This is from the FT:
Washington has warned Brussels against granting China ‘market economy status’, saying the long-sought trade concession could hamper efforts to prevent Chinese companies flooding US and European markets with unfairly cheap goods.
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But the European Commission, the EU’s executive arm, is growing increasingly sympathetic to China’s pleas. The commission is expected to make its decision as early as February.
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The commission declined to comment on its decision, which officials say is still under consideration. However, diplomats and businessmen involved in the process say momentum is building for a positive decision on MES in the first quarter of 2016.
“Brussels’ attitude towards China is better than Washington’s,” said Tu Xinquan, a trade expert at the University of International Business and Economics in Beijing. “Of course, EU industries won’t welcome market economy status for China. But I think it’s quite likely to be granted.”
Under WTO rules, China’s non-market economy status gives the US and EU far greater latitude in determining the fair cost of production for Chinese companies when conducting anti-dumping investigations. As a consequence, say trade lawyers, that has made it easier for complainants to prove their cases against China.
The Obama administration, which is being cheered on by US industry, is advocating a policy of inaction, which would force China to bring a challenge in the WTO and thus put the onus on Beijing to prove that its state-heavy economic model has met all the criteria for MES.
The difference of opinion between the U.S. and EU is interesting. If we do up with litigation against the U.S., will the decision of other countries to treat China as a market economy be used as evidence that the U.S. is acting unreasonably?
