Spotlight: international trade law in China – Lexology

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Overview of trade remedies

China first introduced anti-dumping measures in the Foreign Trade Law in May 1994. In 1997, China promulgated the Anti-dumping and Anti-subsidy Regulations and initiated its first trade remedy case – the anti-dumping investigation against newsprint from Korea, Canada and the United States. Nowadays, China has become one of the major users of trade remedy measures.

As at July 2021, China has initiated 119 anti-dumping investigations, 17 anti-subsidy investigations and two safeguards investigations.

Legal framework

There are three basic trade remedy regulations: the Anti-dumping Regulations, the Anti-subsidy Regulations and the Safeguards Regulations, all of which were enacted in 2002 and amended in 2004.

The Ministry of Commerce (MOFCOM) is the competent authority in charge of all trade remedy cases. MOFCOM has also promulgated a number of implementing rules concerning various issues, such as initiation, questionnaire response, hearing, verification, among other things, throughout investigations.

After China’s accession to the World Trade Organization (WTO), the People’s Supreme Court promulgated three rules concerning judicial review of trade remedy measures in 2002: Rules on Certain Issues Concerning Hearing of International Trade Administrative Cases; Rules on Certain Issues Relating to Application of Law in Hearing of Anti-dumping Administrative Cases; and Rules on Certain Issues Relating to Application of Law in Hearing of Anti-subsidy Administrative Cases. No cases have been brought to judicial review to date.

Treaty framework

i Regional Comprehensive Economic Partnership

To deepen and broaden the engagement among parties and to enhance parties’ participation in the economic development of East Asia, the leaders of 16 countries, including the 10 Member States of the Association of Southeast Asian Nations (ASEAN) and six ASEAN free trade agreement (FTA) partners (Australia, China, India, Japan, South Korea and New Zealand), signed the world’s largest trade agreement, the Regional Comprehensive Economic Partnership (RCEP), in November 2020. The RCEP was established with the spirit to enhance trade and investment as well as to contribute to the economic integration of East Asia. This is the first time China has included government procurement rules in a plurilateral agreement, focusing on improving the transparency of laws, regulations and procedures, and promoting cooperation between signed parties in government procurement.

ii Comprehensive Agreement on Investment

The negotiations on the Comprehensive Agreement on Investment (CAI), a bilateral treaty between China and the European Union, were officially concluded on 30 December 2020. The CAI will replace the existing bilateral investment treaties between the 27 EU Member States and China. Once signed and enforced, the CAI will be the first agreement to deliver on obligations for comprehensive transparency rules for subsidies, the behaviour of state-owned enterprises and commitments related to sustainable development. The content of the CAI still needs to be approved, signed and enforced by both parties. Nevertheless, according to the principles stated in the CAI, European investors will enjoy better access to the Chinese market. As the CAI has not changed the European Union’s existing security and anti-monopoly review on foreign investment, Chinese companies, especially state-owned companies, will be subject to more stringent supervision on investments in Europe.

In May 2021, Members of the European Parliament (MEPs) voted overwhelmingly to ‘justifiably’ freeze the legislative process of the CAI until China lifts sanctions imposed against several European individuals and entities, including five MEPs, in March 2021.

iii Comprehensive and Progressive Agreement for Trans-Pacific Partnership

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which took effect on 30 December 2018, is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Compared with the RCEP, the CPTPP is an FTA with a higher entry threshold and more requirements for state-owned companies. The CPTPP provides more opportunities for government procurement, investment protection and guarantees; a facilitative framework for digital economy and intellectual property protection; and restrictions for state-owned companies on government subsidies. It is reported that China is actively dealing with issues concerning joining the CPTPP and has begun talks with some members of the CPTPP.