China's Litigation on Non-Market Economy Treatment at the WTO: A Preliminary Assessment

Abstract

As promised, China brought a WTO dispute against the US and the EU respectively regarding their antidumping laws, which continue to authorise the application of the so-called non-market economy (NME) methodology. This case was initiated one day after the expiry of paragraph 15(a)(ii) of China’s WTO Accession Protocol on 11 December 2016. Through a preliminary analysis of China’s claims in the request for consultation with the EU, this paper argues that the expiration of paragraph 15(a)(ii) has terminated the right of WTO Members to use surrogate prices or costs for price comparison in antidumping actions against China solely based on their national market economy criteria. The use of surrogate prices or costs must now comply with the relevant WTO rules applicable to all WTO Members. On this basis, the challenged EU measure is likely to be found WTO-inconsistent. Towards this end, WTO Members may continue to label China as an NME for political or other reasons under their national laws. However, whatever this label may entail, it no longer justifies the application of the NME methodology.

Keywords: China, US, EU, WTO, Dispute, Antidumping Laws, Non-Market Economy, NME, WTO Accession Protocol, Surrogate Prices