Why are Chinese firms always the targets of anti-dumping investigations?
2020-05-26    [Source:PUdaily]
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Pudaily,China -- In 2019, the value of China's exports reached 1.723 billion yuan, up 5%. Meanwhile, China’s imports were valued at 14.31 trillion yuan, up 1.6%. This resulted in a trade surplus of 2.92 trillion yuan, up 25.4%. At the end of 2001, China acceded to the WTO. In the following year, Chinese mainland was subject to 12 antidumping investigations, ranking first among WTO members. China has suffered the biggest number of anti-dumping investigations for 24 consecutive years. these investigations account for about a quarter of the global total.

 

Anti-dumping means taking measures to resist the dumping of foreign goods on domestic market. One of such measures is imposing additional duty (which is called "anti-dumping duty") in addition to the general import tariff to prevent foreign goods from being sold cheaply. When a country should resort to anti-dumping measures is clearly specified in the General Agreement on Tariffs and Trade. But in practice, many countries arbitrarily impose anti-dumping duties, using them as the main means of squeezing out imported goods.

 

Why have Chinese firms frequently become the subjects of anti-dumping investigations by foreign countries? PUdaily believes that there are three reasons.

First, as China's exports increase steadily, its firms would inevitably encroach on the market shares of their rivals in foreign countries, thus resulting in conflicts.

Second, China is not recognized as a market economy. When acceding to WTO, China signed the Protocol on China's Accession to the WTO. According to Article 15 of the Protocol, other WTO members reserve the right not to recognize China's market economy status within 15 years after China's accession to WTO. This stipulation has enabled some foreign countries to use anti-dumping measures to protect their economic interests once their companies were put at a disadvantage in the competition with their Chinese competitors. For a long time, China's major trading partners such as the United States and the European Union have been unwilling to recognize China as a market economy. Using the analogue country method, they often concluded that China was dumping its products on their markets. When the 15-year term of protection expires, "even if the United States and the EU still refuse to recognize China's market economy status, Chinese firms would receive fairer treatment and be subject to lower anti-dumping duties when subject to foreign countries’ anti-dumping measures," said Tu Xinquan, Dean of China Institute for WTO Studies of the University of International Business and Economics.

Third, Chinese firms lack the ability to deal with anti-dumping investigations. Many Chinese firms have been subject to anti-dumping investigations. However, few of them counterpleaded, but rather chose not to appear in court. Their lack of mettle has encouraged foreign countries’ arbitrary dumping allegations. Besides, Chinese firms’ ability to respond to anti-dumping investigations lags far behind their peers in other countries. For example, their statements of defense are usually prepared by foreign lawyers, rather than domestic lawyers. In addition, compared with many large foreign companies, which have their own chief risk officers, most domestic firms have not set up such post.

 

Thus Chinese firms still have a long way to go before they can be free from anti-dumping investigations.

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