From ‘Non-market Economy’ to ‘Significant Market Distortions’: rethinking the EU anti-dumping regulation and China’s state interventionism

Abstract

This article questions the consistency of the EU antidumping regulation with the WTO Antidumping Agreement. It argues that with the expiry of paragraph 15 (a) (ii) on 11 December 2016, China’s WTO Accession Protocol may no longer provide the legal basis for the EU to set aside Chinese domestic prices in determining normal value of Chinese products. Moreover, given that the European Commission has consistently used costs that are not actual costs of Chinese producers in constructing normal value of Chinese products, the EU antidumping practice runs the risk of being inconsistent with WTO law since the WTO Antidumping Agreement does not allow for such flexibility when determining costs of production in the exporting country. Drawing on Jackson’s interface theory, this article further argues that the EU’s introduction of the new concept “significant market distortions” to antidumping practices should be conceptualized as an effort to reconstitute alternative interface mechanisms when old ones are no longer applicable. The dubious legality of the EU’s new antidumping regulation is simply a symptom of a long-brewing tension in the multilateral trade system: how can the WTO accommodate systemic friction between heterogeneous economic models?