Costa Rica

I. Legal Authority to Impose Antidumping and Countervailing Duties

A. Treaties or Agreements

Article VI of the GATT 1995, the WTO Antidumping Agreement ("AD Agreement") and the Agreement on Subsidies and Countervailing Measures ("SCM Agreement").

These Agreements apply to all WTO signatories.

B. Legislation

   Under Article 140, paragraph 12 of Costa Rica's Constitution, foreign relations are the purview of the President and the minister of foreign affairs.

   The authority is general and includes both the legal aspects of the negotiation of international agreements - regardless of subject matter - and the politics of the taking of the decisions necessary to defend the country's interests in the international realm.

   The function of negotiating and signing international treaties is stipulated in subparagraph 10 of Article 140 of the Constitution, which states that it is the function of the President and the Minister of Foreign Affairs jointly to conclude international agreements and accords and to promulgate and execute them once they have been approved by the Legislative Assembly, or by a Constituent Assembly when the Constitution so stipulates.

   Under Article 121, subparagraph 4 of the Constitution, only the Legislative Assembly has the authority to approve international agreements.

   It is important to note that the legislative branch merely approves or disapproves the treaty previously negotiated by the executive branch.

   In other words, Congress can neither introduce a change in the text of the agreement nor negotiate an international agreement.

   The foregoing notwithstanding, the Legislative Assembly may introduce interpretative declarations clarifying the content and scope of application of the obligations incurred under the proposed international agreement.

   In 1990, the Constitutional Chamber was established in Costa Rica as a special chamber within the Supreme Court.

   The Law on Constitutional Jurisdiction states that during the approval process of any international treaty, the text of the proposed treaty must be submitted to the Constitutional Chamber for a preliminary review of its constitutionality.

   The review tends to focus on procedural matters, since the evaluation does not preclude the possibility of subsequent challenges asserting the unconstitutionality of the approved treaty.

   Under the Constitution, international treaties have preeminence over national law.

   Under the Law on Constitutional Jurisdiction, treaties come under the Constitution, which means that private parties may request summary proceedings by filing constitutionality challenges or constitutional appeals [amparo] petitions when an act of the administration or a law violates an international agreement.

   This is allowed under Article 7 of the Constitution: As of the date of their promulgation or the date they stipulate, public treaties, international agreements and accords duly approved by the Legislative Assembly shall have an authority greater than the laws.

   This provision is very clear on the hierarchy of treaties within Costa Rica's juridical system.

   But in addition to recognizing the pre-eminence of international treaties over domestic laws, the Costa Rican juridical system goes a step further: it acknowledges the possibility that international treaties can have "direct effect" within the juridical system.

   This means that if certain conditions obtain, an international treaty can be invoked directly by private parties and applied by the courts as if it were an ordinary law, which it is not.

   This means that in Costa Rica, if certain circumstances are present, a treaty will not require implementing legislation; instead, once the treaty has been approved by the Legislative Assembly and ratified by the Chief Executive, it is directly incorporated into the body of Costa Rican domestic law and, therefore, is applied directly as if it were a law. The Constitutional Chamber has determined the conditions that must be met for an international treaty to have immediate effect within Costa Rica's body of laws:

         a) the wording of the treaty must be sufficiently clear and precise to make plain the obligation undertaken by the Costa Rican State;

         b) the wording of the treaty must be sufficiently clear and precise to determine what the rights granted to individuals, institutions, companies or corporations are, and

         c) Costa Rica's domestic legal system must have the procedural institutions or organization needed for these individuals, institutions, companies or corporations to exercise the rights accorded under the international treaty in question.

   In the case of the agreement establishing the World Trade Organization, and in particular the "Agreement on Implementation of Article VI of GATT 1994" (henceforth the "Anti-dumping Agreement") and the Agreement on Subsidies and Countervailing Measures (henceforth the "Subsidies Agreement"), the text of the treaty is sufficiently clear and specific for it to have immediate effect within Costa Rica's legal system.

   This means that in the particular case of Costa Rica, an anti-dumping law or decree that is contrary to the provisions of the WTO Anti-dumping Agreement or Subsidies Agreement will not have force of law. Since the Anti-dumping and Subsidies Agreements have direct effect in Costa Rica, any conflict between one of these agreements and an incompatible law or decree will be settled by having the lesser provision automatically superseded by the text of the international agreement. Therefore, legally speaking a decree or law that is incompatible with the Anti-dumping Agreement or the Subsidies Agreement need not be expressly repealed for the agreement to be pre-eminent in Costa Rica.

   The direct effect of the Anti-dumping Agreement and the Subsidies Agreement of the WTO also means that no new law need be promulgated or any specific office created to implement those agreements.

   The addition of these WTO agreements to Costa Rica's legal system is sufficient for the government to appropriate the funds or resources to comply with the provisions of this international treaty.

C. Regulations

   Given the foregoing, the laws applicable in Costa Rica on the matter of unfair trade practices and the hierarchy of those laws can be summarized as follows:

         a. The relevant provisions of the Constitution (for example, the due process clause, etc.)

         b. The Anti-dumping Agreement and the Subsidies Agreement of the WTO

         c. Law No. 2426 of May 18, 1960, establishing the Joint Commissions in the Ministry of Economy, Industry and Commerce and in the Ministry of Agriculture and Livestock, to deliberate upon the final application of remedies for unfair trade practices.

         d. The following executive decrees:

         
• "Central American Regulations on Unfair Trade Practices", Executive Decree No. 24868-MEIC, of January 31, 1996.
           
• Decree on Establishment of the Office of Unfair Trade Practices and Safeguard Measures, Executive Decree No. 24772-MEIC-MAG, December 5, 1996.

D. Administrative Practice, Handbook or Guide

II. Authorities Responsible for Conducting Investigations

A. Injury

   Decree No. 24773-MEIC-MAG stipulates that: The purpose of the office is to serve as a technical unit conducting the administrative procedures for levying anti-dumping duties, countervailing duties or safeguard measures.

   Its functions include:

         c) receiving complaints of unfair practices such as dumping or subsidies

         e) conducting the necessary studies to determine whether or not the complaints are true

         g) any other... that pertains to it by reason of the subject matter or that is assigned to it by law or international agreement.

   Once the investigation has been conducted, the Minister of the Economy will decide whether an anti-dumping or countervailing duty is in order, once the competent Joint Commission has issued its finding.

   The Joint Commission will be an advisory and consultative body for any complaint or request filed and will be responsible for receiving the technical report from the Office of Unfair Trade Practices and Safeguard Measures to recommend the courses of action to be followed.

   Its recommendations are to be forwarded to the Minister at least fifteen days after receiving the Office's report. If the Minister does not receive the Commission's finding within that fifteen-day period, he or she shall settle it immediately based on the Office's report and the corresponding case file.

B. Antidumping and Countervailing Duties

   The investigating authority is the Directorate for Integration of the Ministry of Economic affairs, or the Directorate which is responsible for Central American economic integration issues in each country, or the technical unit responsible for the investigation of unfair trade practices.

   In the case of a regional procedure it will be SIECA. The Investigating Authority shall be responsible for questioning, analyzing and evaluating alleged unfair trade practices and for deciding whether it is appropriate to recommend the imposition of antidumping or countervailing duties, as the case may be.

III. Methodologies/Definitions

A. Like Product

   The term "like product" shall be interpreted to mean a product which is identical, i.e., alike in all respects to the product under consideration, or in the absence of such a product, another product which although not alike in all respects, has characteristics closely resembling those of the product under consideration.

B. Domestic Producers

   The term "domestic industry" shall be interpreted as referring to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products, except that

         (i) when producers are related to the exporters or importers or are themselves importers of the allegedly dumped product, the term "domestic industry" may be interpreted as referring to the rest of the producers.

         (ii) in exceptional circumstances the territory of a Member may, for the production in question, be divided into two or more competitive markets and the producers within each market may be regarded as a separate industry if

               (a) the producers within such market sell all or almost of their production of the product in question in that market, and

               (b) the demand in that market is not to any substantial degree supplied by producers of the project in question located elsewhere in the territory.

   In such circumstances, injury may be found to exist even when a major portion of the total domestic industry in not injured, provided there is a concentration of dumped imports into such an isolated market and provided further that the dumped imports are causing injury to the producers of all or almost all of the production within such market.

C. Standing

   An investigation shall not be initiated unless the authorities have determined, on the basis of an examination of the degree of support for, or opposition to, the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry.

   The application shall be considered to have been made "by or on behalf of the domestic industry" if it is supported by those domestic producers whose collective output constitutes more than 50 per cent of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application.

   However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25 per cent of total production of the like product produced by the domestic industry. In connection with this point, Decree 24868-MEIC added the following to the above provision: Representatives of the domestic industry of the product injured by the imports for which the investigation is being sought may request that an investigation be instituted, as may producers associations that believe they are being injured or threatened by imports for which allegedly unfair trade practices are being used.

   The application must be filed with the investigating authority, with the following formal requirements:

         ...f) the others specified in the WTO agreements.

   The decree further stipulates that: If the application is reviewed within the statutory time period the investigating authority shall reject it in a substantiated finding if:

         a) it is found that the application was not filed on behalf of a domestic industry in accordance with the WTO Agreements.

D. Polling

E. Normal Value

   A product is to be considered as being dumped, i.e., introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.

   When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country provided that this price is representative, or with the cost of product in the country of origin plus a reasonable amount for administrative, selling and any other costs and for profits.

   Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus selling, general and administrative costs may be treated as not being in the ordinary course of trade by reason of price and may be disregarded in determining normal value only if the authorities determine that such sales are made within an extended period of time in substantial quantities and are at prices which do not provide for the recovery of all costs within a reasonable period of time.

   If prices which are below costs at the time of sale are above weighted average costs for the period of investigation, such prices shall be considered to provide for recovery of costs within a reasonable period of time.

F. Calculation of Cost of Production

   Costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration.

   Authorities shall consider all available evidence on the proper allocation of costs, including that which is made available by the exporter or the producer in the course of the investigation provided that such allocations have been historically utilized by the exporter or producer, in particular in relation to establishing appropriate amortization and depreciation periods and allowances for capital expenditures and other development costs.

   Unless already reflected in the cost allocations under this sub-paragraph, costs shall be adjusted appropriately for those non-recurring items of cost which benefit future and/or current production, or for circumstances in which costs during the period of investigation are affected by start-up operations.

   The amounts for administrative selling and any other costs and for profits shall be based on actual data pertaining to production and sales in the ordinary course of trade of the like product by the exporter or producer under investigation.

   When such amounts cannot be determined on this basis, the amounts may be determined on the basis of:

         (i) the actual amounts incurred and realized by the exporter or producer in question in respect of production and sales in the domestic market of the country of origin of the same general category of products;

         (ii) the weighted average of the actual amounts incurred and realized by other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin;

         (iii) any other reasonable method, provided that the amount for profit so established shall not exceed the profit normally realized by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin.

G. Export Price

   In cases where there is no export price or where it appears to the authorities concerned that the export price is unreliable because of association or compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported prices are first resold to an independent buyer, or if the products are not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as the authorities may determine.

H. Export Price - Adjustments

   A fair comparison shall be made between the export price and the normal value.

   This comparison shall be made at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possible the same time.

   Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are demonstrated to affect price comparability (the endnote is omitted) [...] allowances for costs, including duties and taxes, incurred between importation and resale, and for profits accruing, should also be made.

   If in these cases, price comparability has been affected, the authorities shall establish the normal value at a level of trade equivalent to the level of trade of the constructed export price, or make due allowance as warranted under this paragraph.

   The authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties.

I. Injury

   The term "injury" shall be taken to mean material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of such an industry.

   A determination of injury for purposes of Article VI of the GATT 1994 shall be based on positive evidence and involve an objective examination of both

         (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like products, and

         (b) the consequent impact of these imports on domestic producers of such products.

   With regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production or consumption in the importing country.

   With regard to the effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of a like product of the importing country, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.

   No one or several of these factors can necessarily give decisive guidance.

   The examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments.

   This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.

   It must be demonstrated that the dumped imports are [...] causing injury [...].

   The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities.

   The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports.

   Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry.

J. Threat of Injury

   A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility.

   The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent (the endnote is omitted).

   In making a determination regarding the existence of a threat of material injury, the authorities should consider, inter alia, such factors as:

         (i) a significant rate of increase of dumped imports into the domestic market indicating the likelihood of substantially increased importations;

         (ii) sufficient freely disposable or an imminent, substantial increase in capacity of the exporter indicating the likelihood of substantially increased dumped exports to the importing country's market, taking into account the availability of other export markets to absorb any additional exports;

         (iii) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and

         (iv) inventories of the product being investigated.

   No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped exports are imminent and that, unless protective action is taken, material injury would occur.

   With respect to cases where injury is threatened by dumped imports, the application of anti-dumping measures shall be considered and decided with special care.

K. Material Retardation

   The term "injury" shall, unless otherwise specified, be taken to mean material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of such an industry [...].

L. Cumulation

   Where imports of a product from more than one country are simultaneously subject to anti-dumping investigations, the investigating authorities may cumulatively assess effects of such imports only if they determine that

         (1) the margin of dumping established in relation to the imports from each country is more than de minimis [...] and that the volume of imports from each country is not negligible and

         (2) a cumulative assessment of the effects of the imports is appropriate in light of the conditions of competition between imported products and the conditions of competition between the imported products and the like domestic product.

   It must be demonstrated that the subsidized imports are, through the effects (endnote is omitted) of subsidies, causing injury [...].

   The demonstration of a causal relationship between the subsidized imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities.

   The authorities shall also examine any known factors other than the subsidized imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the subsidized imports.

   Factors which may be relevant in this respect include, inter alia, the volumes and prices of non- subsidized imports of the product in question, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry.

M. De Minimis Provision

1. Antidumping

   An application [...] shall be rejected and an investigation shall be terminated promptly as soon as the authorities concerned are satisfied that there is not sufficient evidence of either dumping or of injury to justify proceeding with the case.

   There shall be immediate termination in cases where the authorities determine that the margin of dumping is de minimis, or that the volume of dumped imports, actual or potential, or the injury, is negligible.

   The margin of dumping shall be considered to be de minimis if this margin is less than 2 per cent, expressed as a percentage of the export price.

   The volume of dumped imports shall normally be regarded as negligible if the volume of dumped imports from a particular country is found to account for less than 3 per cent of imports of the like product in the importing country unless countries which individually account for less than 3 per cent of the imports of the like product in the importing country collectively account for more than 7 per cent of imports of the like product in the importing country.

   In addition to this provision, Costa Rica also has Article 17 of Decree 24868-MEIC, dated January 31, 1996, which stipulates the following:

   The investigation shall be terminated if it is found that the margin of dumping or the amount of the subsidy is de minimis or that the volume of the imports or the injury is negligible.

2. Countervailing

   An application [...] shall be rejected and an investigation shall be terminated promptly as soon as the authorities concerned are satisfied that there is not sufficient evidence of either subsidization or of injury to justify proceeding with the case.

   There shall be immediate termination in cases where the amount of the subsidy is de minimis, or where the volume of subsidized imports, actual or potential, or the injury is negligible. [...] the amount of the subsidy shall be considered to be de minimis if the subsidy is less than 1 per cent ad valorem.

   Any countervailing duty investigation of a product originating in a developing Member shall be terminated as soon as the authorities concerned determine that:

         (a) the overall level of subsidies granted upon the product in question does not exceed 2 per cent of its value/calculated on a per unit basis; or

         (b) the volume of the subsidized imports represents less than 4 per cent of the total imports for the like product in the importing Member, unless imports from developing country Members whose individual shares of total import represent less than 4 per cent collectively account for more than 9 per cent of the total imports for the like product in the importing country.

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