China has long been categorized by many WTO Members as a Non-Market Economy. This treatment often leads to the determination of higher anti-dumping duties.
The Chinese WTO Accession Protocol contains an expiration clause that many scholars believe is the basis for the automatic shift of China’s status from Non-Market Economy to Market Economy in 2016. But many main countries still consider China as Non-Market Economy.
December 11, 2016, is a day that China has been waiting for 15 years. When China joined the World Trade Organization in 2001, it did so under certain conditions: Other members could treat it as a Non-Market Economy and apply anti-dumping tariffs on artificially cheap Chinese goods, mainly steel. But after 15 years, China is now eligible to be recognized as a Market Economy.
“Automatically, as from December 11, China will be entitled to claim that the domestic cost and prices of its exporting producers be used in order to calculate the dumping margins,” said Renato Antonini, Jones Day Law Firm.
Before the expiration, the U.S., Japan and the European Union, all maintained that they did not recognize China’s market economy status, claiming that state-owned enterprises created unfair advantages for Chinese companies. For EU officials in Brussels, the expiration changes nothing.
The EU does have a new proposal in the works to create a new trade defense system against imports from third countries. What about the U.S.? It will depend on the new president.
“The big game-changer in the world economy today is actually the election of Donald Trump,” said Hosuk Lee-Makiyama, European Center For International Political Economy.
“What we are expecting in front of us for the coming four years is probably an environment which is less about global room making, less about WTO, but more about bilateral engagement on a purely transactional basis.”
It is unclear what will come next. The EU says it will do everything in its power to protect itself and its industries against dumping.