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China as Market Economy: US Commerce Dept to Launch New Review After Over a Decade

| Apr 03, 2017 07:54 AM EDT

The U.S. is soliciting insights from the public about China as a market economy, a designation that would limit the calculation of anti-dumping duties on Chinese goods.

After over a decade, the commerce department of the United States is poised to a launch a review of China as a market economy, a report from Reuters revealed.

The new assessment is aimed at studying whether the Asian giant should be considered as a market economy country, a category that entitles China-made commodities to receive limitation on the calculation of anti-dumping duties imposed on them.

The department announced through a federal notice on Wednesday last week that it is soliciting public insights on China's non-market economy status. The document was primarily about an investigation into China's alleged dumping of its aluminum foil into the U.S.

The new review also comes as the U.S. prepares for President Donald Trump and Chinese leader Xi Jinping's first face-to-face meeting. The anticipated talks will be held on April 6 and 7 at Trump's Florida-located Mar-a-Lago retreat.

Beijing considers China's non-market economy status as a trade hindrance as the current U.S. administration pushes a campaign that would reduce the number of Chinese products being imported into the U.S. market.

When China became part of the World Trade Organization (WTO) in 2001, its terms of joining the body included the Asian economy being treated by other WTO members as a non-market one.

Furthermore, the accession terms stipulated that a third country's prices should be used in reviewing whether Chinese imports are sold below the actual cost.

Nonetheless, this part of the clause has already expired on Dec. 11 last year. This means that China's WTO trading partners must now halt from using the prices of a third country in assessing the prices of Chinese commodities. This "has led to higher U.S. anti-dumping duties on imported Chinese goods," Reuters wrote.

Despite the clause's expiry, the U.S., together with the European Union, remained to view China's non-market economy status as the same. In line with the said issue, Beijing has formally filed a complaint against the two before the WTO.

In 2006, when the commerce department last held a review of China as a market economy, the Asian country failed to qualify in all the determining criteria, which include the extent to which its currency can be converted into other currencies, and the extent to which its wage rates are based on the labor and management's free bargaining.

The criteria also cover the extent to which the country permits foreign firms' investments, and the extent of its government's control over the means of productions, the allocation of resources and enterprises' price and output decisions.

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