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Argentina signals granting of market economy status to China
The market economy status of China has been a hotly debated issue in Argentina over the past years. In 2004, the country signed a Memorandum of Understanding (MoU) recognizing China as a market economy. This memorandum was never ratified by the Argentinean Congress, which raised questions about its enforceability in trade remedies investigations.
However, on a new antidumping investigation regarding imports of ceramic sanitary ware (NCMs 6910.10.00 and 6910.90.00), initiated May 19th, 2017, Argentina’s Trade Secretariat of the Ministry of Production granted China a de facto market economy status. The Resolution 396-E/2017, which initiated the investigation, states that in order to calculate the normal value of Chinese products the national authority “shall consider sales prices in the People’s Republic of China domestic market.” This marks a clear departure from the Trade Secretariat’s established practice of using a third-country as a reference to calculate the normal value of Chinese products, as opposed to using the internal market prices.
This recognition came less than one year after Argentina’s ambassador in China Diego Guelar declared in a G20 summit on September 2016 that “China has fulfilled WTO’s conditions and must be considered a free market economy, because 60% of its economy is totally private”. In addition, Argentine president Mauricio Macri has recently signed investment and financing agreements for USD 15 Billion with Chinese president Xi Jinping, including areas such as railways and nuclear energy.
Nevertheless, it is still unclear whether China will be granted a definitive market economy status, since no definitive official position has been taken. President Mauricio Macri is currently facing mounting pressure from domestic industry associations, such as the UIA (Argentine Industrial Union). Furthermore, Minister of Production Francisco Cabrera has acknowledged during a meeting of the Council of Production in 2016 that the recognition of China’s market economy status was not yet decided.
International Trade Team
Mattos Engelberg Advogados