One Year to Go: The Debate over China's Market Economy Status (MES) Heats Up

17-12-2015

Market economy status (MES) – a technical term used in antidumping investigations – has come to the top of the international agenda, bringing heated discussions on whether or not China will soon be granted this status. China argues that its WTO accession documents foresee an automatic acquisition of MES after 11 December 2016. Yet for many other WTO members, the text in question – Section 15 of China's Protocol of Accession – is subject to interpretation. The issue is sensitive for a number of reasons. Legally, the EU must ensure that its rules are compatible with the WTO's. But the economic aspects are complex – and potentially substantial for significant sectors of the Union's economy. The EU's ability to level the playing field for its own industrial products and imports from China depends on its ability to offset unfairly low prices of 'dumped' Chinese imports; the antidumping instruments the Union deploys to this end depend on China's MES. The issue also has political ramifications, and may well affect the Union's relationship with other countries. In general, the EU would benefit from a more elaborated assessment than has yet been undertaken, from the input of the European Parliament, and from a more coordinated approach with major trading partners.

Market economy status (MES) – a technical term used in antidumping investigations – has come to the top of the international agenda, bringing heated discussions on whether or not China will soon be granted this status. China argues that its WTO accession documents foresee an automatic acquisition of MES after 11 December 2016. Yet for many other WTO members, the text in question – Section 15 of China's Protocol of Accession – is subject to interpretation. The issue is sensitive for a number of reasons. Legally, the EU must ensure that its rules are compatible with the WTO's. But the economic aspects are complex – and potentially substantial for significant sectors of the Union's economy. The EU's ability to level the playing field for its own industrial products and imports from China depends on its ability to offset unfairly low prices of 'dumped' Chinese imports; the antidumping instruments the Union deploys to this end depend on China's MES. The issue also has political ramifications, and may well affect the Union's relationship with other countries. In general, the EU would benefit from a more elaborated assessment than has yet been undertaken, from the input of the European Parliament, and from a more coordinated approach with major trading partners.