China Wants to be Named a Market Economy. This Bill Gives Congress a Voice in the Matter.

By Elizabeth Brotherton-Bunch
May 12 2016 |
Sen. Al Franken joined Sens. Amy Klobuchar and Tammy Baldwin to introduce legislation to ensure Congress has a say in China’s market status. | Photo by John Taylor

Granting China market economy status — which it doesn’t deserve — would be a huge mistake.

We’ve written quite a bit in the past few weeks about China’s big push to be reclassified as a market economy. It’s a fairly wonky issue that isn’t getting a ton of attention, but it is hugely important.

Now a group of Senators is aiming to make sure China isn’t given something it doesn’t deserve.

Some background: When China entered the World Trade Organization in 2001, it did so under the condition that the United States and European Union would treat it as a “non-market economy” for 15 years. That status allowed the U.S. and E.U. to take additional steps to impose duties when China breaks trade rules, which it does quite often.

According to the agreement, China would take the 15-year period to implement a series of reforms to liberalize its market. In December 2016, each country would then make a decision about how to classify China’s market status.

Only China didn’t uphold its end of the bargain. Its massive industrial overcapacity problem alone shows exactly how much the state continues to intervene in its market.

But now China wants market economy status anyway.

Enter Sens. Al Franken (D-Minn.), Amy Klobuchar (D-Minn.), and Tammy Baldwin (D-Wis.), who introduced legislation on Wednesday to give Congress authority to review any decision to treat China as a market economy. The bill is companion legislation to a measure introduced by Rep. Rosa DeLauro (D-Conn.) in the House in April.

Right now, it’s solely up to the Commerce Department to decide a country’s market status. The new measure would simply give Congress the ability to approve or deny the decision.

Said Baldwin:

“Removing China’s non-market economy status would force us to rely on questionable Chinese data when settling trade disputes, further limiting our ability to stop China’s trade cheating which has already put thousands of Americans out of work. We must take on unfair trade practices and policies and place our bet on American workers by creating an even playing field.”

Klobuchar noted that China subsidizes 80 percent of the steel companies in China, manipulates its currency, and engages in corporate espionage against American competition (something U.S. Steel is addressing head-on right now).

All of these things are proof that China is underserving of market economy status.

“When China manipulates its trade economy, it undercuts American producers and threatens our workers, communities, and industries,” Franken added. “Granting China ‘market economy’ status would potentially harm regions like Northern Minnesota and would also make it more difficult to crack down on unfair trade practices. Our workers deserve better.”

While Congress seeks to weigh in on China’s market status, their counterparts in the European Parliament overwhelming voted today against recognizing China as a market economy. It’s a nonbinding vote, but it signals that there is significant European resistance to granting market economy status to China. The issue is especially complicated (but equally as important) in Europe, which AAM’s own Riley Ohlson outlined earlier this week.

Here at home, we’re glad to see Members of Congress raising their voice, and encourage other Members to sign onto the bill. We’ll continue to work alongside our colleagues in the Manufacturers for Trade Enforcement coalition to educate both the public and policymakers about this vital issue.