Page 13 - SCBJ-201609
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September 2016
economy methodology for measuring dumping in anti-dumping 4. Not be China-specific – what’s good for China ought
cases against Chinese companies (this China-specific authority to be good to do for any trade partner.
expires after 15 years, running from the date of China’s WTO
accession).” 5. Not require changing U.S. law.
This commitment was integral to getting final agreement with One solution that would appear to fit the above criteria was
China at the highest levels on the terms of its WTO entry. End- included in legislation passed by Congress last summer. Section
stage negotiations with then-Premier Zhu Rongji specifically 504 of the Trade Preferences Extension Act, which was signed
included this provision and its definitive end date to close the in to law on June 29, 2015, expanded Commerce’s discretion to
deal. Breaking the commitment would be enormously detri- assess “particular market situations” in anti-dumping investiga-
mental to American interests on other more significant issues tions, and to use methodologies other than strict comparisons
with China, and would also encourage the Chinese to think that with domestic prices and costs when it finds that those particu-
breaking commitments is acceptable behavior – not a message lar market situations would prevent a proper comparison.
the United States should convey.
In other words, rather than using non-market methodologies
Parts of China’s economy are now functioning as a market across the board and in all cases, Commerce could use this
economy. At the same time, we can all agree that there are authority to address the distortions that may remain in some
parts of China’s economy that continue to function contrary to sectors of China’s economy – just as it can do in cases involving
market principles. For example, by its own admission, China other trading partner economies.
has significant overcapacity in products such as steel and alumi-
num. Those industries have benefited from favorable subsidies There would need to be a rigorous, grounded process for dem-
and other government intervention, with a detrimental effect on onstrating a sector or producer qualifies for using an alternative
both international and China’s own domestic markets. methodology, to avoid simply using this approach for protec-
tionist purposes. The alternative methodology would need to be
The key to the current discussion is in what comes next. Many WTO compliant, but the U.S. has many gifted trade lawyers who
have argued over whether China meets the criteria under U.S. should be able to craft an approach to meet this bar. We should
law to be treated as a market economy. A closer reading of also be talking bluntly to the Chinese government, pointing
China’s WTO accession protocol reveals that this question is ir- out that we will honor the commitment – and clarifying what
relevant. The language in the protocol does not require the U.S. that commitment is – yet we will still take steps to ensure their
to name China as a market economy in December; it simply re- overcapacity problem is not exported to us.
quires ending the use of the NME methodology – an important
distinction that suggests a path forward. Rather than wasting more time arguing over what the U.S. does
not need to do on Dec. 11, we should honor the commitment
There are several principles that should guide how the U.S. can that three successive administrations have articulated and focus
best approach this issue — a middle ground that would enable our energy on finding the effective, middle ground solution – a
us to both meet our WTO commitment and address the clear solution which fits squarely into US interests by addressing the
distortions that some sectors of China’s economy are still creat- distortions of China’s overcapacity in certain sectors and ensur-
ing not only in China but also in global markets: ing that US-China relations remain on stable footing.
1. Honor the commitment and end the use of blanket, This article was first published in China Business Review, the magzine of U.S. - China
across-the-board NME methodology. Business Council.
2. Be WTO compliant.
3. Retain our ability to apply U.S. trade remedies when
necessary and fact-based.
11
economy methodology for measuring dumping in anti-dumping 4. Not be China-specific – what’s good for China ought
cases against Chinese companies (this China-specific authority to be good to do for any trade partner.
expires after 15 years, running from the date of China’s WTO
accession).” 5. Not require changing U.S. law.
This commitment was integral to getting final agreement with One solution that would appear to fit the above criteria was
China at the highest levels on the terms of its WTO entry. End- included in legislation passed by Congress last summer. Section
stage negotiations with then-Premier Zhu Rongji specifically 504 of the Trade Preferences Extension Act, which was signed
included this provision and its definitive end date to close the in to law on June 29, 2015, expanded Commerce’s discretion to
deal. Breaking the commitment would be enormously detri- assess “particular market situations” in anti-dumping investiga-
mental to American interests on other more significant issues tions, and to use methodologies other than strict comparisons
with China, and would also encourage the Chinese to think that with domestic prices and costs when it finds that those particu-
breaking commitments is acceptable behavior – not a message lar market situations would prevent a proper comparison.
the United States should convey.
In other words, rather than using non-market methodologies
Parts of China’s economy are now functioning as a market across the board and in all cases, Commerce could use this
economy. At the same time, we can all agree that there are authority to address the distortions that may remain in some
parts of China’s economy that continue to function contrary to sectors of China’s economy – just as it can do in cases involving
market principles. For example, by its own admission, China other trading partner economies.
has significant overcapacity in products such as steel and alumi-
num. Those industries have benefited from favorable subsidies There would need to be a rigorous, grounded process for dem-
and other government intervention, with a detrimental effect on onstrating a sector or producer qualifies for using an alternative
both international and China’s own domestic markets. methodology, to avoid simply using this approach for protec-
tionist purposes. The alternative methodology would need to be
The key to the current discussion is in what comes next. Many WTO compliant, but the U.S. has many gifted trade lawyers who
have argued over whether China meets the criteria under U.S. should be able to craft an approach to meet this bar. We should
law to be treated as a market economy. A closer reading of also be talking bluntly to the Chinese government, pointing
China’s WTO accession protocol reveals that this question is ir- out that we will honor the commitment – and clarifying what
relevant. The language in the protocol does not require the U.S. that commitment is – yet we will still take steps to ensure their
to name China as a market economy in December; it simply re- overcapacity problem is not exported to us.
quires ending the use of the NME methodology – an important
distinction that suggests a path forward. Rather than wasting more time arguing over what the U.S. does
not need to do on Dec. 11, we should honor the commitment
There are several principles that should guide how the U.S. can that three successive administrations have articulated and focus
best approach this issue — a middle ground that would enable our energy on finding the effective, middle ground solution – a
us to both meet our WTO commitment and address the clear solution which fits squarely into US interests by addressing the
distortions that some sectors of China’s economy are still creat- distortions of China’s overcapacity in certain sectors and ensur-
ing not only in China but also in global markets: ing that US-China relations remain on stable footing.
1. Honor the commitment and end the use of blanket, This article was first published in China Business Review, the magzine of U.S. - China
across-the-board NME methodology. Business Council.
2. Be WTO compliant.
3. Retain our ability to apply U.S. trade remedies when
necessary and fact-based.
11
