The International Trading Environment and China’s WTO Accession:

The International Trading Environment and China’s WTO Accession:
Measured by the Intensity of Anti-dumping
WANG Xiaowen
School of Economics, Tianjin University of Commerce, China, 300134
[email protected]
Abstract: Accession to WTO has provided a great opportunity for China to improve its international
trading environment. China’s export could enjoy lower MFN tariffs granted by WTO members.
However, non-tariff measures consistent to WTO have been more frequently resorted to restrain the
export from China. Anti-dumping is one of these kinds of non-tariff measures. This paper analyzed the
change of the impact of anti-dumping measures comparing the pre-accession and post-accession by
using the Anti-dumping Index and GAD annul data. The findings show (1) China is the most frequently
targeted country by anti-dumping measures prior to and following its accession, which to some extent
can reflect the concerns of WTO member to China’s accession; (2) The intensity of anti-dumping
measures to China’s export is less significant during post-accession than pre-accession, which means
from the perspective of the use of anti-dumping China’s international trading environment has been
improving. This conclusion is quite different from the previous literatures of anti-dumping study, in
which the arguments are that China’s international trading environment has been deteriorated by
anti-dumping. The conclusion of China’s consistently improved international trading environment is
made by dynamic analysis using annul data instead of accumulation data which usually employed by
previous literature.
Keywords: China’s WTO accession, International trading environment, Anti-dumping, Anti-dumping
intensity index
：
1 Introduction
There are many reasons for a country’s policymakers or government who choose to enter into trade
agreement like the WTO. Economic theorists has summarized as two central reasons to this kind of
decision: firstly, as Bagwell and Staiger(1999) has argued that large countries seek reciprocal market
commitment to neutralize the terms-of-trade effects of trade liberalization; secondly, as Maggi and
Rodriguez-Clare(1998) has argued that many countries seek an externally enforced contract in order to
credibly commit domestic sectors to policy reform. Following this line, the motivations for China’s
accession to WTO might be summarized as: China was seeking improving its international trading
environment through trade liberalization; and China’s policy reform would gain domestic credibility
from trading partners’ threat and its liberalization commitments (Bown, 2007).
There were no rules to be applied as to how to treat China’s export for WTO members prior to China’s
accession to the WTO in 2001. For example, although WTO members offer each other
most-favored-nation (MFN) treatment, they don’t have to offer such market access to non-members
such as China. However, there were some countries did offer certain market access through MFN
automatically given or sometimes Generalized System of Preferences (GSP).
The trade policies taken by China’s trading partners to China’s export constitute the China’s
international trading environment. Prior to China’s accession to the WTO, unconstrained by the
multilateral rules, China’s trading partners can adopt tariff as well as non-tariff measures to against
import from China. Actually, the anti-dumping measures had been become the most frequently resorted
instruments of administered protections by many countries to limit the export of China. From the
perspective of economical analysis, the anti-dumping measures are baseless, and are nothing more than
convenient administrative protection instruments. The change of China’s international trading
environment can be reflected by the anti-dumping measures against China to some extent. Besides, the
relatively transparent nature of anti-dumping measures (WTO members are required to report the usage
of the anti-dumping measures periodically), as well as its measurable nature and universally use by
149
developed and developing countries offer us a good chance to explore the change of international
trading environment which is constituted mainly by non-tariff measures nowadays.
Up till now, China’s export still suffers the most frequent anti-dumping investigations and subsequently
measures. Take a very simple example, from 1995 to the first half of 2008, there were 640 anti-dumping
investigations initiated against China’s export, which accounted for the 19.4% of the world total
numbers. Besides, the subsequently measures effected targeting China’s export were 441, which
accounted for the 20.9% of the total number. As to China, one of the potential benefits of the WTO
accession could be that the surging anti-dumping investigations and measures against China’s export
might be curbed by dispute settlement mechanism provided by WTO. To November 2009, China will
realize its WTO membership status for 9 years. During this period of having a WTO membership status,
did the international trading environment faced by China improve or deteriorate? Did China secure the
potential benefits of the WTO accession? These are the questions we are very interested. Though
focusing on the analysis of anti-dumping intensity against China’s export, this paper tries to give an
initial answers to the above mentioned questions.
2. China’s accession to WTO and the change of the anti-dumping intensity
2.1 Anti-dumping intensity index
Following Finger and Murray(1993), the anti-dumping intensity index(ADI) is defined as ratio of the
numbers of anti-dumping investigation initiations or measures over the export performance. ADI is
defined as
ADi (t , t + n )
AD I i =
EX i ( t , t + n )
AD w (t , t + n )
EX w (t , t + n )
where A D i ( t , t + n ) is the number of the anti-dumping investigation initiations or consequent
measures against country i’s export during the period of ( t , t + n ) , and A D w ( t , t + n ) is the total
number of global anti-dumping investigation initiations or consequent measures during the period of
( t , t + n ) , and E X i ( t , t + n ) is the total export value of country i during the period of ( t , t + n ) ,
E X w ( t , t + n ) is the world export total value. If the ADI is larger than 1, i.e ADI>1, then it means that
the anti-dumping initiations or measures against country i have an intense impact on the country i’s
export compared with country i’s export world market share; and if ADI 1, then the anti-dumping
charges against country i’s export is proportional to its world market share, and if ADI<1, compared
with its world market share of export, the impact of anti-dumping is less influential.
Following this line, through some minor alteration, China’s anti-dumping intensity index globally or in
specific market can be defined as
＝
A D ij ( t , t + n )
A D I ij =
A D i (t, t + n )
EX
ij
(t, t + n )
E X i (t, t + n )
where ADij (t , t + n ) is the number of anti-dumping investigation initiations or measures taken by some
specific country or area against China’s export during the period of ( t , t + n ) , and A D i ( t , t + n ) is
the total number of the anti-dumping investigation initiations or measures taken by other counties
against China’s export, and E X i j ( t , t + n ) is the China’s total export value to this certain country
during the period ( t , t + n ) , and E X i ( t , t + n ) is the China’s total export value. As mentioned above,
if ADIij>1, it means that compared its market share in the certain market, the impact of anti-dumping
against China’s export is significant.
2.2 Data
This paper focuses on the change of China’s ADI, ranging from 1995 to 2007. In 2001, China got her
150
WTO membership status. Through comparing the ADI of the before-and-after accession, we hope to
understand the possible changes of China’s international trading environment overall and country
specific.
We get the data required from there sources: we get the data of anti-dumping initiations and measures
against China’s export from the WTO official website. And the other data concerning the value of export
is from UNCOMTRADE and the total export value is calculated by current U.S. dollars. The annul data
of anti-dumping initiations against China’s export in specific market like U.S. and India is from the
Global Antidumping Database, GAD compiled by Bown(2007). However, this database is covering up
to date, and the relative data concerning U.S. and India is not available since 2005.
2.3 Results Calculated
The results calculated are showed by table 1 and table 2. Table 1 shows the annual overall ADI of China
calculated by the number of initiations and measures effected subsequently respectively, ranging from
1995 to 2007.
2.3.1 The China’s Overall ADI
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Table 1 China’s Overall Anti-dumping Intensity Index, 1995-2007
ADI
ADI
(by the number of initiations) (by the number of measures)
4.12
7.07
6.49
5.90
3.96
7.69
3.13
4.06
3.33
3.18
3.76
3.38
3.31
4.25
3.12
3.21
3.71
3.01
3.39
4.19
3.62
4.09
4.16
3.20
4.10
4.94
We could see from the table 1 that the overall ADI of China is significantly larger than 1, which means
that as long as the export market share is concerned, the impact of anti-dumping initiations or measures
to China’s export is significant during this period observed. Comparing pre-accession and
post-accession, there is no clear tendency that this overall index is decreasing, which means that China’s
WTO accession did not significantly alleviate the pain of anti-dumping. We note that the two kind of
overall ADI in 2007 are 4.10 and 4.94 respectively and are the biggest numbers since 1997, which
probably suggest that the rules of WTO have no mechanism restraining the use of anti-dumping. On the
contrary, more frequently, the WTO members have resorted to this convenient and flexible administrated
protection instrument after the use other import limiting measures have been blocked.
However, the average ADI prior to accession (1995-2001) is 4.01, which is larger than the average ADI
3.68 of post accession (2002-2007). From this very perspective, we can conclude that as long as the use
of anti-dumping is concerned, there is no clear evidence that China’s export international trading
environment has been deteriorating since its WTO accession. This is a very important argument, because
many domestic scholars argue that the use of anti-dumping worsen China’s international trading
environment. Besides, they have associated the frequent use of anti-dumping with the concessions made
by China during the accession negotiation.
2.3.2 China’s ADI in the market of U.S. and India
Table 2 shows China’s ADI in two typical markets, U.S. and India during the period 1995-2004. The
reasons why we pick up U.S. and India as the objective markets in our study are that: firstly, both of
these two countries are top two frequent user of anti-dumping against China ranging form 1995 to 2008;
151
secondly, they are representative users of developing and developed countries respectively.
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Table 2 China’s ADI in the market of U.S. and India, 1995-2004
U.S.
India
Export to India/Total
Export to U.S./Total
ADI
ADI
Export
Export
0.166
0.60
0.005
19.44
0.177
0.79
0.005
10.24
0.179
0
0.005
29.66
0.207
0.17
0.006
38.74
0.215
0.77
0.006
23.97
0.209
0.76
0.006
36.29
0.204
0.73
0.007
28.59
0.215
0.82
0.008
35.85
0.211
0.91
0.008
12.60
0.211
0.58
0.010
8.16
We note that during 1995-2004, there was no clear tendency concerning the change of ADI in these two
markets. However, when we compare the ADI in two markets, we find that China’s ADI in the market of
India is much bigger than that of U.S. In other words, from the perspective of export market share, the
impact of anti-dumping is more significant in the market of India. In the market of U.S., in 2003 comes
the biggest ADI (0.91), even so, this number is still less than 1. That means, compared with the market
share China’s export account for. The impact to China’s export by the use of anti-dumping in the market
of U.S. is less influential. We can not get a very obvious tendency, limited by the availability of the
relative data. However, it’s worth noting that ADI had a big drop in both markets in 2004, which was
related with the decreasing use of anti-dumping. In 2001, the global use of the anti-dumping came its
peak level (366) and so did for U.S. (75), then it showed a tendency of gradually decreasing. In 2007,
the global use of the anti-dumping was only 164. For U.S., the use of the anti-dumping in 2006 was 8,
much less than that of 2001, which can partly explains the big drop of ADI in the market of U.S. The
same thing happened in the market of India, in 2004, the ADI was as low as 8.16, compared with its
highest level of 38.74 in 1998. It can be explained by the similar fact that only 4 cases against China in
2004, while there was 15 cases in 2002.
Table 2 also suggests that with the stable and increasing market share of China’s export in the markets of
both countries, even though China is still the most frequently targeted country, the impact of the use of
anti-dumping against China’s export can not be exaggerated.
3 Conclusion
The study of the use of anti-dumping constitutes a very important part of understanding the China’s
international trading environment. WTO accession brought China’s export more favorable MFN
treatment. However, WTO members have resorted more frequently to other import-restricting policy
instruments allowed by WTO, for example the anti-dumping measures and special safeguard mechanism,
to mitigate the pressure caused by the surging Chinese product. One of the benefits of WTO accession
for China is the potential improvement of the international trading environment. Did China reap this
benefit? The abuse of anti-dumping is considered by the domestic scholars as the consequence of one of
the concessions made by China in WTO accession negotiations. Did the use of anti-dumping worsen the
China’s international trading environment? Through above analysis and calculation, we can get
conclusions as follows:
Firstly, as the most frequently targeted country, the discriminative use of the anti-dumping against China
has not changed, which partly reflected the concerns of other members to the possible surging Chinese
products. However, with China’s gradually increasing market share, we can not conclude that the use of
anti-dumping has worsened the trading environment.
Secondly, the comparison of China’s overall or country specific ADI during pre-accession versus
152
post-accession period shows that the impact of anti-dumping against China’s export has not become
more significant during the post-accession period. In other words, the impact of anti-dumping against
China was more industry specified than overall. Even though China is still the most frequently targeted
country of anti-dumping measures, the overall trading environment did have some improvement after its
WTO accession.
To sum up, the conclusion is very different from that of the previous literatures. The piling anti-dumping
study literatures to some extent reflected the concerns of many domestic scholars. They argued that the
concessions made during the accession negotiation gave a good chance to the abuse of anti-dumping,
which constitute a big threat to China’s export. This paper shows that impact of anti-dumping to China’s
international trading environment has been exaggerated. Through using annul data instead of cumulative
data, we can conclude that China’s international trading environment is gradually improving after WTO
accession even though it still suffers the abuse of anti-dumping measures.
References
～
[1]. Shen Guobing. Anti-dumping and Sino-U.S. Bilateral Trade Issues. Financial Study, (1)2007:101
111(In Chinese)
[2]. Bown Chad P. 2007. China’s WTO Entry Antidumping, Safeguards, and Dispute settlement.
NBER Working Paper No. 13349
[3]. Bown Chad P. 2007. Version 3.0. http:// www.brandeis.edu/ cbwn/global_ad/
[4]. Bown Chad P, McCulloch Rachel. 2005. U.S. Trade policy Toward China: Discrimination and
Implication. Paper for presentation at the PAFTAD 30 Conference at the East-west center in
Honolulu.
[5]. Bagwell Kyle, Robert W Staiger.1999. An Economic Theory of GATT J . American Economic
Review, 89(1):215-248
[6]. Maggi Givovanni, Andres Rodriguez-Clare.1998. The Value of Trade Agreements in the Presence
of Political Pressures J . Journal of Political Econmy,106(3):574-601
：
～
［］
［］
153