1. Legal Provision

 

‘Like Articles or Goods’ are generally meant to be “alike” in all respects to the PUC, or if not alike in all respects, having “characteristics closely resembling”.

 

This is necessary to ensure that the subject goods produced by the DI and imports from subject countries are comparable, and technically & commercially substitutable in terms of physical, technical specifications, functions or end-uses.

 

Certain other factors which have been considered relevant by different tribunals are as follows:

 

i. Commercial substitutability and manufacturing   process;

ii. Uses, raw materials, and properties of the products;

iii. The resemblance in terms of properties even though there were substantial impurities in the domestically produced ‘like product’;

iv. If the product is easily convertible and such a fact is also recognized by exporters; and

v. The difference in raw materials has not been considered decisive if the products are commercially / technically  substitutable.

 

Article 2.6 of the ADA provides for a definition of ‘Like Product’ and Rule 2(d) of the Rules defines the like article as:

 

“like article” means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such an article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation

 

2. Operating Practices

 

The rationale in the definition of ‘like article’ within the Rules has to be applied categorically as soon as the process of the PUC identification is completed at the stage of initiation itself.

 

It should be ascertained whether the applicant DI is producing the like articles or not. The production of any other producer making a like article will have to be included to arrive at the total production of the PUC in India.

 

The “like article” is relevant in the context of the Goods produced by the Indian industry, and also for the producer exporter who is alleged to be dumping into India to determine dumping margin more precisely.

 

To define the ‘like article’, the first step is to look for identical articles. In the absence of such identical features, the goods with characteristics closely resembling those of the PUC should be seen. Only if the goods produced by the DI are found to be not identical, then other factors such as channels of distribution, market segmentation, the process of manufacturing, etc., should be considered in determining the ‘like articles’.

 

Like Article can be recognized on the basis of substitutability by consumers or producers or both. The following parameters can be relevant in the determination of like articles in the context of the goods produced by the DI. It may be added here that an article is not required to qualify on all the parameters as they have to be examined independently and the final decision is to be taken on the merits of each case under investigation:

 

Physical Similarity

 

- Similarity of physical characteristics like size, shape, content, weight, appearance, taste, grade, standards, age, strength, purity and chemical composition.

- Verify whether the goods are classified under the same or matching tariff classification.

 

Technical  Substitutability:

- Technical specifications/standards

- Grades, purity, etc.

Commercial  Substitutability

 

- Commercial substitutability refers to attributes identifiable from following market behavior:

i. Are the goods directly competitive in the market? Do the goods compete in the same market sector? Within this sector, how are the goods positioned?

e.g. Within a market sector, are the goods similarly positioned?;

 

ii. What is the extent to which the end-user may (or can) switch between the goods for reasons other than price? What is the extent to which participants in the supply chain are willing to switch between the goods?
e.g. willingness of participants to switch between sources may suggest commercial  interchangeability;

 

iii. How does price competition influence consumption? e.g. close price competition may indicate product differentiation is not recognized by the market;

 

iv. Are the distribution channels same or similar?; and

 

v. Is the packaging same or similar? What is the extent of the differences? Does the packaging reveal a significant difference in the goods? Does the packaging highlight a different sector of the market?

 

Functional  Substitutability

 

- Functional substitutability refers to attributes identifiable from end-use. They may not by themselves establish ‘like goods’, but may provide support to the assessment of physical & commercial substitutability. The DI will have a tendency to make claims in this respect, and hence, these attributes must be examined objectively:

 

i. Do the goods have the same or similar end use? What is the extent to which the two goods are capable of performing the same function? e.g. both a shovel and an earth moving machine can move earth;

ii. Do the goods have differential value? (Since quality claims are subjective, objective evidence like official standards, or verifiable end-user surveys, hold higher probative value); and

iii. Is end-user preference likely to change in the future, based on end-user trends and behaviour in other markets and countries?

 

Production Likeness

- Different production processes may produce identical goods or may create different product characteristics. A comparison of the production process will not itself establish like goods but may highlight differences or provide support to the assessment of other considerations.

 

i. To what extent are the goods constructed of the same or similar materials?

ii. Have the goods undergone a similar manufacturing process? If different, what is the impact of those differences?

iii. Are the costs of manufacture similar? A similarity in the cost of manufacture may be an indicator of likeness but is not determinative.

iv. Are there any patented processes or inputs involved?

Production substitutability may also be examined. It would mean that producers/manufacturers can interchangeably produce the products within the same facility then they should be considered like article, as was held in the case of aluminum radiators wherein the product variants as such were nor substitutable by the end user/consumer but they were being produced by all the producers interchangeably.

 

The quality of the PUC cannot be claimed to be a valid ground for claiming product differentiation as there could be a substantial element of subjectivity in such assessment. However, if the issue of quality is such that it can be demonstrated to lead to technical implications, it should be appropriately examined.

 

The process of manufacture is of no consequence in a trade remedy investigation as the same goods may be produced with different production and technology processes. However, if it is claimed that the production process results in different physical characteristics, then these differences must be taken into account while determining whether the goods are like articles or not.

 

The ‘like articles’ have to be determined in the context of the applicant DI only. It is pertinent that if a product is considered as ‘like article’ then the industry producing that particular like article must necessarily be a part of the applicant DI whose data is being considered for various factors including injury and causal link. The claim of the DI that some of the ‘like articles’ are being produced by other producers (non-applicants) in the Indian industry will put to question DI standing.

 

The applicant is not permitted to add other producers as a part of the DI to give validity to the scope of ‘like articles’. This means that the composition of the applicant DI cannot be altered after the initiation of the investigation. In circumstances with due justification, if it becomes necessary to do so, all parties to the investigation must be given fresh notice of the proposed action.

 

Source: Manual Of Operating Practices For Trade Remedy Investigations