China brings WTO dispute resolution case against US, EU

AFP/File / FREDERIC J. BROWN China joined the World Trade Organisation in 2001

China filed a dispute resolution case with the World Trade Organisation Monday over the so-called “surrogate country” approach used by the United States and the European Union to calculate anti-dumping measures applied to Chinese exports.

When China joined the WTO in 2001 it was written into the terms of the deal that member states could treat it as a non-market economy for 15 years.

The deadline passed on Sunday, but the US, EU and Japan have nevertheless opted to preserve tough rules that protect them from cheap Chinese products flooding their markets.

Now China wants the EU and US to stop using a “surrogate country” system — judging the price of Chinese goods against a third country’s — to determine whether China is selling its products below market prices.

Beijing, which highly covets market economy status, expressed disappointment with decisions by Washington and Brussels to continue using the system and announced it was lodging a complaint with the WTO.

“It is regrettable that the US and the EU have not carried out their obligation,” the commerce ministry said in a statement posted to its website Monday.

“China filing suit with the WTO will protect its own legal rights and interests and the seriousness, fairness, rationality and legality of international trade regulations,” it added.

A WTO official confirmed in an email that it had received China’s “request for consultations” on the dispute, the first step in what will likely be a drawn out battle at the Geneva-based body.

If the US and EU reject China’s initial consultation request, Beijing can instruct the WTO to set up a panel of experts that will ultimately issue a judgement. The process can last months, if not years.

Beijing has said previously that the refusal to grant China market economy status is an example of “covert protectionism” and “double standard” by the West.

However, critics argue the country has not done enough to qualify for the designation.

A US official said Monday that Washington “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.

“China has not made the reforms necessary to operate on market principles,” the official said in an email to AFP, adding that the WTO agreement does not oblige members to automatically grant market economy status on China.

“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.”

Just Friday, the US Commerce Department slapped punitive duties on imports of Chinese plywood and washing machines, which it ruled have been dumped in the US market at below fair market value.

Leave a Reply