Future of Trade Remedy System

1. Future of Trade Remedy System Li Ling MOFCOM P.R. China

2. Current Legal Framework of Trade Remedy System • The principal objective of trade remedy system is to correct unfair trade practices (dumping and subsidy) or to provide temporary remedies to the importing countries in emergency or exceptional circumstances (safeguard), in order to assist the industries of the importing countries to recover from the injury suffered or the threat of injury. • Trade remedy system, as an exception to the WTO spirit of free trade, is subject to strict rules and disciplines, and should be applied with precaution.

3. Applied in a fair, just and reasonable way, trade remedy instruments could play an important role in maintaining the fair international trade order, correcting the impact of unfair trade or unexpected emergencies, and protecting the domestic industries from unjustified injury caused by imports to ensure their healthy development. • In the meantime, as an exception to the WTO principle of free trade, trade remedy instruments are in nature temporary with the objective to provide the domestic industries a period for adjustment to restore normal trade. Once the normal trade is restored, the measures should be revoked in time to avoid overprotection.

4. Reflections of Trade Remedy System • Ideally, effective trade remedy instruments are important to respond to and restrain trade-distorting practices and the market imperfection consequent. • However, in practice, trade remedy instruments have been abused to certain extent. For a long time, trade remedy measures have been used to minimize competition of imports to domestic industries instead of counteracting the injurious effects of dumped imports. In particular, some members still maintain ‘non market economy’ methodology in anti-dumping investigation, which enlarges the dumping margin to a large extent. And these members are reluctant to recognize market economy status to those put into the NME lists, despite of the real circumstance.

5. On the other hand, the ambiguity of the rule of trade remedy itself leaves room for much discretion to the investigating authorities of importing Members. For examples: • There are certain cases where duty lasts for more than 20 years, sunset being sun unset, just as in very midsummer days of Arctic. • In some cases, the investigating authorities’ wide discretion and the different and unfair methodologies conducted by members lead to the initiations and subsequent measures to imported products. • In some cases, the investigating authorities reject the in formation provided by exporters without any explanation, and rely entirely on facts available to determine the dumping margin. As a result, the exporters are subject to very high duty rates.

6. The abuse of trade remedy measures has diminished to some extent the value of the commitments made by these importing Members on trade liberalization, particularly on tariff reduction, in the previous rounds of trade negotiations and therefore has undermined to some extent the market access opportunities for targeted Members. • Under such circumstances, members agreed in Doha “to negotiations aimed at clarifying and improving disciplines under the Anti-Dumping and Subsidies Agreements, while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least-developed participants”.

7. Future -- Balanced Trade Remedy System • The major issues of trade remedy rules need to clarify and improve: ◆ Transparency issues, such as disclosure of information and the essential facts, administrative and judicial review; ◆ Procedures governing initiation, such as initiation thresholds;

8. ◆ Determinations of dumping, such as the use of facts available, constructed normal value, limited examination and all others rates; ◆ The level, scope and duration of measures, such as duty assessment, interim and new shipper reviews, sunset; ◆ SCM issues, such as specificity, prohibited subsidies, allocation of benefit.

9. The attitude of members to trade remedy rules in Doha Round: ◆ Most members appreciate and support such issues as strengthening due process and enhancing transparency; ◆ To the technical issues as initiation, definition of domestic industry, product under consideration, and price undertaking, members focus on the feasibility of specific proposals;

10. ◆ To the substantive issues as prohibition of zeroing, sunset, public interest, circumvention and lesser duty rule, members hold different positions and have conflicts in concept; ◆ To the issues as special and differential treatment of developing and least-developed members, members’ discussions are limited.

11. In my view, the future of trade remedy system lies in an overall balanced interests, governed by strict rules and disciplines. ◆ The understanding of trade remedy system should be placed in the context of economic globalization. ◆ The understanding of trade remedy system should be in line with the general trend of world trade, i.e., trade liberalization.

12. ◆ Trade remedy instruments should be the last resort taken only under exceptional circumstances. ◆ Any improvement of trade remedy system should take into consideration of the need to prevent it from deteriorating into protection mechanism, and to elaborate its nature as the legitimate tool to protect the fair trade order. ◆ Trade remedy system should be operated in an open and transparent manner. The transparency and due process obligations should be further refined.

13. ◆ Mitigating the excessive effects of trade remedy instrument; ◆ Limiting the costs and complexity of proceedings for interested parities and the investigating authorities alike; ◆ Improving the disciplines of sunset review, preventing measures from becoming permanent; ◆ Avoiding the unwarranted and unnecessary use of trade remedy instruments; ◆ Taking into consideration the special and differential treatment of developing and least-developed members.

14. The clarification and improvement of trade remedy rules as set in Doha Round, will help to prevent the abuse of trade remedy instruments and guarantee the value of trade liberalization commitments that Members have made and will make. • What’s more, Members are making their own contributions to this issue. Today, we are here, 2007 Seoul International Forum on Trade Remedies, to celebrate the 20th anniversary of the Korea Trade Commission. In China, our investigating authority is celebrating the 10th anniversary of first anti-dumping in China. And I also notice that EC has released its “Green Paper of its Trade Defence Instruments” to reflect its trade remedy system, and advocated “rejection of protectionism at home”, as well as the idea of “need to import to export”. • I believe, with current efforts from all parities, the trade remedy system will have a bright future.

15. Thanks!