U.S. Government Formally Announces That It Will Oppose WTO Market Economy Status For China

In a brief submitted to the World Trade Organization (WTO) last Thursday, the Office of the U.S. Trade Representative (USTR) formally announced that the United States will oppose granting market economy status to China.

The next day, U.S. Treasury Secretary for International Affairs David Malpass expanded on the USTR’s statement. He said the United States is “concerned that China's economic liberalization seems to have slowed or reversed, with the role of the state increasing.” Malpass argued, “State-owned enterprises have not faced hard budget constraints and China's industrial policy has become more and more problematic for foreign firms. Huge exports credits are flowing in non-economic ways that distort markets.”

The Metals Service Center Institute is a member of the Manufacturers for Trade Enforcement Coalition, which also opposes market economy status to China. As Reuters explained, if China is granted this status it “would lead to dramatically lower anti-dumping duties on Chinese goods by prohibiting the use of third-country price comparisons.”

On Friday, the Chinese government criticized the U.S.’s statement. Foreign ministry spokesman Geng Shuang said, “WTO members must end the ‘surrogate country’ practice in anti-dumping investigations against China by December 11, 2016. This is clear cut and beyond doubt.”

Last week’s USTR action follows a report issued by the U.S. Commerce Department in October that also opposed market economy status for China because, “at its core, the framework of China’s economy is set by the Chinese government and the Chinese Communist Party, which exercise control directly and indirectly over the allocation of resources through instruments such as government ownership and control of key economic actors and government directives.”