How Much Can The Anti-Dumping System Help Chinese Enterprises?

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With the expansion of international trade, China has begun to use anti-dumping system to safeguard the interests of domestic industries in recent years. PTA anti-dumping case is an example.

Impact of imports on China's PTA industry

PTA is the abbreviation of Pure Terephthalic Acid.

This is an important basic organic material for the production of polyester and non fiber polymers. Its downstream products are mainly polyester, including polyester fiber (polyester) and non fiber polyester products such as polyester bottle and polyester film.

China is the world's largest PTA consumer market, spending 12 million tons to 15 million tons a year.

The annual domestic capacity is 15 million 500 thousand tons, accounting for about 34% of the world's total capacity.

In August 12th this year, the Ministry of Commerce issued a notice ruling that the anti-dumping duty on PTA, which was originally produced in Korea and Thailand, ranged from 2% to 20.1%.

Domestic PTA chemical enterprises cheered.

According to the China news service, Petrochemical Industries Co said that "this is the largest amount of anti-dumping cases in the chemical industry, with a total amount of $3 billion 600 million". "This anti-dumping will have a good effect on the development of domestic enterprises"; "there are about 15000000 tons of capacity in the domestic market where the original sales or cancellation projects are re built or set up, and there are about 10 million tons of capacity in the new plan"; "the capacity of Korean and Thailand export enterprises is suppressed"; "according to this trend, China's PTA capacity will increase from 4 to 6 percent of the total capacity of Asia, and will leave behind the international counterparts in terms of pricing power and market coverage."

Ministry of Commerce launched anti dumping measures

Since 2005, the PTA from Samsung petrochemistry Co., three South Petroleum Chemical Corporation, three South Petroleum Chemical Co., Ltd., Tai GUANG industry (plant), KP chemical company, SK Oil Chemical Corporation, Siam sanwell PTA Co., Indorama Petrochemical Co., TPT Tpt Petrochemicals Public Company Limited and other enterprises have gradually become stable in the Chinese market, and enter about 3 million tons of PTA in China each year, accounting for about 25% to 30% of China's consumer market.

Import prices swing between 7500 yuan / ton to 7000 yuan / ton, and the trend of decline since 2006 is obvious.

In line with this, the price of similar products in China also fluctuates, and lingers between 7500 yuan / ton and 6700 yuan / ton.

Contrary to the strong trend of imported products, the competitive advantage of China's PTA industry is becoming weaker and weaker, prices are falling, products are unsalable, and the price difference between costs has dropped rapidly. In 2006, it dropped by 40.26% compared with 2005, and 2007 decreased by 90.96% compared with 2006.

The first industry wide loss occurred in 2007, of which Xiamen Xiang Lu Formosa Petrochemical Co lost 700 million yuan in 2008 and had to make layoffs for the first time.

In December 12, 2008, the former Zhejiang Hualian three Xin Petrochemical Co., Ltd. (now renamed Shaoxing Far East Petrochemical Co., Ltd.), Zhejiang Yisheng Petrochemical Co., Ltd. and Xiamen Xiang Lu Formosa Petrochemical Co (hereinafter referred to as the applicant) have applied to the Ministry of Commerce on behalf of the domestic PTA industry to seek anti-dumping investigations on PTA from South Korea and Thailand.

In February 12, 2009, the Ministry of Commerce issued a formal announcement, and the anti-dumping investigation procedure was launched.

According to the anti-dumping regulations, such investigations are mainly about three aspects: first, whether there are dumping and the extent of dumping in PTA in South Korea and Thailand; two, whether China's PTA industry has been damaged or damaged; and three, whether there is a causal relationship between dumping and injury.

The dumping investigation period is from October 1, 2007 to September 30, 2008, and the industrial injury investigation period is from January 1, 2005 to September 30, 2008.

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During the survey, the Ministry of Commerce officials visited the enterprises and foreign respondent enterprises for several times, listened to the opinions of interested parties, issued questionnaires and organized hearings.

In February 2nd of this year, the Ministry of Commerce issued a preliminary notice that the dumping of PTA in South Korea and Thailand caused damage to Chinese counterparts and decided to impose provisional anti-dumping duties from the following day.

South Korea and Thailand firmly opposed that the applicant did not have the qualification to apply; excluding the PTA from the Taiwan area outside the scope of the investigation, the fairness of the investigation was not affected; during the survey period, there was no real damage caused by the imports of the investigated products in China, nor the possibility of further deepening or causing substantial damage. The anti-dumping measures against the investigated products were not in line with the public interest. After the investigation period, the domestic PTA market changed significantly, and no anti-dumping measures should be adopted.

At the same time, South Korea and Thailand apply for price commitments according to the regulations, that is, to ensure that export prices will be raised to a certain level within a certain period, so as to help China's PTA enterprises expand their market share.

In view of these opinions, domestic applicants also submitted written comments and refute them one by one.

The Ministry of Commerce held that the price commitment was not suitable for the case. It failed to effectively monitor its commitments and rejected the application. Finally, it decided to levy anti-dumping duties for a period of 5 years.

How much can anti dumping help Chinese enterprises?

The antidumping system sprouted in Canada at the beginning of the 20th century, and developed in North America and Europe. It is the oldest system in the WTO system.

Although it has more than 100 years of development history, there are still many problems.

WTO's anti dumping agreement absorbs the results of the rounds of GATT negotiations, and tries to regulate all aspects of the anti-dumping system. However, more than 1/3 of the WTO cases involve anti-dumping.

Why? Because the essence of anti-dumping is a tool of trade protectionism, which aims to protect domestic industry by restricting import products. No matter how strictly the international treaty is regulated, the importing government always has a great degree of discretion.

In practice, importing governments sometimes have to protect some domestic industries for economic safety considerations, so they have to abuse these discretionary powers and restrict the import products legally.

China is the biggest victim of the anti-dumping system. There are numerous cases of antidumping against our products in Europe and America, and sometimes the anti-dumping duty exceeds 200%.

And there is no debate on whether the Ministry of Commerce has any legal questions on the anti dumping rulings of South Korea and Thailand PTA. The key question of this incident is: how much can anti dumping help the domestic PTA industry? What kind of mentality should these enterprises take to deal with the anti-dumping?

The Petrochemical Industries Co boss mentioned at the beginning of this article thinks that this anti-dumping can make China's PTA industry expand its scale of production, dominate Asia and curb its counterparts in South Korea and Thailand.

The reasons are as follows:

First, anti-dumping is nothing but an increase in the cost of sales of imported products, and can not be completely excluded from the national market, just as Chinese products are often subjected to anti-dumping in the United States, but they continue to enter the United States.

Two, the amount of PTA consumed in China is limited every year (about 15 million tons), even if the annual consumption will continue to increase, it will not immediately accommodate about 20000000 tons / year.

The boss should immediately rebuild or set up projects with an annual output of 25 million tons, and he is not sure that he will open up the international market.

Three, this view requires that the government continue to provide one-sided protection with a high degree of dependence. Transferring the risk of enterprises to the credibility of the government will bring trouble to the relevant departments of the state.

Four, the last buyer of anti-dumping duty is not foreign enterprises, but the ultimate consumers of China.

Therefore, the author believes that this anti-dumping only provides an opportunity for China's PTA industry to adjust its industry.

Enterprises should speed up the pace of adjustment, work hard to improve quality and reduce costs, improve international competitiveness as soon as possible, and do not invest blindly.