Thread by @bbaschuk

Some background on the suspension of the EU-China non-market economy dispute.

It was expected but it's still a BFD.

Thread:

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https://twitter.com/bbaschuk/status/1140597163929624576

This is considered one of the biggest dispute cases facing the @wto. @USTradeRep Lighthizer once said if the WTO issued a “bad decision with respect to the non-market economy status of China,” it would be “cataclysmic for the WTO."
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@wto @USTradeRep In 2017 @EconomicPolicy said the case could cost up to 3.5 million European jobs if the @wto forced the EU to grant China market economy status in anti-dumping investigations: bit.ly/2WLRl5H
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@wto @USTradeRep @EconomicPolicy Some background:
China filed the dispute in 2016 and argued that the legal basis that permitted the EU to deviate from standard WTO anti-dumping practices expired in 2016, the 15th anniversary of China’s accession to the @wto
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@wto @USTradeRep @EconomicPolicy Since 2001 the US and the EU have calculated Chinese anti-dumping duties using third country prices to determine whether they were being sold below fair value. That’s allowed them to add extra duties to Chinese imports to keep local producers competitive.
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@wto @USTradeRep @EconomicPolicy The legal authority to do this stems from a key provision of China's @wto accession protocol:
bit.ly/2vdiWS6
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@wto @USTradeRep @EconomicPolicy The provision in question-Section 15 subparagraph (a)(ii)—allows @wto members to use anti-dumping methodologies that are “not based on a strict comparison with domestic prices or costs in China.”
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@wto @USTradeRep @EconomicPolicy China argued that the provision was conditional, and points to a subsequent section of the protocol—Article 15(d)—that says “the provisions of subparagraph (a)(ii) shall expire” 15 years after China's admission to the @wto.
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@wto @USTradeRep @EconomicPolicy China's @wto Ambassador Zhang Xiangchen argued in 2017 that the expiration of subparagraph (a)(ii) was "crystal clear."

"There can be no other plausible reading of this simple and unambiguous treaty language."

Speech: bit.ly/2VKwUdA
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@wto @USTradeRep @EconomicPolicy In 2016 China filed @wto dispute complaints that said despite the expiration of the provision, the EU and the US continued to apply alternative anti-dumping methodologies that resulted in higher duties on dumped Chinese imports.
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@wto @USTradeRep @EconomicPolicy The EU & US pushed back and argued the expiration of one provision of China's Accession Protocol, Section 15(a)(ii), doesn't mean @wto members no longer have the ability to reject and replace non-market domestic prices or costs for purposes of anti-dumping comparisons.
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@wto @USTradeRep @EconomicPolicy This year, in April the three-member @wto panel set up to mediate the EU dispute issued an interim ruling that favored the EU's arguments.

Story:
bloom.bg/2Vbz0lL
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@wto @USTradeRep @EconomicPolicy On May 7 China approached the EU about suspending the case until further notice.
The @wto panel granted suspension on June 14 despite EU complaints that it had dedicated time and money defending itself in the case and deserved an outcome.
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@wto @USTradeRep @EconomicPolicy The suspension of the dispute (if it holds) benefits both the EU and the U.S., which argue that @wto rules permit them to impose discriminatory penalties on China because it hasn't evolved into a true market economy as it promised to do when it joined the WTO.
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@wto @USTradeRep @EconomicPolicy The U.S. currently imposes hundreds of anti-dumping duties on Chinese imports worth billions of dollars—most of which are focused on imports of steel, iron, and aluminum products.
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@wto @USTradeRep @EconomicPolicy The dispute has already spurred the EU to overhaul its basic anti-dumping regulation, which now eliminates the EU presumption that exporters from China and nine other @wto members operate under non-market conditions.
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@wto @USTradeRep @EconomicPolicy The EU's revised anti-dumping regime now determines the normal value for dumped imports by focusing on whether prices and costs are subject to “significant distortion” due to state interventions in the exporting country's economy.
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@wto @USTradeRep @EconomicPolicy The new methodology still permits the EU to impose higher anti-dumping duties on products from countries where domestic prices are considered to be significantly distorted by state interference, such as China.
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@wto @USTradeRep @EconomicPolicy In sum the EU, US and other @wto members can legally retain a key weapon in their trade arsenal that permits them to counter cheap Chinese exports with artificially high anti-dumping duties.
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@wto @USTradeRep @EconomicPolicy END
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