{"id":184271,"date":"2016-08-30T10:30:59","date_gmt":"2016-08-30T14:30:59","guid":{"rendered":"https:\/\/irpp-policy-options.local\/issues\/china-and-the-market-economy-question\/"},"modified":"2025-04-14T04:22:26","modified_gmt":"2025-04-14T08:22:26","slug":"china-and-the-market-economy-question","status":"publish","type":"issues","link":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/","title":{"rendered":"China and the market economy question"},"content":{"rendered":"

China’s latest push to be granted market economy status (MES) under World Trade Organization (WTO) rules could become an irritant in Sino-Canadian relations. The issue threatens to stand in the way of a bilateral free trade deal that could create an estimated<\/a> 25,000 domestic jobs and increase Canadian exports by CAD $7.7 billion<\/a> by 2030.<\/p>\n

When China joined the WTO in 2001, Section 15 of China\u2019s Accession Protocol allowed members to treat China as a non-market economy<\/a> (NME) for a period of fifteen years to protect domestic producers from low-cost Chinese imports. A special provision was created that allowed WTO members to use anti-dumping tariffs \u2013 known as non-market economy (NME) methodologies \u2013 on Chinese goods being sold at unfair prices. This provision expires on December 11, 2016.<\/p>\n

While the United States and the European Union have had heated policy debates over China’s market economy status, the same discussion has been fairly muted in Canada. Part of this is because Canada has applied a caveat that allows it to ignore the expiration of the NME provisions in 2016. Under Canadian law, China and Vietnam are the only two countries that are targeted for anti-dumping practices under Section 20 of the Special Import Measures Act<\/a> (SIMA). Although Canada adopted a 15-year time frame under the Act in 2002, this was later repealed through a 2013 amendment<\/a> that allows Canada to extend anti-dumping tariffs.<\/p>\n

A recurring topic of debate<\/a> is whether China is actually a market economy. Skeptics \u2013 particularly those in affected industries and protectionists \u2013 argue that granting China MES would leave Canadian producers and manufacturers defenceless to a flood of cheap imports and unfair competition. Canada currently has anti-dumping duties in place through SIMA against eighteen products exported from China primarily in the steelmaking and solar panel sectors.<\/p>\n

These concerns are understandable. By its own admission, China is struggling to deal with overcapacity<\/a> in a number of its industrial sectors \u2013 particularly in steel, coal, and aluminum \u2013 that have benefited from favourable subsidies and government intervention. But this discounts the fact that many other parts of China’s economy arguably function according to market principles, prices, and competition as witnessed by the remarkable growth of its private sector<\/a>.<\/p>\n

Prime Minister Justin Trudeau might decide that granting China market economy status at the WTO is worth the potential improvement in commercial relations.<\/p><\/blockquote>\n

The question of whether to grant China market economy status is as much political as it is economic. For Beijing, being recognized as a market economy is a matter of national prestige as much as it is a boon to its struggling exporters. But for Ottawa, conflating MES as a potential bargaining tool towards a bilateral free trade agreement with China would be a mistake. If Beijing is denied MES, it would mostly likely pursue its own legal challenge for what it views as a violation of existing WTO rules, regardless of any free trade negotiations between the two countries. That being said, Prime Minister Justin Trudeau might decide that granting China market economy status at the WTO is worth the potential improvement in commercial relations.<\/p>\n

Canada is not the only country weighing its options<\/a> on whether to recognize China as a market economy. While Australia, New Zealand, Singapore, and Switzerland have already granted China with MES, a number of major global economies including the United States, European Union, Japan, India, and Mexico have yet to come to a decision. In May 2016<\/a>, EU lawmakers in Brussels dealt a blow to China\u2019s bid for MES on grounds that there was no case for relaxing existing anti-dumping measures against Beijing.<\/p>\n

A closer reading of China\u2019s WTO accession suggests that the question of whether China is a market economy is irrelevant. The original section does not legally require Canada to name China as a market economy by 2016, but merely to end the use of NME methodologies. While Section 15 of the protocol allows for the NME provision to expire, it does not stipulate that Beijing should be automatically granted<\/a> market economy status afterward.<\/p>\n

This is where Canada needs to be clear. Rather than focusing on whether to grant MES to Beijing, Ottawa should honour its original 2002 commitment and repeal the anti-dumping amendments made to SIMA in 2013. More importantly though, it should act quickly to avoid setting a dangerous precedent with Beijing that it is acceptable behaviour to break previous agreements.<\/p>\n

Applying anti-dumping tariffs on all Chinese products will hardly alleviate Canadian concerns with market distortions or other unfair practices from China. By the same token, Ottawa should send a clear message that Beijing’s overcapacity problems are not to be exported to Canada which threaten not only China’s own domestic economy but international markets as a whole. This could be done by establishing a similar process that the Americans have adopted through the Trade Preferences Extension Act<\/a> whereby alternative criteria for calculating duties is adopted in cases involving sectors where market distortions exist. Instead of adopting the NME provisions, a different approach may be to create a rigorous procedure that is compliant with WTO regulations.<\/p>\n

Mishandling the situation could lead to a considerable loss in credibility and have a detrimental impact on Canada\u2019s engagement with China for years to come. Whatever the current government decides, it serves as an early litmus test for a prime minister that has previously declared his party as ‘pro-trade’<\/a> and professed his desire to pursue deeper commercial relations<\/a> with Beijing.<\/p>\n

Photo: John Kwan \/ Shutterstock.com<\/p>\n

This article is part of the\u00a0Canada-China Relations Special Feature<\/a>.<\/strong><\/p>\n

 <\/p>\n

\n

Do you have something to say about the article you just read? Be part of the\u00a0<\/em>Policy Options\u00a0discussion, and send in your own submission.\u00a0Here is a\u00a0<\/em>link<\/em><\/a>\u00a0on how to do it. <\/em>|\u00a0Souhaitez-vous r\u00e9agir \u00e0 cet article ? <\/em>Joignez-vous aux d\u00e9bats d\u2019<\/em>Options politiques\u00a0et soumettez-nous votre texte en suivant ces\u00a0<\/em>directives<\/em><\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

China’s latest push to be granted market economy status (MES) under World Trade Organization (WTO) rules could become an irritant in Sino-Canadian relations. The issue threatens to stand in the way of a bilateral free trade deal that could create an estimated 25,000 domestic jobs and increase Canadian exports by CAD $7.7 billion by 2030. […]<\/p>\n","protected":false},"featured_media":33741,"template":"","meta":{"_acf_changed":false,"content-type":"","ep_exclude_from_search":false},"categories":[9362,9360],"tags":[8650],"article-status":[],"irpp-category":[4217,4243,4292],"section":[],"irpp-tag":[6970,7092],"class_list":["post-184271","issues","type-issues","status-publish","has-post-thumbnail","hentry","category-economie","category-international","tag-canada-china-fr","irpp-category-affaires-internationales","irpp-category-economy","irpp-category-global-affairs","irpp-tag-china","irpp-tag-chine"],"acf":[],"yoast_head":"\nChina and the market economy question<\/title>\n<meta name=\"description\" content=\"Deciding whether Canada should grant China with market economy status looms in the backdrop of a potential bilateral free trade deal.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/\" \/>\n<meta property=\"og:locale\" content=\"fr_FR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"China and the market economy question\" \/>\n<meta property=\"og:description\" content=\"Deciding whether Canada should grant China with market economy status looms in the backdrop of a potential bilateral free trade deal.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/\" \/>\n<meta property=\"og:site_name\" content=\"Policy Options\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/IRPP.org\" \/>\n<meta property=\"article:modified_time\" content=\"2025-04-14T08:22:26+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png\" \/>\n\t<meta property=\"og:image:width\" content=\"2000\" \/>\n\t<meta property=\"og:image:height\" content=\"700\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@irpp\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/\",\"url\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/\",\"name\":\"China and the market economy question\",\"isPartOf\":{\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png\",\"datePublished\":\"2016-08-30T14:30:59+00:00\",\"dateModified\":\"2025-04-14T08:22:26+00:00\",\"description\":\"Deciding whether Canada should grant China with market economy status looms in the backdrop of a potential bilateral free trade deal.\",\"breadcrumb\":{\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#breadcrumb\"},\"inLanguage\":\"fr-FR\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"fr-FR\",\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#primaryimage\",\"url\":\"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png\",\"contentUrl\":\"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png\",\"width\":2000,\"height\":700},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/potestlaunch.irpp.org\/fr\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Ao\u00fbt 2016\",\"item\":\"https:\/\/potestlaunch.irpp.org\/fr\/2016\/07\/aout-2016\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"China and the market economy question\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/#website\",\"url\":\"https:\/\/potestlaunch.irpp.org\/fr\/\",\"name\":\"Policy Options\",\"description\":\"Institute for Research on Public Policy\",\"publisher\":{\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/potestlaunch.irpp.org\/fr\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"fr-FR\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/#organization\",\"name\":\"Policy Options\",\"url\":\"https:\/\/potestlaunch.irpp.org\/fr\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"fr-FR\",\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2024\/11\/PolicyOptions_Logo.png\",\"contentUrl\":\"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2024\/11\/PolicyOptions_Logo.png\",\"width\":1200,\"height\":365,\"caption\":\"Policy Options\"},\"image\":{\"@id\":\"https:\/\/potestlaunch.irpp.org\/fr\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/IRPP.org\",\"https:\/\/x.com\/irpp\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"China and the market economy question","description":"Deciding whether Canada should grant China with market economy status looms in the backdrop of a potential bilateral free trade deal.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/","og_locale":"fr_FR","og_type":"article","og_title":"China and the market economy question","og_description":"Deciding whether Canada should grant China with market economy status looms in the backdrop of a potential bilateral free trade deal.","og_url":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/","og_site_name":"Policy Options","article_publisher":"https:\/\/www.facebook.com\/IRPP.org","article_modified_time":"2025-04-14T08:22:26+00:00","og_image":[{"width":2000,"height":700,"url":"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png","type":"image\/png"}],"twitter_card":"summary_large_image","twitter_site":"@irpp","twitter_misc":{"Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/","url":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/","name":"China and the market economy question","isPartOf":{"@id":"https:\/\/potestlaunch.irpp.org\/fr\/#website"},"primaryImageOfPage":{"@id":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#primaryimage"},"image":{"@id":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#primaryimage"},"thumbnailUrl":"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png","datePublished":"2016-08-30T14:30:59+00:00","dateModified":"2025-04-14T08:22:26+00:00","description":"Deciding whether Canada should grant China with market economy status looms in the backdrop of a potential bilateral free trade deal.","breadcrumb":{"@id":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#breadcrumb"},"inLanguage":"fr-FR","potentialAction":[{"@type":"ReadAction","target":["https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/"]}]},{"@type":"ImageObject","inLanguage":"fr-FR","@id":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#primaryimage","url":"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png","contentUrl":"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2016\/08\/WordPress-Image-made-in-china.png","width":2000,"height":700},{"@type":"BreadcrumbList","@id":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/08\/china-and-the-market-economy-question\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/potestlaunch.irpp.org\/fr\/"},{"@type":"ListItem","position":2,"name":"Ao\u00fbt 2016","item":"https:\/\/potestlaunch.irpp.org\/fr\/2016\/07\/aout-2016\/"},{"@type":"ListItem","position":3,"name":"China and the market economy question"}]},{"@type":"WebSite","@id":"https:\/\/potestlaunch.irpp.org\/fr\/#website","url":"https:\/\/potestlaunch.irpp.org\/fr\/","name":"Policy Options","description":"Institute for Research on Public Policy","publisher":{"@id":"https:\/\/potestlaunch.irpp.org\/fr\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/potestlaunch.irpp.org\/fr\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"fr-FR"},{"@type":"Organization","@id":"https:\/\/potestlaunch.irpp.org\/fr\/#organization","name":"Policy Options","url":"https:\/\/potestlaunch.irpp.org\/fr\/","logo":{"@type":"ImageObject","inLanguage":"fr-FR","@id":"https:\/\/potestlaunch.irpp.org\/fr\/#\/schema\/logo\/image\/","url":"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2024\/11\/PolicyOptions_Logo.png","contentUrl":"https:\/\/potestlaunch.irpp.org\/wp-content\/uploads\/2024\/11\/PolicyOptions_Logo.png","width":1200,"height":365,"caption":"Policy Options"},"image":{"@id":"https:\/\/potestlaunch.irpp.org\/fr\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/IRPP.org","https:\/\/x.com\/irpp"]}]}},"_links":{"self":[{"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/issues\/184271","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/issues"}],"about":[{"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/types\/issues"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/media\/33741"}],"wp:attachment":[{"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/media?parent=184271"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/categories?post=184271"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/tags?post=184271"},{"taxonomy":"article-status","embeddable":true,"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/article-status?post=184271"},{"taxonomy":"irpp-category","embeddable":true,"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/irpp-category?post=184271"},{"taxonomy":"section","embeddable":true,"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/section?post=184271"},{"taxonomy":"irpp-tag","embeddable":true,"href":"https:\/\/potestlaunch.irpp.org\/fr\/wp-json\/wp\/v2\/irpp-tag?post=184271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}