Debunking the Myth of ‘Particular Market Situation’ In WTO Antidumping Law

This article explores the issue of ‘particular market situation’ (PMS) in anti-dumping practice. PMS has become one of the most controversial issues in antidumping policy, as reflected for example in the bilateral trade activities between China and Australia, and will soon become a prominent issue at the World Trade Organization (WTO) level once the non-market economy assumption (which is currently allowed under China’s WTO Accession Protocol) expires on 11 December 2016. Essentially, since some of the underlying concerns that led to the creation of such an assumption may endure following December 2016, countries may want to resort to other alternative methods to counteract Chinese imports. One such alternative is to resort to the notion of PMS which is foreseen in the WTO Antidumping Agreement. It is, therefore, important for the WTO tribunals to standardize the law and practice in relation to PMS. This article argues that the existence of a situation in a market, such as government interventions by means of regulation or financial assistance, does not in themselves constitute a PMS within the meaning of the Antidumping Agreement. Rather, a determination of a PMS must be based on an assessment of the comparability between domestic sale price and export price of the subject goods. A PMS should not be found to exist if an alleged price distortion has affected the two prices even-handedly such that a proper comparison of the prices would not be precluded. It is the responsibility of investigating authorities to undertake such an inquiry into comparability. Without such an inquiry, a finding of PMS cannot be justified and would likely result in a comparison between an undistorted normal value and a distorted export price in a manner contrary to the ‘proper comparison’ or ‘fair comparison’ standards which are enshrined in Article 2 of the Antidumping Agreement. The proposed approach to PMS finds support in the Antidumping Agreement itself, as well as in negotiating records of the General Agreement on Tariffs and Trade (GATT) and the WTO, and GATT and WTO jurisprudence. Importantly, it promotes free trade by prohibiting unjustified inflation of dumping margins and discouraging tit-for-tat abuse of PMS.