WTO Rule: The Way To Win Chinese Shoes

I wonder if people still remember the burning flames of Chinese shoes burning in the Spanish town of Elche in 2004.

In May 8th this year, WTO set up an expert group to hear China's anti EU anti-dumping suit against China. Australia, Brazil, Japan, Turkey, the United States, Vietnam and Columbia acted as the third party.

"Shoe wars" in Central Europe

In the past more than 10 years, the EU has taken various measures to protect its footwear enterprises.

In July 7, 2005, the EU carried out anti-dumping investigations on shoes exported to Europe and ruled in October 5, 2006. Apart from a Chinese enterprise getting the market economy treatment and being punished with a "lighter punishment" of 9.7% anti-dumping duty, all other enterprises were imposed a 16.5% anti-dumping duty, with a period of 2 years, which has aroused more than 1200 Chinese shoe enterprises' strong dissatisfaction.

In January 2007, Chinese shoe companies such as AOKANG, Tamar, golden shoe, new HK dollar and other Chinese shoe companies filed a lawsuit against the European Court of justice, demanding judicial review of the ruling.

Unfortunately, the prosecution of Chinese shoe enterprises failed to achieve the intended purpose.

In October 2008, the anti-dumping ruling entered the stage of review.

In December 2009, the European Commission decided to extend the effect of the ruling with a vote of 14 votes and 13 votes. The Chinese shoe continued to levy anti-dumping duties at the same rate for 15 months.

In February 4th, China prosecuted the European Union with impassioned words: the 2006 ruling of the European Union and the full review of 2009 violated almost all the core provisions of the WTO anti dumping Agreement (including substantive provisions and procedural provisions).

Include:

1, according to the EU anti-dumping rules, anti-dumping duties are imposed on products of the "non market economy" countries. The tax rate is against the whole country and is not directed against specific suppliers unless they prove that they are fully in line with the EU's market economy conditions.

China believes that the EU's practice violates the provisions of the WTO agreement on the determination of anti-dumping duty rates on specific suppliers. At the same time, the EU's taxation methods for products of the "non market economy" countries are discriminatory and violate the most favored nation treatment principle of WTO.

2, the European Union's ruling in 2006 failed to verify the application of market economic treatment to some Chinese suppliers in accordance with the requirements of the WTO agreement on anti-dumping and China's accession to the WTO. When calculating the existence and dumping margin of dumping, the calculation method was wrong; no objective and fair evaluation was made when determining the damage suffered by the EU shoe enterprises; during the anti-dumping investigation period, there was no reasonable opportunity for China to offer evidence, pparency and sampling methods were unreasonable; the result of the ruling did not fully state the facts and cited laws.

The EU's expiration of the 2009 review procedure is not legal, the sampling is illegal, there is no objective verification of the evidence, and the 2006 erroneous practice is repeated.

Multinational countries encounter anti-dumping

Following the European Union, Brazil decided to conduct anti-dumping investigations on Chinese shoes in December 31, 2008. In September 16, 2009, it decided to levy a provisional anti-dumping duty of US $12.47 / double. In March 4th this year, we decided to levy an anti-dumping duty of US $13.85 / double, which is valid for 5 years.

The Argentina government also launched anti-dumping investigations on Chinese shoes in February 2009. The provisional anti-dumping duty was imposed in July of the same year, which stipulates that the price of imported Chinese shoes should not be less than $15.5 / double.

Canada, as early as 2000, imposed a 33% anti-dumping duty on plastic waterproof shoes and soles in China. In October 21, 2009, it decided to carry out anti-dumping investigations on such products again. Apart from 6 Chinese enterprises being spared, other enterprises were subject to 49% anti-dumping duties.

Under the "encirclement and suppression" campaign, the export volume of Chinese shoes is bound to drop sharply.

According to statistics from the China Light Industry Import and export chamber, the total export value of footwear products in China in 2009 was 28 billion 10 million US dollars, down 5.54% from the same period last year, of which leather shoes dropped by 14.83%.

According to statistics from China shoe net, after the EU took anti-dumping measures on Chinese shoes, the total amount of Chinese shoe exports to Europe decreased by 15%. In the past 3 years, the revenue dropped from 2 billion 80 million euros to 1 billion 780 million euros in the peak period.

Statistics from the China Leather Industry Association show that the anti-dumping duty has resulted in a 20% reduction in the output of Chinese leather shoes exported to Europe and a reduction of about 40 million pairs, which only caused about twenty thousand workers to lose their jobs in China.

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WTO rules loopholes

In fact, unlike most domestic expectations, the key to winning Chinese lawsuits is not by subjective efforts, but by objective flaws and flaws in the WTO agreement.

According to the WTO Antidumping Agreement, if the product under investigation is from a "non market economy" country, when calculating the production cost, it is not based on the actual data of the producer country, but on the data of the "substituting country" (market economy country) similar to that of the country.

This time, the EU calculates the cost of shoemaking in China based on the cost of production in Brazil.

However, due to the different national conditions, the unit cost of Brazil is higher than that of China, and the anti-dumping is also against Chinese shoes. The result is artificially raising China's production cost and raising the dumping margin accordingly.

This is very unfair to China.

China has repeatedly proposed to abolish this rule during the Doha Round negotiations. However, judging from the revised draft issued recently by WTO, this rule still exists.

For example, business activities are allowed to sell "zero profit" and inferior products, but the WTO "Anti-dumping Agreement" does not provide for this. When investigating the production cost, the investigating countries do not consider defective products, regard all products as high quality products, and add a profit margin, artificially raising production costs and dumping margins.

In addition, the agreement does not calculate the "extent of damage" when determining whether the similar industries in the country of investigation are damaged; in the investigation procedure, it gives the investigative countries great discretion.

These loopholes and flaws make the number of anti-dumping cases large, and many problems become the most difficult to chew.

The reason for the existence of loopholes and flaws is not that the member states do not know how to regulate them, but that the developed countries led by the US are unwilling to change the status quo. They want to make use of these loopholes to protect domestic industries in time.

Because the United States plays a leading role in the WTO negotiations, coupled with the tough attitude of the US Congress, the existing anti-dumping system will continue for a long time.

Of course, this is not to say that we can be pessimistic. On the contrary, it is very necessary to respond positively. Some of the practices of the European Union do discriminate against China and violate the provisions of the treaty.

More importantly, the litigation process is more important than the result, at least allowing the European Commission to converge on the anti-dumping investigation of Chinese products later.

Another point to note is that even winning the lawsuit does not mean that Chinese shoes can travel freely in Europe.

The EU will continue to protect local shoe companies, but it is only a different degree.

The way to win Chinese shoes

In recent years, China and EU have witnessed rapid economic and trade development. China is the second largest trading partner and largest source of imports in the EU.

According to the official website of the European Union, the Sino EU high level economic and Trade Dialogue started smoothly in 2008. In 2009, China exported 214 billion 700 million euros of goods to the European Union and imported 81 billion 700 million euros, with a large trade surplus.

This environment requires Chinese and Chinese enterprises to handle the EU anti-dumping cases.

First of all, it should be divided.

The EU anti-dumping on Chinese shoes is at the expense of the interests of local consumers and importers. The latter must pay the anti-dumping duty, which is bound to arouse their resentment.

Chinese enterprises should make full use of these importers and consumers' emotions and communicate with their chamber of Commerce.

Compared with the United States, the EU's policy is relatively mild. In the Doha Round negotiations, it has always advocated that anti-dumping should take into account the public interests of society. In addition, there are more differences between the 27 EU Member States. This time, 13 member states oppose anti-dumping actions against Chinese shoes, indicating that there is great room for fragmentation.

Second, we should "win by chance".

Chinese shoe enterprises need to increase their R & D efforts, implement brand strategy, actively participate in international standard setting, increase their ability to cope with technical barriers, or bypass the third country to enter their market; when conditions are ripe, they can go directly to the European Union to run factories and no longer be subject to tariff restrictions.

These recommendations also apply to Canada, Brazil and Argentina.