The European Commission will debate the market- economy status of China on July 20, and China's steel overcapacity will be a factor involved in the debate, European Council President Donald Tusk said at a news conference in Beijing on Wednesday.
"The Commission is finalizing an impact assessment of the consequences entailed by the end of Article 15 of the WTO accession agreement with China," Tusk said at the conference.
At an EU-China business summit on Wednesday, Chinese President Xi Jinping said China hopes the EU will carry out its obligations as delineated in Article 15 as scheduled, the Xinhua News Agency reported.
"Article 15 says that all WTO members should stop following replacing country measures in anti-dumping cases. Based on these rules, importers can use production costs incurred in a third country to define the value of exports from a nonmarket economy when calculating the dumping margin," explained Jin Bosong, a researcher at the Economic Cooperation Research Institute of the Chinese Ministry of Commerce.
"Once the EU recognizes the market-economy status of China, importers will not need a third country to calculate the exporter's dumping margin, which gives the EU no excuse to accuse China of dumping anymore," said Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation.
According to Euler Hermes, the world's leading provider of trade-related credit insurance, the eurozone will lose 7 billion euros ($7.76 billion) if China is admitted as a market economy. However, the Washington-based Economic Policy Institute claimed 3.5 million people will lose their jobs if China does not get market-economy status.
Tusk also emphasized the link between steel overcapacity in China and the country's market-economy status.
"The overcapacity of China is exactly twice the entire steel production of Europe, which is demonstrating what kind of problem we have to face."
He noted that a joint platform for "verification and monitoring mechanisms" will be formed between China and the EU to inform ongoing debates related to steel overproduction.
Chinese Premier Li Keqiang, speaking at the summit on Wednesday, said that China is committed to market reforms and is determined to tackle a glut in steel capacity that has sharpened tensions.
Steel overcapacity is a global problem because the economy is getting weak, demand is shrinking and China is conducting structural reform,thus compressing its capacity, said Bai, adding that there should be no connection between steel overcapacity and discussions of market-economy status because overcapacity is precisely the result of market economy mechanisms.