Rules for preventing or correcting
distortions in competition caused by dumping or subsidy practices
THE COMMISSION OF THE CARTAGENA AGREEMENT,
HAVING SEEN: Chapter VIII of the Cartagena Agreement, Decisions 230, 258,
and 281 and the Board’s Proposal 223/Rev. 3;
The Commission approved Decision 230, which contains rules for preventing or
correcting practices that could distort competition;
Decision 258 stipulates that the Commission, at the proposal of the Board,
shall review the rules on trade competition;
Decision 281 stipulates that the Commission, at the proposal of the Board and
by March 31, 1991 at the latest, shall review the rules on trade competition
established in Decision 230;
In order to achieve the objectives of the integration process in a context
characterized by the opening of markets, it is convenient to perfect
Subregional rules on competition in light of international experience so that
they can act as effective mechanisms for preventing or correcting any
distortions that could arise as a result of dumping or subsidies;
Due to their origin and scope, it is necessary to distinguish between the
dumping and subsidies that are the subject-matter of this Decision, and
practices that restrict free competition, in addition to restrictions placed on
The rules regarding subsidies contained in this Decision shall be applicable
until commitments are made to harmonize instruments for promoting foreign
trade; also if the incentives that are covered in the context of that
harmonization were to cause distortions in competition in specified isolated
I. SCOPE OF APPLICATION
Article 1. The purpose of the rules and regulations stipulated in this
Decision is to prevent or correct distortions in competition caused by dumping
Article 2. Member Countries or firms with a legitimate interest may ask the
Board for authorization or a mandate to take measures to prevent or correct
distortions in competition in the Subregional market caused by dumping or
subsidies, in the following cases:
a) When practices originating in the territory of another Member Country
threaten to cause or do cause material injury to national production intended
for the domestic market of the country affected;
b) When practices originating in the territory of a Member Country threaten to
cause or do cause material injury to national production intended for export to
another Member Country;
c) When practices originating in a country outside the Subregion threaten to
cause or do cause material injury to national production intended for export to
another Member Country; and
When practices originating in a country outside the Subregion threaten to cause
or do cause material injury to its national production in the case of products
to which the Common External Tariff is applied and in that case, corrective
measures must be applied in more than one Member Country. In the other cases,
the national regulatory provisions of each Member Country may be applicable.
For purposes of this Decision, a significant delay in building up national
production is considered to be a threat injury.
Article 3.- A good is imported at a dumping price when its export price is
lower than the normal value of a similar product intended for consumption or
use in the country of origin or export, in the course of normal business
Member Countries or enterprises that have a legitimate interest may ask the Board for authorization or a mandate to take measures to prevent or correct threats of damage or effective damage to national production or exports caused by restrictions on exports in effect in another Member Country.
For purposes of this Decision, a significant delay in building up national production is considered to be a threat of damage.
Article 4.- A similar product is a product that is equal in all
aspects to the product being dumped; if that product does not exist, it is
another with very similar characteristics, considering elements like its
nature, quality, use and function.
Article 5.- The export price is that actually paid or to be paid for
the product sold for export to a Member Country.
If there is no export price or if, in the judgment of the Board, that price
is not reliable because an association or a compensatory arrangement exists
between the exporter and the importer or a third party, the export price may
be calculated on the basis of the price at which imported products are
resold for the first time to an independent buyer. If the products are not
resold to an independent buyer or if the products are not resold in the same
state in which they were imported, the price may be calculated on a
reasonable basis to be determined by the Board.
In calculating the export price, the necessary adjustments shall be made to
take account of all expenses incurred up to the resale, including all import
duties, taxes and a reasonable profit margin. Considered among these
adjustments are the cost of transportation, insurance, maintenance and
unloading; import duties and other taxes due after the export from the
country of origin; a reasonable markup for overhead, administrative and
selling costs; a reasonable profit margin; and any fee normally paid.
Article 6.- For purposes of this Decision, the normal value is
considered to be that actually paid or to be paid for a product similar to
that imported into the Member Country when sold for consumption or use in
the domestic market of the country of origin or export, in the course of
normal business operations.
Normal business operations are those carried out between associated parties
or parties that have reached a compensatory arrangement, provided that the
prices and costs are comparable to those of operations between independent
If a similar product is not sold in the course of normal business operations
in the domestic market of the country of origin or export, or if those sales
do not allow for a valid determination of the normal value, the latter shall
be specified as follows:
a) By considering the highest export price for a similar product that is
exported to a third country, provided that it is representative;
b) Otherwise, by considering the calculated price of a similar product. It
will be obtained from the production cost in the normal course of business
in the country of origin, plus a reasonable mark-up for administrative and
selling expenses and a profit margin. That profit shall be no larger, as a
general rule, than that normally obtained on the sale of products of the
same category in the domestic market of the country of origin.
c) If there is no export price to a third country that is representative or
if the price of a similar product cannot be calculated, the normal value can
be established on a reasonable basis to be determined by the Board.
d) For imports coming from or originated in countries with centrally-planned
economies, the normal value shall be obtained on the basis of the comparable
price at which, in the course of normal business operations, a similar
product is sold in a third country with a market economy at a similar degree
of development, for domestic use or consumption. If that comparable price
does not exist, the normal value may be calculated on a reasonable basis to
be determined by the Board.
In the event that the products are not imported directly from the country of
origin, but from a third country, the price at which the products are sold
from the country of export to the Member Country shall be compared with the
comparable price in the country of export. However, it may be compared with
the price in the country of origin when, among other things, the products
merely move through the country of export, or such products are not produced
or there is no comparable price for them in the exporting country.
Article 7.- The dumping margin is the amount by which the export
price is less than the normal value. That margin shall be calculated by unit
of the product that is imported at a dumping price.
The export price and the normal value should be examined on a comparable
basis with regard to the physical characteristics of the product and amounts
and terms of the sale, bearing in mind the differences in taxes and other
criteria that could affect the comparison of the prices. This comparison
shall be made at the same point in the business transaction, generally at
the ex-factory level, based on the sales made on the closest dates possible.
Article 8.- An import has been subsidized when the production,
manufacture, transport or export of the imported product or of its raw
materials or inputs has received, directly or indirectly, any premium, aid,
bonus or subsidy in the country of origin or export. With regard to
transport, Bolivia’s landlocked situation will be taken into account.
The existence of multiple exchange rates for commercial and financial
transactions in the country of origin or export could generate a subsidy and
in that case would be considered as such for purposes of this Decision.
Article 9.- The amount of the subsidy shall be calculated in monetary
units or ad valorem, per unit of subsidized product that is imported.
That amount shall be established by subtracting, among other things, the
expenses necessarily incurred to obtain access to the subsidy and taxes and
other levies that had to be paid for the export.
If multiple exchange rates do exist, the amount of the subsidy shall be
determined on the basis of such rules as may be established within the
context of exchange policy harmonization. In the absence of such
harmonization, the Board shall issue a technical opinion about the amount of
In determining the subsidy, a similar product shall be considered to mean a
product that is the same in all aspects as the product being subsidized. If
such a product does not exist, it shall mean another product with very
similar characteristics considering elements like its nature, quality, use
Article 10.- The following are empowered to submit a petition:
Member Countries through their respective liaison institutions; and
b) The firm or firms that invoke a legitimate interest, in the
degree allowed by national law.
The written petition must contain the following information:
- the nature of the practices and their duration;
- the characteristics of the products that are the object of the practices;
- the firms involved;
- the evidence which allows to presume the existence of injury or actual
injury to national production or exports created by the importation during
the previous or current twelve months, of products that are the object of
those practices and which are similar to those being produced or exported;
- the level of duties requested.
On receipt of the complaint, the Board shall proceed to inform the liaison
institutions of the countries where the firms involved in the investigation
carry out their economic activities.
Article 11.- The Board shall not start the investigation if the
petition is incomplete. In that case, it shall so advise the claimant,
indicating in detail what information is missing, within twenty working days
after presentation of the petition.
If the petition is deemed adequate, within twenty working days after its
presentation, the Board shall go on record with its opinion through a
reasoned Resolution. Furthermore, that Resolution shall be communicated to
the claimant firm or firms.
Article 12.- During the investigation, the Board may request and
collect evidence and information from the liaison institutions and, either
through them or directly, from the producers, exporters, importers or
consumers with a legitimate interest in the investigation. They may also
furnish information or, as the case may be, lodge pleas with the Board.
In cases where the Board requests, collects or receives evidence and
information directly, it shall report this to the respective liaison
The Board may, furthermore, request and collect evidence and information
from the exporters and the authorities of countries outside the Subregion,
whose products are being investigated. Those exporters or authorities may
also supply information or, as the case may be, lodge pleas with the Board.
In no case may the investigations that are undertaken pursuant to this
Decision obstruct the clearance through customs of the respective products.
Article 13.- In exercise of its power to request and collect
evidence, the Board may decide to treat the information given to it
confidentially if the furnisher of that information asks for and justifies
that treatment, for it is the source of that information and its disclosure
may have unfavorable consequences for it.
The parts of internal documents prepared by the Board or the Member
Countries which contain that kind of information, may also be of a
When confidential treatment of evidence is sought, the petitioner shall
provide a summary of the information that may be disclosed or an explanation
of why that information cannot be summarized. In the latter case, the Board
does not have to accept that explanation, in which case it may not take the
evidence into consideration.
Likewise, even if the request is justified, the information may not be taken
into account if the entity offering it fails to submit a non-confidential
summary of its contents, provided that these are capable of being
Those interested in the investigation may submit a written request for the
information furnished or prepared pursuant to this Decision and this will be
supplied to them if it is not confidential in nature.
This article does not impede the disclosure of general information and, in
particular, of the grounds for the Resolutions to which this Decision
refers, if they are demanded in the course of a judicial proceeding. In
making that disclosure, it shall be kept in mind that the trade secrets of
those that have a legitimate interest in the investigation must not be
Article 14.- In the course of the investigation, the Board may, on
its own initiative or at the petition of any of the interested parties, call
meetings for the purpose of seeking a direct solution; the commitments made
and the results of these meetings shall be recorded in the minutes.
No interested party shall be compelled to attend a meeting and the absence
of said party shall not be detrimental to its case.
The Board shall go on record with its opinion through a reasoned Resolution
that will state what commitments have been assumed and whether the
investigation shall be suspended or shall continue at the request of the
The exporters or the authorities of the country where the practice
originated shall furnish the necessary information for verifying compliance
with the commitments assumed. If these commitments fail to be fulfilled or
the pertinent information is not furnished, the Board shall resume the
investigation. It shall then immediately set anti-dumping or countervailing
duties at levels based on the available information or, in its absence, at
levels requested by the firms that have been affected. In issuing its final
decision, the Board shall determine whether those duties shall be
maintained, modified or eliminated.
Article 15.- The Board shall have a period of four months in which to
make its investigation, starting on the date of publication of the
Resolution referred to in Article 11 of this Decision.
In special cases, the deadline may be extended up to two additional months,
in which case the claimant shall be informed thereof.
Article 16.- In order to issue its decision, the Board must consider
the existence of positive evidence regarding:
a) The dumping or subsidy practices that are distorting
b) The threat of injury or actual injury caused by those practices in the
terms of Article 2 of this Decision; and
c) A cause-and-effect relationship between the practices and the threat of
injury or actual injury.
Article 17.- The determination of the existence of the threat of
injury or actual injury and of the cause-and-effect relationship with the
practices may be based, among other things, on the examination of:
a) The volume of imports that are the object of those practices,
particularly to determine if they have increased significantly, both in
absolute terms and in relation to the production and consumption of the
Member Country affected, or in relation to the imports of the claimant
b) The prices of imports that are the object of those practices,
particularly to determine whether they are considerably lower than the
prices of similar products without such practices. Furthermore, to determine
if the effect of those imports is to make prices drop significantly or to
impede the rise in price that would have occurred otherwise; and
c) The effects on the production or exports of the Member Country, as
deduced from real or virtual trends in pertinent economic factors like:
production, domestic sales, exports, market share, use of installed
capacity, employment, stocks and profits.
Article 18.- At the conclusion of the investigation, within twenty
working days after the event provided for in Article 15, the Board shall go
on record with its opinion through a reasoned Resolution, in accordance with
its conclusions and based on the available information.
The Resolution shall indicate what levels of duties shall be established,
the imports that are the object of practices to which those duties shall
apply, the deadlines for their adoption and their duration. Also, when
applicable, the conditions that will determine the duration of those duties.
Article 19.- Once the Board has verified, at the request of the
liaison institutions or of the interested parties, the change in or
elimination of the causes that gave grounds for the Resolution to which the
previous article refers, it shall revoke that Resolution partially or
totally by amending or derogating it. The Board shall have three months in
which to issue its decision.
The Board may also verify on its own initiative the change in or elimination
of the causes that gave grounds for the Resolution in question, amending or
annulling that Resolution.
Article 20.- In cases of dumping, anti-dumping duties shall be
applied to imports that are the object of that practice; these duties shall
be equivalent to the dumping margin determined or less, if sufficient to
resolve the threat of injury or actual injury.
Article 21.- In the cases of subsidies, countervailing duties shall
be applied to imports that are the object of that practice; these duties
shall be equivalent to the amount of the subsidy or less, if sufficient to
resolve the threat of injury or actual injury.
Article 22.- Corrective measures intended to prevent or correct
distortions caused by dumping and subsidy practices may not be applied
simultaneously to the same imported product.
Article 23.- In the event that the threat of injury or actual injury
is evident, the Member Country or the firms with a legitimate interest may
ask for authorization or a mandate from the Board to take immediate
The Board, if it considers the petition admissible, may authorize or
determine the establishment of provisional measures, which could take the
form of anti-dumping or countervailing duties, or of furnishing guaranties
–-through cash deposits or bonds—- equivalent to those duties, for which it
shall have twenty working days as of the date of the petition indicated in
the previous clause. Suspension of the customs valuation shall be an
appropriate provisional measure, provided that the normal duty and the
estimated amount of the anti-dumping duty are indicated.
In the course of the investigation, the Board may suspend application of the
provisional measures and in its final decision shall determine whether to
maintain, amend or eliminate the measures established.
If the definitive duties are higher than the provisional duties paid or
guaranteed, there will be no cause for collection of the amount in surplus
of the payment or of the guaranty which shall be collected. Otherwise, there
shall be cause for the return of the difference or the reduced collection of
If no definitive duties are established, the entire sum paid as provisional
duties shall be refunded or the guaranty shall be refunded or released.
Article 24.- The Board may likewise provide for the application of
definitive anti-dumping or countervailing duties to products cleared through
customs for home use up to 90 days before the establishment of provisional
These definitive duties may be applied for the purpose of keeping the injury
from reoccurring in cases where the Board determines the existence of an
injury difficult to redress, caused by massive imports at dumping or
subsidized prices over a short period of time. In cases of dumping, it is
also necessary to determine the existence of a precedent of dumping with
injury or that the importer was aware or should have been aware that the
exporter was engaged in that practice.
VI. FINAL PROVISION
Article 25.- This Decision replaces Decision 230 as regards the rules
for preventing or correcting distortions in competition caused by dumping or
Signed in the city of Lima on the twenty-first of March of nineteen