WTO members must drop 'alogue country method

China will take measures if countries stick to old method

World Trade Organization (WTO) members have to stop using the “analogue country method” when they investigate Chinese products for alleged anti-dumping violations after Sunday, or China may charge them before the WTO, experts said.

Section 15 of the accession protocol formulated by the WTO and China when the country joined the organization in 2001 states that if China cannot prove that market economy conditions prevail in the industry in question, a country investigating China can use a method of industry assessment that is not based on domestic prices and costs.

Investigating nations have chosen instead to use data from a country at a similar level of development as China, the so-called analogue country method.

The protocol states that the provision of the analogue country method expires 15 years after the date of China’s accession, which falls on Sunday.

Given some member countries including the US and those in the European Union (EU) have no intention to stop using the analogue country method, and the EU’s latest proposal for an amendment to its anti-dumping regulation which also violates WTO rules, it is inevitable that China will seek recourse with the WTO, Hu Jianguo, a WTO law professor at the Tianjin-based Nankai University, told the Global Times.

The European Commission proposed an amendment to its anti-dumping regulation on November 9, stating “undistorted” international prices and costs is an alternative if “significant distortions in an exporting country’s products’ prices and costs exist.”

“The proposal replaces the analogue country method with the ‘market distortion’ principle, but didn’t in fact replace the former method. The move neither fulfills obligations prescribed by China’s accession protocol nor follows WTO rules,” Ye Bin, deputy director of the legal division of the Chinese Academy of Social Sciences’ Institute of European Studies, told the Global Times.

“The EU wants to set its own dumping standard … It is raising its trade protection system to cope with sluggish global trade and protect European industries and economies,” Cui Hongjian, director of the Department of European Studies at the China Institute of International Studies, told the Global Times.

“For European business, it is important that the EU strives for a sound and balanced economic relationship with China. Section 15 of China’s WTO accession protocol refers to dumping charges, which covers less than 2 percent of trade between EU and China,” the European Union Chamber of Commerce in China said in a statement sent to the Global Times on Sunday.

U.S. President-elect Donald Trump told a rally in Iowa on Friday that “China is not a market economy … They haven’t played by the rules, and I know it’s time that they’re going to start.”

The Japanese Ministry of Economy, Trade and Industry also announced it would not acknowledge China’s market economy status (MES) and will maintain its “anti-dumping duty” mechanism, Japan’s Kyodo News Agency reported Thursday.

Whether the U.S. and Japan acknowledge China’s MES, they have to end the analogue country method in anti-dumping investigations against China, Hu said.

There is a big difference between MES and the analogue country method mentioned in the WTO protocol, but some countries align their domestic laws with MES in a bid to evade their responsibilities to the WTO, according to Hu.

If countries continue to use the analogue country method after Sunday, China will take necessary measures in line with WTO rules to defend its rights, Shen Danyang, spokesperson for the Ministry of Commerce, told a press briefing in Beijing on Friday.

Global contribution

Over the past 15 years, China has assumed its responsibilities as a major trading nation. In January 2010, China fulfilled its commitment to cut tariffs from 15.3 percent to 9.8 percent, according to the Ministry of Finance.

China has also long advocated strengthening bilateral and multilateral trade cooperation as reflected in trade relationships with more than 120 countries and regions and the 14 free trade agreements it has reached with 22 countries and regions.

The IMF forecasts a 3.1 percent global economic growth in 2016, to which China would contribute around 39 percent.

China’s accession to the WTO has likewise boosted domestic reform, said Ma Guoshu, a senior fellow at the Chongyang Institute for Financial Studies of the Renmin University of China, told the Global Times.

China’ economy has also benefited from WTO rules that lower tariff barriers, Ma noted. When it joined the WTO, China’s GDP was around 11 trillion yuan (.59 trillion), and by 2015 it had soared to 67.67 trillion yuan, National Bureau of Statistics data shows.

In 2015, the second-largest economy’s exports stood at .27 trillion or nearly 13.8 percent of global exports, and its imports were .68 trillion, or more than 10 percent of global imports, according to a WTO report in November.

Ma said he believes trade conflicts and protectionist measures by developed economies will worsen amid the increasing competitiveness of Chinese products and services.

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