Winton Dong

    dht620@sina.com

    BASED on Article 15 of the accession protocol signed when China officially joined the World Trade Organization (WTO) on Dec. 11, 2001, China’s market economy status should have been recognized and the surrogate country approach should have expired on Dec. 11, 2016, 15 years after its entry into the organization.

    However, the United States and the European Union denied the status and continue to use the approach in anti-dumping investigations against China even after the expiration date. The surrogate country approach is a special system used by Western countries to judge whether “the countries of non-market economy” dump their exporting products and determine the dumping margins.

    On Jan. 9 this year, the United States published a report criticizing that China had not fully fulfilled its duties after its entry into the WTO in 2001. The Chinese Ministry of Commerce disagreed and refuted that instead of pumping the brakes, the U.S. side could inject more positive energy into bilateral trade. The United States and European Union are two of the biggest trading partners of China. Their continuation of such a surrogate country system will surely damage the interests of all three parties in the long run because it has rejected the method for determining a fair market price.

    Instead of exchanging abuses with the other two parties concerned, China has requested the Secretariat of the WTO to have dispute consultations with the U.S. and EU regarding special calculation methodologies in anti-dumping cases. Under WTO rules, if the consultation can not find a satisfactory solution, as the complainant, China has the right to go further with litigation and even apply trade retaliation measures.

    In my point of view, compared with waging a trade war, litigation has many advantages and is a much better way to solve business disputes between or among different countries.

    Firstly, after accumulating years of experience, China is now quite familiar with the rules and regulations of the WTO. According to official statistics, China was involved in a total of 1,123 anti-dumping cases from 1995 to 2015 and always served as the defendant in those lawsuits. However, the country has successfully reversed its position and has turned from the accused to the accuser this time.

    Secondly, a positive and active response from the Chinese Government will form an amiable international public opinion for us. Some Western countries always want to use the market economy status as a special card to bargain with China and get more benefits. To their disappointment, China’s request of consultation and litigation by the WTO will dampen their hope of doing so.

    Thirdly, commercial lawsuits are very costly and unaffordable for many small- and medium-sized firms. If the Chinese Government can actively sue and cover the expensive legal fees, it will greatly reduce the burden of enterprises involved in similar cases. For instance, based on Section 337 of Tariff Act of 1930, the U.S. International Trade Commission has several times now investigated two Chinese high-tech companies, namely Huawei and ZTE, for alleged infringement of intellectual property rights. Despite the fact that the two Shenzhen-based companies finally won the lawsuits, they spent more than US$200 million to prepare for and answer the investigations.

    Fourthly, with the world economy still on a bumpy road of recovery after the 2008 financial crisis, trade frictions and trade protectionism are now rampant in Western countries. Instead of escalating tensions, litigation will help defuse tense situations and avoid conflicts since a final adjudication by the WTO will give a guideline for both the plaintiff and the defendant to follow.

    Last but not least, though it is unfair for China to be treated as a non-market economy, it is still understandable for Western countries to deny China’s market economy status. Recognition of such a status now will be a deadly blow to their employment, economy and even social stability. Generally speaking, a WTO lawsuit takes at least three years to finish. A time-consuming litigation will give Western nations a buffer time to transform their industrial structure and lower production costs, so as to make their products more competitive in international markets.

    Since its establishment in 1995, the WTO has accepted and handled about 500 cases. Among them 119 cases (almost 24 percent) are now in dormant conditions because they surpass the five-year limitation period of action. No matter what the result may be, winning or losing the litigation, this is a great step for China to go forward.

    (The author is the editor-in-chief of the Shenzhen Daily and guest professor of Shenzhen University with a Ph.D. from the Journalism and Communication School of Wuhan University.)