Learning to use WTO rules for protection
By Zhang Lu (China Daily)
Updated: 2004-07-06 14:28

Chinese companies have made important progress in learning about how to play by WTO rules in anti-dumping cases.

On June 30, the Chinese Ministry of Commerce (MOFCOM) announced that it will continue imposing anti-dumping taxes on imported newsprint from Canada, South Korea and the United States, for another five years.

The verdict was reached after a one-year sunset review of the country's first anti-dumping case.

In 1997, nine Chinese newsprint makers made the dumping allegation and the overseas groups were found guilty of the charge by the Chinese Government's judgment, which was handed down in 1999.

Tariffs from 9 per cent to 78 per cent were then levied on newsprint imported from the above mentioned countries from July 10, 1998 to July 10, 2003.

A dozen local newsprint makers including the Jilin Paper Industry Corp Ltd and Guangzhou Paper-making Co Ltd, which makes about 80 per cent of total domestic newsprint output, applied for a review on May 9, 2003.

The MOFCOM started the investigation on July 1 of last year and finally judged that if the duties are lifted, dumping may continue or recur, and damage will probably happen to the local industry.

"As the first sunset review requested by domestic enterprises, this case is a significant experiment for Chinese industries," said Wang Xuehua, lawyer and founding partner of the law firm Beijing Huanzhong & Partners.

The law firm represented China's newsprint companies in this case and also the anti-dumping case in 1997.

According to Wang, Article 48 of Anti-dumping Regulations of People's Republic of China says that domestic companies involved in anti-dumping cases could apply for a sunset review 60 days before the anti-dumping measures expired.

And such requests also accord with WTO rules.

However, there is no specific provisions regulating investigation procedures, and in China, there is no precedent to be followed, he said.

Wang and his colleagues found similar cases in Europe and the United States for reference.

They concentrated on three major points during the investigation: whether dumping still exists, whether dumping will continue or resume, and how about damage to local industry.

At the same time, major allegations were made as following:

 Newsprint produced in Canada, South Korea and the United States heavily relies on exports, as their home markets are shrinking.

 Canadian and US enterprises continued to dump products when anti-dumping tariffs were imposed.

 Some other countries like Malaysia, India and Mexico have also started dumping investigations or imposing anti-dumping tariffs on investigated products from the three countries.

 The domestic industry is still fragile and heavily susceptible to dumping.

With sufficient evidence, the Ministry of Commerce made a positive judgment for the Chinese companies.

"The success of this case shows that domestic enterprises are becoming more mature in using laws and WTO rules to protect their legal rights, when faced with unfair competition," said Wang.

But there is still much room for improvement in anti-dumping work, he said.

Up to now, China has filed some 30 anti-dumping cases against foreign countries. This only equates to a fraction of the more than 600 anti-dumping charges imposed on Chinese products by foreign countries since 1979, which have affected over US$10 billion worth of Chinese exports.

"As time passes, anti-dumping charges filed by the Chinese Government are going to expire, and more companies should learn about how to use sunset reviews to defend against unfair competition and gain more time for their development," Wang said.

"This first case just establishes a good example for other local industries which need to deal with the same issue."

Besides being a significant precedent, the success of the case is also important to the domestic newsprint industry.

"Another five-year anti-dumping period is key to maintaining a fair newsprint market in China," said Wu Jialin, vice chairman of Yueyang Forest & Paper Group Co Ltd.

The first five years of the anti-dumping regime have promoted rapid development in the domestic newsprint industry.

Local enterprises have introduced advanced equipment and technologies, and industry production has increased by 40 per cent during the period.

"But, we should not be too optimistic and should do our best to improve our competitiveness during the next five years," Wu said.

China's newsprint industry is still disadvantaged in terms of technology, equipment, costs and product quality, which should be further improved to compete with foreign counterparts.

At the same time, enterprises should be alert to possible dumping from other countries such as Indonesia, Russia, and Japan.

Wu said that the industry was keeping a close eye on imported newsprint from those countries.