Anti-dumping laws have been implemented to protect domestic markets from surges of under-priced, imported goods.
Under Article VI: 1 of the General Agreement on Tariffs and Trade (GATT), dumping occurs when an exporter introduces products into a foreign market at less than normal value. Normal value is typically calculated by the market value of the product in the exporter’s home country.
GATT Article VI condemns the practice of dumping when it injures or threatens to cause injury to the local economy of the importing country. The GATT allows all countries to impose an anti-dumping duty when dumping has occurred in order to prevent pricing discrimination.
A domestic industry that believes it is being injured by dumped imports may petition its government to initiate an anti-dumping investigation, which may result in an anti-dumping duty.
Industries that are most often subject to anti-dumping investigations include machinery and equipment, chemicals, textiles, and base metals.
Anti-Dumping Protection in the United States
Anti-dumping suits are usually pursued at a national level. Under Title VII of the Tariff Act of 1930, an interested party in the United States may file with the Department of Commerce and the International Trade Commission, requesting the government to investigate and retaliate against specific trading partners who have been dumping products into the country
If an interested party is dissatisfied with the final determination of the DOC or the ITC, the party may file an action in the U.S. Court of International Trade for judicial review.
Anti-Dumping and China
When China joined the WTO, it became subject to anti-dumping provisions of the WTO Agreement on the Implementation of Article VI (GATT’s provision on Anti-Dumping). As one of the world’s lowest cost producers, China is the number one target of anti-dumping cases. India and sometimes Pakistan, Indonesia, and the Philippines have recently been used as analogue/surrogate countries for comparing cost price for non-market economy businesses in China
Most recently, China has questioned many of the anti-dumping laws in place and made suggestions for changing the current laws. Further discussions will be held on China’s suggestions for clarification on anti-dumping on October 27, 2008. In the meantime, the WTO is still working on clarifying anti-dumping laws in the Doha Rounds
Chinese Companies Facing Investigation by the Unites States
An active and quick response is the key to success in any anti-dumping case. While some Chinese companies subject to anti-dumping investigations fight for their rights, a majority of the companies take a wait-and-see attitude. Many recent examples show that Chinese companies are more likely to win a foreign anti-dumping case if they are willing to simply fight the case. It is always worthwhile for Chinese companies to fight for the lowest possible tax rates in order to export at tolerable duties and make a profit on goods produced.
In practice, much can be done by a Chinese company facing an anti-dumping investigation. The USA China Law Group has functioned as a bridge between Chinese companies and U.S. investigators. We help our Chinese corporate clients understand what U.S. investigators need and how to respond to an anti-dumping investigation.
Our anti-dumping experience covers a vast range of products and industries. Aside from helping our clients respond to questionnaires and prepare for auditing, we also provide our clients with strategic advice regarding product control, allocation of pricing, how to argue against utilization of bad surrogate values, use of market economy input, use of sales through other countries in specific instances, and legitimate measures to circumvent anti-dumping orders by different manufacturing processes.
