When China joined the World Trade Organization (WTO) in 2001, there was general agreement that because of the Chinese government’s pervasive control over prices, it would be unrealistic to require other WTO members to use Chinese prices and costs in antidumping investigations of Chinese imports. This agreement was embodied in Section 15 of China’s Protocol of Accession to the WTO. One subparagraph of Section 15 in particular, 15(a)(ii), allows WTO members to apply non-market economic methodology to Chinese industries unless it is shown that the entire industry operates under market economy conditions. This provision will expire on December 11, 2016. Some commentators claim this means that WTO members will be required to give all Chinese imports market economy treatment in all antidumping investigations involving Chinese products.
A thorough analysis of Section 15 establishes that this is simply not true. China’s Protocol of Accession requires other WTO Members to base antidumping comparisons involving Chinese imports on Chinese prices and costs if China has demonstrated that market economy conditions prevail, either in the industry under investigation, in a given sector, or in China as a whole.
After subparagraph 15(a)(ii) expires, the investigating Member is still allowed treat China as a non-market economy country by using something other than Chinese prices or costs in antidumping analyses unless China, or individual Chinese producers, can establish that they operate under market economy conditions. This interpretation gives meaning to every provision of Section 15, and is consistent with the underlying purpose of the provision and with the general framework for antidumping investigations established by the WTO Antidumping Agreement.
The termination of subparagraph 15(a)(ii) on December 11, 2016 does not automatically require WTO members to treat Chinese imports as if they were from a market economy country. Such an interpretation would nullify all of Section 15. This conflicts with the plain language of that provision and the rules of treaty interpretation. It also ignores the underlying purpose of Section 15. It is not reasonable, and should be rejected.
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