1. The Safeguards, Anti-dumping and Countervailing Act, 2019 ("SACA")
1.1. The SACA was passed by the Parliament and received assent by the President on 14 October 2019 (2076-06-27 BS) and published in the Nepal Gazette on the same date. The SACA is effective from January 13, 2020 i.e. from 91 days from the date of Presidential assent.
1.2. This is a new legislation enacted by Nepal which is based on the World Trade Organization’s ( “WTO”) Agreements namely, (a) Agreement on Safeguards (“Safeguards Agreement”) (b) Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade ( “GATT”) (“Anti-Dumping Agreement”) and (c) Agreement on Subsidies and Countervailing Duty (“Subsidies and Countervailing Agreement”).
2. Provisions related to Safeguards measures
2.1. Safeguards measures to be imposed: The Act provides that safeguard measures may be imposed in case of serious injury/ threat of injury which is clearly imminent to the domestic industries producing similar/ identical / directly competitive goods, due to the unprecedented and unconventional increase in import of goods. The Ministry may either initiate suo moto investigation, or the domestic industries producing similar/ identical goods can also file a complaint to the Ministry.
2.2. While imposing of these Safeguard measures common/ different/ quantitative rate of duties can be imposed. To elaborate, following safeguard measures can be imposed: (a) additional customs duty exceeding the duty chargeable under the prevailing laws; (b) additional duty on the duty charged, in case of import of goods exceeding prescribed quota (c) full or partial quantitative restriction on import of such goods (d) other measures as prescribed.
2.3. Threshold for Safeguard Measures: The Safeguard measures is not imposed if the similar/ identical/ directly competitive goods being imported from the developing country the import from where is less than three percentage (3%) of the total import of such goods. However, this exception does not apply if the total import of the goods exceeds nine percentage (9%) of the identical/similar/directly competitive goods produced in Nepal. In such case, Safeguard measures can be imposed even if the import from a particular devel oping country represents less than 3% of the total import.
2.4. Term of Safeguards measures: Four (4) years from the date of imposition of Safeguards measures. The term may be extended for additional four (4) years upon recommendation of the investigating authority.
2.5. Interim Safeguards measures: Government of Nepal ("GON") can impose interim Safeguards measures to prevent immediately the serious injury /threat of injury which is clearly imminent to domestic industries. Interim Safeguards measures can only be imposed in case of existence of any of the following situations if (a) the Initial Report from investigating authority finds that Safeguards should be immediately imposed, or (b) the evidence collected in the initial investigation finds that the goods has caused/ is likely to cause serious injury / threat of serious injury to the domestic industries. The maximum term of interim Safeguard measure may be two hundred (200) days.
3. Provisions related to Anti-Dumping
3.1. Restriction in Dumping goods: No importer is permitted to import goods in import value lower than the normal value of goods (grounds for determination of common value is outlined in the following paragraph), which causes/ is likely to cause injury/ serious injury to the domestic industries producing similar/ identical goods.
3.2. Anti-Dumping Duty: GON can impose Anti-Dumping Duty in addition to the customs duty chargeable on goods if the goods are found to be dumped as per the report submitted by the investigating authority.
3.3. Threshold for Anti-Dumping- Anti-Dumping Duty is not imposed if (a) dumping margin is less than two percent (2%) of the dumped goods and (b) the import of the similar or identical goods from any country or separate customs territory is limited to three percent (3%) of the total import. However, this exception does not apply if the total import from more than a single country or separate customs territories exceeds seven percent (7%) of the total import of identical or similar goods. In such case the Anti-Dumping duty can be imposed even if the import from a particular country or separate customs territory represents less than three percent (3%) of the total import.
3.4. Fixation of rate of Anti-Dumping Duty: Rates shall be fixed by GON on the basis of inter alia, investigation report. Different rates can be imposed as per the nature of imported goods.
3.5. Term of Anti-Dumping Duty: The duty may be imposed for maximum five (5) years from the date of imposition. It can be extended for further term of five years upon recommendation of the investigating authority.
3.6. Interim Anti-Dumping Duty: GON can impose interim Anti-Dumping Duty in the following situations if (a) notice to initiate investigation in respect of the goods is published, (b) goods are found dumped on the basis of evidences collected thus far, (c) sufficient grounds exists that the import of such goods has caused/ is likely to cause injury/ serious injury/ threat of serious injury to the domestic industries, (d) at least sixty (60) days of the commencement of investigation is completed, (f) imposition of interim Anti-Dumping Duty is recommended in the initial investigation report submitted, (g) imposition of interim Anti-Dumping Duty to prevent injury/ threat of injury caused/ to be caused to the domestic industries seems necessary.
3.7. Term of Interim Anti-Dumping Duty: (a) on the request of domestic industries producing similar/ identical goods: - up to 6 months (b) in other situations: - maximum up to one hundred and twenty (120) days.
4. Provisions related to Countervailing Duty
4.1. Restriction on import of concessional or direct/ indirect subsidized goods: No importer shall import concessional or direct/ indirect subsidized goods which causes/ is likely to cause injury/ serious injury/ threat of serious injury to the domestic industries. Concessional or direct/ indirect subsidized goods shall be determined as provided in the SACA.
4.2. Imposition of Countervailing Duty: GON can impose countervailing duty in addition to the customs duty chargeable on goods if the goods are found to be concessional or direct/ indirect subsidized goods as per the report submitted by the investigating authority.\
4.3. Exceptions to the Countervailing Duty: Countervailing duty is not imposed on goods in the following situations if (a) concession or direct or indirect subsidy is less than two percent (2%) of export value of the goods if it is imported from any developing country or less than one (1%) of the export value of the goods if it is exported from separate customs territory, or (b) import of the goods with concession or direct/ indirect subsidy goods from a developing country is less than four percent (4%) of the total import of similar / identical goods in Nepal (however, this exception does not apply if the import exceeds 9% of the total import of similar or identical goods even if import from particular developing country is below 4%) or (c) any goods received by GON in the form of kind or cash subsidy under Bilateral or Multilateral Agreement.
4.4. Fixation of rate of Countervailing Duty: Countervailing duty should not exceed the concession margin of goods. For clarification, concession margin refers to the difference in value of goods caused by the concession provided to that goods. Different rates of countervailing duty can be imposed for imported goods having similar nature of concession or direct/indirect subsidy and similar imported goods having different concessional margin.
4.5. Term of Countervailing Duty: The Countervailing Duty may be imposed for up to five (5) years. It may be extended for additional five years upon recommendation of the investigating authority.
4.6. Interim countervailing duty to be imposed: GON can impose interim countervailing duty on certain situations. The interim Countervailing duty may be imposed for up to one hundred and twenty (120) days from the date of submission of investigation report.
5. Complaint Procedure
5.1. Threshold for Complaint: Following conditions must be fulfilled while filing complaint: (a) complaint must be filed by the domestic industry or industries producing at least twenty five percent (25%) of similar / identical goods; or (b) complaint must be supported by domestic industry or industries producing at least fifty percent (50%) of similar/ identical goods.
5.2. Publication of Notice: If the investigating authority initiates examination on the complaint, the notice relating to such investigation must be published in the national daily newspaper. The notice must state the name, nature, quality, manufacturing company, manufacturing or exporting country’s name, details submitted and other documents submitted by the complainant.
5.3. Written Response (Defense): The concerned party can file written response along with relevant evidences to the investigating authority within fifteen (15) days from the date of publication of notice of investigation.
5.4. Timeline for Preliminary Investigation Report: Investigating authority should submit its preliminary investigation report within sixty (60) days from the date of start of investigation.
5.5. Timeline for Final Investigation Report: Investigating authority should submit final investigation report within one (1) year from the date of start of investigation. Actual details of injury/ serious injury/ threat of serious injury to the domestic industries from the import of goods under investigation. The details to be incorporated in the final investigation report has also been outline in the SACA.
6. Threshold of Serious Injury
6.1. The SACA provides the aspects to be considered while determining the material/serious injury to domestic industry. The investigation authority should consider those aspects while conducting investigation.
6.2. The aspects to be considered while determining material/serious injury for the purpose of SACA include (a) the volume and value of the goods imported in increased quantity subject to investigation; (b) market share of the goods under investigation; (c) impact on production or productivity of domestic industry producing similar/identical/directly competitive goods, (d) impact on the sale and distribution of such goods; (e) impact on consumption of such goods; (f) nature, degree and extent of loss on such goods, (g) impact on employment in domestic industry producing such good.
7. Determination of General Value of Goods
7.1. SACA also provides for the method of determining the General Value of the Goods for the purpose of Anti-Dumping Duty. The investigating authority is required to comply with the method provided in the SACA for the determination of General Value.
7.2. Pursuant to SACA the General Value of the goods should be determined on the basis of following grounds: (a) sale value of such goods in the domestic market of the country or separate customs territory of manufacture or produce or export, (b) in absence of (a) above, sale value of the export made to the third country, (c) if the General Value cannot be determined on the basis of (a) and (b), then on the basis of value determined taking into account the cost and reasonable profit, administrative, sale and other overhead costs of the goods; (d) if, again, the Value cannot be determined on the basis of cost (c) above, the value as determined by investigating authority on reasonable grounds.
8. Determination of Export Value
8.1. The Act also provides for the basis of determination of Export Value of the goods. The basis for the determination of Export Value should be followed while conducting the investigation.
8.2. As per the SACA the export value of goods subject to investigation can be determined on the basis of (a) invoice value (excluding freight, insurance and other costs) submitted to customs point or (b) purchase value of goods obtained from the first purchaser if the goods has already been exported to other country; (b) if the export value cannot be determined on the basis of above (a), then on the basis of re-sale value of similar/ identical goods to an independent purchaser, or (c) if export value cannot be determined on the basis of (a) and (b) above, the value determined by investigating authority on the basis of reasonable grounds.
9. Considering the Concession or Subsidy
9.1. The SACA also outlines the situation in which it is considered that the goods is subsidized goods. Any goods receiving any assistances from any government or agency being partially/ fully owned by the government of the country of export or separate customs territory is subject to of Countervailing Duty.
9.2. The assistance subject to Countervailing Duty includes (a) direct or indirect financial incentive, subsidy, exemption or contribution in production or export of the product, (b) grant, loan, equity infusion or actual or likely direct transfer of capital in the production or export of the product, (c) acceptance of existing or potential liability of the producer of the product or regular purchase of the product, (e) write off or waiver of outstanding tax or revenue obligation to the producer of such product, (f) except basic infrastructure facilities, other facilities or services received for the production of other goods.
9.3. The SACA also provides exception or the permissible assistance. Pursuant to SACA the following assistance is not considered as subsidy for the purpose of imposing Countervailing Duty (a) subsidy for research and investigative works; (b) concession provided by country targeting its under developed or marginalized areas; (c) subsidy limited to promote adaptation of existing facilities to comply with the new law or condition related to environmental protection.
10. Other Coverage of SACA
10.1. The SACA also covers notice requirements, the imposition of duties with retrospective effect, the authority of collecting of such duties.
10.2. The SACA also provides for the review of the duty, cancellation, appeal mechanism along with the definition of certain important terminologies.
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