WTO Anti-Dumping Committee Meeting Discusses Chinese AD Practices and Chinese Concerns with AD Practices of Other Countries

Simon Lester -

At the April 28, 2021 meeting of the WTO Committee on Anti-Dumping Practices, a number of issues were raised by China in relation to other Members’ anti-dumping laws and practices, and by other Members in relation to Chinese practices. China engaged with Australia, the European Union, Japan, the United Kingdom and the United States on these issues. The minutes of this meeting have now been circulated. Key issues discussed were as follows:

Concerns expressed by China:

  • Australia’s “repetitive initiation of investigations on similar products,” and “the issue of cost adjustments” in Australian AD investigations.
  • Continued application of EU trade remedy measures and the transition reviews conducted by the United Kingdom after Brexit.
  • The United States' use of multiple layers of protection that lead to global trade distortions.
  • The European Union's legislation and practices regarding significant market distortions and the methods for constructing normal value in the European Union's AD law.

Concerns expressed by other Members:

  • China's AD investigation into imports of wine from Australia.
  • China’s determination on AD duties regarding stainless billets, hot-rolled plates, and coils from Japan, and the final determination made in August 2015 and the continued imposition of the AD duties on optical fibre preform from Japan.

The full text of the discussion of these issues is below.

Chinese concerns with Australian practices:

76. China raised two concerns about Australia's AD investigation practice. First, China referred to the repetitive initiation of investigations on similar products. China stated that Australia had initiated 27 AD and CVD investigations against six Members in 2020 and that it was one of the most frequent users of trade remedies in the world. China noted that among the products investigated by Australia, many are similar to products that are already subject to measures in force. For instance, Australia had investigated and imposed measures on Chinese aluminium zinc coated steel with a width equal to or greater than 600 millimetres several years ago. However, in June 2020, Australia initiated a new investigation on aluminium zinc coated steel of a width less than 600 millimetres. Meanwhile, Australia also initiated new investigations against aluminium zinc coated steel exported from the Republic of Korea, Chinese Taipei, and Viet Nam with a width of more than 600 millimetres. China noted that such repetitive initiations are not commonly seen in the practice of other Members.

77. China requested Australia to clarify how it ensured that such activities did not give rise to excessive protection of its domestic industries. China mentioned that while Australia's AD and CVD measures on exported aluminium extrusions from China are still in force, Australia has launched a new AD investigation on part of that product, i.e. Aluminium micro-extrusions. In the previous investigation, China had obtained a zero-duty rate, yet the repeated initiation of investigations undermined the favourable result obtained previously by the Chinese respondent.

78. The second concern that China expressed related to the issue of cost adjustments in AD investigations. In September 2020, Australia had made a final AD and CVD determination on imports of hot dip galvanised steel angles from China, finding a de minimis margin of dumping. China welcomed Australia's decision not to impose measures. However, China noted that in the course of the investigation, the Anti-Dumping Commission of Australia had refused to accept the cost data provided by the investigated respondent, and had used the price data of raw material from the Republic of Korea and Chinese Taipei, instead. In addition, in other cases initiated in 2020, the Australian authority had also rejected cost data from Chinese steel and aluminium producers, although that data was in accordance with generally accepted accounting principles and reasonably reflected the production cost of the product under investigation. China queried the compatibility with the findings by WTO panels and the Appellant Body on these matters, including EU — Biodiesel, Australia – Anti-Dumping Measures on A4 Copy Paper, and EU — Cost Adjustment Methodologies II (Russia).

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81. In response to China's systemic concern, Australia explained that investigations are initiated by application of the domestic industries and not at the initiative of the Government; they are thus not retaliatory in nature. Comparing the more limited range of tariff lines Australia exported to China with the larger range of goods imported from China into Australia, together with Australia’s low applied and bound tariffs, the incidence of AD cases was not unusual and reflected Australia’s open trade regime. On the matter of cost adjustments, Australia referred China to the findings in the Australia – Anti-Dumping Measures on A4 Copy Paper dispute.

82. In relation to China's questions, Australia noted that it could only provide some information on the investigations referred to by China, given the short notice it had received on this matter. It explained that the AD investigation on imports of hot dip galvanised steel angles from China was initiated on 24 June 2019 in response to a properly documented application from the domestic industry. All interested parties, including the Government of China and Chinese exporters, were able to make submissions. All submissions were carefully considered by the Commissioner in conducting the investigation. The statement of essential facts was published on the Commission's website on 18 June 2020. Australia indicated that the Commissioner had terminated the investigation because dumping was not found above the de minimis level. The investigation was terminated by the Commissioner on 18 September 2020 and a notice was published on the Commission's website. A separate AD investigation concerning imports of solid based angles from China was initiated on 26 February 2019 in response to a properly documented application from the domestic industry. However, the applicant withdrew its application and the investigation was subsequently terminated. A notice about the withdrawal was published. Australia does not currently have any investigation or measures on any of these products. Australia assured the Committee that its AD and CVD regime operates in accordance with its international commitments under the WTO Agreements. Australia encouraged further questions, if any, to be submitted in writing and indicated its availability for bilateral discussions.

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Chinese concerns with UK practices:

129. On the semi-annual report of the United Kingdom, China expressed its concern over the continued application of the European Union trade remedy measures and the transition reviews conducted by the United Kingdom after Brexit. China opined that this practice was in breach of the provisions of the AD Agreement. China requested that the United Kingdom terminate all AD measures originally taken by the European Union as well as the transition reviews. China was of the view that the United Kingdom should initiate new investigations if it considered that its domestic industries were injured.

131. In response, the United Kingdom stated that it had retained certain definitive trade remedy measures applied before the end of the United Kingdom-European Union transition period and in respect of which the United Kingdom held an interest. These measures had been established based on an investigation covering the entire territory of the European Union, including the United Kingdom. Therefore, they have been maintained in respect of the United Kingdom territory as of the end of the United Kingdom-European Union transition period. The United Kingdom explained that it determined which AD measures should be retained based on evidence presented by the United Kingdom's industries and all interested parties. The relevant assessment was based on objective evidence relating to specific criteria, including a market share threshold for the United Kingdom-based producers of the product in question of more than 1%. The United Kingdom underlined that it was committed to maintain a fair and transparent approach. Its investigating body would conduct objective evidence-based transition reviews of the retained measures. These reviews would determine whether the measures remained necessary to offset dumping and whether injury of the United Kingdom's domestic industries would recur in case the measures were lifted. This could result in the measures being amended, terminated, or maintained. Until the conclusion of the reviews, the measures would be maintained. Its investigating body had initiated five transition reviews in respect of AD duties. The United Kingdom noted that it has an online digital service where interested parties could register their interest, access the public files, and participate in the cases.

Chinese concerns with U.S. practices:

138. China addressed what it referred to as the United States' use of multiple layers of protection that lead to global trade distortions. China noted that in recent years the United States has imposed several AD measures on aluminum products, including aluminum volume and steel from China and several other countries. The United States' Department of Commerce published the final determination in this case and AD duties ranged from 49.4% to 242.8% and CVDs ranged from 4.89% to 25.5%. China claimed that the world production and consumption of aluminum products remained relatively stable, with Asia, North America, and Europe being the main producers and consumers of aluminum products. Despite all these measures, the United States was still taking measures or conducting trade remedy investigations on these products. China referred to the United States' Section 232 measures on imported aluminum as affording the United States domestic industry protection on the ground of national security. China stated that multi-layer protection of the domestic industries was not conductive to resolving any real issues but could only result in distorting consumption and production of the affected products.

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140. In response to China, the United States noted that this Committee was not the right forum to discuss the Section 232 actions. The United States encouraged Members to follow the practice of informing Members of their intention to raise questions in order to enable the responding Member to provide appropriate answers.

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Chinese concerns with EU legislation and practices:

158. The Russian Federation raised concern over the issue of certain amendments to the European Union's legislation on AD, namely the ones introduced by Regulation (EU) 2017/2321 and Regulation (EU) 2018/825. It stated that the European Commission had published two country reports on socalled significant distortions in the Russian Federation and China. …

162. China also addressed the European Union's legislation and practices. It reiterated that the European Union's legislation and practices regarding significant market distortions are inconsistent with the relevant WTO principles and rules. First, the European Union's AD law created the concept of significant market distortions and other concepts not included in the AD Agreement which authorise the European Commission to review the market situations of other Members in an AD investigation and to construct the normal value. China opined that this practice would contravene WTO rules. China explained that so far, the European Union had issued only two reports on significant market distortions in the Chinese and Russian markets. There were no reports on any other market, which China considered to amount to de facto discrimination.

163. Second, China added that the methods for constructing normal value in the European Union's AD law were inconsistent with WTO rules. China claimed that according to the European Union's AD law, normal value should be constructed exclusively based on the cost of production and sales in a sufficiently representative country, or on international prices, if a significant market distortion is found to exist. China hoped that the European Union would return to the method set forth in the WTO AD Agreement and comply with its obligations as a WTO Member.

164. The European Union stated that it had addressed this issue at previous meetings of the Committee, and that it would therefore only comment on the statement from the Russian Federation about the quality of the report. The European Union reminded Members that both reports were prepared using reliable and reputable sources, including the official public records of the countries concerned. The reports were thoroughly reviewed, and the European Union was confident of their accuracy, objectivity, and impartiality. Prior to its publication, the European Union had invited the Russian Federation to review the document and to provide any comments or clarifications, which the Russian Federation declined to do.

165. With regard to the issue of compliance with WTO rules, the European Union referred both countries to the regulations that have been published in the official journal, where all these arguments have been duly addressed.


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Australian concerns with Chinese practices:

88. On the semi-annual report of China, Australia raised concerns over China's AD investigation into imports of wine from Australia. Australia thanked the Chinese delegation for the opportunity to hold further constructive bilateral discussion in the week of 19 April 2021. It explained that China initiated the investigation on 18 August 2020 and issued a preliminary affirmative determination on 27 November 2020 with provisional measures set in the range of 107% to 212%. China issued its final determination on 26 March 2021 and imposed final measures in the range of 116.2% to 218.4%. These duties have effectively ceased Australian exports to the Chinese market.

89. Australia indicated that it was still examining the final determination but highlighted some specific areas of concern. Australia respected China's right to investigate alleged dumping consistent with WTO rules but did not believe that this investigation was justified or properly initiated. In particular, there was a lack of proper identification of the domestic industry and the legal standing of the applicant. It also added that the product under investigation was not properly identified. This had flow-on implications for identifying domestic production and consumption as part of the injury analysis.

90. Australia also raised concerns that its ability to respond to the disclosure report was significantly constrained by China's Ministry of Commerce (MOFCOM) not having provided Australia with complete disclosure of all the essential facts under consideration. Rather, it received in piecemeal fashion distributed extracts from what Australia surmised at the time must have been a fuller disclosure report. In Australia's view, this undermined its procedural fairness entitlements. China used recourse to facts available which was both unwarranted and disregarded in part or in total the information supplied. The Australian Government and the three sampled Australian exporters fully cooperated in this investigation and provided comprehensive information and replies as part of this investigation. Australian exporters completed their respective replies to questionnaires, including supplemental questionnaires issued on 1 February 2021. The Australian Government also completed the questionnaire in so far as it related to the allegation that there were non-market economic conditions in Australia. In this regard, Australia noted that the final determination upheld the preliminary finding that MOFCOM "would not determine the particular market situation of the Australian wine industry". Australia failed to understand this section of the final determination as it did not explain the relevance of the assessment, nor how it was used (or not used) to establish the margin of dumping for the sampled Australian exporters.

91. Australia was also concerned over the apparent misapplication of sampling, specifically as far as purpose, rationale and application are concerned. Australia explained that China apparently drew adverse inferences that registered but non-sampled companies were non-cooperative and used facts available on the basis that not all the non-sampled companies submitted questionnaire replies. In addition, one Australian exporter sought to be one of the sampled companies, but in its final determination, MOFCOM stated that it had limited its selection to three companies for practicality purposes and discouraged the company from providing voluntary replies. Australia continued to remain open to further discussions with China on this case to find a mutually beneficial solution.

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95. In response to Australia, China explained that it had initiated the AD investigation on imported wine from Australia on 18 August 2020 at the request of its domestic industry. China had issued its final determination on 26 March 2021. Based on evidence and information obtained during the investigation, the Chinese authority had reached the conclusion that Australian producers export wine to the Chinese market at dumped prices causing material injury to the Chinese industry. It had, therefore, decided to impose an AD duty in the range of 116.2% to 218.4%. To avoid double remedies, China had decided not to impose countervailing duties in a parallel CVD investigation. China stated that the Chinese authority had provided opportunities for all interested parties to present their comments during the investigations and that the investigation procedure was fully in line with Chinese and WTO rules.

96. Regarding the technical issue raised by Australia concerning MOFCOM's disclosure, China stated that its investigating authority had, before making its final decision, disclosed the essential facts to Australia and other relevant parties on 12 March 2021. China claimed that its investigating authority had given all parties reasonable time to comment and that it had taken into consideration their comments. 97. Regarding the issue of duty rate calculation of non-sampled companies, China explained the method used for that purpose. China stated that exporters and producers who registered for the investigation and answered the sampling questionnaire were regarded as cooperative and the dumping margin was determined using the weighted average of the selected companies' margins. Exporters and producers who did not register or answer the sampling questions were referred to as uncooperative and their duty was determined using best information available according to the Chinese law. During the sampling in this case, one Australian exporter sought to be included in the sampling but due to limited resources, only three exporters were selected. Although, this company could have volunteered to respond to the authority, the company did not do so.

98. Concerning MOFCOM's finding of a particular market situation in Australia, China explained that the applicants had asserted a particular market situation in Australia's wine market resulting from the cost impact of the major input on the product under investigation and the like product. After the examination of the application, China's investigating authority determined that the applicants had provided sufficient prima facie evidence and initiated an investigation, including with respect to the alleged particular market situation. Based on the information received, and the evidence obtained, the investigating authority found that the activities of the Australian Government had an impact on supply, demand, and price in Australia. Due to limited time and resources, the investigating authority decided not to make a determination with respect to this issue.

99. Regarding concerns raised with respect to the definition of the product under investigation, China referred to page 24 of the final determination which sets forth the relevant product definition. China also pointed to page 70 of the determination as regards the legal standing of Chinese applicants and information on domestic consumption and production.

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Japanese concerns with Chinese practices:

92. Japan expressed its concern with respect to the final determination made by China in July 2019 and the continued imposition of the AD duties regarding Japan's stainless billets, hot-rolled plates, and coils. Throughout the investigation, Japan had continued to express its serious concern that the definition of the product under consideration was too broad and included semi-final and final products. It also had expressed concern that the finding of injury to the domestic industry and causal link between the imports and injury had been made inappropriately because the users and consumers of these products were considerably different. In this light, Japan had requested the Chinese investigating authority to make findings and a determination that are consistent with the AD Agreement. However, Japan regretted that the Chinese investigating authority had made the final determination without considering any of Japan's concerns.

93. Japan also referred to the cumulative assessment conducted by China's investigating authority of the effects of Japanese products together with the imports from other countries, including Indonesia, in the injury assessment although it was not appropriate in view of the competitive relationship. Given its doubts as regards the measure's consistency with the AD Agreement, Japan had repeatedly expressed serious concerns to China, including through bilateral exchanges. Nevertheless, China had maintained the AD measure thus far. Japan requested China to take into consideration Japan's serious concerns and review the determination in accordance with the AD Agreement.

94. With regard to Japanese exports of optical fibre preform, Japan expressed its concern on the final determination made in August 2015 and the continued imposition of the AD duties. Article 11.3 of the AD Agreement stipulates that any AD measure shall be terminated in five years unless the authorities determine the substantial necessity to continue the measure, namely that the elimination of the AD duty would be likely to lead to the continuation or recurrence of dumping and injury. Japan opined that China must apply Article 11.3 of the AD Agreement in a strict manner and perform appropriate reviews in accordance with this Agreement. Japan requested the early termination of the AD measures so that it would not be improperly maintained for a long period of time.

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100. With respect to Japan's concern on the final determination regarding Japan's saintliness billets, hot-rolled plates, and coils, China stated that the investigation was initiated on 23 July 2018 at the request of the domestic industry. The final determination was made in July 2019. Recently, China had bilateral discussions with Japan on this measure, after which China's authority provided further written clarification on this issue to Japan. A further bilateral meeting was scheduled in May 2021. China was, therefore, of the view that the Committee meeting was not the appropriate forum for discussion. Nonetheless, China indicated its willingness to clarify Japan's technical questions. China stated that the investigation was conducted in accordance with China's legalisation and regulations. All interested parties, including Japan, were provided with sufficient opportunity to make comments and these comments, including the points raised by Japan, were fully considered in the final determination. Regarding the scope of the product definition, China explained that the chemical components and the main physical properties of the different product classifications were substantially the same. Therefore, and despite certain negligible differences in physical form, etc., the investigating authority determined that the products belong to the same product category.

101. Regarding Japan's concern on the final determination on Japan's optical fibre preform, China took note of Japan's comments and encouraged Japanese companies to cooperate fully in the subsequent review investigation.