What Is Anti-Dumping Duty?

Anti-dumping duty refers to a tariff imposed by one country on its own importer to prevent dumping in other countries. According to Article 6, paragraph 1, of GATT 1994, a country's products are exported to other countries in a way that is less than its normal value, thereby causing material damage or threat of material harm to a given industry on the territory of a Contracting State, or seriously obstructing it The establishment of a new industry in the country constitutes dumping. In practice, the most important and effective measure to resist dumping is the collection of anti-dumping duties.

Chinese name: Anti-dumping duties
Foreign name: Anti-dumping duty

Sector Law: international law
Purpose: Resist dumping

Basic definition of anti-dumping duties

Anti-dumping duty refers to an additional tariff imposed by the government of the importing country on the dumped product in addition to the normal tariff. In practice, the most important and effective measure to resist dumping is the collection of anti-dumping duties. Anti-dumping duty is an import surcharge, the amount of which should not exceed the dumping margin, and is limited to the realization of anti-dumping actions. The theoretical basis for imposing anti-dumping duties on import operators is that after imposing anti-dumping duties on import operators, it will increase the cost of importing such goods, and then switch to importing other countries or purchasing higher-priced products such as domestic products, thereby reducing the The influence of domestic products, thereby protecting the interests of domestic industries and resisting vicious competition.

China's Ministry of Commerce issued Announcement No. 43 of 2018, announcing the final ruling on anti-dumping investigations on imported styrene originating from South Korea, Taiwan, and the United States. The mainland styrene industry has suffered substantial damage, and there is a causal relationship between dumping and substantial damage. It was decided to levy anti-dumping duties on the above products starting from June 23, 2018. 5 years.

Basic content of anti-dumping duties

Anti-dumping tax entity elements

First, dumping. In theory, dumping can be divided into accidental dumping, predatory dumping (predatory dumping) and long-term dumping, which can be said to be classified by time. First of all, accidental dumping refers to short-term low-price sales, usually to deal with the backlog of surplus products, the need for bankruptcy or special circumstances of the company, such as changing production or shutting down. This is the normal marketing method for operators. At the same time, due to the short time, it usually does not pose a threat to market competition, so countries have not made it an anti-dumping target. The second type is predatory dumping. From the perspective of time, this usually takes several months to several years. The purpose is to occupy the market of the importing country through low-price sales and obtain the dominant economic status of the importing country. Finally, it takes advantage of its own advantages, such as limited competition or monopolistic position in the importing country, to obtain profits through monopoly prices. This is the object of anti-dumping control. The third is long-term dumping. The main purpose is to achieve economies of scale, maintain domestic price balance, and sell some goods abroad at low prices. Although the purpose of this dumping is not to subjectively crowd out the markets of other countries, it is also regulated to a certain extent by the anti-dumping laws of various countries because it objectively harms the interests of importing countries. The WTO Anti-dumping Agreement clearly states that dumping is a way for a country's products to enter another country at a price lower than the comparable price of similar products in the normal trade process of the exporting country, that is, a price lower than normal value. The most important factor in determining dumping is price. According to the provisions of the WTO Anti-dumping Agreement, there are three methods for determining the normal price. Generally speaking, for a market economy country, if the same or similar domestic product is sold, and the product is representative, this price will be regarded as the normal price. If the exporter does not sell such or similar products in his country, or the prices of such products are not representative, he can choose a comparable price to sell to a third country. At the same time, this price is also the most common method used by European and American countries to determine the normal price of non-market economy countries. The last normal method of price determination is to use a structured price determination method. The specific price determination method is to add a reasonable amount of management fees and other costs and profits to the production cost. The premise of using this method of price determination is the same as comparable prices applicable to third countries, that is, both can be chosen to apply to specific situations. However, in fact, the EU prefers structured prices and the United States prefers third country prices. For a long time, European and American countries have used the sales price or structural price of a third country as an excuse for China's non-market economy countries to recognize that Chinese goods have been dumped. It will also be cancelled in 2016, so this will also improve China's anti-dumping situation to a certain extent.

Second, the identification of damage. Damage is a core element of anti-dumping duties. First of all, from the purpose of levying anti-dumping duties, the purpose of anti-dumping duties is to eliminate dumping damage and restore trade to a healthy competition. Secondly, judging from the amount of anti-dumping tax, the degree of damage determines the level of dumping tax. Without damage, no anti-dumping duties will occur. According to the provisions of the WTO Anti-Dumping Agreement, damage can be divided into three types, namely, material damage, threat of material damage, and material obstruction. Among them, material damage and threat of material damage emphasize the protection of the same or related similar industries, and threat of material damage includes protection The establishment of new industries. According to EU anti-dumping regulations, the European Commission is mainly responsible for anti-dumping investigations and related work. The European Commission must prove that the industry was harmed during anti-dumping investigations. Among them, industry is the main body of damage, including three types: all producers, major producers and qualified regional markets. The regional market means that there are two or more competitors in the market, but the demand for products outside the region is very small, mainly depending on the production of products in the market. When the European Commission determines that dumping has caused substantial damage to the domestic industry, it must first prove that the quantity of dumped products has increased absolutely or relatively in a certain period of time, and that the increase in quantity must be substantial. Second, the European Commission must prove that the prices of similar domestic products have been hit by dumping by exporters, mainly including falling prices or preventing reasonable price increases. In addition, when reviewing the substantial damage caused by dumping to the domestic industry, we must consider relevant economic factors, including: profit, market share, output, productivity, production capacity, return on investment, equipment utilization, inventory, employment, investment capacity Wait. When the European Commission determines a threat of material damage, it will prioritize it as material damage if there is evidence that the threat of material damage has developed into material damage. The European Commission also considered the quantity and price of exports when determining the threat of material damage. In terms of export volume, exporters must be able to continue to export in large quantities. As far as prices are concerned, the prices of related products in importing countries must be suppressed. Unlike material damage and the threat of material damage, material obstruction is a very vague concept in the EU. There are no specific provisions in the law, which will make anti-dumping duties vulnerable to abuse. Real obstacles cannot be simply understood as obstacles to the establishment of related industries, because competition itself will have some adverse effects on competitors' production and sales, and the actual obstacles should be more obvious. Specifically, when a series of work to establish related industries is about to be completed, due to dumping by exporters, such obstacles must make production and sales of related industries impossible, so that we can realize that dumping has actually hindered related industries.

Third, the causal relationship between dumping and damage. Determining the causal relationship between dumping and damage is a key link in deciding whether to levy anti-dumping duties. According to the WTO Anti-Dumping Code, the WTO Anti-Dumping Agreement, and the anti-dumping laws of various countries, the purpose of levying anti-dumping duties is to eliminate the damage and threat of damage caused by dumping to related industries. Premise. This requires relevant anti-dumping investigation authorities to not only prove the existence of exporter dumping and damage to domestic industries, but also prove that exporter dumping caused damage to domestic industries when deciding whether to levy anti-dumping duties. However, due to the complexity of market competition, it is difficult to say that the damage to related industries in importing countries was caused entirely by exporters, and factors such as the exchange rate and domestic market demand should be considered at the time. However, it is difficult to determine the extent to which dumping exporters have caused damage to the domestic industry. Therefore, no matter whether it is the WTO Anti-dumping Agreement or the specific legal practice of each country, the main causality standard has been abandoned, but the general causality standard has been adopted. In the EU anti-dumping law, on the one hand, the anti-dumping investigation authority is required to prove that the dumping is causing damage, on the other hand, other factors that damage the related industries should also be considered fairly. These factors mainly include: changes in consumption patterns themselves, imports of identical products without dumping, changes brought about by competition between domestic and foreign same industries, and so on. In specific practice, we should strictly avoid injuries caused by non-dumping actions due to injuries caused by dumping.

Anti-dumping Duty Procedure Elements

Review system for anti-dumping duties. Anti-dumping tax, as a kind of tax, is different from ordinary tax and has obvious time characteristics. At the same time, it has more disciplinary factors and its purpose is more to promote normal trade behavior. Therefore, when the objective basis of taxation, that is, the dumping phenomenon changes, anti-dumping tax will inevitably follow the change, otherwise the anti-dumping tax will deviate from its own requirements. The review of anti-dumping duties includes two aspects: on the one hand, time review, including interim review, mid-term review, and sunset review; on the other hand, review whether anti-dumping duties are sufficient to resist dumping and whether it is necessary to stop and reduce anti-dumping duties.

Conditions applicable to the mid-term review. Anti-dumping duties regulate dumping behavior. When the dumping behavior changes or does not exist, the anti-dumping tax should be changed accordingly. The WTO Anti-Dumping Agreement stipulates that anti-dumping duties will be implemented for a maximum of five years in principle, which means that anti-dumping duties can be terminated within five years. According to Article 11.2, when an interested party submits a corresponding review request and provides sufficient evidence, the anti-dumping investigation agency can review the anti-dumping tax, and the anti-dumping investigation agency has also accepted this request, or the anti-dumping investigation agency has initiated the investigation. In the WTO Anti-dumping Agreement, the provision on the provisional review of anti-dumping duties is very simple and more fair in principle. The European Union has set the deadline for the interim review to be one year after the implementation of anti-dumping measures, and the basis for the interim review must be major changes in dumping and damage. The deadline for the implementation of the mid-term review is the same as the deadline for the sunset review, which is 12 months. The EU's mid-term review system does not specifically regulate the increase or decrease of anti-dumping duties, but limits the termination of anti-dumping duties. The conditions for terminating anti-dumping duties are that dumping no longer exists, and cancellation of anti-dumping measures will not cause dumping to happen again. Unlike the European Union, the United States has a mid-term review, which is an annual review and a review of changes in the situation. The mid-term annual review means that the Ministry of Commerce will issue a review announcement within a certain period of each year after the imposition of anti-dumping duties to urge relevant stakeholders to conduct an administrative review. If there is no stakeholder requirement, the announcement will naturally be invalid.

The dilemma facing the review of new exporters. The review system of the international anti-dumping mechanism aims to promote fair taxation, prevent damage to the legitimate interests of exporters, and more importantly, provide relief for the rights of exporters. Among them, the mid-term review and sunset review system are more about the changes in the export status of the same exporter at different stages, rather than providing relief procedures for the rights of different exporters after the anti-dumping investigation is completed. In addition, the anti-dumping duties stipulated in the WTO's Anti-dumping Agreement are imposed on importers, which means that different exporters export the same products to importers at different stages and may suffer the same anti-dumping treatment. New exporters are the main players. The new exporter in the anti-dumping agreement refers to the exporter who did not export the investigated product to the exporting country during the anti-dumping investigation, and exported the corresponding product to the importing country during the implementation of the anti-dumping measures. Unlike other exporters who are under anti-dumping investigations, new exporters are not involved in anti-dumping investigations. This one-size-fits-all approach will inevitably lead to injustice if the tax rates established during the survey apply directly to them, regardless of the special circumstances of the new exporter. Generally, new exporters will apply other tax rates in the anti-dumping process to protect the interests of new exporters. Article 9 (5) of the WTO Anti-dumping Agreement provides for a new exporter system. It first explained the meaning of new exporters, that is, exporters who failed to export goods to exporting countries during the investigation, and could prove that there was no connection between them and the exporters under investigation. Second, the agreement emphasizes that importing country authorities should expeditiously review and decide on review requests from new exporters. Generally speaking, anti-dumping duties cannot be levied on new exporters during the investigation, but new exporters can be estimated and required to provide guarantees, and can also be collected retroactively. Although the WTO's anti-dumping agreement provides for new exporters, the terms are too vague. For example, among the requirements for the composition of new exporters, only the requirements have nothing to do with the exporters surveyed, but they do not specify the criteria for connection. The regulations during the review only require as fast as possible and follow the normal review procedures, but the lack of specific regulations will lead to a hollow and lack of reality in the new exporter system, and its existence does not make much sense to protect the rights of new exporters.

Anti-dumping tax related laws

China's anti-dumping mechanism can be traced back to the "Foreign Trade Law of the People's Republic of China" promulgated in 1994. Article 30 of this law clearly stipulates China's anti-dumping rules. At this time, the "Foreign Trade Law" only defines dumping and points out that investigations can be conducted based on dumping, but because the terms are too general, it is difficult to guide specific anti-dumping practices. What really achieved the milestone development of anti-dumping was the "Regulations of the People's Republic of China on Anti-dumping and Countervailing Measures" promulgated by the State Council on March 25, 1997. Since China's entry into the WTO in 2001, international trade has grown, and foreign anti-dumping systems have had a profound impact on China. China promulgated the "Anti-dumping Regulations of the People's Republic of China" in 2001 and perfected them in 2004. In addition to the aforementioned laws and regulations, China's anti-dumping legal system also includes laws and regulations formulated by relevant Chinese administrative and judicial authorities.

Anti-dumping tax reference materials

[1] Yi Zaicheng. Research on the Double Relief in the Post- "Non-market Economy" Era: Taking US Products' "Double Countermeasure" Measures as an Example [J] .French Business Research, 2018,35 (01): 160 -169.

[2] Yue Xiaozheng. Research on Legal Issues of International Anti-dumping Duties [D]. Southwest University of Political Science and Law, 2017.

[3] Zeng Yanjun. Legal countermeasures of anti-circumvention measures in China's anti-dumping [J]. Yue Lu Law Review, 2014, 9 (00): 186-199.

[4] Duan Wenjing. Theoretical and empirical analysis of the impact of anti-dumping on China's industry [D]. Hunan University, 2015.

[5] Mike Sheppard, GlennGu. Anti-dumping duties imposed by the United States will adversely affect China s solar module exports [J]. Integrated Circuit Applications, 2012 (08): 8-9.

[6] Ye Bo. Law and case analysis of "double anti-investigation" and its enlightenment [J]. Journal of Beijing Institute of Technology (Social Science Edition), 2011, 13 (05): 96-99 + 106.