Global Trade and Customs Journal

Volume 12 (2017)

Volume 12 (2017) / Issue 9

Fernando González-Rojas, 'All Parts Should Have Meaning: A Proposal on the Correct Interpretation of section 15(a) & (d) of China’s Protocol of Accession' (2017) 12 Global Trade and Customs Journal, Issue 9, pp. 328–343

Abstract

For almost six years, there has been a heated legal debate about the correct interpretation of section 15 of China’s Protocol of Accession to the World Trade Organization (WTO). In essence, this discussion turns around one crucial question: what are the legal effects of the single sentence in that protocol, commonly known as the ‘sunset clause’? This particular sentence establishes that a certain provision in section 15 that expressly allowed for the use of non-Chinese prices or costs during normal value calculations was due to expire fifteen years after China acceded to the WTO, namely, on 11 December 2016. According to some experts, the effect of the sunset clause was transforming China into a market economy and consequently, forcing other WTO Members to use Chinese prices or costs during their investigations. On the contrary, some other scholars believe that non-Chinese prices or costs may continue to be used, even though the specific paragraph that expressly granted such permission has already expired. This confrontation has not been resolved yet, since both trends of thought have offered explanations that render certain provisions in section 15 inutile.

This article offers a solution to this problem. It proposes that the backbone of section 15 is a rebuttable presumption that China is a nonmarket economy (NME) and that this presumption subsists until today. The legal basis for this presumption is the language in section 15 of China’s Protocol that was not terminated by the sunset clause. This same language also allows the investigated exporters to rebut that presumption, forcing the investigating authority to calculate the normal value of the Chinese exports, based on Chinese prices or costs. However, if this presumption is not refuted, the investigating authority may rely on non-Chinese prices or costs, but only to the extent that it complies with the requirements mandated by Article VI of the General Agreement on Tariffs and Trade (the GATT) and the WTO Anti-Dumping Agreement (ADA). The persistence of the NME presumption plays a role in demonstrating compliance with those requirements. Nevertheless, since the language in section 15 that provided for such automatic authorization has already expired, the NME presumption does not automatically authorize the use of non-Chinese data, as it was the case before 11 December 2016.

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ISSN: 1569-755X
ID: GTCJ2017045