The US has finally issued a formal rebuke of China’s bid to be treated under World Trade Organization rules as a market economy, filing a brief on Wednesday as a third party in a case brought against the European Union, according to multiple media reports.
Trump administration officials have made no secret about where they stand on the issue, but this was the first official decision submitted to the WTO. It also comes as the White House is hoping to enlist Beijing’s help on a new set of sanctions for North Korea.
China argues in the case that under the agreement granting it membership in the WTO, other member countries were automatically required to treat China as a market economy after the fifteenth anniversary of its accession. The US and EU both disagree, arguing that China still has to meet specific criteria before the change could be made.
Under the classification of nonmarket economy, China is subjected to special rules allowing other members to determine whether it is selling products at an unfairly low price. Should China succeed in the case, it would make it harder for the US and the EU to levy antidumping duties against China, and may accelerate the pace at which the Trump administration seeks to undermine the WTO.
The top US trade official, Robert Lighthizer, told the Sentate in June that this case “is the most serious litigation matter we have at the WTO right now,” as recounted by the New York Times.
Lighthizer said he had “made it very clear that a bad decision” on China’s status “would be cataclysmic for the WTO.”
The filing by the US comes after China said Wednesday it was “strongly dissatisfied” with a US Commerce Department announcement this week on an antidumping investigation into Chinese aluminum.
While the US appears to be letting loose on the China trade front, a promised new round of sanctions on North Korea, which Trump presumably has discussed with Xi, still hasn’t materialized. Trump vowed more sanctions after speaking with Xi by phone on Wednesday, and the White House press secretary stressed that additional sanctions would be coming “very shortly.”
With the North Korea situation seeming to spiral out of anyone’s control, except perhaps Kim Jong-un’s, one might easily come to the conclusion that Trump’s offer to Xi last April is all but off the table:
I explained to the President of China that a trade deal with the U.S. will be far better for them if they solve the North Korean problem!
— Donald J. Trump (@realDonaldTrump) April 11, 2017