A dumping margin calculation in involves currency conversion of either the export price or the normal value. Although the Anti-dumping Agreement permits the conversion of currency when it is necessary for the price comparison, it does not provide a sufficient guideline to guard against potential distortion in the dumping margin calculation resulting from conversion. Unless the conversion is done with an appropriate exchange rate, an investigation authority's price comparison potentially results in a spurious estimate of dumping margin, in violation of the fair comparison requirement of Article 2.4 of the Anti-dumping Agreement. In particular, the distortion in the dumping margin calculation is magnified when the exchange rate moves significantly.

This paper reviews the currency conversion clause of the Anti-dumping Agreement and suggests modifications in order to address the shortcomings.

Executive Summary

Ⅰ. Introduction

Ⅱ. Currency Conversion in the Anti-dumping Agreement

Ⅲ. Exchange Rate Conversion in the U.S.

Ⅳ. Exchange Rate Conversion in the EU

Ⅴ. Distortion from Exchange Rate Conversion

Ⅵ. Suggestions to Modify the Currency Conversion Clause

References