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Xia’s popularity was initially limited mostly to China’s mainland until late 2002; a year after China joined the WTO. In
2002, Xianda Co. saw a surge in demands for Xia products start in France, spread throughout Europe and North
America, and move into South America. Today, Brazil is Xianda Co.’s biggest export market for Xia goods, and Xia’s
popularity in Brazil alone accounts for 19 percent of worldwide Xia sales and 2 percent of Xianda Co.’s manufacturing
output. Since 2003, Xia the Panda Bear has become the most popular toy in Brazilian history.
A bear market
A media frenzy of confirmed cases and unconfirmed speculation pertaining to China’s use of hazardous materials (for
example, lead paint and potentially carcinogenic plastic and rubbers) to manufacture toys cheaply, sparked consumer
panic around the globe. In response, the Brazilian government ordered all Xia goods pulled from store shelves and
banned further toy imports from China until toxicology tests had been performed to guarantee they were free of
potential hazards. Almost overnight, Xia product sales fell by almost 20 percent and Xianda Co. production decreased
by 2 percent
The Chinese government, fearing other countries would act in a similar manner to Brazil, brought the case before the
WTO for resolution.
As justification, China declared the lower cost and surge of all imported soybeans were jeopardizing the livelihood of
coastal soybean farmers who were being forced to raise soybeans prices domestically to offset harvest losses from
flooding. China stated the quota restriction would only last for eighteen months, long enough for their farmers to
recover economically. Brazil, declaring the quotas were retaliation for the Xia ban, brought the case before the WTO
for resolution.
Case Study Discussion Questions
1. In the Xia case, if the WTO were to rule in favor of Brazil, which of the WTO trade agreements would contain
the justification and why? (5 Marks)
2. If the details of the Xia case were indeed presented to the WTO, explain what the WTO ruling would most
likely be and why. (5 Marks)
3. In the soybean case, what was the measure adopted by the Chinese government to protect soybean
farmers from import surges, and what are the WTO parameters for instituting such measures? (5 Marks)
4. If the details of the soybean case were indeed presented to the WTO, explain what the WTO ruling would
most likely be and why. (5 Marks)
5. This assignment will be graded out of 25 Marks. The final 5 Marks will be based on
Professionalism – this will include spelling, grammar, proper title page and proper citations.