Will China Make the Cut for “Market Economy” status?
Leading U.S. trade associations has formed a group in Virginia, U.S.A very recently & announced the formation of a new coalition by the name Manufacturers for Trade Enforcement (MTE), to thwart out China’s designation as a market economy by the end of 2016.
The Aluminum Association based in Virginia, on its website, www.aluminum.org ,- announced that “China has claimed that it should be automatically accorded treatment as if it were a market economy after the 15th anniversary of its accession to the World Trade Organization (WTO) in December 2016. U.S. law requires that the Department of Commerce make a market economy status (MES) determination based on established criteria, which many experts agree that China has not met.”
The Aluminum Association is one of eight current groups that have teamed together to voice opposition to the automatic granting of MES for China by the end of 2016.
“Our industries can compete against any other market-oriented competitors, but we cannot compete against the Chinese government,” says Heidi Brock, president and CEO of the The Aluminum Association. “The Chinese economy does not meet the basic requirements set forth by U.S. statutes and the Department of Commerce for a functioning market economy, and we will work together in this coalition to speak loudly, and with one strong voice, to prevent China from gaining a status that it does not yet deserve.”
The eight groups who have united in their opposition to MES for China include: Alliance for American Manufacturing (AAM), Washington; The Aluminum Association, American Fiber Manufacturers Association (AFMA), Arlington, Virginia; American Iron and Steel Institute (AISI), Washington; Narrow Fabrics Institute (NFI), Roseville, Minnesota; National Council of Textile Organizations (NCTO), Washington; PET Resin Association, New York; and U.S. Industrial Fabrics Institute (USIFI), Roseville, Minnesota.
These above mentioned organizations represent 800,000 direct manufacturing jobs in the U.S. The Aluminum Association voiced a pertinent issue saying that, granting market economy status to China would put many of these jobs at risk by limiting U.S. manufacturers’ ability to seek remedies for unfair trade practices by Chinese firms.
“The unfortunate reality is China continues to be a state-run economy in many respects, creating an unlevel playing field for manufacturers here at home,” says Thomas J. Gibson, president and CEO of AISI. “What we are calling for is a fair and accurate assessment of the Chinese economy—and we believe, that will show that market economy status for China is not warranted at this time.”
Paul O’Day, president of the American Fiber Manufacturers Association, adds, “China has not taken appropriate steps over the past decade to warrant market economy status. Granting MES to China would not only violate global trade rules but also put a huge number of domestic manufacturing jobs at risk.”
State support of domestic manufacturing in China has totally distorted global markets, leading to significant oversupply and other issues that are hurting domestic manufacturers, according to The Aluminum Association. In the aluminum industry alone, eight U.S.-based aluminum smelters have curtailed or closed since the beginning of 2015, representing more than 60 percent of U.S. primary aluminum capacity and impacting more than 3,000 workers. In November, the AISI presented research performed by the North American Free Trade Agreement (NAFTA)-region economists demonstrating the negative impact to the steel industry and related industries in North America of granting China market economy status before China has made the necessary market-oriented reforms to its economy.
According to MTE’s position statement, “Fair international competition and a level playing field are essential for the global competitiveness of U.S. manufacturers. Effective and predictable trade enforcement mechanisms must include the accurate assessment of and response to distortions from state-run or other nonmarket economies, which risk endangering U.S. jobs and the economy.”
MTE (Manufacturers for Trade Enforcement) is a coalition of leading U.S. manufacturing associations united in opposing China’s request to automatically grant MES for the country at the end of 2016. U.S. law requires that the Department of Commerce make a MES determination based on established criteria, which China has not met. MTE affirms that, State support of domestic manufacturing in China has distorted global markets, hurting domestic manufacturers.
China, however believes that it is entitled to market economy status as of Dec. 11, which is the 15th anniversary of its entry into the World Trade Organization. But as that date approaches, the United States and many other governments are taking the position, the upgrade is not automatic. The declaration would require the Commerce Department to change how it calculates Chinese “dumping” and could lead to significantly lower duties on steel and other products.
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Thus far, there’s no sign whatsoever that Obama is going to short-circuit the Commerce Department’s process for determining whether a country is a market economy. But the domestic manufacturers said they want to go on record with a united voice. “What we are calling for is a fair and accurate assessment of the Chinese economy — and we believe that will show that market economy status for China is not warranted at this time,” said Tom Gibson, president and CEO of the American Iron and Steel Institute.