Mark Wu Responds to Scott Kennedy

by Harvard International Law Journal

[This post is part of the Third Harvard International Law Journal/Opinio Juris Symposium.]

I want to thank Scott Kennedy for his insightful comments. Kennedy’s work has been instrumental in increasing our understanding of the forces driving the rising use of trade remedies in China and other emerging powers. He is certainly correct to point out that many questions remain unanswered. My hope is that this article will spark others to join in examining this phenomenon and debating the consequences of maintaining the global antidumping regime in its current form.

I agree with Kennedy that the methodology for the retaliation analysis is not as robust as one might hope. As I myself note in the discussion of the methodology in the article, my approach presents a real risk of Type I errors. I did try to limit the possibility of Type II errors by examining whether an action may be in response to another protectionist tool besides antidumping sanctions and found little change in my results. But the possibility exists that my approach may be both over- and under-inclusive in what it considers to be retaliation.

Proximity in timing is but an indicator of a retaliatory motive, and I agree with Kennedy that further confirmation through case studies would help buttress my retaliation argument. Unfortunately, I found that policymakers involved in deciding antidumping petitions were willing to only go as far as to discuss overall trends, but not specific cases, even when promised anonymity. This reticence limited my ability to rely upon case studies in my methodology. Here’s to hoping that others will find greater success in getting government officials to open up further about specific cases in future studies.

Still, with respect to China, I am convinced that we have been witnessing a shift in its willingness to retaliate over the past two years. Tit-for-tat actions are increasingly common. Just last month, after the US filed a WTO case challenging China’s antidumping duties on US poultry, China responded the following week by taking action against American-made SUVs. Although the amount of trade affected is not overwhelming, China is clearly keen to signal that it too can play this game if it wants and that it would behoove the rest of the world to take notice.

While Kennedy makes a valid point that antidumping cases on the whole appear to be “of little consequence to global macro-economic patterns,” we should not be focused on simply the numbers alone. There is also a political dimension to each of these cases, which if not carefully managed, could provide the spark for a greater trade war. So far, government officials have done a laudable job containing these frictions, especially in the aftermath of the global financial crisis. Nevertheless, increased aggressiveness of the part of India and China raises the risk that one day a series of trade remedy actions may spiral into a larger trade war. My article seeks to raise the question of whether it is worth undertaking legal reforms to decrease this risk. If not, then we at least need to be clearer in articulating why we remain unconvinced about the need to use law to mitigate against a plausible risk with negative welfare consequences for all sides involved.

Kennedy’s point about the differences in procedural fairness between the Chinese and Indian antidumping regimes is intriguing. While aware that foreign firms are even less likely to prevail when defending against antidumping actions in India than in China, I have not seen work to date explaining why this is the case. I very much look forward to reading Kennedy’s upcoming work highlighting his interviews and his thesis.

Finally, I strongly concur about the value of additional work involving further interviews with lawyers, industry associations, and government officials to understand further the factors that drive the use of the antidumping regime in the new users. I hope this article plays a small part in raising questions and sparking interest in such work. I look forward to further contributions by Kennedy and other readers of this blog on this phenomenon.

http://opiniojuris.org/2012/01/26/hilj_wu-response-to-kennedy/

One Response

  1. Response…
    A Comment on Mark Wu’s Article by Marcia Harpaz
     
    I would like to comment on Mark Wu’s basic argument that China seems set to become a major user of anti-dumping (AD) measures, and therefore, its AD regime, along with that of India represents a threat to the global trade regime. I will only address China’s AD practices here, as my own research focuses on China. I have found that China is presently using anti-dumping in a surprisingly restrained manner, despite expectations to the contrary. China’s AD initiations peaked in 2004 (shortly after it joined the WTO), and have not reached that level since. Although China’s initiations climbed temporarily in 2008-2009, they declined in 2010 and again in 2011. And we’re talking about small numbers, for example, 8 initiations in 2010, down from 27 in 2004 according to WTO statistics. The numbers are even smaller if we look at China’s AD initiations by product rather than by source country: 4 initiations in 2010 down from 8 initiations in 2004. So not only doesn’t there seem to be a “dramatic rise” in China’s use of AD, but there seems to be a decline. Some of its other AD practices also reveal a pro-trade orientation. Scott Kennedy, in his response to Wu, provides a few examples of this. Another example is that unlike the EU which rarely uses its public interest provision, China put a public interest clause into its AD legislation in 2004, and uses it. Public interest clauses take into account consumer interests, and work to the detriment of the domestic industry in an AD investigation. Furthermore, the fact that China is promoting stricter AD disciplines in the Doha Round negotiations, suggests that China views its export interests as outweighing its desire to protect domestic industry interests, a consideration that is not likely to change in the near future, however much China attempts to reduce its dependence on exports for growth. For these reasons and others, in my view, China’s AD regime does not represent a threat to the US and EU. But even if it does, I don’t think that it is realistic to expect the US or the EU to support stricter AD disciplines in the WTO any time soon. Anti-dumping is simply too politically charged.
     

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