Other China Issues

In a belated effort to comply with its WTO obligations to ensure that all of its current anti-dumping cases against Mexican imports from China complied with WTO rules by a just-passed December 11, 2007 deadline, Mexico has announced reviews of its current anti-dumping cases against Mexican imports of footwear, apparel and textiles (all in Spanish) from China. The Mexican government requests comments from all interested parties by around January 5, 2008. While the comment period for footwear has officially closed, it appears that the Mexican government is still accepting comments. Meanwhile, the current dumping duties, ranging from 300 percent to 1,100 percent, will remain in place. According to informed sources, the Mexican government is in negotiations with China to implement a one-time extension of the current dumping duties for a defined period of time (probably 18 months), after which the dumping cases will be permanently terminated.

Both the U.S.-China Strategic Economic Dialogue (SED) and the 18th U.S.-China Joint Commission on Commerce and Trade (JCCT) in Beijing, China concluded last week with what U.S. Treasury Secretary Henry M. Paulson Jr. observed as modest improvements in the U.S.-China economic relationship. Both the SED and JCCT also included U.S. Trade Representative Susan C. Schwab, U.S. Commerce Secretary Carlos M. Gutierrez, the U.S. Department of Agriculture along with Chinese Vice Premier Wu Yi. The forum was established to open dialogue between high-level government officials in order to address critical market access, trade and investment issues between the U.S. and China. Both meetings focused on import product safety – especially with regards to food and drugs. The Chinese also agreed to further strengthen their intellectual property rights (IPR enforcement) and improve treatment for foreign investors.

The United States announced November 29 that China has agreed to terminate all the subsidies that the United States alleged were illegal under World Trade Organization (WTO) rules. Most of the challenged subsidies were either export subsidies or import substitution subsidies. Under the agreement, China has committed to complete a series of steps by January 1, 2008 to ensure that the WTO-prohibited subsidies cited in the US complaint have been permanently eliminated, and that they will not be re-introduced in the future.

The US International Trade Commission (ITC) announced November 20 that it rejected the first-ever anti-subsidy (countervailing duty-CVD) case against China. The ITC voted 5-1 that a US industry was neither materially injured nor threatened with material injury by reason of imports of coated free sheet paper from China, Indonesia and Korea. Overturning twenty years of precedent, the US Department of Commerce had determined that imports of coated free sheet paper (glossy paper used in magazines and other publications) from China were subsidized and sold in the United States at less than fair value. However, the ITC decision effectively ends the case. To learn more about this countervailing duty (CVD) case and its implications for the US apparel and textile industry, please join us for AAFA's March 11, 2008 seminar in New York City titled Apparel & Textile Trade After 2008: Trade Remedies in a Post-Quota World.

In the first case brought by China since it joined the World Trade Organization (WTO) in 2001, China filed a WTO dispute settlement case on September 14 against the United States for its anti-dumping and countervailing duty cases against US imports of coated paper for China. In the case, the United States broke with its own 23-year old policy not allowing countervailing duty cases against non-market economies, like China, because it is impossible to determine the actual value of subsidies in a non-market economy. Prior to this case, the United States compensated for alleged subsidies in China by using third countries, called "surrogate" countries to determine actual market costs and prices, the result of which is that there has historically been much higher dumping duties against US imports from China than against market economy countries. In its WTO case, China alleges that by allowing both an anti-dumping and a countervailing duty (anti-subsidy) case against US imports of Chinese coated paper, the United States has imposed WTO-illegal double taxes against its exports for the same alleged violation. The WTO case calls into question various pieces of AAFA-opposed legislation moving through Congress that legislates the use of countervailing duty cases against China for currency manipulation and a range of other alleged offenses.