The Trade War Is Over: Will The US Impose Tariffs On US $325 Billion Chinese Products? Those Holes In The Textile Industry

Sino US trade friction ups and downs, and new murmurs! Not long ago, the United States just announced that it would stop the new tariff imposed on China. The economic and trade team of the two sides will resume economic and trade consultations on the basis of equality and mutual respect in accordance with the requirements of the consensus of the two heads of state Osaka meeting. But in July 16th, Trump also said at the White House cabinet meeting that the United States had a long way to go to reach a trade agreement with China, but if necessary, the United States might impose tariffs on Chinese products worth 325 billion US dollars.

China's Foreign Ministry spokesman Geng Geng responded that if the United States imposed new tariffs, it would set new obstacles to bilateral economic and trade consultations, which would only make the Sino US economic and trade agreement a longer journey.

Over the past year, Sino US trade friction is undoubtedly the most interesting hot topic. At the same time, the overall situation of trade friction encountered by China's textile and clothing products is worth checking and paying attention to.

During the whole year of 2018, under the background of Sino US trade friction and the continuous decline of global economic situation, China's products suffered 106 trade relief surveys, among which 60 were anti-dumping, 29 against countervailing and 17 from safeguards. Compared with the number of 75 launched in 2017, the number of cases increased by 41.3%. The situation of trade and relief in China's textile and clothing products is basically flat with that in 2017, with a slight increase of 4 cases.

In 2018, there were 14 new cases of trade remedy cases in textile and garment industry, of which 10 cases were originally tried, and the total amount involved was nearly US $250 million. Compared with the 11 cases in the same period in 2017, the number of cases increased by 27.2% and the amount involved was reduced by 51%. The situation of trade friction continues to be grim.

China's textile and garment trade relief cases in recent 5 years

Looking back in 2018, the 14 new cases in the year are: Mexico polyester staple anti-dumping investigation, India linen yarn anti-dumping investigation, Argentina denim anti-dumping investigation, Turkey acrylic double reverse investigation (Note: double anti investigation for anti-dumping, countervailing investigation at the same time, therefore, according to two cases), Egyptian seal strip anti-dumping investigation, Madagascar travel blanket guarantee measures Investigation, the US DTY polyester processing silk double reverse survey, Turkey nylon deformation yarn safeguard measures survey; sunset review survey 4, are: Indonesian polyester staple anti-dumping sunset review review, Turkey synthetic short fiber fabric third sunset review, Turkey synthetic polyester staple second sunset review, Brazil nylon filament sunset review.

Trade remedy investigation is grim.

The 2018 trade remedy investigation case has the following characteristics: the amount of cases has declined, and the number of cases filing is more in Asian countries, and the South American countries continue to exert their strength.

Although the number of cases registered in 2018 is generally the same as that in 2017, the amount involved has dropped significantly. In 2017, the new legislation involved $510 million. In 2018, the number of new cases was only about $260 million. Most of the products involved are raw materials and fabric products, and the export amount is not large.

Of the 14 new cases, 5 cases were filed in Turkey, 2 in the United States and 1 in other countries. Asian countries have a large number of cases, and South Africa and Africa continue to exert their strength as a newly launched country. Latin American countries have been using trade remedy measures in China since 1994, and the most common means of investigation are anti-dumping investigations. With the increasing scale of economic and trade contacts between Latin American countries and Latin American countries, Latin American countries frequently use anti-dumping investigations and measures to curb imports and seize their domestic market. These investigations have seriously affected China's export trade to Latin America and have a significant impact on the survival and development of Chinese export enterprises. Latin American countries have resumed the investigation of textile and clothing trade relief since 2017. Brazil, Columbia, Argentina, Peru and Mexico have become the main sponsors.

In the case, the enthusiasm of Chinese enterprises to sue is generally not high. In 2018, the total amount of money involved in the new cases was not high. The amount of cases involved was below 10 million U.S. dollars. In addition, the registered countries were developing countries such as South America. Due to the lack of strict procedures, unconventional channel clearance, high cost of litigation, and uncertain results, the enthusiasm of enterprises was not high enough, and the difficulty of coping with the work was also increased. Non prosecution will lead to a punitive high tariff in the final ruling, and then it will be difficult to continue exporting to the target market. At the same time, abandoning the lawsuit also led to the stagnation of the investigation procedure and the vicious circle of litigation.

Industry consultation is a powerful channel to resolve friction

At present, the industry organization is the main force to promote the healthy development of market order under the mature market economy. The launch of the WTO trade remedy survey has many limitations, especially the limitation of the industry's representativeness. Therefore, the application of the business association basically solves the representational problems. Even if there are different opinions within the business association, the association can only issue a unified voice representing all the members' opinions. At the stage of submission, the applicants mostly expressed their support and voice with trade associations. Some industry organizations also lobbied the government and relevant agencies to set limits on Chinese enterprises. If the respondent is a single Chinese enterprise or although many enterprises are responding to it, it is only a response to each enterprise's response. It often leads to unequal attack and defense situation. Single enterprises can not express the overall views and demands of the Chinese industry, and can not provide the data that is conducive to their own industry. Only when enterprises unite to take part in the lawsuit as an industry, can the industry associations publish comments and participate in defense as one of the subjects of complaint, so as to form a better situation and get the right to speak.

The initiation and investigation of trade remedy cases need to comply with legal procedures, but the outcome often depends on the interests of all parties. This kind of game is not only reflected in the defense, but also in lobbying and negotiation. Therefore, the participation of industry organizations will increase lobbying and negotiation efforts, and negotiate with other business associations and governments and exchange conditions. In addition, if Chinese enterprises are too numerous to sue, only industry organizations can give a unified voice on behalf of enterprises.

Through the trade union's action and the advantage of the trade organization, the enterprise can realize the solution of the friction before the case, and regulate the import and export trade through the professional technical response and effective communication. In the case, negotiation and negotiation will be conducted to reduce the extent of the impact of the measures. After the case, the situation of import and export will be traced and the export of the enterprises will be well prompted.

Sino US trade friction increases the difficulty of cases

The United States is the world's largest member of the world trade remedy case. From 2016 to 2018, it launched a double anti investigation case for my textile and clothing for three consecutive years. They were: double reverse survey of glass and cotton fabrics in 2016, double reverse survey of polyester staple fiber (PSF) in 2017, and double reverse survey of polyester processing yarn (DTY) in 2018.

Polyester processing silk double reverse investigation involves about $10 million. After receiving the early-warning information, the relevant departments of the China Textile Import and Export Chamber shall immediately organize the main enterprises to sue. Because the case involved in the product belongs to the United States 301 investigation 200 billion tax range, has added 10% tariff. Some export enterprises have already faced enormous difficulties, so they have given up their action.

In response to the US 301 investigation and response, the chamber of Commerce promptly followed the US 301 investigation and progress, and actively guided enterprises to do a good job in product elimination. The working group was sent to China's provinces and municipalities to concentrate on the export of textile products to the United States, and to communicate with local commercial authorities and enterprises. In the link of the hearing held by the US government, we attended and submitted comments to show our position. During the hearing, the delegation communicated extensively with the representatives of the textile and garment industry, the law firms and relevant experts, and exchanged and exchanged views on the industry in a timely manner. After many efforts, in September last year, the United States announced the final list of taxes, PVC gloves were successfully excluded from the United States tax range.

Focusing on case review

In the 14 newly established cases, the chamber of Commerce focused on the anti-dumping investigation of India linen yarn, the investigation of Madagascar travel blanket safeguard measures, the anti-dumping investigation of Mexico polyester staple, the anti dumping investigation of Argentina denim, and the anti-dumping investigation of Columbia denim in 2017.

Case 1 India flax yarn anti-dumping investigation

In 2017, India launched 7 trade remedy investigation cases for China's textile and clothing products, and only 1 cases were launched in 2018. Although the number of registered cases has declined, the difficulty has continued to increase. India has launched a trade remedy survey of Chinese textile and garment products in the past 5 years, reaching its peak in 2017. In the case type, the form of anti-dumping investigation used by India has begun to adopt the form of anti-dumping investigation combined with countervailing investigation in recent years. As India's Moody's prime minister has been in power, India has been encouraged to make efforts to develop traditional industries in India and boycott imported products. After the reform of India's domestic tax system, the domestic industry is more active in applying for the launching of trade remedy investigation.

The case received $80 million from the Ministry of Commerce and industry in India, covering almost all of China's Linen Yarn export enterprises. 8 representatives and lawyers of the main export enterprises took part in the respondent's meeting. At the meeting, the enterprises unanimously decided to sue and participate in the industrial injury defense organized by the China Textile Import and Export Chamber of Commerce. Subsequently, the chamber of Commerce submitted the defense opinions to the Indian side on behalf of the industry, and carried out trade negotiations, went to India to attend the hearing held by the Ministry of Commerce and industry of India, and spoke on behalf of China's flax, hoping that the Indian side would make no final damage according to the actual situation of Sino Indian cooperation. In the August final, the Indian government decided to impose 1%~40% tariffs on Chinese respondent enterprises regardless of the fact evidence provided by the Chinese side and the statement made by the importers of the Indian side. The 110%~120% tax was not imposed on the respondent enterprises. In this case, although I will lead the company to make a full and comprehensive defense, the final ruling still imposes a higher tax rate on Chinese companies. The competition between China and India in the textile industry has not subsided with the easing of relations between the two countries. It is predicted that the "dragon elephant competition" will exist for a long time in the future.

Case 2 Mexico polyester staple anti-dumping investigation

This case is the first textile trade relief survey in Mexico since 2013. Mexico's textile products in China mostly investigate raw materials and fabric products, and the amount of money involved is usually not large. Due to the fact that Mexico still adopts the "one country one tax" policy, it leads to poor prosecution and a high final tax rate. The case involved $49 million. Upon receipt of the notification, the China Textile Import and Export Chamber of Commerce promptly held a joint meeting with the Jiangsu Provincial Department of Commerce in Nanjing, organized 5 main enterprises to participate in the industry's no injury defense. In responding, the relevant departments and lawyers actively cooperated to assist the main enterprises and the competent commercial departments to provide industrial data.

The case has been made preliminary in December 2018. The Mexico investigation authorities refused to give the market status of China polyester staple fiber industry to the market, giving the Chinese respondent enterprises the initial tax rate of 0.46~0.52 USD / kg, and temporarily levying provisional anti-dumping duties.

Case 3 anti dumping investigation of Argentina denim

In recent years, Argentina has launched 8 trade remedy surveys on China's textiles and clothing, and has never changed the practice of "one country, one tax" in the survey. At present, the company has abandoned the use of surrogate countries to calculate the dumping margin and accepted some enterprise's price commitment in the case. Since 2015, the government of Argentina has introduced an import licensing system for sensitive products. In order to protect labor-intensive industries, a non automatic licensing system for textiles has been implemented. Under the framework of the system, the government and importers' associations discuss the import quota and so on. In recent years, the consumption level of Afghanistan has been declining, and the government's taxes and fees continue to rise. To ease pressure, the domestic industry had to suppress the competitiveness of imported products by launching a trade remedy survey.

The domestic demand of denim in Argentina is continuously strong, but its domestic output can only meet the 30%~60% demand. The main imports are from China, Vietnam, Brazil and Peru. The quality and price of Chinese products are more dominant. If Argentina levying tariffs on denim after Columbia, it will easily lead other countries in South America to follow suit and cause the fall of such products in the South American market.

In order to find out the background of filing the case, we try to resolve the friction through negotiation. The responsible person of the China Textiles Import and Export Chamber of commerce took the lead. He held talks with the Argentina Importers' Association and more than ten representatives of the denim importers on the filing of the case, and communicated with the importers representatives on the background of the case filing and the import restrictions of the products, and expressed the concern of the Chinese industry to the Argentina anti-dumping investigation case that may be on the way. Argentina's Ministry of production said it would handle cases involving Chinese exporters cautiously. In February 21, 2018, the investigation authorities issued a notice in which Chinese products were involved in the amount of about $15 million. In view of the small amount involved in the final case, Argentina persisted in using the implicit quota system to manage the involved products, and the enterprise finally gave up the lawsuit.

Case 4 Columbia denim anti dumping case

The Columbia denim anti-dumping case was filed on August 2017, involving a sum of $130 million. This case is also one of the largest cases of Latin American countries' launching of trade remedy investigation in 2017. It has received high attention from the Ministry of Commerce's trade relief Bureau, the main producing area of products involved in Zhejiang, Lanxi Municipal Bureau of Commerce and local enterprises, and has organized 9 enterprises to participate in the non injury defense. After the chamber of Commerce and the Zhejiang provincial chamber of Commerce jointly organized negotiations with the elder brothers and called on many parties, the final price was awarded to a minimum price of 3.25 US dollars / kg per kilogram, and more than 90% of China's export products would not be affected by anti-dumping duties. However, the case should be very tortuous. After the final ruling, the two sides of the elder brother COLTEJER S.A. and FABRICA.TO S.A. appealed against the final appeal and demanded that the investigation authority change the tax rate. After receiving the appeal, the Columbia Trade Practice Committee decided to modify the tax rate to $4.12 / kg. The procedure is similar to administrative reconsideration, but it does not inform stakeholders including Chinese enterprises. Therefore, the Chinese side believes that the elder brother decided to violate the law and will take administrative action through the court.

Trade friction situation and prospect forecast

As the prospects for Sino US trade frictions are still uncertain, the global economic situation is hard to break through, and Chinese products are actively seeking market breakthroughs, which will inevitably lead to the boycott of the domestic industries of the destinations. To sum up, the situation of trade remedy in 2019 will be cautiously optimistic.

First, the United States will continue to combine the use of various trade policies and trade restrictions to resist imports. The US textile survey in China reached a small climax in 2009. In recent years, almost every year 1~2 cases occurred in ~2011. The Trump Administration held high the banner of trade protectionism. The United States no longer imposed import restrictions on trade remedy alone. Instead, it turned to combine various restrictive measures to make full efforts, and trade remedy cases will continue to rise. In addition, the US trade remedy investigation case is more difficult to deal with, and individual enterprises need to invest more and prepare for low tax rates. Industry collective defense will become a breakthrough to get a lower respondent rate.

Second, South America will continue to be the leading country on file. From 1995 to 2017, the major countries in Latin America launched anti-dumping investigations on China. There were 12 countries in Latin America. The total number of anti-dumping investigations against China totaled 335. Among them, 106 cases were filed against China from Argentina, 96 from Brazil to Columbia, 46 from Mexico, 52 from Mexico by China, and 22 from Peru by China.

From the statistics of the number of anti-dumping investigations launched by Latin American countries in ~2017 in 1995, we can see that about 92% Latin American countries have initiated anti-dumping investigations. Anti dumping investigations are likely to cause products to be pursued in various countries. This Domino effect is more obvious in Latin American countries' anti-dumping investigations.

In textile and apparel products, Latin American countries are the main processing and consuming countries of cowboy products. Venezuela launched anti-dumping investigations on jeans produced in Venezuela in January 1994. The investigation has not yet been fined. Peru also launched anti-dumping investigations on jeans in China in October. In 2010, Mexico launched anti-dumping investigations on denim again. In 2011, Peru's Denim survey again carried out the anti-dumping sunset review review. The final ruling continued to take 5 years of anti-dumping measures.

Latin American countries have generally absorbed the legal characteristics of European and American countries in the formulation of anti-dumping rules, and have strict procedures in defining anti-dumping investigations. But in practice, the degree of freedom of law enforcement is relatively large, the discretion of the investigation authorities is too large, and there are many cases explaining laws and creative procedures. In view of this, China's enterprises should rely on the strength of the government and industry organizations to strike together in response to individual responses, so as to get a breakthrough in the case.

Third, cumulative cases in Turkey have entered the sunset review case. WTO, the Anti-dumping Agreement and the anti-dumping laws of various countries all stipulate that the enforcement of anti-dumping measures shall not exceed 5 years. At the same time, it also stipulates that if the original investigation measures are expired, if necessary, the procedures for the examination of the effect of the anti-dumping measures on the subsequent importation can be cancelled.

The sunset review review of anti-dumping in most countries does not change the final tax rate of the original trial, but decides whether to continue to use the original anti-dumping measures. However, in the sunset review, Turkey re calculated the dumping margin and tax rate of the enterprises involved.

From 2007 to 2008, Turkey launched 9 anti-dumping investigations against China and superimposed the cases of continuous review. These cases gradually entered the sunset review process in 2019. Enterprises should seize the opportunity of reexamination, and strive to obtain a lower export tax rate in the next 5 years and obtain market share opportunities through active submission of papers.