According to statistics from the latest “World Trade Report” released by the WTO in July this year, China has surpassed India and has become the world’s largest country subject to countervailing investigations from 1995 to 2012, accounting for 10% of the number of countervailing investigation cases. to 21% since WTO statistics were collected in 1995. Due to its “non-market economy status”, China first encountered a countervailing case against Chinese products from Canada in 2004. However, since then, the proportion of countries being investigated in global countervailing cases has increased sharply, and countervailing measures are being taken by developed countries. Countries and even developing countries regard it as a new means of trade relief against China. Against the international background of the world economic downturn and the rise of protectionism, “Made in China” seems to be becoming the biggest victim of the rise of international trade protectionism.
Countervailing system in international rules
The practice of the countervailing system has been in developed countries for more than 100 years. From the General Agreement on Tariffs and Trade to the WTO, international rules on the countervailing system have gone through a process of formulation, development and continuous adjustment. The current rules of the World Trade Organization on countervailing, Broadly speaking, it refers to the relevant provisions of the General Agreement on Tariffs and Trade 1994, the Agreement on Subsidies and Countervailing Measures (hereinafter referred to as the SCM Agreement), the Agreement on Agriculture, and the General Agreement on Trade in Services, as well as related resolutions and declarations , a set of rules established by the declaration. Among them, Articles 6 and 16 of the 1994 General Agreement on Tariffs and Trade establish the basic principles of the World Trade Organization on subsidies and countervailing measures for trade in goods; and the SCM Agreement is the World Trade Organization’s regulation on subsidies and countervailing measures for trade in industrial goods. Detailed specification of measures. The starting point of the WTO SCM Agreement is to pursue the greatest fairness of free trade, but it has always been controversial among scholars whether the use of countervailing duties will bring more benefits to international trade and economic development. Due to international rules It is itself the result of the balance of interests between countries. The development of the countervailing system in international rules also frequently shows the color of trade protectionism.
The SCM Agreement stipulates the remedies that WTO members can take against countervailing acts: first, relief can be taken directly through the WTO dispute settlement mechanism; second, relief can be obtained directly through the imposition of countervailing duties through members’ own countervailing measures procedures. . Dispute settlement procedures and countervailing measures can be invoked in parallel, that is, they can be conducted simultaneously, but they can only take one form, not both at the same time. For more than 10 years, countervailing measures implemented by some WTO members against other members have been on the rise, resulting in an increasing number of trade disputes among members. In particular, the United States enacted the U.S. Trade Rights Enforcement Act in 2005 to Domestic anti-subsidy legislation applies to products exported to the United States from so-called non-market economies, including China.
In the recent global market, there are two dominant movements: one is limited internal market diversification that can bring benefits to consumers, and the other is the growth of intra-sector competition accompanied by institutional frictions between countries. In the past 10 years, secondary protectionist measures such as anti-dumping and countervailing measures have become priority non-tariff barriers. At present, the United States is the country with the largest number of countervailing investigations. Its implementation of trade remedy measures emphasizes the principle of giving priority to national interests and political interests. In the field of trade remedy laws, it emphasizes that domestic law is superior to international law. Therefore, in practice, the United States’ countervailing measures The measures are often in line with the economic policies of the United States and in many cases violate the rules of the World Trade Organization. Therefore, the United States is also the country with the most disputes over subsidies and countervailing issues.
Developed countries are targeting “Made in China”
The SCM Agreement is the basis and basis for WTO member states to formulate domestic countervailing laws. However, when countries formulate their domestic countervailing legislation, they often take advantage of the vague loopholes in the provisions of the SCM Agreement and often make favorable decisions in their domestic legislation. Regulation. In recent years, developed countries such as the United States and Europe have begun to apply countervailing tax laws to “non-market economy countries” by adjusting their domestic countervailing systems, so that their domestic industries can receive dual protection from anti-dumping and countervailing measures. The economic impact of dumping or subsidies in market economy countries can be distinguished, but in non-market economy countries it is difficult to distinguish between the two, so it is unreasonable to apply both laws at the same time. Therefore, developed countries such as the United States and Europe apply both laws to non-market economy countries at the same time and use countervailing as a new weapon in trade competition and industrial competition. This is equivalent to setting up a new barrier to imports from non-market economy countries and hitting their exporters. It has a strong color of trade protectionism.
From the end of World War II to the Cold War, due to the restrictions on trade between the two camps of the United States and the Soviet Union, the concepts of “market economy countries” and “non-market economies” first appeared in GATT in 1947. GATT was formed by market economy Established by and for the state. During the Cold War, the division between the two camps became more obvious, so there were no different methods of anti-dumping investigations in the two categories of countries: “market economy” or “non-market economy”. However, after the end of the Cold War, more and more “non-market economy countries” began to transform to market economic systems and participate in the development of international trade. Therefore, the 1994 GATT specifically stipulated how such countries should consider their currency control in international trade. Question�Some WTO members believe that although they consider China a non-market economy country, based on the current stage of China’s economic reform and the characteristics of China’s economic operation at this stage, there is also the possibility of creating trade-distorting subsidies. This This form of subsidy not only increases the degree of market protection, but also distorts China’s export performance in the markets of other WTO members. Under such conditions, China’s exports should also be subject to the WTO’s SCM Agreement. However, out of concern that China will benefit from the provisions of Article 27 of the SCM Agreement, some members advocate restricting Article 27 of the SCM Agreement as a treatment for non-market economies. Country of China applies. Some members also raised concerns about the support provided to state-owned enterprises through loans from the government-controlled banking system due to the non-market nature of the Chinese economy. These loans typically have the effect of automatic extension, forgiveness, or below-market interest rates upon maturity, none of which are included as subsidies in Schedules 5A and 5B. In addition, WTO members also provide subsidies to local governments, China’s subsidies to specific economic sectors such as telecommunications, exports of high-tech products, and the steel industry, as well as China’s subsidies and preferential policies related to special economic zones. expressed concern about the issue. The WTO Accession Protocol does not stipulate the application period of special rules for anti-subsidy investigation procedures. This means that after the non-market economy rules related to anti-dumping investigations finally expire in 15 years, the investigation agencies of importing members will still So-called non-market economy rules can be applied in countervailing investigation procedures. At the same time, the “Protocol of Accession to the WTO” does not stipulate whether China is a “transition economy”. Whether or not countervailing tax laws can be implemented against China depends on the specific regulations of each country.
The countervailing countries that currently need attention against China can be divided into three categories: The first category is those that have conducted countervailing investigations against China many times, such as the United States, Canada, and the European Union. These countries have mature domestic countervailing laws and regulations. Countries with rich practical experience in the application of countervailing, and countervailing against China have entered a stable and frequent period; the second category is countries that may expand countervailing investigations against China despite not having rich practical experience in countervailing, such as India. Although the trade between China and India It accounts for a small proportion of China’s, but India is a country that often has trade frictions with China. It ranks first in the number of anti-dumping cases against China. In 2008, it also began to try to use countervailing tools against China, but India’s own countervailing practical experience is not Rich, domestically it does not comply with the SCM Agreement, and subsidies are often used. It is the main countervailing country among WTO members, so India’s countervailing trends against China will not be serious in the future; the third category is those that have recognized the Chinese market Countries with high economic status, such as Australia, New Zealand and other countries, because there are no obstacles to legal rules, and these countries are also countries that use countervailing tools more frequently among WTO members, whether these countries initiate countervailing investigations against China depends entirely on on trade competition with China.
Avoid countervailing duties against China in accordance with international norms
The biggest difference between countervailing and anti-dumping is that anti-dumping mainly targets the behavior of individual companies, while countervailing targets the behavior of the government, which will have a huge impact on a country’s industry and open policy. Countervailing measures against China, as a new trade protectionist measure, will do the most harm to China by interfering with China’s domestic economic development policies, thereby causing “development distortion.” Some unreasonable domestic subsidy policies that have been in place for a long time have neither achieved equitable domestic development issues, but have also easily led to foreign countervailing, and the domestic subsidy system needs to be improved.
But not all subsidy policies are prohibited. Subsidies that comply with WTO rules are allowed. Reasonable domestic subsidy policies are also an indispensable means for developing countries to achieve development. In addition, from practice, the differences between developed countries Subsidies and the resulting disputes account for the largest proportion of subsidies. Although subsidies are subject to regulatory restrictions to a certain extent, developed countries often exceed the limits of WTO rules when using subsidies.
Therefore, it is necessary to systematically sort out China’s existing subsidy policies, cancel the subsidies prohibited by the WTO, use limited financial resources to support scientific research development and the development of backward regions, and better achieve China’s balanced development within the institutional space allowed by the WTO. Use subsidies more strategically and in compliance with international norms and avoid foreign countervailing measures against China.
Since encountering foreign countervailing investigations in 2004, from the Ministry of Commerce to local governments and the companies involved, they have gone through a process of being unfamiliar with countervailing rules and passively responding to effectively organizing all parties to actively respond. From a practical point of view, on the one hand, enterprises that can actively respond to the lawsuit will suffer relatively small losses in the case; governments at all levels and relevant departments should also provide enterprises with information on countervailing trade frictions in a timely manner and mobilize the enterprises involved in the case to actively respond to the lawsuit. It plays a good role as a bridge and link in communicating information between the four main entities: superior and subordinate commercial authorities, chambers of commerce and associations, and enterprises.
On the other hand, as the world’s largest exporter and the second largest country in GDP, China should also work to promote the revision of WTO rules to restrict other countries’ use of countervailing tools and strive for greater benefits for the country and enterprises. With the current diversified development of globalization and regionalization, China’s influence in international and regional economic organizations is increasing. Recently, whether it is the progress of Sino-US BIT negotiations, TPP negotiations, or the approval and approval of the China (Shanghai) Pilot Free Trade Zone, Innovative opening-up models have given Chinese companies greater space to deal with foreign countervailing and other trade frictions against China.
(The author is a visiting scholar at the Harvard Kennedy School and deputy director of the Research Office of the Shanghai Academy of Social Sciences)
Enterprises strive for greater benefits. With the current diversified development of globalization and regionalization, China’s influence in international and regional economic organizations is increasing. Recently, whether it is the progress of Sino-US BIT negotiations, TPP negotiations, or the approval and approval of the China (Shanghai) Pilot Free Trade Zone, Innovative opening-up models have given Chinese companies greater space to deal with foreign countervailing and other trade frictions against China.
(The author is a visiting scholar at the Harvard Kennedy School and deputy director of the Research Office of the Shanghai Academy of Social Sciences)
