Updated International Anti-Dumping Regulations

Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value. This is an unfair trade practice which can have a distortive effect on international trade. Anti-dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Dumping is a process where a company exports a product at a price lower than the price it normally charges in its own home market.

Anti-Dumping Duty

The anti-dumping duty is a tariff imposed on foreign-manufactured goods that are priced below the fair market value of identical items in the home market. Authorities all over the world impose anti-dumping duties on the foreign imports when there is a credible reason to believe that the items are being dumped in the domestic market. Generally, the anti-dumping duty is imposed to safeguard the local businesses and markets from the unfair competition by foreign imports.

Article VI of GATT and the Anti-Dumping Agreement

The GATT 1994 sets forth a number of basic principles applicable in trade between Members of the WTO, including the “most favoured nation” principle. It also requires that imported products not be subject to internal taxes or other changes in excess of those imposed on domestic goods, and that imported goods in other respects be accorded treatment no less favorable than domestic goods under domestic laws and regulations, and establishes rules regarding quantitative restrictions, fees and formalities related to importation, and customs valuation.

The World Trade Organization (WTO) plays a critical role in the regulation of anti-dumping measures. As an international organization, the WTO does not regulate firms accused of engaging in dumping activities, but it possesses the power to regulate how governments react to dumping activities in their territories. Almost all WTO member countries have adopted/amended their anti-dumping legislation largely in accordance with the GAIT provisions to deal with dumped imports. Some of the countries that are not members of WTO have also acquired their anti-dumping legislations.

Countries carry out anti-dumping probe to determine whether their domestic industries have been hurt because of a surge in cheap imports. The duty is aimed at ensuring fair trade practices and creating a level-playing field for domestic producers with regard to foreign producers and exporters.

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3 Compliance Issues Foreign Companies Must Maintain in China

A considerable number of US companies are getting worried about the prospect in the Chinese market because of the tariff war between Washington and Beijing. Most of them are concerned that the Chinese authorities may come up harder on them and this may harm their China production.

The US Treasury Secretary Steven Mnuchin said “the reason why we put on tariffs is for the last two and a half years, we’ve been working with China to rebalance the trading relationship and it hasn’t rebalanced. The trade deficit has grown significantly despite assurances from China.” Despite the ongoing trade war, the U.S. businesses continue to do well in China. American companies like Boeing, Nike and Starbucks now are deriving a huge revenue by serving the vast and growing Chinese middle class.

It is an accepted fact that Chinese authorities may tighten the noose around US companies doing business in China, but it is unlikely that they will aggressively go against them. The current economic situation in China requires a revival and showing doors to the foreign and the US firms will certainly not going to help that cause. There are few factors and issues that foreign firms need to focus on in order to continue their operations in China hassle-free and smooth.

Maintaining China Compliance

After the recent high-profile anti-corruption investigations by the Chinese enforcement authorities, nothing should be taken for granted. MNCs are reminded to reconsider and reassess their China component of their internal compliance programs.

The US and foreign firms need to conduct a detailed analysis of the industry requirements in relation to their business and what is essential to make sure the compliance standards are met. At this moment, the services of a China law firm becomes valuable. The highly experienced China business lawyers can provide a strategic and solid plan in relation to what is required to maintain China compliance.

Joint Venture and WFOE is licensed

The second important thing US companies need to make sure their WFOE and Joint Venture or Representative Office actually exists. Maintaining their license is crucial as the Chinese authorities may conduct a check and if you can’t produce these papers, be ready to face a prolonged legal battle.

Environmental compliance for foreign businesses in China

China is undergoing an environmental paradigm shift has dramatically strengthened the enforcement of its environmental regulations. Companies and public institutions that discharge listed pollutants directly into the environment will pay taxes for producing noise, air and water pollution as well as solid waste. China now has the toughest emissions standards in the world. The foreign companies who have a manufacturing hub in China need to familiarize themselves with the Environment Protection Tax Law as they may now be subject to additional obligations and liabilities.

 

Final Thoughts

Although the current geopolitical situation between the US and China is not highly-conducive, but still China offers a huge business prospect. Beijing, Shanghai, Shenzhen and Guangzhou generally have the best business environment. Businesses from retail to electronics to home goods, can grab the diversity of business opportunities available in China.

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