Challenges for China—the world’s largest antidumping target
Bin Jiang
Doctoral Student in Business Administration,
University of Texas at Arlington
China has become the world’sbiggest target for antidumping investigations. WTO statistics不用谢用英语怎么说 indicate that since the early 1990s nasa是什么Chine export products have attracted around 500 investigations that have resulted in more than 350 antidumping measures. What are the reasons behind the proliferation of the investigations against Chine export products? And how can the Chine government and export producers deal with such cas against the country in the future?
When a product is exported at a price lower than that normally charged for it in its home market, it is often assumed that the exporter is “dumping” the product in the importing country. Antidumping (AD) is the legal framework countries u to place duties or import sur
charges on products determined to have been dumped. The legal definitions are more preci, but basically the “Antidumping Agreement” of the World Trade Organization (WTO) allows governments to take action against dumping where there is a genuine (“material”) injury to the competing domestic industry. In order to take such action, the government must prove that dumping is taking place, calculate the extent of it (how much lower the export price is compared to the exporter’s home market price), and show that dumping is actually causing material injury.
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Why is China targeted?
The reasons for the dramatic increa in antidumping cas against Chine export products are both complex and diver. Here we prent and discuss four of the reasons.
Reason 1: Most Chine export producers compete on cost becau local economic conditions make labor- or resource-intensive Chine products extremely competitive in international markets. The country’s labor rates are approximately one-twentieth of tho
typically found in developed countries and one-tenth of tho found in developing bec中级教材economies like Mexico and Korea. Moreover, China has an abundance of natural resources such as minerals英语星期一到星期日 and raw materials. The indigenous advantages allow Chine manufacturers to produce traditionally labor- or resource-intensive commodities more economically than their counterparts in other countries. However, such products tend to be relatively homogeneous, affording their manufacturers scant competitive advantage and creating minimal entry barriers. If a particular product succeeds in an international market, other Chine firms can decide relatively easily to enter that market 普特英语学习网by producing and exporting similar products. This, in turn, precipitates the sort of price cutting that is characteristic of intenly competitive markets, with the result that Chine exporters find themlves competing against each other in cannibalistic price wars. Local government policies also motivate the internecine price wars.
Reason 2: China is still treated as a non-market economy (NME). For NME dumping cas, the benchmark of “normal value” is calculated by using data from a surrogate country, but the WTO’s Antidumping Agreement does not specify any criteria for determini
ng which surrogate country is appropriate. Prior to the economic reform movement, China’s centrally planned economic system dominated all industry ctors. Over the last decade or so, this system has gradually shifted away from the socialist model toward a free market必读书 model. Today, the Chine economy lies somewhere between the two and contains many “bubbles of capital-ism”—defined by Neeley (1992) as ctors in a centrally planned economy in which reforms have progresd to the point that all prices and costs faced by the producers in that ctor are determined by the market.
However, many importing countries automatically treat Chine export products as NME cas. In order to receive the market-economy ca treatment, it is incumbent on Chine producers to prove that inputs are bought and sold, and that labor is compensated at prevailing market rates. If they do not or cannot provide sufficient evidence that their products are made in the market-economy mode, the importing country will apply the surrogate country method to calculate the dumping margin of the products.
Reason 3: Many Chine exporters do not have the capability or experience to defend themlves against AD charges, but relinquishing the right of lf-defen against 吮吸the charges simply encourages other countries to launch more AD investigations against China.
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Another factor behind the large number of AD measures that have been enacted against Chine exports is Chine firms’ unwillingness to respond to dumping accusations and their general lack of knowledge about how to do so. Most Chine export producers are medium or smallsized enterpris that lack the information and capability to deal with international trade disputes.
Reason 4: Chine exports have been growing rapidly, with low-priced “Made in China” commodities significantly affecting less competitive domestic firms in importing countries; this motivates the countries to u AD strategies to protect local industries and prevent successful Chine products from grabbing market share.
To minimize further economic loss from AD cas, the Chine government and export
ers will focus their efforts on activities designed to fix or ameliorate the issues that trigger the investigations. Here we offer some predictions about the nature of the activities.
Prediction 1: Chine industry associations will be strengthened and improved as soon as possible so that firms can agree on baline export prices for products and end the cannibalistic price wars among Chine provincial exporters. A result of the economic reforms in China is that the government has relinquished its control of imports and exports to local enterpris and thus no longer dictates uniform export prices. This has created an administrative vacuum for pricing in the Chine export ctor. Exporters realize that pricing unions must be established to fill this administrative vacuum and protect their own interests. Accordingly, industry associations will play a growing role 初级英语视频教程in deciding and monitoring the price levels of exports.
