INTERNATIONAL TRADE SEMINAR: ANTI-GLOBALIZATION SCENARIOS AND WTO RESTRICTIONS ON INDUSTRIAL POLICIES

Transcription

1 INTERNATIONAL TRADE SEMINAR: ANTI-GLOBALIZATION SCENARIOS AND WTO RESTRICTIONS ON INDUSTRIAL POLICIES Chunlian (Lian) Yang, International Trade & Regulatory

2 CHINA S NON-MARKET ECONOMY STATUS

3 AGENDA I. Overview II. Specifics of NME treatment III. China s Push for ME Status IV. What to expect?

4 I. OVERVIEW

5 U.S. Trade Remedy Proceedings US system is bifurcated: Two agencies with role in AD/CVD proceedings. Department of Commerce (DOC) International Trade Commission (ITC) U.S. Customs and Border Protection (CBP) Determine sufficient industry support for initiation of AD and CVD investigations. Whether there is dumping, and the extent. Whether a countervailable subsidy has been provided, and the amount. Independent, quasijudicial Federal Agency (6 Commissioners - half Republican/ half Democrats) Whether dumped or subsidized imports have caused material injury, or threat thereof. Section 337 (infringement of IP rights or even antitrust claims - e.g.: Steel) Responsible for collecting antidumping and countervailing duties. The Enforce and Protect Act of 2015 (EAPA) Investigations (Evasion of AD/CVD)

6 China in U.S. Trade Remedy Proceedings From 1995 to June 2016 (source: WTO) Out of 593 AD cases initiated in the U.S., 140 were against China (~ 25%) Out of the 368 AD measures imposed by the U.S., 107 are against China (almost 30%) As of April 2017 (source: ITC) 392 CVD and AD orders in place, out of which 153 are against China (~ 40%) 17 ongoing AD/CVD investigations, out of which 7 against China (over 40%) e.g., mechanical tubing; aluminum foil

7 II. SPECIFICS OF NME TREATMENT

8 U.S. Surrogate Value Methodology for China Rationale: China does not operate on market principles of cost or pricing structures; distorted by government control. AD Margin = Normal Value minus U.S. Price For the Normal Value calculation, U.S. uses prices in a surrogate market economy country to value Chinese producers factors of production, instead of producers home market sales prices.

9 U.S. Surrogate Value Methodology for China Surrogate countries: economically comparable based on per capita Gross National Income (GNI); producer of comparable merchandise Based on 2014 GNIs: Mexico, Romania, Bulgaria, South Africa, Ecuador, Thailand. Use surrogate values to value Factors of Production: raw materials, labor, energy and other utilities, representative capital cost (including depreciation). Cost accounting records and production records examined

10 Special Treatment of Chinese Companies All Chinese companies considered part of same entity ( China wide or PRCwide ) for AD purposes. This China-wide entity is typically assigned a very high dumping margin, normally the margin alleged by petitioners in the petition. To obtain a separate rate, a company must prove not being controlled by the Chinese government in law and in fact. Within last few years, U.S. determined that any State Owned Entity cannot obtain a separate rate.

11 III. CHINA S PUSH FOR ME STATUS

12 WTO China s Protocol of Accession Paragraph 15(a)(ii) allowing use of surrogate values in antidumping proceedings Paragraph 15(d) provisions of subparagraph (a)(ii) shall expire 15 years after the date of accession (December 11, 2016) DS 516 (against EU only) Panel established on April 3, 2017 China dropped the WTO case against the U.S.

13 Why Not A WTO Case Against the United States? Less leverage with the U.S. than with the EU Challenges of having U.S. as an official respondent (more legal arguments to rebut, costs etc.) Prospect of success in light of the Trump Administration s tough stance with trade and China Concern over implementation after a successful WTO case Political reasons Trump-Xi meeting went apparently well U.S.-based strategy

14 China s NME Status In the U.S. DOC reviewed China s NME status in 2006 and determined to continue to treat China as an NME. DOC initiated an inquiry into China s NME status in Aluminum Foil on March 29, Active participation of China is expected.

15 IV. WHAT TO EXPECT?

16 Any Changes Expected? China likely to remain NME China SOEs likely to continue to be treated as not independent. More cases self initiated by Trump Administration Section 201 cases (e.g., solar cells and modules on 4/26) Korea OCTG Case use of Section 504 of TPEA Focus on specific sectors such as steel and aluminum/section 232

17 THANK YOU OBRIGADA/ OBRIGADO