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China’s Anti-Dumping Duties on X-Ray Security Scanners Assignment

Anti-dumping measures can be imposed when an investigation finds that imported products are sold at prices lower than the domestic prices of the product and that this “dumping” causes injury to the industry of the importing country. There needs to be a proven direct link between the dumping and the injury that occurred. On February 2013, WTO panel report have found that China’s anti-dumping duties on X-ray security scanners imported from EU were in breach of WTO anti-dumping rules, which were explained above.

In addition, the report has shown a clear victory for the EU. To go further back, China had imposed anti-dumping duties on X-ray security scanners imported from EU in January 2011. The import duties ranged from 33. 5% to 71. 8%, which resolved into Chinese market being closed to imported X-ray security scanners from EU. These Chinese anti-dumping measures were imposed shortly after EU had decided to bring anti-dumping duties on a similar product, which were cargo scanners imported from China in June 2010.

Which made the Chinese action look more like retaliation and not as a real concern about ”dumping”. Subject to the China’s anti-dumping duties was any kind of X-ray security inspection equipment. These so called ”security scanners” are widely used in almost any type of security checks or custom inspections. Mainly used in the inspection of explosives, weapons, smuggled goods and other suspicious or dangerous items. The measure covered a wide range of such scanners, going from hand luggage security scanners to cargo scanners.

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The trade of the goods before the anti-dumping duties represented approx. €70 million of EU exports to China annually. After the high duties were placed, that number dropped a lot. So, looking at WTO panel, we could see the investigation challenged by the EU in December 2011, found China violated all aspects of WTO rules, when applying anti-dumping measures. Firstly, the panel agreed with the EU that China used flawed methodology for analyzing the effects of EU exports on prices of X-ray scanners in China’s domestic market.

The methodology used the weighted average value per unit for the entire range of products covered by the Chinese measure. Without taking into consideration major differences among the products, particularly between ‘‘high-energy’’ and ‘‘low-energy’’ scanners. That being said, we need to know EU only exported the cheaper ‘’low-energy’’ scanners, used for luggage inspection which are much cheaper then ‘’high-energy’’ scanners used for inspecting cargo. Panel stressed that we cannot compare prices of imported and domestic product, in a way it was done in this case.

Also, Chinese authorities didn’t take into account an evidence showing that price comparability was also an issue: differences in the use and physical characteristics of scanners exported to China and the domestic scanners. Secondly, the panel stated that China’s assessment of the injury to its domestic industry of x-ray security scanners was wrong. Because China failed to take into consideration all of the relevant economic factors. While it was also lacking in objectivity and was not always reasonable and adequate.

And lastly the panel also stated that the Chinese Ministry of Commerce (MOFCOM) failed to respect some requirements provided by WTO anti-dumping rules. In particular, it failed to ensure a proper summary of certain confidential information; failed to disclose certain essential facts during the investigation; failed to provide relevant information regarding certain aspects of the investigation in its public notice; and failed to explain in its public notice why it rejected certain arguments of the cooperating EU producer.

In the ruling on February 2013, the WTO panel agreed that China’s additional duties were not justified. The panel report was adopted by the WTO Dispute Settlement Body and after 60 days, it was ruled that China needs to comply with the recommendations of the panel report to bring its measures back in place with WTO rules, and therefore also should revoke all the anti-dumping duties. Anti-dumping measures for import from the EU were removed on 19 February 2014.

References

http://www.eubusiness.com/regions/china/scanners/

http://trade.ec.europa.eu/doclib/press/index.cfm?id=1031

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