by Jacques Gordon
The U.S. International Trade Commission has opened an investigation into allegations of refrigerant dumping by manufacturers in China. Dumping refers to the practice of selling a product in a foreign market below its home-market price, sometimes even below its actual production cost. While not specifically prohibited, dumping is “condemned” by the World Trade Organization (WTO) because it is typically done to drive competitors out of their own local market. The 159-member organization, which includes both the United States and China, has established rules and procedures for dealing with dumping through the General Agreement on Tariffs and Trade (GATT).
The U.S. International Trade Commission has determined there is “a reasonable indication” that U.S. refrigerant producers are being “materially injured” by imports of 1,1,1,2- Tetrafluoroethane from China being sold here at less than fair market value. That chemical is used primarily as the refrigerant R-134a and as aerosol can propellant. Principal manufacturers in the U.S. are DuPont and the U.S. arm of Mexichem, the company that petitioned the Trade Commission to open the investigation. As a result of the Commission’s determination, the U.S. Department of Commerce will now conduct their own investigation and presumably issue a “preliminary countervailing duty order” in January 2014 and a “preliminary antidumping duty order” in March. If upheld, these actions would add duty (import taxes) to raise the price of the product to something approximating the prevailing market price. The duty would be paid to the U.S. government by the foreign companies and/or the Chinese government.
In response, the Chinese government has formally requested, through the WTO Secretariat, consultations with the United States to discuss the way in which anti-dumping investigations are carried out when Chinese products are involved. While the U.S. has initiated anti-dumping activities and engaged in similar consultations over the years with other governments, including Korea, Viet Nam, the EU and Brazil, according to the WTO this is the eighth case filed by China against anti-dumping activities adopted by the US, and the fourth just this year. This may simply be a reflection of the level of trade between the two countries, but it may also indicate deeper differences. Some of the other products involved are automobiles, boiler parts, shrimp, saw blades, grain and steel.
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