Whether or not a country is granted Market Economy Status (MES) by the EU sounds like a rather arcane economic argument but it can, in fact, have a huge impact on that country’s exports.
This is because MES is used to calculate anti-dumping measures when the EU decides to take action against a country, which it believes is helping exporters to sell into the EU market at unrealistically low prices.
If an exporting country is not accepted as having MES, in other words if its costs and prices are not market based, then it will face much higher anti-dumping duties as the European Commission seeks to protect European industries from unfair competition.
China has been pushing for MES from the EU for some time and its patience seems to have run out as it has now turned to the World Trade Organization (WTO) for redress.
It has opened a dispute process at the WTO with regard to both the EU and the USA, claiming that both use unfair “calculation methodologies” in anti-dumping proceedings.
When China joined the WTO, existing members were given a 15-year period during which they could treat it as a non-market economy if dumping duties had to be calculated. However, that period ran out on 11 December 2016 and China has wasted no time in demanding that it be granted MES.
It was reportedly angry that the EU had imposed anti-dumping duties on its steel products, still treating it as a non-market economy just a few weeks before the WTO’s deadline. China described this decision as protectionist.
Under WTO rules, the parties to a dispute must discuss the matter and try to find a satisfactory solution without proceeding further with litigation. Only if consultations have failed after 60 days can the complainant request adjudication by a WTO panel.
