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PRC drops WTO dispute on market economy status against EU.

Published: June 25, 2020

China recently lost a dispute related to itsmarket economy status to the European Union (EU) at the World Trade Organisation (WTO) by allowing the dispute to lapse. The former fought a four-year battle for market economy status. The designation would have put the country in a stronger position relative to its commercial and trade partners.

“At the request of China, the panel suspended its work on 14 June 2019 (WT/DS516/13). Since the panel has not been requested to resume its work, pursuant to Article 12.12 of the DSU, the authority for establishment of the panel lapsed as of 15 June 2020,” said a note by the WTO Secretariat.

Hearings on the issue started in November 2017 and, at the time, US Trade Representative Robert Lighthizer testified before the US Congress that this issue is the “most serious litigation that we have at the WTO right now,” noting, “I have made it very clear that a bad decision with respect to the non-market economy status of China…would be cataclysmic for the WTO.”

China lost an interim ruling on the matter last year after the WTO rejected the argument that Beijing’s 2001 agreement to join the WTO automatically granted it the right to be treated as a market economy in anti-dumping investigations after 15 years.

According to the EU, China subsidises its industries to a great extent, particularly steel and aluminium, making their sales prices in the international market unfair.

After the latest development, the EU and the United States can apply high anti-dumping tariffs on goods from China to protect their industries.

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