The White House has formally told the World Trade Organization (WTO) the US opposes China’s demand to be treated as a “market economy” under global trading regulations.
The objection comes as a third-party brief in support of the European Union in its trade dispute with China as Beijing has stepped up efforts to be accepted as a market economy.
The status could lead to significantly lower anti-dumping duties on Chinese goods by preventing its trading partners from the use of third-country price comparisons.
In contrast, the lack of status gives Beijing’s trading partners a legal right to impose high import duties on Chinese goods, based on the assumption that government intervention in the economy creates an unfair advantage for exporters. While China is branded as “non-market economy,” the US and the EU may impose tariffs of up to or even over 100 percent, washing billions out of Chinese producers’ export profits.
The dispute began a year ago when Chinese authorities confirmed the terms of its accession to the WTO automatically gave the status to the country after 15 years of membership. However, the US, the EU, and some other WTO members refused to accept China as a market economy, claiming the country hadn’t completed liberalization of its market.
Beijing filed complaints with the WTO trade court against the two dominant players, demanding the organization grant the country market economy status. The US case has since stalled, but the complaint against the EU is moving toward hearings.