Revising European Safeguards and Antidumping Provisions in Light of the Chinese WTO Accession

Abstract

In November 2001, the WTO members allowed the People's Republic of China, a formerly planned economy that is going through different stages of domestic economic and related legal restructuring, to accede to the WTO. This accession is believed to be necessary for the WTO to become a truly international organisation in the post-Cold War era, along side of the IMF and the World Bank, and for China to become an integrated member of the international economic community. Although the end of the Cold War has changed European trade policy profoundly, the European Community (EC)" has maintained a traditionally bifurcated trade policy, in which planned economies, also referred to as "non-market economies", are given treatment different from market economies in trade policy instruments, such as the EC emergency safeguards provisions and EC anti-dumping regulation. The EC perceives the Chinese domestic legal and economic reforms as unfinished; and, although the treatment of Chinese products under the EC import and anti-dumping regulations has been liberalised in recent years, China is still generally considered to be a non-market economy. It is questionable whether in light of China's WTO accession such a non-market approach vis-ä-vis China, as approved in the Chinese Protocol of Accession, is justified. This thesis argues that the non-market approach for China, as it stands today, should be adjusted for two basic reasons. First, this approach does not allow China to benefit fully from its WTO accession for a number of years to come. Second, as long as the period allowing non-market economy treatment continues, the danger exists that the non-market economy trade policy, especially as far as anti-dumping is concerned, may tend to be abused for protectionist purposes by the EC. Protectionist abuse would be harmful for China because its export-oriented growth is necessary to advance the country's domestic legal and economic reforms. Protectionism, equally, would be harmful for the EC because it prevents the Community industry from adjusting itself to face the challenge of increased Chinese competition. Because there is no satisfactory methodological solution to deal with the new variant of non-market economies, and because it is impossible for China - despite all good intentions - to implement fully the WTO accession requirements by the time they must phase in, the suggested approach is for the EC to show restraint in employing these trade policy instruments against China. As far as emergency safeguards are concerned, this restraint is already a fact. Nonetheless, some holdovers from the Cold War should be put up for change. Such adjustments will also be required for the EC anti-dumping regulation.