China-EU Geopolitics: News & Discussions
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beijingwalker
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India studying impact of market economy status for China
India’s Commerce Ministry is assessing the implications of the likelihood of China being granted “Market Economy Status” (MES) from December this year under the World Trade Organisation (WTO) norms.
This comes against the backdrop of instances of India's manufacturers in steel, chemicals, electrical and electronics sectors being “severely hurt” by “unfairly low-priced” imports from China, and the extensive usage of anti-dumping duty by India to offset the losses caused to the local manufacturers due to dumping.
Of the 535 cases where anti-dumping duties were imposed by India from 1994-2014, a maximum of 134 has been on goods from China.
Beijing has cited the 2001 agreement on China joining the WTO to say that WTO-member countries had then decided to deem China as a 'market economy' from December 2016 while adjudicating anti-dumping cases.
Official sources told The Hindu that since the main impact of China being granted MES would be on 'anti-dumping' cases, the Directorate General of Anti-Dumping and Allied Duties (or DGAD, an autonomous body under the commerce ministry) has begin consultations with stakeholders including international trade experts and lawyers on the issue.
Unfair trade
Dumping is an unfair trade practice of exporting goods to another country at a price lesser than what is paid in the exporting nation or their normal production cost, thereby distorting international trade and causing injury to the domestic manufacturers of the goods in the importing country.
As per the 2001 agreement (Protocol on the accession of China to the WTO), in calculating the 'normal value' of the exported goods while adjudicating anti-dumping cases, the WTO member nations could for 15 years (that is till December 2016) ignore selling price and production costs in China.
They could instead calculate the ‘dumping margin’ on the basis of a comparable export price to an appropriate third country and by 'constructing' the production cost with 'reasonable' additions.
This permission to compare prices or costs with external benchmarks to calculate the 'normal value' and 'dumping margin' has often led to many countries using the anti-dumping route extensively against China and imposing high anti-dumping duties.
The 15-year time period was given to China to carry out internal reforms and transition into a 'market economy.' Like India, the European Union (EU) is also undertaking stakeholder consultations on the ramifications of granting MES to China.
Once China is granted MES, it will severely limit India's ability to resort to anti-dumping as the authorities (DGAD) will have to accept the production costs and selling price in China as the benchmark, the sources said. They added that it will in turn mean lesser chances of anti-dumping duties being imposed or lesser anti-dumping duties even if they are imposed.
To deny China the 'MES’, India -- and others such as the US and the EU -- have been saying that unlike in 'market economies' where prices are mainly determined by market forces (of demand and supply), there is significant government influence in China that in turn causes distortions in international trade.
These countries have also been citing factors such as huge Chinese government subsidies, 'price fixing', 'absence' of proper business accounting standards, besides lack of transparency in not just loan rates, but also in minimum wages and property rights in China.
India studying impact of market economy status for China - The Hindu
It will give China more force to flood the world market for everything and wash away the products from other countries, especially from newly emerged manufacturing countries.
Chinese-Dragon
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Full Market economy status is really going to make it hard for others to use trade protectionist measures against us.
And once the protectionism is gone, they'll actually have to become efficient in order to compete.
And once the protectionism is gone, they'll actually have to become efficient in order to compete.
jhungary
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Didn't they did that sometime ago when IMF included RMB in the basket currency??
That's the ultimate sign for accepting China as market economy, why say that again??
jhungary
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When a country is declaring a market economy, which mean all the financial activities are following a "Free Market System" in oppose to "Protectionist Market System"
Without giving you a lecture of Economic 501. In short, basically, it means now China are to follow free pricing instead of planned economy, which included taxes and tariff. Which means the country cannot control the market and have to be free to compete.
2 things will be affected. 1.) the impossible to protect your own company as there are no intervention from your own government. 2.) the market follow the route of supply and demand, where instead of heavily subsiding non-perform company, those who cannot make the quote or edge would simply weeded out.
It would be good for Chinese economy if the supply and demand within its own is up to level and standard, on the other hand, if not, then the competition would basically wipe out the Chinese own market and flooded with foreign brands. The result is purely based on the confident of the market and the quality of the Chinese's own company
On the other hand, export would also be affected as if China cannot put import restriction to other, other too cannot put import restriction to China too, then again, it may boost to kill Chinese export again depending on Supplies and Demands and the quality edge of the company.
It would be silently admitted to that when IMF included RMB in the basket. Because that is the way they see as minimal interventionist in term of Chinese government.
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jhungary
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What have US protectionist measure have to do with China become a Market Economy recognized by EU??
Chinese-Dragon
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USA will be the hardest hit, no wonder they are the ones opposing full Market economy status for China.
jhungary
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USA will be the hardest hit, no wonder they are the ones opposing full Market economy status for China.
Did you actually think before you post? like EVER??
You were saying before, the US market were already full of Chinese product. And this is the reason why the American cannot do anything to China, as you said the Chinese are using it as a leverage.
Now you are saying the US will hit hardest? What? So you are suggesting a secario that the Chinese product will flood the American market even more than now? LOL
The US oppose to China becoming a market economy because the CHINESE AREN'T MARKET ECONOMY. Even now. I don't see anymore harm can do to US as they were already flooded with Chinese product before. On the other hand, I seriously have doubt to Chinese local business survival.
If and when EU or US accept China as a free market, I will think Xiaomi will go bust first as there would be million of lawsuit that will be brought on by Apple and Samsung which nby then the Chinese government cannot pretend those thing don't exist.
Chinese-Dragon
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Once we are officially recognized as having Market Economy Status (not just by the EU but also the WTO), they will have to compete based on efficiency rather than simply using overwhelming protectionist measures like they are doing now.
So ironic. The champion of free trade (USA) is also the country that imposes the most protectionist measures, by far.
jhungary
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Once we are officially recognized as having Market Economy Status (not just by the EU but also the WTO), they will have to compete based on efficiency rather than simply using overwhelming protectionist measures like they are doing now.
So ironic. The champion of free trade (USA) is also the country that imposes the most protectionist measures, by far.
You still have not answer me how US will be hit hard like you said when US is already flooded with Chinese product??
By the way, if you care to look at what US put on export/iimport control, almost all of the control item are defence or strategically related. Do us a favour, go look at DoC import and export control list and look at what they were protecting. Then open your mouth. Not before.
Once we are officially recognized as having Market Economy Status (not just by the EU but also the WTO), they will have to compete based on efficiency rather than simply using overwhelming protectionist measures like they are doing now.
So ironic. The champion of free trade (USA) is also the country that imposes the most protectionist measures, by far.
In my opinion, it should be a two way street, yes @Chinese-Dragon ?
A great find, @powastick , will keep this as reference in future analyses that i might write. Thanks again.
sicsheep
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what does Market Economy have to do with intellectual right and patents?
the most comprehensive international IP rule are set in trade agreements like TPP.
Huawei selling phones in USA right now, why is Apple not suing them?
Export control is mostly high tech, you should check ITC anti-dumping list.
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