What trade frictions did China’s textiles and apparel encounter this year?

Not long ago， the United States just announced that it would stop adding new tariffs to 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 of the two heads of state in Osaka. But on July 16th， Trump again said at the White House cabinet meeting that there is still a long way to go before the United States can reach a trade agreement with China， but if necessary， the United States may impose tariffs on Chinese goods worth 325 billion U.S. dollars.

Geng Shuang， a spokesman for the Chinese Foreign Ministry， responded by saying that if the United States imposes new tariffs， it would be tantamount to setting new obstacles to bilateral economic and trade negotiations， which will only make China and the United States have a long road to economic and trade agreements.

Over the past year， Sino-US trade frictions have undoubtedly been the hottest issue of concern. At the same time， the overall situation of trade frictions encountered by textile and apparel products in China deserves inventory and attention.

In the whole year of 2018， under the background of Sino-US trade friction and the continuous decline of the global economic situation， Chi- nas products encountered 106 trade remedy investigations， including 60 anti-dumping， 29 countervailing and 17 safeguard measures. Compared with the number of 75 initiated in 2017， the number of cases has increased by 41.3%. The trade relief situation of Chinas textile and apparel products was basically the same as that of 2017， with a slight increase of four cases.

In 2018， there were 14 new cases in trade remedy cases in the textile and garment industry， including 10 cases in the original case， and the total amount involved was nearly 250 million U.S. dollars. Compared with 11 new cases in the same period in 2017， the number of cases increased by 27.2%， and the amount involved was reduced by 51%. The trade friction situation continues to be severe.

Trade remedy investigation is grim

The 2018 trade remedy investigation case has the following characteristics： the amount of cases has decreased， the number of cases filed is higher in Asian countries， and increased number of cases filed in South American countries.

Although the number of filings in 2018 was generally the same as that in 2017， the amount involved was significantly reduced. In 2017， the amount of the new case involved was 510 million U.S. dollars. In 2018， the amount involved in the new case was only about 260 million U.S. dollars. Most of the products involved are raw materials and fabric products， and the export value is not large.

In the 14 new cases， 5 were filed in Turkey， 2 in the United States， and 1 in each of the other countries. The number of cases filed is larger in Asian countries， and increased number of cases filed in South American and Africa countries. Since 1994， Latin American countries have used trade remedy measures against China. The most common investigation method is anti-dumping investigation. With the continuous growth of economic and trade exchanges between China and Latin American countries， Latin American countries frequently use anti-dumping investigations and measures to curb imported products to seize their domestic market. These investigations have seriously affected Chinas export trade to Latin America and have had a major impact on the survival and development of Chinese export enterprises. Latin American countries have restarted the investigation of textile and apparel trade relief since 2017. Brazil， Colombia， Argentina， Peru， and Mexico have become major initiators.

In the cases， the enthusiasm of Chinese enterprises to respond to litigation is generally not high. Because the total amount of new cases in 2018 is not high， the amount of cases involved is mostly less than 10 million U.S. dollars. In addition， the countries of filing cases are developing countries such as South America. Lack of rigorous procedures， unconventional channel customs clearance， high cost of responding， uncertain results and other factors lead to the low enthusiasm of enterprises to respond to litigation， and also increase difficulty of the industry response work. Failure to prosecute will result in a final ruling that imposes punitive high tariffs， which in turn will make it difficult to continue exporting to the target market. At the same time， the abandonment of the appeal also leads to the stagnation of the investigation procedure of the investigating state， resulting in a vicious circle of difficulty in responding to the appeal.

Industry consultation is a powerful channel for resolving friction

At present， industry organizations are the main force for promoting the sound development of the market order under the mature market economy. Since the launch of the WTO Trade Relief Survey has certain restrictions， especially the limitations of industry representation. There- fore， the application of the business association basically solves the problem of representation. 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 the stage of submitting comments， the applicants mostly use industry associations to express their support opinions and voices. Some industry organizations have also specifically lobbied the government and relevant agencies to impose restrictions on Chinese companies. If the responding party is only a single Chinese enterprise or although there are many enterprises responding to the lawsuit， but only the respondents of their respective respondents， the offensive and defensive postures are often not equal， and individual companies cannot express the overall opinions and appeals of the Chinese industry， and they are not able to provide conducive to their own industry data. Only when enterprises unite to participate in the response as an industry， so that industry associations can comment on and participate in the defense as one of the respondents， in order to 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 game of the interests of all parties. This kind of game is not only reflected in the defense， but also in lobbying and negotiation. On this point， the individual responding to the law has no advantage. Therefore， the participation of industry organizations will increase lobbying and negotiation， negotiate with the other business associations and the government and propose exchange conditions. In addition， if Chinese companies have too many respondents， only industry organizations can make a unified voice on behalf of enterprises.

Sino-US trade frictions increase case response difficulty

The United States is the worlds WTO member with the largest number of trade remedy cases against China. From 2016 to 2018， it launched a double-reverse investigation case on textiles and clothing for three consecutive years. In response to the U.S. 301 investigation response， China Chamber of Commerce for Import and Export of Textiles and Apparel （CCCT） closely followed the U.S. 301 investigation and progress in a timely manner， and actively guided enterprises to do product exclusion work. At hearings in the U.S. Government， attend and submit comments， and actively demonstrate our position. After many efforts， in the final taxation list announced by the U.S. in September last year， PVC gloves were successfully excluded from the taxation by the United States.

Focus on case review

Among the 14 new cases， the CCCT organized anti-dumping investigations of Indian linen yarn， Madagascar travel blanket safeguards， Mexican polyester staple fiber anti-dumping investigations， Argentine jeans anti-dumping investigations and other cases according to the amount involved， country and response effect.

Case 1 Indian linen yarn anti-dumping investigation

In the past five years， India has continued to launch trade remedy investigations on Chinese textile and apparel products， reaching its peak in 2017. In this case， the amount of products involved in the case notified by the Indian Ministry of Commerce and Industry was 80 million U.S. dollars， covering almost all Chinese linen yarn export enterprises. Representatives of the eight main export enterprises and lawyers participated in the responding work meeting. The company unanimously decided to respond to the lawsuit and participated in the industry damage defense organized by CCCT. Subsequently， the CCCT submitted defense opinions to the Indian side on behalf of the industry， and conducted industry negotiations， went to India to attend the hearing held by the Ministry of Commerce and Industry of India. We hope that the Indian side will make a final ruling based on the actual situation of Sino-Indian cooperation. In the final ruling in August， the Indian government， in disregard of the factual evidence provided by the Chinese side and the statements of the Indian importers， decided to impose tariffs of 1% - 40% on Chinese enterprises responding to complaints， and 110% - 120% on non-responding enterprises. In this case， although the CCCT led 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 field has not subsided with the easing of relations between the two countries. It is expected that the “battle between dragon and elephant” will exist for a long time in the future.

Case 2 Mexican polyester staple fiber anti-dumping investigation

The case is the first textile trade relief survey in Mexico since 2013. Most of Mexicos textile cases against China are for the investigation of raw materials and fabric products， and the amount involved is usually small. Since Mexico still adopts the one-country-one-tax approach， the response to the case is not good and the final tax rate continues to be high. The amount involved in the case was 49 million U.S. dollars. After receiving the notice of filing the case， the CCCT and the Jiangsu Provincial Department of Commerce jointly held a response meeting in Nanjing， and organized five main enterprises to participate in the industry without damages. In responding， the relevant departments and lawyers actively cooperated to assist in contacting the main enterprises and the competent commercial departments to provide industrial data.

The case was first made in December 2018. The Mexican investigation authorities refused to give the Chinese polyester staple fiber industry a market economy status， and gave the Chinese responding enterprise a preliminary tax rate of 0.46 - 0.52 U.S. dollars/kg. No temporary anti-dumping duties were imposed.

Case 3 Argentine denim anti-dumping investigation

In recent years， Argentina has initiated eight trade remedy investigations on Chinas textiles and clothing， and has never changed the one-country-one-tax approach in the investigation. Domestic consumption levels in Argentina continue to decline， while government taxes and fees continue to rise， and domestic producers are under greater pressure. In order to alleviate the pressure， domestic industries have to suppress the competitiveness of imported products by initiating trade remedy investigations.

In order to find out the background of the case， try to resolve the friction through industry negotiations. The relevant person in charge of CCCT led a team to Argentina to hold talks with the Importers Association of Argentina and representatives of more than ten importers of denim before filing the case. The Argentine Ministry of Production said that the cases involving Chinese exporters would be treated with caution. On February 21st， 2018， the investigative authorities issued a notice of filing that the amount of Chinese products involved in the case was about 15 million U.S. dollars. In view of the small amount of money involved in the case， Argentina insisted on the use of implicit quota system for the management of the products involved， and the enterprises finally abandoned the appeal.

Case 4 Colombian denim anti-dumping case

The Colombian denim anti-dumping case was filed in August 2017 and the amount involved was 130 million U.S. dollars. This case is also one of the largest cases in which Latin American countries initiated trade remedy investigations in China in 2017. After CCCT and the Zhejiang Provincial Department of Commerce jointly organized a delegation to go to Colombia for negotiations， and with the efforts of all parties， the final ruling reached the minimum price 3.25 U.S. dollars/kg， more than 90% of Chinese export products will not be affected by anti-dumping duties.

Forecast of trade friction situation

As the prospect of trade friction between China and the United States is still inconclusive， the global economic situation is difficult to break through， and Chinese products actively seek market breakthroughs， which will inevitably lead to boycotts of domestic industries in destination coun- tries. In summary， the trade relief situation in 2019 will be cautiously optimistic.

First， the United States will continue to use multiple trade policies and trade restrictions to boycott imports. The U.S. textile survey of China has almost 1- 2 cases per year in recent years. The Trump administration holds high the banner of trade protectionism. The United States no longer uses import restrictions on trade remedies alone. Instead， it has turned to a combination of multiple means of restraint and the trade relief case will continue to rise. In addition， the U.S. trade remedy investigation case is more difficult to deal with， and a single company to obtain a low tax rate requires more preparation for work. The industry collective defense will become a breakthrough in obtaining a lower response tax rate.

Secondly， South America will continue to be the main country for filing cases. From 1995 to 2017， the main Latin American countries launched anti-dumping investigations against China. There are 12 countries in Latin America， and a total of 335 anti-dumping investigations were initiated against China. From quantitative statistics， it can be seen that about 92% of the trade relief cases in Latin American countries were initiated by anti-dumping investigations. The domino effect is more obvious in the anti-dumping investigation of Latin American countries.

Third， the cumulative cases in Turkey have entered the process of sunset review. The anti-dumping sunset review investigation in most countries does not change the final ruling rate of the original trial， but only decides whether to continue to use the original anti-dumping measures. However， in the sunset review， Turkey recalculated the dumping margin and tax rate of the enterprises involved.

Between 2007 and 2008， Turkey launched nine anti-dumping investigations against China， superimposing cases of ongoing review， and these cases entered the sunset review process in 2019. Enterprises should seize the opportunity of review and actively obtain the answer and strive to obtain a lower export tax rate in the next five years to gain market share.