TRADE, LAW, AND DIPLOMACY: CHINA’S NON-MARKET ECONOMY STATUS

This Article presents an in-depth exploration of one of the most intricate systemic challenges confronting the global economy: the controversial non-market economy (NME) status of China. This issue, while primarily economic, has far-reaching implications extending into the realm of international politics, shaping the dynamics of global trade relations. Despite China’s transition to a market economy post-2016, several countries, including the United States and EU, continue to categorize it as an NME, thus impacting anti-dumping duty calculations via surrogate country methods. Adopting a rigorous law and economics framework, this study provides a comprehensive legal analysis of the World Trade Organization (WTO) rules related to the continuance of China’s NME status post-2016. This Article also explores the consequent effects on international disputes over antidumping, subsidies, and countervailing measures involving China.

A robust methodology forms the backbone of this research, with a novel application of game theory modeling, offering crucial insights into the potential future patterns of NME clause invocations against China by different global economies. The findings underscore that irrespective of China’s NME status, other countries, especially the United States, are well-equipped with a range of trade remedy measures to maintain a certain “special treatment” against China. The empirical analysis, based on an extensive data set, reveals a transformative trend in the anti-dumping disputes lodged at the WTO against China in the post-2016 period. A significant reduction in arbitrary investigation initiations and an uptick in expiry (of the measure) without review suggest a strategic shift in national responses to the evolving NME discourse.

© 2024, Julien Chaisse, Debashis Chakraborty, and Oindrila Dey.