A Few Reflections on Ds474 and the Intersection of Russia’s Domestic Energy Policies and the EU’s Anti-Dumping Cost Replacement Methodology

Abstract

The World Trade Organization dispute DS474, initiated by the Russian Federation (Russia), stands at the intersection of an increasingly important topic in anti-dumping law and certain aspects of Russia’s energy management policy. Russia’s claims in this dispute are directed against certain “cost adjustment” methodologies applied by the European Commission when determining costs of production in antidumping proceedings. The approach taken by the Commission lies in rejecting the cost data contained in the exporters’ records and then replacing it with the export price charged by Russia to customers in the European Union. The ground for this is the regulation by the Government of the Russia of price for natural gas when destined for domestic consumption, which results in signifi cantly lower domestic prices when compared to export prices, and thus creates a dual pricing system for Russian gas. A similar approach taken by the EU in other anti-dumping investigations is subject to separate challenges under WTO law by Argentina and Indonesia.
Th e EU Commission’s approaches raises interesting legal questions under the Anti-dumping Agreement. It is not clear whether Article 2.2.1.1 offers a legal basis for the Commission’s approach, because its rules about the acceptability of the costs as recorded in the fi nancial records of the exporter appear to revolve around the quality of the financial records, rather than governmental distortions in the market. Article 2.2 and its reference to a “particular market situation” may also be raised by the EU as a defense, but this phrase has never been subject to interpretation by WTO adjudicative bodies. Finally, the cost-replacement methodology raises interesting questions about the relationship between the Antidumping and the SCM Agreements, as well as the question whether the Anti-dumping Agreement can be used to address governmental intervention in the market. Refs 47. Fig. 1. Table 1.

Keywords:

anti-dumping, anti-dumping agreement, dual pricing, European Commission, gas, Gazprom, cost of production, cost adjustment, WTO