Public counter-consultation on the potential grant of the market economy status to China

By the 11th of December 2016, the European Union will have to decide whether to grant to China the status of market economy. The potential implications of such a decision are of enormous importance for citizens, employees and European businesses. Therefore, such a decision must be taken at political level.

Through this public consultation, us, Members of the European Parliament, we want to know your opinion. Businesses, trade unions, NGOs and ordinary citizens, everyone is invited to contribute, so that the European institutions can choose on the basis of multiple and different opinions. Have your say! ...

Introduction

On the 11th of December 2016 certain provisions of China’s accession protocol to the WTO will expire.

There is significant legal debate over the significance of this expiration.

For some, it means that China must be treated as a market economy by the end of 2016. Thus, the formula for calculating anti-dumping and anti-subsidy duties would be based on Chinese prices and not on an analogue country, as has been the case since 2001. After this date the standard methodology for calculating these duties on Chinese products would be comparing the sales price on the domestic market and export prices.

For others, granting market economy status to China on 11th December 2016 should not be automatic. They argue that after this date trade partners should be allowed to use a non-standard method to calculate anti-dumping duties (either the current analogue country method or another).

In a word, granting market economy status to China amounts to using the standard method of calculating anti-dumping duties. It would not be designated a market economy if the objective were to use an alternative method.

The EU is the primary actor in this debate. The European Commission outlines three scenarios for after 11th December 2016:

  • Granting market economy status to China. Using the standard method to calculate anti-dumping duties.
  • Granting market economy status to China but also accompany this with ‘compensatory measures’. This would be more or less the standard method but with strengthened trade defence measures.
  • Do not grant market economy status to China and continue to use alternative methods to calculate anti-dumping duties.

Under European law China does not meet one of the five criteria for market economy status: China is not a market economy as defined by EU law. Thus, in the current situation, Chinese companies must prove that they operate within a market economy if they want the standard method applied.

In order to make an informed decision, the European Commission launched, on 10 February, a public consultation to ask stakeholders on " the response to the expiration of certain provisions of the Protocol of Accession of China to WTO ".

Though the aim of this consultation is commendable the basic premises of the European Commission and the methods it uses are questionable.

First, while claiming to put all options on the table, the public consultation fails to ask stakeholders about the fundamental question: should, in their opinion, the EU grant market economy status to China?

Indeed, the method of the European Commission seems to be based on a questionable premise: the public consultation implies that the European Union will undoubtedly use the standard method of calculating anti -dumping duties after 2016. The consultation only asks about ways to mitigate the negative consequences of this change of method. Yet there is no indication that the EU is obliged to apply the standard methodology (or to grant market economy status to China): for many, the expiry of this part of China’s protocol of accession to the WTO means that the EU should start looking for a new alternative method of calculating anti -dumping duties.

Moreover, the Commission favors a purely economic analysis. They forecast social and environmental impacts of this decision would be relatively negligible even though they may be significant.

Furthermore, if the Commission is honestly open to consulting all actors (including non-Europeans), the formulation of the questions would not be so technical. This favours business over citizens, trade unions and NGO’s who don’t have the capacity to respond.

Finally, the questions were all closed which did not permit room for respondents to raise environmental or social issues of for the collection of stakeholders’ testimonies. Regrettably the consultation was also only in English and there was no means to prevent a single individual responding multiple times.

That's why a group of MEPs , whose spokespersons are Messrs David Borrelli , Edouard Martin and Emmanuel Maurel , decided to launch a public counter-consultation on the question of whether to grant market economy status to China.

This counter-consultation, open from 16 March to May 15 2016, will explore the blind spots of the public consultation of the European Commission, collecting testimonies and analysis on all the options that can be put on the table.

The counter- consultation is not limited to the analysis of the economic implications of such a decision, but will also consider its social and environmental effects.

This questionnaire is composed of both "closed"and "open" questions, thus leaving room for both greater accuracy and greater openness for non-economic actors. It will be translated into five languages, in order to reach a larger number of respondents.

Finally, precautions must be taken so that a single individual can answer only once.

We hope to get many answers.

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