Guidance

How we assess causation in dumping and subsidy investigations

Updated 25 April 2024

Overview

Based on applications from UK industries, we investigate claims of dumped goods or subsidised imports which may have caused or be causing injury, in order to determine whether a trade remedy measure is needed.

Once we have initiated an investigation, we need to establish if there is dumping or subsidisation of particular goods, if there is injury to the UK industry for the same or similar goods, if the dumping or subsidy has caused or is causing that injury and if the Economic Interest Test is met. If we don’t find both injury and causation, we cannot apply measures to the dumped or subsidised goods.

Primary legislation in the Taxation (Cross-border Trade) Act 2018 (the Taxation Act)

The requirement to demonstrate causation in anti-dumping and anti-subsidy investigations is referenced in paragraphs 8(1)(b) and 8(3)(b) of Schedule 4 to the Taxation Act.

Secondary legislation in The Trade Remedies (Dumping and Subsidisation) (EU Exit) Regulations 2019 (the D&S Regs)

Regulations 27 and 35 of the D&S Regs set out further details on causation.

Legislation says that where we find dumped goods or subsidised imports and injury to the UK industry, we should determine whether a causal link exists before recommending that a trade remedy measure is applied. These regulations also require us to check if factors other than the dumped goods or subsidised imports have caused or are causing the injury.

World Trade Organisation – relevant provisions

Article VI(1) and (6) of the General Agreement on Tariffs and Trade (GATT) set out high-level provisions on establishing causation in anti-dumping and anti-subsidy investigations.

The following agreements provide further details:

• Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the Anti-Dumping Agreement or ADA)), particularly Article 3.5.
• Agreement on Subsidies and Countervailing Measures (SCM), particularly Article 15.5.

Assessing causation – our process

When we are asked to investigate claims of dumped goods or subsidised imports of particular goods, we will examine whether there is any injury to the UK industry that produces these goods and whether this has been caused by the dumping or subsidisation of the goods concerned.

What we mean by the ‘goods concerned’

We will often refer to the goods which are the subject of our investigation as ‘the goods concerned’ in the case. When we initiate a new case, we will specify the goods that the case covers.

What we mean by ‘like goods’

Our investigation will look at injury caused to the UK industry which produces goods in the UK that are similar to the goods concerned in the dumping or subsidy investigation in all respects or have characteristics which closely resemble them. These are known as ‘like goods’.

In identifying like goods, we will consider the following non-exhaustive list of criteria:

• physical likeness, such as physical characteristics
• commercial likeness, including competition and distribution channels
• functional likeness, such as end-use or if the goods can be substituted for each other
• similarities in production, such as method and inputs
• other relevant characteristics

When a UK industry applies to us to investigate claims of dumped goods or subsidised imports which are affecting the market for their goods, we will determine whether these goods constitute ‘like goods’ or not for the purposes of our investigation.

How we analyse causation

We will conduct the causation assessment alongside the injury assessment. We will examine all the relevant evidence available to us to check for a causal link between the dumped goods or subsidised imports and the injury to the UK industry.

The first part of this assessment involves analysing:

• the volume of the dumped goods or subsidised imports during the injury period
• the effect of the dumped goods or subsidised imports on prices in the UK market for the like goods during the injury period
• the consequential impact of the dumped goods or subsidised imports on UK industry during the injury period
• any other factors we consider relevant

Assessing these factors allows us to understand the impact of the dumped goods or subsidised imports on the UK industry and this will help us to determine whether a causal link exists.

We will then conduct a further assessment to establish whether there are other known factors that could be causing the injury suffered by the UK industry and whether they break the causal link between the injury we’ve identified and the dumped goods or subsidised imports we are investigating. This is known as non-attribution testing. There are many different factors to consider and some of these are described below.

The volume (and the prices) of imports into the UK that are not dumped or subsidised

We may look at whether imports which are not being dumped or subsidised (from the same country or a third country) are injuring the domestic industry.

Contraction in demand or changes in the pattern of consumption of the like goods in the UK

There may be instances when external factors can result in a significant decline in demand for the like goods. Examples of this type of factor might include a financial crisis or new models of the like goods entering the market.

Trade restrictive practices of and competition between the overseas exporters and the UK industry

We may look at whether the UK industry concerned is carrying out any restrictive practices that could result in an increase in imports, such as focusing sales on a particular part of the market.

Developments in technology

We may look at whether the costs of production have been affected by the use of technology.

The export performance and productivity of the UK industry

It is possible that the UK industry’s focus on the export market may have resulted in reduced or lost share of the domestic market.

We would also look at any other relevant factors that are made known to us or that we become aware of. This might include factors such as natural disasters or seasonal issues.