China: Market Economy Status

Debate between Baroness Falkner of Margravine and Lord Price

Monday 9th May 2016 Lords Chamber

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government what is their policy on the European Union granting market economy status to China.

[The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Price) (Con)]

I thank the noble Baroness for her Question. The Government believe it is important that WTO members meet their obligations. China’s 2001 protocol of accession to the WTO removes certain provisions after 15 years, so countries may need to grant China market economy status when conducting anti-dumping investigations. We recognise there are real concerns about this. We are committed to discussing implementation of the protocol’s requirements with our international partners and look forward to the European Commission’s proposals in this area.

[Baroness Falkner of Margravine (LD)]

I welcome the Minister to his role. He will be aware that several studies show that if China were granted market economy status, it could reduce Europe’s GDP by 1% to 2% and reduce total output by up to €220 billion per annum. It is not a straightforward matter. I suggest to the Minister that he is legally allowed, under Article 15(d) of China’s WTO accession plan, to put the onus on Chinese manufacturers to prove that they do not benefit from state aid or manipulation of currency policy. When he is having discussions with other EU member states, will he suggest to them that this compromise is perhaps the way forward, rather than kowtowing to the Chinese Government in a self-defeating way for British manufacturing and jobs?

[Lord Price]

I thank the noble Baroness for her suggestion. There are a number of things we are doing as this process moves through. First, as your Lordships know, the EU is looking at the legal position with Article 15 and we continue to assess that and have discussions with countries that have not yet agreed the protocol with China. Secondly, a piece of work by the Commission will assess the impacts and when we receive that, we will know what position we are actually in. Thirdly, we are discussing a number of mitigations in the event that we find the impacts unfavourable. So a number of things are in train, both legally and in terms of mitigations, to make sure that our position is one where we trade fairly with China.