Author(s): Apoorva Vashishtha
Paper Details: Volume 4, Issue 1
Citation: IJLSSS 4(1) 39
Page No: 460 – 469
ABSTRACT
The latest actions taken in the arena of International trade, specifically by countries driven by individualistic interest rather than a common/community interest, have yet again brought into focus questions on the procedures undertaken that abide by the ‘rule of law’ in trade. There have been plenty of accusations of unfair practices against which the Trump-led US Administration has waged a full-scale trade war. These punitive and vengeful measures are being taken in the guise of trade remedies available under the WTO regime. In light of these developments, this study shall scrutinize their objective, focusing on Anti-Dumping Measures and their association with the ‘public interest’ clause. Keeping in mind the interests of various stakeholders when trade is considered part of the natural law and when Anti-Dumping measures and Countervailing duties have a direct impact on market behavior, especially negatively, and are proving to counter the benefits for the downstream market, it is non-negotiable for the country to consider the interests of public rather than just the interests of the ‘interested parties’ during the investigations. It is not contested here that injuries to the domestic industry should be ignored, but thought should be given to the influences the said duties might have on the customer interests. This study shall demonstrate how mandatory adherence to the ‘Lower Duty Rule’ shall benefit both the industry stakeholders and consumers, while also abiding by Article VI of the General Agreement on Tariffs and Trade (GATT). The study also has under its purview the consideration of market response in dispute resolution involving AD/CV measures, and the considerations of ‘rule of law’ for Dispute Settlement Bodies of various intergovernmental and multilateral trading associations.
INTRODUCTION
The United Nations General Assembly has reiterated multiple times the necessity of universal adherence and implementation of the rule of law at both national and international levels through its resolutions.[1] Defining what the rule of law means is a matter of great political debate, but it is to be noted that the said deep involvement and inherent association of the ‘rule of law’ in the International Trading system is something which is only reflected indirectly in affiliate WTO decisions, but is missing both in letter and feeling. Due to the state of affairs surrounding the famed ‘Dispute Settlement Body’ of the WTO, which has lost both power and authority in the global trading systems, the focus of assessing the measure of ‘rule of law’ shifts to a more contemporary issue, which is to address the tariff remedies available and their correlation to ‘public interest’, a less talked about aspect of the propogation of ‘rule of law’. There is a lack of mention of both terms in the laws that govern trade multilaterally. But some brief discussions ensued during the initial rounds of discussions like the Doha and the Uruguay Round. The problem of dumping has been universally accepted with the clause of it necessarily affecting the economy of the nation in question, and thus the Anti-Dumping Agreement was signed. The inclusion of the public interest clause in ADA was debated twice, first during the Uruguay Round, where consensus could not be reached and the second time, during the Doha rounds,[2] where there was a significant objection owing to the subjective nature of the proposed clause. Members argued against the inclusion of non-economic, internal market factors that change according to consumer behavior, to affect the principles on which AD measures should be applied. In present times, the rule to ensure the application of the ‘public interest’ clause, although non-mandatory, is the ‘Lower Duty Rule’ often not used in practice. To offer a brief definition, the lower duty rule mandates anti-dumping duties to be imposed as the lower of the two: dumping margin and injury margin. A stark contrast from the way the ‘public interest’ clause is treated, the provision of LDR finds its mention in the adopted documents of WTO, from discussions stemming from the Kennedy and Tokyo Rounds. Though even these provisions do not call for mandatory application of LDR, and leave it to the discretion of the countries.
‘PUBLIC INTEREST’ CLAUSE IN TRADE REMEDIES – AND ITS RELATION WITH THE RULE OF LAW
WTO provisions on Anti-Dumping Rules do not expressly state the necessity of considering ‘public interest’ but put a discretion on the affected nation to act, keeping in mind the lowest duty that would remove the injury caused to the domestic market in Article 9.1 of ADA. There have been instances where the imposition of the Anti-Dumping Duties has negatively impacted the economy and, most importantly, consumer behavior in the downstream market. The introduction of the AD duties causes a spike in prices of the particular commodity, which, on the other hand, leads to a decline in market demand and lowers the profits and sales of the domestic producers of the same. These challenges are subjective and largely depend on the country as well as the economic interference of the government. To lower the burden of the higher commodity price on the consumers is the objective behind the proposition of the ‘public interest’ test. This application would lead to a closer scrutiny by the authority of trade remedies in question of the market challenges and responses and would help in curbing the unnecessary rise in price. If, as a result of the Anti-Dumping Duty, the price of the commodity rises, and the rate of production and, in turn, the profits of the industries and domestic producers decline, the injury that the duty was introduced to curb is maximized, then the duty, anyhow, would not serve its purpose. This issue shall be curbed by the inclusion of the principle of ‘public interest’ by nations when considering the application of the duty. ‘Public Interest’ in International Trade Law has a definition commonly cited in Bilateral Treaties as “any regulation with a basis other than a state of necessity, national security or the public order.” It’s a matter of understanding that this proposed provision has its origin in the natural law principle of ‘Rule of Law’. Internationally, there have been some commendable and drastic steps to inculcate the said principle in practice, with some provisions reserved for the trade remedies. Though not expressly mentioned, the adherence to the ‘rule of law’ and to its subsidiary in the form of the principle of public interest in the WTO can be inferred from Article 6.2 of the Anti-Dumping Agreement,[3] which mentions the provision of all interested parties having a full opportunity for the defence of their interests. The scope of these ‘interested parties’, is non-exhaustive and includes within itself exporters, foreign producers, importers, producers of the thing in the downstream market country, as well as the government of the exporting Member. The above mentioned article is so inclusive that it also allows parties to include their local and foreign stakeholders as interested parties. The most interesting part of this is a sort of mediation/mitigation clause that has been added in Article 6.2 of the ADA which points to the dispute settlement-oriented mindset of the makers. The article mentions, “The authorities shall, on request, provide opportunities for all interested parties to meet those parties with adverse interests, so that opposing views may be presented and rebuttal arguments offered.” To protect adherence to the rule of law, the provision also mandates transparency of proceedings and confidentiality of the shared information of the parties. It is also important that the inclusion of the ‘public interest’ clause in AD claims is checked under the judicial review mechanism, by trade governing bodies like the WTO. For that to materialise, the violation as well as compliance of the AD rules must be brought under the WTO DSS. The substantial loss in authority of the DSS is currently a separate topic, which isn’t being discussed in the essay. The crux of the ‘public interest’ debate is the complexity of balancing the interests of domestic industries that might be harmed because of the competitive pricing of the exports with the interests of the stakeholders whose benefit lies with the cheaper exports.[4] Now, there are a number of ways how this public interest principle, and indirectly the universally accepted principle of ‘rule of law’ can be better followed in the regime of trade remedies.
- Initiation of the compulsory nature by introducing a mandatory clause in for nations to inculcate the ‘public interest’ clause as a legislative amendment.
The adherence to International Law, by its very nature as an International Law, becomes complex. In practice, there are only a few countries that are Monist in nature. Ensuring adherence by Dualist countries without mandating exclusive inclusion in nation-specific laws is next to impossible for the existing intergovernmental trade bodies. It shall also ensure that countries are liberal only in exceptional circumstances and have a standard benchmark for practicing ‘public interest’, and only treat it as an exception, not as a rule. The argument essentially pitches for an amendment in Article 5 of the ADA for the application of the ‘public interest’ clause in an AD investigation be done before the commencement of the investigation. So that if any such overpowering effect is found, the investigation is barred.
- Broadening of the scope of ‘Interested Parties’ under Article 6.11
In current times, the provisions under the ADA, recognize only a limited number of stakeholders as interested parties during the consideration of the applicability of the ‘public interest’ clause. It is important for us to note that during investigations, these ‘interested parties’ have the right to safeguard their interests while also offering evidence and obtaining oral information. This provision should be broadened to include industry experts of the product in question as well as consumer organizations, so that the ‘interest’ that has to be taken into regard is actually known to the investigative agency as well as the government. Furthermore, for a fair investigation, representatives from the downstream market should be included to gather information that is specific to their market. This would also result in the flowing in of multiple opinions and would lead to a successful analysis of the consequences of the cheap foreign exports and the anti-dumping duties.
INJURY MARGIN V DUMPING MARGIN, WHAT IS THE LDR RULE?
Article 9 of ADA mentions the recommendatory value of a comparative analysis of the dumping margin (the difference between the export price at which the commodity is dumped in the downstream market and the non-injurious price (NIP) for the local market) and the injury margin (the difference between the actual cost of the product in the upstream market and the price at which the country dumps it), to ensure application of duties in a way that the injury caused is mitigated but the liberty to charge is not used to penalize the upstream market with exorbitant duties.[5] This is known as the Lower Duty Rule (LDR), which can be depicted with the help of an example. Normal Market Price in Country of Origin – Net Export Value, Let’s say $140 – $100 = $40 or 40% duty This is the Dumping Margin. Non-Injurious Price – Value of Imports, Let’s say $120 – $100 = $20 or 20% duty This is the Injury Margin. Now the question that arises is, if the injury caused to the domestic market can be cured by applying an AD duty of 4%, is it feasible and is it fair to apply a 40% Anti-Dumping Duty? Thus, to ensure the protection of both the domestic market of the exporting nation and the downstream industries, Article 9.1 of ADA proposes the Lesser Duty Rule to find a middle ground between the stringent Anti-Dumping Duties and the lenient theory of ‘public interest’. The objective of this principle also lies in the welfare goal that the interests of the domestic industry and producers of the same are protected from the cheap foreign exports are balanced alongside the interests of the consumers as well as their rights to get products at competitive prices. The WTO Appellate Body in the case of EC-Bed Linen observed that Article 9 of the ADA gives a discretionary power to the members to even apply Anti-Dumping Measures when, after an investigation, all essentials of dumping are met. It is said that domestic anti-dumping legislation can be improved by the inclusion of these WTO Plus provisions of the ‘public interest’ clause and the Lesser Duty Rule. The lesser duty rule is promoted as a valuable addition to the pre-existing laws as a way of better incorporating consumer interest and mitigating, to some extent, the adverse effects of the Anti-Dumping Tariffs. As per the WTO ADA, it is recommended that the duty imposed is lower in margin, so much so that it alleviates the harm caused to the downstream market. The LDR provision is not mandatory in the GATT and the statement uses persuasive language instead of assertive language to condone it. But it is imperative to note that if this LDR is mandatorily applied to all Anti Dumping Transactions, it will not only ensure the curtailment of dumping activities but also cushion the impact of the tariffs on consumer behavior.
INTERNATIONAL LAWS AND AD REGIME IN INDIA AND THE APPLICATION OF THE ‘PUBLIC INTEREST’ CLAUSE
National laws and legislations neither have a binding nor a recommendatory value on how international functions. But, inspiration can still be taken to the extent of the effects of the application of a principle in a domestic environment. This domestic study can then be extrapolated to an international setting, and the universal application of the principle can be understood through that. The absence of mandatory inclusion of the ‘public interest’ clause in Anti-Dumping investigations is highlighted in this essay and the impact of which can be studied by looking at the countries that have a mandatory public interest test as part of their investigation before applying any trade remedy. This part, rather than having a universal view, shall have a largely domestic focus. The first part will talk about countries that make this principle compulsory and the second part will talk about the status of ‘public interest’ in AD investigations in India. The international models of applying this test provide valuable insights to not just India but also to international forums looking to restore their credibility, as well as to ensure the formal inclusion of a principle, which is nevertheless cited numerous times by countries in global tariff and non-tariff investigations.
The European Union, under Article 21 of its Council Regulation Act 2016, mandates the use of the Interest test to assess whether the proposed taxes, if imposed, serve the people and the economy of the EU or not.[6] This test aims to check the overall community benefit of applying or deterring intervention on the part of the government. The mandatory test calls for taking into consideration all community stakeholders, like domestic industry producers, consumer organizations, importers and users. It clearly says that even if a clear injury to the domestic market is found and there is evidence of intentional dumping by the market of an upstream producer, if there is simultaneously existing evidence that higher duties will cause unasked-for harm to their own consumers, the case should be taken as an extraordinary one and all investigations in this regard should be forfeited. It is also important to note that, contrary to common interpretation, the EU law does not necessitate the application of this test prior to the start of investigations.
Another such legislation has been brought by Canada, where the concerned authority, the Canadian International Trade Tribunal, has the power of conducting a public interest test if sufficient evidence is found of the proposed duties causing considerable damage to Canadian consumers. This has been inculcated legislatively through Article 45 of the Special Imports Act. As an additional benefit, this Canadian legislation is not restricted to only Anti-Dumping Duties but also comprises Countervailing and any other tariff measure that may reasonably have an effect on the interest of the consumers and industry alike. Though not necessarily incorporated formally, the Director General of Trade Remedies (DGTR) of India has been using this test in a largely inherent manner in many cases. But due to rising cases, where, due to no legal cohesion, the public interest test has been put to use in a rather arbitrary fashion, the concerned bodies are pondering over a rather methodical approach. India’s response to the mentions of public interest garnered attention when the MoF dismissed several favourable decisions in Anti-Dumping cases by the DGTR, without any lawful justification for the same. Later, it was clarified by the Finance Minister that the said anti-dumping cases were dropped because of clashes with public interest. In the years that followed, the DGTR conducted a thorough analysis of nearly all cases that came to them for a public interest angle. It also studied the potential effects of the duties on various stakeholders. Additionally, effects on employment, environment, risks of creating an anti-competitive environment, and any substantive effects on the MSME industries were also investigated. When public interest was cited as a reason to discontinue the entire procedure and investigation, there was also a rise in cases filed against the non-imposition in the Customs Excise and Service Tax Appellate Tribunal (CESTAT) by the concerned industry representatives. As a result of this, one landmark judgment was passed, which contributed to giving some respite to the domestic industry in Jubilant Ingrevia Limited v. Union of India and others[7] in which the tribunal ruled that when discarding an anti-dumping recommendation by DGTR, the MoF must give a detailed reasoning behind it. To further reduce such arbitrary use, the DGTR also put forth a proposal to introduce a detailed questionnaire for the industry and consumer representatives to assess where a consideration of public interest is required. Another case that highlighted the judicious use of the power is Apcotex Industries Ltd v. Union of India (2023)[8], where the tribunal assigned the Central Government the power to differentiate the legislative and quasi-judicial functions in terms of the application of Anti-Dumping duties. It further said that the final authority to accept or discard the findings of the designated authority lies with the Central government, but this power should be put to use judiciously in accordance with principles of natural justice, and mandated appellate protection by designating a right to appeal in the tribunal for the decision made by the Central Government.
Drawing from the analysis conducted by DGTR, it can be inferred that codification of these measures, the following criteria for the judgment of public interest can be adopted:
• Impact on MSMEs
• Current market price and effects of non-availability
• Overall employment effects
• In accordance with national goals, related to the security, environment etc.[9]
Presently, such is the case that any proposal of a ‘public interest’ test to be mandatorily incorporated in the already troubled appellate body of the WTO, would end in severe backlash from the members, but trying for a gradual transition, by first incorporating the test in the national laws of the respective countries, would be a helpful and hopeful start.
CONSIDERATIONS OF THESE PRINCIPLES IN DISPUTE SETTLEMENT MECHANISMS
With the famed Dispute Settlement Body (DSB) slowly losing its credibility and the appellate body rendered dysfunctional, the scope of mention of ‘rule of law’ in dispute settlement is nearly absent. In earlier cases, consisting of clauses that concern trade remedies.
We will deal with the considerations of the ‘public interest rule’ in dispute resolution mechanisms under two heads: (i) Broadly understanding ‘rule of law’ in dispute settlement and (ii) Is public interest a deciding factor in arbitration proceedings concerning trade remedies?
RULE OF LAW IN DISPUTE SETTLEMENT
The proximity of the WTO DSS, as well as the Appellate Body has to the principles of ‘rule of law’ can be deciphered by studying the instances of mention of general rules of natural justice, due process and procedural law, in cases that come to them. To display this, we will be talking about five sub-principles that combine and form a checklist for enhancing the implementation of the rule of law.
- Kompetenz Kompetenz (also called competence de la competence)
First originated in the US-1916 Act (EC), and highlighted the need to test the jurisdictional power of the WTO when any dispute comes to it. The question in the above-mentioned case related to the admissibility of any objection to WTO dispute adjudication, when the proceedings have already begun. Hearing a case within its own jurisdiction is essential to ensure non-encroachment in international judicial forums and imperative for the safeguarding of the rule of law.
- Burden of Proof
The invocation of the assessment of the burden of proof during a case is guided by the maxim onus probandi incubit actori. This maxim finds its origin in Roman Law and means that one who brings the cause of action must also be the one proving it. In 1927, Cheng said that actions of the international courts are impossible to fulfil without referring to general principles of private law and when the truth of a case is to be ascertained, the reasonability and judgment stems out from common say and prudence based on human experience.[10]
- Due Process
Due Process rarely finds mention directly in the statutes and acts that govern the dispute settlement mechanism of the WTO. The concept was first highlighted in the EC – Hormones Report. Additionally, this report also mentions the fundamental inclusion of natural justice principles into the proceedings undertaken.[11] The due process doctrine was not taken from some national judicial precedent or judicial handbooks, but merely incorporated on the basis of an assertion.
- Good Faith
The WTO Appellate Body, while referring to the concept of good faith, talks about the ‘good faith’ to be exercised by the adjudicators as well as the parties of the case. Good faith is one of the doctrines that finds direct mention in the Dispute Settlement Understanding (DSU), derived from its Articles 3.10 and 11[12]. It also includes within itself the concept of estoppel, which restricts the party from denying a fact in the judicial forum that it had earlier admitted. The principle also blankets within itself mentions of procedures to follow when the adjudicator’s actions are under scrutiny.
- Judicial Economy
The exercise of judicial discretion in hearing a case in a particular manner or setup to impart justice in a better way. This principle, in contrast to the ones mentioned before, has evolved from GATT dispute settlement practices.[13] Whereas the others have found their way into this list through other domestic legal systems or other international forums.[14]
PUBLIC INTEREST IN TRADE-RELATED ARBITRATION
The concept of public interest as used in matters referred to dispute settlement can be further looked at from two points of view, one is related to the State-State Dispute Settlement (SSDS) and the other related to Inter State Dispute Settlement (ISDS). Before discussing them in brief, it is imperative to note that the mention of the ‘public interest’ clause has been more prevalent in ISDS mechanisms. Though not directly related to our questions surrounding State behavior, the precedents of use of the public interest test in proceedings of bodies like UNCITRAL set an example of how this principle can be better incorporated in SSDS as well.
The scope of public interest norm in International Commercial Dispute Settlement is any such consideration about which the state sponsor, or state party, is concerned, irrespective of the forum’s lex causae. It is said that a state shall consider the application of this rule only when the consumer interest (the one who is injured by the remedy on which the PI test is applicable) is a far more important consideration.[15]
In cases of conflicts where states are either one or both of the parties, some issues arise that aren’t usually present in purely commercial arbitrations. Investor-State disputes have a recurring tendency of revolving around the wrongful and unjustified acts of the other party, which is the state. Another complication that occurs in state-oriented disputes is the challenge of incorporating their own respective government laws and regulations.[16] A good example of this incorporation is the implementation of certain subsidies and interference by the Indian government in the market, and the expression of dissatisfaction by other countries, because of the advent of an uncompetitive environment. Furthermore, the aim of governments to address social welfare issues is another proponent of the imperative need to mandatorily include the test of public interest, to put a restriction on the arbitrary use of terms like ‘social welfare’, ‘community welfare’, and ‘public interest’.
CONCLUSION
In recent times, India has broadened its network of free trade agreements as well as bilateral trade deals with various partner nations. This comes with the Indian goal of balancing consumer welfare with its industry needs. On one hand, stringent Anti-Dumping duties are essential for protecting the markets and production industries of the country; on the other hand, consumer welfare is usually lost with the soaring prices due to the supply gap caused by the dumping tariffs. As mentioned earlier, India has no statutory mandate for the application of the ‘public interest’ clause. This principle, in the absence of legislative or judicial precedent, is often lost within the battle of authorities concerned with the implementation of these tariffs and duties. The public interest test should, on a very fundamental note, have a legal mandate that can (i) ensure its application before anti-dumping investigations begin and (ii) compare the duty to be applied, keeping in mind the effects it may have on downstream consumers and upstream producers alike, and not be punitory in nature. The public interest clause came under intense scrutiny after the Ministry of Finance had abolished and rejected numerous dumping accusations and requests to implement Anti-Dumping duties on products in 2020, and the Minister, in their budget speech the following year, cited the ‘public interest’ test as the reason behind it. It is worth noting that when unfavorable trade nations were concerned, the economic administration had never mentioned, let alone investigated a potential case under this principle. The ‘public interest’ test is the closest, though not through a standardized legal procedure, that we have reached to the real implementation of the ‘rule of law’. And at times when intergovernmental trade regulating bodies are losing their enforcement powers due to an established hegemony, it is imperative that members of the new world trading order take charge of the reestablishment of the same ‘rule of law’ that was envisaged in the nascent rounds of the formation of the World Trade Organization. Additionally, it is also recommended that India look at some of its biggest trading partners, like the European Union and Canada, for their direct mention of the public interest test and mandating its use, and draw upon these models, with some other local specifications, to give rise to a fair, welfare and development-oriented trading order, which not only has its foundations in the rule of law, but also pushes the most integral value of any statutory implementation on a higher pedestal.
[1] Ngangjoh Hodu Yenkong, Reflecting on the rule of law contestations narratives in the world trading system, Journal of International Dispute Settlement 242, 2024, Vol. 15, 238–254
[2] ANANT SWARUP ET AL, RECENT ISSUES IN TRADE REMEDIES UNDER THE WTO REGIME 42-45 (Print Media 2024).
[3] Article 6, Agreement on Implementation of Article VI of GATT, 1994, World Trade Organization, 1994 (WTO).
[4] Supra. 2
[5] Technical Information on Anti-Dumping, World Trade Organization, https://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm#top
[6] D. Spatharis, Trade Defence Instruments: The Union interest test, Retrieved from https://wtocentre.iift.ac.in/conference/pdf/26.pdf (3 September 2025)
[7] Jubilant Ingrevia Limited v. Union of India, Final Order No. 51899/2021, dated 27 October 2021
[8] Apcotex Industries Limited v. Union of India (2023) 7 Centax 86
[9] Devinder Bangia & Arpit Mehra, A missing piece in India’s trade remedy law: Codifying ‘public interest’, Lakshmikumaran Sridharan attorneys, https://www.lakshmisri.com/insights/articles/a missing-piece-in-india-s-trade-remedy-law-codifying-public-interest/# (Retrieved on 5 September 2025)
[10] Hersch Lauterpacht, ‘Private Law Sources and Analogies of International Law (with special reference to international arbitration)’ (1927) p. 335.
[11] C – Hormones, Appellate Body Report, adopted on 13 February 1998 (WT/DS26/AB/R) p. 49, para. 133.
[12] Graham Cook, A digest of WTO jurisprudence on Public International Law concepts and principles (2015) ch 10
[13] Canada – Wheat Exports and Grain Imports, Appellate Body Report, adopted on 27 September 2004 (WT/DS276/AB/R), para. 133
[14] Mariana Clara de Andrade, General Principles of Procedural Law in the Practice of the WTO Appellate Body (2021) International Community Law Review, 444-475, Available From: Brill https://doi.org/10.1163/18719732-12341463 [Accessed 08 September 2025]
[15] Phillip Landolt, The application of public interest norms in international commercial arbitration (2023) Arbitration International, Volume 39, Issue 4, Pages 469 514, https://doi.org/10.1093/arbint/aiad047
[16] Nathalie Bernasconi-Osterwalder and Lise Johnson, Transparency in the Dispute Settlement Process: Country best practices (2011) International Institute for Sustainable Development, Transparency in the Dispute Settlement Process: Country best practices | International Institute for Sustainable Development [Accessed 26 August 2025]