China’s Market Economy Dilemma and its Interplay with EU Anti-Dumping Law

In recent years, the issue of market economy in relation to the status of China as a WTO member has been at the top of heated international debates especially with regard to the expiry of Paragraph 15(d) of the Protocol on the Accession of the People’s Republic of China to the WTO (hereinafter “Accession Protocol”). Many commentators had hoped that December 2016 would signal the end of the contestations as to whether China is a market or non-market economy. At the end of 2017, the EU enacted a new anti-dumping and anti-subsidy legislation aimed at addressing state-induced market distortion that will undoubtedly reinvigorate the debates on market and non-market economies at the WTO. The EU practice and the new legislation are yet to be subjected to extensive academic scrutiny. Although the US has also been at the forefront of invoking particular market situation ("PMS") in relation to dumping investigation against imports from China, this paper focuses on China– EU relations vis-à-vis WTO anti-dumping law. It argues that although paragraph 15(d) of the Accession Protocol might have expired in December 2016, the substantive content of the concept of NME in the calculation of dumping margin in the EU has not disappeared. The concept of ‘significant distortions’ due to state interference, introduced in the 2017 EU’s country-neutral legislation, still allows the EU investigating authorities to calculate normal value in a manner that disregards domestic prices of the exporting country. The paper concludes with some remarks on how going forward this contestation can be settled.