OBSERVER NEWS

William Perry on Trade Relations with China

By CHASE STEWART

NANJING—Inside the cave-like shelter of Secco Restaurant and Lounge, William Perry recently brought his extensive expertise and experience on international trade to an audience of eager listeners. Starting with the obvious, “there is a huge amount of trade between the U.S. and China,” he moved on to the not-so-obvious, “but trade relations are not too good.”

Mr. Perry, a 1973 graduate of Columbia Law School, has 25 years of experience dealing with Sino-U.S. trade cases, specifically representing foreigner exporters, U.S. importers and U.S. end-users. His experience includes everything from working for the government to fight the import of gray-market Duracell batteries and faux Rubik’s Cubes to anti-dumping cases involving solar panels and wooden bedroom furniture. This past week, Mr. Perry took time out of his busy schedule to come to Nanjing for a presentation on anti-dumping, intellectual property rights, and the politics of trade.

There is currently a trade war going on. It is small, to be sure, but it is growing. According to Mr. Perry,  there are now $10 billion worth of Chinese goods being blocked by the U.S. government and $3 billion worth of U.S. goods being blocked by the Chinese government.  The trade restrictions are from the U.S. Department of Commerce and are a result of dumping or subsidization by the government. An important caveat that must be remembered when discussing trade with China is that before joining the World Trade Organization (WTO) in 2001 China agreed that other WTO countries could treat China as a non-market economy for fifteen years.

Being considered a non-market economy has one major consequence: the Department of Commerce does not apply the usual dumping test to Chinese firms and instead uses a surrogate country to compare production costs. When the Department of Commerce is investigating a Chinese firm for dumping, it takes a comparable firm in a third country and determines the market cost of producing those goods. If the Chinese firm is selling the goods for less than the cost of producing them (in the surrogate country), it is found to be dumping. This is regardless of the actual production costs in China, which is famous for its cheap labor.

In addition to tariffs being levied, an additional punishment is retroactive liability for the U.S. importer. This comes when the Department of Commerce changes the surrogate country used to determine production costs and then retroactively applies these costs to U.S. importers, sometimes costing them hundreds of millions of dollars. The U.S. is the only country in the world with retroactive liability.

According to a 2014 Pew Research Center poll about trade and foreign investment, only 20% of Americans believe trade creates jobs and 17% believe it increases wages. Mr. Perry attributes this to “lousy P.R. and failure to make the case known.” In an interview after the presentation, Mr. Perry said that “people don’t realize that ‘dumping’ is really mostly raw materials. Of 121 outstanding dumping orders 75 are raw materials, so with these dumping laws for every hundred jobs you are protecting upstream, you lose thousands downstream.”

The HNC had a strong turnout for the event. Zhang Jinjin, a Master’s student at Liaoning University doing the one year Certificate program, said she went because she is interested in the complexities of WTO procedural rules. Jinjin said the presentation was a good review of what she had learned in her undergraduate years, an opportunity to learn more about the Sino-U.S. trade relationship as well as a great chance to meet people working in her future field. Eliot Kim, also a certificate student, attended the event as he had taken a course on China’s foreign trade legal system last semester and had become interested in law. He wanted to hear about the topics his Chinese professor had covered in class from a different angle. “In class we discussed the fact that China’s fifteen years of non-market economy status in the WTO is going to end soon, so it was interesting to hear someone who is a practicing lawyer and former regulator frame it from a different perspective.”

Finally, Mr. Perry had some advice for those interested in getting into international law. “You have to decide if you want to live in a foreign country.” If you do, Mr. Perry advises to get into corporate law because it involves contracts and dealing with companies on a day-to-day basis. If you don’t want to live abroad, litigation offers the opportunity for lots of travel while still living in the U.S. “If you want to do trade law, you should start in the government and the move into the private sector, as I did.”

Prior to entering private practice, from October 1980 to May 1987, Mr. Perry was an attorney with the Office of General Counsel, U.S. International Trade Commission (“ITC”), and Office of Chief Counsel and Office of Antidumping Investigations, U.S. Department of Commerce.

Since 1991, Mr. Perry has won more than 50 anti-dumping and countervailing duty cases for Chinese producers/exporters and U.S. importers.

For more than twenty years, Mr. Perry has been involved in trade litigation between the United States and China and has seen the impact of the trade war up close.

From his blog:

http://www.uschinatradewar.com/

Advertisements