In rapid succession, the Government of China has lost three cases before the World Trade Organization ("WTO") involving its conduct of injury investigations. The affirmative injury findings involve the disparate products of grain-oriented electrical steel, x-ray equipment, and chicken broiler parts. These cases evince a pattern of conduct by the Chinese investigating authority ("MOFCOM") that show a lack of compliance with WTO obligations to conduct objective and fair injury investigations in antidumping and countervailing duty proceedings.
The recent WTO decisions criticizing MOFCOM's injury investigations are consistent with long-standing WTO precedent. MOFCOM's decisions have failed to include two critical aspects of any valid injury investigation. First, the investigating authority must examine whether the imports subject to the antidumping or countervailing duty investigation ("subject imports") are causing negative price effects -- either price suppression or depression. A key aspect of this price analysis is valid product price comparisons designed to determine whether there is a pattern of price undercutting (or underselling) by subject imports. MOFCOM has either disclaimed such an analysis or conducted the analysis in a manner that is not objective and not designed to yield valid results. For example, instead of attempting to evaluate whether subject import prices are consistently lower than domestic prices and to what degree, MOFCOM has relied on average unit value ("AUV") comparisons that aggregate prices over annual periods, ignore differences in levels of trade, and ignore differences in product mix. MOFCOM has made no effort to establish actual competition between subject imports and domestic production or establish any causal price relationship.
A second key aspect of any injury investigation is the "non-attribution" analysis, whereby the investigating authority must examine whether there are potential alternative causes of any injury suffered by the domestic industry. MOFCOM has repeatedly failed to conduct any meaningful investigation of potential alternative causes of injury to the domestic industry even when such alternative causes are undeniably present and have had a major impact on the domestic industry seeking relief. Indeed, MOFCOM has denied the existence of these alternative causes even when they are plainly established by data submitted by the petitioning companies or by analyses conducted by Chinese organizations aligned with the Government of China.
In sum, it is apparent that China has achieved great economic gains by joining the WTO and gaining liberalized access to export markets. Yet China has willfully ignored its WTO obligations in the conduct of injury investigations, the effect of which has been to shut imports out of its own market. China shows no sign that it will bring its injury investigation procedures into line with WTO norms, suggesting that there will be more WTO disputes to come.