The US has given a formal statement to the World Trade Organization that it opposes a move to grant China market economy status. If China maintains a market economy status, it will disallow the US to have high anti-dumping duties to goods from China. The opposition statement was submitted in support of the European Union as a third party brief. The dispute between China and the European Union would have significant repercussions on the future of the World Trade Organization. The EU is receiving a fight from China for being recognized as a market economy. The market economy designation to the EU would mean that anti-dumping duties to Chinese goods would drastically be lowered by the prohibition of the use of third-party comparison of prices.
The EU and the US argue that the state’s pervasive role in the economy of China would lead to the distortion of domestic prices and prices not being determined by the market. China’s victory before the world trade Organization would translate to the weakening of the trade defenses of many countries against the flooding of cheap Chinese products. This would consequently put the viability of many industries from western nations at risk. Robert Lighthizer, the US Trade Representative, told the US Congress that the case was the most severe litigation that the US had at the moment.
Lighthizer also noted that any decision that was made in favor of the Chinese government would be catastrophic for the World Trade Organization. The US Trade Representative has expressed dissatisfaction with the dispute settlement body at the WTO and has suggested that there was a need for drastic changes in the organization. A brief by the USTR found out that the Chinese government had failed the tests that qualify a country for a market economy status. The brief also argues that the expiration of its accession protocol of 2001 last year should not guarantee China a direct market economy status.
The brief concludes that there is overwhelming evidence that the members of the WTO had not had their longstanding rights surrendered. These rights included the right to reject costs and prices that were not determined under the pre-set market economy conditions. This would also include broad quotas and tariffs on aluminum and steel. There was also to be an investigation of misappropriation of the Chinese intellectual property. The Department of Commerce launched the first anti-subsidy and anti-dumping investigations that were sponsored by the government on Chinese Aluminum imports on Tuesday.