Oct. 12, 2016
 
China's Road to Market Economy Status Getting Steeper

On December 11, a one-sentence provision in the agreement that granted China access to the World Trade Organization will expire. The interpretation of that provision is under considerable dispute by the world’s leading economies, said Alan Price, a trade attorney with Wiley Rein LLP, at this month’s CRU Steel Markets North America Conference. How the dispute is resolved could have a considerable impact on global trade.

The provision, in two parts, claims that if Chinese producers can show free market conditions prevail in their industry, WTO members must consider China’s domestic prices as a legitimate basis for international trade. More significantly, the second part states that if such conditions are not met, WTO members can use a measure other than Chinese prices for trade considerations.

The Chinese government claims that the second part of the agreement is set to expire in December, and thus the country must be granted market-economy status. The U.S., increasingly backed by other world economies, contests that reading of the language and maintains that the Chinese government continues to intervene in its market. Wiley believes China will file for a dispute settlement with the WTO immediately, a process that could take an additional two years. If China is successful in its settlement case or cases, all WTO members could be forced to grant the country market-economy status.

Price claims that if China achieves market-economy status, the country would be free to manipulate domestic prices to ensure that low or no dumping margins are ever found on its exports, notably steel.

China’s possible status upgrade was also a key topic at last month’s AMM Ferroalloys Conference in Chicago. Participants discussed the growing opposition to China’s market-economy status by economies outside the U.S. Lawrence Lasoff, a partner in the law firm Kelley Drye, noted that Canada has repealed legislation requiring it to grant China status, and a similar debate is under way in Europe. “Down the road, I think the issue will be litigated,” Lasoff said.

Steel Manufacturers Association President Philip Bell said that while many countries are opposed to the move, the EU is a wild card. “Some major countries like Australia and Brazil were almost forced to indicate they’d support market economy status for China. It remains to be seen how the EU plays out,” he said.

On the other hand, veteran international trade lawyer Peter Koenig of Squire Patton Boggs told attendees there is some potential upside for the U.S. steel industry. “If China is granted market economy status, there are aspects of the dumping law that China would have to face that they didn’t before. For one, the investigation curve is a full year of data, versus a half-year. That’s a huge additional burden to a respondent.”

He noted that when some countries went from non-market to market status, the burden was substantial and caused fewer responses to trade filings, and thus higher dumping margins. Additionally, countries deemed market economies face stiffer internal accounting practices. “Even if China became a market economy, for dumping law purposes, other aspects of the market economy methodology could work to increase dumping margins,” Koenig said.


November 2017: 'Steady but Sloppy' Fittingly Sums 2017
More...
 
Pause
November 2017: Scrap First Steel Impact from Storms
More...
Fall 2017: Cutting & Sawing Equipment
More...
Summer 2017
More...
 
Pause
Advanced Controls on Braner Slitters
More...
AHVS Precision Leveler Features Flip-Top Design
More...
Formtek’s Tishken Slitter Increases Production Volume
More...
Red Bud System Handles High-Strength Steels
More...
Bradbury Launches Flat Trak CL Monitoring System
More...
Artus Knives Custom Designed
More...
 
Pause
Privacy Statement  |  Terms Of Use
Copyright by Metal Center News



Saturday, December 16, 2017