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Imposition of Temporary Preventativ

Imposition of Temporary Preventative Measures on Imported Reinforcement Steel
On 14 October 2014, the Minister of Industry, Trade, and Small and Medium Enterprises unveiled temporary preventative measures on the import of reinforcement steel.[1] This decision comes in response to a complaint filed by a number of domestic reinforcement steel producers, in which they claimed that the increase in imported reinforcement steel has had a negative effect on the local market. In light of the above measures, it is important to clarify the legislative framework guiding similar measures. To do so, it is necessary to analyze relevant laws and decisions concerning Egypt’s agreements with the World Trade Organization ("WTO") and agreements concerning the protection of Egypt’s national economy from harmful practices of international trade. The WTO has played an instrumental role in the wave of globalization and economic integration since its inception in Marrakech, Morocco, on the 15 April 1994. Following the “Uruguay Round” of trade negotiations a year later, the Republic of Egypt joined the WTO’s trade agreement and ratified this process through Presidential Decree No. 72 of 1995.[2] Included in the WTO’s General Agreement on Trade and Tariffs ("GATT") of 1994 was an agreement relating to prevention measures, as well as an implementation agreement relating to GATT Article VI, which outlined the regulations pertaining to anti-dumping rules. These annexed agreements determined the measures that may be taken by a member country in the event that its local industry is subjected to serious damage as a result of increase in imports or dumping. The agreements also laid down rules for determining the damage suffered by local industry, as well as the investigatory measures to be taken in the event of such harmful practices.
Preventative Measures Concerning the Import of Reinforcement Steel
In the context of Article VI of GATT, the Chamber of Metals Industries put forward a complaint on the 9th of September 2014 on behalf of domestic reinforcement steel producers, claiming that the large increase in imports has inflicted grave harm on the local industry. The investigative authority began investigations in light of this complaint, sending its findings to the Minister of Industry, Trade and Small and Medium Enterprises, who decided on the 14th of October 2014 to impose preventative fines on imports of this product in the amount of 7.3% of their “CIF” value, at a minimum of 290 EGP per ton, for the duration of two hundred days from the decision, in accordance with Article 1/83 of the Executive Regulations of Law No 161/1998, which regulates anti-dumping and protective measures. The above-mentioned notice, issued by the Agency for Protection and for Countering Subsidies and Dumping, a department under the Ministry of Industry, Trade and Small and Medium Enterprises, investigated the damages incurred.[3]  The notice also clarifies that the complainant, the Chamber of Metals Industries, includes domestic producers who account for 68% of reinforcement steel products in the marketplace. The investigation showed that there was a drastic increase in imported products (210% and 129% respectively) for the first eight months of 2014 compared to a similar period in 2011, which caused serious damage to local industry.
Background to the Ministerial Decision
Application of Article VI in Egyptian Law In the same context, and in ensuring the implementation of GATT, Law No. 161 of 1998 was issued concerning the protection of the national economy from the effects of harmful international trade practices.[4]  Article 1 of the Law sanctioned the Ministry of Trade and Provisions (later the Ministry of Industry and Trade) to take necessary actions for the protection of the Egyptian national economy through the penalization of product dumping and unjustifiable increase in the supply of imports. This was followed by the issuance of Decision No 549/1998 from the Ministry of Trade and Provisions detailing the Executive Regulations for Law No 161,[5]  which outlined the procedures for enforcing Article VI of GATT in Egypt, and detailed measures to counter harmful trade practices, specifically “dumping”, “subsidies” and “unjustifiable increases in imports”. The Regulations stipulated the procedures for the investigation and the implementation of preventative measures in Egypt. Article 79 of the Regulations required the investigative authority to prove the existence of a causal relationship between an unjustifiable increase in an imported good and negative impact on the affected local product, by ascertaining that:
  1. there is an unjustifiable increase in an imported good, either in absolute terms or relative to production in Egypt; and
  1. there is a negative impact of such increase on the economies of local production in terms of its sales, its production, its profits and its market share.
If such conditions are met, the Regulations permit the relevant authorities to undertake temporary preventative measures if the expected negative impact of the justifiable increase is irreversible. The preventative measures may not take place for more than 200 days and the value of such measures must be repaid to the relevant exporter should it be proven that the increase in imports did not cause material damage to the local industry. Article VI of the General Agreement, concerning trade and tariffs The 1994 GATT defines a dumped product as one entering another country at a price below its market price, meaning that the price at which it is exported is lower than its price (or the price of a similar product) in the country of origin, the exporting country. This approach was adopted by the Egyptian legislator, through Article 32 of the Executive Regulations for Law No 161, according to which the regular value is the price of production in addition to costs and profit margin, or the price usually sold at in a third country, or the price usually given in the country of origin. The process for determining the damage is in many ways similar to the above-mentioned process relating to proving damages from unjustifiable increase in imports. The Agreement on Implementation of Article VI of GATT went on to list the permissible temporary measures that may be undertaken if a material damage on local industry resulted from the dumping of a product. In doing so, the Implementation Agreement permitted the imposition of anti-dumping fees if all necessary requirements are met. At the same time, the agreement prohibited the imposition of fees that exceeded the margin of dumping, representing the price difference between the imported good and its (or its equivalent) price in the country of origin. The third section of the Regulations establishes comprehensive anti-dumping rules and assesses the damage caused by it, as well as measures to prevent dumping. Article 32 of the Regulations defines “dumping” as the export of products to Egypt at a price lower than their normal market value as used in regular trading. The regular value is the price of production in addition to costs and profit margin, or the price usually sold at in a third country, or the price usually given in the country of origin. The process for determining the damage is in many ways similar to the above-mentioned process relating to proving damages from unjustifiable increase in imports. To commence an investigation, Article 19 of the Regulations stipulates that a complaint must be supported by producers who represent at least 25% of local production of the similar product. In the event that there is preliminary evidence of harmful dumping, the investigative authority may impose preventative measures mentioned in Article 44, in the form of a cash deposit not exceeding the margin of the dumping. The investigative authority will then determine the final amount of the fees required to counter the act of dumping, as stipulated in Article 45 of the Regulations. The investigative authority may also impose such fees retroactively if it reaches a final conclusion that there has been a material damage, or at least if there is a threat of such damage, throughout the duration of the determination of preventative measures. Nevertheless, Article 55 of the Regulations allowed for the revision of final anti-dumping fees by the investigative authority after a year of their imposition, with the condition that such revision be based on the request of one of the relevant parties.   [1] Minister of Industry, Trade, and Small- and Medium-Sized Enterprises' Decision No. 765/2014 imposing preventative measures on imports of reinforcement steel, Official Gazette, issue No. 231 (cont.), 14 October 2014. [2] Presidential Decree No. 72/1995 agreeing to join the World Trade Organization and its final agreements following the “Uruguay Round” of trade talks, Official Gazette, Issue No. 24, 10 June 1995. [3] Notice by the Authority for the Prevention of Dumping No. 11/2014 imposing temporary preventative fines on imports of reinforcement steel, Official Gazette, Issue No. 231 (cont.) (a), 14 October 2014. [4] Law No. 161/1998 on the Protection of the National Economy from the damaging effects of international trade, Official Gazette, Issue No. 24 (cont.) (a), 11 June 1995. [5] Minister of Trade and Supplies' Decision No. 549/1998 enacting the Executive Regulations of Law No. 161/1998 on the Protection of the National Economy from the damaging effects of international trade, Egyptian Gazette, Issue No. 241, 24 October 1998.
On 14 October 2014, the Minister of Industry, Trade, and Small and Medium Enterprises unveiled temporary preventative measures on the import of reinforcement steel.[1] This decision comes in response to a complaint filed by a number of domestic reinforcement steel producers, in which they claimed that the increase in imported reinforcement steel has had a negative effect on the local market. In light of the above measures, it is important to clarify the legislative framework guiding similar measures. To do so, it is necessary to analyze relevant laws and decisions concerning Egypt’s agreements with the World Trade Organization ("WTO") and agreements concerning the protection of Egypt’s national economy from harmful practices of international trade. The WTO has played an instrumental role in the wave of globalization and economic integration since its inception in Marrakech, Morocco, on the 15 April 1994. Following the “Uruguay Round” of trade negotiations a year later, the Republic of Egypt joined the WTO’s trade agreement and ratified this process through Presidential Decree No. 72 of 1995.[2] Included in the WTO’s General Agreement on Trade and Tariffs ("GATT") of 1994 was an agreement relating to prevention measures, as well as an implementation agreement relating to GATT Article VI, which outlined the regulations pertaining to anti-dumping rules. These annexed agreements determined the measures that may be taken by a member country in the event that its local industry is subjected to serious damage as a result of increase in imports or dumping. The agreements also laid down rules for determining the damage suffered by local industry, as well as the investigatory measures to be taken in the event of such harmful practices.
Preventative Measures Concerning the Import of Reinforcement Steel
In the context of Article VI of GATT, the Chamber of Metals Industries put forward a complaint on the 9th of September 2014 on behalf of domestic reinforcement steel producers, claiming that the large increase in imports has inflicted grave harm on the local industry. The investigative authority began investigations in light of this complaint, sending its findings to the Minister of Industry, Trade and Small and Medium Enterprises, who decided on the 14th of October 2014 to impose preventative fines on imports of this product in the amount of 7.3% of their “CIF” value, at a minimum of 290 EGP per ton, for the duration of two hundred days from the decision, in accordance with Article 1/83 of the Executive Regulations of Law No 161/1998, which regulates anti-dumping and protective measures. The above-mentioned notice, issued by the Agency for Protection and for Countering Subsidies and Dumping, a department under the Ministry of Industry, Trade and Small and Medium Enterprises, investigated the damages incurred.[3]  The notice also clarifies that the complainant, the Chamber of Metals Industries, includes domestic producers who account for 68% of reinforcement steel products in the marketplace. The investigation showed that there was a drastic increase in imported products (210% and 129% respectively) for the first eight months of 2014 compared to a similar period in 2011, which caused serious damage to local industry.
Background to the Ministerial Decision
Application of Article VI in Egyptian Law In the same context, and in ensuring the implementation of GATT, Law No. 161 of 1998 was issued concerning the protection of the national economy from the effects of harmful international trade practices.[4]  Article 1 of the Law sanctioned the Ministry of Trade and Provisions (later the Ministry of Industry and Trade) to take necessary actions for the protection of the Egyptian national economy through the penalization of product dumping and unjustifiable increase in the supply of imports. This was followed by the issuance of Decision No 549/1998 from the Ministry of Trade and Provisions detailing the Executive Regulations for Law No 161,[5]  which outlined the procedures for enforcing Article VI of GATT in Egypt, and detailed measures to counter harmful trade practices, specifically “dumping”, “subsidies” and “unjustifiable increases in imports”. The Regulations stipulated the procedures for the investigation and the implementation of preventative measures in Egypt. Article 79 of the Regulations required the investigative authority to prove the existence of a causal relationship between an unjustifiable increase in an imported good and negative impact on the affected local product, by ascertaining that:
  1. there is an unjustifiable increase in an imported good, either in absolute terms or relative to production in Egypt; and
  1. there is a negative impact of such increase on the economies of local production in terms of its sales, its production, its profits and its market share.
If such conditions are met, the Regulations permit the relevant authorities to undertake temporary preventative measures if the expected negative impact of the justifiable increase is irreversible. The preventative measures may not take place for more than 200 days and the value of such measures must be repaid to the relevant exporter should it be proven that the increase in imports did not cause material damage to the local industry. Article VI of the General Agreement, concerning trade and tariffs The 1994 GATT defines a dumped product as one entering another country at a price below its market price, meaning that the price at which it is exported is lower than its price (or the price of a similar product) in the country of origin, the exporting country. This approach was adopted by the Egyptian legislator, through Article 32 of the Executive Regulations for Law No 161, according to which the regular value is the price of production in addition to costs and profit margin, or the price usually sold at in a third country, or the price usually given in the country of origin. The process for determining the damage is in many ways similar to the above-mentioned process relating to proving damages from unjustifiable increase in imports. The Agreement on Implementation of Article VI of GATT went on to list the permissible temporary measures that may be undertaken if a material damage on local industry resulted from the dumping of a product. In doing so, the Implementation Agreement permitted the imposition of anti-dumping fees if all necessary requirements are met. At the same time, the agreement prohibited the imposition of fees that exceeded the margin of dumping, representing the price difference between the imported good and its (or its equivalent) price in the country of origin. The third section of the Regulations establishes comprehensive anti-dumping rules and assesses the damage caused by it, as well as measures to prevent dumping. Article 32 of the Regulations defines “dumping” as the export of products to Egypt at a price lower than their normal market value as used in regular trading. The regular value is the price of production in addition to costs and profit margin, or the price usually sold at in a third country, or the price usually given in the country of origin. The process for determining the damage is in many ways similar to the above-mentioned process relating to proving damages from unjustifiable increase in imports. To commence an investigation, Article 19 of the Regulations stipulates that a complaint must be supported by producers who represent at least 25% of local production of the similar product. In the event that there is preliminary evidence of harmful dumping, the investigative authority may impose preventative measures mentioned in Article 44, in the form of a cash deposit not exceeding the margin of the dumping. The investigative authority will then determine the final amount of the fees required to counter the act of dumping, as stipulated in Article 45 of the Regulations. The investigative authority may also impose such fees retroactively if it reaches a final conclusion that there has been a material damage, or at least if there is a threat of such damage, throughout the duration of the determination of preventative measures. Nevertheless, Article 55 of the Regulations allowed for the revision of final anti-dumping fees by the investigative authority after a year of their imposition, with the condition that such revision be based on the request of one of the relevant parties.   [1] Minister of Industry, Trade, and Small- and Medium-Sized Enterprises' Decision No. 765/2014 imposing preventative measures on imports of reinforcement steel, Official Gazette, issue No. 231 (cont.), 14 October 2014. [2] Presidential Decree No. 72/1995 agreeing to join the World Trade Organization and its final agreements following the “Uruguay Round” of trade talks, Official Gazette, Issue No. 24, 10 June 1995. [3] Notice by the Authority for the Prevention of Dumping No. 11/2014 imposing temporary preventative fines on imports of reinforcement steel, Official Gazette, Issue No. 231 (cont.) (a), 14 October 2014. [4] Law No. 161/1998 on the Protection of the National Economy from the damaging effects of international trade, Official Gazette, Issue No. 24 (cont.) (a), 11 June 1995. [5] Minister of Trade and Supplies' Decision No. 549/1998 enacting the Executive Regulations of Law No. 161/1998 on the Protection of the National Economy from the damaging effects of international trade, Egyptian Gazette, Issue No. 241, 24 October 1998.