Regulatory Controls on Trade Part II

1
Regulatory Controls on Trade Part II

• Donald J. Lewis
• Faculty of Law
• The University of Hong Kong

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Rationale for Chinas Anti-dumping Legislation

• Substantial unilateral reduction in Chinas
  tariff rates and elimination of NTBs (e.g.,
  import quotas) as a result of WTO Accession
• Trade protection is necessary to protect Chinas
  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

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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

4
PRC Anti-Dumping Authorities

• MOFTEC (Fair Trade Bureau)
• Receives anti-dumping petitions
• Conducts investigations on foreign dumping and
  dumping margins
• Makes preliminary and final determinations of
  dumping
• Makes provisional and final recommendations re
  anti-dumping duties

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• 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
• Customs General Administration (CGA)
• Enforces anti-dumping measures, including
  anti-dumping duties
• Customs Tariff Commission (CTC)
• Determines provisional and final anti-dumping
  duties on recommendation of MOFTEC

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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

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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

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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 value
• 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 transaction

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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

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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

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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
  

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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
  product

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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

14
Illustrative Cases

• As of January 2002, 12 anti-dumping
  investigations under the prior 1997 Anti-Dumping
  and Anti-Subsidy Regulations
• 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

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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.

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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.

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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.

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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

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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 petitioner
• Problems of confidential information
• Ex parte contacts and conflicts of interest
• Insufficiency and lack of transparency of
  MOFTEC/SETC preliminary and final determinations