China files WTO dispute case over surrogate country approach

China has launched dispute settlement procedures at the World Trade Organization (WTO) by requesting consultations with the United States and the European Union (EU) regarding the surrogate country approach when calculating anti-dumping measures against Chinese exports, the Ministry of Commerce said Monday.

In a statement on its website, the ministry said in accordance with Article 15 of the accession protocol signed when China joined the WTO in 2001, the surrogate country approach expires on December 11, 2016.

All WTO members should live up to their international obligations to abandon the surrogate country approach when calculating anti-dumping measures against Chinese exports, it said.

Unfortunately, the United States and the European Union have not fulfilled this obligation yet, said the ministry.

Under the surrogate country approach, WTO members use costs of production in a third country to calculate the value of products from countries on its "non-market economy" list, which includes China. The practice allows countries to levy high tariffs easily in trade disputes.

In November, the U.S. Commerce Secretary Penny Pritzker said the time was "not ripe" for the U.S. to grant China market economy status, suggesting old anti-dumping practices would be retained.

Meanwhile, to cut the link with the "non-market economy" list, the European Commission, the bloc's executive arm, last month presented a new methodology for its anti-dumping and anti-subsidy calculations, replacing the concept with those of "market distortion."

Although the surrogate country approach has been dropped, the EU left open the option to use "international" prices and cost reference in further anti-dumping cases if "market distortion" was found, which analysts said is simply another way of extending the previous practices.

The United States and the EU's use of the surrogate country approach has seriously affected exports and employment in some Chinese industries, said the commerce ministry.

The ministry stressed that filing litigation is a normal way for WTO members to settle disputes under WTO rules. By lodging the case at the WTO, China is protecting its rights and the seriousness of international trade rules.

Chinese Commerce Minister Gao Hucheng said in an article published earlier Monday that all WTO members should fulfil the obligation enshrined in the accession protocol, which is clear and unquestionable.

"China's lawful rights must be protected," he said, adding that China will "firmly defend its lawful rights and reserves the right of further action."

China firmly opposes the distortion of WTO rules and the dismemberment of a multilateral trade mechanism, the minister said in the article.

Gao said protecting the seriousness of rules and obligations, as well as the authority of the multilateral trade mechanism is a shared duty of all WTO members and is in line with their common interests.

China urges all WTO members to keep their commitment, comply with international laws and fulfill their obligations, he said.

China is willing to work with other WTO members to fight trade protectionism, protect multilateral trade mechanism, revive trade and investment as world economic engines, and build an open global economy that is more dynamic, more inclusive and more sustainable, said Gao.

Official data from the first 11 months of this year showed that the EU is China's biggest trading partner, with a trading volume of 3.26 trillion yuan (472.4 billion U.S. dollars), followed by the U.S. with a trade volume of 3.08 trillion yuan.