China lodges WTO complaint against EU, US over market-economy rules

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12 December 2016. By Poppy Bullock *

Beijing has accused the EU and US of violating global trade law by failing to change how they treat China in trade-defense probes.

The day after a deadline at the World Trade Organization for all economies to adjust their rules, China says trading partners can no longer ignore Chinese costs and prices when calculating dumping levels. Beijing will file its request for consultations with the EU and US today, MLex has learned.

Some clauses of China's WTO accession protocol expired yesterday, meaning the other 163 members of the Geneva-based trade body had to decide whether to adjust the way they treat the country in trade-defense probes. Beijing insists it should be treated as operating as a free market from now on, which would require that its companies' costs and prices be taken into account for dumping calculations.

Dumping occurs when a foreign good is sold below the cost of production or the value on its home market.

Products from free markets typically face lower dumping tariffs.

The EU proposed changing its trade rules last month (see here), but still operates under the old legislation. China says its complaint "includes any changes made" to EU trade law, "pursuant to the legislative processes initiated by these proposals," suggesting that Beijing doesn't believe that the changes are in line with global rules today.

China's request to the EU, seen by MLex, says the bloc "denies Chinese imports an advantage that is enjoyed by imports from other WTO members." This practice "ceased to be justifiable" yesterday, the three-page document says.

Chinese imports "are denied the advantage of the rules in [EU trade laws] regarding the determination of normal value," Beijing says. Instead, China faces "less favorable rules" unless "Chinese producers satisfy a requirement . . . to demonstrate that "market economy" conditions prevail, it says.

It's unclear how closely the Chinese complaint against the US mirrors the one against the EU.

Under WTO rules, parties to a potential dispute must hold consultations for at least 60 days to see if they can resolve the matter without resorting to a request for the trade body to appoint judges to investigate the complaint. Beijing can request adjudication by a panel if these consultations fail.

* with additional reporting by Jennifer Freedman