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1/ Quick explainer on why this is HUGE if true.
One of the World Trade Organisation's most important but least known rules allows countries to introduce "remedies" against "dumping."
Note: This isn't my speciality so read replies from smarter people.
One of the World Trade Organisation's most important but least known rules allows countries to introduce "remedies" against "dumping."
Note: This isn't my speciality so read replies from smarter people.
2/ "Dumping" means selling a product abroad for less than it would fetch domestically.
"Remedies" are targeted tariffs that address dumping. They are exceptions to the normal WTO rules in that they can be higher than bound (maximum) rates, and target only one country.
"Remedies" are targeted tariffs that address dumping. They are exceptions to the normal WTO rules in that they can be higher than bound (maximum) rates, and target only one country.
3/ To use remedies, the WTO requires a country to first undertake an "investigation."
This is basically an economic study to determine if a product is being dumped, and if so, to what extent (how much more cheaply is it being sold abroad than it could be at home).
This is basically an economic study to determine if a product is being dumped, and if so, to what extent (how much more cheaply is it being sold abroad than it could be at home).
4/ When China joined the WTO, part of its Accession Agreement was that it would not initially be considered a "market economy" for the purposes of other's anti-dumping investigations.
5/ WTO Members felt that the Chinese government had such a large market distorting influence on prices that just comparing Chinese export prices to Chinese domestic prices wasn't going to give investigations an accurate picture of whether/how much dumping was happening.
6/ Since then, anti-dumping investigations of China by countries like the US have used all sorts of complicated methods like using regional price proxies.
This would normally be a breach of the WTO rules, but was specifically allowed because of China's non-market economy status.
This would normally be a breach of the WTO rules, but was specifically allowed because of China's non-market economy status.
7/ The catch was that China's Accession document said this would change 15 years after the country's joining the WTO (late 2016).
China's view was that as of that date, all future anti-dumping investigations against China had to be calculated using Chinese prices.
China's view was that as of that date, all future anti-dumping investigations against China had to be calculated using Chinese prices.
8/ China also felt that all existing anti-dumping remedies (tariffs) against it calculated using a non-market economy were now illegal.
There are dozens of these remedy tariffs, and some are to the tune of 100% or more. A huge deal.
There are dozens of these remedy tariffs, and some are to the tune of 100% or more. A huge deal.
9/ The US and EU refused, because in their view, the Chinese Government is still distorting the domestic market beyond what can be considered a market economy.
Hence this critically important case.
Hence this critically important case.
10/ A win for the US and EU, if true, will have huge implications for the WTO and global trade.
Would recommend watching this space. /end
Would recommend watching this space. /end
For a lot more detail on the legal side of this 👇.
