The trade remedy issue in the context of non-market economy within the WTO legal system – a case study of the “double remedy” issue

Recently, regulating the modern trade remedies in the context of non-market economy always raises vigorous debates, which potentially challenges the efficiency of the dispute settlement regime in the WTO. Following a finding by the Ministry of Commerce of the PRC in July 2020 that the non-market conditions exist in the US energy and petrochemical sector, the terminology of “non-market economy” is no longer an emblematic of countries with particular market situation (“PMS”) such as China. In fact, all WTO members are potential targets of “non-market economy” treatment nowadays in the trade remedies investigations. However, the WTO trade remedies agreements are ambiguous on regulating the trade behaviours of the modern “non-market economies”, which provides no substantial references about the implementation of trade remedies. Therefore, the unclear provisions raise controversary over trade remedies applications and brings uncertainty to trade disputes settlements, which is contrary to the “predictable and transparent” principle of the WTO. This research aims to prevent the abuse of trade remedies through exploring the appropriate interpretation and application of the WTO trade remedies agreements, using the “double remedy” issue of China as a special case. It contributes to the promotion of good international economic governance and increasing the predictability and stability of the WTO dispute settlement on the remedies. Specifically, it originally provides proposals from both anti-dumping and countervailing perspective to clarify the procedure of trade remedies investigations. To avert the abuse of countervailing measures, this research submits that the potential subsidization behaviour, especially by a “public body”, in the anti-subsidy investigations should be conscientiously evaluated. Accordingly, this research contributes substantially on the clarification of term “public body”. It provides the specific criteria to define the “public body” by the doctrinal analysis of WTO tribunal reports and international treaties, which provides predictability to identify a subsidy. To avoid the abuse of anti-dumping measures, this research contends that it is crucial to carefully determine the normal value in the anti-dumping investigations. This research further demonstrates that when calculating dumping margin of either market or non-market economies, the primary choice in determining the normal value shall be based on the actual cost of production, even though such a cost is considered to be “distorted”. When it is necessary to construct the normal value, all factors related to the cost in that country, including “price distortions”, should be considered ‘as long as they reflect the prevailing conditions in the market of exportation’.