The 15-year hitch: A pact from 2001 stirs trouble between China and the West, and between America and Europe

7 May 2016 / The Economist weighs in on the debate on China's market economy status (MES), which China argues should be granted automatically in December 2016. This argument is based on the expiry of a part of China's WTO Accession Protocol, which the Economist describes as follows:

"Article 15 provides that if Chinese producers can prove that market conditions prevail in their industry, then the importing country has to use Chinese prices as a comparison. And, it goes on, “in any event” the non-market presumption will expire 15 years after China’s accession—ie, on December 11th 2016. It amounts, says China, to a guarantee of market status by that date. That is not, however, what the agreement says. Rather, it says that importing countries will lose the right automatically to treat China as a non-market economy for anti-dumping purposes. That is not the same as according it full market status under their domestic laws."

And while the legal interpretation is under debate, everyone agrees that China remains a non-market economy. Although China agreed to market-oriented reforms in 2001, it fails to meet four out of the EU's five criteria for being considered a market economy.

The Economist further warns that the US is unlikely to grant China MES, and should the EU decide differently, it would widen an "already worrying rift" in the transatlantic alliance.

Read the article in full here.