The Application of the Nonmarket Economy Rule under the United States' Antidumping Law

Abstract

Despite the expiration of a key provision in Chinas WTO Accession Protocol, it is questionable whether there is any legal justification for the enforcement of WTO members to grant market economy status to China. In order to understand the Nonmarket Economy (NME) treatment issue, it is important to analyze both the legal and administrative frameworks designed specifically for the nonmarket economies of WTO Members. Since the United States is a frequent user of antidumping sanctions against China, the implications of this practice will obviously be significant for China. However, rather than focusing on the origins and evolutionary process of nonmarket economy provisions, this paper seeks to analyze both the legal and administrative implications of nonmarket economy provisions, based on case studies of dumping investigations initiated by the United States against Chinese imports between 1980 to 2016. This paper argues that there are three intrinsic problems specifically applied to nonmarket economy cases. First, the lack of clear, multilaterally agreed definition of a nonmarket economy country has led the WTO importing country to have wide discretion on determining a nonmarket economy country and will continue to cause problem even after Chinas nonmarket economy status has expired. Second, the United States adopts a methodology that grants market economy treatment to Chinese exporters while the evidence suggests that they are almost impractical in reality. Last, Chinese respondents have been resorting to the separate rates test in order to avoid receiving a country-wide dumping margin, but subsequent administrative hurdles have been intricately designed and implemented to negatively affect the antidumping investigation procedure. Therefore, the benefits of graduating from nonmarket economy status may not be so great for China in light of the associated burdens.