US WTO plaque: refusing to automatically grant China's market economy status in December

The United States refused to automatically grant China's market economy status in December.
The First Financial Reporter learned that at the formal meeting of the World Trade Organization (WTO) Monetary and Trade Council on the 14th local time, the Chinese side reminded the parties of the "China's Accession to the World Trade Organization Protocol" (hereinafter referred to as "China's Accession Protocol") Article 15(a) stipulates that the US will respond to the Chinese statement for the first time after the expiration on December 11, 2016.
The US proposed: First, maturity does not mean automatic granting of China's market economy status; second, China's market economy reform has not yet reached expectations, especially in the aluminum and steel industries, there are still problems such as overcapacity.

Have a clue
Another overseas media also reported that a WTO official said that the United States will not automatically grant China's market economy status on December 11th, as China has requested.
In fact, this kind of reaction has long been a clue. During the exclusive interview with the US ambassador to the WTO, Punke, in this year, he told reporters simply that he did not feel that China’s “market economy status” could be automatically obtained. He also called The decision made by the United States is not based on a specific day on the calendar.
During his eighth round of China-US Strategic and Economic Dialogue (S&ED) in early June, US Treasury Secretary Jacob Lu was asked at a forum at Tsinghua University whether he believed China’s market economy status could When “automatically acquired,” he replied: “Market economy status is not an automatically recognized status, which will depend on the analysis and evaluation conducted by the US Department of Commerce.”
Then, what is the stipulation in Article 15(a) of the China Accession Protocol?
The provision states that when price comparability is determined in accordance with Article 6 of the General Agreement on Tariffs and Trade (GATT) 1994 and the Anti-Dumping Agreement, the WTO importer shall use the Chinese price or cost of the surveyed industry or use it in accordance with the following rules: Not based on a strict comparison with China's domestic prices or costs:
(i) If the producer under investigation can clearly prove that the industry producing the same product has market economy conditions in the manufacture, production and sale of the product, the WTO import member should use the surveyed industry when determining the price comparability. Chinese price or cost;
(ii) If the producer under investigation cannot clearly prove that the industry producing the same product has market economy conditions in the manufacture, production and sale of the product, the WTO import member can use it without strict comparison with China's domestic price or cost. Methods.
(d) Once China has confirmed that it is a market economy under the domestic law of the WTO importing member, the provisions of subparagraph (a) shall be terminated, but as of the date of accession, the domestic law of the WTO importing member shall include the relevant market. The standard of the economy. In any event, the purpose of subparagraph (a) (ii) shall be terminated 15 years after the date of accession. In addition, if China confirms that a particular industry or sector has market economy conditions based on the WTO import members, then the non-market economy provisions in subparagraph (a) shall no longer apply to the industry or sector.
The above provisions are in short, that is, because Article 15(a) of the China Accession Protocol provides that WTO members can conduct anti-dumping investigations on Chinese enterprises to determine the prices and costs of related products. There are two options: one is to use China's cost and price. One is that you can not use Chinese costs and prices.
If the Chinese company under investigation can prove that the industry in which it is in compliance with the market economy, the WTO import members will apply China's cost and price; if the Chinese company cannot prove that the industry has market economy conditions, WTO import members can use China's cost and price.
At the same time, Article 15(d) stipulates that if a WTO member determines China's market economy status, the entire a paragraph is terminated. In any case, the second case a(ii) under section a is terminated 15 years after China's accession to the WTO. This is also known as the "sunset clause."
At the meeting on July 14, the Chinese side reminded that after December 11th, WTO members should stop using anti-dumping investigation measures against "substitute countries" in China, and set dumping based on the prices and costs reported by Chinese companies. Amplitude.
China also urges those countries that are still using the “alternative country” approach to stop such practices in time to maintain the authority and seriousness of the multilateral trading system.

First statement why refused
The First Financial Reporter was informed that the United States first stated in the response why the two refused to automatically grant China's market economy status, and China later refuted it.
The US side stated that, first of all, Article 15(a)(ii) of the China Accession Protocol does not require member states to grant China's market economy status. It is very clear in the "China Accession Protocol" that the market economy status is based entirely on the assessment of "fait accompli" and the domestic rules of each member.
Specifically, Article 15(a)(ii) of the China Accession Protocol stipulates that Article 15(a) will expire only if China can confirm that China is a market economy under the domestic law of a member state. This is different from the expiration of Article 15(a) (ii) of the China Accession Protocol. Therefore, the expiration cannot automatically require recognition of China's market economy status.
Second, the US side said that China's market-oriented reforms have not yet met expectations, especially in industries such as steel and aluminum, where China has overcapacity and oversupply.

China: The termination of the "substitute country" approach to the above-mentioned US statement, the Chinese responded that Article 15(a)(ii) of the China Accession Protocol does not require member states to automatically grant China market economy status, but the expiration requirements are Member States eliminate the legal basis for discriminatory practices used by China in anti-dumping investigations.
Countries that still use the above-mentioned alternative country practices after the expiration date will violate the WTO Anti-Dumping Agreement, and this issue has nothing to do with the problem of excess capacity.
Earlier, during the S&ED period, the Chinese side repeatedly urged the US to implement the commitments set out in Article 15 of the China Accession Protocol as scheduled.
Zhang Xiangchen, deputy representative of the International Trade Negotiation of the Ministry of Commerce of China, spoke at the briefing during the S&ED period on June 6th that the Chinese Minister of Commerce Gao Hucheng was concerned about the issue of replacing the country. "High Minister is still in the conversation and expressed that the Chinese side is in the US. Concerns about the use of alternative country price practices in terms of prices in the China Trade Relief Survey.
He stated that Article 15 “Sunset Clause” has nothing to do with market economy status. What the Chinese side demands is that the US side will cancel the anti-dumping and substituting practices on schedule, hoping that the US will fulfill its treaty obligations as scheduled and make the right choices. ”

EU: will comply with the commitment
What is different from the United States at present is that the EU has clearly chosen a more cooperative and win-win attitude with China.
On July 13, European Commission Chairman Juncker said in Beijing that in order to cope with overcapacity, the China-Europe Steel Working Group will be set up to confirm and test the data, and the EU will meet on July 20 to discuss China's market economy status.
At the same time, when Junck met with the Chinese leaders, they said that the EU will abide by its commitments and seriously discuss the obligations fulfilled by Article 15 of the China Accession Protocol.
However, the attitude of the European side is also related to the important provision in the statute “but as of the date of accession, the domestic law of the WTO importing members must include the relevant standards of the market economy”. JeanFrancois Bellis, a partner at Belgian VBB law firm and EU trade law expert, has participated in hundreds of EU anti-dumping and countervailing cases in more than 30 years. At a key hearing of the European Parliament at the end of last year, he pointed out that when signing the agreement, the EU did not define market economy standards in domestic law, and so far, the EU did not.
"So the EU should be grateful for this. China has never formally raised doubts in this regard." Bairis stressed: "The important point is that even the five standards proposed by the EU on market economy status are not official. In the legal text."
What Berry reveals is that China can actually waive the EU's claim to Article 15(a) of the China Accession Protocol on the grounds that the EU has no domestic laws on the "market economy status" before China's accession to the WTO. .
Berry explained that the reason for the emergence of domestic law is because it is the result of bilateral negotiations between the Sino-US negotiating team. It should be noted that since the 1970s, the United States has long-standing domestic laws in terms of "market economy status."
The European Commission has now made further strategic preparations for this issue. On June 22nd, the EU High Representative for Foreign and Security Policy and the European Commission adopted a joint strategy document entitled “The EU's New Strategic Elements for China”, which is a plan for China-EU relations in the next five years.
When referring to the issue of China's market economy status, the above documents pointed out that in the context of the expiration of certain provisions in the China Accession Protocol, the European Commission is analyzing whether it should change the anti-dumping investigation against China after December 2016. Ways and will return (discuss) this issue in the second half of 2016."
The European Commission also mentioned in the document that the key to further strengthening the effectiveness of EU trade remedy measures is to quickly adopt the draft amendments to trade remedy measures proposed by the European Commission in April 2013.
On May 12th, the European Parliament passed a resolution in Strasbourg, citing China’s position in the market economy unilaterally on the grounds that China does not meet the five market economy standards set by the European Union. In addition to the "concession", the EU is also called upon to take anti-dumping measures.
The resolution ended with 546 votes in favor, 26 votes against and 77 abstentions. It called on the EU to find a balance between "not violating WTO international law" and "not recognizing China's market economy status and adopting anti-dumping measures". .
However, due to the establishment of a special EU authority, the European Commission itself tends to grant China a market economy status.

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