Globalisation

China is top of the list for anti-dumping lawsuits

In recent years, China is the World Trade Organization member most accused of anti-dumping behaviors. Has China improved since its accession to the WTO? A recent report from the WTO states:

During the period from 1 July to 31 Dec 2002, among the 149 anti-dumping lawsuits, 27 cases involving China are under investigation. The figure is lower than previous years. But China is still top of the list for anti-dumping lawsuits.

Chinese enterprises suffer seriously

Relevant figures reveal: 1979 investigations into anti-dumping were launched during the period from 1995 to 2002. Of which, some 278 (or 14%) involved China. The cases covered manufactured goods such as iron and steel products, machines, color television sets, multi-use electric lights, door locks, and agricultural produce such as garlic.

Among these anti-dumping cases, Chinese enterprises obtained favourable ruling in about 30%. For the rest, enterprises were given extremely high tariff, suffering big losses.

In July 2001, the European Commission announced a ruling concerning multi-use light products, which are manufactured by thousands of factories in China.

Of these factories, only two were granted either zero tariff, or charged a tariff rate of 8.45%. These two particular factories are owned by Hong Kong business. The rest were punished with over 200% tariff rate.

In 2001, there was an anti-dumping lawsuit involving an Egyptian enterprise suing Chinese enterprises for cutlery. 86 enterprises in Guangdong Province were involved. The ruling was a big surprise to everybody since the tariff rate became 305%. It led to big loss by the Guangdong enterprises and forced them to withdraw from the North Africa market.

In the same period, there was an anti-dumping lawsuit for pottery construction materials. The Guangdong enterprises were punished with a tariff rate of 247%.

As for anti-dumping lawsuits for bicycles involving European and American markets, the majority of Chinese enterprises were fined with a tariff rate of 186.09%.

By some rough estimates of 500 anti-dumping lawsuits involving Chinese enterprises, the total amount involved was above 10 billion US dollars.

Counting the cost

After much suffering in the international market, Chinese enterprises eventually learn the lesson that an ideal trade environment does not come from the gods. Chinese enterprises cannot play passive or simply try to avoid losses. The right way is to give up fancy, toe sensibly the WTO line, and be ready to face possible lawsuits.

In June 2002, Maanshan Iron & Steel Company Ltd. commissioned an American law firm, O'Melveny & Myers LLP and after one year won an anti-dumping lawsuit on H-type steel. This is encouraging to the whole steel industry, which has suffered so much from anti-dumping allegations.

After that, Chinese enterprises began to defend themselves.

Beginning in mid 2002, Chinese enterprises began to adopt an unprecedented toughness with anti-dumping allegations. The reaction rate on the lawsuits was 70%. The winning rate was higher than before. This proves that Chinese enterprises have become better in safeguarding their legitimate rights and interests.

On 12 May, the PRC Ministry of Commerce made a preliminary ruling on an anti-dumping lawsuit on imported PVC (polyvinyl chloride), determining that the United States, Korea, Japan, Russia and Taiwan show dumping behavior in importing PVC products to China. The act is a boost to PVC manufacturers on China. Anti-dumping investigation should be launched in the five countries.

According to expert analysis, the preliminary ruling made by the Ministry of Commerce will in the long run give a boost to the gloomy chemical manufacturing industry in China.

It was not the first case for China to take a first move against anti-dumping behaviors of enterprises in overseas countries. According to s official figures, China launched investigation in 2002 for 10 anti-dumping cases on imported goods. Of these, one case requires second ruling. Another one led to the adoption of protection measures. Industries in China have been learning how to protect their interests in line with the WTO regulations.

At present, the number one television production company “Chang Hong” in Sichuan is involved in a multi-billion dollars anti-dumping lawsuit. The Ministry of Commerce called an emergency meeting with the enterprise concerned and the Machinery and Electronics Association.

Speaking to the media, an official of the Fair Trade Bureau of the Ministry of Commerce made clear the position of his government.

According to the official, in order to safeguard normal international trading environment, and protect the legitimate rights and interests of Chinese enterprises, the Chinese Government would do its best to guide and to help the concerned enterprises to defend themselves.

Given the current keen competition in international trade, it can be imagined that Chinese manufacturing goods for export will face more and more challenges. It is not going to be easy, but we believe Chinese enterprises can beat them.

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By Zhong Xin, China Reform Daily, 2003