This article aims to discuss the concept of non market economy as followed under WTO andvarious other jurisdictions with special emphasis on China’s Status post December 2016
In layman terms a market economy is that where money is exchanged for goods and services. In the same tone, a non‐market economy thrives on the concept of self‐sufficiency also understood as a barter trade. As per WTO non market economy is that where the government has complete or substantially complete monopoly of its trade. Further wherein all the domestic prices are fixed by the state. Thus, the law under GATT and the relevant agreement prescribe that a strict comparison with the domestic or home market prices need not be appropriate. Therefore, countries exercise discretion and devise methods to properly calculate the normal value of products exported from non‐market economies.1
Both Vietnam and China acceded to WTO on the condition of being afforded the non‐market economy treatment for a said duration. For China this expires in 2016 December and for Vietnam in 2018. However, this in no manner prevents these countries from persuading jurisdictions to afford market economy treatment to them or specific companies in specific investigations. In fact, India treats Vietnam as a market economy treatment in its investigations.2
China has launched vigorous measures in the form of diplomatic campaigns in order to ask its major trading partners to grant it market economy status. More than 60 countries have given China this recognition, but the major countries like USA and EU have still not agreed. Although it is widely believed that by December 2016 China will automatically be given a market economy status, it is not devoid of confusion and contradiction. Many EU and US lawyers are advocating a different interpretation of Article 15 of the Accession Protocol and say that China will have to present sufficient evidence that it has established a market economy.
Surrogate country concept is that in case of a non‐market economy the investigating country will take another market economy’s prices and proceed on that basis. The USA has many times considered India or Bangladesh prices in case of China. India has also not expressed any desire to give China a NME status and has cited many factors including huge government subsidies and loan rates in China. Whatever, may be the outcome, the major regimes will have to rethink the strategies and principles that they apply to anti dumping investigations when dealing with market and non‐market economies.
Hansa Sinha, Associate (Legal), TPM Consultants.
©Forum for Trade Remedies™ 2016
1 Technical Information: https://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm , Also see Article 2.7 of the Agreement on Anti dumping.
2Digital Versatile Discs‐ Recordable (DVD‐R and DVD‐RW) from Malaysia, Thailand and Vietnam, Final Findings, (July 2, 2010)