The EC Commission has decided, according to the Financial Times, that China may meet the least significant of its five tests of a ‘market economy’: the absence of state interference with entreprises linked to privatization and the absence of barter trade policies. But … bq. The verdict is muchtougher on the four key hurdles: the degree of government influence on the economy, for example through tax discrimination; the existence and implementation of transparent and non-discriminatory company law that ensures adequate corporate governance; the existence and implementation of a coherent, effective and transparent set of laws to ensure property rights and the operation of a bankruptcy regime; and the existence of a genuine financial sector which operates independently from the state. (“Financial Times”:http://www.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373292651&p=1012571727102) “New Zealand(see my earlier report)”:http://www.inquit.com/article/26/china-fta—-nz-pays-its-dues, Singapore, and Malaysia have given China the requested recognition. Australia is being asked to do so as a condition of beginning a free trade agreement negotiation with China. The impact of the adverse decision, in the EU as in Australia, is chiefly in the way in which China’s trade is treated in anti-dumping investigations. Investigations of imports from a ‘non-market economy’ are prejudicial. There’s more on the ‘leaked’ EC report “here”:http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373297286&p=1045050946495 Update: In fact, Thailand has also now offered ‘market economy status’ to China. See “this(link to China New Daily)”:http://www2.chinadaily.com.cn:80/english/doc/2004-06/22/content_341279.htm report.
Peter Gallagher is a leading Australian consultant on trade and public policy.[bio].
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