Mauritius’ Trade Act of 2022

Part 2 – Anti-Dumping, Countervailing and Safeguard Measures

 

Trade Remedies in Mauritius

This article is the second of a series of three analysing Mauritius’ Trade (Anti-Dumping, Countervailing and Safeguard Measures) Act of 2022. As highlighted in Part 1,[1] trade remedies are trade policy tools used to address ‘unfair’ or ‘distortive’ trade practices. Whilst ‘unfair’ trade might adopt many forms and guises, such as dumping, subsidisation, cartel agreements, price-fixing and the abuse of a dominant position on the market, the current multilateral rule-based system only deals with dumping and certain types of subsidisations. The World Trade Organisation (WTO) also provides a ‘safety valve’ for ‘economic emergency exceptions’ such as an unforeseen surge of imports, known as safeguards (Bossche, 2005). Table 1 provides a comparison of the different trade remedy measures available.

Table 1: Comparison of Trade Remedy Measures

Anti-dumping Countervailing Duties Safeguard
Situation Dumping (sales at less than fair value) Subsidisation Import surge
Level of injury Material injury (or threat thereof) Material injury (or threat thereof) Serious injury (or threat thereof)
Relevant industry Domestic industry: like products Domestic industry: like products Domestic industry: like or directly competitive products
Target Country specific Country specific Irrespective of (import) source
Compensation No compensation No compensation Compensation may be required

Source: Bhatnagar, 2014

In addition to establishing a dedicated Trade Remedy Investigating Authority (TRIA), the Trade (Anti-Dumping, Countervailing and Safeguard Measures) Act of 2022 updates the trade remedy framework for Mauritius, incorporating, for the first time, the figure of safeguard measures in the domestic legislation. This short article highlights the key aspects of the new legislation, focusing on the process, steps, and timelines to be considered for the private sector to use anti-dumping and countervailing measures in Mauritius.

Anti-Dumping and Countervailing Measures: Overview

Anti-dumping and countervailing measures are trade policy tools designed to tackle dumping and subsidies, respectively.

Following the definition of the WTO’s Agreement on Anti-Dumping (ADA), Article 15 of the 2022 Trade Act identifies that a product is being dumped when “it is imported into Mauritius at a price that is less than its normal value.” The analysis of what constitute “normal value” is complex, but in summary it may be determined as follows:

Option 1: The determination of this “normal value” is made according to the prices payable in the ordinary course of trade, for the sale of the like product when destined for consumption in Mauritius (Article 16).

Option 2: However, this is not always possible, either because the investigated product is being trans-shipped in Mauritius, or it is not produced in the island, or there are simply no comparable prices. In such cases, prices in the exporting country shall be taken into consideration to determine whether a product is being dumped (Article 17).

Option 3: When neither of the two first two options are possible,[2] the Authority could determine the normal value of the investigated product based on a comparable price of a product exported to a third country, or the cost of production in the country of origin plus a reasonable amount for administrative, marketing and general costs, and for profits.

With regards to countervailing measures, the 2022 Trade Act states that a countervailing measure may be adopted when, following an investigation, it is determined that;

(1) The investigated product is subsidised;

(2) There is injury to the domestic industry; and

(3) There is a causal link between the subsidised imported product and injury to the domestic industry (Article 27).

In this context, a subsidised product is defined as the one receiving “a financial contribution by a government of a country other than Mauritius that confers a benefit to persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods but does not include the amount of any duty or internal tax imposed on goods by the government of the country of origin or country of export from which the goods, because of their exportation, have been exempted or have been or will be relieved by means of a refund or drawback; or any form of income or price support” (Article 2).

Prima facie, the scope of the 2022 Trade Act with regards to countervailing measures is broader than the one contained in the WTO’s Agreement on Subsidies and Countervailing Measures (SCM). The Act indicates that all subsidised products could be subject to countervailing measures, whilst Article 1.2 of the SCM Agreement indicates that only the prohibited subsidies, i.e. those subsidies contingent to export performance or contingent to the use of domestic over imported goods (Article 3 of the SCM Agreement) and those subsidies that are “specific to an enterprise or industry or group of enterprises or industries […] within the jurisdiction of the granting authority” (Article 2 of the SCM Agreement) are actionable via countervailing measures. Non-specific subsidies are deemed as “non-actionable” by Article 8 of the SCM Agreement. This wider understanding of actionable subsidies in the Mauritian legislation might open the country to possible challenges via the WTO’s dispute settlement system.

Anti-Dumping and Countervailing Measures: The Investigation

The process to initiate an anti-dumping or countervailing investigation is the same. Article 36 of the Trade Act specifies that the application to initiate an anti-dumping or countervailing investigation must be made to the Authority by, or on behalf of, a domestic industry, and it must include:

Common elements
(A) Identification of the applicant (the name, address and telephone number);

(B) Description of the domestic industry, including the names, addresses and telephone numbers of all other known producers in the domestic industry;

(C) Degree of the support of the domestic industry for the application, including:

(i) the total volume and value of domestic production of the domestic like product; and

(ii) the volume and value of the domestic like product produced by the applicant and by the domestic producer identified;

(D) A description of the allegedly dumped or subsidised product, including the raw materials, production processes, technical characteristics and uses of the product and its current tariff classification number;

(E) The country of origin from the allegedly dumped or subsidised product and the country from where it is imported from;

(F) Identification (name and address) of each person the applicant believes sells the allegedly dumped or subsidised product to Mauritius during the most recent twelve-month period.

Anti-Dumping Countervailing
(i) Information on prices at which the alleged dumped product is sold for consumption in the domestic market of the country of export or origin;

(ii) Information on the prices at which the product is sold from the country of export or origin to a third country, or on the constructed value of the allegedly dumped product and information on export prices (where necessary);

(iii) Information on the export price to Mauritius;

(iv) Information on the prices at which the allegedly dumped product is first resold to an independent buyer in Mauritius, and on any allowable adjustment to determine the ex-factory export price (where necessary);

(v) Information on the evolution of the volume of the

allegedly dumped imports, the effect of those imports on prices of the domestic like product in the domestic market and the consequent impact of the imports on the domestic industry; and

(vi) Information on the existence of a causal link.

(i) Evidence with regard to the existence, amount and nature of each alleged subsidy;

(ii) Information on the evolution of the volume of the

allegedly subsidised imports, the effect of those imports on prices of the domestic like product in the domestic market and the consequent impact of the imports on the domestic industry; and

(iii) Information on the existence of a causal link.

 

 

 

 

 

Source: Article 37 of the 2022 Trade Act

Upon receipt of the request, and unless the application is withdrawn by the applicant, the TRIA has 60 calendar days to decide whether to initiate an investigation (Article 40 of the Act), on the basis of (1) the accuracy and adequacy of the evidence presented, (2) the additional information that the TRIA might request, and (3) the sufficient evidence of subsidy or dumping, injury and causal link. In addition to the above criteria, Article 42 of the Act specifies that the TRIA shall not initiate an investigation if the volume of imports of the product at hand is negligible or the subsidy provided is de minimis, i.e. below 1 percent of the value of the product according to Article 11 of the SCM Agreement. The TRIA can also self-initiate an investigation without having received an application by or on behalf of the domestic industry (Article 41 of the Act).

When the TRIA decides to initiate an investigation, a notice must be issued to all relevant stakeholders (traders, associations and representatives of the third country among others) and must also be published in the Government Gazette (Article 43 of the Act). The Act does not specify the required interval between the publication of the notice and the initiation of the investigation.

Upon the initiation of an investigation, the TRIA will disseminate questionnaires to stakeholders that it considers necessary, giving a minimum of 30 days for them to respond. The timeline for responses may be extended by the TRIA. In addition to the questionnaires, the Act establishes a number of ways through which the wider public, i.e. any interested party, can argue the adequacy of the trade remedies:

  • Within 30 days of the publication of the preliminary determination, an interested party may request a hearing at which all parties can submit information and arguments;
  • If no hearing is requested and held, any interested party can submit written arguments 45 days before the date for final determination;
  • If a hearing is held, any interested party can submit written arguments within 10 days of the hearing.
  • Where no preliminary determination is made, an interested party may request a hearing no later than 90 days prior to the date proposed for the final determination of the Authority.

The TRIA has a period of 60-250 days to issue a preliminary determination on the anti-dumping or countervailing measure, which shall be submitted to the Minister of Foreign Affairs, Regional Integration and Trade (hereafter referred to as ‘The Minister’) and be made public.

According to Article 92 of the Act, such provisional anti-dumping measures will last up to 180 days, which might be extended to 270 days at the request of exporters representing more than 50 percent of trade involved. In the case of provisional countervailing measures, these will be applied for up to 120 days.

The timeline of 180-270 days for the provisional application of anti-dumping measures is not aligned to Article 7.4 of the WTO’s Agreement on Anti-Dumping (ADA) which states that “[the] application of provisional measures shall be limited to as short a period as possible, not exceeding four months or, on decision of the authorities concerned, upon request by exporters representing a significant percentage of the trade involved, to a period not exceeding six months.” Article 7.4 of the ADA further states that “[when] authorities, in the course of an investigation, examine whether a duty lower than the margin of dumping would be sufficient to remove injury, these periods may be six and nine months, respectively.” Article 92 of the 2022 Trade Act adheres to the timelines of six to nine months in the case of provisional anti-dumping measures, but does not consider the fact that these timelines are only applicable in the specific case of duty lower than the margin of dumping. If the TRIA exceeds the periods stated in the ADA, these discrepancies may be challenged through the WTO Dispute Settlement process.

The TRIA is expected to make a final determination within 180 days of the preliminary determination in anti-dumping investigations, and within 120 days in the case of a countervailing investigations. Overall, the final determination in an anti-dumping or countervailing investigation shall be published in the Government Gazette within one year of the initiation of the investigation.

The responsibility for the definitive anti-dumping or countervailing duty rests upon the Minister. Article 94.1 of the Trade Act stipulates that the Minister has the discretion to decide whether to impose a definitive anti-dumping or countervailing measure. This approach is similar to the one followed by other countries, such as Indonesia or the United Kingdom. However, the 2022 Trade Act does not provide guidelines with regards to the circumstances under which the Minister could contradict the determination of the TRIA. In the case of Indonesia, the Minister of Trade must take into consideration the “national interest” before deciding whether to move ahead or not with anti-dumping or countervailing measures (see Box 1).

Box 1: Considerations of National Interest under Indonesia’s Trade Remedy Regime

“Considerations of national interest” means considerations of the overall interests which are directly or indirectly related to the applicable trade remedy measure(s), inter alia, (i) considerations of the existence of the petitioner’s industry in the country as the party that is injured directly because of the existence of ‘unfair’ or ‘distortive’ trade practices resulting in serious injury or threat of serious injury, either financially, in the form of declining market share, the declining number of employees, or losses, etc; and (ii) considerations of the impact of the applicable trade remedy measure(s) on the industries in the country, in accordance with the interest of developing national industry, national food security and food price stability, increasing employment,  fiscal interests, and so on.

The process of considering the national interest made by the Minister after received recommendations on the imposition of the applicable trade remedy measure(s) from the responsible agencies (either KADI for antidumping and/or countervailing, or KPPI for safeguard). Minister discusses these recommendations in a discussion involving the minister and/or heads of non-ministerial government agencies related to the policy of the applicable trade remedy measure(s). [3]

Source: GoI (2011); WTO (2020)

In any case, the final anti-dumping duty approved by the Minister cannot exceed the dumping margin or amount of subsidy identified by the TRIA, nor can the duty be applied for more than five years without a “sunset review”, i.e. a new investigation to determine whether the dumping is still taking place.

The revamping of the trade remedy legislation in Mauritius is a welcome development, having incorporated the procedural aspects of the trade remedy investigations in the Act itself, as opposed to the 2010 Trade Act, now repealed, which governed the process via regulations. The new law is expected to lead to an increase in the use of trade remedies to level the playing field for domestic companies, which are mostly small and medium enterprises. However, it is necessary for the government to consider whether the domestic industry protected by these measures is robust enough to meet the local demand when applying trade remedies.

International Economics Consulting Ltd (IEC) is an independent consultancy firm working with national and international development partners, governments, and the private sector to create value and promote sustainable growth and development. With extensive experience in trade policy, research and negotiations, IEC can support governments and businesses deal with unfair trade practices and unforeseen consequences of free trade by providing analytical expertise and support.

Authors:

Paul Baker, Chief Executive Officer |+230 263 33 24 | baker@tradeeconomics.com

Pablo Quiles, Manager of Trade Advisory Services |+230 263 33 24 | quiles@tradeeconomics.com

Smita Bheenick, Trade Specialist |+230 263 33 24 | bheenick@tradeeconomics.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about specific circumstances.

Footnotes: 

[1] Baker, P., Quiles, P. & Bheenick, S. (2023). Mauritius’s Trade Act Of 2022: Part 1 – The New Trade Remedy Investigating Authority. Mondaq, January 16. Available from: https://www.mondaq.com/international-trade-amp-investment/1271242/mauritiuss-trade-act-of-2022-part-1—the-new-trade-remedy-investigating-authority

[2] This may be because there is no sale of the product (or like product) in the ordinary course of trade in the domestic market of the country of export, there is a particular market situation, or the low volume of the sale in the domestic market of the exporting country.

[3] According to the Elucidation for Articles 18, 25, 52, 58, 81, 84, and 87 of the Government Regulation No. 34 of 2011 concerning antidumping, countervailing, and safeguard measures.

References:

Bhatnagar, M. (2014). Overview of Trade Remedy Instruments in WTO. Retrieved from https://www.unescap.org/sites/default/files/Overview%20of%20Trade%20Remedies%20Instruments%20in%20WTO.pdf

Bossche, P. V. (2005). The Law and Policy of the World Trade Organisation. Text, Cases and Materials. Cambridge University Press.

GoI. (2011). Government Regulation Number 34 of 2011 concerning Antidumping Measure, Countervailing Measure, and Safeguard Measure. Government of Indonesia. Retrieved from https://enforcement.trade.gov/trcs/downloads/documents/indonesia/GSGN1IDN3.pdf

WTO. (2020). Trade policy review Indonesia – 2020 – WT/TPR/S/401. World Trade Organisation.

This article has also been published on the Mondaq website

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