Whether Particular Market Situation In Anti-dumping Would Be A New Threat To China

The term “particular market situation”(hereafter referred to as PMS)was first stipulated in the Agreement on Implementation of Article VI of the GATT1994(hereafter referred to as the Agreement).Article 2.2 of the Agreement regulates that,“When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when,because of the particular market situation or the low volume of the sales in the domestic market of the exporting country,such sales do not permit a proper comparison,the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country,provided that this price is representative,or with the cost of production in the country of origin plus a reasonable amount for administrative,selling and general costs and for profits.”Though regulated,no details on how to define a PMS was given in the Agreement.Thus a discretion on the interpretation of PMS is granted to authorities of WTO members themselves.As for those countries who regulated PMS in their domestic legislation,Australia,EU and the USA were the most representative.After acknowledging that China has a "market economy" status,Australia continues to apply the "surrogate value" approach according to PMS in its anti-dumping investigations against China,which constitutes a violation of the Agreement.Meanwhile,the practices of PMS in anti-dumping investigations of EU and American are deemed be an attempting of new approach to apply "surrogate value" after the authority from Article 15 ofProtocol on the Accession of the People’s Republic of China.Because of the discretion on the interpretation of PMS,all above-mentioned countries(excluding China)expanded the scope of PMS in the domestic legislation.Especially on the problem of how to determine the normal value of the like product,surrogate value was adopted by nearly all countries.From this point of view,the process of applying PMS in these countries is actually a process of trying to bypass Article 2.2 of the Agreement on the grounds of PMS and shall be deemed a violation of WTO regulations.Though Article 2.2 of the Agreement contains PMS,it does not authorize PMS to trigger the applying of surrogate value approach in anti-dumping investigations.There are two stages in Australia’s applying of PMS,one is shortly after the beginning of its recognition of China’s "market economy" status,and it did not really apply the PMS rule for value determination,but instead adopted a normal domestic price for calculation.Since the Certain Aluminium Extrusions Exported to Australia from the People’s Republic of China in 2010,it has begun to emphasize the existence of PMS in anti-dumping investigations towards China,and based on this,it has begun to apply surrogate values approach instead of domestic sales data of China.In 2017,in the case of A4 copy paper,Australia applied the PMS rule to countries other than China for the first time.However,it was immediately sued by the victim Indonesia to the WTO,and considered that its PMS rule violated the Agreement.As for the U.S.,the U.S.Department of Commerce(DOC),for the first time under a recent amendment to the Tariff Act of 1930,has applied the concept of PMS to depart from the foreign producers’ home market production costs in calculating the producers’ antidumping margins.The DOC was granted expanded authority under the Trade Preferences Extension Act of 2015(TPEA)to deviate from foreign producers’ reported home market sales prices or production costs as“outside the ordinary course of trade” when determining whether exports to the United States have been sold at dumped prices.The DOC invoked the statutory authority to make an upward adjustment to the reported costs of producers in the Republic of Korea to account for certain alleged distortions in the Korean market for oil country tubular goods(OCTG)— a type of steel product used in oil fields,which has been the subject of bruising anti-dumping disputes in the United States.This decision opens the door to similar allegations against foreign producers in other market economy cases under U.S.law,particularly where structural conditions in an exporting country,China for example,are alleged to create “distortions” in the foreign producers’ recorded costs or prices.The EU is facing problems similar to those of Australia.Because it applies its PMS rule in its anti-dumping investigations against Russia and uses it as a basis for surrogate values.Russia has already brought such practices of EU to the DSB.For this reason,the EU had to introduce new legislation and introduce the concept of “market distortions” as an attempt to continue its surrogate value approach to China when the time limit specified in Article 15 of China’s Accession Protocol to the WTO approached.However,from the perspective of the legislation itself,there are also serious violations of the Agreement.In addition to trying the PMS rule,both the EU and the United States are trying to retain the surrogate value approach in anti-dumping against China.In 2017,they released new analysis reports for China,accusing China of failing to meet the market economy standards in all aspects.However,"market economy status" is itself a false proposition.Whether China has a "market economy status" is not important.The key point is whether other countries can apply the surrogate value approach in their anti-dumping investigations against China.If China wins in DS515 and DS516,it needs to be vigilant that the US,EU,and other countries may turn to the PMS rule and seek to continue to apply discriminatory practices in anti-dumping investigations against China.