On the occasion of its 15th anniversary as a member of the World Trade Organization, China has launched a dispute against the United States and European Union over its standing as a non-market economy.
China’s claim is based on a provision set at the time of its membership, which stated prices for its goods could be subject to anti-dumping duties for 15 years. Dec. 11th marked the expiration date for this clause, yet neither the U.S. nor the EU show signs of amending China’s status.
As a result of China’s non-market economy standing, WTO members can use pricing in third party countries as a benchmark for comparison to guard against a flood of goods imported below market value.
China says that according to the original agreement, this provision must be lifted.
“China has communicated through many channels for the third-country comparison to expire. What’s very regrettable is that EU and US have not acted to allow it to expire. It has had a severe impact on Chinese exports,” China’s commerce ministry said. “China is protecting its lawful rights and acting appropriately to maintain the WTO rules.”
The U.S. is standing strong on its position amid a flood of billions of dollars in cheap Chinese steel, washing machines and suspect plywood. For its part, the EU is defending itself against what it fears will be a deluge of cheap goods into its countries.
The U.S. government would only be inclined to change China’s status once it feels certain prices on goods are set by supply and demand not by the Chinese government or some other artificial means.
With the incoming administration’s protectionist stance, it’s unlikely that President-elect Donald Trump will be inclined to make changes that are favorable to China.