Today’s WTO Dispute Doesn’t Make China a Market Economy
China fails all six U.S. criteria for market economy designation
China launched a complaint Monday at the World Trade Organization (WTO) after the United States and European Union rightly made clear that they still consider China to be a "non-market" economy — and will impose tariffs when appropriate.
China has failed to meet any of the United States' criteria for "market economy" status (MES), as it continues to break its promises to take meaningful steps to open the country's market, address its ongoing industrial overcapacity issues, and permanently stop manipulating its currency.
Said Alliance for American Manufacturing (AAM) President Scott Paul:
“Pure and simple: China’s not a market economy. Not by the smell test, and certainly not through a rudimentary understanding of U.S. trade law.
"The U.S. is right not to graduate China to market economy status as it fails all six of the tests in our statutes. Anyone who wants to wreck the legitimacy of the WTO will be defending China’s position in this case."
Department of Commerce Criteria for Determining MES:
In order to earn the MES designation, China must meet six specific criteria. China meets none. The Department of Commerce's criteria are:
1. Is China’s currency convertible into the currency of other countries?
2. Are wages of Chinese workers determined by free bargaining between labor and management?
3. Are foreign companies or joint ventures free to make investments in the Chinese market?
4. Is China’s economy free of government ownership and/or control over the means of production?.
5. Is China’s economy free of government control over the allocation of resources and price and output decisions of companies?
6. Does China operate on the global trade stage in a transparent manner?