What is behind China’s anti-dumping complaint against Australia at the World Trade Organization?
It was a thunderclap.
On Thursday, the Chinese government suddenly announced that it would be raising a dispute at the World Trade Organization (WTO) against Australia’s anti-dumping duties on three of its exports.
At first glance, the products seemed to have been chosen almost at random.
Beijing said it is challenging Australia’s rights to Chinese stainless steel sinks, wind towers and railroad wheels.
China has not given Australia any notice, and senior ministers were quick to publicly label the move “small.”
After all, the announcement came just five days after the federal government announced it would file its own WTO complaint against Beijing’s crippling tariffs on Australian wine.
At first glance, it looked like a clear act of tit for tat retaliation.
But why did China target Australia in this way at the WTO? What is their exact complaint? Could this have some merit? And how is that likely to unfold?
What is dumping?
“Dumping” refers to the practice of exporting goods below their normal prices, either to gain market share or to get rid of surplus products.
It is prohibited by WTO rules, and when identified, the importing country is allowed to impose “anti-dumping duties” to bring the goods back to a normal price.
Australia has imposed dozens of anti-dumping measures against foreign goods, especially from China.
This is not surprising, and it is not necessarily proof that Australia is discriminating against China.
“China is the world’s largest exporting economy and its economy is also plagued by overproduction,” said Richard McGregor, a Chinese expert at the Lowy Institute.
But he says China has “had a bee in its hat for a long time” over Australia’s anti-dumping measures against its exports.
“They never took us to the WTO on this. I suspect they kept these cases in reserve to do just that,” McGregor said.
“And Australia’s announcement for the wine deal was the trigger for them to do it.”
So, does the case of China have any merit?
At the moment, it’s very difficult to say.
Beijing is essentially alleging that Australian taxes on these three products are unfair because they are not dumped, but simply sold at a fair price, above the cost of production.
A spokesperson for the Commerce Ministry said it was taking action to “safeguard the multilateral trading system”.
“China opposes the abuse of trade remedies, which not only harms the legitimate rights and interests of Chinese companies, but also harms the seriousness and authority of WTO rules,” he said. declared.
But the ministry has yet to provide details of its complaint, so experts have little material to work with.
“The question at stake is not how many times Australia has applied these duties to China, but whether it has done so in accordance with long-standing WTO rules,” said trade expert Jeffrey. Wilson of the Perth USAsia Center.
“Until all the details of the Chinese claim are released, it is impossible to say whether they have a strong case.”
The government has already made it clear that it considers the complaint to be frivolous and vexatious, with Finance Minister Simon Birmingham calling the decision “more petty than provocative”.
“Our systems, our processes are strong, transparent and contrast with the type of approach that was used in China’s decision against our wine and barley,” Senator Birmingham said.
Dr Wilson says this refers to the fact that Australian politicians can’t just hit just any old product with anti-dumping sanctions on a whim.
Of course, that doesn’t mean our record is flawless.
Has Australia ever lost a case like this?
Yes it is.
In 2019, the WTO supported an Indonesian complaint against Australia’s anti-dumping tariffs on A4 paper, concluding that Australia had made incorrect price assumptions.
The federal government did not appeal the decision and dropped the anti-dumping tariffs.
Still, Dr Wilson points out that Australia’s record on this front remains strong.
“In hundreds of cases, only once has a duty imposed by the commission been canceled by the WTO,” he told the CBA.
Mr McGregor of the Lowy Institute said it “may well be the case” that Australia’s system is strong and fair.
But he says that since Australia applies anti-dumping tariffs so regularly, it would be good to get them tested again at the WTO.
And he suggests that China may well have been emboldened by Indonesia’s victory in 2019.
“Maybe they saw the Indonesian case as a precedent that they can follow,” he says.
The complaint will also put additional pressure on the relatively small teams of hard-working – and already overworked – Australian officials responsible for disputes like this.
Even if Australia wins comfortably, defending the case will consume time and energy and distract trade officials from their focus on Australia’s two WTO lawsuits against China over barley and wine.
And that could be reason enough for Beijing to keep moving forward, even if its prospects for victory are dim.