With  the  textile  export  to  EU growing  at  a  pace  faster  than anticipated,  the  joint  efforts  to slow  down Chinese  shipment  to this market  in  a  predetermined arrangement  known  as  "bi lateral check"  seem  to  be  abortive, more and more  producers  there  seem  to grow  out  of  their  patience with EU's past deal with China. A new wave of trade protectionism  is coming on  the surge…

EU Trade Protectionism Surges

On Tues day of Sept. 9th, Chinese ministry  of  commerce chided  the  European Union  for its  use  of  "anti-dumping"  duties levied  on  Chinese  shipment  it thinks  to  be  predatorily  priced  at an  unfairly  low  level. Mr. Cheng Yongru  from Chinese ministry  of commerce  points  out  there  is  a very strong tendency of resorting to protectionism  on EU  side, wishing to  kick  competitive  imports  from China out of EU market.

To  protect  local manufacturing industries  in EU,  especially  textile and  clothing  sector  that  has  an amazing size of 170,000 companies and  2.7 mi l l ion  employees,  EU has  been  frequent  in  using  trade remedies and other trade defensive instruments  to slow down Chinese surging  imports  into  the  local market. Shortly  after  the  quota control  system was  terminated at  the  very  beginning  of  2005, EU went out in a rush to arrive at a new textile  arrangement with China, which  is known as EU-China  textile agreement,  to  cap  10  categories of  textile  products  in  a  quantitative growth  deal  from EU's safeguard action. When this two-year deal was finished  last  year, EU  urged China to  adopt  a  bilateral  check  system to  oversee  these  liberalized  textile products in fear of too rapid growth in EU.  This new  arrangement  lives only  for  one  year  and  is  expected to  end  its  life  at  the  end  of  2008.

There comes a growing worry with what will happen after this double check system is gone. China would  not  like  any  new restrictive measure to be taken from EU after 2008 and is opposed to any sorts  of  trade  protectionism  in  the textile trade with EU and with other European countries as well. Among the most  competitive  countries  in the  region,  Turkey  seems  to  have been, and probably continues  to be a  trouble-maker  for Chinese  textile trade  there. Although  Turkey  is not a member  of  EU,  its  geological proximity  to EU market  enables this  past Empire  to  be  in  better position  to withstand  any offensive movement  into what  it thinks as  its courtyard market.  To  get  an  upper hand, Turkey  is  spurring  a  stepped- up effort to take an allegro action for protecting  itself  from Chinese  rapid growth of  textile  imports  in  its own country.

Turkish Action

On Aug.1st,  Turkish  Foreign Trade Authority  finished  its  sunset review  over Chinese  synthetic filament  ( local  customs  code 5407)  and  came  to  a conclusion that  if  its  antidumping  action  is revoked,  the  product  in  question will  continue  to  cause  damage  to its  local  industry.  From the date of this announcement, 70.44% antidumping duty shall be retained.

Also on Aug.1, Turkish Foreign  Trade Authority  carried on  the  final  round  of meeting, technically named as sunset review, to  conclude with  a  sustained antidumping  duty  for  4  dollars/  kilo levied  on man-made  fiber  blanket (customs  code:  630140,630190, 600110000011,600192)from China.  The  action  is  carried  on  as Turkish  side  is  of  the  belief  that if  antidumping measure  is  called off,  the  shipment  of  the  blanket  in question  from China will  continue to  do  harm  to  the  local  blanket industry.

On Aug.  2,  Turkish  Foreign Trade Authority  also made  an  anti- dumping  decision  to  investigate Chinese  shipment  of non-wovens in  all  spectrums  of weight  (grams) into Turkey. On Aug. 7, the authority started  to  solicit  public  comments in  response  to  its  local  non-woven producers who  requested  for  an immediate  action  to  leash  the wild run of  the  dumped  products  in these categories: 5603.11.10.00.00,

5603.11.90.00.00, 5603.12.10.00.00,

5603.12.90.00.19, 5603.13.10.00.00,

5603.13.90.00.19, 5603.14.10.00.00,

5603.14.90.00.00, 5903.90.91.90.00.

On Sept.9,  2008,  the  Turkish government has decided  to impose  ant i -dumping  duty  on Chinese  synthetic  textile  yarn  in its  declaration  to  further  deter  low- priced  Chinese  chemical  fiber products  from  flowing  into  Turkey.
 
The  declaration  issued  by  Turkish Foreign  Trade Authority  claims  that Chinese  import  of  synthetic  yarn (coded 5402.31 in Turkish Customs) institutes  dumping  and  has  led to  a  direct  damage  to  its  local producers. The investigation proves this damage has  causal  result from  the  dumping. Hence, Turkish customs  shall  levy  37.7%  ant i - dumping duty on Chinese synthetic yarn from the date of its announced determination.

Economic Nationalism?

While China criticizes the EU for protectionism  rise,  the European business  people working  in China also complain economic nationalism that  is rising.  Joerg Wuttke, president of the European Chamber of Commerce  in China  points  out that  the  economic  nationalism basically shows up  in protectionism here.  From  important  government procurement  projects  and  some major acquisitions, companies  from Europe and other foreign companies were  often  excluded.  In  a  sharp contrast, Chinese  companies were able to buy companies in Europe.

When  a European  company  is interested  in  acquiring  a Chinese company,  national ism  rises  to go  up with  the  sense of  being patriotic with the country to protect nationalistic  economy.  The  recent Coca-Cola's  $2.4  billion  bid  buy Chinese  famous  juice manufacturer named Huiyuan  has  stirred  up  a very  strong  sentiment  from  local nationalists,  and  a  heated  disputes are  going  on  there  among  the netizens who go even as far as to denigrate  the  owner  of Huiyuan as  a  "betrayer"  or  "a  thief to sell motherland".

Whether  this  acquisition will be made  t rue  is  a wait -and-see issue,  there are many  failed  foreign takeover cases  in China all because of the protectionism-rooted national ism,  as many European companies  in China  believe.  Just in  July,  only  a  bit  over  one month away  from now, Carlyle Group,  the US private equity frm, sighed a sigh of  distress,  admitting  defeat  after three years of political opposition to its  "  ambitious  but  attracting  bid" to  buy Xugong, China's  biggest construction machinery  company.

The  bid was  offered  to  buy  85% stake for $375 million back in 2005.oerg Wuttke mentioned  in a  report  from  his Chamber  that "European  exports  to China  grew 12  per  cent  in  2007  to  arrive  at 72bn, but China's exports to Europe accounted  for  20  per  cent  of  al l Chinese  outbound  shipment  to hit  230bn,  up  by  18  percent."  The report  also  finds  out  that  non-tariff barriers  laid  down  by China  cost European operators 21.4bn  in 2006 in  business  opportunities  lost  as  a result of economic nationalism.
 
Anti-Dumping Cases on and from China

In  2006,  there were  187  anti -dumping cases instituted on the global basis, hitting the low level in historical standards.  EU  launched  35  ant i -dumping  investigations,  representing 18.7% of  the world  total  in  the same year,  and  it  has  traditional ly  been placed with No. 1  in  terms of using ant i -dumping  instrument ,  and India  placed No.2,  starting  31  anti-dumping investigations. Next comes Argentina with  19  investigations  of anti-dumping  cases. More significantly,  cases on China are  increasing,  from 16.2%  in 2001  to 33.68 % in 2006.
 
Amid  at  increased  ant i -dumping  cases on China's  outgoing  products  that  are  often alleged as "dumping-priced exports", China has also  learned well  to  resort  to  trade  remedies to  protect  its  own manufacturing  industries from  being  damaged  by  foreign  flooding  of dumping  products  into  its  own market  that  is more apparently opened  than before. Up  to  the end  of  June  in  2006, China  instituted  139  anti-dumping  cases 2001 ~ 2006 Anti-Dumping Lawsuits on China & Global Share gains t  foreigner fairly low-priced  imports, covering 43 product categories for  7,300 million
dollars.  The  first anti-dumping and  countervailing  rule was promulgated  in March  of  1997. Over  the  past  10  years, China has  established  anti-dumping  law  system  and investigation  department  to  deal with  this case.  "We  shall  handle well  the  relationship between  encouraging  import  enlargement  and maintaining  safety  of  domestic  industry. To reach  that  goal, we must  abide  by WTO's  rules and  domestic  relevant  laws  and  regulations  to avoid  improper  practices  in implementing  anti-dumping  investigation  and  determination  of  the case in question," emphasized by Gao Hucheng, V. Minister of Ministry of Commerce in a national conference  to  commemorate China's  ten  year anniversary  of  anti-dumping  practices.

It  still means  a  lot when China  is  challenging  the trade  protectionism  not  only  from EU,  but  also from  other  developed  and  developing  countries now,  and  from  the  complicated  sense  of  trade protectionism and economic nationalism.