According to a recent article in the China Business Review, some lawyers are already encouraging vulnerable Chinese industries to institute anti-dumping actions by emphasizing their "protectionist benefits" for state-owned enterprises.

"This is not true," said Wang Xuehua, managing partner of China Huanzhong & Partners. Wang represented the plaintiffs in China's first ever anti-dumping suit in 1997.

He insisted that foreign firms really are dumping their products into China, and talk of "protectionism" is a red herring.

"Dumping" is a form of unfair competition when firms sell their products in foreign markets at prices so low, sometimes even below cost, that other companies cannot compete.

"Yes, there will be more and more charges against foreign exporters," Wang said, "but the reason is that foreign dumping is sure to rise after China reduces its barriers."

If the country enters the World Trade Organization as expected, the lower barriers would make it easier for foreign products to enter the market.

"In this case, dumping is inevitable," Wang said, "because it can be a powerful tool to price rivals out of the market."

One of the co-authors of the Review article was Susan Ning, a partner in the Beijing office of King & Wood and a leading agent for foreign clients in anti-dumping lawsuits.

In an interview with reporters, Ning backtracked from her accusation of "new protectionism". Challenged as to whether vulnerable State enterprises may really exploit dumping legislation to fend off foreign competition, she said only: "We can't rule out such a possibility."

The perceived "transparency" of dumping regulations has emerged as the key bone of contention.

Foreign defendants are likely to lose if they despise, distrust or misunderstand Chinese law, said Wang. For example, defence lawyers should appeal for a public hearing (which must be granted), at which decisions are required to be explained to both parties. During the newsprint case, however, the defence lawyer did not appeal for a public hearing.

"I, of course, did not bother to remind him of his rights," Wang said. In the case, nine Chinese newsprint makers charged the United States, Canadian and South Korean companies of dumping in 1997 and the Chinese government, after three years' investigation, decided to levy different rates of anti-dumping taxes on the foreign newsprint makers.

The American defendants also failed to show up at the case's first-round debate.

"I guess they didn't believe China had the law and the guts to charge them anti-dumping duties," Wang said. "That means they despised and distrusted us."

Ning agreed that trust is a major problem, but blamed it on the so-called "black-box" (heixiang) phenomenon. Neither party is allowed to see the other's full submissions to investigators, hampering their ability to come up with timely and sufficient counter-arguments.

"We are like blind people groping an elephant," she said, referring to the tale of 10 blind men feeling various parts of an elephant and each giving a different view of what they were touching.

In the United States, a lawyer can apply for an Administrative Protection Order (APO) to view their rival's submissions. In China, applications are split into public and confidential sections. Respondents may not view the confidential part, diminishing their ability to analyze and defend against the applicants' charges.

This lack of transparency tends to worry foreign clients about the fairness of the process.

Wang said such concerns are essentially groundless. Public hearings allow both parties access to relevant information, he argued, and it is possible to appeal to the State Economic and Trade Commission for permission to study the other party's submissions.

That access, however, is only granted on a discretionary basis. It may not be transparency as Americans understand it, Wang said, but it is good enough - if you know the procedures.

Knowing the ins and outs of the legal bureaucracy is key to coming out on top of an anti-dumping suit, Ning said.

Some foreign firms have mistakenly pinned their hopes on guanxi (relationships), she said, rather than simply giving honest answers to government investigators. The questions sometimes stray too far into areas which firms consider business secrecy, so defendants can be wary of giving too much away.

Even if firms want to protect their interests, Ning said they have no choice but to respect the Chinese practice. Ning's law firm has represented six foreign companies in four of China's anti-dumping cases. She said the firms have been subject to "relatively lower" penalties after the dumping charges were upheld.

"Careful analysis of the questions is of vital importance. Overemphasis on 'guanxi' is misleading and amounts to treating both government and clients without due respect," she said.

(China Daily 11/5/2000)