13th May 2016

MEPs discuss China market economy status

On 11 May, MEPs discussed the possibility of granting market economy status to China with representatives of the Council and of the EC. There was practically unanimous agreement that China is not a market economy, judged by EU standards. The situation is legally complicated, though. China entered WTO in 2001. A protocol allowed other countries to regard it as non-market economy until December 2016. As a result, other WTO members were allowed to protect themselves against subsidized Chinese exports more easily than usual. China is of the opinion that in December 2016 these measures cease to apply and, therefore, all other WTO members need to regard it as market economy with regard to anti-dumping measures. Protection against dumped and subsidized exports is more legally tricky. However, since there is huge overcapacity in the steel sector in China, and it could flood EU market if no anti-dumping measures could be taken, the issue is highly political. Steel sector in the EU is at an unprecedented risk and thousands could lose jobs.

In a non-binding resolution on the matter voted on 12 May, the MEPs declared that China is not a market economy by EU standards. Also, even though China is an important trade partner, the MEPs think the EU should use non-standard anti-dumping measures, compatible with WTO rules, even if China is to be regarded as market economy after December 2016. Trade defense instruments of the EU should be updated accordingly. The legislation is stuck in the Council. The EP and the Commission called on the member states to make some progress.

For more, click here, here and here.

Members of the American Chamber of Commerce in the Czech Republic