I OVERVIEW OF TRADE REMEDIES
Korea's Customs Act contains provisions on the anti-dumping measure, countervailing duty measure and safeguard measure. These measures were introduced into the Korean legal system in compliance with relevant provisions of the World Trade Organization (WTO) Agreement. In addition, Korea conducts unfair trade practice investigations and issues corrective measures, such as import bans and destruction orders, and imposes administrative fines if exported or imported products infringe the intellectual property rights of others or violate other domestic laws, including the origin marking regulations.
The most commonly triggered trade remedy measure in Korea is the anti-dumping measure. The Korea Trade Commission (KTC), which is responsible for anti-dumping investigations, received 152 applications for anti-dumping investigations and has imposed anti-dumping duties on 106 products since its establishment in 1987. By country, the most frequently targeted country in anti-dumping investigations was China, followed by Japan, the United States and European Union Member States. By product, the most frequently targeted item was chemical products, followed by steel products, paper/wood products, textiles products, machinery products and electrical equipment products. As to unfair trade practices, the KTC has received 349 applications for investigation in total, and took disciplinary measures in 110 cases. Recently, more and more applications are filed for investigations regarding infringement on intellectual property rights.
In contrast, Korea has never performed a countervailing duty investigation, and has conducted safeguard investigations into four items (soybean oil, dairy products, bicycle parts and garlic), with safeguard measures being imposed on two of these (dairy products and garlic) since the establishment of the WTO in 1995. The KTC has not conducted any safeguard investigations since 2003.
II LEGAL FRAMEWORK
The procedure for anti-dumping investigations is provided in Article 23 of the Act on the Investigation of Unfair International Trade Practices and Remedy against Injury to Industry and Articles 51 to 56 of the Customs Act. The procedure for countervailing duty investigations is prescribed in Article 24 of the Act on the Investigation of Unfair International Trade Practices and Remedy against Injury to Industry and Articles 57 to 64 of the Customs Act. Their subordinate rules and regulations provide very detailed information on the investigation procedures.
Korea has two government bodies that are responsible for the anti-dumping and countervailing duty measures. The KTC is in charge of conducting anti-dumping and countervailing duty investigations, while the Ministry of Strategy and Finance (MOSF) is responsible for making final decisions on whether to issue an anti-dumping or countervailing duty order after examining the result of the KTC's investigations.
The procedure for safeguard investigations is provided in Articles 16 to 20-2 of the Act on the Investigation of Unfair International Trade Practices and Remedy against Injury to Industry. The KTC performs safeguard investigations and recommends safeguard measures to the head of the competent government agency.
As to unfair trade practices, including import or sale of IP-infringing products and products in violation of the origin marking, the KTC conducts investigation and issues corrective measures, such as import bans, and imposes administrative fines. Unlike other countries, Korea may issue corrective measures and impose administrative fines not only in relation to products imported but also in relation to exported products that are in violation of IP infringement or manufacturing of such products in Korea. In other words, what is unique in Korea's legal system is that a foreign IP holder may request the KTC to conduct investigations on the manufacturing of products in Korea that infringe its IP rights or exportation of such products from Korea to foreign countries.
In Shanghai ASA Ceramic Co, Ltd v. Ministry of Strategy and Finance (Korean Supreme Court Decision 2008Du17936 delivered on 30 January 2009), the court denied the application of a WTO Agreement directly in the court proceedings, explaining that it is generally the governments who have the rights and obligations under the WTO Agreement rather than individuals. In Shanghai ASA, the plaintiff claimed that the Korean government's imposition of an anti-dumping duty on its products was inconsistent with the WTO Antidumping Agreement (ADA). However, the court clearly indicated that individuals have no standing to argue whether the Korean government's measure in question is in compliance with the WTO Agreement at Korean courts. Therefore, it is clear that individuals cannot directly invoke the WTO Agreement at Korean courts. The reason for the court's decision in Shanghai ASA was based on the WTO Agreement being designed to deal with legal relationships between the WTO Member States.
There is a commentary to the above Supreme Court decision, which can be summarised as follows.2 From the perspective of comparative law or reciprocity, there is nothing to be surprised at in the court's decision. Indeed, Korea's main trading partners, such as the United States, the European Union, China and Japan also do not recognise the direct effect of the WTO Agreement. As, however, Korean lower courts have allowed a direct application of the WTO Agreement, the meaning of the Shanghai ASA case cannot be underestimated. Although the Korean Constitution reflects monism with regard to the relation between treaty and domestic law, the Shanghai ASA case is legitimated under the principle of reciprocity in international economic relations.
III TREATY FRAMEWORK
Korea has been actively pursuing free trade agreements (FTAs) to secure stable overseas markets and enhance competitiveness of the Korean economy in response to the worldwide spread of FTAs. As a result, starting with the Korea–Chile FTA, Korea effectuated FTAs with 52 countries, including EFTA, ASEAN, Australia, Canada, China, Colombia, the EU, India, New Zealand, Peru, Turkey, the United States and Vietnam and is conducting FTA negotiations with the Regional Comprehensive Economic Partnership (RCEP), etc., at the moment.3
|In force (15)||Chile||Became effective in April 2004||First FTA Foothold to enter the Latin American market|
|Singapore||Became effective in March 2006||Foothold to enter the ASEAN market|
|EFTA||Became effective in September 2006 (EFTA: four countries - Switzerland, Norway, Iceland and Liechtenstein)||Foothold to enter the European market|
|ASEAN||Became effective in September 2006 (ASEAN: 10 countries – Malaysia, Singapore, Vietnam, Myanmar, Indonesia, Philippines, Brunei, Laos, Cambodia and Thailand)||First FTA entered into with the large economic bloc|
|India||Became effective in 2010||BRICs country Large market|
|EU||Became provisionally effective on 1 July 2011 Became fully effective on 13 December 2015||Largest economic bloc in the world (based on GDP)|
|Peru||Became effective on 1 August 2011||Rich with resources Foothold to make inroads to Latin America|
|US||Became effective on 15 March 2012||Large advanced economic bloc|
|Turkey (basic agreement, agreement on trade in goods)||Became effective on 1 May 2013||Foothold to make inroads into the Europe and Central Asia|
|Australia||Became effective on 12 December 2014||Rich with recourses Major market in Oceania|
|Canada||Became effective on 1 January 2015||Advanced market in North America|
|China||Became effective on 20 December 2015||No. 1 trade partner of Korea|
|New Zealand||Became effective on 20 December 2015||Major market in Oceania|
|Vietnam||Became effective on 20 December 2015||No. 3 investee country of Korea|
|Colombia||Became effective on 15 July 2016||Rich with recourses Emerging market in Latin America|
|Adoption of the text (1)||Latin America||Initialing on 10 March 2017 (Latin America: six countries – Panama, Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua)||Created new markets in Latin America|
|Under negotiation (4)||Korea–China–Japan||The fifth negotiation was held in April 2016||Lay groundworks for economic integration of Northeast Asia|
|RCEP||The 19th negotiation was held on 19 July 2017 (RCEP: Korea, China, Japan, India, Australia, New Zealand and 10 ASEAN countries)||Contribute to the economic integration of East Asia|
|Ecuador SECA||The fifth negotiation was held in November 2016||Rich with resources Foothold to enter the Latin American market|
|Israel||The fourth negotiation was held in May 2017||Model country of the creative economy|
IV RECENT CHANGES TO THE REGIME
The amendment to the Enforcement Decree of the Customs Act on 26 March 2010 provided a legal ground for the lesser duty rule, which had been implemented in practice without legal grounds, under which anti-dumping duties are imposed based on the lesser of the dumping margin and the injury margin.4 Furthermore, the enforcement rule of the Customs Act was amended on 30 March 2010 to expressly stipulate the prohibition of zeroing, by prescribing that if individual export prices are higher than the normal value, the weighted average of such export prices shall be the dumping price in the calculation of the average dumping margin.5 Also, while the KTC independently determined the products under investigation previously, the 14 February 2013 amendment to the Enforcement Decree of the Customs Act allowed the KTC to consult with the Commissioner of the Korea Customs Service to determine the merchandise subject to investigation.
In addition, the 27 March 2017 amendment to the Enforcement Decree of the Customs Act clearly provided two measures that can be taken if an exporter fails to keep its price undertaking. The amendment prescribes that a provisional measure shall apply for no longer than four months, and even after a price undertaking has been accepted, anti-dumping duties shall be imposed if the investigation had been continued and details of anti-dumping duties to be imposed, such as anti-dumping duty rates, have been determined.6 In the past, if a material injury caused by imported products subject to a provisional measure has been acknowledged owing to an exporter's breach of its price undertaking, all products imported after the acceptance of the price undertaking were to be subject to anti-dumping duties. However, the amendment limited the imports subject to anti-dumping duties only to those products that breached the price undertaking.7 This amendment was triggered by the following background: in the anti-dumping investigation of the Chinese H-shape steel beam, a Chinese exporter was offered and accepted a price undertaking and then breached the price undertaking. In the course of reviewing measures to be taken against the breach of the price undertaking, many issues arose with respect to the period of provisional measures and the scope of products subject to anti-dumping duties, etc., and the above amendment was enacted to promote legal stability.
V SIGNIFICANT LEGAL AND PRACTICAL DEVELOPMENTS
i Verification method on the domestic price of the exporting country as the normal value
Described below are the factors that the KTC uses to recognise the normal value in calculating dumping margins.
COP below test
After reasonably computing the cost of production (COP) and the domestic sales price, if the volume of sales below COP is less than 20 per cent of the domestic sales volume, the entire trade of the relevant product is deemed to have been conducted in the ordinary course of trade.8 According to the KTC's practice, if the volume of sales below COP is 20 per cent or more and less than 80 per cent, only sales of the relevant product at or above COP are regarded as having been conducted in the ordinary course of trade. If the volume of sales below COP is 80 per cent or more, no trade of the relevant product is considered as having been conducted in the ordinary course of trade.
Domestic sales volume viability test
If the sales volume of the product under investigation in the exporting country is less than 5 per cent of the import volume from the exporting country, the domestic price in the exporting country is deemed to be inappropriate to use as the basis for determining the normal value. However, even if the sales volume is less than 5 per cent, this test does not apply if it has been established that the domestic price is comparable to the normal value.9 The entire sales volume of like products in the domestic market of the exporting country and the entire export volume to Korea are compared, but verification is made by individual model taking into account the characteristic of the product.
Article 10(1)2 of the Enforcement Rule of the Customs Act prescribes that the sales price between interested persons, which has been influenced by their special relationship, may not be used as a basis for determining the normal value. However, this clause does not provide the standards to apply in determining whether or not a sales price had been influenced by such special relationship.
Hence, the KTC, in practice, excludes sales between interested persons from the calculation of dumping margins if domestic sales of an exporter have been made for self-consumption or the weighted average sales price with an interested person is less than 98 per cent or more than 102 per cent of the weighted average sales price with independent third parties. In addition, if domestic sales of an exporter have been made to independent trading parties through an affiliated company for the purpose of a resale, the normal value is determined based on the first resale price of the affiliated company to a non-affiliated third party. The scope of interested persons is listed in Article 23(1) of the Enforcement Decree of the Customs Act.10
ii Method of calculating profits in determining the constructed export price
Article 2.3 of the WTO ADA and Article 58(4) of the Customs Act stipulate that in cases where there is no export price or where it appears that the export price is unreliable because of an association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the reasonable basis. Article 10(7) of the Enforcement Rule of the Customs Act prescribes that reasonable profits should be considered under circumstances described above, but it does not provide any specific method.
In practice, the KTC adjusts profits between the supplier and the affiliated company in Korea by distributing the profits realised by the Korean affiliated company's resale of the merchandise subject to the investigation (i.e., the aggregate of the profits of the supplier and the affiliated company) in proportion to the costs incurred by both parties.11
iii Application of a single dumping margin to affiliated companies
Although the Customs Act and its subordinate regulations do not expressly have provisions, if a company under investigation is likely to manipulate prices because of their special relationship, etc., the KTC calculates a single dumping margin assuming that such suppliers are a single economic entity because two or more affiliated entities are highly likely to distort transactions, including prices, COPs, etc., through inside trading, and could incapacitate anti-dumping duties by committing a circumvention through affiliated companies.
As indicated in Korea – Antidumping Duties on Imports of Certain Paper from Indonesia (DS312) below, the WTO panel ruled that calculation of a single dumping margin does not violate the WTO ADA if certain conditions are met.
iv Method of calculating dumping margins in the review
If it is found in a sunset review that dumping is likely to continue or recur, dumping margins computed in the original investigation or the recent sunset review shall apply. On the contrary, if it is found in a sunset review that dumping is likely to discontinue or stop recurring, dumping margins newly calculated in the sunset review shall apply. If there is an enterprise under investigation that submitted responses in the original investigation but failed to submit responses in the sunset review, a dumping margin should, in principle, be calculated based on available facts.
If the import volume has substantially reduced or import ceased completely, it is regarded that dumping is likely to continue or recur. If the import volume remained unchanged or increased, it is deemed that dumping is not likely to continue or recur. Other factors can also be considered in determining whether dumping is likely to continue, such as exporters' conditions, idle production facilities and plans to extend production facilities, status of export to third countries, prospect of demands for like products in the exporting country, anti-dumping measures taken in third countries, likelihood of switch of export from third countries to Korea when anti-dumping measures expire and increase or decrease trends of exporters' production volume, etc.
v Service of anti-dumping questionnaires in Korean
In the past, the KTC's questionnaire was in English. However, it began to distribute questionnaires in Korean from 2007. Although the questionnaire is in Korean, companies may submit their responses either in English or in Korean.
vi Period for determining whether imports are negligible
According to Articles 3.3 and 5.8 of the WTO ADA and Article 12(2) of the Enforcement Rule of the Customs Act, if imports from a certain country are less than 3 per cent of total imports, they are deemed as negligible and the authorities should terminate the investigation regarding that country. However, there have been lots of controversies because the WTO ADA and the Customs Act do not provide the period for determining negligible imports.
In Korea, facts that took place within the three years immediately prior to the application until the initiation of investigation can be reviewed in investigating the existence of injury to the domestic industry. However, the information after the initiation of investigation until the determination on the existence of injury to the domestic industry may be considered, if necessary. In general, the KTC reviews six months or one year additionally when conducting the investigation on the injury to the domestic industry.
Meanwhile, in 2002, the WTO Committee on Anti-Dumping Practices proposed three recommendations regarding the fixation of the period in order to determine whether the imported volume of the subject merchandise to the investigation is de minimis, which are: (1) the period of investigation on dumping margins; (2) one year prior to the initiation date of the investigation; and (3) one year prior to the application date of the investigation. Nowadays, Korea applies recommendation (1), above. However, in the past, the KTC thought it was best to evaluate the very recent period and reviewed the one-year period before whatever determination that it made. For instance, if the preliminary determination were made in June of 2016, it would review the volume of imports from June 2015 to May 2016 in order to determine whether the import volume was less than de minimis. In the same investigation, if the final determination were made in February of 2017, it would have reviewed the volume of imports from February 2016 to January 2017 in order to determine whether the import volume was less than de minimis. The reason for such an approach was to see the import trend right before making the determination. However, such an approach caused unreasonable results. That is, under such an approach, according to the timing of making the preliminary and final determination, the determination on whether the import volume satisfies de minimis constantly changes. Also, companies subject to investigation can manipulate their import volume in order to escape from the investigation on the basis of de minimis level of import volume. This substantially undermined the effectiveness of anti-dumping measures, and the KTC changed its policy to consider the import volume during the period of investigation in determining whether there was a sufficient amount of products to impose anti-dumping duties in the investigation.
vii Determination of the scope of products subject to anti-dumping duties
There are two systems to determine whether a certain item to be imported after imposition of anti-dumping duties is subject to anti-dumping duties.
First, an importer or a customer may request the KTC to: (1) exclude a certain product from anti-dumping duties on the ground that the product falls outside the definition or scope of the product subject to anti-dumping duties; or (2) exclude a certain product from anti-dumping duties on the ground that the product is not produced by domestic producers or that it is difficult to produce the product.
Second, a domestic producer may request the KTC to include a certain product in the scope of products subject to anti-dumping duties on the ground that, although the product was excluded in the original investigation because the producer did not produce the item at that time, the producer is now producing the product and its products are competing with the products excluded in the original investigation.
Although the first system has been primarily used in most cases, there were recently cases in which the second system was used. These systems concern determination of whether a certain product that was imported after the imposition of anti-dumping duties should be subject to such duties, and are not relevant to the determination on whether certain imports falls within or outside the product scope under the investigation. These two systems are examined below.
First, an importer or a customer may request the KTC to exclude a certain product from anti-dumping duties. If the applicant requests the exclusion on the ground that a certain product does not fall within the product scope subject to anti-dumping duties, the KTC would determine whether to exclude this product from the scope considering its physical characteristics and intended use. If the applicant requests the exclusion of a certain product claiming that the product is not produced by the domestic industry, this would cause sharp conflicts between domestic producers and importers or customers. In many cases, the KTC excludes certain products from anti-dumping duties imposed if domestic producers are not producing the requested products. However, even if domestic producers are not currently producing certain products, domestic producers can produce and sell the product at any time if they have produced such product in the past or currently have production facilities for such items. Therefore, whether to exclude such products from anti-dumping duties imposed should be carefully considered. Up to the present, the KTC accepted the application to review for the exclusion of a certain product from the scope at any time. However, from 2017, the KTC adopted a new system, and only allows importers or customers to request the exclusion of a certain product from anti-dumping duties imposed after at least one year has elapsed from the imposition of the anti-dumping measure.
Next, there are cases where a domestic producer requests the KTC to include a certain product, which was excluded in the original investigation, in the products in scope subject to anti-dumping duties because, although the producer could not produce a like product at the time of the original investigation, the producer came to obtain the ability to produce and sell a like product while conducting the investigation. For example, in the anti-dumping investigation on kraft paper, the KTC excluded a certain product from anti-dumping duties in the original investigation because the domestic industry could not produce like products of the products imported. However, the domestic industry prepared production facilities and began to produce and sell the product while the KTC conducted the original investigation. In the review process, domestic producers requested the KTC to include certain types of products in the product scope subject to anti-dumping duties. However, the KTC dismissed the domestic producers' request, ruling that:
[W]ith respect to a review, as Article 11.2 of the WTO ADA stipulates that the authorities shall review the need for the continued imposition of a duty and Article 11.3 prescribes that a duty may not be terminated if the authorities determine that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury, a product which was excluded from the measure of the original investigation shall not be included in the products subject to anti-dumping duties through a review.
More specifically, if a certain product was excluded from the product scope subject to the anti-dumping duties in the original investigation, there is no order of imposition of anti-dumping duties on such products, and, therefore, there is nothing to be reviewed in relation to such products that were not subject to the anti-dumping duty in the first place. Considering the purposes of the sunset review system, the KTC negated to allow an interested person to apply to expand the product scope subject to the anti-dumping duties through the sunset review procedure. Consequently, the KTC rejects applications for the expansion of the product scope subject to anti-dumping duties to include certain products that were not within the scope at the time of the original investigation into the product scope subject to the imposition of anti-dumping measure.
This also relates to the circumvention issue. For example, in the anti-dumping investigation of Chinese plywood, although the domestic industry included all plywood, whether made of broadleaf trees or needle leaf trees, in the application, the domestic industry provided only the Harmonized Commodity Description and Coding System of Korea (HSK) code on broadleaf tree plywood (needle leaf tree plywood was not imported from China into Korea at that time). The KTC's final investigation report included plywood made of both broadleaf trees and needle leaf trees in the definition of the products subject to anti-dumping duties, but stated the HSK code of broadleaf tree plywood only, and subsequently, anti-dumping duties were only imposed on broadleaf tree plywood (the final investigation report states that the HSK codes are for reference rather than being conclusive and may be added or revised in light of the definition, physical characteristics and intended use of the products under investigation).
However, after anti-dumping duties were imposed on broadleaf tree plywood, Chinese plywood exporters increased export of needle leaf tree plywood instead of broadleaf tree plywood in order to avoid the anti-dumping measure, and the domestic industry requested imposition of anti-dumping duties on the circumventing needle leaf tree plywood. However, the MOSF took a stance that even if the KTC's final determination and the MOSF Enforcement Decree stated the Chinese plywood as products subject to anti-dumping duties, if the HSK code only refers to broadleaf tree plywood, it is reasonable to impose anti-dumping duties only to the narrower extent (i.e., only on broadleaf tree plywood). It is thought that the MOSF took such stance based on the principles of clear taxation requirements and strict interpretation on taxations, which are derived from the principle of no taxation without law.
Since Korea does not have a legal basis to investigate circumventive behaviours of companies, domestic producers could not request an anti-circumvention investigation regarding needle leaf tree plywood. In the end, domestic producers submitted a separate application for anti-dumping investigation of needle leaf tree plywood (original investigation) and anti-dumping duties were imposed on the needle leaf tree plywood as well. Although there are discussions on whether Korea should adopt provisions on the anti-circumventions, it seems that it will take some time before Korea could adopt such measures in the future.
viii Lesser duty rule
Provisions on the lesser duty rule were adopted into the Customs Act in 2010. Under the lesser duty rule, the injury margin shall be imposed as the anti-dumping duties if the margin of injury to the domestic industry is lesser than the dumping margin. The basis of this rule is Article 9.1 of the WTO ADA.12 This WTO rule is not mandatory but rather optional. Some WTO Members have adopted this rule while some countries did not.
The injury margin is a concept that means the difference between the price that does not cause injury to the domestic industry, non-injurious import price (NIP), and the sales price of the dumped products. In order to calculate a proper injury margin, the KTC compares prices of dumped products and domestic like products after making some adjustments with regard to different aspects between the two products other than prices. The KTC provides four basic methods of calculating the injury margin. These are regarded as being identical to the formula that the Friends of Anti-dumping, including Korea, proposed in the WTO DDA rule negotiation.13
Injury margin 1 = actual sales price of domestic products
- sales price of imported products
------------------------------------------------- × 100
CIF import price
Method 1 is the price undercutting method. This is suitable when the domestic products price is not influenced by dumped imports, and calculation can be easily made based on objective statistics. The injury margin can be calculated using the weighted average sales prices on all products or by selected representative models in case there are various models. However, method 1 has the limitation that it cannot be applied if the sales price of dumped imports is higher than the sales price of domestic products.
Injury margin 2 = target sales price of domestic products
- sales price of imported products
------------------------------------------------- × 100
CIF import price
Method 2 is the price underselling method. This method is suitable when the sales price of domestic products is influenced by dumped imports, and can be used even when the sales price of dumped imports is higher than the sales price of domestic products. The target sales price is calculated by adding selling, general and administrative expenses and a reasonable amount of profits to the manufacturing cost of domestic products. Reasonable profits are, in principle, calculated by using the operating profit rate of the relevant industry in the Business Management Analysis issued by the Bank of Korea. However, if necessary, the average profit rate of a foreign country or other reasonable references may be used.
Injury margin 3 = target sales price of domestic products
- actual sales price of domestic products
------------------------------------------------- × 100
CIF import price
Method 3 is a method necessary to impose anti-dumping duties when the domestic sales price of dumped imports is higher than the target sales price of domestic products.
Injury margin 4 = CIF price of non-dumped products
- CIF price of dumped products
------------------------------------------------- × 100
CIF import price
Method 4 is applied when non-dumped imports have a high market share and have material influence on the domestic market price.
Korea has calculated injury margins using the above formulae taking specific circumstances into consideration. Injury margins can be calculated for all countries, for individual country, or for individual exporter. In the past, Korea calculated injury margins for each exporting country except in few cases when the calculation was done on individual exporters. However, the KTC has used a single injury margin for all exporting countries and individuals since the case on the Indonesian and Chinese wood-free paper in September 2003.14
In Korea, an application for countervailing duty investigation on stainless steel bar from India was officially filed but was withdrawn before its initiation in 2003. Since then, Korea has not conducted any countervailing duty investigation up to the present. Also, as explained above, Korea has not done any safeguard investigation since its negative determination in the sunset review on Chinese garlic in 2002. In other words, all trade remedy measures imposed by the KTC after 2003 are anti-dumping measures. The KTC recently conducted a study on WTO disputes, subsidy investigation methods, etc., in relation to countervailing duty investigation. Although this may not be considered as the KTC's intention to immediately conduct countervailing duty investigations, this implies, at the very least, that the KTC recognises the difficulty of curing the injury to the domestic industry owing to subsidised products with anti-dumping measures alone.
In addition, Korea has never conducted investigations on circumvention because Korea does not have provisions to conduct anti-circumvention investigations. However, more and more domestic companies are actively requesting the KTC to perform circumvention investigations, like in the United States or the EU, on the actions taken by foreign exporters circumventing anti-dumping duties. To conduct circumvention investigation, it is necessary to amend the Customs Act, and add new provisions that allow the KTC to conduct circumvention investigations. Recently, Korea has taken aggressive action on this issue – the Korean government is holding public discussions in order to gather information from domestic industries on the necessity of anti-circumvention investigations. The government is also considering adopting legislative measures that would make it possible to conduct anti-circumvention investigations. Anti-circumvention measures may be adopted to the Customs Act in 2019.
As discussed above in detail, if a person, after the imposition of anti-dumping duties, intends to apply for an exclusion of a product from the scope subject to anti-dumping duties, such person should apply for a circumstantial change review from 2017.
In addition, Korea recently showed deep interest in the investigation on IP infringement by imported/exported products and is trying to find a way to enhance the effectiveness of provisional measures as a prior step before making the final determination. As noted above, even a foreign person may apply to the KTC for the investigation if products manufactured in, and exported from, Korea infringe the applicant's intellectual property rights. As the result of the investigation, the KTC has the authority to issue corrective orders, such as export bans for Korean products, or imposing administrative fines on the entity that committed unfair trade practices if it finds any IP infringements in relevant investigations.
Korea has recently amended the Anti-dumping Operating Regulations to further facilitate its practice on anti-dumping investigations. The amended Anti-dumping Operating Regulations, which became effective on 12 July 2018, complement the existing regulation and introduce new procedures. Some of the key aspects of the amendments are as follows:
- the KTC is required to notify the result of the on-site verification to the overseas supplier under investigation;
- the overseas suppliers must submit written responses in the Korean language; and
- overseas suppliers must provide sufficient good cause to the KTC when they request that information regarding the business be submitted in a confidential manner.
1 Dongwon Jung and Sungbum Lee are partners at Yoon & Yang.
2 Jinyul Ju, 'The Korean Supreme Court's First Denial of Direct Effect to the WTO Agreement: 2008 Shanghai ASA Ceramic Co Ltd v. Ministry of strategy and Finance', Seoul International Law Study Book 16, No. 1 (2009), pp.231–235.
4 Article 65(1) of the Enforcement Decree of the Customs Act.
5 Article 10(8) of the Enforcement Rule of the Customs Act.
6 Article 68(5) of the Enforcement Decree of the Customs Act.
7 Article 69(1)3 of the Enforcement Decree of the Customs Act.
8 Article 10(1)1 of the Enforcement Rule of the Customs Act.
9 Article 10(2) of the Enforcement Rule of the Customs Act.
10 Article 23 (Scope of Special Relationship, etc.):
'Special relationship prescribed by Presidential Decree' in Article 30 (3) 4 of the Act means any of the following cases:
1. Where the buyer and the seller are an executive officer or manager of their business.
2. Where the buyer and the seller are legally in the same line of business.
3. Where the buyer and the seller are in the employment relationship.
4. Where any specified person holds or controls, directly or indirectly, at least five per cent of the voting stocks of the buyer and the seller.
5. Where either the buyer or the seller is in a position to direct or control the other legally or practically or one party controls directly or indirectly the other party.
6. Where the buyer and the seller are controlled directly or indirectly by the same third person.
7. Where the buyer and the seller jointly control directly or indirectly the same third person.
8. Where the buyer and the seller are in a relationship by blood falling under any of the subparagraphs of Article 1-2(1) of the Enforcement Decree of the Framework Act on National Taxes.
(Amended by Presidential Decree No. 19478, 22 May 2006; Presidential Decree No. 22816, Apr. 1, 2011; Presidential Decree No. 24373, 15 February 2013.)
11 This applied to the original anti-dumping investigation of the Taiwanese and Chinese POY (November 2008) and to the changed circumstances review of the Chinese tiles (October 2008), etc.
12 Article 9.1 of the ADA provides: 'The decision whether or not to impose an anti-dumping duty in cases where all requirements for the imposition have been fulfilled, and the decision whether the amount of the anti-dumping duty to be imposed shall be the full margin of dumping or less, are decisions to be made by the authorities of the importing Member. It is desirable that the imposition be permissive in the territory of all Members, and that the duty be less than the margin if such lesser duty would be adequate to remove the injury to the domestic industry.'
13 KTC, Understanding Trade Remedy System (2009), pp. 68–70.
14 Cases where a single injury margin was calculated for multiple exporting countries are as follows: alkali manganese batteries from China, Japan and Singapore (October 2003); stainless steel bars from Japan, India and Spain (June 2004); and lithium batteries from Japan and the US (June 2004).