The European Commission is seeking legal guidance on whether China should be recognized as a market economy, according to Trade Commissioner Cecilia Malmstroem, who cited a need for “greater clarity” on the matter.
Market-economy status for China would signal more European Union trust in China by ensuring the EU uses Chinese data for trade probes affecting the country. At present, the EU uses other nations’ figures to calculate levies against China meant to counter below-cost, or “dumped,” imports. China faces more EU anti-dumping duties than any other country.
“This is indeed a very important issue,” Malmstroem told the European Parliament’s trade committee in Brussels on Wednesday. “We are looking and taking legal advice on the issue of that. That’s an ongoing process.”
The commission, the 28-nation EU’s executive arm, is weighing legal and political considerations as it interprets an ambiguous part of the agreement that led China to join the World Trade Organization in 2001.
Under the accord, WTO members pledged to scrap in December 2016 a shortcut for applying a non-market economy standard in calculating anti-dumping duties on China. At the same time, the expiration doesn’t grant China blanket status as a market economy.
The legal gray area threatens to spark a battle within the EU between northern countries that tend to oppose import curbs and primarily southern nations that are keen to protect domestic manufacturers from overseas competitors.
“As soon as we have greater clarity on this, we will share those conclusions,” Malmstroem said.