China’s NME status post 11th Dec: My essential reading list.

By Hansa Sinha

China’s status as a non-market economy was arguably set to expire on 11th December 2016, i.e. 15 years post the entry into force of China’s Accession protocol (Read Article 15 herein). Since past one year, there have been active news reports and official statements that USA and EU are not keen on giving market economy status to China. Essentially, they are arguing that there is no ‘automatic’ transition of China from a non-market economy to a market economy. To get a background on the issue you can read my earlier article on the same topic in this blog which happens to be one of my most popular blog posts.

Anyhow, so if you want to stay updated on the issue, following is what you should be reading:

  1. USA has introduced a new term called ‘particular market situation’ which may allow it to ignore Chinese costs and prices. They introduced it via Trade Preferences Extension Act, 2015. It has introduced therefore many vital amendments to the normal value law.
  2. EU has also changed its law here (subsidies law) and here (anti-dumping law) and recently made a proposal whereby it has suggested an approach similar to that of USA. Additionally via this proposal it has suggested preparation of a EC report on specific sectors or country which the parties can use to argue the merits of their cases. It has also suggested that for all non-WTO members the non-market methodology will apply. You can read the relevant proposal here. Thereby, it is being sensed that while EU and USA amendments are not using the word ‘market economy’ or ‘non-market economy’ for China, they are still not willing to embrace China with open arms.
  3. A recent WTO decision has a direct impact on the issue of China’s cost and prices and that is the EU- Argentina Bio-diesel decision. This decision has reduced the discretion of the Investigating authorities, particularly when they decide as to whether the records of exporter or producer reflect actual costs of production. This is relevant for China NME debate because countries that treat China as non-market economy have a wide discretion to ignore the Chinese costs and prices.
  4. Japan has agreed to the EU and USA approach and has out rightly refused to accord China market economy status and will continue to treat it a non-market economy for the purposes of anti-dumping investigations. Read more here.
  5. 11th December was a Sunday and without wasting any further time on 12th December, 2016 China filed complaint against EU and USA over price comparison methodologies. The news item as well as the respective consultation requests are available here.
  6. Further China’s unhappiness on the move of EU, USA and Japan has been expressed quite frequently. There are as expected counter news reports from the Chinese side like here.
  7. Australia has come forward and supported its long existing stance that China is and will remain a market economy. However, there are mixed views in Australia about the market economy status that it gave to China in 20015.

India is yet to release any official statement in this regard. However, it is not difficult to imagine that China’s trade presence in India is overwhelming. Granting of a market economy status can only increase our woes. However, the question is that if China has waited for 15 years is it a fruitless wait? Can it be so? Or has it been a marriage of two sides without any adjustments and fulfilling of obligations at China’s end? We may never have the answers to the above questions but the coming 12 months would be crucial to see if a trade war ensues or is there finally an amicable arrangement that we can agree to.

Please comment below and tell me your views….

Thank you for reading!

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