Chapter
Four Trade
Remedies
A WTO member may be able to avail itself of
three trade remedies under specific conditions, i.e. anti-dumping,
countervailing or safeguard remedies. With tariff and non-tariff barriers
reduced and eliminated over time, these trade remedies have become an important
part of trade policies and laws for WTO members.
I.
New Developments of Trade Remedy Mechanism
in Shanghai
After accession to the WTO, China enjoyed strong export growth. Out of
economic and political considerations, some WTO members have resorted more
frequently to anti-dumping and other trade remedies against Chinese products.
As the largest port in China, Shanghai has keenly experienced such great impact.
Take anti-dumping and safeguard measures as an example. In 2001, Shanghai was involved in 13 cases initiated. The
number jumped to 22 in 2002, and 23 in 2003, while the
amount of individual cases has also seen a considerable rise. Once a case
affecting tens of millions of US$ worth exports nation-wide, or millions of US$
worth exports in Shanghai locally was considered as a serious case. Now every
year there are several cases valued ten times as much in Shanghai and other parts of China. 2001 saw the anti-dumping cases against
cold- and hot-rolled steel sheets, and welded steel pipes, 2002 ball-bearings
and non-forged cast-iron pipe fitting, and 2004 color TVs and wood furniture.
Over tens of thousands of US$ worth exports were affected in Shanghai.
Confronted with the new situation after WTO
accession, Shanghai has taken steps to set up an effective
fair trade mechanism in order to promote fair trade and protect the right to
fair trade for Shanghai exporters. Firstly, education and training on
anti-dumping laws have been strengthened. Under the auspices of the Shanghai Municipal
Economic Relations and Foreign Trade Commission (SMERT), a series of training
sessions on anti-dumping were conducted for business managers, merchandisers of
trading companies, financial staff and other key people. Columns on
anti-dumping were opened in newspapers to introduce international trends in
anti-dumping and relevant international laws as well as laws of other
countries. Secondly, special organizations or institutions have been
established to offer support. SMERT, the Shanghai International Chamber of
Commerce, the Foreign Trade Business Association and other organizations have
one after another set up Fair Trade Departments, staffed with full-time personnel.
All trade disputes from 1979 to 2003 have been reviewed and compiled into a
fair trade databank, consisting of information on over 600 cases. Thirdly, more
efforts have been devoted to help exporting businesses deal with anti-dumping
cases. Necessary information, legal advice and assistance were offered upon
request.
There has been an apparent improvement of
both willingness and capabilities of exporting enterprises in Shanghai to cope with trade protectionism from
other countries. Having gone through over 10 times of anti-dumping
investigations, and having actively responded to the steel global investigation
by U.S under Section 201 of the Tariff Act of 1974, the Baoshan
Steel Co. Group has effectively protected its legitimate interests by hiring
lawyers, preparing documents, responding to investigations, and collecting
statistics.
At present, exporting enterprises in Shanghai have acquired the consciousness and
capability to deal with anti-dumping cases initiated by other countries. Among
large-sized enterprises, there are a group of managers, legal and financial personnel
who have accumulated a wealth of experience in dealing with anti-dumping. A
number of foreign law firms and consultancy companies have also established
long-term cooperation with the Shanghai Foreign Trade Business Association
after providing satisfactory legal and consulting services to Chinese
enterprises.
II.
Number and Outcome of Anti-dumping Cases
and Safeguard Measures against Shanghai
Exports
In 2003, 18 anti-dumping
cases, 1 safeguard, 3 special safeguard measures, and 1 technical barrier case
were raised against exports from Shanghai enterprises, among which, 2 have been
awarded the final decisions while others still pending.
III.
Number and Outcome of Anti-dumping Cases by
Shanghai
Enterprises against Imports
Since the first ever anti-dumping case
against press print from Canada, U.S. and Korea, till the end of December 2003, China has initiated a total of 26 anti-dumping
investigations against imports, among which, 1 in mid-term investigation, 2
awarded non-injury decision, 16 imposed anti-dumping duties, and others in the
process of review.
By the end of December 2003, Shanghai enterprises had participated in 7
anti-dumping cases against imports, mainly in the sector of chemical products
and steel products.
IV.
The Monitoring and Early-Warning
Information System for Trade Remedies in Shanghai
Since the first anti-dumping investigation
against Chinese saccharin initiated by EU in 1979, Chinese exports have been
subject to over 500 anti-dumping investigations. According to statistics from
the WTO, in the period from its establishment in 1995 to early 2003, a total of
324 anti-dumping investigations have been initiated against China by its members, making China the number 1 target.
To resolve the difficulties in dealing with
anti-dumping cases caused by lack of information, encourage Chinese enterprises
to respond actively, raise the competitiveness of Chinese products in the world
market, and to reduce adverse impact caused by unfair trade, as well as to
provide Chinese enterprises and government agencies a service platform backed
up by information and legal expertise in dealing with trade disputes, the WTO
Action Plan Leading Team of the Shanghai Municipal Government entrusted the
Shanghai WTO Affairs Consultation Center (SCC/WTO), the Shanghai Information
Center and SMERT to jointly develop an early-warning and consulting service
system for anti-dumping from May 2001.
As a monitoring and quick-response
mechanism for trade remedies, it is similar to other projects home or abroad.
For example, the industry injury early-warning system against imports developed
by the Chinese Ministry of Commerce, the trade remedy firewall of Taiwan, the global monitoring network of Japan
External Trade Organization (JETRO)and Korean Trade
Promotion Cooperation, and the statistical monitoring for major importing
countries of the American Department of Commerce.
Compared with similar projects home and
abroad, the early warning and consulting service system for anti-dumping
developed by Shanghai focuses the monitoring on exports. It has its proprietary
intellectual property rights, is developed at low cost and is operated on a
market basis. In developing the system, the guideline was to develop an alert
system which can exercise real-time monitoring of anti-dumping information from
major WTO members against Chinese exports, an accurate system based on customs
statistics, a scientific system programmed according to anti-dumping laws and
procedures of major WTO members, a standard system with a combination of
expertise and information technology, a long-term system incorporating
monitoring, early-warning and assessment, consulting, and training, and an evolving
system which is able to extend monitoring into other trade remedies.
The goal of the anti-dumping early-warning
and consulting service system is, on the basis of giving dynamic early-warning
and consulting services on the trend whether there is dumping by Chinese
exports and whether it has caused injury to like industries in specific custom
areas, it can serve as a system and working platform able to provide both
online and offline early-warning and consulting service on the trend whether
there exists dumping by Chinese exports to major trading partners and whether
there is injury to like industries of importing countries making similar products.
The clients of the system include
government agencies at all levels, enterprises, trade associations and
professional service providers of all kinds registered in China. The development of the anti-dumping
early-warning and consulting service system has offered a practical service
platform for Chinese exports producers and distributors to adjust timely export
quantities and export price so as to uphold the principle of fair trade, raise
competitiveness in the world market and avoid unfair trade treatment.
The system works along the model whereby,
upon request from clients, it will give corresponding early-warning signals
through system monitoring, and a final early-warning report will be issued
after consulting with experts. In the process, built-in data warehouse, data
base and knowledge base serve as the important back and guarantee for normal
operation of the system.
At present, system version V1.0 to monitor
anti-dumping by U.S. against China is about to be completed. V1.0tasaic, a
derivative of V1.0, developed for monitoring safeguard measures by U.S. against Chinese textiles, has also been
put into pilot use.
System V1.0 and V1.Otasaic are developed on
the basis of relevant U.S. laws and practices. Both have utilized
modern mathematical statistics and information technologies as well as
artificial intelligence to conduct real-time dynamic monitoring of quantities
of exporting products, price trends, dumping margins and extent of industry injury.
Through consultation with experts, a decision is made on whether to give an
early-warning signal. It also offers forward-looking and practical consulting
and training services as well as detailed case studies.
Box
4.1 China’s
WTO Accession Commitments (Anti-dumping)
During the WTO accession negotiations, China and WTO members agreed to a specific
provision on anti-dumping investigation, stated in Article 15(a) in China’s Accession
Protocol as follows, “The importing WTO member shall terminate the use
of third country substitute price in anti-dumping investigations against
Chinese products 15 years after the date of its accession. During the 15-
year transition, the importing WTO member may still use substitute price
for setting dumping margin against Chinese products. However, if the
producers under investigation can clearly show that market economy
conditions prevail in the industry producing the like product with regard
to the manufacture, production and sale of that product, the importing WTO
Member shall use Chinese prices or costs for the industry under
investigation in determining price comparability in accordance with the “Anti-dumping Agreement” of the WTO.”
There are detailed specifications on the standard for invoking this
article, its definition and procedure in the Working Party Report to prevent possible abuse. Other WTO
members are under duty to grant Chinese producers under investigation
market economy treatment when they can clearly show their products are
produced, sold and priced under market economy conditions.
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Box
4.2 China’s
WTO Accession Commitments (Subsidies and Countervailing)
China’s commitments on subsidies are set
forth in Article 10 of the Accession
Protocol. China commits to fulfill the following
obligations: China shall notify WTO of any
subsidy within the meaning of Article 1 of the Agreement on Subsidies and Countervailing Measures ("SCM
Agreement"); China shall eliminate all prohibited
subsidy programs upon accession. China commits to phase out the following subsidies:
subsidies provided by the central budget to certain loss-incurring
state-owned enterprises, export-performance-based favors of access to loans
and foreign exchanges, favorable tariff rates granted according to domestic
content of car making, and etc.
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Box
4.3 Transitional
Product-Specific Safeguard Mechanisms
During
the WTO accession negotiations, certain WTO members were worried about the
potential adverse impact and injury on their domestic markets and
industries caused by a surge of Chinese exports after its accession to WTO.
Therefore, they asked for a transitional product-specific safeguard
mechanism against Chinese exports. This mechanism was finally adopted in
Article 16 of China’s Accession
Protocol, which specifies that in cases where products of Chinese
origin are being imported into the territory of any WTO Member in such
increased quantities or under such conditions as to cause or threaten to
cause market disruption to the domestic producers of like or directly
competitive products, the WTO Member so affected may request consultations
with China with a view to seeking a mutually satisfactory solution. If, in the
course of these bilateral consultations, it is agreed that imports of
Chinese origin are such a cause and that action is necessary, China shall take such action as to prevent
or remedy the market disruption. If consultations do not lead to an
agreement between China and the WTO Member concerned, the WTO
Member affected shall be free, in respect of such products, to withdraw
concessions or otherwise to limit imports only to the extent necessary to
prevent or remedy such market disruption. According to the Protocol and the Working Party Report, application of
this mechanism shall be terminated 12 years after the date of accession.
For 2 years since China joined the WTO, 4 WTO members have
initiated a total of 8 special safeguard measures against China, which have attracted great attention
from the Chinese government. Most of these cases were resolved after
consultation.
For textiles and apparel, a strongly competitive product for China, a special transitional safeguard
mechanism was agreed during China’s accession negotiations. According to
paragraph 242 of the Working Party
Report, before 2008, if there is market disruption caused by a surge of
textile exports from China, other WTO members are permitted to resume restraint
limits, which, however, should keep an appropriate increase, (7.5% for
cotton products, and 6% for wool product categories), and the restraint can
only be used once against one product within 4 years with a duration of one
year, and can’t be repeated against the same product. In November 2003,
after long deliberation, the United States imposed special transitional safeguard
measures against Chinese knitted fabric, robes, and brassieres.
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Box
4.4 New Developments in China’s
Trade Remedy System
To seek fair trade, China has developed and gradually improved
its own trade remedy system on the basis of relevant WTO rules and
experiences of developed countries.
The principal legal
framework for anti-dumping is the “Foreign
Trade Law of P.R.C” coming into force on July 1st,
1994, the “Anti-dumping Regulation of P.R.C”
effective on January 1st, 2002, and other rules and regulations on
anti-dumping investigation proceedings issued by the Ministry of Foreign
Trade and Economic Relations (MOFTEC). The legal framework for countervailing
consists of the “Foreign Trade Law of
P.R.C” promulgated in 1994, the “Countervailing
Regulation of P.R.C” issued on December 11, 2001 and supporting provisions for its
implementation. Article 29 of the “Foreign
Trade Law of P.R.C” constitutes the basis for the implementation of
safeguard measures. In December 2001, the “Safeguard Regulation of P.R.C” was issued by the State Council.
With a series of other provisions issued governing its implementation, a
complete legal system for safeguard measures has now taken shape.
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Box 4.5 2003 Statistics on Anti-dumping against
Shanghai Exports
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Serial number
|
Initiating
country/region
|
Case title
|
Date of
initiation
|
Product involved
|
Final ruling
|
|
1
|
India
|
Titanium dioxide
|
Jan. 16, 2003
|
Chemicals
|
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2
|
Thailand
|
Citric acid
|
March 6, 2003
|
Chemicals
|
28.7%
anti-dumping duty for Shangdong Lemon Bio-chemical Co. Ltd., and 38.1% for
other companies
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3
|
Turkey
|
Door lock
|
April 11, 2003
|
Light industry
|
1.6 US$ per piece for round door locks (except
electro-mechanical); 1.77 US$ for other door locks (except
electro-mechanical), 0.74 US$ for lock barrel and lock shell
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4
|
Mexico
|
Perambulator
|
April16,
2003
|
Machinery &
electrical
|
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5
|
Ukraine
|
Citric acid
|
May 6, 2003
|
Chemicals
|
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6
|
U.S.
|
Color TV
|
May 22, 2003
|
Machinery &
electrical
|
|
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7
|
EU
|
Polyester
chipper
|
May 22, 2003
|
Chemicals
|
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8
|
Turkey
|
Plastic
automatic pencil and ball-pen
|
May 22, 2003
|
Light industry
|
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9
|
India
|
Polyether
polyatomic alcohol
|
May 22, 2003
|
Chemicals
|
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10
|
South Africa
|
Acrylic fabrics
|
May 28, 2003
|
Textiles
|
|
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11
|
U.S.
|
Polyethylene
shopping bag
|
July 10, 2003
|
Light industry
|
|
|
12
|
U.S.
|
Standing
metal-face ironing board
|
July 21, 2003
|
Light industry
|
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13
|
EU
|
Plywood
|
Aug. 19, 2003
|
Light industry
|
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14
|
Australia
|
Hot-rolled plate
|
Aug. 20, 2003
|
Hardware &
minerals
|
|
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15
|
India
|
Curtain fabric
|
Oct. 29, 2003
|
Light industry
|
|
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16
|
New Zealand
|
Zinc-coated wire
|
Oct. 31, 2003
|
Light industry
|
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17
|
Canada
|
Wooden window
shades and boxing shutter
|
Nov. 21, 2003
|
Light industry
|
|
|
18
|
U.S.
|
Bedroom
furniture
|
Dec. 11, 2003
|
Light industry
|
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Box
4.6 2003 Statistics
of Safeguard and TBT Measures against Shanghai
Exports
|
Serial Number
|
Initiating
country/region
|
Case title
|
Case category
|
Date of
initiation
|
Product involved
|
Final ruling
|
|
1
|
Philippines
|
Figured glass
|
Safeguard measures
|
April 15, 2003
|
Light industry
|
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2
|
U.S.
|
Purple natural
and synthetic rubber protecting gloves
|
Section 337
investigation
|
Nov. 20, 2003
|
Light industry
|
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Box
4.7 2003 Statistics on Special Safeguard
Measures against Shanghai
Exports
|
Serial Number
|
Initiating
country/region
|
Case title
|
Date of
initiation
|
Product involved
|
Final ruling
|
|
1
|
U.S.
|
Chinese knitted
fabric, robe, and brassiere
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