China’s Nonmarket Economy Treatment and US Trade Remedy Actions

Abstract

The price comparability provision of China’s accession protocol recognizes that WTO members may face special difficulty in determining subsidies and dumping from China, due to its government’s pervasive intervention in the economy. The provision permits importing members to disregard domestic prices or costs in China and to use alternative benchmarks in determining the normal value of Chinese exports. Consequently, this so-called nonmarket economy (NME) methodology tends to inflate antidumping and countervailing duty rates. Certain paragraphs of the provision determining dumping expire on 11 December 2016, and yet the heated debate on China’s economic status post-December 2016 remains ongoing. This article studies the history of US trade remedy actions against nonmarket economies and traces recent developments and findings at the WTO dispute settlement body. Congressional history shows that antidumping regulations in the US have been constantly amended to catch up with agency practices that discriminate against nonmarket economies. Meanwhile, the Department of Commerce (DOC) recently started to apply countervailing duties on Chinese imports and has finally codified such practices into law. The article offers many reasons to believe that the US is equipped with various trade remedy measures to continue ‘special treatment’ against China, even if the country graduates from a NME status.