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This guidance uses shortened names when referring to legislation:

• 鈥榙umping and subsidisation regulations鈥� refers to the
• 鈥榮afeguards regulations鈥� refers to the
• 鈥�TCBT Act鈥� refers to the

This legislation has been amended, including by:

• schedule 19 of the Finance (No.2) Act 2023
• Trade Remedies (Increase in Imports Causing Serious Injury to UK Producers) (EU Exit) (Amendment) Regulations 2023

In order to calculate the appropriate level of duties, the TRA will need to establish the extent of the injury to UK industry resulting from dumped or subsidised imports, or unforeseen surges in imports, and determine an anti-dumping amount , a countervailing amount or a safeguarding remedy as the case may be, that is adequate to remove that injury. This is referred to as assessing the injury margin.

Dumping and subsidisation investigations

World Trade Organisation (WTO) members can impose duties up to the level of the margin of dumping or the amount of subsidy. However it is desirable that the duty is set at a lower level if this level is adequate to remove the injury caused to the UK industry (the 鈥榣esser duty rule鈥�). Details of this are in Article 9.1 of the WTO Anti-Dumping Agreement and Article 19.2 of the WTO Subsidies and Countervailing Measures Agreement.

As the lesser duty rule is not a WTO requirement, the WTO does not set any rules for establishing the injury margin. However, UK legislation mandates that the lesser duty rule must be applied in all investigations and reviews, in a non-discriminatory way.

The TRA鈥檚 recommendation on a measure must not exceed either:

• the margin of dumping or the amount of subsidy
• the amount adequate to remove the injury to a UK industry (the 鈥榠njury margin鈥�), if that amount is less than the margin of dumping or the amount of subsidy

This is in accordance with paragraph 18(6) of Schedule 4 to the TCBT act.

Safeguards investigations

Article 5 of the WTO Safeguards Agreement states that 鈥渁 Member shall apply safeguard measures only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment鈥�. For definitive safeguarding amounts, this is in accordance with paragraph 17(4)(a) of schedule 5 to the TCBT Act. For definitive tariff rate quotas, this is in accordance with paragraph 18(2)(a) of schedule 5 to the TCBT Act.

The TRA may only make a recommendation for a provisional safeguarding amount or a provisional tariff rate quota that 鈥渋s necessary to prevent serious injury which it would be difficult to repair from being caused during the investigation to UK industry of the goods鈥�. This is in accordance with paragraph 11(5)(a) of Schedule 5 to the TCBT Act.

Determination of the injury margin

Regulation 36 of the dumping and subsidisation regulations says that the TRA must determine an amount that is adequate to remove injury caused to UK industry by dumping or subsidisation.

Regulation 10 of the safeguards regulations describes how the TRA should determine an amount that is adequate to prevent or remove serious injury caused by unforeseen surges in imports.

The objective of determining the injury margin is to find:

• an amount which the TRA 鈥渋s satisfied is necessary to prevent injury to UK industry based on an assessment of the minimum increase in import prices of the dumped goods or subsidised imports that would remove injury鈥�. This is in accordance with regulation 36(2) of the dumping and subsidisation regulations.
• a remedy which the TRA 鈥渋s satisfied is necessary to prevent or remove serious injury to UK industry of the like goods and directly competitive goods based on an assessment of the minimum increase in average import prices of the goods concerned that would prevent or remove serious injury鈥�. This is in accordance with regulation 10(2) of the safeguards regulations.

These provisions require the TRA to take into account all relevant factors in calculating the injury margin and choosing a methodology. The TRA is also required to disregard factors other than the importation of the dumped goods, subsidised imports, or the unforeseen surges in imports that are causing injury to the UK industry.

The circumstances of a specific investigation are likely to demand different approaches in calculating the injury margin. An overly prescriptive methodology or a strict hierarchy of methodologies should be avoided.

Duties based on an injury margin should allow UK industry to raise prices to a target price, and make an appropriate higher rate of profit. These prices should be at levels which UK industry could reasonably count on in the absence of dumping, subsidy or unforeseen surges in imports.

The TRA should also consider that UK industry and third country suppliers may also take the opportunity to increase market share instead of, or as well as, increasing sales prices. Therefore, domestic sales prices might not increase by the full amount of the duty.

The injury-based measure should look to counteract the effects of dumped or subsidised imports, or unforeseen surges in imports, going forward. It should not try to compensate for past losses.

The injury margin should usually be based on a comparison of a target price and the import price during the period of investigation at the same level of trade (i.e. goods at the same stage of the production to import process, for example at ex-factory level or after transport costs have been incurred).

The import price will usually be the landed import price, which equates to the Cost, Insurance, Freight (CIF) import price plus any relevant import duties and costs associated with importing. The difference between the two should then be expressed as a percentage of the CIF import price.

Where relevant, the TRA鈥檚 choice of methodology and its calculations may be affected by the following factors:

• the degree of price depression and/or suppression
• factors other than dumping, subsidies or the unforeseen surges in imports that the TRA considers having caused injury
• availability of data relating to situations of normal conditions of competition
• the degree of overlap between the range of goods produced by the UK industry and those imports subject to the investigation (see section on Product Control Numbers (PCNs))
• the ability of the TRA to make meaningful comparisons between different qualities and specifications and UK produced goods

Injury margins may be calculated:

• in all new dumping, subsidisation and safeguards investigations
• in the following dumping and subsidisation reviews (see regulation 68(11) of the dumping and subsidisation regulations):
  • expiry reviews where the duties are being recalculated
  • full interim reviews
  • partial interim reviews relating to injury
  • new exporter reviews where sampling was not used in the original investigation
  • absorption reviews
• in transition reviews where the TRA has decided to revise the level of duties and where it is possible to conduct a meaningful injury margin calculation (under regulation 99A(2)(b) of the dumping and subsidisation regulations)

In other reviews (for example, interim reviews relating to dumping only and new exporter reviews where sampling was used in the original investigation), the application of the lesser duty rule will rely on existing injury margins calculated during the original investigation.

An individual injury margin should be calculated for each exporter subject to investigation, unless sampling of exporters is used. A single weighted average target price should be calculated and applied to calculate all individual exporter鈥檚 injury margins, even where the investigation or review covers multiple countries.

According to regulation 36(5) of the dumping and subsidisation regulations, an injury margin of less than 2% should be disregarded. A zero duty will then be applied to the exporter in question.

Initially, an injury margin should be expressed as a percentage of the CIF import price. This is so the injury margin can be compared with the margin of dumping or the amount of subsidy.

This comparison enables the TRA to determine, in accordance with the lesser duty rule, which margin should be the basis of its recommendation. Where the injury margin is lower than the margin of dumping or amount of subsidy, the injury margin should be used.

However, it can also be adapted and expressed in a range of different types of measure.

For safeguards cases, a single target price for UK industry should be compared with a single weighted average import price for the goods concerned. For multiple products, where each product is to be subject to an individual duty, it may be more appropriate to calculate separate injury margins for each.

Tariff rate quotas (TRQs)

Where the TRA considers a TRQ, the overall effect of the TRQ should be equivalent to a tariff set at the injury margin. Therefore, the out-of-quota tariff should be set at a level that, when combined with the in-quota tariff applied to specified quota amounts (usually a zero tariff), provides an equivalent impact on UK prices.

Although the TRA should adopt a methodology best suited to the specific circumstances of a case, it should, base the estimate of injury margins for each exporter on underselling margins, unless there is good reason not to do so.

The underselling margin is a comparison of import prices and a target price. The target price represents the price that would prevail in the UK in the absence of dumped or subsidised imports, or the unforeseen import surges. The target price can be obtained from a range of sources, but in most cases, it is likely that it will be constructed using cost data from sampled UK industry and an estimate of the 鈥渘ormal鈥� profitability of the UK industry. This injury margin is then translated into an ad valorem duty rate (the lowest duty that would allow the UK industry to achieve the target price).

Basic formula

The basic calculation would consist of:

The target price and the import price should be estimated at the same level of trade (i.e. goods at the same stage of the production to import process).

This will usually be the landed price for the import price, including all relevant importing costs, and the ex-works price for the target price. The denominator should be expressed at the CIF level of trade because this is the point at which duties would be applied.

Calculation of the normal rate of profit

Factors setting the normal rate of profit

Relevant factors may include:

• the market conditions in which UK industry operates
• the degree of competition from non-dumped sources
• trends in consumption
• whether the product is of a commodity nature or whether it is differentiated
• the normal investment requirements of the industry
• the level of risk
• whether the product is subject to cyclical fluctuations.

For example, if UK industry earned x% profit rate in an earlier period when there were no dumped imports on the UK market, x% could be regarded as the starting point for estimating the normal profit of the industry.

However, the TRA will also need to take account of any other changes in market conditions since that earlier period, including any change in the level of competition from non-dumped imports and long-term consumption trends.

For cyclical industries, the TRA should ensure that the normal profit reflects the average profitability over the economic cycle rather than a low point or high point in the cycle.

The normal profit is not the level of profit that would ensure the survival of the UK industry, or the level of profit that UK industry seeks to achieve for investment decision purposes.

It also does not necessarily relate to a time when there was a complete absence of imports from the country concerned into the UK market. Instead, it is the actual level of profit that UK industry could achieve going forwards in the absence of dumped or subsidised imports (above de minimise levels from the country under investigation), or, in a safeguards investigation, the significant increase in imports.

To avoid possible discrimination, in dumping and subsidisation investigations, the same normal profit should be used to determine injury margins in different investigations for the same product against different countries. An exception should be made where investigations take place at different times and there is a material change in normal circumstance for the UK industry in the intervening period.

What form should it take?

Profitability should be calculated as a return on sales of the like good in the UK, that is, excluding export sales. Where the data relating profits on UK sales of the like goods is not available, the profit rate should relate to sales as close to this as possible, as reasonably determined by the TRA.

The normal profitability of the UK industry should refer to the weighted average profit of all UK industry. However, in practice, data may be limited to the profits of sampled producers. In exceptional circumstances the TRA may consider alternative approaches, e.g. the profit of the most efficient producers. However, there should be consistency between the choice of companies used to calculate normal profit and the companies used to calculate costs of production.

The TRA should retain flexibility to use alternative measures of profit, such as earnings before interest and tax, where appropriate, e.g. to deal with start-up operations or large-scale investments. The TRA should ensure consistency between the measure used in the injury assessment and the injury margin calculation.

The normal rate of profit

The following may be used to assess the appropriate normal profit:

• profits actually achieved by the UK industry at the start of the injury period
• if there were significant dumped or subsidised imports from the exporting country or territory at the start of the injury period, profits actually achieved during an earlier period. If data is available for a number of years it may be appropriate to average it to remove cyclical fluctuations
• recent investigations of the product concerned. For example, if there was a recent investigation into dumping or subsidisation in the same product market but from a different country. Again, due account should be taken of changes in market conditions in the intervening period
• normal profit rates determined in previous investigations into closely related products
• commercial databases that provide UK profit data
• any other information: for example, profit rates achieved by producers in other markets with similar characteristics to the UK which have been unaffected by dumping, other verified information from interested parties (and contributors) and international surveys

Comparison of target price with import price

Product Control Numbers (PCNs) and the choice of PCNs for comparison

In most dumping and subsidisation investigations, and where applicable in safeguards investigations, the range of products produced and sold by UK industry will not be identical to the range of products exported by exporters subject to the investigation.

Therefore, both the UK-produced like product and the imported product under consideration will be subdivided into a number of sub-products, according to PCNs or models. This ensures that, as far as possible, injury calculations are based on comparisons between identical or similar products.

To ensure that comparisons are made between similar products, injury margin analysis will typically take place at the PCN level, and the comparison may be limited to matching PCNs (i.e. PCNs where there are both export sales and sales by UK industry).

Where there are a large number of PCNs, it may be appropriate to limit the comparison to representative PCNs. The PCNs chosen to be compared should be based on the share of import volumes and UK sales accounted for by the chosen PCNs.

Adjustments

The TRA can make a number of adjustments to ensure it makes meaningful comparisons between different imported models and UK-produced goods.

Adjustment for differences between the goods concerned and the like good in the UK

In some cases, the range of PCNs sold by any given exporter to the UK will not completely overlap with the range produced by the UK industry. Where the match is limited, the TRA may have to undertake price adjustments for differences in physical characteristics in order to improve the match.

If, for example, the imported good includes additional features, it may be appropriate to adjust the import price downwards to reflect the cost of these additional features (e.g. a mobile phone with or without a camera). In cases of limited PCN matching, such adjustment can allow the comparison of a wider range of PCNs than would otherwise be possible.

Where consumers appear to be willing to pay a price premium for products produced in the UK, or indeed for imports, consideration should be given to making adjustments to allow for this. For example, if UK-produced goods benefit from brand recognition resulting from high marketing costs among UK industry, but this is not the case for imports, consideration should be given to making an adjustment to the import prices or to the costs of production to reflect this price premium.

Other differences in terms and conditions of sale between imported and UK-produced goods may also merit adjustments, including differences in warranty terms and post-sales service.

Level of Trade Adjustments

The import price will need to be expressed at the same level of trade as the prices of UK-produced goods. The import price comparable to the ex-factory price of domestically produced goods is the landed price. The landed price includes the costs incurred between the exporter鈥檚 factory and the UK border (internal and international transport, insurance and port costs), and any applicable import duties. It may also include the costs incurred byand a profit margin for importers.

Comparison methodology

The TRA should make a weighted-average to weighted-average comparison between the target price and the import price. Comparisons should be made with a strong presumption that all transactions should be included in the weighted average calculation, unless the TRA believes that there are circumstances which mean that average injury margins do not reflect the full extent of injury and so require a focus on particular parts of the market.

The appropriate weighting of injury margins calculated for PCNs

The weights chosen to compute average injury margins will have an impact on the results of an injury margin calculation. In most cases, import volumes can be used as weights to calculate the weighted average.

However, the TRA has the discretion to use alternative weighting systems where it considers that this would better reflect the injury caused by dumped or subsidised imports. For example, where there is limited overlap between the PCN structure of imported and UK-produced goods, one option might be to include the total imports or total UK sales in the denominator of the calculation illustrated above, including non-matching imports/sales.

The TRA has the flexibility to make adjustments to the basic underselling margin calculation to ensure that it fully reflects the injury caused by imports. In addition, alternative methodologies to the underselling margins can be used where there are data limitations, or because particular economic or other complexities of a case demand this.

Direct target price estimates

Rather than estimating a target price using UK industry cost data and adding a normal rate of profit, it may be possible to find more direct estimates of the market price that might prevail in the UK in the absence of dumped or subsidised imports, or unforeseen surges in imports.

For example, one option could be the market price that prevailed before dumping took place, adjusted for inflation, or, preferably, a product-specific price index. Another option is the price in an overseas market with similar characteristics to the UK, where this market has not been affected by dumping, subsidised imports or the unforeseen surges in imports.

Although it is not always possible to find a suitable direct price estimate, where it is feasible, this approach may provide a more accurate estimate of the price that might be expected in the absence of dumped or subsidised imports, or the unforeseen surges in imports.

Difficulties in estimating UK cost of production

The TRA may face difficulty in obtaining product specific cost data for UK industry. In such cases it may be possible to estimate the cost of production. For example, estimations could be based on the average loss-making prices sold by the UK industry plus an estimate of the overall losses made.

The degree of price depression/suppression

Where the UK industry has not decreased its prices, and has not been prevented from increasing them, in response to competition from the investigated imports, the injury margin will be identical to the undercutting margin.

Other causes of injury

As part of its causation assessment, the TRA will have assessed whether factors other than dumping, subsidy or unforeseen surges in imports have made a significant contribution to the injury suffered by the UK industry.

Where the causation analysis suggests that a particular additional factor has been a significant cause of injury, and that the standard approach to calculating injury margins fails to exclude injury caused by this factor, it is desirable that the calculation of an injury margin should take account of this assessment and make adjustments to the data where it is practical to do so.

For example, if the UK industry had suffered a significant loss of exports during the injury period, and this had led to cost increases due to a loss of economies of scale, the TRA could consider adjusting the UK industry costs during the period of investigation (and hence the injury margin) downwards to take account of this. Similarly, if a UK producer were incurring costs related to a restructuring programme, these costs could be excluded when calculating the cost of production.

Conversely, where the TRA considers that the standard underselling margin understates the prices that the UK industry could achieve going forwards in the absence of dumped imports, the TRA may consider making appropriate adjustments.

There is no requirement for the TRA to try to undertake a quantitative analysis of the relative contributions of various causal factors in every case.

Using a single injury margin for all exporters

Where there are difficulties in computing individual injury margins for each sampled exporter, or in comparing imported models with UK products, it may be necessary to calculate a single injury margin for all exporters. However, because this provides a less accurate outcome, it should be avoided where possible.

Consideration in reviews, including transition reviews

In general, the method for determining the level of the injury margin, including the normal profit, should be the same in reviews as in the original investigation unless there has been a material change in circumstances justifying a change in methods. A change may be necessary, for example, where a long period of time has elapsed between the time of the review and the time on which the normal profit was based in the original investigation.

However, where injury margins are calculated in reviews, the TRA should exclude the existing anti-dumping measure or countervailing measure when calculating the import price. Using this approach ensures any absorption of the duty will automatically be reflected in a higher injury margin.

Standard tariffs which apply irrespective of trade remedy actions, including most-favoured-nation and preferential tariffs or other import charges should be included in the import price.

In some reviews, including transition reviews, exports from an individual exporter may have ceased, or fallen to very low levels, as a result of the imposition of measures. In these cases, it may be difficult to estimate injury margins using underselling margins. The TRA may therefore need to consider using alternative methodologies to calculate injury margins.

Considerations in new investigations involving threat of injury or material retardation

In cases where the imposition of measures is based on threat of injury, a flexible approach to the calculation of injury margins may be required.

Other approaches, which have been used in threat of injury cases, include economic modelling and contribution margin analysis. The latter estimates the lowest prices at which exporters might be prepared to supply the market based on an analysis of their variable costs of supply, and compares these prices with prevailing import prices. Whichever method is chosen, the TRA should give special consideration to monitoring the impact of measures after their imposition and, where necessary, to reviewing the injury margin.

Individual injury margins should be calculated for each cooperating exporter, unless sampling of exporters is used for the calculation of the margin of dumping or the amount of subsidy. This is in accordance with regulations 36 and 37 of the dumping and subsidisation regulations.

Where an exporter is non-cooperating, the TRA can use other information gathered as part of the investigation to determine the import price and assign an individual injury margin to that exporter on that basis. Where there is total non-cooperation, the TRA will need to estimate a single injury margin using the facts available.

Where sampling is used:

• sampled exporters will be assigned an individual injury margin using the target price and their own export data
• non-sampled, cooperating exporters will be assigned a single duty rate that is no higher than the weighted average duty rate of sampled exporters, unless the TRA has accepted a request from the exporter for an individual injury margin (see regulation 57(4) and (5) of the dumping and subsidisation regulations)

In all cases, a residual injury margin will need to be calculated for all other exporters 鈥� for example, those who are silent, non-cooperating, or new exporters. This can be calculated using any reasonable means, in accordance with regulation 38 of the dumping and subsidisation regulations.

Depending on the overall level of cooperation, which has an impact on what information is relied on, the residual injury margin may be the highest injury margin calculated for sampled cooperating exporters, or a different injury margin no lower than the highest injury margin of sampled cooperating exporters.