative sample of the Related Parties or products provided that the sample is statistically correct based on the available information at the time of selection or on the highest percentage of the volume of export, production, or sales made by the concerned country.
It is crucial that the principle of due process is observed in the proceedings. Therefore, article 14 of Cabinet Decision No. 8 of 2018 enshrines the principle of due process. The Department gives the Related Parties and those who declared their desire to participate in the investigation a fair chance to defend their interests. To that effect, the Department may decide to hold hearings during which they can express their views, present their arguments and documents so long as the confidentiality of information is observed. However, no party is under obligation to attend the hearings and the interest of any party who fails to attend the hearing may not be prejudiced merely as result of non-attendance. The other parties who expressed their desire to participate in the investigation should be given sufficient chance, upon written request, to have access to the information related to the investigation without breach of confidentiality.
The Related Parties must, at least seven days prior to the date of the hearing, inform the Department of the names of the representatives who will attend and the arguments and documents they plan to submit in the hearing. Hearings have to be chaired by the head of the Department or any person duly authorised by him.
The Department may undertake field trips inside the UAE to verify the information submitted and obtain more information and data as may be required to complete the investigation. As for field trips outside the UAE, the Department may undertake such trips. However, such trips are subject to the following conditions: (a) the concerned companies must consent to the visits and (b) there is no object by the concerned country.
(c) Reporting on Investigation
The Department prepares a preliminary report within 180 days from the announcement of the commencement of investigation. Such preliminary report contains the results of the investigation. Then, the Department prepares a final report within the 180 days following the date of the preliminary report. The final report contains the information, clarifications, notices, announcements and notifications made by the Department as well as the matters of fact and law and the reasoning of the conclusions reached.
The Related Parties may, within 15 days from the date of the publication or making the preliminary report available, submit comments and defences in respect of the report and the results before the issuance of the final report.
The investigation must be completed within 12 months from the commencement date. The Minister or any person authorised by the Minister may, in exceptional cases, extend the duration of the investigation for other period(s) provided that such extension may not exceed six months.
Within (30) business days from the date of submission of the final report, the Minister or any person authorised by the Minister issues, based on the recommendation of the Consultative Committee, a decision either ordering the closure of investigation without imposing any measures when (a) there is no evidence that dumping, subsidy, or increase of import took place; (b) no injury has been suffered; or (c) the causality link between the practices and the injury suffered is non-existent. If the decision is negative, the Department must inform the complainant and publish the decision in the Official Gazette and two of the most widely distributed daily newspapers. Such publication must include the following: the identity of the complainant(s) and the national products for which the investigation was initiated, the products subject of investigation and the reasons for the closure of investigation. If the decision is positive and results in the imposition of temporary or final measures, the Department must inform the complainant and publish the decision in the Official Gazette and two of the most widely distributed daily newspapers. Such publication must include the following: the identity of the parties and entities against which the measures will be taken, the products subject of the measures, summary of the reasons for imposing such measures and the form, value and duration of the measure.
(d) Measures To be Taken
Article 5 of the Law provides for the cases where the Minister can impose the measures as follows: (1) if it is proven that the products subject of investigation were dumped, or have been subsidised with a special subsidy, which caused, threatened to cause, a material injury to an existing national industry, or materially retarded the establishment of such national industry and there is causality relationship between them, or (2) if it is proven that the products subject of investigation were supplied to the national market in excessive quantities either in absolute or relative terms and under such conditions that would cause, threatens to cause, serious injury to the national industry that produces the like or directly competing products and there is causality relationship between them.
The different forms of measures to be taken are set forth in article 6 of the Law. Such measures are:
(1) Imposition of anti-dumping duty and final countervailing duty that does not exceed the dumping margin or the amount of subsidy as finally determined;
(2) Imposition of duty or taking temporary security to combat the dumping or specialised subsidy which may not exceed the dumping margin or the amount of subsidy as initially determined;
(3) Imposition of final preventive measures against the increase of imports in the form of a duty or quantitative restrictions; and
(4) Imposition of temporary preventive duty against the increase of imports for a maximum period of 200 days.
The Implementing Regulations deal with the measures in case of dumping and specialised subsidy and give more details in article 36 and 58 of Cabinet Decision No. 8 of 2018. As for the increase of imports, the preventive measures are addressed in article 73 and 74 of Cabinet Decision No. 8 of 2018.
Article 39 of Cabinet Decision No. 8 of 2018 allows the Minister or any person authorised by the Minister to prematurely close the investigation without imposing any measures in case the Department receives voluntary satisfactory pricing undertakings from the exporters, which would eliminate the harmful effects of the dumping. The said undertakings can take either of two forms, namely: (a) undertaking by the exporter to increase its export prices for the products subject of investigation to the extent that eliminates the dumping margin and (b) undertaking by the exporter to stop exporting the products subject of investigation with dumping prices. Article 61 contains an equivalent authority for the Minister of any person authorised by the Minister in case of specialised subsidy if the Department receives voluntary satisfactory undertakings. The undertakings in this case will be either: (a) the government of the exporting country agrees to abolish or limit the subsidy, or take measures to alleviate its impact, or (b) undertaking by the exporter to revise its prices to ensure that the negative impact of the subsidy is eliminated.
05 Dec 2018
(Previously published by LexisNexis)
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