China Won't Be Granted Market Economy Status, U.S. Senior Official Says -- Update
December 09 2016 - 6:01PM
Dow Jones News
By Ian Talley
WASHINGTON -- The Obama administration has decided it won't
grant China the official market-economy status Beijing thinks it
deserves, a move sure to raise tension, as China pushes the U.S.
and other countries to ratchet down import tariffs.
China contends Washington and other members of the World Trade
Organization should grant it market-economy status on Sunday, the
15th-anniversary of its WTO accession, under the terms of its
joining the group.
But the Obama administration disagrees. "The U.S. is not
changing China's status as a non-market-economy," a senior U.S.
administration official said in an interview. "China's protocol of
accession to the WTO doesn't require the U.S. or any other WTO
member to automatically grant China market-economy status after
December 11 2016."
Market-economy status can dramatically lower tariffs WTO members
can apply in cases charging another country with violating trade
terms.
The incoming Donald Trump White House isn't likely to reverse
the Obama administration's decision, given the president-elect and
his transition team have said they plan to place higher tariffs on
Chinese imports, blaming Beijing for many of the American economy's
ailments.
Mr. Trump, at a rally in Iowa on Thursday, said: "China is not a
market economy." He cited alleged dumping of artificially low-price
goods on the U.S. market and theft of intellectual property by
Chinese companies. "They haven't played by the rules, and they know
it's time that they're going to start," he said.
Meanwhile, the Obama administration says China must formally
file a case challenging U.S. treatment, something Beijing has yet
to do.
Even though the senior Obama administration official said the
U.S. would have to decide on the merits of a challenge, the person
signaled Washington wouldn't likely change its outlook. "If China
wants to benefit from treatment as a market-economy country, it
must change its own practices to let the market play a decisive
role in the economy," the official said.
Tension between the U.S. and China has been elevated in recent
years over a host strategic and economic issues. The Obama
administration has filed scores of anti-dumping and counter-valuing
duties on Chinese imports, from shrimp to steel to solar cells.
"Maintaining China's status as a nonmarket economy is yet another
step in the Obama administration's vigorous enforcement of trade
laws against China and holding China to its WTO commitments," the
senior official said.
But since Mr. Trump has put China in his trade-policy
crosshairs, those strains are expected to intensify.
Although China's leadership has said in recent years that it
plans to make its economy more market-driven, U.S. officials and
companies complain Beijing has in many cases made things more
difficult.
China's state-owned enterprises are still deeply integrated in
nearly every aspect of the country's economy and international
acquisitions. U.S. companies complain government subsidies give
Chinese firms an unfair advantage. That behavior by the Chinese has
led to one of the biggest trade frictions in recent years: China's
huge excess steel production capacity that is pushing down prices
globally.
Officials in Washington are also frustrated about the lack of
access for U.S. investment in China. "China's failure to take
action and in some ways becoming even less open, has given rise to
increased trade frictions and has led to global firms to question
their ability to succeed in that market," the official said.
Write to Ian Talley at ian.talley@wsj.com
(END) Dow Jones Newswires
December 09, 2016 17:46 ET (22:46 GMT)
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