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The End of Non-Market Economy Treatment against China : Seeking Policy Inspiration for the European Union

초록/요약

The question of China’s entitlement to Market Economy Status (MES) after December 11th 2016 has become more relevant than ever, because after 15 years since China’s accession to the World Trade Organisation, the article that allows non-market economy methodologies to be used in determining the normal value of imports from China, is set to expire. In the light of the fact that China continues to be the number one target for anti-dumping duties, this thesis will firstly explore what other permissible trade defence instruments the European Union has in the current legislation in order to react to market and trade distortions coming from countries with state influenced competition, namely found in the anti-dumping, anti-subsidy, and safeguard agreements. Secondly, this thesis will explore selected countries’ legislations to gain insight on the reasons why to grant market economy status to a country that still has a strong influence over the economy, and furthermore, how can other countries’ legislation provide policy inspiration for the European Union in trade defence investigations beyond 2016. It is found that the EU has several options in its current legislation to calculate value for Chinese products beyond non-market methodologies and to buy more time to develop its trade defence instruments. Additionally, the experience of the US, Canada and Australia show that if the European Commission had more discretionary powers, higher duties could be applied on imports with distorted value.

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목차

I. Introduction 1
1.1 Background 1
1.2 Purpose and Question 4
1.3 Method 6

II. The Chinese WTO Accession Protocol and Recognizing China’s MES 7
2.1 Legal obligations to grant MES? 9
2.2 Non-market economy treatment in AD investigations after 11 December 2016 12

III. Current EU Trade Defence Instruments against China 18
3.1 Anti-dumping Regulation 21
3.1.1 Continued application of Article 2(7) ADR 27
3.1.2 “Grandfathering” 28
3.1.3 Article 2(3) and 2(5) ADR 29
3.1.4 Article 2(10) ADR 34
3.2 EU Anti-Subsidies Regulation 36
3.3 Safeguard Measures and Import Regulation 46

IV. Third Country Approaches to China 49
4.1 Absence of specific rules and methodology 51
4.1.1 Brazil 51
4.1.2 South Africa 52
4.1.3 Switzerland 53
4.1.4 Japan 54
4.2 Adoption of special legislation 54
4.2.1 USA 55
4.2.2 Canada 62
4.2.3 Australia 64

V. Implications for EU Trade Policy Towards China 69
5.1 Giving the Commission more discretionary powers in determining Market Economy Status 70
5.2 Making full use of other instruments 73
5.2.1 Elimination of the lesser duty rule 73
5.2.2 Calculation of duties: Cost construction method 74
5.2.3 Grandfathering 76
5.2.4 Subsidies and Countervailing Measures: Proxy benchmarking 76
5.2.5 “Full” double remedies 79
5.2.6 Safeguards 80
5.3 Cultivating Chinese internal reforms 80

VI. Conclusion 81

Bibliography 87
List of Cases 93

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