China's Accession to the WTO: Impact on Anti-dumping Legislation & Practice

China's existing anti-dumping regime is a multi-level legislative system composed of the PRC, Foreign Trade Law³ (the Foreign Trade Law), the aforementioned Anti-dumping Regulations and several departmental rules promulgated respectively by the Ministry of Foreign Trade & Economic Cooperation (MOFTEC), the State Economic & Trade Commission (SETC) and the General Customs Administration (GCA). The Foreign Trade Law provides the law-level legal basis by defining the basic concept of dumping, specifying the types of injury to the domestic industry and authorizing the State Council to designate the investigating authorities. To implement the Foreign Trade Law, the State Council issued the Anti-dumping Regulations, which are the most important part of China's legal system dealing with dumping allegations.

Some WTO members raised their concern at the meetings of the Working Party that China's current anti-dumping system would be judged to be inconsistent with the Agreement on Implementation of Article VI of GATT 1994 (the Anti-dumping Agreement) if China were a WTO member.

China's accession to WTO will definitively improve the situation in this regard. In addition to the fact that China has committed itself to bringing the national anti-dumping legislation into conformity with the WTO rules, the WTO Anti-dumping Agreement itself can be invoked before the Chinese investigating authorities by the interested parties when China's membership of the WTO comes into force.

Actually, amendments to the Anti-dumping Regulations are in the process of being formulated already. According to our information, some important rules will be incorporated into the updated regulations, such as formulating the basis for fair comparison between the export price and normal value, the prerequisites necessary for cumulative assessment, detailed rules concerning the undertaking, newcomer review and interim review, and the possibility for judicial review. All these are crucial to boosting fairness for the interested parties, especially foreign respondents, who will be subject to the restrictive measures.

Investigating Authority Reform

Under Chinese legislation, five governmental agencies have been designated to take charge of certain parts of the anti-dumping investigation. MOFTEC, together with GCA, takes the lead and is responsible for the dumping investigation; SETC, together with a relevant agency under the State Council, is responsible for injury and causation investigations and the Tariff Commission of the State Council (TCSC) is responsible for determination of an anti-dumping duty.

Soon after China's WTO entry, the investigating authorities will undertake important reforms entailing a reallocation of power and responsibilities. GCA and the relevant agency under the State Council will no longer be designated as the investigating authorities; for example, the Ministry of Agriculture will join forces with SETC in an injury investigation, in the case of an agricultural product being the subject of investigation. The causal link will be investigated by both MOFTEC and SETC. The TCSC will be renamed as the State Tariff Commission to avoid the possibility of the State Council being sued.

The main players, MOFTEC and SETC, have already begun their reorganization. Anticipating the increased caseload accompanying the growth in the volume of international trade, MOFTEC has established the Import/Export Fair Trade Bureau, under which the Anti-dumping Office has been formed. SETC also established its Bureau of Industry Injury Investigation with its own Anti-dumping Office. Along with these reforms, an expansion of staff handling anti-dumping cases in each office is to be expected.

A More Transparent Working Practice

It is an obligation for China to bring its anti-dumping investigations into conformity with WTO rules. In our opinion, transparency is among the most critical issues. Upon China's accession to the WTO, this problematic issue will be, to some extent, alleviated.

In the Acrylates case of 1999 MOFTEC, before the final determination was made, informed the interested parties of the essential facts under consideration, which formed the basis for the final determination. Only non-confidential information was disclosed. However, this simple disclosure procedure was not regularly followed. In order to comply with the WTO Anti-dumping Agreement, such a disclosure procedure will be explicitly consolidated into Chinese anti-dumping legislation.

In previous cases, some parties claimed that the findings and determinations of the investigating authorities were virtually unintelligible, with a factual basis for the final decision undisclosed and the computing methodology for injury assessment and the related legal reasoning omitted from the final report. Recognizing its obligations to the WTO, China will commit its investigating authorities to provide fact-based, reasoning-provided and rule-cited findings and determinations.

The as yet-to-be introduced judicial review will be an important mechanism to safeguard the interests of the interested parties and the transparency of the administrative proceeding. According to the WTO Anti-dumping Agreement, to provide such an opportunity is an obligation incumbent on each WTO member whose national legislation contains provisions for anti-dumping measures. According to our information, China's new anti-dumping legislation will explicitly provide for this mechanism.

Impact on Doing Business in China

In the private sector, parties normally will ask, "How conducive is the business regulatory environment to us doing business in China without problems?" To answer this question, we would like to recall a part of the EU negotiator's report: "Import tariffs and other non-tariff restrictions will be sharply and permanently reduced. And investments by foreign companies will take place in a more attractive, and more predictable business environment. WTO membership will consolidate and accelerate China's own efforts to promote transparency, fairness and openness in its regime across the board. And the WTO's independent and legally binding dispute settlement system will enable both sides to resolve trade problems. In short, this agreement greatly enhances the climate for foreign companies to export to, and do business in, China."⁴ In our opinion, these words precisely outline the business environment after China's entry to the world trade body. As a matter of fact, China's willingness to commit itself to the generally accepted rules of international trade will facilitate deepening and acceleration of its ongoing economic and political reforms.

With regard to the anti-dumping measures, China, as one can reasonably expect, will continue, even more intensively, to use the legal recourse offered by anti-dumping legislation. We have a strong belief that foreign manufacturers and exporters will have more opportunities to win their cases after China's entry to the WTO, although at the same time they may be involved in more cases.

Endnotes

1 Promulgated March 25 1997.

2 For the background of these cases and an extensive overview of China's anti-dumping legislation, see Patrick Norton and Kermit Almstedt, "Defending Dumping Claims: Exporters to China Beware," China Law & Practice, June 2000, 14(5), pp. 32-39.

3 Promulgated May 12 1994.

4 Overview of the Terms of China's Accession to WTO, from http://www.Europa.eu.int.