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Sino-US trade friction ups and downs, and new noise! Not long ago, the United States just announced that it would stop imposing new tariffs on China. The economic and trade teams of the two sides will restart economic and trade consultations on the basis of equality and mutual respect in accordance with the requirements of the consensus reached by the two heads of state in Osaka. But on July 16, trump said at the White House cabinet meeting that the United States still has a long way to go to reach a trade agreement with China, but if necessary, the United States may impose tariffs on $325 billion worth of Chinese goods.

In response, Chinese Foreign Ministry spokesman Geng Shuang said that if the United States imposes new tariffs, it will be tantamount to setting new obstacles to the economic and trade consultations between the two sides, which will only make the road for China and the United States to reach an economic and trade agreement longer.

Over the past year, Sino-US trade friction is undoubtedly the most concerned hot events. At the same time, the overall situation of trade frictions encountered by China's textile and garment products is also worthy of inventory and attention.

In 2018, under the background of Sino US trade friction and the continuous decline of global economic situation, China's products encountered 106 trade remedy investigations, including 60 anti-dumping cases, 29 countervailing cases and 17 safeguard measures. The number of cases has risen by 41.3 per cent compared to the number of 75 cases initiated in 2017. China's textile and garment products encountered trade relief situation is basically the same as in 2017, a slight increase of 4 cases.

In 2018, trade remedy cases in the textile and garment industry encountered 14 new cases, including 10 cases in the original trial, involving a total amount of nearly $0.25 billion. Compared with the 11 new cases in the same period in 2017, the number of cases increased by 27.2, and the amount of money involved decreased by 51%. The trade friction situation continues to be severe.

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

Looking back in 2018, the 14 new cases were: Mexico polyester staple fiber anti-dumping investigation, India flax yarn anti-dumping investigation, Argentina denim anti-dumping investigation, Turkey acrylic double anti-dumping investigation (note: double anti-dumping investigation is anti-dumping investigation and anti-subsidy investigation, so it is calculated according to two cases), Egypt sealing strip anti-dumping investigation, Madagascar travel blanket safeguard investigation, US DTY polyester processed yarn double anti-dumping investigation, Turkey nylon textured yarn safeguard investigation; there were 4 sunset review investigations, namely: Indonesia polyester staple fiber anti-dumping sunset review investigation, Turkey man-made synthetic staple fiber fabric third sunset review investigation, Turkey synthetic polyester staple fiber second sunset review investigation, Brazil nylon filament sunset review investigation.

　　The situation of trade remedy investigation is grim

The overall trade remedy investigation cases in 2018 have the following characteristics: the amount of cases has decreased, the number of cases filed is higher in Asian countries, and South American countries continue to exert strength.

Although the number of cases filed in 2018 was generally the same as that in 2017, the amount of money involved dropped significantly. In 2017, the amount of new cases involved was 0.51 billion US dollars. The amount involved in the new case in 2018 was only about $0.26 billion. The products involved are mostly raw materials and fabric products, and the export amount is not large.

Of the 14 new cases, five were filed in Turkey, two in the United States and one in each of the other countries. Asian countries have a large number of cases, and South America and Africa continue to make efforts as emerging countries. Latin American countries have been using trade remedy measures against China since 1994, and the most common means of investigation is anti-dumping investigation. With the continuous growth of the scale of economic and trade exchanges between China and Latin American countries, Latin American countries frequently use anti-dumping investigations and measures to restrain imported products from seizing their domestic markets. 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 restarted investigations on textile and clothing trade remedies since 2017. Brazil, Colombia, Argentina, Peru and Mexico became the main sponsor countries.

In the case, the enthusiasm of Chinese enterprises is generally not high. As the overall amount of new cases in 2018 is not high, the amount of cases involved is mostly less than 10 million US dollars, and the countries where the cases are filed are developing countries such as South America, the procedures are not rigorous, the customs clearance through unconventional channels, the cost of responding to lawsuits is high, and the results are uncertain. As a result, the enthusiasm of enterprises to respond to lawsuits is not high, which also increases the difficulty of the industry's response work. A failure to respond would result in a final ruling that punitive high tariffs would make it difficult to continue exports to the destination market. At the same time, the abandonment of responding also leads to the stagnation of the evolution of the investigation procedure of the investigating country, resulting in a vicious circle of difficulty in responding to the lawsuit.

　　Industry consultation is a powerful channel to resolve friction

At present, industry organizations are the main force to promote the sound development of market order in a mature market economy. Due to the WTO trade remedy investigation launched many restrictions, especially the industry representative restrictions. Therefore, the application of the business association basically solves the problem of representativeness. Even if there are different opinions within the business association, the association can only issue a unified voice to represent the opinions of all members in terms of the overall application. At the stage of submitting comments, most applicants express their supporting opinions and voices through trade associations. Some industry organizations have also lobbied the government and relevant agencies to impose restrictions on Chinese enterprises. If the respondent is only a single Chinese enterprise or although there are many enterprises responding to the lawsuit, but only their own response to the enterprise's answer, often resulting in offensive and defensive situation is not equal, a single enterprise can not express the overall opinions and demands of the Chinese industry, but also can not provide favorable industry data. Only when enterprises unite to participate in the response as an industry, and make the industry association as one of the subjects of the response to comment and participate in the defense, can we better form a reciprocal situation and obtain the corresponding right to speak.

The initiation and investigation of trade remedy cases need to comply with legal procedures, but the results often depend on the interests of all parties. This kind of game is not only reflected in the defense, but also in the lobbying and negotiation. On this point, the enterprises that respond to the lawsuit alone have no advantage. Therefore, the participation of industry organizations will increase lobbying and negotiation, negotiating and proposing exchange terms with the other business associations and governments. In addition, if there are too many Chinese companies responding to lawsuits, only industry organizations can issue a unified voice on behalf of the company.

Enterprises through the chamber of commerce group to respond to the lawsuit, give full play to the advantages of industry organizations, through professional technical response and effective negotiation and communication, can achieve before and after the case to resolve friction, standardize import and export trade.

　　Sino-US trade friction increases the difficulty of dealing with cases.

The United States is the WTO member with the largest number of trade remedy cases against China in the world. From 2016 to 2018, it launched a double anti investigation case against China's textile and clothing for three consecutive years. They are: double reverse investigation of glass cotton fabric in 2016, double reverse investigation of polyester staple fiber (PSF) in 2017, and double reverse investigation of polyester processed yarn (DTY) in 2018.

Polyester processing silk double reverse investigation involved in the amount of about $10 million. After receiving the early warning information, the relevant departments of the China Textile Import and Export Chamber of Commerce immediately organized the main enterprises to respond to the lawsuit. As the products involved in this case fall within the scope of the US 301 investigation 200 billion, a 10% tariff has been imposed. Some export micro-enterprises said that exports have faced great difficulties, so they abandoned the lawsuit.

In response to the U.S. 301 investigation, the Chamber of Commerce closely followed the U.S. 301 investigation and progress in a timely manner, actively guided companies to do a good job in product exclusion, and sent working groups to provinces and cities where my country's textile export production enterprises to the United States are concentrated to communicate with local commerce authorities and enterprises Communicate, introduce product exclusion legal procedures to enterprises, and listen to their opinions. Attend and submit comments at the hearing held by the US government to actively express our position. During the hearing, the group had extensive exchanges with representatives of American textile and garment industry organizations, law firms and relevant experts to understand and exchange mutual industry opinions in a timely manner. After many efforts, in the final tax list announced by the United States in September last year, PVC gloves were successfully excluded from the scope of taxation by the United States.

　　Review of key response cases

Among the 14 new cases, the Chamber of Commerce organized anti-dumping investigations on Indian flax yarn, Madagascar travel blanket safeguard measures, Mexican polyester staple fiber anti-dumping investigations, Argentine denim anti-dumping investigations and Colombian denim anti-dumping investigations filed in 2017 according to the amount involved, country and response effect.

Case 1 Anti-dumping Investigation on Flax Yarn in India

In 2017, India initiated 7 trade remedy investigations against Chinese textile and apparel products, and only 1 case was initiated in 2018. Although the number of cases filed has declined, the difficulty of coping continues to increase. India has continued to launch trade remedy investigations on Chinese textile and garment products in the past five years, reaching a peak in 2017. In terms of the types of cases, India has used the form of anti-dumping investigations, and in recent years has begun to adopt the form of anti-dumping investigations combined with countervailing investigations. Since Prime Minister Modi of India has been in power to encourage manufacturing in India, to focus on the development of traditional industries in India and to resist imported products. After India's domestic tax reform, the domestic industry has been more active in applying to initiate trade remedy investigations.

In this case, the amount of products involved in the case received notice from the Indian Ministry of Commerce and Industry was 80 million US dollars, covering almost all flax yarn export enterprises in China. Representatives and lawyers of 8 main export enterprises participated in the response work meeting. At the meeting, the enterprises unanimously decided to respond to the lawsuit and participated in the industry damage defense organized by the China Textile Import and Export Chamber of Commerce. Subsequently, the Chamber of Commerce submitted defense opinions to the Indian side on behalf of the industry, and carried out industry negotiations, went to India to participate in the hearing held by the Indian Ministry of Commerce and Industry, and spoke on behalf of Chinese flax, hoping that the Indian side would make a final decision without damage according to the actual situation of cooperation between Chinese and Indian enterprises. In the final ruling in August, the Indian government, regardless of the factual evidence provided by the Chinese side and the statements of Indian importers, decided to impose a tariff of 1-40 per cent on Chinese enterprises responding to the lawsuit and 110-120 per cent on enterprises not responding to the lawsuit. In this case, although the company led the company to make a full and comprehensive defense, the final ruling still imposed a higher tax rate on Chinese companies. The competition between China and India in the field of textiles has not subsided with the easing of relations between the two countries. It is expected that the "dragon and elephant dispute" will exist for a long time in the future.

Case 2 Mexican Polyester Staple Fiber Anti-dumping Investigation

The case is Mexico's first textile trade remedy investigation since 2013. Mexico's textile cases against China are mostly investigated for raw materials and fabric products, and the amount of money involved is usually small. Mexico's one-country, one-tax approach has led to poor responses and continued high final tax rates. The amount involved in this case is 49 million US dollars. After receiving the notice of filing the case, the China Chamber of Commerce for Import and Export of Textiles and the Jiangsu Provincial Department of Commerce jointly held a response meeting in Nanjing in a timely manner, and organized 5 main companies to participate in the industry's no-damage defense. In responding to the lawsuit, relevant departments actively cooperated with lawyers to assist Contact the main company and the competent commercial department to provide industry data.

The case was initially ruled in December 2018, and the Mexican investigative authorities refused to grant China's polyester staple fiber industry market economy status, giving Chinese responding enterprises a preliminary tax rate of $0.46-0.52/kg, with no provisional anti-dumping duty for the time being.

Case 3 Argentina denim anti-dumping investigation

In recent years, Argentina has launched eight trade remedy investigations on China's textiles and clothing, and has never changed the practice of one country, one tax. At present, Albania has abandoned the use of surrogate countries to calculate dumping margins and has accepted some corporate price commitments in individual cases. Since 2015, the Argentine government has implemented an import licensing system for sensitive products and a non-automatic licensing system for textiles to protect labor-intensive industries. Under the framework of the system, the Government and the Association of Importers discuss matters such as the number of import quotas. In recent years, the level of domestic consumption in Afghanistan has been declining, while various government taxes and fees have continued to rise, and domestic producers are facing greater pressure. In order to ease the pressure, the domestic industry has to launch trade remedy investigations to suppress the competitiveness of imported products.

The domestic demand for denim in Argentina continues to be strong, but its domestic production can only meet 30% to 60% of the demand. The main imported products come from China, Vietnam, Brazil and Peru. The quality and price of Chinese products are dominant. If Argentina imposes tariffs on denim after Colombia, it will easily lead to other countries in South America to follow suit, resulting in the fall of China's such products in the South American market.

In order to find out the background of the case, try to resolve the friction through industry negotiations. The relevant person in charge of the China Chamber of Commerce for Import and Export of Textiles led a team and went to Argentina to hold talks with the Argentine Importers Association and representatives of more than ten denim importers before filing the case, and discussed the background of the case, product import restrictions and other issues with the importer representatives. Exchanges, and expressed the concerns of the Chinese industry to the Argentine side on the denim anti-dumping investigation case that may be filed. Argentina's Ministry of Production said it would treat cases involving Chinese exporters with caution. On February 21, 2018, in the filing notice issued by the investigating authorities, the amount of Chinese products involved was about US $15 million. In view of the small amount of money involved in the case, Argentina insisted on using the hidden quota system to manage the products involved, and the enterprise finally gave up responding to the lawsuit.

Case 4 Colombia Denim Anti-dumping Case

The Colombian denim anti-dumping case was filed in August 2017, involving an amount of US $0.13 billion. This case is also one of the largest cases in which Latin American countries initiated trade remedy investigations against my country in 2017. It has received great attention from the Trade Remedy Bureau of the Ministry of Commerce of my country, the Zhejiang Lanxi Municipal Bureau of Commerce, the main origin of the products involved, and local enterprises. Damage defense. After the Chamber of Commerce and the Zhejiang Provincial Department of Commerce jointly organized a delegation to Colombia to conduct negotiations and multi-party visits, with the efforts of all parties, the final cut was a minimum price of US $3.25 per kilogram, and more than 90% of Chinese exports will not be affected by anti-dumping duties. However, the case was very tortuous. after the final ruling, colombian COLTEJER s. a. and FABRICA. to s. a. appealed against the final ruling and asked the investigating authorities to change the tax rate. After receiving the appeal, the Colombian Trade Practice Committee decided to revise the tax rate to US $4.12/kg. The process is similar to an administrative review, but stakeholders, including Chinese companies, are not notified. Therefore, China believes that the decision of the Colombian side clearly violates the law and will conduct administrative proceedings through the courts.

　　Forecast of Trade Friction Situation

As the prospect of Sino-US trade friction is still inconclusive, the global economic situation is difficult to break through, and Chinese products are actively seeking market breakthroughs, which is bound to trigger resistance from domestic industries in destination countries. To sum up, the trade relief situation in 2019 will be cautiously optimistic.

First, the United States will continue to use a combination of trade policies and trade constraints to resist imports. The US textile investigation into China reached a small climax from 2009 to 2011. In recent years, there have been almost 1 to 2 cases every year. The Trump administration is holding high the banner of trade protectionism, and the United States is no longer imposing import restrictions solely by means of trade remedies, but is turning to the consolidation of a variety of constraints in a comprehensive manner, and trade remedy cases will continue to rise. In addition, it is more difficult to deal with the US trade remedy investigation cases, and it takes more investment and preparation for a single enterprise to obtain a low tax rate. The industry's collective defense will be a breakthrough in obtaining a lower response tax rate.

Second, South America will continue to be the main country to file a case. From 1995 to 2017, major Latin American countries launched anti-dumping investigations against China. There were 12 countries in Latin America, and a total of 335 anti-dumping investigations were initiated against China. Among them, Argentina filed 106 cases against China, Brazil filed 96 cases against China, and Colombia 46 cases. Mexico filed 52 cases against China, and Peru filed 22 cases against China.

Statistics from the number of anti-dumping investigations initiated in Latin American countries from 1995 to 2017 show that about 92% of trade remedy cases in Latin American countries were initiated in the form of anti-dumping investigations. Anti-dumping investigations are easy to cause products to be chased and intercepted in various countries. This domino effect is more obvious in anti-dumping investigations in Latin American countries.

In textile and clothing products, Latin American countries are the main processing and consumption countries of denim products. In January 1994, Venezuela launched an anti-dumping investigation on jeans made in China. The investigation has not yet been finalized. Peru also launched an anti-dumping investigation on Chinese jeans in October. In 2010, Mexico again launched an anti-dumping investigation into denim. In 2011, Peru's denim investigation conducted another anti-dumping sunset review investigation, and the final ruling continued to take anti-dumping measures for 5 years.

Latin American countries have generally absorbed the legal characteristics of European and American countries in the formulation of anti-dumping rules, and there are strict procedural definitions in the legal provisions of anti-dumping investigations. However, in practice, the freedom of law enforcement is greater, the discretion of the investigation authorities is too large, and there are many cases of interpreting the law and creating procedures. In view of this, Chinese enterprises should rely more on the strength of the government and industry organizations to attack together while responding individually, in order to get a breakthrough in individual cases.

Third, Turkey's cumulative cases are entering the sunset review period. The WTO Anti-Dumping Agreement and the anti-dumping laws of various countries stipulate that anti-dumping measures shall be implemented for no more than 5 years. At the same time, it also stipulates that when the original investigation measures expire, if necessary, the anti-dumping measures can be canceled to apply for review of the impact on subsequent imports.

The anti-dumping sunset review investigation in most countries does not change the final tax rate of the original trial, but only decides whether to continue to use the original anti-dumping measures. However, Turkey recalculated the dumping margins and tax rates of the companies involved in the sunset review.

Between 2007 and 2008, Turkey launched nine anti-dumping investigations against China, overlaid with old and continuous review cases, which entered the sunset review process in 2019. Enterprises should seize the opportunity of review, and strive to obtain a lower export tax rate in the next five years and obtain market opportunities by actively submitting answers.

(Source: China Textile News)