Currency Conversion in the Anti-Dumping Agreement

The Anti-dumping Agreement (“Agreement”) provides that a product is considered as being dumped if it is exported to another country at less than its normal value, the comparable price of like product when destined for consumption in the exporting country. In order to calculate the dumping margin, an investigating authority compares the export price with the normal value. This price comparison usually involves the conversion of currency of either the export price or the normal value. Although the Agreement permits the conversion of currency when it is necessary for the price comparison, it does not provide sufficient guidelines to guard against potential distortion in the dumping margin calculation resulting from conversion. Unless the conversion is done with an appropriate exchange rate, an investigating authority's price comparison potentially results in a spurious estimate of dumping margin, in violation of the fair comparison requirement of Article 2.4 of the Agreement. In particular, the distortion in the dumping margin calculation is magnified when the exchange rate moves significantly. Therefore, the currency conversion clause of the Agreement needs to be modified to ensure a fair comparison.Section II of this article discusses the exchange rate conversion clause of the Agreement. Sections III and IV consider exchange rate conversion provisions of European Union (EU) and US anti-dumping laws and examine country practices. Section V analyses the potential distortion from exchange rate conversion.Finally, section VI concludes with some suggestions for the modification of the Agreement