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Two-way trade between China and Australia is worth around A$240 billion (US$171 billion), while China buys around 39 per cent of Australia’s merchandise exports. Photo: Reuters

Fact-Check | China-Australia relations: do Beijing’s anti-dumping and anti-subsidy investigation claims hold up?

  • Chinese Ministry of Foreign Affairs spokesman Wang Wenbin claims that Australia has launched 106 anti-dumping and anti-subsidy investigations against China
  • He also said that China had only initiated four investigations against Australian goods

China earlier this month made one of its strongest public comments to date about its ongoing conflict with Australia, its largest Asia-Pacific trading partner.

Two-way trade between China and Australia is worth around A$240 billion (US$171 billion), with China buying around 39 per cent of Australia’s merchandise exports.

But since Canberra pushed in April for an international inquiry into the origins of the coronavirus, the conflict between the two countries has escalated with a series of trade actions from China against Australian products. It has also spread into non-trade areas.

Between China and Australia, which country is breaching the principles of market economy and the bilateral free trade agreement?
Wang Wenbin
Since April, there have been a series of trade actions from China against Australian products including a new anti-dumping duty on barley, suspensions of beef exports, and the slowing down of coal purchases.

While these were backed by investigations or provable trade breaches, the most recent wave of actions from China were more opaque including the verbal suspension in November of seven Australian products, namely barley, coal, log timber, copper, wine, sugar and lobsters.

What did China claim?

On November 6, Chinese Ministry of Foreign Affairs spokesman Wang Wenbin provided an update on the latest suspension of Australian products.

“Opening up is China‘s basic state policy. Upholding a vision of openness, cooperation, solidarity and mutual benefit, China will stay committed to greater opening up. We act on our words,” Wang said.

“I noticed that some in Australia have recently been questioning China‘s measures, with some even accusing China of violating international trade rules.

“So far Australia has launched as many as 106 anti-dumping and anti-subsidy investigations against Chinese products, while China only initiated four investigations against Australian goods.

“Between China and Australia, which country is breaching the principles of market economy and the bilateral free trade agreement? And which country is reneging on its commitments, undermining cooperation and taking discriminatory measures? The facts are all too clear.”

Dumping is a situation in which the price of a product sold in an importing country is less than the price of that product in the market of an exporting country, according to the World Trade Organization (WTO).

A country can initiate an anti-dumping investigation against another in accordance with WTO rules – specifically the Anti-Dumping Agreement – and if the alleged country is found to have dumped goods, the investigating country can impose anti-dumping duties to protect its domestic industries.

Is there any evidence to support China’s claim?

The latest WTO official data shows that between 1995 and June 2020, Australia has initiated 65 anti-dumping cases against China.

Both countries have been trading as WTO members since 2001 when China became a member of the WTO. Australia joined the global trade body in 1995.

Australia also initiated 20 countervailing or anti-subsidy investigations against China at the same time on top of the 65 anti-dumping cases.

Countervailing actions are brought about in the same vein as anti-dumping actions in that an investigating country can levy countervailing duties on another country for subsidising its industries so that they can sell goods cheaply overseas.

That brings the reported number of Australian investigations against China to 85 when combining the 65 anti-dumping cases and the 20 countervailing or anti-subsidy investigations.

In July, Australia also brought an anti-dumping case and an anti-subsidy case against China for copper tubes, although that has yet to be officially recorded by the WTO. That brings the number to 87.

It is possible that China’s claim also includes investigations against imports from Taiwan, Hong Kong and Macau. Hong Kong and Macau are special administrative regions of China, although both are members of the WTO in their own right. The self-ruled island of Taiwan, which is considered a renegade province by Beijing, is also a member of the WTO, which lists it as “Chinese Taipei”.

Australia has instigated 23 anti-dumping cases against Taiwan and one against Hong Kong as of the end of June, according to the WTO.

This would bring the number of Australian actions to 111, which would be generally in line with China’s claim that “Australia has launched as many as 106 anti-dumping and anti-subsidy investigations against Chinese products”.

In turn, China launched one anti-dumping and one anti-subsidy investigation against Australia between 1995 and June this year, and one anti-dumping and one anti-subsidy investigation in the current reporting period since but they have not been officially reported to the WTO yet, bringing the number of actions against Australia to four. Investigations are reported to the WTO every six months, so any actions since the start of June have not yet been recorded by the WTO.

So does China have a case against Australia?

If Australia’s actions against Hong Kong and Taiwan are excluded, the number of actions against China on its own of 87 still outweighs China’s four against Australia. This reinforces China’s claim that Australia has not traded as openly as it has. Australia’s complaints against China’s recent trade actions were made against its own aggressive trade actions against China.

Further, while Australia agreed to recognise China as a market economy – Australia was one of the first countries to do so in 2005 which means it has to accept China’s prices of goods as fair – Australia did not do so in many investigations, applying instead proxy prices based on other markets to determine that China had dumped cheap goods.

Australia’s use of anti-dumping measures has also been repeatedly criticised by its Productivity Commission, an Australian government advisory body which conducts public inquiries into the effectiveness of policies in improving economic performance.

In an inquiry in 2010 and an update in 2016, the Productivity Commission said Australia’s anti-dumping system only benefited a small number of local industries and “increased its protectionist impact and so increased its net costs for the community as a whole”.

Australia ostensibly has an anti-dumping system because WTO rules allow it. However, there is no compelling economic rationale for doing so
Productivity Commission

The Productivity Commission also said the average dumping and countervailing duty currently in place in Australia is 17 per cent, more than three times greater than the general tariff rate of 5 per cent. Some measures have been in place for more than 15 years.

“Australia ostensibly has an anti-dumping system because WTO rules allow it. However, there is no compelling economic rationale for doing so and it is clear that current anti-dumping arrangements are making Australia, on a national welfare basis, worse off,” the Productivity Commission said.

Between 1995 and 2019, Australia was the sixth most prolific anti-dumping instigator among the 164 members of the WTO after India, the United States, the European Union, Argentina and Brazil.

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