Anti-Dumping Duty and its Effect on the U.S.-China Trade Policy

US-China-Trade-Agreement

An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.

 

China’s recent legislative changes have largely facilitated and promoted foreign trade and investment. The new Anti-Dumping Regulations differ from most other recent trade laws and regulations because they are designed to protect local industries. The Regulations allow China to deliberately protect local industry and yet enjoy the protection of GATT authority.

 

Since the Regulations are so simple and lack protections for defending parties, or for an appellate process, they are highly favorable to local industries. It is likely that MOFTEC’s mere announcement of an investigation will be sufficient to discourage importers of suspect foreign goods.

 

After its accession to the WTO in 2001, China established its own trade remedy system in order to safeguard its own markets and industries. China now employs a single agency model in the anti-dumping system and uses a prospective methodology for calculating and assessing anti-dumping duties. In using anti-dumping measures and also by implementing WTO rulings, China has continuously improved its practices.

 

The variety of Chinese goods brought under anti-dumping measures is on the increase. Since the first anti-dumping case against Chinese exports, Chinese goods under anti-dumping investigations vary from labor-intensive products or easily processed products, such as mineral products and chemical products, to textile products, clothing, light industry products, home electric appliances, hardware, chemical products, mineral products, medicine, and farm produce.

 

Under the Tariff Act of 1930, United States industries may petition the government for relief from imports that are sold in the United States at less than fair value (i.e., “dumped”) or which benefit from subsidies provided through foreign government programs. Under the law, the United States Department of Commerce (“USDC”) determines whether the dumping or subsidizing exists and, if so, the margin of dumping or amount of the subsidy while the United States International Trade Commission (“USITC”) determines whether there is material injury or threat of material injury to the domestic industry by reason of the dumped or subsidized imports.

 

Chief among those measures is the U.S. antidumping law, which allows domestic manufacturers and unions to request that the government impose special duties on injurious imports allegedly priced below “fair market value” and has been a (deserving) target of criticism here at Cato for more than four decades. Recent economic research has bolstered these criticisms while demonstrating why any legitimate account of U.S.-China trade policy.

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China’s Support Policies for Domestic & Foreign Businesses in the Covid-19 Pandemic Era

To cushion the economic hit caused by the COVID-19 outbreak, China’s central and local governments have been rolling out a series of supporting policies to shore up the confidence of businesses and ease some of their compliance burdens. Businesses in China, including foreign-invested enterprises (FIEs), can leverage these special policies to overcome the difficulties caused by COVID-19.

 

In 2020, we see opportunity and fast development in capital markets, investment, insolvency and restructuring, IP, anti-trust, and dispute resolutions. Since people are adopting the remote life and working style, data protection and compliance requests soar, attracting lots of attention.

 

The state council executive meeting, 18th of February, 2020

Phased reduction and exemption of corporate social insurance fees and implementing the policy of payment delaying of housing fund by enterprises: “In order to reduce the impact of the epidemic on enterprises, especially small and medium-sized enterprises, in all provinces except Hubei province from February to June, small and medium-sized enterprises can be exempted from endowment insurance, unemployment insurance, and industrial injury insurance, and from February to April, large enterprises can be reduced by half; Hubei Province can be exempted from February to June for all kinds of insured enterprises. At the same time, before the end of June, the enterprise can apply for delaying the payment of the housing provident funds. During this period no overdue treatment will be made for the provident fund loans that the employees fail to repay normally due to the impact of the epidemic.”

 

State Council: Introducing Strong Financial Measures to Help Smaller Firms Resume Production and Operation (CN/EN) The State Council executive meeting on February 25, 2020, unveiled a string of measures to support SMEs. For eligible SMEs, financial institutions will be encouraged to provisionally defer their principal loan repayments. Their interest payments can be deferred to June 30, with penalty interest payments exempted.

 

Employment Matters

Since the outbreak of severe acute respiratory syndrome coronavirus 2 (“COVID-19 virus”) and the adoption of response measures by government authorities at national, provincial, and municipal levels, manufacturers have probably most focused on employment issues, such as the resumption of work, levels of compensation, and, sometimes, layoff options. Over the past six weeks, PRC authorities at the national and local levels have issued guidance for employers with respect to the resumption of work and the entitlements of employees. On January 24, 2020, the Ministry of Human Resources and Social Security issued the Notice on Labor Relations under the COVID-19 Situation (the “Labor Notice”)

 

In essence, the pandemic won’t reshape international relations, but it will accelerate history. Besides the impact of COVID-19, we should fully realize the pressure from the structural competition between China and the U.S. and the bump of deglobalization and respond accordingly.

 

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