China promulgated the PRC Anti-dumping and Anti-subsidy Regulations on March 25 1997. The Regulations aim to maintain fair competition in foreign trade and protect the relevant Chinese domestic industries in the event dumped and subsidized 'imported products' cause substantial damage to the established domestic industries, pose a substantial threat of damage, or create substantial obstacles to the establishment of domestic industries.
Under the Regulations, dumping refers to a situation in which the export price of an imported product is lower than its normal price. The normal price is determined as follows:
- by taking the comparable price of the same or similar product in the export country; or
- if the same or similar product does not have a comparable price in the market of the export country, taking the normal price as the comparable price of that product exported to a third country, or the sum of production costs plus reasonable expenses and profits of that product.
The export price is determined in two ways:
- if an imported product has an actual payment price or price to be paid, that will be the export price; or
- if an imported product has no actual payment price, no price to be paid, or its price cannot be determined, then the price at which the imported product is first resold to an independent buyer or the price 'reasonably' determined by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), after consulting with the General Office of Customs, shall be the export price. The export price of the product minus the normal price is the dumping margin.
In the event of alleged dumping, domestic manufacturers whose products are the same as or similar to imported products may submit an application to MOFTEC, which will examine the evidence submitted and determine whether to carry out an investigation after consulting with the State Economic and Trade Commission (SETC). MOFTEC may also carry out investigations, after consulting with the SETC, without the submission of complaints, in circumstances where there is sufficient evidence to prove the existence of dumping and damages and causation between the two.
An investigation into dumping will fall into two parts: an initial verdict and a final verdict. During the initial verdict stage, MOFTEC and the SETC will conduct an investigation into whether dumping exists, and decide on the dumping margin and extent of damages. If dumping exists, certain anti-dumping measures may be adopted, such as the levy of a provisional anti-dumping tax, cash guarantees or other forms of guarantee. The term of the provisional anti-dumping tax shall be four months from the public announcement of the provisional anti-dumping measures, and, in special circumstances, the term may be extended to nine months. If after such time further investigation reveals that dumping continues, MOFTEC and the SETC will deliver a final verdict, and an anti-dumping tax may be proposed. The anti-dumping tax will be valid for five years, during which time it may be reviewed.
The Regulations also include three articles concerning subsidies. Subsidies refers to the financial support or aid given directly or indirectly by foreign governments or public institutions to industries and enterprises. The anti-dumping measures described above also apply to subsidies with respect to damages caused by subsidies, the investigation of subsidies and the implementation of anti-subsidy measures.
Florence Li and Connie Zhong