New MOFCOM Rule on Curbing Unscrupulously Low Export Prices

The Ministry of Commerce (MOFCOM) is soliciting public opinion on a set of revised draft rules on investigating and punishing acts of exporting at unscrupulously low prices. MOFCOM aims to finalise the draft revisions based on public feedback and announce the revised rules by the end of June 2006.

The draft stipulates that any individual, legal person or organisation in China may file requests with MOFCOM to investigate alleged cases of exporting like products at unscrupulously low prices.

The draft sets out detailed provisions for determining unscrupulously low export prices. If the average export price of a given product is lower than that of the weighted average of the product during the investigation period by no more than 2%, it will not be considered as an unscrupulously low price. Besides, the products to be investigated must be exports originating in China that are manufactured, processed or assembled within the Chinese territory.

After a case is opened, MOFCOM must complete the investigation within 270 days. Under special circumstances, an investigation may be extended but the extension must not exceed 90 days. If unscrupulously low price is confirmed by MOFCOM, the punishment may range from being ordered to stop the unlawful act, to a penalty of no more than Rmb30,000. The products concerned are prohibited from export within 12 months from the day the announcement is made.

If the party being investigated can provide lawful evidence to prove that the low export price is necessitated due to any of the following reasons, and foreign trade order is not damaged as a result of the low price, MOFCOM may decide not to impose any punishment: handling of fresh and live products, seasonal products, stockpiled products, and outdated products due to technological upgrade.

When the new rules are announced, they will supersede the provisional rules promulgated by the former Ministry of Foreign Trade and Economic Cooperation in March 1996.