Recently, India self-initiated 4 anti-dumping investigations, while the European Union also self-initiated the much-talked-about anti-subsidy investigation on Electric Vehicles from China PR. In both set of investigations, no formal application in prescribed format has been filed by the concerned domestic industry as against the standard practice in trade remedy investigations.
Anti-dumping measures and countervailing/anti-subsidy measures are forms of trade remedy measures, which intend to remedy unfair trade practices of dumping or subsidisation. Both the measures are regulated by specific WTO multilateral agreements, that is, Agreement on Anti-Dumping (‘ADA’) and Agreement on Subsidies and Countervailing Measures (‘ASCM') read with domestic legislations enacted by respective WTO member countries. The agreements as well as domestic legislations provide detailed substantive procedures for examining various aspects of the investigation such as standing of domestic industry, like articles, dumping/subsidy, injury and causal link as well as procedural aspects of the investigation such as process of initiation of investigation, contents of application, timelines for completing the investigation, granting of hearing and filing of submissions, etc.
Starting point of any trade remedy investigation is the formal initiation of the investigation by the investigating authorities. Such initiations are pre-dominantly based on an application filed by the aggrieved domestic industry of the investigating country. However, in certain circumstances, the WTO Agreements as well as corresponding domestic provisions allow the investigating authorities to self-initiate an investigation without receiving a formal application from the domestic industry.
Such suo-moto (or sua sponte) investigations are extremely rare in practice and most of the countries have abstained from invoking the said provisions for self-initiation. Thus, the provisions surrounding the self-initiation process remain largely untested.
This article briefly examines the nature of suo-moto initiations in trade remedy investigations and explores important questions surrounding suo-moto initiations, including-
(a) What is a suo-moto initiation and where there is in-fact a suo-moto initiation?
(b) What are the conditions for initiating an investigation suo-moto?
(i) What is the standard of evidence considered for such initiation?
(ii) What constitutes “special circumstances”?
(iii) Is existence of “special circumstances” a sine qua non for suo-moto initiations?
(iv) Is the provision self-judging?
Issue 1: What is a suo-moto initiation and whether there is in-fact a suo-moto initiation?
Article 5.1 of ADA and Article 11.1 of ASCM provide for the standard initiation procedure by requiring a written application to be filed by or on behalf of the domestic industry before an investigating authority. Article 11.2 ASCM and Article 5.2 ADA require the application to contain evidence of (a) dumping/subsidy, (b) injury, and (c) causal link. Both the Agreements also make it clear that “simple assertion, unsubstantiated by relevant evidence” cannot be considered sufficient to meet the requirements of Article 11.2 and Article 5.2 respectively and that the authorities “shall review the accuracy and adequacy of the evidence provided in the application to determine whether the evidence is sufficient to justify the initiation of an investigation.”
Further, both the Agreements make it expressly clear that an investigation shall not be initiated unless the Authorities have determined that the application has been made by or on behalf of the domestic industry. In other words, Authorities must, as a pre-requisite, determine the domestic industry’s standing to file an application.
However, Article 11.6 of ASCM (pari-materia to Article 5.6 of ADA) states as under with respect to circumstances in which the investigating authorities may initiate an investigation on suo-moto basis:
“If, in special circumstances, the authorities concerned decide to initiate an investigation without having received a written application by or on behalf of a domestic industry for the initiation of such investigation, they shall proceed only if they have sufficient evidence of the existence of a subsidy, injury and causal link, as described in paragraph 2, to justify the initiation of an investigation.”
While initiation of trade remedy investigations upon an application filed by or on behalf of the domestic industry is the pre-dominant practice world-wide, however, the ADA and ASCM provide for an exception to the said procedure by allowing investigating authorities, in special circumstances, to initiate an investigation without having received a formal written application by or on behalf of the domestic industry. However, in such cases as well, the investigating authority must have sufficient evidence of dumping, injury, and a causal link.
Article 11.6 of ASCM and Article 5.6 of ADA clearly provide that the investigating authorities may initiate an investigation, even without a written application on or behalf of the domestic industry. However, the provisions still require the investigating authorities to ensure that there is sufficient evidence of dumping/subsidy, injury and causal link. Thus, if the investigating authority is able to gather sufficient evidence of (a) dumping/subsidy, (b) injury or threat of injury to the domestic industry and (c) causal link, they may initiate an investigation without requiring the domestic industry to provide the same.
The first question that arises is the meaning of the phrase “decide to initiate an investigation without having received a written application by or on behalf of a domestic industry”. In other words, what is the meaning of the term “suo-moto” or self-initiation?
Sua sponte, which is synonymous to the term “suo-moto”, is a Latin legal term which means “of one’s own accord; voluntarily” or “without prompting or suggestion” The term is usually used in legal context to describe a situation where an authority acts on its own without being prompted or requested to act by another party. Thus, suo-moto actions involve the concerned authority taking actions without any prompt or request by another party.
Suo-moto initiation of investigation remains an exceptional procedure in the context of trade remedy investigations and the procedure has been used rarely and only by a handful of countries. Thus, there is limited jurisprudence on the coverage of such initiations.
An example of a case where the authorities might decide to initiate an investigation on their own motion might be where the domestic industry is so fragmented that, although it is suffering material injury, it is not possible for domestic producers to coordinate their efforts to meet the standing requirements to bring an application due to a lack of cooperation amongst the producers. Indeed, in all of the recent self-initiated anti-dumping investigations by India, all of them are based on representations by producers as well as associations of large number of producers of the subject articles.
However, at the same time, the investigations are stated to be “suo-moto”, however given the active participation of the domestic industry associations, the investigation can hardly be referred to as suo-moto as the said representation takes away the very nature of a ‘suo-moto’ or self- initiation. In fact, in one investigation, the Indian Authority has even examined and satisfied itself of the standing of the applicants by stating that “the representation has been made ‘by or on behalf of the domestic industry in terms of the provisions contained in Rule 2(b) and Rule 5(3) of the Rules.” If representation, instead of a proper application, is received from domestic producers, it may tantamount to circumvention of standard initiation procedure and possibly abuse of exception provisions.
Secondly, even if one were to consider that ‘self-initiation’ may be permissible in cases where the number of producers is fragmented and it is not possible to determine standing of the domestic industry, it is noted that India has also initiated number of investigations with fragmented producers as domestic industry upon an application by the said producers. In fact, the Indian authority has even prescribed a separate format for fragmented producers participating as domestic industry. Thus, the mere fact that domestic industry is fragmented may not be considered as the sole criterion for suo-moto initiation of investigation and there needs to be more factors to justify self-initiation.
However, in the past, India self-initiated 3 anti-dumping investigations, wherein the source of the information was not disclosed and was instead termed as “reliable sources”. Since the source of the said information was never disclosed, it cannot be said with certainty whether the said information was received from the domestic producers, or the Authority undertook its own research and analysis. If the authority conducted its own research, then one may rightly refer the initiations as “suo-moto” initiations.
Similarly, EC initiated an anti-dumping investigation in 1998, referencing existence of “special circumstances” and “information made available”, without actually providing further information or source of such “special circumstance” or “information” received.
In the more recently initiated CVD investigation on Electric Vehicles from China, the EC stated that “On the basis of publicly available information, there is sufficient evidence demonstrating that imports of the product under investigation originating in the People's Republic of China benefit from countervailable subsidies provided by the Government of the People's Republic of China.”
The EC while maintaining that it examined information obtained from “independent” sources, does not actually disclose the source of the information, which creates aspersions on the accuracy or genuineness of the information. In the absence of source of information, it remains highly unlikely that the investigation was initiated without an active or passive push from the domestic producers.
Considering the existing provisions and above practices of India as well as EC, though there remains theoretical possibility of self-initiations by the investigating authorities without receiving any active or passive request from the domestic industry, however, in reality, it remains improbable as trade remedy investigations is ultimately an economic tool meant for the protection of the domestic industries from unfair imports and it is highly unlikely that the domestic industry will not take any active or passive steps to curb import competition.
Any investigation initiated based on even a representation from the domestic industry must not be considered as suo-moto initiation as it will only result in circumvention and abuse of the standard initiation procedures and will give undue advantage to the domestic producers to not comply with formal application requirements.
Issue 2: What are the conditions for initiating an investigation suo-moto?
Article 5.6 of ADA and Article 11.6 of ASCM allow suo-moto initiations of trade remedy investigation, if there exist, inter-alia, (a) special circumstances and (b) sufficient evidence of the existence of dumping/subsidy, injury and causal link.
On the sufficiency of the evidence, the standard of review applied by Panels to a claim under Article 5.3 has been to verify 'whether or not an objective and unbiased investigating authority, looking at the facts before it, could properly have determined that there was sufficient evidence of dumping, injury and causal link to justify the initiation of an anti-dumping investigation'.
The provisions do not require the investigating authorities to explain how the examination was carried out or about the nature of the examination carried out. Having said that the sufficiency of evidence must be based on an assessment of the accuracy and adequacy of the information. It must, however, be kept in mind that "the quantum and quality of the evidence required at the time of initiation is less than that required for a preliminary, or final, determination of dumping, injury, and causation, made after the investigation”.
In respect of suo-moto initiations, the last part of Article 5.6 of ADA and Article 11.6 of ADA make it clear the applications must meet the criteria mentioned in paragraph 2 of respective articles, that is, they must include sufficient evidence of (a) dumping/subsidy, (b) injury and (c) causal link between dumped/subsidised imports and injury. It must also be ensured that simple assertion, unsubstantiated by relevant evidence should not be considered sufficient to meet the evidentiary requirements. Thus, the standard of examination in case of suo-moto initiations remains the same as that in case of normal initiations (based on applications filed by the domestic industry).
However, when it comes to the requirement of “special circumstances”, some important aspects need to be considered, namely -
Firstly, what constitutes “special circumstances”?
Secondly, is existence of “special circumstances” a sine qua non for suo-moto initiations?
Finally, can the provision be considered self-judging?
(i) What are “special circumstances”?
The phrase “special circumstances” appears twice in the ADA as well as ASCM. Summary of the provisions is given below:
Article 11.6 ASCM/ Article 5.6 ADA
If, in special circumstances, the authorities concerned decide to initiate an investigation without having received a written application by or on behalf of a domestic industry for the initiation of such investigation, they shall proceed only if they have sufficient evidence of the existence of a subsidy (or dumping), injury and causal link, as described in paragraph 2, to justify the initiation of an investigation.
Article 11.11 ASCM/ Article 5.10 ADA
Investigations shall, except in special circumstances, be concluded within one year, and in no case more than 18 months, after their initiation.
There is no WTO jurisprudence on the above-mentioned provisions as there are no disputes specifically analysing the said provisions.
Article 31 of Vienna Convention on the Law of Treaties (‘VCLT’) provides for general rule of interpretation of treaties and states that a “a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose”. Among other things, Article 31 of VCLT requires the treaty provisions to be given ordinary meaning in their proper context.
The word “special” means “not ordinary or usual”. It may also mean as “something having a particular purpose”. The word “circumstance” is defined as a “fact or event that makes a situation the way it is”. If given a textual meaning, the phrase “special circumstances” would mean an event or fact that is not ordinary or has some particular purpose. In other words, the phrase indicates that the provision must be used in cases, which are not in ordinary course.
The EU’s anti-subsidy regulations contained in Commission Regulation 2016/1037, is pari-materia to Article 11.6 of ASCM. Among other things, it requires the existence of “special circumstances” for the Commission to initiate the investigation on a suo-moto basis.
In the recently initiated CVD investigation on Battery Electric Vehicles from China PR, the European Commission (‘EC’) has stated as under:
“After an in-depth analysis of recent market developments and considering the sensitivity of the electric vehicle sector and its strategic importance to the EU economy in terms of innovation, value added and employment, the Commission has collected market information from various independent sources. This information tends to show the existence of subsidisation by the People’s Republic of China which negatively affects the situation of the Union industry.”
“The available evidence, as summarised in Section 4 of this Notice, shows the likelihood of substantially increased subsidised low-priced imports that would pose an imminent threat of injury to an already vulnerable EU industry. Such a surge of low- priced imports, gaining significant markets share in a rapidly growing market in which a significant and sustained rate of investments is needed as the Union market transitions to full electrification, would lead the Union industry to incur heavy losses which could prove rapidly unsustainable.”
The EU conducted an extensive analysis of market developments concerning the electric vehicle sector, considered its strategic importance to the EU economy as a whole and took into account the imminent threat of injury to an already vulnerable EU industry due to increased subsidised low-priced imports, to reach to a conclusion that there exists a “special circumstance” that necessitated it to take suo-moto action. Without going into the merits of the reasons provided, the brief explanation of the circumstances, prima facie, constitutes “special circumstances”.
However, in the prior investigation concerning synthetic fibre ropes from India, EC mentioned “special circumstances” that existed but did not explain the meaning of the said phrase that prompted self-initiation.
Thus, the EC practice indicates reference of “special circumstances” in its initiation notices but until recently, the explanation was not forthcoming. The Electric Vehicles investigation does provide more explanation on the meaning of the term “special circumstances”, which is a welcome step.
India’s anti-dumping provisions, on the other hand, are silent on the aspect of “special circumstances”. The pertinent rule states, “Notwithstanding anything contained in sub-rule (1) the designated authority may initiate an investigation suo-moto if it is satisfied from the information received from… or from any other source that sufficient evidence exists as to the existence of the circumstances referred to in clause (b) of sub-rule (3).”
The phrase “notwithstanding anything contained in sub-rule (1)” in fact provides additional powers to the investigating authority to initiate an investigation, not only without any application by domestic industry but also without having to show existence of “special circumstances” as contemplated under the ADA.
Apart from the recent 4 suo-moto anti-dumping investigations initiated by India, India has previously self-initiated 3 anti-dumping investigations and one countervailing duty investigation. However, in none of these investigations, any explanation or reason for suo-moto initiation was provided. In the countervailing duty investigation, the authority noted that the representation received contains information about the steep decline in production in India due to significant increase in imports because of significant subsidies available in the subject countries. Such a reason cannot be treated as “special circumstance” since the very basis of every CVD investigation is the existence of increase in imports causing injury to the domestic industry due alleged subsidisation.
Thus, the Indian jurisprudence does not shed any light on the meaning of the phrase “special circumstances” as there is no domestic requirement, which may very well be against the corresponding provisions of ADA and ASCM.
(ii) Is existence of “special circumstances” a sine qua non for suo-moto initiations?
The WTO Agreements provide for a deviation from the standard provisions for initiation of investigations in “special circumstances”.
As noted previously, Article 11.11 ASCM/Article 5.10 ADA state that the “investigations shall, except in special circumstances, be concluded …..”. The provision makes it clear that such provision may be applied as an exception and not as a routine affair. In contrast, Article 11.6 ASCM and Article 5.6 ADA do not specially state “except for” so as to indicate the exceptional nature of the “special circumstances”. Hence, it is arguable that in terms of Article 11.6 ASCM or Article 5.6 ADA, existence of “special circumstances” is not sine qua non.
At the same time, one cannot ignore the specific words used in treaty provision. Had the drafters intended the use of self-initiation as just another method of initiation process, then the phrase “special circumstances” would not have been used. If it is argued that existence of “special circumstances” is not a necessary requirement, then the usage of the phrase itself becomes redundant. A provision cannot be given an interpretation, which renders the words inutile.
For the said reason, due respect must be accorded to the phrase “special circumstances” in Article 11.6 ASCM and Article 5.6 ADA.
EU’s provisions are completely aligned with the ASCM with respect to the initiation process, requiring the Commission to explain the “special circumstances” necessitating the need for self-initiation. Indeed, the EU in its initiation notice in the Electric Vehicles investigation complied with the said requirements by stating the reasons. However, no reasons were provided in previous anti-dumping investigation on synthetic fibre ropes from India, though there was a mere mention of existence of “special circumstances”.
Indian provisions do not contain the phrase “special circumstances” in respect of suo-moto initiations. Hence, India does not provide any reasons for deviating from the standard procedure.
However, the phrase is used elsewhere in the Indian anti-dumping rules as extracted below:
17(1) The designated authority shall, within one year from the date of initiation of an investigation, determine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding…
Provided that the Central Government may, [in its discretion in special circumstances] extend further the aforesaid period of one year by six months:
Rule 29(3) - The domestic industry or any other interested party shall file the application seeking initiation of anti-absorption investigation normally within two years from the date of imposition of definitive anti-dumping duty:
Provided that in view of special circumstances in a given case, for reasons to be recorded in writing, the designated authority may accept an application for such initiation after expiry of the said period of two years.
Rule 30(7) Any such investigation shall be concluded within six months from the date of initiation of the investigation: Provided that in special circumstances for reasons to be recorded in writing, the Central Government may extend the said period for another three months.
Proviso to Rule 17(1) allows the Central Government in India to extend the time period for completion of investigation in its discretion under special circumstances. In practice, the reasons are seldom stated in respect of existence of special circumstances warranting extension of time and the extension is granted.
As regards anti-absorption provisions, the rules make it explicit that the reasons for existence of special circumstances must be recorded in writing. However, in practice, the provision is yet to be applied and hence remains untested. Nonetheless, the fact that the anti-absorption provisions themselves provide for reasons to be recorded is indicative of the fact that existence of special circumstances is necessary.
Thus, the Indian jurisprudence on the issue of “special circumstances” is somewhat mixed with different provisions having different requirements. However, if one takes into account the specific requirement under Rule 29(3) and Rule 30(7) extracted above, the requirement to provide reasons in writing aligns with the intent and purpose of the term “special circumstances” used in the domestic legislation and helps maintain adequate checks and balances against arbitrary decision making.
As regards Rule 5(4) of the Indian AD Rules, which deals with suo-moto initiations, the same deviates from the corresponding provisions in ADA by omitting to provide for existence of “special circumstances”, which prima facie, appears to be problematic and potentially in violation of ADA. This is because India is a signatory nation to an international treaty, and if a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. Considering the same, the Indian provision must align itself to meet the requirements of ADA and provide for existence of “special circumstances”.
(iii) Is the provision requiring existence of “special circumstances” self-judging?
It is equally plausible to argue that even if there exists a provision requiring existence of special circumstances, the investigating country may still decide not to provide any reasons considering the provision to be self-judging.
The aspect of self-judging of a provision was tested in Russia - Measures Concerning Traffic in Transit, wherein the Panel concluded that it had the jurisdiction to review Russia’s invocation of security exception provided under Article XXI(b)(ii) of the GATT 1994, though Russia argued that its invocation of exceptions provided under Article XXI(b)(ii) is non-justiciable and entirely self-judging. Even in case of security exceptions, the Panel made it clear that “there is no basis for treating the invocation of Article XXI(b)(iii) of the GATT 1994 as an incantation that shields a challenged measures from all scrutiny.”
In other words, if the provision is considered to be self-judging, then the country invoking the provision need not provide any justification about the circumstances necessitating deviance from the normal process and other countries cannot question such a decision.
At the same time, it is important to consider whether the said provision has been applied by the country in good faith and considering its exceptional nature. The fact remains that if investigating authorities do not exercise discretion and initiate investigations on a suo-moto basis without having regard to its exceptional nature, not only will requirement to file applications by domestic industry become futile but more critically, it may allow countries to use trade remedy measures to circumvent an important pre-requisite for initiating an investigation, which is likely to promote protectionism.
Self-initiation of trade remedy investigation is a process authorized under the WTO Agreements. However, given its exceptional nature, the provision must be used with circumspect and not in a routine manner. Further, the use of the phrase “special circumstances” used in Article 5.6 of ADA and Article 11.6 of ASCM ensures that the investigating authorities provide adequate reasons for invoking the said provision, which ensures keeping adequate checks and balances to avoid misuse of trade defence instruments.
An analysis of WTO Agreements and domestic laws and practice of EU and India show their extremely limited usage in trade remedy investigations. Nonetheless, the investigations do not provide clear-cut guidance on the usage of the exceptional procedure for initiation of a trade remedy investigation.
The Indian law and practice appears to be problematic since suo-moto investigations have taken place, which are primarily based on representations of domestic producers (instead of formal applications), which in itself raises serious doubts on the nature of “self initiations”. Further, the domestic provisions do not require existence of “special circumstances”, as against ADA or ASCM, which can be potential issue, if challenged. The EU, on the other hand, does have a provision that mirrors ADA and ASCM and the limited practice is to rely on “reliable information” obtained by the EC. Nonetheless, in the absence of source of such information, it remains unclear if that information was supplied by the domestic producers in some way or it was obtained by the EC purely by its own research without any involvement of domestic producers. It is only then; the initiation may be termed as “suo-moto”.
To conclude, the suo-moto procedure is an exception provision for a reason and must be respected and be used only in very special cases and that too, upon proper explanation. A suo-moto investigation, by definition, must be initiated by the investigating authority without any request (active or passive) as otherwise, it is only likely to breed circumvention of standard initiation procedure requiring domestic industry to provide detailed information on dumping/subsidy, injury and causal link.
 Anti-dumping investigation concerning imports of Unframed Glass Mirror from China, dated 21-Sep-2023; Anti-dumping investigation concerning imports of Fasteners from China, dated 22-Sep-2023; Anti-dumping investigation concerning imports of Telescopic Channel Drawer Slider from China, dated 20-Sep-2023; Anti-dumping investigation concerning imports of Roller Chains from China, dated 30-Sep-2023.  Anti-subsidy proceeding concerning imports of new battery electric vehicles designed for the transport of persons originating in China PR, dated 04-Oct-2023  Article 5.2 ADA and Article 11.2 ASCM  Article 5.3 ADA and Article 11.3 ASCM  Article 5.4 ADA and Article 11.4 ASCM  Black’s Law Dictionary, Ninth Edition, p. 1560  A Handbook on Anti-Dumping Investigations, Judith Czako, Johann Miranda and Jorge Miranda, 2003, Pg.22-23  Anti-dumping investigation concerning imports of Telescopic Channel Drawer Slider from China, dated 20-Sep-2023, para 10  Anti-dumping investigation on imports of Jute Products from Nepal and Bangladesh, Initiation notice dated 21-Oct-2015  Trade Notice No. 09/2021 dated 29-Jul-2021 at https://www.dgtr.gov.in/sites/default/files/Trade%20Notice%2009%3A2021_Simplification%20of%20procedure%20for%20fragmented%20industries.pdf  Anti-Dumping investigation concerning imports of Sports Shoes (both branded and un-branded) originating in or exported from China PR, Initiation dated November 20, 2000; Anti-Dumping investigation concerning imports of Dry Batteries originating in or exported from China PR, Initiation dated November 11,2000; Anti-Dumping investigation concerning imports of toys originating in or exported from China PR, Initiation dated November 20, 2000  Anti-dumping investigation concerning imports of synthetic fibre ropes from India, July 1997  Anti-subsidy proceeding concerning imports of new battery electric vehicles designed for the transport of persons originating in China PR, dated 04-Oct-2023, page 1.  Panel Report, Morocco – Definitive AD Measures on Exercise Books (Tunisia), paras. 7.356-7.358  Panel Report, Guatemala – Cement I, para. 7.57. Report reversed in total by Appellate Body on procedural grounds as dispute not properly before the Panel; Panel Report adopted as reversed, WT/DSB/M/51, section 9(a)  https://dictionary.cambridge.org/dictionary/english/special  https://dictionary.cambridge.org/dictionary/english/circumstance  Commission Regulation 2016/1037, Article 10(8)  Anti-subsidy proceeding concerning imports of new battery electric vehicles designed for the transport of persons originating in China PR, dated 04-Oct-2023, page 1.  Customs Tariff (Identification, Assessment And Collection Of Anti-Dumping Duty On Dumped Articles And For Determination Of Injury) Rules, 1995, Rule 5(4)  Anti-Dumping investigation concerning imports of Sports Shoes (both branded and un-branded) originating in or exported from China PR, Initiation dated November 20, 2000; Anti-Dumping investigation concerning imports of Dry Batteries originating in or exported from China PR, Initiation dated November 11,2000; Anti-Dumping investigation concerning imports of toys originating in or exported from China PR, Initiation dated November 20, 2000  Countervailing Duty investigation concerning imports of Copper Tubes and Pipes from Malaysia, Thailand and Vietnam, initiation dated 25-Sep-2020  Commnr. Of Customs, Bangalore vs M/S. G.M. Exports & Ors, Supreme Court of India, Judgment dated 23-Sep-2015, Para 23(4)  Panel Report, Russia-Measures Concerning Traffic in Transit, para 7.102 and 7.103  Ibid, para 7.100