U.S. Commerce Department to launch China market economy review

WASHINGTON (Reuters) - The U.S. Commerce Department is launching a new review of whether China should be treated as a market economy country, a designation that would effectively limit the calculation of anti-dumping duties on China-made goods.

FILE PHOTO: The seal of the Department of Commerce is pictured in Washington, D.C., U.S. March 10, 2017. REUTERS/Eric Thayer

Buried in a federal notice on Wednesday about an investigation into alleged dumping of Chinese aluminum foil into the U.S. market, the department said it is seeking public comments on China’s non-market economy status.

The review comes as the White House prepares for the first face-to-face meeting between President Donald Trump and China’s President Xi Jinping on April 6-7 at Trump’s Mar-a-Lago retreat in Florida.

China’s non-market economy status is considered an irritant for Beijing as the Trump administration works on trade policies aimed at reducing the flow of Chinese imports in to the United States.

When China joined the World Trade Organization in 2001, its accession terms allowed other WTO members to treat it as a non-market economy and use a third country’s prices to assess whether Chinese goods were being sold below cost.

But part of that clause expired on Dec. 11, 2016, which China says means WTO trading partners must drop their use of such surrogate pricing, which has led to higher U.S. anti-dumping duties on imported Chinese goods.

The United States and European Union failed to change their view of China’s status. A day later, Beijing launched a formal complaint against them before the WTO.

The Commerce Department last conducted a review of China’s non-market economy status in 2006, determining that China failed on all six determining criteria, which are:

* the extent to which the country’s currency is convertible into other currencies;

* the extent to which wage rates are determined by free bargaining by labor and management;

* the extent to which joint ventures or other investments by foreign firms are permitted in the country;

* the extent of government ownership or control of the means of production;

* the extent of government control over allocation of resources and over price and output decisions of enterprises, and

* other factors the administering authority considers appropriate.

Reporting by David Lawder, editing by G Crosse