Washington alone in refuting China’s MES

Source:Global Times Published: 2015-12-30 0:43:01

According to reports, Washington has warned Brussels against granting the market economy status (MES) to China, saying the decision would hamper their efforts to prevent Chinese firms from dumping unfairly cheap goods on the US and EU markets, and amount to "unilaterally disarming" Europe's trade defense against China. US officials were scathing about the European move, thinking Europeans are trying to curry favor with Beijing for vast investment.

Under the Chinese accession protocol to the World Trade Organization (WTO) in 2001, China can be treated as a non-market economy during a 15-year period, which allows the WTO members to adopt alternative methodologies for determining normal values of Chinese goods in anti-dumping investigation. This principle will not apply once China is granted the MES, and the protocol stipulates that relevant provisions will expire by the end of 2016.

So far over 90 countries, including Australia, South Korea and the ASEAN countries, have recognized the MES of China. Since the accession protocol stipulates that China will be automatically granted the MES after December 2016, it is believed that the EU wants to make a favorable gesture and reach a decision as early as February.

Against this backdrop, the US claimed that the automatic granting of the MES is misreading of the provisions and that the granting of the MES status should be postponed. The US and EU are split on the matter.

European countries led by the UK, Germany and France have proactively developed closer ties with China in recent years and consider China-EU cooperation as a critical opportunity. Keen to save its No.1 position, Washington can't help strategically counter China by being active in setting barriers yet reluctant to remove them. Different from the US, the EU is more interested in forging a mutually beneficial relationship. 

Granting China MES is less significant than before. With the emergence of various free trade zones, the function of the WTO has been diluted. After years of competition and engagement, the EU has fully acknowledged China's ability to wield its market influence.

Russia, which joined the WTO in 2012 and with a much less developed economy than China, was recognized by the EU as a market economy in 2002. Obviously China's MES is largely a political decision. No country has a market economy in a complete sense. The Chinese yuan's inclusion into the IMF's Special Drawing Rights basket is a global recognition of China as a market economy.

Europe has its own interest at heart in changing its attitude toward China's MES. Washington's bid to pressure European countries to promote its own interests will inevitably lead to disagreement and opposition. Europe is facing the urgent task of realizing economic recovery. It is hoped it can keep a clear mind when being warned by Washington.

Washington was already "betrayed" by Europe on joining the China-initiated Asian Infrastructure Investment Bank.

In the globalized era, instead of following Washington's lead, EU should consider its own interest.

Posted in: Editorial

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