Chapter 10 Data Speaks: Accounting Power in Response to Anti-dumping

In the field of international trade, trade protectionism and various means of excluding foreign competitors have existed for a long time, from the early tariff and non-tariff barriers to the frequent anti-dumping that still occurs today.Over the past 20 years of reform and opening up, with the continuous growth of my country's economy and the continuous increase in the number of exports, my country's total foreign trade has now ranked among the top in the world, and more and more anti-dumping lawsuits have been initiated against my country, and my country has become the main target of anti-dumping.But this phenomenon is not unique to our country. When a country’s foreign trade develops rapidly, accompanied by a rapid increase in export trade volume, the rate of anti-dumping complaints rises sharply. For example, Japan before 1990 was known as the world’s The factories in Japan were accused of dumping the most, as well as South Korea and my country's Taiwan, which experienced rapid economic development during the same period.Suffering from anti-dumping will of course cause losses to export trade.But we should see that the countries that are accused of dumping more often are countries with very successful export trade.Therefore, in the face of anti-dumping, what we need to do is actively seek countermeasures.

Although our export trade is currently suffering more and more anti-dumping, after all, a small number of companies have experienced it. They usually think that to deal with anti-dumping is to hire one or a group of famous lawyers to fight a vigorous transnational economic lawsuit. In fact, it is not the core of anti-dumping. It is accounting work.According to WTO regulations, dumping means that the price of a product exported from one country to another is lower than the comparable price (or normal value) of similar products for consumption in the exporting country in the normal course of trade.Entering another country's market at a price below normal value is an essential feature of dumping.If this feature is confirmed, and thus causes substantial damage with causal relationship to the relevant industries of the importing country, the importing country has the right to initiate an anti-dumping investigation on the imported products, and take anti-dumping measures (usually imposing punitive tariffs) depending on the investigation results. ).The normal value is the sum of production cost, three expenses (administrative expenses, sales expenses and financial expenses), income tax and reasonable profit.Comparing the normal value with the export price is the basic method for judging whether to dump or not. Therefore, how to obtain the data of calculating the normal value of the anti-dumping products and whether these data are considered to be in compliance with technical standards and laws is particularly critical, and these tasks must be done by accountants Finish.Responding to anti-dumping lawsuits is a process that needs data to speak. All stages of responding to litigation are closely related to accounting work. Without accounting, responding to litigation will be difficult.Therefore, some people think that responding to the anti-dumping lawsuit is "fighting accounting" and defeating the opponent with the power of accounting.

According to WTO regulations and my country's WTO commitments, other WTO members have the right not to recognize my country's "market economy status" within 15 years after joining the WTO.Countries such as the United States and Europe regard my country as a "non-market economy country" according to their domestic anti-dumping laws, and when calculating the normal value of products of Chinese enterprises in anti-dumping, they refuse to use the domestic sales price or cost of Chinese enterprises themselves, and quote the price of the surrogate country. That is, the normal value is calculated using the cost and other data of market economy countries (such as the Philippines and other countries) that are roughly equivalent to my country's economic development level.However, there is an actual difference between the surrogate country and my country's economic development level, which directly leads to a large number of failures of Chinese enterprises in responding to foreign anti-dumping cases.

If Chinese enterprises want to enjoy market economy status treatment, they must apply for individual cases to prove that they operate according to the market economy system and meet the accounting requirements of market economy status.Combined with the confirmation standards of "market economy status" in Europe, the United States and other countries, in order for Chinese enterprises to obtain market economy status, they should at least meet the following conditions in accounting: 1. The company must have a clear set of basic accounting books; 2. Accounting books Accounts should be kept in accordance with international accounting standards; 3. The basic accounting books must have been independently audited and universal; 4. The production costs and financial status of enterprises are no longer severely distorted by the past non-market economic system, and equipment depreciation, Other depreciation, barter and debt offset expenditures.The common feature reflected in these requirements is the emphasis on market costs and prices, and the emphasis on the autonomy of enterprises.

From a global perspective, there are roughly three accounting standards currently in use: the first is the "International Accounting Standards" (IAS) formulated by the International Accounting Standards Committee.The second is the "Generally Accepted Accounting Principles" (GAAP) developed by the Financial Accounting Standards Board of the United States.The third is the guidelines formulated by countries and regions according to their national and regional conditions.The first two standards play a leading role in the world, but most enterprises in our country currently only implement the "Enterprise Accounting Standards" promulgated by the state. The main difference between the "Accounting Standards for Business Enterprises" and the "International Accounting Standards" is that the former emphasizes that the basis of accounting valuation is historical cost and the principle of true presentation in terms of accounting valuation of assets and disclosure of financial reports; the latter requires accounting valuation of assets It must be a fair value, and financial reporting disclosures must follow the principles of fair presentation.For example, the land and factory buildings of many enterprises in our country were allocated by the state in the past, and they were not obtained according to the market value. Therefore, this factor is reflected in the product cost is very limited; international accounting standards are based on market prices. Valuation of assets.It can be seen that there is a big gap between the product production cost and financial status reflected by different accounting standards.Since the accounting data provided by Chinese enterprises cannot "truly" reflect the normal value of the exported products, the complainant denies the market economy status of Chinese enterprises and chooses a surrogate country to determine the normal value.

To strive for the "market economy status" treatment, enterprises must do the following in terms of accounting: 1.First of all, the materials or information needed to calculate the normal value of the product should be compiled in strict accordance with the national unified accounting standards for enterprises.Some people think that the main reason for the anti-dumping of Chinese enterprises is the difference between the accounting standards for Chinese enterprises and the international accounting standards. This view is one-sided. The handling violates our country's accounting standards.Even domestic accounting standards cannot be complied with in accordance with the law, let alone international accounting standards.Therefore, under the premise of strictly following the requirements of my country's accounting standards for enterprises, accounting work must be carried out in accordance with international accounting standards to speed up the integration with international practices.

2.Improve the accounting system.The accounting system has two basic tasks: one is to prepare the three financial statements of balance sheet, profit and loss statement and cash flow statement; the other is cost accounting, which is to calculate the unit cost and total cost of the product.Among them, cost accounting is particularly important, because inventory value, profit amount, cash flow, etc. are all the results of cost accounting, and cost accounting involves the choice of accounting mode (full cost method, variable cost method or activity cost method), indirect cost allocation, approximation, etc. There are several aspects such as output calculation, division of finished and unfinished product costs, etc.If the accounting process is too rough or not standardized, the enterprise itself will not be able to provide the information needed for the calculation of the normal value of the product.An effective accounting system should be able to ensure that enterprises can quickly and accurately fill out anti-dumping investigation questionnaires when encountering anti-dumping investigations.

3.Legality of cost content.The legality of the cost content is the key to whether the anti-dumping investigation is established.If the cost that should be recorded is not included, and the amount of the recorded cost is not sufficient, then the price of the export product determined by adding a certain profit to the cost calculated on this basis must be low.If the cost of omission and undercount is greater than the profit added when the price is determined in quantity, then the export product will undoubtedly be dumped.There are two cases of the so-called omission and undercalculation of costs: one is that the cost has already occurred, but the entire cost is omitted or undercalculated, such as cost allocation, if the method is too rough or improperly selected, it may cause the cost of some products to be high while others The cost of some products is low; another example is the dividends of virtual shareholders and employees. Companies usually treat them as profit distribution, but it is not unreasonable to treat them as employee wages. , the so-called "no" or "less" here are relative to the laws and regulations, that is to say, the expenditure stipulated by the regulations, the enterprise has no expenditure or insufficient expenditure (this phenomenon is very common in my country's private export enterprises), under such circumstances , the more effective the enterprise accounting system is, the easier it is to expose the enterprise's own problems!Perhaps because of this reason, some companies deliberately do not set up accounting institutions and accounting personnel, and the accounts look chaotic.Using this method to deal with some Chinese tax officials may be effective, but it is ineffective against EU anti-dumping investigators. If they cannot obtain reliable data from a company, they will simply find another company to replace it.

4.Establish internal control and audit system.Does the accounting system comply with accounting standards?Are the calculated data or information consistent with each other, true and complete?The answer must be yes to pass the anti-dumping inspection. The evidence of "positive answer" is nothing but a sound internal control system and auditing system.The former is a means of self-discipline of enterprises, which is used to ensure the authenticity and integrity of information and the integrity of property, to ensure the efficiency and effectiveness of strategy realization and operation, and to ensure legal compliance; the latter is a means of external restraint, theoretically based on internal control systems, However, in practice, it is important to ensure that the accounting results conform to accounting standards and regulations.In short, if an anti-dumping enterprise does not implement an effective internal control and audit system, it cannot be considered that the accounting system of the enterprise complies with the accounting standards, and the financial statements and cost data of the enterprise cannot be considered reliable.In this case, the accounting data of the enterprise cannot be used to calculate the normal value of the product.

In the anti-dumping prosecution stage, when the complainant applies for an anti-dumping investigation, the accountant must first review the accounting evidence provided by the complainant, which includes: the sales volume and price of the accused product; the estimated dumping margin of the accused product ; Dumped products cause sales changes, profit changes, inventory changes, etc. of similar domestic products.It is a pity that very few export enterprises in our country can actively monitor and collect the market share and price dynamics of domestic export products and similar foreign products in advance, which cannot produce the ex-ante protective effect of accounting.We often wait for the anti-dumping prosecution to come before we start to collect relevant data and respond in a hurry.This fully reveals that the understanding of Chinese enterprises to deal with anti-dumping is not enough, because anti-dumping is an accusation against a certain product of a country, not just an accusation against a specific manufacturer's product, which leads enterprises to think that it is the government's business to deal with anti-dumping investigations and should Let the government respond, or think that responding to the lawsuit is the same as not suing, and I will be rewarded if others win the lawsuit.

Except for a few enterprises in our country, the vast majority of enterprises have not yet achieved a complete market economy status.If the market economy status cannot be obtained, the investigation authority of the anti-dumping complaining country will refer to the cost and other data of the surrogate country to calculate the normal value, and then determine the dumping margin and implement corresponding taxation measures.Therefore, if the market economy status cannot be obtained during the anti-dumping investigation stage, it is imperative to choose a suitable "surrogate country" and quickly grasp the cost structure and sales price of similar products of the relevant enterprises in the surrogate country.This requires accountants not only to respond in a timely manner, but more importantly, to pay attention to the accumulation of accounting information on major overseas competitors.Without timely grasping relevant information such as production cost elements, transportation, insurance premiums, sales prices, etc. of similar products of related enterprises in other countries, it is difficult to actively choose a specific substitute country that is beneficial to oneself based on the situation of competitors. There are two types of standards for international anti-dumping investigations: price dumping and cost dumping.The price dumping investigation is the investigation of the export price and the normal value, and the cost dumping investigation is the investigation of the export price and the cost. Through the investigation, it is confirmed that the difference between the export price lower than the normal value or the export price lower than the cost is the dumping margin. Determine the existence of dumping.At this stage, the task of accounting is very arduous. Because the product cost in the anti-dumping law is inconsistent with the production cost in accounting, there are differences with my country's corporate accounting standards and international accounting standards. For example, product costs usually refer to production costs, while anti-dumping In addition to production costs, product costs in France and China also include sales expenses, management expenses and general expenses, which forces accountants to redefine the cost range and adjust the cost accordingly.In addition, in order to make the data of export price and normal value comparable, usually the two should be at the same trade level (generally refers to the level before the factory), under the same sales time, sales conditions and terms are basically the same conditions Perform data conversion.The anti-dumping laws of various countries have detailed regulations on this, and corporate accounting should also have an accurate grasp of this. There are three judging criteria for the investigation of dumping damage: substantial damage, threat of substantial damage, and substantial industry hindrance.Except for the third standard, that is, there is no clear regulation on substantially hindering the industry, the other two standards have specified the main factors and contents of the review in detail.Some of these factors (such as the price, quantity, progress, etc.) of the accused product are crucial to determining whether damages have been constituted.Chinese corporate accountants often do not pay attention to the guidance of export strategies, do not pay attention to the analysis and research of the market conditions of similar products in the exporting country, and blindly export or sell at reduced prices, leaving hidden dangers for future judgments of damage.In addition, with regard to the cumulative assessment of damage, according to the conditions stipulated in the "WTO Anti-dumping Agreement", Chinese enterprise accountants must not only monitor the manufacturers in the importing country, but also monitor all other competitors of the same product in the entire importing country's market. analysis, otherwise it is more likely to cause damage once the evaluation is accumulated. Investigation of causality.Only when the determined damage is caused by the determined dumping, that is, when there is a causal relationship between the two, can the dumping be finally determined and anti-dumping measures implemented.However, regarding the determination of causality, the limit set by the Anti-dumping Law is very low, and it does not require dumping to be the major or main cause of damage to a country’s industry, but as long as it is ruled that the accused product is one of the reasons for the damage to a country’s industry, A causal relationship can be identified.In this regard, the impact of Chinese enterprises on anti-dumping investigations is relatively limited, and what accounting can do is to monitor the market conditions of similar products in the importing country and control export progress and prices.In addition, good accounting records and financial data of the company for several consecutive years are needed to prove that the export price is greater than the production cost, and that the product price has not been greatly reduced in recent years, and the export volume has not increased significantly. The important role played by accounting in the anti-dumping investigation stage will provide guarantee for the success of anti-dumping response and proof. In the face of increasingly severe anti-dumping, the role of accounting should not only be reflected in the after-the-fact remedy, but more importantly, it should play an effective anti-dumping accounting early warning function, actively prevent beforehand, and try to avoid anti-dumping charges. (1) Start competitor accounting Competitor accounting is a modern management method that collects and analyzes competitors' financial and non-financial information through various modern management methods to deal with international anti-dumping, so as to grasp the situation of major international competitors, deal with competition and avoid and meet international anti-dumping litigation.The use of competitor accounting can be said to be prepared for anti-dumping lawsuits. Once an anti-dumping lawsuit against the country is encountered, it can produce accounting evidence that is beneficial to the country and win the lawsuit. The use of competitor accounting can not only accumulate financial information on major overseas competitors, but also select a specific alternative country plan that is beneficial to the country according to the guidelines of the competitor's accounting information platform during the litigation process, and provide sufficient accounting evidence. Use accounting to strengthen the accumulation of internal accounting data in production, operation, management, etc., and do a good job of collecting relevant data in combination with the anti-dumping investigation content, so as to be prepared; Accounting early warning of dumping in the market, and evidence for anti-dumping complaints. When using competitor accounting, three elements should be paid attention to. The first is the confirmation of the main overseas competitors of the enterprise.In international competition, as an international operating enterprise, it is necessary to understand the main international competitors and create an information file for each competitor worthy of attention.The second is the information to be collected by competitor accountants.The distribution of origins or exports of the same products from competitors, and the companies associated with the sales of these products; financial and non-financial information such as production cost elements, cost structures, expenses, market shares, and business strategies of competitors' products; competition The sales price of the competitor's product in the domestic market and the sales price and sales quantity in the third country market; the sales price and sales quantity of the competitor's product in the market that competes with us.The third is the channels and methods for competitor accountants to obtain information.Information sources about competitors are diverse.The main source channels include: government statistical announcements, industry analysis reports, industry association materials, consulting reports from industry expert consultants, trade and financial reports, company public financial reports, competitor advertisements, product technical analysis, common suppliers and customers, competitors former employees, etc. (2) Establish an accounting information platform for anti-dumping evidence Responding to foreign anti-dumping lawsuits requires the collection of a large amount of accounting information and accounting proofs for different stages. Therefore, the establishment of an anti-dumping proof accounting information platform is of great significance for companies to improve effectiveness, pertinence and timeliness in the process of responding to lawsuits .For example, at the stage of applying for market economy status, an enterprise should clearly indicate that it is applying for market economy status, and fill out the application form for market economy status, and strive to use domestic prices as the basis for calculation, so as to provide a basis for future countermeasures.In the questionnaire survey stage, filling in the questionnaire survey is the focus of the responding process. The content of the questionnaire survey is mainly financial data. Export enterprises are required to: the documents provided must be detailed, accurate and complete, and the data provided must be neat, clear, Specifications, the submitted materials must have relevant evidence and be convincing.The financial data provided at the same time try to reflect the market-oriented operation trajectory of product manufacturing, production and sales.In the verification stage, attention should be paid to the consistency of the data. Not only can the data be clearly stated, but more importantly, the original data is consistent with the account books and report data.At the same time, measures should also be considered if the market economy status cannot be obtained. In this case, we should actively strive to choose a country recognized by WTO that is similar to my country's economic environment as the "third substitute country". Dumping is a kind of unfair trade behavior, which damages the interests of the importing country, affects the economic development of the importing country, and disturbs the normal international competition order.All countries have suppressed and resisted dumping behaviors by enacting anti-dumping laws.The anti-dumping system is also one of the few legal and unilateral protection systems established by the WTO.However, in international trade, anti-dumping has the dual nature of maintaining the normal order of international trade and domestic trade protectionism. It is not uncommon for anti-dumping measures to be abused to make them a shield for trade protection and a means of trade retaliation. Negative impact, hindering the good development of international trade.But this is unavoidable, just as my country's export products cannot avoid more and more normal and abnormal anti-dumping.Due to factors such as cheap labor force and low standards of the production environment, the prices of my country's export commodities in the international market have been kept low, lower than those produced by developed countries in Europe and the United States. Low, my country's export products are very easy to fall into the trap of anti-dumping. As an export enterprise, of course, we should not be intimidated by the intensified anti-dumping. Internationalization is the only way for the development of Chinese enterprises and even the national economic development.Huge economic interests in the international market are waiting for Chinese enterprises to explore, but subjectively we should try to eliminate export dumping, avoid harming the interests of importing countries, and avoid troubles caused by anti-dumping charges.For unavoidable anti-dumping allegations, we should also actively respond to them.All of these require the participation of accountants and play a major role.In the face of increasingly severe anti-dumping, the role of accounting should not only be reflected in the after-the-fact remedy, but more importantly, it must play an effective anti-dumping accounting early warning function, actively prevent beforehand, eliminate all kinds of hidden dangers that already exist, and fundamentally avoid them. anti-dumping charges.Accountants should pay attention to the construction of anti-dumping accounting information platform, and use standardized, detailed, accurate and complete accounting data to strive for market economy status for enterprises. At the same time, they must dynamically monitor the relevant information of competitors in the international market. The door-to-door investigation provides a guarantee for the success of the anti-dumping response and proof.