Trade Protectionism The Case of Antidumping

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Trade Protectionism The Case of Antidumping Powered By Docstoc
					Regulatory Controls on Trade –
            Part II
           Donald J. Lewis
            Faculty of Law
      The University of Hong Kong
           Rationale for
  China’s Anti-dumping Legislation
• Substantial unilateral reduction in China’s tariff
  rates and elimination of NTBs (e.g., import quotas) as
  a result of WTO Accession
• Trade protection is necessary to protect China’s
  inefficient SOEs against international competition
• Trade retaliation mechanism available to China to
  combat WTO Members’ (e.g., US and EU) anti-
  dumping actions against China
           Relevant Legal Texts

• PRC Foreign Trade Law
• PRC Anti-Dumping Regulations (2002)
• Article VI, GATT 94
• WTO Anti-Dumping Agreement
• WPAC, paras 148 and 152
    PRC Anti-Dumping Authorities
(1) MOFTEC (Fair Trade Bureau):
•   Receives anti-dumping petitions
•   Conducts investigations on foreign dumping and dumping
•   Makes preliminary and final determinations of dumping
•   Makes provisional and final recommendations re anti-
    dumping duties
(2) State Economic and Trade Commission (SETC)
    (Bureau of Industry Injury Investigation):
•   Conducts investigations of injury to the relevant PRC
    domestic industry
•   Makes preliminary and final determinations of injury

(3) Customs General Administration (CGA):
•   Enforces anti-dumping measures, including anti-dumping

(4) Customs Tariff Commission (CTC):
•   Determines provisional and final anti-dumping duties on
    recommendation of MOFTEC
     Anti-Dumping: Basic Features
Definition of “Dumping”:
PRC Anti-Dumping Regulations provide:
• Importation of a product at an export price lower than
  its “normal value” in the ordinary course of trade
• “Normal value” is usually determined on the basis of
  the comparable price for the like product in the
  country of export
     Anti-Dumping: Basic Features
“Export Price” Determination:
PRC Anti-Dumping Regulations provide:
• Export price is the purchase price; OR
• If no identifiable or reliable export price, the re-sale
  price; OR
• If no resale price, MOFTEC will infer export price
  “on a reasonable basis”
     Anti-Dumping: Basic Features
“Dumping Margin”:
PRC Anti-Dumping Regulations provide:
• The “dumping margin” is the differential between the
  export price of the imported product and its “normal
• Methods of determining the “dumping margin”:
• Weighted average normal value vs weighted average export
  price; OR
• “Average value” vs export price per transaction; OR
• Weighted average normal value vs. export price per
     Anti-Dumping: Basic Features
Definition of “Injury”:
PRC Anti-Dumping Regulations provide:
• “Injury” means:
• substantial injury or threat of substantial injury to a
  related established domestic industry caused by
  dumping; OR
• substantial impediment to the establishment of a
  related domestic industry caused by dumping
      Anti-Dumping: Basic Features
Injury determination: relevant factors
PRC Anti-Dumping Regulations provide:
•   volume of dumped products
•   price of the dumped product
•   impact of the dumped product on the related industry
•   production and export capacity and stockpiles of the
    dumped product in country of export
     Anti-Dumping: Basic Features
Definition of “Domestic Industry”:
PRC Anti-Dumping Regulations provide:
• All producers of the like product in China; OR
• Producers whose total output of the like product
  accounts for a majority of output in China; OR
• In special cases, producers for a regional market may
  be regarded as a separate “domestic industry”
     Anti-Dumping: Basic Features
Definition of “Like Product”:
PRC Anti-Dumping Regulations provide:
• “Like product” means:
• The same product as the dumped product; OR
• A product “very closely resembling” the dumped
     Anti-Dumping: Basic Features
“Standing” to Petition:
PRC Anti-Dumping Regulations provide:
• 50% Rule: if output of petitioners accounts for more
  than 50% of total output of petitioners and
  respondents, petition is deemed to be that of the
  domestic industry and will be accepted by MOFTEC
• In special cases, MOFTEC may sua sponte initiate its
  own dumping investigations
               Illustrative Cases
• As of January 2002, 12 anti-dumping investigations
  under the prior 1997 Anti-Dumping and Anti-Subsidy
• Six (6) cases have led to final determinations
• In five (5) of those cases, anti-dumping duties were
  assessed against foreign importers; the sixth case was
  dismissed as Chinese producers failed to prove
  causation (i.e. Polystyrene case)
• At least six (6) additional cases currently pending
                 Illustrative Cases
Pre-WTO Accession Cases: Issues
Russian Silicon Steel
• “Like products”
  Russian exporters submitted evidence of major differences
  between two types of silicon steel to establish that the two
  types of steel were different products. The Chinese petitioner
  appeared to concede that the types of steel were not like
  products by requesting different dumping margins for each
  type of steel. MOFTEC and SETC ignored this evidence and
  found that imported silicon sheet was one “like product”.
                 Illustrative Cases
Russian Silicon Steel
• Injury Determination
  Russian exporters submitted evidence that Russian silicon
  steel imports accounted for only 2% of the PRC market and
  that this percentage was in fact decreasing. Further, the
  Russian exports were sold primarily in one region, Northeast
  China, whereas the products of the Chinese petitioner were
  sold in a different region, Central and South China. SETC
  disregarded such evidence on the issues of “substantial injury”
  and causation.
                 Illustrative Cases
Japanese and Korean Cold-Rolled Steel
• Injury Determination
  Japanese exporters submitted evidence that the Chinese
  petitioners’ business was in fact prosperous and there was no
  apparent injury. Further, that PRC government authorities in
  charge of the Chinese steel industry had published reports that
  Chinese production problems were caused by technology and
  management issues, not competition from foreign imports.
  SETC disregarded such evidence in its preliminary
  determination that injury had occurred.
     Current Situation: An Assessment

• 2002 PRC Anti-Dumping Regulations are a
  substantial improvement over prior 1997 regulations
• 2002 Regulations closely track the WTO Anti-
  Dumping Agreement in many respects
• Judicial Review: now available (Article 53) in line
  with WTO Anti-Dumping Agreement
   Current Situation: An Assessment
• Continuing Problem Areas:
• Transparency and Procedural Fairness
• Opportunity to be heard remains compromised
• Limited access to evidence and arguments of the Chinese
• Problems of “confidential information”
• Ex parte contacts and conflicts of interest
• Insufficiency and lack of transparency of MOFTEC/SETC
  preliminary and final determinations

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