Congressman Dan Lipinski (IL-3) is leading a bipartisan group of more than 50 members of Congress in urging the Obama Administration to stop China from being granted market economy status (MES), which would be a disaster for American workers.  When China joined the World Trade Organization (WTO) in 2001, a provision was put in place labeling China as a non-market economy, which allows the United States to implement significant anti-dumping duties to protect American companies from unfair Chinese trading practices.  China has stated that it believes this provision expires at the end of this year.

“We understand that some argue that [Article 15 of China’s Protocol of Accession to the WTO] obligates granting China market economy status for the purposes of calculating anti-dumping duties.  However, there are strong arguments that this provision creates no such obligation,” stated Rep. Lipinski and his colleagues in a letter to United States Trade Representative Ambassador Michael Froman and U.S. Secretary of Commerce Penny Pritzker.  “The anti-dumping law is a vital tool to ensure that unfairly priced Chinese imports do not injure U.S. companies and workers.  This unfair trade is often due to Chinese production overcapacity, particularly in the steel and aluminum industries, and has had harmful effects on U.S. producers.  Any consideration of the implications of the December 11, 2016, deadline must be consistent with U.S. law and should reflect the importance of effectively addressing unfairly priced Chinese imports.” 

During last Thursday’s State of Steel Hearing in Washington, D.C., Congressman Lipinski reiterated the potential widespread economic harm that could transpire in the event that China is granted MES.  At the hearing, industry stakeholders said that granting China market economy status would have a devastating impact on American steel, aluminum, and other commodity industries. 

“China continues to utilize market-distorting tactics such as limitations on market access, export subsidies, state-owned enterprises, and import controls to support its own firms to the detriment of the global economy,” said Rep. Lipinski and his colleagues in a separate letter to Ambassador David O’Sullivan, Head of the Delegation of the European Union to the United States.  “Additionally, China continues to manipulate its currency in order to promote exports.  China’s policies continue to protect its state-controlled local firms from international competitors, at the expense of the United States and the European Union.  Based on these policies, China does not operate as a market economy.  Given that the U.S. and the European Union are currently in negotiations on a new trade deal, it is important to consider a universal approach to China’s trade and economic policies.  The European Union should reject granting MES to China, and to similarly reject any proposal to use China’s own prices and costs in anti-dumping calculations.”