Co-authored with Sandeep Chandy
The growing trade tensions between China and Australia have been widely reported in the press. In a recent manifestation of these tensions, China last Friday issued an affirmative preliminary determination regarding alleged dumping of wine from Australia, and imposed provisional duties of between 107.1% to 212.1%.
While China uses anti-dumping regularly (with 232 measures imposed since 1995, it is the world’s sixth most frequent user), this investigation follows a recent trend, in that the petitioner argued the existence of a “particular market situation” (PMS) in the Australian wine industry. MOFCOM ultimately did not rely on the existence of a PMS to calculate the preliminary margins, but rather relied upon facts available to determine the exporters’ costs. Nevertheless, MOFCOM’s determination discusses Australian market conditions in detail, and based upon the facts available finds the existence of “non-market conditions”.
According to MOFCOM, the Australian wine industry benefited from government intervention in the form of (1) regulations and restrictions on production and sales of wines and grapes by the government or public bodies; (2) legislation to regulate and control the wine industry; (3) industrial planning and development strategy; (4) supportive measures through inter alia R&D funds, investment subsidies (5) controlling entry into the wine industry; (6) controls on import and export of wines; and (7) price controls. An informal translation of the most relevant portions of the determination is available here.
These findings of “non-market conditions” parallel findings of government intervention in the US energy market in a preliminary determination regarding n-propanol from the United States (discussed here). Although China has not yet taken the final step, a finding of the existence of a particular market situation could be the basis to disregard exporters’ costs and replace them with “undistorted” market costs. Given the widespread use of such methodologies in other AD users, including Australia, these findings look like a shot across the bows by China, indicating that it too can play this game.
