US FORMALLY OPPOSES CHINA MARKET ECONOMY STATUS AT WTO

WASHINGTON— The United States has formally told the World Trade Organization (WTO) that it opposes granting China market economy status, a position that if upheld would allow Washington to maintain high anti-dumping duties on Chinese goods.

The statement of opposition, made public on Thursday, was submitted as a third-party brief in support of the European Union in a dispute with China that could have major repercussions for the trade body’s future.

China is fighting the EU for recognition as a market economy, a designation that would lead to dramatically lower anti-dumping duties on Chinese goods by prohibiting the use of third-country price compar- isons.

The US and EU argue that the state’s pervasive role in the Chinese economy, including rampant granting of subsidies, mean that domestic prices are deeply distorted and not market-determined.

A victory for China before the WTO would weaken many countries’ trade defenses against a flood of cheap Chinese goods, putting the viability of more western industries at risk.

US Trade Representative Robert Lighthizer told Congress in June that the case was “the most serious litigation we have at the WTO right now” and a decision in China’s favor “would be cataclysmic for the WTO.”

Lighthizer has repeatedly expressed frustration with the WTO’s dispute settlement body and has called for major changes at the organization.

The USTR brief, which follows a Commerce Department finding in October that China fails the tests for a market economy, argues that China should not automatically be granted market economy by virtue of the expiration of its 2001 accession protocol last year.

“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 in determining price comparability for purposes of anti-dumping comparisons,” the brief concludes.