Following the amendments to the public procurement legislation (effective July 2016), on 13 July 2016, the President of the Republic of Azerbaijan signed the Decree on the Implementation of Law No. 261-VQ On Anti-dumping, Countervailing and Protective Measures, dated 31 May 2016 (the "Law"). The Law becomes effective after 90 days from the date of its official publication, which is 15 July 2016.
The Law aims to protect Azerbaijan's economic interests by supporting and stimulating local producers, and by regulating the implementation of antidumping, countervailing and protective measures against dumped, subsidized and increased imports that cause injury or risk of injury to the domestic industry.
The Law sets forth the criteria for the determination of dumped goods and injury, the definitions of domestic industry and subsidy, and the methods of calculation and comparison of normal market value and export price. It also presents the grounds and order for the imposition and collection of anti-dumping and countervailing duties, including the application of provisional measures, and the initiation of and subsequent investigation, such as consultation and dispute settlement.
One of the major innovations of the Law is the determination of the concepts of dumped and subsidised imports. According to Section 1 of the Law, dumped import is the importation of a product into the customs territory of Azerbaijan at a price less than its normal value.
Under Section 9 of the Law, a subsidy is deemed to exist if a foreign government grants discounts to an entrepreneur by any of the following means:
(i) a government practice involves a direct transfer of funds (e.g. grants, loans and equity infusion), potential direct transfers of funds, or liabilities (e.g. loan guarantees);
(ii) government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives, such as tax credits). The exemption of an exported product from duties or taxes borne by the like product when destined for domestic consumption, or the remission of such duties or taxes in amounts not in excess of those which have accrued, should not be deemed to be a subsidy.
(iii) a government provides preferential goods or services other than general infrastructure or purchase of goods; or
(iv) a government directly or indirectly supports revenues or prices, which has resulted in export increase or import decrease.
Further, in case the amount of dumping margin and subsidy is "de minimis" (which is less than 2% for margin and 1% for subsidy) or the volume of the dumped or subsidized import or the caused injury is of less importance (meaning that the aggregate value of all dumped and subsidized imports from different countries is less than 7% of aggregate sales of import of the like products) the investigation should be cancelled.
The Law also introduces the concept of special and differential treatment of developing countries. Thus, in accordance with Section 21.3 of the Law, protective measures are not applicable to certain developing countries using the national preferential system, provided the volume of imports from these countries meet particular requirements.
The notion of a public hearing in investigations regarding potentially dumped products is presented by the Law. According to Section 28 of the Law, all the interested parties to the case are entitled to question each other in a public hearing and present written evidences to the relevant state authority (the Ministry of Economy).
The Law entitles the Cabinet of Ministers to apply antidumping measures by imposing a provisional antidumping duty or price undertakings on exporters. The Cabinet of Ministers can also impose compensation duties against exporters benefiting from foreign subsidies after following certain procedures provided under the law.
Finally, notifications regarding the initiation, suspension or cancellation of an investigation, notifications on public hearings, as well as all other notifications issued by the respective state authorities, should be in writing, prepared and served as per the requirements prescribed in the Law and made publicly available in mass media. The Law requires that all notifications be clearly grounded with an explanation of all determinations.
This LEGAL ALERT is issued to inform clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.