Probe Covers

Probe Covers

Rising trade probes spur makers into action

The country's export manufacturers are facing a greater number of lawsuits from new markets, forcing some to organize and disprove the allegations.

 

China suppliers are realizing they can no longer sit idly by while associations and lobbyists in their export markets, including emerging economies, file anti-dumping and countervailing suits against them. A growing number of exporters are now banding together to fight such allegations.

Early this year, two glass fiber manufacturers in India launched an anti-dumping complaint against their counterparts in China, including Jushi Group Co. Ltd. The company formed a special team to respond to the case. While waiting for the final decision, Junshi is paying provisional duties 60 percent lower than other suppliers affected by the suit.

In April 2009, four ceramic tile exporters responded to India's anti-dumping investigation. All four companies won and did not have to pay tariffs. In contrast, those that did not respond to the complaint were levied duties of 137 rupees ($2.90) per square meter.

The China Fiberglass Industries Association encourages such action from exporters, especially those targeting new markets, as there is a greater chance of success if they band together. Costs could be shared as well. Companies generally spend between $30,000 and $100,000 each to counter lawsuits, which could run as long as 13 to 15 months. Responding as a group requires similar investment in money and time.

In fact, some associations and local governments are extending their help to affected suppliers, including finding lawyers and other experts who can help explain options and ramifications. The ceramic association and the Foshan government organized manufacturers in the Guangdong province city to file a counter suit against Thailand's anti-dumping probe. More than 100 businesses are involved in the ongoing case.

Moreover, the China Ceramic Industry Association in Foshan is considering establishing an anti-dumping foundation, which can extend financial aid to cover companies' litigation costs. The association hopes this can encourage even the smaller operations to be more active in responding to anti-dumping lawsuits. Although the number of exporters filing rebuttals is on the rise, most are midsize and large enterprises.

Even so, not all suppliers are convinced taking action is the right step. Compared with the EU and the US, shipments to emerging economies are smaller in both volume and value. In 2009, China's total exports to new markets, including India and ASEAN-member countries, amounted to $304.9 billion. But sales to the US alone were at $220.8 billion.

As such, they would rather look for other export markets than allocate resources to familiarize themselves with lawsuits and filing counter actions.

 

Investigations, lawsuits pile up

Anti-dumping duties have forced an estimated 10 to 15 percent of factories to close or target other markets. This translates to between 200 and 450 businesses in the ceramic industry, and 20 to 45 in the glass fiber sector.

In the first five months of 2010, various countries in South America filed 19 cases, including anti-dumping and provisional minimum price measures, against 21 products from China. Argentina listed the most with 10 lawsuits, followed by Brazil with seven. Mexico and Colombia accounted for the rest.

South Asia, India in particular, is another market that has been actively launching investigations on China-made products. Since the start of the year, India has started anti-dumping inquiries on China's exports of steel, glass fiber penicillin G potassium, 6-APA and PVC coating.

Statistics from China's Ministry of Commerce also showed a total of 26 trade probes from 13 countries were initiated during the first four months of 2010. More than 60 percent came from emerging markets.

Seventy-nine anti-dumping cases were filed against various products made and exported from China in 2009. In the same year, 12 countervailing and nine safeguard cases were investigated.

 

This article was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

About the Author

Global Sources is a leading business-to-business media company and a primary facilitator of trade with China manufacturers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

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