Three Viewpoints on China’s Non- Market Economy Status

Abstract

On December 15, 2016, China requested for consultations with the United States and the European Union, regarding their continued use of special methodologies in the calculation of normal value, based on the Non-Market Economy [“NME”] status of China. Whether other countries are entitled to continue treating China as an NME depends on the interpretation of a sunset clause in China’s Accession Protocol [“AP”]. As the WTO gears up for a long-drawn dispute about China’s status, the author attempts to test the legal basis of China’s claim. After providing a brief background of the conditions under which China acceded to the WTO, the author examines the three viewpoints that have been adopted by commentators towards the question of China’s NME status. The “magic deadline viewpoint” argues that China will acquire a Market Economy Status [“MES”] automatically after 15 years of the AP coming into effect. The “business as usual viewpoint” posits that there is no change in China’s NME status. The “shifting the burden of proof viewpoint” argues that China does not acquire a MES automatically, but the burden of proving its continued NME status shifts to the importing country. The author finally concludes that the third viewpoint i.e. shifting the burden of proof offers the most persuasive interpretation of China’s AP, in consonance with the rules of treaty interpretation under the Vienna Convention on the Law of Treaties.