On Thursday, China’s Ministry of Commerce announced that China has filed a complaint against Australia in the WTO. China’s WTO complaint concerns anti-dumping and countervailing duties imposed by Australia on Chinese railway wheels, wind towers and stainless steel sinks.
This is the latest stage of an escalating trade conflict between Australia and China. In recent years, both countries instituted multiple rounds of tariffs on key goods from the other, and Australia has restricted the activity of Chinese companies within Australia. In 2018, Australian Prime Minister Scott Morrison banned Huawei from building out Australia’s 5G network.
Anti-dumping and countervailing duties are imposed when a country believes that goods from another country are being sold at an unfairly low price that harm local producers of the same goods. Australia alleged that Chinese manufacturers benefit from government subsidies that allow them to price goods substantially below the cost to produce those goods.
China uses subsidies to accomplish numerous policy goals, such as alleviating unemployment in certain regions, developing independent supply lines for strategic goods (such as massive recent investment in Chinese semiconductors), and competition. For example, China subsidized steel to the point where it generated excess steel 65% above demand, which resulted in a worldwide price slump for the product.
WTO disputes are heard by the WTO’s Dispute Settlement Body, which meets monthly. Their next meeting is Monday the 28th, where they will likely begin addressing China’s complaint.