Some Critical Issues on Constructed Normal Value Under the Anti-Dumping Agreement

Dumping could be considered to exist when the export price of a product is lower than the normal value. Comparing the export price and the normal value is the starting point of anti-dumping process. The normal value is, in principle, determined on the basis of the domestic sales price in the exporting country. However, where the normal value cannot be determined on that basis, it may be determined on the basis of the 'third-country sales' or the 'constructed normal value'. The 'constructed normal value' is calculated on the basis of the cost of production in the country of origin plus reasonable amount for administrative, selling and general costs and for profits. This article reviews how to derive normal value, and discusses various issues on constructed normal value by analysing the relevant provisions of the Anti-Dumping Agreement, and WTO Panel and Appellate Body Reports.