State policy and purpose
- Republic Act No. 7843 declares the policy of the State to protect Filipino enterprises against unfair foreign competition and trade practices.
- The State policy is implemented by strengthening substantive and procedural remedies for Filipino enterprises.
- Remedies must be made responsive to recent developments in world trade.
Amended dumping duty framework (Sec. 301)
- Section 3 amends Section 301, Part 2, Title II, Book I of the Tariff and Customs Code to establish the Dumping Duty system.
- The Secretary of Finance or the Secretary of Trade and Industry (collectively referred to as the “Secretary”) acts upon anti-dumping petitions and information.
- Dumping triggers remedies only when imports or sales are at a price less than its normal value and may injure or retard the establishment of a Philippine domestic industry producing like articles.
Prima facie dumping and notice timelines
- The Secretary determines whether there is a prima facie case of dumping when an anti-dumping petition is received from the domestic industry, or when the Secretary has reason to believe dumping exists from submitted information (including invoices or other documents, or newspaper/magazine information or translations).
- The Secretary must determine a prima facie case within twenty (20) days from receipt of the petition or information.
- The Secretary must notify the protestee-importer within five (5) days and require the submission of evidence from the producer of the imported article.
- The protestee-importer must submit evidence within ten (10) days from notice, and the Secretary bases the decision on available pertinent data if no evidence is submitted within the prescribed period.
Withholding release; imminent danger bond
- Pending determination of a prima facie case, the petitioner may petition that release from the Bureau of Customs of the alleged dumped product be withheld.
- If the Secretary finds that, on the face of the petition and documents, there is imminent danger of injury to a particular industry due to the alleged dumping, the Secretary directs the Commissioner of Customs to hold release upon filing by the petitioner of a bond equal to the alleged margin of dumping.
- The bond answers for damages the importer may suffer from holding release if the Secretary finds no prima facie case.
- The petitioner’s damages liability does not exceed the amount of the bond, and the bond is cancelled once a prima facie case has been determined.
- The Secretary may motu proprio hold release of the questioned articles based on information that imminent danger exists.
Advice to Tariff Commission and customs hold
- Upon determination of a prima facie case, the Secretary advises the Tariff Commission (the Commission) and instructs the Commissioner of Customs to hold release of questioned goods unless the importer/protestee files a cash bond.
- The cash bond must be not less than the provisionally estimated dumping duty plus the applicable regular duty, based on documentary evidence submitted with the dumping protest, to answer for payment of duties, fees, and charges if a dumping case is established.
- If the protest is dismissed, the cash deposit must be returned within ten (10) days from finality of the order.
Related parties and domestic industry
- The Secretary has discretion to exclude related parties from the domestic industry.
- Producers and exporter/importer are related if the relationship involves control directly or indirectly between producer and exporter/importer, control through a third party, or control of both producers/exporters/importers such that the relationship causes the producer to act differently from an unrelated producer.
Commission investigation: verification, injury, procedures
- The Commission, upon receipt of advice from the Secretary, investigates to:
- Verify whether the article is being imported into, sold, or is likely to be sold in the Philippines at less than normal value.
- Determine the normal value as the comparable price in the ordinary course of trade for like articles destined for domestic consumption in the exporting country (where “exporting country” means the country of production or manufacture).
- Determine the difference between export price and normal value.
- Determine whether the domestic industry suffers injury, is threatened with injury, or will suffer material retardation of establishment.
- The Commission must determine whether domestic industry injury exists by evaluating wholesale price reasonableness using: cost of raw materials, labor, overhead, a fair return on investment, and overall efficiency.
- The Commission must also evaluate whether further importation and/or like articles are clearly foreseen and imminent using relevant factors, including:
- Rate of increase: for potential injury, there must be at least three percent (3%) increase in volume of importation relative to the average monthly volume for the immediately preceding three (3) months.
- Reasonable likelihood of increased importations.
- Freely disposable or increased capacity of the exporter.
- Import prices with significant depressing or suppressing effect on domestic prices.
- For material retardation of establishment, the Commission must have evidence of the forthcoming commercial operation of the industry.
- In determining injury, the Commission considers:
- Whether the imported articles are identical or alike in all respects, or substantially of the same material, or serve the same or similar purpose as substitutes, in quantities sufficient to supply at least ten percent (10%) of local consumption computed using average local production, average imports, and subtracting average exportation for the immediately preceding three (3) months before filing of the dumping protest.
- The volume of dumped imports and their effects on prices, using economic factors and indices including:
- Five percent (5%) decline in sales volume or decline in sales prices of at least two percent (2%) compared to average monthly sales for the immediately preceding three (3) months; or
- Five percent (5%) decline in volume of production compared to average monthly volume of production for the immediately preceding three (3) months; or
- Actual and potential negative effects on employment and inventories.
- Within five (5) days from receipt of advice, the Commission identifies all parties concerned and requires submission of memoranda within fifteen (15) days from notice.
- The Commission must terminate its investigation within ninety (90) days from receipt of advice, and submit findings to the Special Committee within sixty (60) days from termination.
- The Commission must give notice to interested parties of findings submitted to the Special Committee.
- If parties fail to submit memoranda within the prescribed period, the Commission bases findings on best available evidence.
- The Commission must motu proprio terminate its investigation if the provisionally estimated margin is less than two percent (2%) of export price or if the volume of dumped imports is negligible.
- Dumped import volume is negligible if imports from a particular country are less than three percent (3%) of average monthly imports, unless countries individually below three percent (3%) collectively account for more than seven percent (7%) of total average monthly imports of that article.
Special Committee decision; dumping duty collection
- The Special Committee on Anti-Dumping decides whether the article is being imported in violation of the Act within fifteen (15) days after receipt of the Commission report.
- The Special Committee must give due notice of its decision.
- If the decision is affirmative, the Special Committee directs the Commissioner of Customs to cause the dumping duty to be levied, collected, and paid.
- Dumping duty must be collected in addition to other duties, taxes, and charges imposed by law on the article and on like subsequent imports under similar circumstances from the same specific country.
- If the Special Committee fails to decide within the prescribed period, the Commission’s recommendation is deemed approved and becomes final and executory.
Dumping duty amount; covered imports
- The dumping duty equals the difference between the actual export price and normal value as determined in the dumping decision.
- The investigation covers all importations of like articles within one hundred fifty (150) days immediately preceding the filing of the protest.
- For subsequent importations of the same kind/class from the specific country named in the protest, dumping duty equals the difference between actual export price and normal value actually existing at the time of importation, as determined by the Commission from supporting documents or other reliable sources.
Cash release and bond requirements pending case
- Pending investigation and final decision, the article in question and like subsequent imports under similar circumstances must be released to the owner, importer, consignee, or agent upon filing of a cash bond.
- The cash bond must be not less than the provisionally estimated difference between actual export price and normal value, including applicable regular duty.
- If the Special Committee decision results in dumping duty imposition, the party must ensure payment according to the final duty and applicable duties/charges, subject to the release/reexport rules below.
Release after decision; payment or reexport
- If the article has not been previously released under cash bonds under the pending-release rule, it must be released after payment of the corresponding dumping duty plus ordinary duties/taxes/charges, or it may be reexported at the owner/importer/consignee/agent’s option and expense upon filing of a cash bond meeting specified minimums.
- The cash bond for release/reexport requires an amount not less than the provisionally estimated difference between actual export price and normal value plus applicable regular duty, conditioned upon presentation of a landing certificate issued by a consular officer of the Philippines at the country of destination.
- If the article has been previously released under cash bond under the pending-release rule, the party must pay the corresponding dumping duty in addition to ordinary duties/taxes/charges.
Consultations, technical information, and hearing
- Parties concerned, including the protestant, domestic producers/manufacturers, importers, and the protestee, are afforded consultations with the Commission and the Secretary.
- Interested parties may avail of any technical information and data needed to sustain their case.
- The Commission must include public hearing(s) in its investigation.
- The owner/importer/consignee/agent, local producers/manufacturers of a like article, other directly affected parties, and other parties the Commission judges entitled to appear must be given an opportunity to be heard and to present evidence.
Reconsideration and appeal limits
- An interested party dissatisfied with a decision in a dumping protest may file a motion for reconsideration with the Special Committee within thirty (30) days from notice.
- No motion for extension of time to file a motion for reconsideration is allowed.
- An aggrieved party may appeal only the amount of the dumping duty to the Court of Tax Appeals, using the same manner and within the same period as provided by law for appeal from a decision of the Commissioner of Customs.
- Findings of fact in a dumping case are final and conclusive.
Adjustment, quarterly verification, and stoppage
- The established dumping duty is subject to adjustment based on whichever is higher of the prevailing normal values as defined in the normal value rules.
- The Commission must conduct quarterly examination and/or verification of normal value to determine the necessity of adjustment.
- After a public hearing, if the Special Committee finds adjustment is needed, it must advise the Commissioner of Customs so the Commissioner can effect the adjustment in dumping duty.
- The Special Committee must advise the Philippine Finance Attache’ abroad; if there is no Finance Attache’, it must advise the Commercial Attache’, or, if absent, the Trade Attache’, or, if absent, the diplomatic officer or consular officer abroad.
- The concerned Attache’/Officer must submit quarterly reports on normal values to the Special Committee.
- If the Commission, on its own motion or upon application of any interested party, finds after a public hearing that conditions necessitating dumping duty have ceased, it must submit recommendations to the Special Committee for discontinuance or modification and advise the Commissioner of Customs.
- Decisions or orders of the Special Committee must be published in the Official Gazette and/or in a newspaper of general circulation.
Duration, extension limits, and timing
- A dumping decision promulgated by the Special Committee is effective for five (5) years from promulgation, except where the interested party represents the necessity to continue implementation.
- The extension request must be brought before the Special Committee at least six (6) months before expiration.
- The Commission must submit its findings to the Special Committee at least three (3) months before expiration, but in no case later than one (1) month after receipt of advice from the Special Committee.
- Any extension period cannot exceed twenty-four (24) months or two (2) years.
Definitions and key valuation concepts
- Comparable price means the domestic price in the exporting country at the same level of trade sold or offered for sale at wholesale on the date of exportation to the Philippines.
- Cost of production equals:
- (a) Costs of materials and fabrication/manipulation/other processes employed in manufacturing/producing like articles, at a time preceding shipment which ordinarily permits manufacture/production in the usual course of business;
- (b) Administrative, selling, and general expenses of at least ten percent (10%) of production costs incurred by the exporter or producer;
- (c) Costs of containers and coverings and all other costs incident to placing the article in packed ready-for-shipment condition to the Philippines, but not less than one percent (1%) of production costs; and
- (d) A reasonable profit not less than eight percent (8%) of the sum of (a), (b), and (c).
- Domestic industry refers to domestic producers of like articles as a whole or those whose collective output constitutes a significant share of total domestic production in the industries concerned, except when producers are related to exporters or importers, in which case domestic industry may be interpreted as referring to the rest of the producers.
- Export price means the purchase or agreed purchase price prior to exportation by the importer (or for whose account the article is imported), plus amounts not included in that price for: containers/coverings and packing-ready costs; import duties in the country of exportation not collected due to exportation; and taxes imposed in the country of exportation that are rebated or not collected due to exportation.
- Additional costs for transporting from the shipment place in the country of exportation to delivery in the Philippines and Philippine customs duties are not included in the export price.
- Like article means a product identical or alike in all respects, or substantially of the same material, or serving the same or similar purpose as substitutes for articles produced in the Philippines.
- Domestic producers and “like articles” are tied to the domestic industry and injury determination thresholds used in the Commission’s injury analysis.
- The Act creates a special committee on anti-dumping composed of three (3) members: the Secretary of Finance (as chairman), the Secretary of Trade and Industry, and either the Secretary of Agriculture (if agricultural product) or the Secretary of Labor (if non-agricultural product).
Rules and implementing authority
- The Secretary of Finance, in consultation with the special committee on anti-dumping and the Commission, must promulgate rules and regulations necessary to carry out the Secretary’s and the Commission’s respective functions under Section 301.
Creation of dumping duty special committee
- The Special Committee’s function is to decide whether an article is being imported in violation of the dumping provisions.
- The Special Committee directs Customs collection of dumping duties when the decision is affirmative.
Separability and repeal of inconsistent rules
- If any section or provision of Republic Act No. 7843 or its application is declared unconstitutional or invalid, the remainder remains effective under the Separability Clause (Section 4).
- Section 5 repeals or modifies:
- Section 301, Part 2, Title II, Book I of the Tariff and Customs Code as amended,
- Presidential Decree No. 1999,
- Executive Order No. 1073, and
- all other laws, orders, decrees, issuances, rules, and regulations related to dumping that are inconsistent with the Act.