Recently, the U.S. administration reaffirmed China’s non-market economy (NME) status for antidumping purposes.
The U.S. Commerce Department has instructed Customs and Border Protection to collect cash deposits from U.S. importers of Chinese-made aluminum foil at dumping margins ranging from 96.81 percent to 162.24 percent.
The Aluminum Association Trade Enforcement Working Group petitioned Commerce for the antidumping investigation on March 9.
The Commerce Department concluded that China remains a non-market economy country for purposes of assessing antidumping duties. The action was immediately criticized by China, which has cases on this issue pending at the World Trade Organization against both the U.S. and the European Union.
China’s protocol of accession to the WTO allowed members to use calculations in anti-dumping proceedings involving Chinese products that are not based on the actual costs of Chinese producers if they can’t demonstrate that market economy conditions prevail in their industry. The U.S. has used this provision to automatically assign NME status to goods imported from China, which typically results in higher antidumping duties than would otherwise be the case.
In December 2016, China asserted that WTO members would have to stop using NME-type methodologies with respect to Chinese goods. The U.S. and others, however, believe they could continue to use such methodologies as long as the petitioners show that market economy conditions do not prevail in the industry at issue. As a result, as part of its ongoing antidumping duty investigation of aluminum foil from China, the International Trade Administration (ITA) conducted an inquiry into whether it should continue to treat China as an NME.
In an Oct. 26 memo, the ITA determined that China continues to be an NME for antidumping purposes because it does not operate sufficiently on market principles to permit the use of Chinese prices and costs for purposes of antidumping analysis.
The ITA explained that at its core the framework of China’s economy is set by the Chinese government and the Chinese Communist Party, which exercise control directly and indirectly over the allocation of resources and do not seek economic outcomes that reflect predominantly market forces outside of that control. The government’s and the CCP’s legal and actual ownership and control over key economic actors and institutions pervades China’s economy, the memo noted, and authorities use this control selectively to affect the interaction of supply and demand and accordingly distort the incentives of market actors.
“Following the positive preliminary countervailing duty determination this summer, the association and its foil-producing members are very pleased with this finding that again underscores the Commerce Department’s commitment to combatting unfair trade,” said Heidi Brock, president and CEO of the Aluminum Association, in a statement.
“U.S. aluminum foil producers are among the most competitive producers in the world, but they cannot compete against products that are sold at unfairly low prices and subsidized by the government of China,” she added.
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Manufacturers for Trade Enforcement Applauds China NME Decision, Nov 1, 2017 The Manufacturers for Trade Enforcement (MTE), a coalition representing more than one million workers in the aluminum, steel, cement, chemical, textile and other manufacturing industries, applauded the Department of Commerce (DOC) determination affirming that China is a non-market economy (NME) for purposes of calculating antidumping margins in trade cases. The determination comes in the context of a trade remedy case against China on dumped aluminum foil exports to the U.S.
China angered over U.S. aluminum foil anti-dumping duties, Reuters, Oct 29, 2017
Aluminum foil anti-dumping row: China hits back at US, says follow WTO rules, Financial Express, Oct 31, 2017
China turns to WTO in aluminum foil dispute with United States, Reuters, Nov 6, 2017
USTR Lighthizer warns against China “Market Economy” Status, Financial Times, June 22, 2017
USTR Lighthizer has fired a warning shot at both Beijing and the World Trade Organisation, cautioning that any decision to label China a “market economy” would have “cataclysmic” consequences for the body.
The US trade representative singled out a dispute brought December 2016 by China against the EU and US over whether it should be deemed a “market economy” as the “most serious litigation that we have at the WTO right now”. “I have made it very clear that a bad decision with respect to the non-market economy status of China . . . would be cataclysmic for the WTO,” he said.
Beijing contends that the agreement when it joined the WTO in December 2001 was that it would automatically be awarded market economy status [after 15 years] for the purpose of the calculations used in anti-dumping cases. Currently, its non-market economy status means that the US and other countries can use prices in third countries to determine the size of punitive tariffs used to combat dumping, or the selling below cost, of products by Chinese companies. In written testimony submitted [to Congress], Mr Lighthizer said he had already begun discussions with the WTO’s director-general, Brazilian Roberto Azevedo, and others about reforming the WTO’s dispute system. “This is now a topic of serious discussion at the WTO,” he wrote. “We expect to see meaningful changes in order to maintain the relevance of the system.”
U.S. Reaffirms China’s Non-Market Economy Status – What It Means, Sourcing Journal, Nov 3, 2017
The Committee to Support US Trade Laws (CSUSTL) has welcomed (and applauded) the determination issued by the US Department of Commerce (DOC) that China’s economy should continue to be properly treated as a non-market economy (NME) for the purposes of calculating anti-dumping margins.
“Commerce’s findings comport exactly with everything we know about the Chinese economy from ongoing study by USTR, DOC, international financial institutions, published research and just day-to-day observation of what lies behind most major economic decisions made by China,” said CSUSTL president Thomas M. Sneeringer.
“The DOC report finding that China continues to be an NME under the US statute is extremely well documented,” said Roger Schagrin, chairman of CSUSTL’s executive committee.
According to Schagrin, “It demonstrates beyond any doubt that the Government of China continues to orchestrate the Chinese economy. The results of the recent Party Congress show that China is more committed than ever to its state-owned enterprises in major industries. This is why it is important that the rest of the world adheres to market-based principles and takes the appropriate action necessary to prevent closures and bankruptcies of their own manufacturers in the face of this unfair competition by the Chinese government.”