The U.S. warned China on Thursday that it had not done enough to qualify for market economy status, especially in steel and aluminum and pushed the two trading partners closer to a full-on trade war between Washington and Beijing at the end of 2016.
Two-Month Trial: Metal Buying Outlook
U.S. trade diplomat Chris Wilson told the World Trade Organization meeting that the expiration of a clause in China’s original petition to join did not require other WTO members to automatically grant China market economy status on Dec. 11.
Instead, China must establish under each WTO member country’s domestic law that it is a market economy, he said, according to an outline of his remarks seen by Reuters.
“Second, there is little doubt that China’s market reforms have fallen short of the expectations that were held by many members when China joined the WTO,” he said. “This is particularly evident in the steel and aluminum industries where China’s pervasive interventions have led to a significant overcapacity of global supply that is threatening the viability of competitive firms in these industries around the world.”
The two giant trading partners have been locked in a war of words about China’s ascension for more than a year now.
The EU and China Announce ‘Bilateral Mechanism’
Meanwhile, China and the European Union agreed to establish a bilateral mechanism to deal with overcapacity in steel, Chinese Foreign Minister Wang Yi said on Thursday.
China is by far the world’s biggest steel producer and its annual output is almost double that of the 28-nation EU.
Rival producers have accused China of selling into export markets at below cost after a slowdown in demand at home, causing a crisis for the industry that has led to job cuts and plant closures.
Free Download: The July 2016 MMI Report
“Through this bilateral mechanism, the two sides can have … in-depth discussions to find solutions acceptable to both parties and in this way maintain free trade and sustainable development of the global economy,” Wang said.
Wang did not provide details on the planned mechanism.