backReports from Australia were coming out this week on the detrimental impact on national industries from the Governments decision to grant China market economy status in 2004. Local steel and aluminum producers, backed by a report from the McKell Institute, a progressive research institute, argue they are being severely damaged by dumped products from China.
Australia granted China market economy status in April 2005, and is among a small group of WTO Members that have unilaterally chosen not to apply a non-market economy methodology to Chinese imports in anti-dumping investigations.
Under standard WTO rules, dumping is calculated by comparing export price and normal value (either the domestic price or cost of production, plus profit) of the product at issue in the exporting country. However, given the heavy state-interference in the Chinese economy, China agreed when acceding to the WTO in 2001 to allow the other WTO Members, in investigations concerning Chinese imports, to calculate dumping by comparing the export price with, for example, a reference value in a third country that is a market economy.
It is generally considered that the result of using third-country reference prices as opposed to prices in China is higher dumping margins. Therefore, Australias decision to unilaterally grant China market economy status effectively diminished the protection for its national industries against dumped imports from China.