The EU said on Wednesday (20 July) it will no longer debate whether or not China’s economy is market driven, but will instead focus on new measures to tackle Chinese dumping and illegal subsidies.
The controversial issue of Market Economy Status (MES) matters because it means that partners will have to treat communist-ruled China as a free market equal when it comes to settling trade disputes.
China says that when it joined the World Trade Organisation (WTO) in 2001, it was promised the status by the end of 2016, a move opposed in the 28-nation European Union as letting Beijing off the hook over a long series of disputes ranging from steel to solar panels.
Meeting on Wednesday (20 July), the European Commission agreed the bloc would have to meet its WTO obligations regarding China’s membership, but at the same time it should draw up plans to “maintain a strong trade defence system”.
EU Commissioner for Jobs, Growth and Investment and Competitiveness Jyrki Katainen told reporters “we should forget this phrase” when asked if that meant granting market economy status to China.
“It is better to forget this concept because our approach is entirely different,” Katainen said.
He stressed the new proposals would ensure EU companies had the same level of protection and redress against Chinese dumping and illegal subsidies as now.
EU Trade Commissioner Cecilia Malmström said the new proposals, to be detailed later this year, will be “country neutral… this new methodology will lead to roughly the same level (of protection) as today”.
Earlier this week, the EU lodged a complaint at the WTO over Chinese curbs on exports of key industrial materials, prompting a sharp response from Beijing that they were entirely legal.
At an EU-China summit in Beijing last week, European Commission President Jean-Claude Juncker warned the EU would use all means to protect itself from a flood of Chinese steel imports.
China makes more than half the world’s steel and is accused of massive dumping as its own market slows sharply, but premier Li Keqiang said the problem was not “triggered by any one country”.
China is the EU’s second largest trading partner after the United States but the government, nominally Communist, still plays a central role in directing the economy.