Guidance

How we carry out a dumping investigation

Updated 25 April 2024

What is dumping?

Dumping occurs when goods are imported into a country and sold at a price that is below their normal value in their country of export. An anti-dumping remedy may be needed if the dumping causes or threatens material injury to a domestic industry or makes it more difficult for one to be established.

If we find dumped imports that are causing injury to UK industry during our investigation, then (subject to the other requirements of the investigation) we will recommend anti-dumping measures to counter the effects of this unfair trade practice.

When we undertake dumping investigations, we calculate dumping margins for each exporter sampled as part of our work to assess whether the dumped imports have caused material injury. The dumping margin is the difference between the export price and the normal value of the goods being dumped, described as a percentage of the export price. We then use the dumping margin along with the injury margin to set anti-dumping duty rates where they are needed. This chapter describes how we calculate the dumping margins.

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

Schedule 4 to the Taxation Act describes how dumping investigations should be carried out.

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

Part 2 of the D&S Regs covers the calculation of dumping margins.

Regulation 128 of the Customs (Import Duty) (EU Exit) Regulations 2018 (a) gives a definition of related persons. We use this to determine association.

World Trade Organization (WTO) – relevant provisions

Article 2 of the Anti-Dumping Agreement (ADA) provides guidance on calculating dumping margins.

How we calculate a dumping margin for an exporter

Calculating a dumping margin involves the following stages:

• calculating the normal value of the goods concerned
• determining the export price
• ensuring a fair comparison between the normal value and the export price
• calculating the dumping margins

The calculation process involves reviewing data associated with the goods concerned in the investigation. These goods are described fully in the Notice of Initiation we issue at the beginning of an investigation. We give goods in our investigations Product Control Numbers (PCNs) which are identifiers unique to our work and are created on the basis of the main characteristics differentiating the goods from other goods. We use PCNs to allow comparison between the foreign producers’ exported goods and their domestically sold goods.

Calculating the normal value based on comparable price

Where possible, we will calculate the normal value of the goods which are suspected of having been dumped (the goods concerned in the investigation) using the comparable price. This is the price of the goods or like goods in the ordinary course of trade in the home market of the exporting country.

Like goods are defined as goods which are similar to the goods concerned in the dumping investigation in all respects or have characteristics which closely resemble them. 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

Determining when not to use comparable price

We won’t base the normal value of the imported goods on comparable price if we think it is not appropriate to do so.

This applies to situations where:

• there are no sales of like goods in the ordinary course of trade in the domestic market of the exporting country

• these sales don’t allow a proper comparison with the goods concerned because of:

  • a particular market situation
  • low volume of sales in the domestic market of the exporting country
  • the overseas exporter does not sell like goods in their domestic market

Sales of like goods in the exporter’s home market

We won’t use comparable price to calculate the normal value of the goods if the exporter does not sell goods domestically which are identical to or closely resemble the goods they export to the UK.

Particular market situation

We won’t use comparable price to calculate the normal value of the goods where, because of a particular market situation in the exporting country, such sales do not allow a proper comparison between the like goods and the goods concerned. This may be, for example, because:

• prices are artificially low
• there is significant barter trade
• prices reflect non-commercial factors

This could also include government interventions affecting the sales price of the goods concerned or the upstream or downstream markets.

We will assess whether a particular market situation is present on a case-by-case basis. We will examine whether there is a particular market situation in a country if sufficient relevant evidence arises which makes it necessary or appropriate for us to do so.

Where there is a low volume of sales

We won’t use comparable price to calculate the normal value of the goods concerned if, due to a low volume of sales, this does not allow a proper comparison between the like goods and the goods concerned. We consider domestic sales to be in sufficient volume to allow a proper comparison where they make up at least 5% of the overseas exporter’s UK sales volume. In some cases, however, we may consider the volume of sales is sufficient even where they make up less than 5% of the exporter’s UK sales volume. We will review this on a case-by-case basis.

We will only include sales destined for consumption on the exporter’s domestic market when we are assessing sufficient volume of sales. If goods are destined for export markets, we will exclude these sales from our domestic sales analysis.

We may also make an exception for captive sales (sales made between associated companies for further processing, transformation or assembly). In general, we will not consider these sales as destined for consumption in the domestic market of the exporting country, so we will exclude them from our sales volume analysis. However, if the exporter shows that these sales were in the ordinary course of trade, we will include them in our sales volume analysis.

If sales are not in the ordinary course of trade

We won’t use comparable sales if the sales in question are not in the ordinary course of trade. There are many situations where this may apply. The two most common situations are where goods are sold:

• at prices below per unit costs
• between parties we consider to be associated, unless exporters show us that the association does not affect prices

We consider sales below cost to be sale prices that are below the per unit cost of production, including admin, selling and general costs. We will only consider sales below cost as not in the ordinary course of trade where they meet three conditions. These are that sales are made:

• within an extended period of time (normally one year or at least six months)
• in substantial quantities
• at prices which do not include the recovery of all costs within a reasonable period of time

We consider sales below cost to be in substantial quantities where:

• the weighted average selling price per PCN is below the weighted average per unit cost
• the volume of sales below cost represents 20% or more of the volume sold in the relevant transactions

If we conclude that an exporter’s below cost sales fit either of these descriptions, we may disregard all or some of these sales when we are calculating normal value for the goods concerned in the investigation.

In general, we will consider sales to associated parties as not being in the ordinary course of trade. However, if parties provide sufficient evidence that the association does not affect prices and we accept this, we may then include these sales within our comparable price assessment.

We consider parties to be ‘associated’ when they meet the definition of ‘related persons’ in Regulation 128 of The Customs (Import Duty) (EU Exit) Regulations 2018 (a).

Sequencing

In general, we will assess each of these conditions for using comparable price in a default order

Alternative methods to determine the normal value

When we can’t use comparable price, we will use alternative methods to determine the normal value of the goods concerned.

In general, this alternative method will be either constructed normal value or representative export sales prices to an appropriate third country.

We may also determine normal value based on other exporters’ domestic sales if the exporter does not sell like goods domestically. This is sometimes known as the ‘exporter next door’ method.

Finally, further alternative methods for determining normal value are available for imports from particular foreign countries.

Using a constructed normal value

For the goods concerned, we will construct the normal value by adding together:

• the Costs of Production (CoP)
• a reasonable amount for administrative, selling and general (AS&G) costs and profits

We will normally calculate CoP based on the exporter’s records. We will do this if those records:

• are in accordance with the generally accepted accounting principles of the exporter’s country
• reasonably reflect the costs associated with the production and sale of the like goods in the exporter’s country

If an exporter’s records do not meet either of these conditions, we may calculate CoP on another reasonable basis.

When we determine CoP, we will consider all the evidence we have access to about the proper allocation of costs. We will consider allocations that have been used historically by the exporter and we will establish appropriate amortisation and depreciation periods. We will also establish allowances for capital expenditures and other development costs. If appropriate, we will adjust costs for non-recurring items or costs which benefit future and/or current production. We will also adjust costs affected by start-up operations and any other factors we consider relevant.

Once we have arrived at a cost of production for the goods concerned, we will calculate AS&G costs and profit. We can do this based on actual data from the exporter if these records relate to the production and sale of the goods concerned in the ordinary course of trade in the domestic market of the exporting country.

However, if we find that an exporter’s records do not meet these conditions, we may calculate AS&G costs and profit based on:

• actual costs incurred by the overseas exporter for producing and selling the same general category of goods in their domestic market
• the weighted average of AS&G costs incurred by other overseas exporters we’re investigating for production and sales of the like goods in their domestic market
• any other reasonable method, as long as the amount we determine for profit is not more than the profit normally realised by other overseas exporters for sales of the same general category of goods in their domestic market

Adjusting costs in order to accurately construct normal value

When we are constructing normal value, we may adjust certain costs or profit if they are unrepresentative. This applies where they do not reasonably reflect what they would be in their domestic market if they were substantially determined by market forces. We will only adjust significant cost or profit elements.

When we make these adjustments, we may base our calculation on the costs or profits in an appropriate third country or on international prices, costs or benchmarks. When we use figures from a third country, we will consider whether it has a similar level of economic development. Where appropriate, we will adjust third country data or benchmarks to reflect circumstances in the exporting country. For example, this may include differing transport costs. When choosing an appropriate third country to source data from, we may also take into account whether exporters in that country make reliable information available to us or any other factors we consider relevant.

Determining normal value based on export prices to an appropriate third country

In some cases, we may determine normal value based on the price of the exporter’s goods when they are exported to an appropriate third country. We will only do this if the price is representative. We will also consider whether the exporter’s volumes of trade to the third country and the UK are sufficiently similar and whether these sales are made in the ordinary course of trade.

Determining normal value based on domestic sales of other exporters (exporter next door)

We can only determine normal value based on other exporters’ domestic sales in the exporting country where the exporter of the goods in question does not sell like goods domestically.

Establishing normal value for imports from particular foreign countries/territories

For some foreign countries, there are further methods we may use to determine normal value.

This refers to:

• non-WTO members
• WTO members whose memberships have specific normal value provisions
• countries where there is a substantially complete trade monopoly and substantially all domestic prices are fixed by the government.

In any of these situations, we may determine normal value using any reasonable method. This includes using a constructed normal value drawing on data from an appropriate third country.

Determining export price

Basing the export price on the selling price of the goods concerned

To calculate the margin of dumping, we compare the export price of the goods concerned in the investigation to their normal value. Unless it is not appropriate, we consider the export price to be the selling price of the goods concerned. This could be from sales to a UK importer or a third party for export to the UK.

Determining the export price using an alternative basis

In some cases, we will construct the export price. This includes where:

• there is no export price
• the price is unreliable due to an association or compensatory arrangement between the exporter and UK importer or third party

In general, we will construct the export price based on the price at which the goods concerned were first sold to a UK independent buyer. We will use any other reasonable basis where there are no sales to UK independent buyers or where they are not resold in the condition in which they were imported.

Where we construct the export price, we may make adjustments to account for actual costs incurred by the importer or exporter between export to the UK and independent sale.

This may include:

• transport costs
• insurance
• handling, loading and ancillary costs
• import duties
• any taxes payable in the UK due to importing or reselling the goods in the UK;
• a reasonable margin for profit as determined by the TRA
• selling, general and administrative costs
• any other costs incurred in the importation and resale of the goods

Export price in cases of transhipping

This applies when products are not imported directly from the country of origin but are exported to the UK from an intermediate country. In these cases, we will usually compare the price at which the products are sold from the country of export to the UK with the comparable price in the country of export.

However, we may compare export price to the UK with the normal value in the country of origin, if, for example, the goods are only transhipped through the country of export. This may also apply where those goods are not produced in the country of export, or there is no comparable price for them in the country of export.

Making a fair comparison

Once we have determined the goods’ normal value and export price, we need to make these comparable in order to determine the dumping margin. We use this to set the level of the anti-dumping duty we will impose.

We conduct a fair comparison by comparing like with like and compare export price and normal value:

• at the same level of trade
• on an ex-factory level
• based on cash sales
• of sales made at as near as possible the same time

To achieve this comparison, we may need to adjust our calculations to account for any differences which affect price comparability.

This includes those relating to:

• conditions and terms of sale
• taxation
• levels of trade
• quantities
• physical characteristics

Making adjustments

When we make adjustments to our calculations, we will ask the relevant parties for data on each factor, including what adjustments they would propose. We will explain what information we need to ensure a fair comparison. When we receive this data, we will assess any differences identified to determine whether the adjustment is justified.

We will make adjustments if there is evidence that a particular difference between the normal value and the export price affects our ability to make a fair comparison. Exporters may request that a particular adjustment is needed, but they must provide supporting evidence as promptly as possible. This lets us assess the circumstances and confirm the supporting accounting information.

The following adjustments are the most common types we may make. This list is non-exhaustive, and we may make adjustments for other factors where appropriate.

Table 1: Possible adjustments for export prices and normal values

Table of adjustments	Export price	Normal value
Physical characteristics	No	Yes
Import charges and indirect taxes	No	Yes
Discounts, rebates, quantities	Yes	Yes
Level of trade	No	Yes
Transport, insurance, handling	Yes	Yes
Packing	Yes	Yes
Credit	Yes	Yes
After sales costs	Yes	Yes
Commissions	Yes	Yes
Currency conversion	Yes	Yes

Physical characteristics

We may adjust for differences in physical characteristics of goods where these affect price. These include:

• quality
• chemical composition
• structure
• design

For example, if exported goods include extra features, we may adjust to reflect the cost of these.

If parties provide different selling prices for products with different physical characteristics or quality, we may base any adjustment on the price difference. If we can’t do this, we will use another reasonable method.

Import charges and indirect taxes

We may adjust normal value to account for import charges and indirect taxes. The import charge refers to tax collected on imports and some exports by customs authorities. An indirect tax is the duty imposed on goods and services rather than on income or profits

Discounts and rebates

We may adjust normal value and/or export price for discounts and rebates granted to customers when certain conditions are met, for example a certain quantity is purchased. Rebates are where some of the price paid is reimbursed. Discounts are a reduction of the price to be paid.

Level of trade

We will compare normal value and the export price at the same level of trade in both markets. Comparing prices at different levels of trade introduces distortions. This is due to differences in selling and distribution costs paid by different customers.

When we are considering whether the sales are at different levels of trade, we look at two main issues. First, we consider the selling activities carried out at different marketing stages. Secondly, we assess the price differences between sales in the domestic market.

We will only adjust for level of trade where differences affect our ability to compare prices.

Transport, insurance and handling

We may make adjustments to account for price differences in transport, insurance and handling costs.

Handling costs may include:

• wharfage and other port charges
• container taxes
• document, customs brokers and clearance fees
• bank and other charges

Packing

We may adjust for differences in packing costs where there are different packaging types and we may adjust either export price or normal value to address this. Any adjustment for packing is restricted to directly-related costs – in other words, the cost of the direct labour and materials. Where the exporter allocates these in their production or general costs, they must show that the allocation is reasonable and consistent with their historical cost allocation methods.

Credit

Credit is a means of deferring payment for goods received. Parties agree credit terms when they enter into a contract. These are normally referred to as the ‘terms of payment’ and they affect the overall price of the goods – for example, through the interest rates applied. We will generally express the normal value and export price for goods concerned in an investigation on a cash basis in order to make a comparison. Therefore, when credit terms for export sales and domestic sales differ from each other, we may adjust these sales to bring both prices to a cash basis.

In general, we will use the credit period agreed at the time of sale. Normally, this will be shown on the sales invoice or contract. If an interested party asks for some other credit period to be taken into account in our investigation, they must show that prices were set to credit terms not shown on the invoice.

In some cases, we may calculate an average credit term for adjustment purposes. This applies where no fixed credit period has been added to the invoice or sales contract, there are various credit terms, or the credit terms on the invoice were not followed.

We will generally apply the same interest rate in calculating both domestic and export credit terms adjustments. We may follow a different approach where the exporter can show that different interest rates apply to domestic and export sales.

After-sales costs

After-sales costs are costs incurred after a sale has been completed. This includes guarantees, technical assistance and services. These costs are generally detailed in the sales contract or other legal document. After-sales costs only include costs directly related to the after-sales service. These must be properly quantified.

A party claiming this sort of adjustment must show that the after-sales cost is included in the price. This means we can identify and allocate this cost and adjust where appropriate.

Commissions

A commission is a sum, usually a set percentage of the value involved which is paid to an agent in a commercial transaction. We may adjust for commissions charged by an independent trader or agent performing certain selling functions for the exporter.

We may adjust normal value or export price to account for commissions paid. For commissions paid in both markets, we may adjust the domestic sales price to reflect the difference in those commissions.

If a commission is paid in only one of the markets we are looking at, we may also adjust to account for relevant selling expenses incurred in the market where the commission had not been paid.

Currency conversion

As export sales and domestic sales take place in different markets, transactions are often made in different currencies. We will normally make dumping calculations in the exporting country’s currency. If a price comparison requires a currency conversion, we may adjust prices using the rate of exchange on the date of sale.

We will generally use the rate of exchange used by the exporter for the sales in question. The date of sale is normally the date of contract or invoice – whichever decides the material terms of sale. When a sale of foreign currency on forward markets is used in direct relation to an export sale, we will use the rate of exchange in the forward sale for all related transactions.

We will disregard short-term fluctuations in exchange rates. We may consider sustained movements in exchange rates during the period of investigation. If we do, we will allow exporters at least 60 days to adjust their export prices to reflect this.

How we calculate the dumping margin

Once we have made sure the export price and the normal value can be compared fairly (including any necessary adjustments), we will calculate the dumping margin. Along with the injury margin, this allows us to determine the level of anti-dumping duty, if any, to recommend.

A dumping margin is the difference between the export price of the goods concerned and the normal value, given as a percentage of the export price.

Dumping is defined as being when the export price of goods is less than their normal value, so the dumping calculation calculates the difference between export price and normal value as a percentage. If this percentage margin is minimal (less than 2%), we would end the investigation.

Methods for calculating dumping margins

There are two main methods we may follow to calculate dumping margins:

1. Comparing a weighted average normal value with a weighted average of all comparable export transactions.

2. Comparing normal value and export prices on a transaction-by-transaction basis.

We will generally use the weighted average to weighted average method.

In rare cases of targeted dumping, we may compare export price on a transaction basis, with the weighted average normal value. Targeted dumping is where a pattern exists of dumping that is targeted to certain purchasers, regions, or time periods. In these cases, we may use this method if we cannot assess such differences using the other two methods.

Closing an investigation when we find minimal dumping margins

We will terminate a dumping investigation relating to an individual exporter if we find that the dumping margin is minimal. We consider the dumping margin minimal if it is less than 2% of the export price.

We may also close the investigation if we find that the volume of imports is negligible. The import volume is considered negligible if the volume of dumped imports coming from any individual country is less than 3% of imports of like goods into the UK. This does not apply when exporting countries individually account for less than 3% of dumped imports but collectively account for more than 7% of dumped imports.

We will also terminate an investigation where we find that the injury is negligible.

Calculating anti-dumping amounts for exporters

After we have calculated dumping and injury margins, we will determine what anti-dumping amounts to recommend. Our aim is to determine an individual dumping amount for each cooperating exporter or foreign producer in an investigation. However, in most cases, investigations involve a large number of exporters and we cannot calculate individual dumping margins for each exporter. To solve this issue, we make use of sampling. For more information about this process, see the sampling section in our Investigation Process guidance.

When we sample exporters in a dumping investigation, we will set different duty rates for sampled and non-sampled parties. First, we will set an individual duty rate for each sampled exporter and then we will set a single duty rate for all non-sampled, cooperating exporters. Finally, we will set a single duty rate for non-sampled, non-cooperating exporters and new exporters. This is known as the ‘residual rate’.

Applying the lesser duty rule

When we set the duty rates, we will follow the lesser duty rule. Under this rule, in some cases we will impose duties at a level lower than the margin of dumping, but which is enough to remove injury (the injury margin).

Calculating an anti-dumping amount for sampled exporters

We will calculate individual anti-dumping duty rates for each sampled exporter. Following the lesser duty rule, this will be the lower of the injury margin and their individual dumping margin.

Calculating an amount for non-sampled cooperating exporters

Cooperating exporters who are not in the sample will receive a single amount that is no higher than the weighted average of the amounts calculated for those sampled once the lesser duty rule has been applied. We will not include in this weighted average margin any margins that are minimal, or based on facts available.

Any cooperating exporter or foreign producer who was not chosen for the sample can ask us to calculate an individual dumping margin for them. This is done by submitting the necessary information at the appropriate period of the investigation. We will accept this request and calculate an individual duty rate for them unless this would be overly burdensome and prevent timely completion of the investigation.

Calculating an anti-dumping amount for non-cooperating and new exporters (residual amount)

We will set this amount on a case-by-case basis and we can use any reasonable means to do so. If an interested party does not cooperate and relevant information is withheld from the TRA, this situation could lead to a less favourable amount being calculated.