China launches trade case at WTO to gain market status

China has launched a legal dispute against the United States and the European Union for recognition as a market-driven economy, the World Trade Organization (WTO) said Monday.

Beijing is insisting that the EU and the U.S. must change how anti-dumping duties are calculated on Chinese goods because the WTO accession protocol signed 15 years ago automatically grants the Communist nation market economy status.

But the United States, EU and other nations argue that China has not made the effort necessary to earn the label and benefit from a change in how anti-dumping duties are calculated, which would likely lead to smaller tariffs on goods imported from China but priced unfairly from U.S. products.

{mosads}U.S. officials say they will continue to fight China over its demands to be recognized as a market economy.

“The United States remains concerned about serious imbalances in China’s state-directed economy, such as widespread production overcapacity, including in the steel and aluminum industries, and significant state ownership in many industries and sectors,” according to a U.S. official.  

“China has not made the reforms necessary to operate on market principles,” the official said.

The official said that the WTO accession rules “do not require that WTO members automatically grant market economy status to China, or discontinue use of all alternative antidumping calculation methodologies on, or after, Dec. 11,” which is the anniversary of China’s 2001 accession to the WTO.

So the United States will continue to apply alternative anti-dumping methodologies in proceedings involving China, the official said.

The call for consultations comes a little more than a month ahead of President Obama’s departure from the White House.

President-elect Donald Trump has called for cracking down on China’s trade misbehavior and is making waves with Beijing over a call with Taiwan’s president and other statements he has made.

Trump has vowed to pull the U.S. out of the Trans-Pacific Partnership, a move that supporters of the sweeping agreement say creates a vacuum for China to set the rules across the rapidly growing region instead of the United States.

The Commerce Department calculates anti-dumping duties by using prices in a similar third country to determine its price if China had a free market economy.

The United States plans to keep working with other WTO members that oppose a change to China’s market economy status in an effort to apply robust duties where needed to counteract harmful Chinese dumping.

“The United States is prepared to defend its right at the WTO to protect American workers and firms from the damaging effects of persistent distortions in the Chinese economy,” the U.S. official said.

We will continue to press China to address distortions in its economy and to implement its international commitments, including at the WTO.”