China seeks special consideration for SMEs in antidumping and countervailing probes

October 30th by Dimana Todorova

 

At an informal meeting held on October 11th, 2017, the WTO Negotiating Group – in charge of negotiating in the area of “WTO Rules” (the Anti-dumping Agreement and the Agreement on Subsidies and Countervailing Measures) – examined, inter alia, a proposal made by China on April 21st, 2017, and inviting investigating authorities to give special attention to small and medium-sized enterprises (SMEs) in antidumping investigations and countervailing duty investigations.

The aim of the proposal is to create a freer trade environment for SMEs and to facilitate their participation in international trade.

For SMEs, responding to different antidumping or countervailing duty procedures represents a heavy burden. This is due not only by their limited capacity but also by their lack of experience. Because of these difficulties, their requests are often rejected. As a result, SMEs are even reluctant to engage in procedures that require mobilising resources while the outcome remains uncertain.

To remedy the current situation, China proposes to add in the Antidumping (AD) Agreement and the Subsidies and Countervailing Measures (SCM) Agreement a full article relating to “Small and Medium Enterprises”.

At this time, the only articles that could be useful for SMEs are Article 6.13 of the AD Agreement and Article 12.11 of the SCM Agreement, which both provide that ” The authorities shall take due account of any difficulties experienced by interested parties, in particular small companies, in supplying information requested, and shall provide any assistance practicable.”

However, China believes that these articles do not grant sufficient protection for SMEs.

Adding a new article on SMEs would (i) improve information communicated to them, (ii) help SMEs provide adequate information to the authorities, (iii) provide extended deadlines and (iv) finally ensure that SMEs are not discriminated against. The authorities will have to take into account the capacities of SMEs when processing their files and be more tolerant.

For this purpose, investigating authorities should, as much as possible, identify SMEs in order to provide them specific assistance.

This proposal raises two major difficulties. The first lies in the definition of SMEs. Indeed, in the absence of a general definition, the investigating authorities are free to determine whether the company should be considered as a SME or not. But this disparity in definitions could create significant distortions of treatment between States. Some States could use a very narrow definition to justify the lack of assistance they provide to companies.

Secondly, this proposal does not consider the increase of administrative burden States would likely have to support. Indeed, investigating authorities will have to set up internal procedures that not only determine how to identify SMEs but also the extent of the assistance they will have to provide. As a result, the adjustment will be gradual to allow States time to take appropriate actions.

On the other hand, some delegations proposed not to create a new article but to interpret the existing articles more efficiently in a way they would imply adaptation to the more specific needs of SMEs.

China submitted this proposal for discussion but if it wishes to pursue its proposal to amend the provisions of the Multilateral Trade Agreements, it should submit it to the Ministerial Conference.

Any amendment shall be accepted by consensus of the member States.