Date
12 December 2017
A decision to deny 'market economy' status to China will give the US wider discretion to impose higher duties on Chinese goods. Photo: Bloomberg
A decision to deny 'market economy' status to China will give the US wider discretion to impose higher duties on Chinese goods. Photo: Bloomberg

US rejects China bid for ‘market economy’ status

The US has formally rejected China’s demand that it be treated as a “market economy” under global trading rules, a move likely to add to tensions between the two powers, the Wall Street Journal reports.

The Trump administration submitted its decision to the World Trade Organization (WTO) in Geneva in mid-November and made it public on Thursday, the report said.

The decision gives the US wider discretion to impose higher duties on Chinese goods on the theory that distortions from state intervention give Chinese producers unfair advantages.

In a recent speech, a senior Chinese commerce ministry official, Wang Hejun, said the continuing refusal by the US to grant China market-economy status “undermines the seriousness and authority of multilateral rules.”

Beijing “will take will take necessary measures to protect legitimate benefits of Chinese enterprises,” he said.

Beijing argued at the WTO that the 2001 agreement granting its WTO membership required other members automatically treat China as a market economy by the 15th anniversary of its joining the organization.

The US, Europe, and others say their promise to grant China that status was contingent on Beijing implementing market liberalization measures that have yet to be carried out.

China filed complaints late last year against both the US and the EU with the WTO trade court demanding that the US and EU grant it market status.

The US case has since stalled, but the complaint against Europe is moving forward toward hearings. What the US revealed on Thursday was a brief supporting Europe in its case, the Journal said.

That shows that Washington will take a similar stance when its own case proceeds.

“The evidence is overwhelming that WTO members have not surrendered their longstanding rights…to reject prices or costs that are not determined under market economy conditions,” the US brief concludes.

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RC

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