As briefly described in our earlier publication, “The Law Relating to Anti-Dumping Part 1”, in this article we will now further introduce and explore on the relevant investigation procedures undertaken by the Ministry of International Trade and Industry of Malaysia (“MITI”) in regulating and combating dumping issues in Malaysia under the Countervailing and Anti-Dumping Duties Act 1993 (“1993 Act”).
Stage 1: Filing of Petition
Where there is evidence of acts of dumping of foreign merchandise into Malaysia which is causing injury and loss to the domestic industry, the common approach is for the trade associations of representatives of the particular industry to file a petition to MITI.
Nevertheless, MITI has power to commence an anti-dumping investigation on its own accord without any written petition being filed. It is crucial to note that a submission of petition does not trigger an automatic commencement of an investigation by MITI towards the alleged product (refer Stage 2, below).1
Stage 2: Initiation of Investigation
MITI must examine the accuracy and adequacy of the evidence submitted along with the written petition and make a decision whether to initiate an investigation on the petition within 30 days of receipt of the petition.2
Under the 1993 Act:
“The Government shall, within the prescribed period, examine the petition and other available information and evidence to determine whether—
(a) the evidence is sufficient tojustify the initiation of an investigation;
(b) there is a sufficient degree of support for or opposition to the petition expressed by the domestic industry; and
(c) an investigation is in thepublic interest.3”
Upon deciding to initiate an investigation, MITI shall make a public announcement on its decision and notify the petitioner (refer Stage 3, below) accordingly.
Stage 3: Preliminary Determination
The relevant procedure applicable to the initial stage of an anti-dumping investigation is discussed below.
Under the 1993 Act:
“The Government shall, within such period as may be prescribed, make a preliminary determination regarding—
whether a dumping margin exists
(a) with respect to the subject merchandise and the margin of such dumping; and
(b) whether injury is found to exist in any one of the following ways:
(i) the subject merchandise, through the effects of dumping, is causing material injury to the domestic industry in Malaysia producing the like product;
(ii) the subject merchandise, through the effects of dumping, is threatening to cause material injury to the domestic industry in Malaysia producing the like product; or
(iii) the subject merchandise, through the effects of dumping, is causing material retardation of the establishment of such an industry in Malaysia.”4
MITI shall complete the initial investigation of the alleged dumping within 120 days (can be extended by another 30 days), which will likely include:
(a) conducting on-site verification visits to local importers and manufacturers; and
(b) determining the causal link and injury between the alleged product and the domestic industry (if any) and whether the injury caused or threatened to be caused to the domestic industry in Malaysia is material.5
During the investigation, the alleged parties are given opportunities to defend their positions by submitting relevant evidence to MITI.
As discussed in the last article, the definition of “dumping margin” means “the amount by which the normal value of merchandise exceeds the export price”.6
In the event the initial investigation reveals no existence of dumping margin and injury to the domestic industry, MITI may proceed to terminate the investigation by issuing a negative preliminary determination or to continue the investigation. In all cases, MITI shall circulate a Notice of Preliminary Determination to all interested parties.7
On the contrary, if there is an affirmative preliminary determination, a temporary importation duty known as provisional measures may be imposed on the alleged product (refer “Provisional Measures”, below).8
The implementation of provisional measures against future importation of the alleged product shall be exercised by MITI only if MITI considers such measures are necessary to prevent injury and loss from occurring during the period of investigation.9
Under the 1993 Act, provisional measure is defined as:
“Provisional measures shall take the form of provisional anti-dumping duties guaranteed by a security equal to the amount of estimated dumping margin…”10
The period of application for such measures is generally 4 months (can be extended for another 30 days) pending completion of investigation.
Provisional measures shall cease to apply 60 days after initiation of the investigation (refer Stage 2, above).
There are provisions for suspension of investigation in exchange for a price undertaking by the alleged manufacturer or exporter to MITI.11 Price undertakings are only available to the foreign exporters being subject to the investigation after MITI has made a preliminary affirmative determination on the existence of dumping and injury.12
In essence, a price undertaking is an agreement between the alleged foreign exporter and MITI to conduct its future export trade in a fair and competitive manner which shall not cause injury to the domestic industry.
The acceptance of the foreign exporters’ price undertakings by MITI will usually lead to the following legal consequences:
Under the 1993 Act,
(4) “If the price undertakings are accepted by the Government after the preliminary determination, the Government shall—
(a) suspend the investigation;
(b) suspend any provisional measures applied under section 24 and release all or part of the security required by such measures as the Government deems appropriate; and
(c) publish a notice stating the reasons for the suspension of the investigation and actions under paragraph (b).
(5) Notwithstanding the acceptance of the price undertakings, the investigation shall be completed upon the written request of the exporter or if the Government so decides.
(6) Where the Government completes the investigation pursuant to subsection (5), and makes an affirmative determination, the price undertakings shall remain in effect consistent with the provisions of this Act.
(7) Where the Government completes the investigation pursuant to subsection (5), and makes a negative determination, the price undertakings shall lapse, except where the negative determination is due in large part to the existence of the price undertakings.
(8) Where the negative determination referred to in subsection (7) is due in large part to the existence of the price undertakings, the price undertakings may be maintained for a reasonable period consistent with the provisions of this Act.”13
In any event, whilst MITI may suggest for price undertakings to be provided by an exporter, the exporter is not obliged to provide such undertakings. 14 Furthermore, any failure to offer price undertakings or acceptance of an invitation to do so by the exporter shall also not in any way affect MITI’s consideration of the relevant investigation.15
In all circumstances, MITI retains its power to determine that a threat of injury is more likely to be realised if the importation of the subject merchandise continues.16 The MITI further retains its power to resume a suspended investigation at any time if it determines that the price undertakings accepted before no longer meet the legal requirements or there is a material violation of the price undertakings.17
Stage 4: Final Determination
At this stage, MITI may conduct on-site verification visits of the foreign producers/exporters involved to ascertain the validity of information submitted by them.18 This aims to further establish and verify the existence of the injury caused to the domestic industry by the importation of the alleged product into Malaysia.
The timeline for MITI to make a final determination following completion and full anti-dumping investigation is within 120 days from the date of its issuance of Notice of (affirmative) Preliminary Determination. The timeline can be extended to an additional 30 days.19
Additionally, a Notice of Essential Facts is to be circulated to interested parties by MITI to collect their relevant responses and comments, which will usually form the basis of the Final Determination.20
Under the 1993 Act, interested parties who may receive such notices include:
(a) “a producer, exporter or importer of the subject merchandise;
(b) a trade or business association of which a majority of its members are producers, exporters or importers of the subject merchandise;
(c) the government of a country in which the subject merchandise is produced or from which it is exported;
(d) a producer of the like product in Malaysia;
(e) a trade or business association of which a majority of its members produce a like product in Malaysia; or
(f) any other party as the Government considers appropriate.”21
Where MITI issues an affirmative final determination, MITI will:
(a) circulate the Notice of Final Determination to all interested parties;
(b) circulate a Final Determination Report to all interested parties; and
(c) impose anti-dumping duties on the alleged product. Whilst MITI’s policy states that the period of imposition of anti-dumping duties is five (5) years from the date of publication of such notice, Section 27(A) of the 1993 Act provides that the period of anti-dumping duties being imposed can be any duration which MITI deemed necessary to counteract the dumping that is causing the injury.22
An affected party has an option of initiating a court action against the decision by way of judicial review.
Following the imposition of anti-dumping duties by MITI upon its issue of an affirmative final determination, penalised exporters or parties have an option to request for an administrative review after the lapse of one year from the date of publication of the imposition of anti-dumping duties.23
Under the 1993 Act,
“Whenever an interested party provides information to the Government, or the Government otherwise obtains information, that—
(a) the dumping margin has changed substantially;
(b) the imposition of an anti-dumping duty is no longer necessary;
(c) an undertaking is no longer necessary or should be revised;
(d) an anti-dumping duty or undertaking which is required to be terminated pursuant to subsection (6) should be maintained; or
(e) an administrative review is in the public interest,
the Government may conduct an administrative review, provided that no administrative review shall be undertaken unless the period prescribed has lapsed.”24
The prescribed period is one (1) year.
In summary, all Malaysian importers who enter into a business relationship with foreign exporters, manufacturers or producers for importation of foreign products into Malaysia must be wary of the Malaysian legal framework and regulatory control on anti-dumping as discussed above.
- Section 20 of the 1993 Act.
- Section 20(4) of the 1993 Act.
- Section 23 of the 1993 Act.
- Section 2(1) of the 1993 Act.
- Section 24 of the 1993 Act.
- Section 24 (1) of the 1993 Act.
- Section 24(2) of the 1993 Act.
- Section 27(1) of the 1993 Act.
- Section 27(3) of the 1993 Act.
- Section 27(4) to (8) of the 1993 Act.
- Section 27(8A) of the 1993 Act.
- Section 27(8B) of the 1993 Act.
- Section 27(8C) of the 1993 Act.
- Section 27(9) of the 1993 Act.
- Section 2(1) of the 1993 Act.
- Section 28 of the 1993 Act.
Written by: Lee Kin Hing & Ong Sern Tai