REPLIES TO QUESTIONS POSED BY CHINA[1] REGARDING

The following communication, dated and received on 28 October 2025, is being circulated at the request of the delegation of Sri Lanka.

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Sri Lanka thanks the delegation of China for the interest of Sri Lanka's Notification regarding the Anti‑dumping and Countervailing Duties Act（Act NO. 2 of 2018）and would like to submit following responses relating to the posted questions.

Question 1

In this Act, Article 6 stipulates that "(s)ales of the like product in the domestic market of the exporting country, or sales to a third country at prices below per unit (fixed and variable) cost of production, may be treated as not being in the ordinary course of trade by reason of price". And Article 8 (1)(b) stipulates that, for the purpose of Article 5 and 6, the cost of production of the like product shall be the total sum of the cost of materials and fabrication or processing, and "a reasonable amount for administrative, selling and general costs (including financial cost and profits)". However, according to Article 2.2.1 of the Anti-Dumping Agreement, when considering whether certain sales are made in the ordinary course of trade by reason of price, the sales prices of like products shall be compared with costs of production plus administrative, selling and general costs. Please clarify whether profits will be considered as a part of the cost of production?

Reply:

Article 5 of this Act sets out options to determine the normal value of the product where there is no ordinary cause of trade in the exporting country. The first is using the comparable price paid or payable to any third country and the second is using cost of production and sale of the product under consideration where we have to construct the normal value with the reasonable amount of Profit.

Article 6 stipulates instances where the third country price may be disregarded in determining normal value. Here the cost of production is without profit.

Article 8 of the Act refers to both Article 5 and 6 of the Act. According to article 2.2.1. of the Anti‑dumping Agreement authorities need to consider cost associated with cost of production and sale. So, in order to determine the sales of production for the purpose of determining whether they are made in the ordinary cause of trade, costs of production plus administrative, selling and general costs will be considered by Sri Lankan authorities. A reasonable amount of profit will be calculated to the cost of production for the purpose of article 5(1)(b), in determining constructed normal value.

Because Article 8 (1) refers to both scenarios, words "including financial cost and profits" are inserted within brackets. So profit will not be considered as a part of the cost of production.

Question 2

Article 38 stipulates that "(4) The Director-General shall examine whether a duty less than the full dumping margin would be adequate to remove the injury to the Sri Lankan industry. Where the Director-General determines that such a lesser duty would be adequate to remove the injury, the amount of the final anti-dumping duty imposed shall not exceed that lesser duty." Please clarify whether, in accordance with this provision, the investigating authority shall conduct an analysis of applying a lesser duty in each case?

Reply:

According to the provisions of the Anti-dumping and Countervailing Duties Act No.2 of 2018, lesser duty rule will be applied in imposition of a measure during and/or after investigation.

Question 3

Article 60 stipulates that "(1) Where an article subject to anti-dumping duty imported into Sri Lanka from any country including the country of origin or country of export notified for the purposes of levy of antidumping duty, in an unassembled, unfinished or incomplete form and is assembled, finished or completed in Sri Lanka or in such country, such assembly, finishing or completion shall be considered to circumvent the antidumping duty in force if, (a) the operation started or increased after, or just prior to, the anti-dumping investigations and the parts and components are imported from the country of origin or country of export notified for purposes of levy of anti-dumping duty; and (b) the value consequent to assembly, finishing or completion operation is less than thirty-five per centum of the cost of assembled, finished or completed article." Please explain (1) if there is a clear threshold of time for determining that the operation referred to in sub‑paragraph (a) started "just prior to" the relevant investigation, and (2) the rationality and basis for using 35% as the threshold of the value of operation referred to in sub‑paragraph (b).

Reply:

(1) Time periods will be evaluated on a case-by-case basis, dependent on the circumstances.

(2) Sri Lanka is using the 35% margin after studying the value addition criteria considered by other countries in the Asian region in determining whether there is a circumvention, as well as the economic situation of Sri Lanka.

Question 4

Third Schedule provides for non-actionable subsidies. Please clarify whether such subsidies, if any, will be disregarded in the countervailing duty investigations by the investigating authority of Sri Lanka.

Reply:

Sri Lanka is in the process of amending the Act to remove the Third Schedule of the Anti-dumping and Countervailing Duties Act No.2 of 2018.

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