Replacing the Non-Market Economy Methodology: Is the European Union's Alternative Approach Justified Under the World Trade Organization Anti-Dumping Agreement?

Abstract

The European Commission has announced that it would issue a proposal to amend the European Union (EU) anti-dumping regulation to tackle the forthcoming expiry of the provision in China’s Protocol of Accession to the World Trade Organization (WTO) which allows WTO Members to derogate from the WTO rules on dumping determinations against imports from China. The proposal will include the removal of the ‘non-market economies’ (NME) list, which justifies the use of the ‘analogue country’ methodology, and the adoption of a new, country-neutral methodology to ‘capture distortions linked to State intervention’. This article analyses the consistency of this alternative approach to NME conditions with the WTO anti-dumping rules. It argues that the EU’s approach may amount to a continuous treatment of China as a NME for anti-dumping purposes. Such an approach, however, finds no legal basis under the WTO Antidumping Agreement which does not concern any government intervention per se but concerns a proper comparison between export price and normal value. Moreover, should normal value be constructed, the investigating authority shall take into account costs actually incurred by exporters. It follows that an investigating authority cannot use the WTO anti-dumping rules to sanction all forms of State intervention that results in lower export prices.