China’s economic statistics - the "GDP numbers riddle"

by M. Ulric Killion

(People's Republic of China State Statistical Bureau / 中华人民共和国国家统计局). In the news media circuit, the month of August witnessed a great deal of attention directed to China and its economic statistics. For instance, according to the China Economics Blog, Where Chinaeconomicsblog leads the FT is sure to follow (Posted by ChinaEconomist on Aug. 5, 2009):

"Of course the fact that the FT is covering the 'GDP numbers riddle' has nothing to do with Chinaeconomicsblog's coverage but it is good to see the FT picking it up nonetheless.
China's growth figures fail to add up [FT].

All but seven of the regions reported GDP growth rates above the bureau's first-half figure of 7.1 per cent. At the start of the year, Beijing set 8 per cent as China's growth target for the year.

Hmmmm.
However, this is the first time I have seen poetry as the first line of defence.

The criticism has prompted the NBS to launch a campaign last week, entitled 'Statistical Feelings: We have walked together – Celebrating the 60th anniversary of the founding of New China,' to boost confidence among statisticians.

The campaign has already produced works such as: 'I'm proud to be a brick in the statistical building of the republic.' In another poem, a contributor writes: 'I am arrange the stars in the sky because I have statistics.'"

There is the earlier Aug. 4, 2009 blog at China Economics Blog, "Chinese riddles" - Chinese numbers questioned yet again, which also addresses the recent controversy concerning China statistics. The Aug. 4, 2009 blog reads:

"Let us imagine that the numbers are wrong. What harm can it do? It might artificially inflate confidence that may in turn cause a virtuous circle of growth and prosperity? Can it be that easy or is it simply storing up a whole lot of trouble for later?

I have posted this article in full as it makes for important reading. This is an issue I have posted about on this blog on numerous occasions. The "oil use" issue is important as these numbers are harder to fake. Can oil use fall and output rise by so much? previous correlations suggest not. Can 100,000 statisticians be wrong? This number of statisticians might even help the UK get its numbers right."

As for the Financial Times' coverage of the issue, The Financial Times reports that economic statistics about regional economic growth aren't tallying with Beijing's numbers:

"But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government's national figure, raising fresh questions about the accuracy of statistics in the world's most populous nation.

GDP totalled Rmb15,376bn ($2,251bn) in the first half, according to data released individually by China's 31 provinces and municipalities, 10 per cent higher than the official first-half GDP figure of Rmb13,986bn published by the National Bureau of Statistics." 

The article goes on to describe a campaign launched by the National Bureau of Statistics in response:

"The campaign has already produced works such as: 'I'm proud to be a brick in the statistical building of the republic.' In another poem, a contributor writes: 'I can rearrange the stars in the sky because I have statistics'" (China Digital Times, China's Growth Figures Fail to Add Up (Updated), Aug. 6, 2009)."

The Aug. 4 blog (China Economics Blog) rightly describes the issue of the accuracy and reliability of statistical reports from China as an old subject that occasionally resurfaces. However, the premise of the Aug. 4 blog (i.e., "What harm can it do?") is challengeable. This is because the "GDP numbers riddle" presents an important issue for several and obvious reasons.

For instance, "Problematic are past reports of economic growth rates because they routinely contain embellished or reportedly higher rates of economic growth than real rates, by reflecting higher reported growth rates of 9 percent or more. According to Li Deshui, commissioner of the National Bureau of Statistics (NBS, guojia tongjiju), China's economy grew at an annual average growth rate of 9.6 percent from 1979 to 2004, at 10 percent in 2003, at 10.1 percent in 2004, and then at 9.9 percent in 2005. Li reported that for 2005 the GDP was 18.23 trillion yuan ($2.26 trillion), reflecting value-added components of several industries. Li also reported that primary industry reached 2.27 trillion yuan (5.2 percent increase), secondary industry was 8.62 trillion yuan (11.4 percent increase) and tertiary industry was 7.34 trillion yuan (9.6 percent increase). Although challengeable on several grounds - theoretical and practical - Li also announced economic performance in 2005, 'boosted the income per head of China's 1.3 billion citizens to $1,700, making the country richer than Morocco.' Further, Li adds, 'The data also means China, with output of 18.2 trillion yuan ($2.3 trillion), has overtaken France to become the world's fifth-largest economy and might also have leapfrogged fourth-placed Britain, depending on growth rates and currency changes in 2005.' In 2006, China's GDP reportedly reaches $2.6847 trillion and per capita GDP surpasses $2000 for the first time, and many predict that by 2020 per capital GDP will reach $3000" (internal citations omitted) (Killion, Modern Chinese Rules of Order (2007), Chapter 8).

"However, an IMF study observed that, in the long term, it is consumption rather than investment or even GDP serving as a better measure of economic welfare. A recent 2006 Organisation for Economic Co-operation and Development (OECD) study also found that within a national account framework, there are better measures of economic resources than GDP per capital, such as national product and net income. In terms of China, the earlier mentioned IMF study also observed the difficulty of operating in an environment of institutional deficiencies, which includes a weak legal framework, poor governance and economic data of dubious quality. A January 2006 article (Shenzhen Daily) reads, 'Economists agreed that China had the wind in its sails.' However, as early as 2003, Li Deshui acknowledged for the first time that China's economic estimates were flawed, and its research methods 'did not always reflect the real situation,' which necessitated that after about twenty years the NBS had to switch from the Soviet accounting system, and not standard international practices of readjusting quarterly and annual GDP growth estimates, to Western accounting standards. In terms of the reliability of China's statistics published by the NBS, one hopes that the 'wind in its sails' is not from the 'wind of falsification and embellishment (jiabao fukuafeng)'" (internal citations omitted) (Killion, 2007).

Copyright © Protected - All Rights Reserved M. Ulric Killion, 2009.

The charge of treason - "Musharraf booked for detaining judges: police"

by M. Ulric Killion

Pakistani leaders have filed treason charges against Pakistan’s former leader Pervez Musharraf. The treason charges relate to his detention of about sixty (60) members of the judiciary or judges of the Supreme Court. The illegal detention of these judges occurred during Musharraf’s 2007-imposition of emergency rule. The pending charges have the potential of brewing an international crisis, as the government of Britain lobbies Pakistani leaders to spare Musharraf from the charges of treason. (Photo: Julian Simmonds).

As news sources are generally reporting, [Xinhua, Musharraf booked for detaining judges: police, Aug. 12, 2009], - ISLAMABAD: Police in the Pakistani capital Tuesday registered a case against former President Pervez Musharraf for illegally detaining top judges during 2007 emergency rule a day after a court called for registration of the case, police said. Up to 60 judges including chief justice Iftikhar Muhammad Chaudhry, were sacked and put under house arrest when they refused to show loyalty to Musharraf. 

Musharraf was charged under various sections which carry at least three-year jail term, said Liaquat Niazi, Deputy Superintendent of Police at Secretariat Police Station, where the case was registered. Niazi said that all aspects will be reviewed during the investigation as to which police officers and officials in Islamabad followed instructions from the former president. A lawyer Aslam Iqbal Ghuman had filed a petition in the district court Islamabad, requesting the judge to order the police to register case against the former military president. Ghuman told reporters that he will also name more people to be booked in the case when he will record his statement with the police.

 

The petitioner said that the former President had put under house arrest the Chief Justice Iftikhar Muhammad Chuadhry and around 60 judges of highest judiciary and their families when he imposed emergency rule on November 3, 2007. He argued that President Asif Ali Zardari restored the judges on their November 2, 2007 positions and said that Musharraf's action was not only illegal but also an insult to the judiciary. The judges had lost jobs after they refused to take oath under the Provisional Constitutional Order (PCO) after Musharraf suspended the country's Constitution.

 

Musharraf, currently in London, resigned in August 2008 to avoid impeachment by the parliament. On July 31, Supreme Court ruled that former president Pervez Musharraf's decision to impose emergency rule and dismiss dozens of senior judges was unconstitutional. A 14-member Supreme Court bench headed by Chief Justice Iftikhar Muhammad Chaudhry had summoned Musharraf to appear in person or through a lawyer to explain his position, but the ex-president ignored the notice. Opposition leader and former Prime Minister Nawaz Sharif demands of the government to put Musharraf on trial for suspending constitution (Xinhua, 2009).

In the interim, and as earlier mentioned, the government of Britain is lobbying Pakistani leaders, more particularly the Pakistan Muslim League, to spare the former leader Pervez Musharraf from treason charges. According to senior opposition figures, the charges of treason are punishable by the death penalty (Dean Nelson in New Delhi and Javed Siddiq in Islamabad, Telegraph.co.uk, Aug. 12, 2009). 

As for the efforts being made by Britain, “Sir Mark Lyall Grant, political director of the Foreign Office and a former High Commissioner in Islamabad, was reported to have visited the former premier Nawaz Sharif and urged him not to press for Mr. Musharraf to be extradited to Pakistan to face trial over his imposition of emergency rule in November 2007” (Nelson and Siddiq, 2009).

However, “British sources denied Sir Mark had intervened on behalf of Mr. Musharraf, who now lives in London, but stressed the need to avoid any ‘distraction’ from creating regional stability. Despite Britain's intervention, Mr. Sharif [the leader of the Pakistan Muslim League] appears determined to bring Mr. Musharraf back from the UK, where he is staying under Pakistani government protection, to face a trial for treason under Article 6 of its constitution. If convicted he would face the death penalty. Pakistan's Chief Justice, Muhammad Iftikhar Chaudhry, has already ruled that Mr. Musharraf broke the constitution when he imposed emergency rule and sacked seven supreme court judges in November 2007. A case has been registered against him for holding these judges under house arrest, for which he could face three years in jail. But Mr. Sharif believes he must also face treason charges to discourage military chiefs from seizing power in the future. ‘We should go on with it. Something must be done if we are to prevent another military takeover,’ said an aide” (Nelson and Siddiq, 2009).

 

For the moment, Britain stands alone, while also having to deal with the consequence of Musharraf, after his 2008 resignation, currently residing in Britain. However, Britain’s plea for Pakistan to spare Musharraf, which is supposedly in the greater interest of regional stability, may eventually garner support from other countries. This is because the substance of Britain’s plea that Pakistan spares Musharraf in the interest of regional stability is, actually, couched in the language of Parkistan not becoming distracted from its progress in pursuing al-Qaeda and Taliban fighters. Growing international support for Britain’s call to spare Musharraf from treason charges, as so couched, may well serve to challenge the reticence of Pakistani leaders, or perhaps more accurately, the reticence of former premier Nawaz Sharif and the Pakistan Muslim League.

Copyright © Protected - All Rights Reserved M. Ulric Killion, 2009.

The Chinese trade regime: will the prey become hunter or vice versa?

by M. Ulric Killion 

Borrowing from a page at the website of the International Association of Machinists and Aerospace Workers (IAM), which addresses common complaints about trade with China, “Unfair trade practices by the People’s Republic of China continue to plague American workers. The trade deficit hit a record $232 billion last year and manufacturing jobs continue to diminish as companies such as Wal-Mart look to China for cheap labor.”

The IAM further characterizes the problem with China trade as, “The United States continues to be flooded with a wave of imports from China. Clothes, toys, refrigerators, air conditioners – the list goes on and on. U.S. corporations such as Wal-Mart are jumping at the opportunity to import products from a country where workers are forced to work ungodly hours for a mere fraction of what American workers earn. Meanwhile, the Chinese government continues to drastically undervalue their currency, making American products more expensive in China and Chinese products cheaper here. The result is the continued loss of manufacturing jobs and a record trade deficit that hit $232 billion last year.”

In the United States and other (both developed and developing) countries and economies, the aforesaid statements of the IAM are typical of the complaints made about trade with China. For this reason, it should hardly come as a surprise that China enjoys the status of being the trade regime that is the most frequent subject of new World Trade Organization (WTO) investigations (WTO, 2009).

As the China Ministry of Commerce observed, “China can expect to be a major target of rising trade protectionism - particularly from the United States and India - as the world struggles to recover from the global financial crisis, the Ministry of Commerce (MOFCOM) said Thursday. The crisis has pushed trade protectionist cases to a historical high” (Ding, 2009).

Sino-US Trade 

The year of 2009, however, may well represent a pivotal year for China as a Member of the WTO. As of this writing, China has filed its first complaint against the European Union (EU) with the WTO, in relation to its complaint against the EU’s anti-dumping duties on China-made screws and bolts, and there is also its filing of a challenge to a US ban on the imports of Chinese poultry.

China’s participatory efforts in addressing its trade disputes within the realm of the WTO and its Dispute Settlement Body (DSB) is a good or bad consequence, mostly dependent on who or what trade regime is the alleged wrongdoer, or even, in the future, who or what trade regime may find themselves at the other end of the AD/CVD variety of trade measures. A good consequence owing to China’s increasing use of the WTO trade regime, especially its DSB, is that it lends to the processes of juridification, which arguably associate with the increasing utilization of international trade laws or the WTO rules—substantive and procedural—governing the world multilateral trade system.

From the perspective of those countries or trade regimes witnessing China increasingly employing the WTO regime in resolving trade disputes, other countries or trade regimes may perceive this as a bad consequence. In this respect, the United States should proceed with greater caution on issues of Sino-US trade, lest it may find itself in this category of those countries or trade regimes.

For instance, when the United States filed a complaint with the WTO over Chinese restrictions on the export of key industrial raw materials, such as coke, bauxite, fluorspar, magnesium, silicon metal, yellow phosphorus and zinc, China responds by filing its complaint challenging a US ban on the imports of Chinese poultry. In another example, the United States introduced its new variety of protectionist-trade policy, which is the legislative-enacted Buy American variety. In July 2009, China, perhaps as a response or as even following the example set by the United States, introduced its Buy China variety of protectionism (i.e., the Buy China requirement), as an inclusion in its domestic stimulus package.

In June 2009, there is also the controversial decision of the International Trade Commission (ITC). The ITC ruled “by a 4-2 vote that a surge of low-priced consumer tires from China is harming the domestic industry,” an import surge they alleged has caused “major job losses and plant closures in the United States” (Killion, June 20, 2009). The ITC considered the issue of remedy, and send its report to the US President and the US Trade Representative by July 9. The United Steelworkers (USW) Union, who filed its complaint with the ITC on April 20, 2009, is now urging the Obama administration to employ section 421 of the Trade Law, which requires the ultimate approval or rejection of the president even after a ruling of the US International Trade Commission. In this respect, the USW wants the Obama Administration to approve the ruling of the ITC, thereby, from their perspective, they want the Obama administration to more than halve the number of imports from 46 million units last year to 21 million. The USW perceives these China-tires imports as having cost about 7,000 US jobs. All of this presents a dilemma for the Obama administration, however.

"This is the administration's first real test on trade policy . . . [and] they're either going to implement new trade barriers or not," as Chad Brown explained, "this is the first decision that has been in the administration's lap that they have direct responsibility over" (Shin, 2009). “In his short tenure, Obama has sent conflicting signals on trade. He has warned against policies that ‘send a protectionist message’ and criticized trade barriers, saying they ‘hurt us all in the end.’ But the administration has also failed to stop policies that major trading partners have decried as protectionist. It has largely ignored complaints by Canada, its largest trading partner, over the Buy American policy. And it has failed to resolve a dispute with Mexico over Mexican truck access to U.S. highways” (Shin, 2009).

Moreover, the Obama administration has been sending other conflicting signals on Sino-US trade. For instance, there is Secretary of State Hillary Clinton encouraging China to continue to buy US debt, while US Treasury secretary Timothy Geithner earlier accused China of currency manipulation, and the appointment of Ron Kirk as the new US trade representative, who announced that he did not come to the job with deal fever. Kirk, though supporting international trade in a broad sense, "has also made comments suggesting that protectionism might not be so bad after all" (Abrams, 2009). The problems of US protectionist policy may become more of a reality with the passage of time for proponents of Buy American provisions; a path to protectionism that may ultimately serve as a legacy of the Obama presidency.

It is a crisis in Sino-US trade relations that seems to present a paradox for both the Obama administration and the US congress. As the Wall Street Journal (2009) observed, when addressing the first case initiated under the Obama administration, which involves Chinese restrictions on the export of key industrial raw materials, [US Trade Representative Kirk] "said it does seem somewhat 'counterintuitive' that the Obama administration's first WTO complaint involves allegations that China isn't exporting enough" (WSJ, 2009). 

China and WTO Investigations 

In addition, what other countries or trade regimes, especially Western countries or economies, should consider is the record of trade measures taken against China. This also serves as reminder of the recent WTO data or statistics on anti-dumping investigations. The data, more importantly, generally concludes the China enjoys the status of being the trade regime that is the most frequent subject of new investigations. Relevant portions of the WTO data follow.

In May 2009, “The WTO Secretariat reported that during the period 1 July — 31 December 2008, the number of initiations of new anti-dumping investigations showed a 17 per cent increase compared with the corresponding period of 2007. The number of new measures applied also increased between these periods. In particular, during July — December 2008, 15 WTO Members reported initiating a total of 120 new investigations, compared with 103 initiations reported by 14 Members for the corresponding period of 2007.” As the WTO Secretariat also reported, “On a yearly basis, there were 208 initiations of new anti-dumping investigations in 2008, as compared to 163 in 2007 and 202 in 2006 . . .”

According to the WTO Secretariat, “The Members reporting the highest number of new initiations during July-December 2008 were India, reporting 42, followed by Brazil, reporting 16, China (11), Turkey (10), Argentina and the European Communities (9 each), Indonesia (6), Ukraine (4), Pakistan and the United States (3), Australia and Colombia (2 each), and Canada, Korea and Mexico (1 each). These figures represented increases for Argentina, Australia, Brazil, India and Turkey, and declines for Korea and the United States, while the numbers of initiations by Canada, the European Communities and Mexico remained unchanged, compared with the numbers reported for July — December 2007. China, Colombia, Indonesia, Pakistan and Ukraine, which did not report new initiations for July — December 2007, reported new initiations for the second semester of 2008.” 

The WTO Secretariat, more importantly, reported that, “China was the most frequent subject of the new investigations, with 34 new initiations directed at its exports. This was a 17 per cent decrease from 40 new investigations opened in respect of exports from China during July — December 2007. The European Communities (including individual member states) was next with 14 new investigations directed at its exports, followed by Chinese Taipei, Thailand, and the United States (6 each), Indonesia, Korea and Malaysia (5 each), India and Saudi Arabia (4 each) and Iran and Turkey (3 each). These were followed by Australia; Belarus; Hong Kong, China; Japan; Russia; South Africa and Ukraine (2 each), and Argentina, Armenia, Brazil, Chile, Ecuador, Israel, Kazakhstan, Kuwait, Peru, Philippines and Sri Lanka (one each).”

China’s increasing participation in the WTO regime, especially increasingly employing its trade dispute resolution mechanism, is a good or bad consequence, mostly depending on who or what country stands on the other side of the aisle. However, despite China’s antagonists or those acting on behalf of China antagonists, in terms of the aspirations embodied in the WTO regime, it is actually a good consequence that will promote free and fair trade, in the long run. For the same reason, China’s increasing usage of the WTO regime in resolving trade disputes does not present an issue of whether the prey becomes hunter or vice versa.

Sources:

Ding Qingfen, China a major target of trade protectionism: official, China Daily, July 31, 2009.

M. Ulric Killion, US, Europe charge China with WTO violations, mulrickillion.blogspot.com, June 27, 2009.

M. Ulric Killion, ITC rules on China tire imports - finds import surge (dumping) in US, mulrickillion.spaces.live.com, June 20, 2009.

Annys Shin, In Tire Tariff Case, Obama Faces First Chinese Trade Policy Test, Washington Post, August 7, 2009.

Jim Abrams, Former Dallas Mayor Ron Kirk confirmed as US trade representative, AP, March 18, 2009, (Chicago Tribune).

U.S., Europe File Trade Complaint against China, WSJ, June 24, 2009.

China Defends Curb on Exports, WSJ, June 24, 2009.

WTO: 2009 Press Release, SPRESS/556, 7 May 2009, Anti-Dumping, WTO Secretariat reports increase in new anti-dumping investigations.

Copyright © Protected - All Rights Reserved M. Ulric Killion, 2009.

Pyongyang – Two jailed US journalists – Washington and diplomacy by Bill Clinton

On August 3, 2009, former President Bill Clinton shook hands with a North Korean official in Pyongyang.

(Photo/Zhang Binyang/Xinhua, via Associated Press).

In an update to an earlier blog (M. Ulric Killion, North Korea sentenced US journalists to 12 years of hard labor, June 9, 2009), which discussed the case of two American television journalists, Laura Ling and Euna Lee, who were sentenced by a North Korean court to 12 years of hard labor for illegally entering North Korean territory, former president Bill Clinton is now in North Korea attempting to negotiate the release of the two journalists.

On August 3, 2009, the New York Times reported that, “Mr. Clinton landed in Pyongyang,” though “The White House declined to comment.” (Mark Landler and Peter Baker, Bill Clinton in North Korea to Seek Release of two U.S. Reporters, NY Times, Aug. 3, 2009). This also marks the first public mission by Clinton on behalf of the Obama administration.

Washington is approaching the issue of the two journalists with caution. In formulating how to approach Pyongyang on the issue of the two journalists, Washington has been weighing the options of a special envoy, and United Nations-supported “strict sanctions against the North Korean government, including a halt to all weapons sales and a crackdown on its financial ties” (NY Times, Aug. 3, 2009). All of this may also explain the failure of Washington to comment on Clinton’s trip to Pyongyang.

In the end, though not conclusive on available diplomatic options, Washington appears to be attempting to separate its official diplomatic campaign from the case of the two journalists, though presenting the issue as a humanitarian issue. Nonetheless, the negotiation of an earlier release of the two American journalists, which is short of the twelve (12)-year sentence of hard labor, as earlier mentioned (Killion, June 9, 2009), is contingent on some form of diplomacy, such as a special envoy or couching the crisis as one of a humanitarian issue.

In this respect, Washington appears to be on the right track, by approaching the crisis as one of a humanitarian issue. By doing so, Washington also engaged a diplomatic approach that enhances its ability to garner additional support from the international community, especially from countries such as China and Russia. The voting record of China and Russia as permanent members of the United Nations Security Council evidence a reluctant to impose strict sanctions against Pyongyang, especially military action (Killion, Modern Chinese Rules of Order (2007), 164-69).

As earlier mentioned (Killion, June 9, 2009), “Kim Yong-hyun, a professor at Seoul's Dongguk University, said the 12-year sentence, though the maximum under Korean law, "does not mean much because the issue will be resolved diplomatically in the end.”

Moreover, as foretold by Kim Young-hyun, due to Washington and the diplomacy of Bill Clinton, the two U.S. journalists were released. As reported by the Washington post, “North Korea announced Tuesday that it had pardoned two detained American journalists, hours after former president Bill Clinton met in Pyongyang with reclusive dictator Kim Jong Il as part of an unannounced and highly unusual diplomatic mission to win their freedom” (Glenn Kessler and Stella Kim, N. Korea Says Two U.S. Journalists Have Been Pardoned, Washington Post, August 4, 2009).

Kim issued an order "granting a special pardon to the two American journalists who had been sentenced to hard labour in accordance with Article 103 of the Socialist Constitution and releasing them," the official Korean Central News Agency (KCNA) said (Kessler and Kim, 2009).

Copyright © Protected - All Rights Reserved M. Ulric Killion.

Sino-US trade - import duties on steel pipes, tyres and laminated woven slacks - issues of AD/CVD

by M. Ulric Killion

Chinese steel pipes; Photo/Internet.

There is an interesting blog at the International Economic Law and Policy Blog that addresses, and is titled, "GATT Article VI:5 and Dual Remedies for AD/CVD," which is posted by Simon Lester on July 27, 2009. Mr. Lester is discussing the US viewpoint that, "dual remedies against dumping and subsidies are only prohibited where the subsidies in question are export subsidies."

According to Mr. Lester, "For other kinds of subsidies, dual remedies are permitted. This seemed like a strange result to me, so I went where I always go for questions about the meaning of the GATT text: John Jackson's World Trade and the Law of GATT. At page 412, he says: Article VI:5 'prevents the imposition of both antidumping and countervailing duties to compensate for the same situation -- one or the other can be utilized but not both at the same time. It's interesting that his description does not distinguish between export subsidies and other kinds of subsidies. And it may very well be that the drafters did not have this distinction in mind, and did not mean to carve out separate rules for export subsidies.' Nevertheless, as a textual matter, I find the U.S. argument difficult to rebut."

The source or center focus of Mr. Lester's comments is the US response in the WTO/DS379 dispute or, more accurately, UNITED STATES – DEFINITIVE ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA (WT/DS379).

The history of this particular trade dispute dates back to 2008, when China filed a WTO complaint against duties placed by the United States on the imports of certain Chinese steel pipes, tyres and laminated woven sacks. On September 27, 2009, China publicly announced, "Considering that bilateral consultations between China and the US failed to solve concerns of China, China requested consultations with the US under the WTO dispute settlement mechanism regarding those measures" (考虑到中美双边协商无法解决中方关注的问题，中国要求在WTO争端解决机制下与美方就[关税]措施进行协商). 

Washington imposed the import tariffs because China allegedly was selling those products in the US market at less than their normal value, or simply, dumping. As a general rule and broad definition, dumping in trade constitutes the practice of selling goods abroad below the price charged for the same goods in the domestic market or at a price below the cost of production, usually with the aim of driving competitors out of the market.

On September 27, 2009, China further announced, "After the anti-dumping and countervailing investigations by the US against the above mentioned products were initiated, China was highly concerned and has repeatedly articulated its position at various occasions, opposing the unfair practices of the US in those investigations" (美国对上述产品发起反倾销和反补贴调查后，中国即表示高度关注并且在不同场合反复阐明自己的立场，反对美国在这些调查中的不公平做法). According to China, the anti-dumping and countervailing investigations, including the import duties against China products, were unfair trade practices.

Moreover, and potentially consequential for future Sino-US trade, the pending trade dispute and/or request for consultation represents the second time that China's government has officially initiated a dispute at the WTO level.

In the historical context of WT/DS379, Mr. Lester's comments examined the First Written Submission of the United States, filed May 27, 2009, in UNITED STATES – DEFINITIVE ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA (WT/DS379). His comments focused, in light of the US response in WT/DS378, on the issues of GATT Article VI:5 and the availability of dual remedies for anti-dumping and countervailing duties.

Then there is the issue of Sino-US trade. Although the final outcome of this trade dispute remains pending, the final resolution of this case at the WTO level may affect both future Sino-US trade relations, and subsequent legal interpretations of GATT Article VI: 5 and anti-dumping and countervailing duties, especially the issue, or US argument (WT/DS379), of whether "dual remedies against dumping and subsidies are only prohibited where the subsidies in question are "export subsidies" (Lester).

In other words, for many reasons, the pending dispute in WT/DS379 presents an interesting trade dispute deserving our attention.

Copyright Protected - All Rights Reserved M. Ulric Killion, 2009.

China challenges EU duties on screws, bolts at WTO

On July 17, 2009, China filed its first complaint against the European Union (EU) with the World Trade Organization. China's complaint against the EU targets anti-dumping duties on China-made screws and bolts, which is a trade dispute that has been pending since January of this year. A summary introduction, by way of relevant news releases, to the trade dispute follows.

BRUSSELS, July 17 (Reuters) - China has decided to challenge at the World Trade Organisation European Union anti-dumping duties on Chinese-made screws and bolts imposed by Brussels in January, sources with knowledge of the case said on Friday.

"[MOFCOM] (China's ministry of commerce) is going to seek WTO dispute settlement consultations in the EU fastener case over the legal process used by Brussels," one source told Reuters.

Source: Darren Ennis, reporting.

The Background

UPDATE 1-EU puts antidumping duties on Chinese screws, bolts

BRUSSELS, Jan 31 (Reuters) - The European Union imposed on Saturday import duties of up to 85 percent on screws and bolts from China, a move likely to trigger retaliatory action by Beijing at the World Trade Organisation. The tariffs affect up to 200 Chinese companies selling components widely used for cars, white goods and machinery in the EU and are worth some 575 million euros ($739 million) a year.

Chinese manufacturers, anticipating the duties, have asked Beijing to take the EU to the WTO, the global trade watchdog, over the matter. They say Brussels is protecting European companies amid the worst global economic slowdown in 80 years. But the European Commission, which oversees trade policy in the 27-nation bloc, rejected the allegation.

"We reject strongly the implication from various sources quoted in the press that any anti-dumping measures in this case would be protectionist and not based on fact," the Commission said in a statement to Reuters. "The Commission rejects any notion that anti-dumping measures are used to protect European companies from fair competition."

"Anti-dumping is about fighting unfair trade, and the Commission will continue to address unfair trade where we find it, based on the facts. . ."

Sources:

Darren Ennis (reporting, Reuters UK), China challenges EU duties on screws, bolts at WTO, Reuters UK, July 17, 2009.

Darren Ennis (reporting, Reuters UK), UPDATE 1-EU puts antidumping duties on Chinese screws, bolts, Reuters UK, January 31, 2009.

Copyright © Protected - All Rights Reserved M. Ulric Killion.

WTO - "DSB establishes panel in China-US poultry case"

by M. Ulric Killion

China launched the first World Trade Organization case against the administration of President Barack Obama on Friday, challenging a U.S. ban on Chinese poultry. Beijing said Washington was violating a number of global commerce rules by preventing Chinese chicken parts from entering the U.S. market. Its request for consultation kicks off a 60-day consultation period, after which it can ask the WTO to launch a formal investigation. The WTO can authorize sanctions against countries failing to comply with trade rules, usually after years of litigation; Source: PoultryMed, 2009-China challenges U.S. ban on its poultry, April 18, 2009.

As a follow up to an earlier blog (Killion, China request WTO panel on US imports of poultry, July 27, 2009), according to the WTO, "At a meeting of the Dispute Settlement Body (DSB) on 31 July 2009, a panel was established regarding US measures that, according to China, affect imports of Chinese poultry" (WTO: 2009 News Items, 31 July 2009 Dispute Settlement, DSB establishes panel in China-US poultry case).

At the heart of the controversy between China and the United States is US legislation that precludes "the use of any of the funds appropriated under legislation for FY 2010 for establishing or implementing a rule allowing mainland China poultry products to be imported into the United States" (Killion, 2009).

China's perspective on the problematic US legislation follows: "China said that on 11 March 2009, the US President had signed the US Omnibus Appropriation Act of 2009 into law. China pointed out that Section 727 of the Act states that 'none of the funds made available in this Act may be used to establish or implement a rule allowing poultry products to be imported into the United States from China.' This resulted in a complete ban on the import of poultry products from China into the US, China said, thus violating various WTO rules" (WTO: 2009 News Items, 20 July 2009, Dispute Settlement, China, Canada request panels).

Finally, the WTO DSB, as earlier mentioned, did eventually establish a panel, and the WTO's public announcement of the establishment of a panel follows.

WTO: 2009 New Items

31 July 2009

Dispute Settlement DSB establishes panel in China-US poultry cases

At a meeting of the Dispute Settlement Body (DSB) on 31 July 2009, a panel was established regarding US measures that according to China, affects imports of Chinese poultry.

Panel establishment


DS392: United States — Certain measures affecting imports of poultry from China The panel was established of the basis of China's second request for a panel (WT/DS392/2). Under the rules of the WTO's Dispute Settlement Understanding, the establishment of a panel is automatically approved by the DSB in response to a second request for a panel by a Member. In its request, China noted that on 11 March 2009, the US President signed the US Omnibus Appropriation Act of 2009 into law. China pointed out that Section 727 of the Act states that "none of the funds made available in this Act may be used to establish or implement a rule allowing poultry products to be imported into the United States from the People's Republic of China".

China said that the matter had not been solved during consultations with the United States, and therefore renewed its request for a panel, which was first presented at the 20 July 2009 DSB meeting.

The US expressed disappointment with China's decision to pursue its request for a panel. The US said that it does not agree with China's claims that the measures in question are discriminatory or protectionist. It said that nothing in the measures identified by China prevents the relevant U.S. authorities from working to reach an objective, science-based response to China's request for a declaration of equivalence with respect to poultry, and such authorities are continuing to do so. The US also noted certain technical deficiencies in the Chinese request.

The EC, Guatemala, Korea and Turkey reserved their third-party rights.

Copyright © Protected - All Rights Reserved by M. Ulric Killion, 2009.

China Barium Carbonate export - (Sunset) review AD duty order – Brazil and the United States

by M. Ulric Killion

 

The photo is from Yuci Jintai Barium Salt Chemical Co., Ltd., (榆次金泰钡盐化工有公司) in Jinzhong City, Shanxi Province. 

Yuci Jintai Barium Salt Chemical Co., Ltd., is one of the largest, if not the largest, professional manufacturer and exporter of Barium Hydroxide and its series of products in Mainland China (我公司是中国无机盐协会常务理事，是全国规模最大的氢氧化钡及盐系列产品生产易企业，氢氧化钡年产量占全国总产量的三分之一. 从93年开生产氢氧化钡产品至今，公司重科技、抓管理，生产的"榆贝"牌八水氢氧化钡、粉体一水氢氧化钡、晶体一水氢氧化钡、偏硼酸钡、碳酸钡、硫脲等产品，销美国、日本、欧洲、南非、东南亚、台湾等国家和地区, Yuci Jintai Barium Salt Chemical Co., Ltd.).

In Mainland China, companies such as Yuci Jintai and other producers of barium carbonate are facing a recurring problem with the export of this product.

As a case in point, in the context of China and barium carbonate exports, and seemingly ongoing problems relating to the AD/CVD variety of trade disputes, Brazil's Ministry of Development, Industry and Trade has recently instituted a (sunset) review (that is classified under NCM 2863.60.00) of the AD duty order on Mainland China exports of barium carbonate.

According to the announcement, the review will seek to determine whether revocation of "this order would be likely to lead to continuation or recurrence of material injury to a domestic industry within a reasonably foreseeable time. Imports of subject merchandise are currently subject to an AD duty of US$105.17 per tonne" (Brazil Begins Sunset Review of AD Duty Order on Barium Carbonate, Hong Kong Traders, International Edition, July 17, 2009).

Brazil's announced (sunset) review also serves as a reminder of a similar dispute involving China and the United States. Nowithstanding politics or a political decision, if the facts in the Brazilian case are similar to the US case, especially in the context of a continuing (or recurring) material injury, it is reasonable to anticipate that following a (sunset) review the existing AD duty order will remain in place.

The earlier US case is a factually similar trade dispute. This is because the US case is a dispute instituted on September 2, 2009 that addresses a five-year (sunset) review, which also involves barium carbonate exports from Mainland China.

In January 2009, the U.S. International Trade Commission (ITC) earlier determined that revoking the existing antidumping duty order on barium carbonate from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time. The ITC report Barium Carbonate from China (Inv. No. 731-TA-1020 (Review)), USITC Publication 4060, January 2009) sets forth both the views of the ITC and information developed during the review (News Release 09-006, Inv. No. 731-TA-1020 (Review), ITC makes Determination in Five-Year (Sunset) Review Concerning Barium Carbonate from China, January 21, 2009).

All of the Commissioners, which total six, voted in the affirmative. As a consequence of the ITC's affirmative determination, the existing order on imports of barium carbonate from Mainland China would remain in place.

Copyright © Protected - All Rights Reserved M. Ulric Killion, 2009.