U.S. Campaign Rhetoric and the Distortionary Chinese Trade Practices that Fuel It

Abstract

Controversy over China’s trade policies was a key battleground issue in the 2012 US presidential election, and remains an economic concern today. China’s transition economy arguably affords its exporters with unique advantages in international trade, which provokes retaliatory tariffs against its exports and trade disputes at the World Trade Organization (WTO). Though in need of reform, the WTO-sanctioned trade remedy measures strive to protect its members against purported unfairness in the pricing of exports. Some critics contend that Chinese trade practices are systematically unfair to its trading partners, while others claim China is discriminated against in the international trading system. This paper addresses the political and economic factors that shape China’s experiences confronting trade remedy measures; argues that a negotiated settlement between the US and China is unlikely; and describes strategies used by Chinese policymakers to discipline the use of trade remedies against its exports.


Introduction

The efforts of both the Romney and Obama campaigns to be harsh on Beijing’s trade policies created quite a ruckus in Washington last fall. Yet, the recent focus is but the latest round of the ongoing US debate over China’s economic plan. Partisan disagreements abound over how best to manage the delicate relationship with the US’s most significant bilateral trading partner. But despite the political hullabaloo surrounding China’s trade policies, the underlying economic factors that drive such heated political debates are noteworthy challenges for Sino-US trade, as well as for the international trading system more broadly. The core of the debate is how to address distortions in bilateral trade and reprimand China for seemingly harmful trade practices that compromise American jobs.

China’s movement away from a command-style economy and its opening to international trade and investment have sensationally increased its significance in the global economy. Thirty-three years since it initiated economic reforms and began to liberalize trade, China has emerged as the world’s largest merchandise exporter, the second largest economy and recipient of foreign direct investment, and the largest holder of foreign exchange reserves. However, the extent to which China’s domestic  market is liberalized is an increasingly contentious topic around the world, in particular because it provokes retaliatory tariffs against its exports and trade disputes at the World Trade Organization (WTO). The central concern is the Chinese government’s involvement in the market, which drives allegations that Chinese trade practices are systematically unfair to its trading partners. While private firms are vital components of the Chinese marketplace and contribute to its exceptional economic growth and advancement, the government still intervenes in the market through the apportionment of financial resources, state control over a number of key sectors, access to land, energy price controls, and other forms of protection against competition.

As a consequence of the high state involvement in allocating economic resources, China is defined as a nonmarket economy (NME) by its largest trading partners, the US, European Union (EU), and Japan. Underlying market distortions in such NMEs decrease firms’ production costs and arguably provide an unfair advantage to its exporters. The WTO strives to deter the proliferation of distortionary trade practices – including dumping and export subsidization – by allowing retaliatory tariffs to be placed against dumped or subsidized imports. As a result, exports emanating  from nonmarket economies in general, and from China in particular, are subject to higher tariffs than would be faced by exporters from market economies. Consequently, Chinese exporters are harmed by sometimes- prohibitive tariffs that displace their products from the markets and decrease revenue afforded to their exporters. In the end, China’s incomplete transition to a market economy disadvantages its exporters, allows its largest trading partners to manage the growth of its exports into their markets, and provokes trade disputes between itself and its most significant trading partners.

The combination of China’s status as a nonmarket economy,  its dominance as the world’s largest merchandise exporter, and WTO trade enforcement mechanisms make China the most frequent target of trade remedy measures from the US. Once China attains “market economy” status (MES) its trading partners will be unable to apply such harsh penalties, and its exporters will benefit by facing fewer punitive retaliatory tariffs in overseas markets. As such, the benefits afforded to Chinese exporters have induced Chinese policymakers to attempt to negotiate attaining MES from the US and EU earlier than 2016. Inducing the US to recognize China as a “market economy” would require concessions from the Chinese on other trade policy measures – such as on currency revaluation – which they are unlikely to make. Though reaching a negotiated settlement on the coveted “MES” may be mutually beneficial for both trading partners, prolonging the process will result in increased trade disputes between the two countries and may threaten the US’s long- run competitiveness.

 This paper addresses, first, the rationale for deterring export subsidization and dumping through the use of trade remedy measures; second, the extent to which China faces discrimination in the international trading system; third, whether political or economic factors shape China’s experiences in international trade; fourth, the plausibility of reaching a negotiated settlement (from US and Chinese perspectives); and fifth, strategies used by Chinese policymakers to discipline the use of trade remedies against its exports.

Rationale for Deterring Export Subsidization and Dumping 

The WTO has good reason to deter the use of export subsidies and dumping by its members. To ensure an orderly and fair global trading system, the WTO provides protections against the unfair pricing of exported products. Dumped or subsidized exports are believed to provide an unfair advantage to exporting firms in the world market. Thus, such advantaged exports may adversely impact import-competing industries, in which case antidumping or countervailing duties may be imposed.1

Subsidies, in some form or another, lower a firm’s production and operating costs, which in turn enables the firm to sell its products at a lower price than its competitors. Subsidizing exports or production is  often part of countries’ overall trade strategy but, in some circumstances, has been used for predatory purposes.2 Economically, export subsidies “may distort international production and trading patterns, leading to the misallocation of resources and a reduction in world welfare.”3 The argument presented by the WTO is that export subsidies, preferential loans, or free or discounted inputs distort the costs of factors of production and provide an unfair advantage to the exporting firms in the international marketplace.

Discriminatory pricing, known as “dumping” or selling below a firm’s cost of production, is also considered a distortionary trade practice. Generally, dumping is seen as an attempt to drive out competitors, capture the market, and then raise costs to recoup losses and exploit monopolistic market conditions. As such, the use of subsidies and dumping is subject to various trade remedies (in the form of tariffs) if trading partners deem their exports do not reflect the fair value of the merchandise. In such instances, trade remedies in the form of anti-dumping (AD) or countervailing duties (CVDs) may be applied to “level the playing field.” Additionally, in an arguable deviation from the most favored nation principle4 (though lawful by WTO rules), AD or CVDs legally may be calculated differently for products coming from nonmarket economies than those from market economies, which frequently results in higher tariffs applied against products from nonmarket economies.5

It is worth noting that economists strongly dislike antidumping in practice. Protections against dumping are predicated on the notion that predatory pricing will drive out competition, allow one firm to monopolize the market, and then raise prices to gouge consumers and recoup losses. However, such a predatory pricing strategy is implausible in a modern, globalized economy. It is unlikely that a foreign producer could sustain its market share after raising prices to exploit monopolistic market conditions. Indeed, such a strategy would require high barriers to entry so that other producers (foreign and domestic) could not enter to sell at a lower price than the monopoly. Accordingly, the theoretical basis for employing antidumping duties for fear of predatory pricing is questionable. Further, in practice, methodologies used to calculate the extent of “dumping” are flawed and may result in unfair retaliation against innocent foreign firms. In fact, the US Department of Commerce (USDOC) curiously finds that dumping has occurred in 94% of its investigations, which fuels allegations that methodologies used to measure dumping are biased against foreign firms.6 In consequence, critics  contend that “antidumping law does not accurately measure international price discrimination, that which it sets out to measure.”7 At the behest of many economists, trade remedy reform was included on the negotiating agenda for the Doha round, though experts suggest it is unlikely to result in meaningful reform.8

Discrimination Faced by Nonmarket Economies

 China ostensibly joined the WTO in order to face less discriminatory treatment in export markets. In exchange for greater certainty of market access for its exports and increased credibility from trading partners, China agreed to undertake substantial import liberalization upon its accession to the 2001.9 This is rational, given that the basic tenet underlying the establishment of a rules-based trading system was to form a system of open, nondiscriminatory trade. Nonetheless, “China is the most frequently investigated foreign target of US antidumping, facing 13 percent of all investigations.”10 There is an argument to be made that AD and CVD investigations serve as an “easy-to-access tool of protectionism,” in lieu of raising tariffs directly, which was the strategy of choice in the pre-WTO era. Perhaps, “now that China is a member of the WTO, in the face of China’s booming exports [and subsequent increased pressure on US politicians to be harsh on China], a WTO member that seeks to legally discriminate against Chinese exports must now funnel that discrimination into a WTO-consistent policy instrument or face risk of a trade dispute.”11

Clearly, China has benefited from the rules-based, nondiscriminatory nature of the world trading system. The fact that China is the world’s largest target of ADs, CVDs, and safeguards fuels allegations that China is discriminated against in the international trading system. However, while it is one thing to claim that NMEs face unique experiences in international trade is one thing, it is quite another to assert that these measures are discriminatory against China

The number of ADs applied against China may partly reflect its position as the world’s largest merchandise exporter. As Chinese exporters’  market share in the US has increased, so has the number of petitions filed by their US competitors seeking trade remedy measures to slow the flow of China’s low-cost imports. Petitions against Chinese goods generally follow a substantial surge in Chinese imports, which may displace US import-competing firms. For instance, in the recent concentrated solar photovoltaic (CSPV) investigation, the US International Trade Commission (USITC) found that US imports of solar cells from China increased by 447.2% from 2008 to 2010 and of solar modules increased by 311.2% over the same period.12 Such a drastic surge in low-cost imports will undoubtedly disrupt production in the US and mobilize domestic competitors to seek trade protection. The USITC measures the market share of importers and growth of imports to determine whether or not the domestic industry is adversely impacted by dumped or subsidized imports.13 The bottom line is that China is the largest target of ADs, for example, because of the sheer breadth and depth of its exports, rather than any concerted effort to discriminate against Chinese exports. Quite simply, China supplies the rest of the world with merchandise on a scale unforeseen in the history of international trade. Also, trade remedies are only justifiable if a surge in imports is substantial enough to displace existing producers, in addition to products being sold at less-than-fair- value.

China’s NME Status: Politically or Economically Motivated?

 China is due to receive the coveted “market economy” status from WTO member states in December 2016, per its accession agreement; it agreed to be labeled as a nonmarket economy for up to fifteen years.14 Such NME designation was warranted by the fact that China’s economic structure is fundamentally different than those of existing WTO members, and such differences provide its exporters with advantages in world trade. As such, leveling the playing field is not only rational and expected, but also was agreed to by the Chinese in its WTO accession protocol. Accordingly, protesting that trade remedy measures applied against nonmarket economies violate the most favored nation principle – as China did in the WTO panel dispute15 – is baseless and manipulative. 

The extent to which China’s nonmarket economy designation is political, not economic, is dubious. Political grandstanding, on the part of US policymakers, fuels the argument that trade remedy measures are politically motivated. Similarly, the media oversimplifies the process by which the US government implements trade remedies against foreign firms. Generally, headlines imply that politicians proactively invoke these trade remedies in order to advance a partisan agenda. However, the President, US Trade Representative, and members of Congress have no authority whatsoever to intervene in trade remedy investigations. In fact, the process by which the executive administrative agencies (USDOC and USITC) implement trade remedies controlled by career civil service personnel (not political appointees), and based on longstanding US statutory guidance rather than political persuasion. 

Admittedly, the US did invoke two “safeguards” or Section 421 privileges against China since its WTO accession, possibly for political reasons. As part of its WTO accession agreement, and incorporated into Section 421 in US trade law, China agreed to allow the US to apply remedial trade measures against Chinese imports if the volume of such imports resulted in “serious injury” to import-competing industries in the US. This agreement designed to allow certain US industries to adjust gradually to the influx of Chinese (low cost) competitors and harm to US industries.

Procedurally, safeguard measures are distinct from anti-dumping and countervailing duties: the ITC investigates whether or not imports from China cause “serious injury” to US producers of the same product and, if it reaches an affirmative determination, it recommends to the US President temporary remedial trade measures to employ against said imports. Therefore, the ultimate authority to employ trade restrictions resides with the US President. Since Section 421’s inception, the US International Trade Commission has conducted seven Section 421 investigations, six of which occurred during the second Bush Administration. The ITC reached a negative “market disruption” determination in two of the cases, which effectively ended the proceedings at that phase. However, “in five other investigations, the Commission reached affirmative market disruption determinations. None of the four affirmative Commission determinations during the Bush Administration resulted in the proclamation of import relief. In contrast, President Obama proclaimed increased duties on imports of certain Chinese passenger vehicle and light truck tires in 2009.”16

 

Plausibility of a Negotiated Settlement

US Perspective

 US trade negotiators have taken into account underlying economic conditions – or the extent of government involvement in the economy – of its trading partners since a 1935 bilateral trade agreement with the Soviet Union. Due to the overwhelming role that the state played in foreign  trade, the trade agreement required the Soviet Union to compensate for the inherent advantage afforded to public bodies engaging in international trade by importing at least $30 million a year in exchange for most- favored nation status.17 Such a concession illustrates the longstanding reluctance of US policymakers to engage in free trade with centrally planned economies, due to the distortionary impact that state-controlled resources may have on international trade and competitiveness.

 The US, along with the rest of China’s trading partners, may recognize China as a “market economy” if they find that market-based conditions prevail, either in the economy generally or in a specific industry.18 The benefit afforded to China’s trading partners for granting this concession early, quid pro quo, is that it offers an opportunity to obtain concessions from China on other issues. Nearly 80 countries – including Switzerland, Russia, South Africa, Australia, South Korea, and ASEAN member states – have formally recognized China as a market economy, ostensibly in exchange for free-trade agreements.19 Also, the EU periodically entertains the idea of recognizing China as a “market economy,” reportedly in exchange for financial support of the Euro zone bailout fund.20 Still, China’s three largest trading partners – the US, EU, and Japan – are withholding “market economy” status, perhaps as a strategic bargaining chip to induce China to comply on issues such as currency revaluation, intellectual property rights, national treatment, financial and services sector reform, inter alia. The benefits for China attaining the “market economy” status include lower AD and CVD duties – which would greatly benefit Chinese exporters – as well as recognition that China has evolved into a modern economy.21

 Increased pressure from interest groups in the US has induced policymakers to forward a hard-line stance against China’s unfair trade practices. In early 2012, President Obama initiated the Interagency Trade Enforcement Committee, which aims to increase resources dedicated to  enforcing US trade law to ensure that US firms “are able to compete on a level playing field with foreign trade partners.”22 During the presidential campaign, Republican presidential nominee Mitt Romney pledged to sanction China for harmful trading practices that distort the international marketplace and compromise American jobs. At the core of this debate is the escalating political pressure to reprimand China for maintaining its currency below market levels.

There has been increasing interest among US policymakers23 in employing tariffs against Chinese goods in proportion to the level that the Chinese renminbi is estimated to be undervalued. However, the legal framework  of the WTO may render such measures implausible. Currency manipulation may fail to meet the WTO’s “specificity” requirement that is essential for a subsidy to be deemed countervailable.  Accordingly, since US policymakers may not have a “legal” way of sanctioning China for its currency manipulation, it seems there may be potential for a negotiated settlement.

However, time is running short for China’s MES is to be negotiated. If used as a bargaining chip, the implied value of the “market economy” endorsement decreases with time. That is, the potential benefit for  Chinese firms – in terms of increased export revenue due to lower AD and CVD margins – will decrease as 2016 approaches. In turn, the extent to which Chinese negotiators are willing to concede on other trade policy measures in exchange for MES will presumably decrease at the same rate.

 Chinese Perspective

 Chinese scholars argue that there is no objective way of testing whether or not an economy is sufficiently “marketized.” Nonetheless, numerous examples exist of countries attaining the “market economy” status through economic reform, not negotiation. Indeed, Russia, Poland, the Czech Republic, Ukraine, and Bulgaria, among others, have been formally recognized by the US as a “market economy” in accordance with US statutory framework. China has the same opportunity to earn the “market economy” status. Still, there appears to be some leverage for Chinese policymakers to expedite a concession from their US counterparts if it concedes on some key trade policy issues.

 The extent to which Chinese firms are harmed by trade remedy measures is central to gauging China’s willingness to negotiate MES status with its trading partners. To be sure, the antidumping duties applied against firms from NMEs are usually higher than those applied against firms from market economies. In a comprehensive study, the US Government Accountability Office (GAO) compared duties applied to the same product emanating from China and from market economies. The GAO found that, “on 25 occasions from 1985 to 2004, AD duties on Chinese products were on average 20 percentage points higher than those applied to market economies. China country-wide AD duties were over 60 points higher than comparable market economy rates.”24 AD margins are higher against goods from nonmarket economies because prices in the domestic market are usually lower than they would be in a comparable market economy; and such duties aim to offset preferential governmental bounties afforded to some firms.

The higher duties faced by Chinese firms show that they would benefit from locking in less punitive market economy AD rates. However, the benefits would reach only a few exporters. In fact, only a negligible number of Chinese firms are subjected to antidumping duties in global export markets: “In 2009, for example, 2.6 percent of China’s exports to developing countries and 1.6 percent of its exports to developed countries were subject to antidumping.”25

Given that such a small number of Chinese exporters are adversely impacted by trade remedy measures, it is unlikely that Chinese policymakers will continue to press the US, EU, and Japan for recognition as a market economy. It is even more doubtful that Chinese policymakers will accelerate economic reforms and scale back government involvement in the economy to attain “market economy” status prior to 2016.

 In the meantime, Chinese policymakers can ignore the complaints of a relatively small number of firms and continue to disperse resources to foster local Chinese champions. Interest group politics are at play as those that benefit from the status quo are likely to lobby the PRC for continued support. According to the World Bank and Development Research Center of China’s State Council:

In terms of political costs, it is important to remember that the political economy of policy reform is complex and difficult in all countries, including China. Every subsidy creates its own lobby, whether the subsidy takes the form of preferential access to land and credit, or access to cheap energy and resources. State-owned enterprises have political power and lobbying capacity, and energy-intensive export industries will also lobby for subsidies to maintain their competitiveness.26

Certainly, the government of China still “uses various means to provide ‘guidance’ on the allocation of resources.”27 The state-owned sector has, by far, been the largest beneficiary of the Chinese government’s largesse; state-owned enterprises (SOEs) benefit disproportionately from the Government’s economic stimulus measures to boost the economy,28 have better access to capital than private enterprises,29 and enjoy preferential regulatory treatment,30 inter alia. Whereas many economists believe that extensive liberalization of product markets has resulted in prices of over 95% of products being market-determined, severe distortions in factor markets remain, which act “like implicit subsidies and artificially raise the profits of production, increase returns to investment, and increase China’s external competitiveness.”31 Many Chinese scholars and policymakers recognize the need for China to continue reforms to introduce competition for SOEs, liberalize the financial sector, implement land reform initiatives, and increase domestic consumption to balance the economy, among other things.32 However, it seems each of those endeavors will be undertaken in true Chinese fashion, that is, gradually.

Disciplining the Use of Trade Remedies against Chinese Exports

While the US, European Union, and Japan maintain that China is a nonmarket economy, nearly 80 countries have formally recognized China as a market economy to date.33 The surge in trading partners that award China “market economy” status appears to be part of China’s strategy in responding to trade remedy measures undertaken by the US, EU, and Japan. This strategy has three main elements: increased assertiveness in bringing WTO disputes against its trading partners, opening up new markets for its exports to circumvent ADs and CVDs, and “tit-for-tat” retaliation against its trading partners by imposing ADs and CVDs against its imported goods.

First, China has accelerated its use of the WTO dispute mechanism in recent years. In the first few years after China’s accession, it participated as a third party in many cases in order to train lawyers to become more familiar with WTO proceedings.34 Since 2008, China has brought more cases of its own, mostly against trade remedy measures it deems are a guise of protectionism. Between 2001 and 2008, China filed only one trade dispute. Since 2008, it has brought eight WTO disputes.35 This  surge in Chinese-brought WTO disputes illustrates China’s increased confidence in its ability to assert its prominence in the international trading system.

A second component of China’s strategy appears to be that of finding new markets for its products, as more countries recognize China as a “market economy” (this is often a sign of an imminent free trade agreement). As more countries recognize China as a market economy, Chinese firms will be less vulnerable to prohibitive tariffs imposed by the US, EU, and Japan because they will have alternative markets available for their exports. As such, AD and CVD measures are becoming less valuable as a bargaining chip for the US to induce more concessions from the Chinese regarding other trade policy measures. Additionally, while ADs and CVDs may provide recourse to import-competing firms in their home market, aggregate export competition will increase, as firms will have to compete with China’s subsidized or dumped exports in tertiary markets without recourse. Therefore, limiting Chinese imports into the US may result in a loss to consumer surplus (by restricting low-cost imports to the US) and hamper long-term US export growth into tertiary markets (as Chinese firms do business elsewhere).

 Finally, China has recently embarked on a “tit-for-tat” strategy whereby it imposes ADs and CVDs against US exports. In doing so, Chinese policymakers seek to underscore their perspective that, when it comes to whether or not an economy is sufficiently “marketized,” there are no universally-accepted criteria for reaching a fully market-oriented economic system. Many industries in so-called “market economies” still benefit from preferential policies: the EU provides state aid to the aerospace industry (as illustrated by the WTO dispute regarding fiscal incentives for Airbus36) and the US supports the development of green technology.37 As such, in May 2012 the Chinese Ministry of Commerce (MOFCOM) announced that fiscal incentives afforded to renewable energy firms in certain states in the US “constitute prohibited subsidies” in violation of the WTO Subsidies and Countervailing Measures (SCM) and are thus subject to retaliatory CVD measures.38 This case illustrates the Chinese perspective that the state financing provided to Chinese tech firms is no different, in principle, from the preferential programs afforded to designated industries in market economies. In the end, China’s strategy of retaliating against other US exporters may awaken other constituencies, adding to the ruckus in Washington. Already, China’s  highly  discretionary bureaucracy has proven successful in retaliating against foreign invested companies in China – harassing importers is not inconceivable.

 While China’s strategies for confronting unfair trade remedy measures are not a panacea, they may discipline the use of defensive trade measures against Chinese firms. Facing a more aggressive China eager to bring WTO disputes, China’s trading partners must weigh the likelihood of having to defend their actions to the WTO dispute settlement body, a costly and onerous legal process. In addition, China’s trading partners must focus more on increasing export competitiveness rather than attempting to protect import-competing firms from increased competition. Though today’s battle might entail fighting for market share in the US, tomorrow’s might be competing for access to tertiary markets, which China is already opening up for its products. Last, the “tit-for-tat” strategy may temper US policymakers’ enthusiasm for provoking such a strategic and mighty trading partner.

Conclusion

In the lead up to the 2012 US presidential election, rhetoric from the Romney and Obama campaigns outlined many of the challenges faced in rebalancing global trade between two dominant players, the US and China. Much of the debate will continue to revolve around the notion of  “fairness,” which is driven largely by domestic interest groups that feel disenfranchised by international trade. Political pandering to such groups leaves the rest of us to ponder: Which is more distorted, Chinese trade policies or US political rhetoric?

Controversy over China’s nonmarket economy status, and its severe impact on trade remedy investigations, unveils key challenges in maintaining a free and fair trading system. Trade remedies purportedly counter the advantage that subsidies or predatory pricing afford subject exporters. Regardless of concerns with the theoretical foundation for antidumping policies, the WTO continues to provide protection against dumped or subsidized exports, with little prospect of reforming trade remedies in the Doha round. Similarly, despite allegations of discrimination against nonmarket economies, the longstanding tradition of treating NMEs differently than market economies in trade negotiations will likely remain well into the future. While China might not face such distinct treatment for much longer, other countries in transition might.

While many scholars contend that trade remedy measures are discriminatory because they disproportionately affect Chinese exports, such arguments must consider the breadth and depth of Chinese products in subject countries. Considering the largest volume of merchandise exports in the world emanate from China, its products are nearly ubiquitous in global markets and are thus most likely to be scrutinized. Still, competitor countries have to prove that import-competing firms are adversely impacted by a surge in products traded at less than fair value.  As such, both the scale and the market share of Chinese products help explain why China is the dominant target of trade remedies.

 Trade remedies impact only a few Chinese exporters, whereas bounties provided by the government benefit countless firms. It is therefore unlikely that Chinese policymakers will push to expedite “market economy” recognition from the US, despite an apparent opportunity to reach a negotiated settlement. Instead, Beijing will likely await “market economy” recognition in 2016. In the meantime, it appears that Chinese policymakers intend to discipline the use of trade remedy measures against its exports by filing WTO disputes, opening new markets for its exports, and retaliating against countries that impose ADs and CVDs against its products. In doing so, China effectively shifts the battleground to the WTO, where the US government engages in costly legal disputes, and to tertiary markets, where US firms will face increased competition from low-cost Chinese imports in search of new frontiers.


Endnotes

1 Jeanne J. Grimmett, “US Trade Remedy Laws and Nonmarket Economies: A Legal Overview.” Congressional Research Service. 09 March 2012, 1

2 This is illustrated by the collusion of seven Japanese television manufacturers to fix prices which resulted in an antidumping investigation by the United States in the 1960s as well as the ensuing US Supreme Court case, Matsushita v. Zenith, which considered broader economic principles pertaining to antitrust law. Still, the Japanese TV case study is recognized as the epitome of price predation and its counterproductive impacts for the international trading system. See: Harry First, “An Antitrust Remedy for International Price Predation: Lessons from Zenith v. Matsushita,” 1995, http://digital.law.washington.edu/dspace- law/bitstream/handle/1773.1/934/4PacRimLPolyJ211.pdf?sequence=1.

3 Longyue Zhao and Yan Wang, World Bank working paper “Trade Remedies and Non-Market Economies: Economic Implications of the First US Countervailing Duty Case on China,” March 2008, 11.

4 “Most favored nation”(MFN) is a status given to trading partners that

amounts to a pledge that they will be given the same trade advantages, such as low tariffs or high import quotas, as other MFNs. No other trading partners may enjoy better treatment than MFNs.

5 Ibid, 19.

6 Daniel J. Ikenson and Brink Lindsey, “Antidumping 101: The Devilish Details of ‘Unfair Trade’ Law.” Cato Institute, November 2002. http://www.cato.org/publications/trade-policy-analysis/antidumping-101- devilish-details-unfair-trade-law, 4.

7 Ikenson and Lindsey.

8 Michael O. Moore, “Antidumping Reform in the Doha Round: A Pessimistic Appraisal,” December 2005, http://home.gwu.edu/~mom/ad_reform_doha.pdf.

9 Chad Bown, “China’s WTO Entry: Antidumping, Safeguards, and Dispute Settlement.” China’s Growing Role in World Trade, National Bureau of Economic Research, University of Chicago Press 2010, 281.

10 Ibid, 290.

11 Ibid, 290.

12 US International Trade Commission. “Crystalline Silicon Photovoltaic Cells and Modules from China,” Publication 4295, December 2011.http://www.usitc.gov/publications/701_731/pub4295.pdf.

13 The USITC also takes into account the domestic industry’s sales, market share, employment, and profits in such investigations. See the USDOC/ITA’s “An Introduction to US Trade Remedies,” http://ia.ita.doc.gov/intro/index.html.

14 World Trade Organization, “Accession of the People’s Republic of China,” 23 November 2001, 9.

15 Jeanne J. Grimmett, Congressional Research Service, “US Trade Remedy Laws and Nonmarket Economies: A Legal Overview,” 09 March 2012, www.crs.gov, p22.

16 Patrick J. Togni, “Are You There, America? It’s Me, Section 421,” Global Trade & Customs Journal, 7, Issue 4, April 2012.

17 Longyue Zhao and Yan Wang, “Trade Remedies and Non-Market Economies: Economic Implications of the First US Countervailing Duty Case on China,” March 2008, 12.

18 World Trade Organization, “Accession of the People’s Republic of China,” 23 November 2001, http://www.wto.org/, 9.

19 Gong BaiHua, Professor of International Law in the Law School of Fudan University and Director of Information at the Shanghai WTO Affairs Consultation Center, Personal Interview, 11 June 2012.

20 Keith Bradsher, “Europe Steps Up Talks With China on Its Market Status.” New York Times, 16 February 2012.http://www.nytimes.com/2012/02/17/business/global/europe-steps-up- talks-with-china-on-its-market-status.html.

21 Gong BaiHua, Professor of International Law in the Law School of Fudan University and Director of Information at the Shanghai WTO Affairs Consultation Center, Personal Interview, 11 June 2012.

22 The White House, “Executive Order -- Establishment of the Interagency Trade Enforcement Center,” 28 February 2012, (July 2012).

23 US House Committee on Ways and Means, “Republican Additional Views on H.R. 2378, the ‘Currency Reform for Fair Trade Act’,” 29 September 2010, Accessed 08 May 2012. http://republicans.waysandmeans.house.gov/News/DocumentSingle.aspx?Do cumentID=209242.

24 US Government Accountability Office, “Eliminating Nonmarket Economy Methodology Would Lower Antidumping Duties for Some Chinese Companies” January 2006.

25 World Bank & Development Research Center of China’s State Council, “China 2030: Building a Modern, Harmonious, and Creative High-Income Society,” 27 February 2012, http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/02/28/000356161_20120228001303/Rendered/PDF/671790WP0P127500China020300complete.pdf, 412.

26 World Bank & Development Research Center of China’s State Council, “China 2030: Building a Modern, Harmonious, and Creative High-Income Society,” 27 February 2012, http://www- wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/02/ 28/000356161_20120228001303/Rendered/PDF/671790WP0P127500China020300complete.pdf, p266.

27 World Trade Organization, China Trade Policy Review 2011, 24.

28 Ibid, 25.

29 Ibid, 25.

30 American Chamber of Commerce, Shanghai, “2011-12 China Business Report,” 5

31 World Bank and Development Research Center of China’s State Council, “China 2030: Building a Modern, Harmonious, and Creative High-Income Society,” 27 February 2012, http://www.worldbank.org/en/news/2012/02/27/china-2030-executive- summary, 93.

32 Professor Song of Fudan University’s American Studies Center, Personal Interview, 14 June 2012; see also World Bank & Development Research Center of China’s State Council, “China 2030: Building a Modern, Harmonious, and Creative High-Income Society,” 27 February 2012, http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/02/ 28/000356161_20120228001303/Rendered/PDF/671790WP0P127500China020300complete.pdf.

33 Gong BaiHua, Professor of International Law in the Law School of Fudan University and Director of Information at the Shanghai WTO Affairs Consultation Center, Personal Interview, 11 June 2012.

34 Ibid.

35 World Trade Organization, “Disputes by country,”https://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e. htm#respondent, (19 October 2012).

36 World Trade Organization, “European Communities — Measures Affecting Trade in Large Civil Aircraft,” http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e.htm.

37 Gong BaiHua, Professor of International Law in the Law School of Fudan University and Director of Information at the Shanghai WTO Affairs Consultation Center, Personal Interview, 11 June 2012.

38 Chinese Ministry of Commerce, “Conclusion on the US Policy Support and Subsidies for Its Renewable Energy Sector,” 24 May 2012, http://english.mofcom.gov.cn/aarticle/policyrelease/buwei/201206/20120608 161120.html.



Lisa Schaefer, Former Contributing Writer

Lisa Schaefer is a Master’s candidate in International Trade and Investment Policy at the Elliott School of International Affairs in Washington, DC. In the past few years, her areas of research have been on U.S. trade policy, Argentina’s macroeconomic restrictions to trade and China’s challenges to world trade.

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