US Formally Voices Opposition to China's Market Economy Status
Xu Wei
/SOURCE : Yicai
US Formally Voices Opposition to China's Market Economy Status

(Yicai Global) Dec. 1 -- The Trump Administration has formally voiced its opposition to China's efforts to gain recognition as a market economy under global trade rules, a move that could exacerbate tensions between the world's two biggest economies.

The US submitted its position to the World Trade Organization (WTO) in Geneva in mid-November, the government said yesterday.

Although President Trump's staff has long hinted his position on the matter, the move represents the first time that the country has openly stated a position and provided reasoning.

Countries labeled as non-market economies may be subjected to high tariffs by other trading partners on the basis that government intervention may distort the market and bring unfair competitive advantages to its own manufacturers.

The US and the EU's labeling of China as a non-market economy has cost manufacturers in China billions of dollars in exports, with some of their products being subject to tariffs well above 100 percent, economists estimated.

The US' continued denial of China's market economy status will undermine the solemnity and authority of multilateral rules. The Chinese government will take necessary measures to protect the legitimate rights and interests of Chinese enterprises, said Wang Hejun, director of the trade remedy and investigation bureau at the Ministry of Commerce.

WTO rules do not require changes in the way that the US calculates anti-dumping tariffs on China, Bloomberg cited a US Trade Office official legal document on the dispute as saying.

The US and EU have ignored China's production costs and prices when calculating anti-dumping tariffs over the past 15 years. Instead, they use data from third-party countries that are so-called free market economies. Using a high-cost country as a benchmark makes the determining of the existence of dumping more likely.

The EU carried out an anti-dumping investigation during the 1990s on color TVs from China, which used Singapore as a benchmark country to calculate the cost of production. The labor costs in Singapore were 20 times that of China at that time, resulting in a conclusion that China was dumping products at a low price.

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Keywords: US , WTO , Market Economy Status