Washington Rejects China’s Demand to Be Treated as Market Economy

United States officials have filed a brief with the World Trade Organization as a third party in a case that China has brought against the European Union. The officials explain in the brief why China doesn’t deserve the designation of a market economy under global trading rules. It is expected that the move heightens tensions between the U.S. and China. The White House has previously called China one of the world’s biggest trade offenders and if China now gets the designation, that could test the willingness of the Americans to remain in the organization, The New York Times reports.

President Donald Trump has called WTO disaster and has said that it might be time for the U.S. to leave the organization. WTO is an international body that establishes trade rules and settles disputes. China is now classified as a non-market economy. That classification gives the United States and other countries right to use a special framework under the rules of the organization to decide whether Beijing is dumping its products in other countries by selling them at very low prices.

The framework makes it possible for the United States to add additional duty on Chinese products in order to protect the American ones. China says that the members of the organization promised to award it the market economy designation on Dec. 11, 2016, but EU and the U.S. opposed. According to Washington, the heavy hand of the Chinese government distorts costs in the country and harms competitors abroad.

China filed complaints against the EU and the U.S. at the WTO and said that it is only protecting its lawful rights and demanded that they grant the market status. The complaint against the EU is moving forward towards hearings, but the U.S. case has stalled. According to The Wall Street Journal, the U.S. will take a similar stance as the EU when its own case proceeds.

“The evidence is overwhelming that WTO members have not surrendered their longstanding rights…to reject prices or costs that are not determined under market economy conditions,” the U.S. brief says.