Status of market economy to China: What political answers can be given to this legal straitjacket?

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Series Details No.389, April 2016
Publication Date 18/04/2016
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The European Union is the world's leading exporter of goods and services and the first export market for 80 countries. Imports and exports combined, trade with China totals 1 billion € per day.

Chinese exports are subject to specific conditions set when it entered the WTO in 2001, with the individual agreement of the Member States and according to the decision making rules of this international organisation. The formal reason behind this at the time was that China did not meet the criteria to be a market economy; this led to the temporary introduction of specifically restrictive anti-dumping measures. These measures will come to an end on 11th December 2016.

With the consultation by the Commission, hearings at the European Parliament, corporate involvement and petitions, the status of China as a market economy is the focus of debate in Brussels. On 17th March the European Commissioner for Trade, Cecilia Malmström recalled that China still does not meet European criteria. All observers agree on this. However the legal measures adopted by the WTO do provide that the protective measures employed by Europe will no longer be applicable. Hence the main question is not about whether China is a market economy - it is not - but what the effects of the expiry of the measures set out in its WTO accession protocol will be. Two legal systems - that of the WTO and that of the EU - are struggling to work in harmony.

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