Europe must not let itself be guided by fear

Members of the European Parliament take part in a voting session in Strasbourg, France, April 12, 2016. [Photo/Agencies]

Semantics are often the cause of misunderstandings, and this is true of the debate in the European Union over whether or not to grant China market economy status.

When China joined the World Trade Organization in 2001, it agreed to a 15-year transitional period during which other WTO members were allowed to apply the "nonmarket economy methodology" in anti-dumping procedures concerning China.

Under this methodology, the trade officials of the EU Commission are entitled to estimate by analogy the domestic production cost and prices of export products, instead of basing their investigation on domestic market prices.

The Chinese government argues that when the transitional period ends on December 11, 2016, the trade officials from the Commission will no longer be entitled to apply the nonmarket economy methodology.

Conversely, some lawyers argue that until the other WTO members grant market economy status to China in their national legislation, their anti-dumping investigators can continue to use the nonmarket economy methodology. That, in a nutshell, is what the whole China market economy status debate is about.

The interpretation of the WTO agreement could be tested in a dispute settlement procedure. But is this advisable? Let us not forget the political and symbolic dimensions of the debate. According to the Mission of China to the EU, more than 80 countries, including New Zealand, Australia, Peru, Chile and Association of Southeast Asian Nations countries, have already granted China market economy status. Their choice was primarily dictated by political reasons, including the conclusion of free trade agreements.