China is responding to complaints from the World Trade Organization that its exports are being sold at unfairly inexpensive prices in foreign markets. The United States and several European countries have long criticized China for this dumping practice. China has stated that complaints regarding its trading practices will need to cite more legitimate comparisons between prices by the end of next year in order for concerns to be addressed.
According to world trade rules, countries that are importing goods are allowed to place punitive tariffs on dumped goods. However, the principle of dumping cheap goods is usually subjective, and situations are considered on a case by case basis. Typically, an analysis is made by comparing the prices of similar domestic goods from the exporting country with the prices of the exported goods.
Still, China is saying that these comparison rules are not being applied, based on the grounds that China is not a true market economy. As a result, China says that under current policies, other countries are not required to point out domestic prices in China in order to justify their accusations of dumping. Instead, they can accuse China of the practice regardless of prices. China went on to insist that they are not dumping goods on other countries.
The representative for China at a recent WTO meeting said that dumping was “outdated, unfair and discriminatory”. Based on China’s WTO membership terms, the country will start being treated as a market economy by the end of next year. At that point in time, accusing countries will have to stop making random comparisons and start legitimately comparing prices.
Earlier this year in September, the WTO received dumping complaints in regards to 22 different categories of Chinese exports. These goods included industrial components, medicine, various food agreements and more. While the accusations might be legitimate at the present time, by the end of next year, countries will have to start looking at Chinese domestic prices. This should largely avoid any WTO disputes over the practice.
During the 20 year history of the WTO, there have been roughly 500 different trading disagreements. More than 20% of these disagreements have involved dumping, most of which have been complaints from the United States and the EU about China.