In the late 1990s, China began to formulate anti-dumping rules and use antidumping measures to ensure fair competition in its domestic markets.
The first antidumping regulation was announced in 1997, namely
The Regulations on Antidumping and Countervailing Measures of the People’s Republic of China
(
The 1997 Regulations
). Subsequently, the Chinese legislator has issued a number of other pieces of legislations:
The framework on anti-dumping in China (Regulations and Implementations):
China’s anti-dumping regulations
It is necessary to distinguish the legislation before China’s World Trade Organization accession and after its accession:
Anti-dumping regulations before China’s WTO accession
Anti-dumping issues were mentioned in China for the first time in Article 30 of
The Foreign Trade Law of 1994
(
The Foreign Trade Law of the People’s Republic of China
, adopted at the Seventh Meeting of the Standing Committee of the Eighth National People’s Congress on 12 May 1994, was promulgated by Order No.22 of the President of PR China on 12 May 1994 to take effect as of 1 July 1994, available at the following web site:
http://www.lehmanlaw.com/resource-centre/laws-and-regulations/foreign-investment/foreign-trade-law-of-the-peoples-republic-of-china-1994.html
).
Article 30 of the Foreign Trade Law states that, if products were imported at prices below its normal value, thereby causing substantial damage (or threatens to cause substantial damage) to the relevant domestic industries, the State would take necessary measures to eliminate or reduce such damage (or threat of damage).
The
Foreign Trade Law of 1994
also specified that the department or agency designated by the State Council shall conduct investigations and make rulings based on relevant laws or administrative regulations. However, the language in the
law
was quite general and there were no subsequent regulations to implement it.
The 1997 Regulations
:
It was not until 1997 that the first anti-dumping regulation was adopted in China. On March 23, 1997, the State Council promulgated
The Regulations on Antidumping and Countervailing Measures of the People’s Republic of China, i.e.
the
1997 Regulations
. with immediate effect.
(
The Regulations on Anti-dumping and Countervailing Measures
were issued by the State Council of PR. China on March 23, 1997, available at:
http://www.apeccp.org.tw/doc/China/Competition/cncom03.html
). This was the first regulation to implementing Article 30 of
the Foreign Trade Law of 1994
.
The 1997 Regulations
aimed to ensure fair competition and thus to protect business interests of China’s domestic industries. At the same time,
the 1997
Regulations
also included a clause on possible retaliatory measures against discriminatory anti-dumping or anti-subsiday measures targeting China’s export. (Article 40 of
the 1997 Regulation
states that China may assume corresponding measures against any country or region that adopts discriminatory anti-dumping or anti-subsidy measures against its exports)
In the early to mid-1990s, China lowered its trade barrier considerably in its pursuit to join the WTO. As China’s trade surged in both export and import, there was a growing need for formulating anti-dumping legislations to ensure fair competition.
The 1997 Regulations
consist of 6 chapters and 42 articles, focusing primarily on anti-dumping issue with a number of articles on countervailing duties. It defines
dumping
as an action when the price of an imported product is less than its normal value.
The 1997 regulations
also provided the methods to determine the normal value and the price of an import. Moreover, it includes provisions on the determination of injuries, as well as anti-dumping investigation procedures and measures. The Ministry of Foreign Trade and Cooperation (MOFTEC) and the Customs Bureau have been designated as the responsible government agencies to jointly investigate the existence of dumping action and to determine the dumping margin. At the same time, the State Economic and Trade Commission (SETC) and the relevant State Council departments shall jointly investigate the existence and extent of injuries.
The 1997 Regulations
were later modified and amended after China joined the World Trade Organization in 2001.
China’s anti-dumping regulations after its WTO accession
On December 11, 2001, China became the 143rd member of WTO after 15 years of negotiations. While enjoying various privileges as a WTO member, such as better access to the world market, China is also obliged to its commitments and to abide WTO rules. Following its accession, China has revised its anti-dumping regulations and promulgated new rules on anti-dumping to conform with WTO’s
Anti-dumping Agreement:
The 2002 Regulations
:
On November 26, 2001, the State Council issued
The Regulations of the People’s Republic of China on Anti-dumping,
which was to take effect on January 1,
2002 (
the 2002 Regulations
, available at the following web-site:
https://hk.lexiscn.com/law/law-english-4-0439FA183.0000747B.73DA.html
), in replacement of the
1997 Regulations
on antidumping.
Compared to the
1997 Regulations
,
the 2002 regulations
represents a significant improvement. Issues on countervailing measures7 are not included in
the
2002 Regulations
and are regulated by separate rules.
The 2002 Regulations
consisted of 6 chapters with 59 articles, which covered several provisions on investigations and applications of anti-dumping measures, including
general provisions
;
dumping and injury
;
anti-dumping investigation
;
antidumping
measure
;
duration of anti-dumping duties and price undertakings
;
administrative review
; and
supplementary provisions
.
According to the
2002 Regulations
, MOFTEC shall be responsible for the investigation and determination of dumping. The
2002 Regulations
reduce the number of government agencies for formulating specific implementing measures to only MOFTEC and SETC (State Economic and Trade Commission). Following the streamlining and clarification, a number of legal documents have been promulgated for the implementation of the regulation. These include:
-
Provisional Rules on Initiation of Anti-dumping investigation
, promulgated by MOFTEC on 10 February 2002, and effective as of 13 March 2002;
-
Provisional Rules on Questionnaire in Anti-dumping Investigations
, promulgated by MOFTEC on 13 March 2002, and effective as of 15 April 2002;
-
Provisional Rules on Sampling in Anti-dumping Investigations
, promulgated by MOFTEC on 13 March 2002, and effective as of 15 April 2002;
-
Provisional Rules on Disclosure of Information in Anti-dumping Investigations
, promulgated by MOFTEC on 13 March 2002, and effective
as of 15 April 2002;
-
Provisional Rules on Price Undertakings in Antidumping Investigations
, promulgated by MOFTEC on 13 March 2002, and effective as of 15 April 2002;
-
Provisional Rules on Refund of Anti-dumping Duty
, promulgated by MOFTEC on 13 March 2002, and effective as of 15 April 2002;
-
Rules on Investigations and Determinations of Industry Injury for Antidumping
, promulgated by SETC on 13 December 2002, and effective as at 15 January 2003.
Jointly, the above legal documents have formed a relatively comprehensive framework for conducting investigations and applying measures on anti-dumping.
Nonetheless, China’s anti-dumping regulations continued to be modified with the latest revision completed in 2004 (known as
the revised 2002 Regulations
or
the 2004
Regulations
).
The 2004 Regulations
:
On March 31, 2004, the State Council announced its decision to modify
the Regulations of the People’s Republic of China on Anti-dumping
, which was to take
effect on June 1, 2004 (
The 2004 Regulations
).
http://www.chinamining.org/Policies/2006-08-07/1154937124d482.html
The 2004 Regulations
include a number of minor changes to
the 2002 Regulations
. Firstly,
the 2004 Regulation
s reflect an institutional change10 in antidumping investigating authorities. The Ministry of Commerce (MOFCOM, please note that in March 2003, the MOFTEC went through a reorganization and was renamed the Ministry of Commerce (MOFCOM)) shall be responsible for the investigation and the determination of both dumping and injury.
Secondly, the revised
2004 Regulations
encourage the authorities to take “public interest” into consideration when accepting an offer of price undertaking (Article 33) and provide that the collection of anti-dumping duty shall conform to the public interests (Article 37). Thirdly, the
2004 Regulations
also stipulate that MOFCOM may take necessary measures to collect retroactive anti-dumping duties after launching an investigation (Article 44).
Determination of import dumping in China:
Dumping:
An imported product is regarded as being dumped if it is introduced (in the ordinary course of trade) into China’s market at an export price less than its normal value (Article 3, Chapter II,
the 2004 Regulations
).
MOFCOM shall be responsible for the investigation and the determination of dumping.
Normal value:
The normal value of an import into China is defined as the comparable price of a like product in the exporting country in the ordinary course of trade (Article 4, Chapter II,
the 2004 Regulations
).
In cases where there is no like product on sale in the domestic market of the exporting country (or the price and the quantity of such sales do not permit a fair comparison), the normal value shall be determined in either of the following two ways:
(a) comparable price of the like product exported to a third country;
(b) production costs of the like product in the original country plus a reasonable mark-up for expenses and profits.
Export price:
There are three options for determining export price (Article 5, Chapter II,
the 2004 Regulations
):
(a) the price actually paid for the imported product;
(b) the price at which the imported product is resold for the first time to an independent buyer (applied in the case where export price does not exist or the price is unreliable);
(c) the price reconstructed by MOFCOM on reasonable basis (applied in the case where the imported product is not resold to an independent buyer or is not resold in the condition as imported).
Dumping margin:
The margin of dumping is the amount by which the export price of an imported product is less than its normal value (Article 6, Chapter II,
the 2004
Regulations
).
Export price and normal value should be compared by fair and reasonable means, taking into consideration various comparable factors which affect price.
Determination of Injury
There are three types of injury: (i) material injury to an established domestic industry; (ii) threat of material injury to an established domestric industry; or (iii) creation of obstacles to the establishment of corresponding domestic industry (Article 6, Chapter II,
the 2004 Regulations
).
MOFCOM shall be responsible for the investigation and determination of injury. It shall examine the following factors to determine injury:
(a) quantity of dumped imports, both in absolute amount and in market share;
(b) prices of dumped imports, including any reduction in such prices and the effect on the prices of like domestic products;
(c) effect of the dumped products on various economic indicator of the domestic industry;
(d) production capacity, export capacity and “inventory situation” of the exporting country;
(e) other factors causing injury to the domestic industry.
It is required that there must be a causal relationship between the injury and dumping action.14
Anti-dumping investigation
A domestic industry, or an individual, or a legal entity or an organization which represents the domestic industry can apply for an anti-dumping investigation.
An anti-dumping investigation may be initiated if the application is supported by domestic producers whose output satisfies both of the following conditions (Article 17, Chapter III,
the 2004 Regulations
):
(a) Above 50% of the total like output is produced by domestic producers expressing either support or opposition to the application;
(b) At least 25% of the total like output is produced by the domestic industry.
Governing Authorities
There are three governing authorities in China that are involved in the investigation and administration of anti-dumping, including: (i) MOFCOM; (ii) Tariff Commission of State Council (TCSC); and (iii) the General Adiministration of Customs (GAC).
i)
MOFCOM:
MOFCOM is responsible for initiating anti-dumping cases, conducting investigations, and submitting recommendations on anti-dumping measures to TCSC.
Within MOFCOM, the investigation function is assumed by two bureaus: the Bureau of Fair Trade for Imports & Exports (BOFT) and the Investigation Bureau for Industry Injury (IBII). BOFT takes charge of dumping margin investigation, while IBII analyses injury to the domestic industry as well as the causal link between theaccused and the injury (Appendix Figure 1)
ii)
TCSC:
TCSC is responsible for making decisions on the imposition of provisional anti-dumping duties (Article 29, Chapter IV,
the 2004 Regulations
) and definitive anti-dumping duties (Article 38, Chapter IV,
the 2004 Regulations
). In addition, TCSC makes decisions on the refund of extra duties (Article 46, Chapter IV,
the 2004
Regulations
) based on MOFCOM’s proposals.
TCSC shall review and decide whether to confirm MOFCOM’s recommendations. When MOFCOM’s recommendations are confirmed, such recommended measures are final and would be published in MOFCOM’s Gazette.
iii)
GAC:
GAC is under the direct judiciary of the State Council and is in charge of administering China’s customs offices.
GAC’s Department of Duty Collection and Administration is responsible for implementing TCSC’s decisions on anti-dumping measures including collecting provisional and definitive anti-dumping duties and refunding extra duties (Article 29, 38, and 46, Chapter IV,
the 2004 Regulations
).
Substantially what was exposed above represents the China’s framework for anti-dumping. All the regulations and the laws mentioned are to be considered when the authorities are asked to examine a case. However the main reference remain the revised 2002 Regulations also known as the “The 2004 Regulations”.
Cristiano Rizzi