The Chinese Ministry of Commerce has slammed the US government’s refusal to classify China as a market economy during a trade tiff over aluminium foil exports.
In a memo released following a review of China’s market status in relation to a dispute over aluminium foil exports, the US Commerce Department said that the state continues to play a pervasive role in the Chinese economy that causes “fundamental distortions” to resource allocation.
“At its core, the framework of China’s economy is set by the Chinese government and the Chinese Communist Party, which exercise control directly and indirectly over the allocation of resources through instruments such as government ownership and control of key economic actors and government directives,” said the memo.
As a consequence the US has maintained its refusal to grant China market economy status, and opted to impose antidumping duties on Chinese aluminium foil that could run anywhere between 96.81% – 162.24%.
The MOFCOM has slammed the decision, directing pointed criticism at the use of the “surrogate country approach” by the US to determine anti-dumping measures.
The surrogate country approach involves the use of costs of production in a third country to determine the value of products from countries that are categorised as “non-market economies,” and has been criticised for allowing WTO members to impose excessive tariffs.
A MOFCOM spokesperson said that the continued use of surrogate country prices by the US is in breach of article 15 of the Protocol on the Accession of the People’s Republic of China to the WTO concerning international responsibilities, and called for the US government to “take substantive action to rectify its errors.”
MOFCOM further points out that the concept of a “non-market economy” as contained in the memo relates to a definition outlined by the 1930 US Tariff Act, but is not applicable under the rules of the WTO.
“The concept of the so-called non-market economy nation does not exist under the multi-lateral regulations of the WTO, and the use of substitute country prices for anti-dumping measures directed against China must stop,” said MOFCOM spokesman Gao Feng.
According to Gao Feng the concept of a non-market economy nation is the creation of individual members of the WTO during the Cold War, yet very few of the organisations 164 member states contain this definition in their domestic law.
“This cannot be confused with the duty to comprehensively and thoroughly implement the duties of WTO international protocols.”