What is the list of countries with a market economy
“The market economy is a narrow concept. This is not a dictionary definition, but a concept that the US Department of Commerce uses to impose or not impose anti-dumping measures against imports. Dumping is a concept of international trade when a country sells goods at a price below cost or below the price of production. Before the inclusion of Russia, there were 11 states in the list of countries with non-market economies. For them, the internal price of goods cannot be calculated, and they may receive direct or indirect subsidies (government funding and artificial interference for competitors), then it becomes difficult to calculate the price. With these countries, the United States uses a different method: either they look at the prices at which the same goods are sold to third countries, or they calculate some kind of synthetic price – they look at how much it costs to produce similar goods in countries with market economies and compare them with the price at which country sells them.
The list of countries with non-market economies now includes Armenia, Azerbaijan, Belarus, China, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan and Vietnam. If US firms believe that their competitors are behaving in a non-market manner and engaging in dumping, then they can file a complaint with the US Department of Commerce, and in most cases, the department will refer this complaint to the International Trade Commission for consideration, where it is analyzed. The commission looks at whether the price is really below the norm or if the company is simply trying to eliminate a competitor. If a country is included in the list of countries with non-market economies, then it becomes easier for the United States to impose additional duties against dumping.
If a country is included in the list of countries with non-market economies, then it becomes easier for the United States to impose additional duties against dumping
The methodology is not transparent because you can't just look inside the country and apply formulas and coefficients, choose the most similar country, and so on. More wiggle room for the Trade Commission: it can decide that dumping has taken place and impose duties to cover the difference between the calculated normal price and the price that is lower.
In practice, introducing tariffs in the United States is quite difficult: the president must sign a decree that will work temporarily, and confirmation from the Senate is needed. This is a complex procedure that does not even happen every year, while there are hundreds of cases against dumping – companies come, complain, complaints are quickly considered, anti-dumping duties are introduced, so in general there is a consensus that companies are abusing this. Now it will become easier to recognize any import from Russia as violating anti-dumping restrictions.
Russia has been on the list of countries with a market economy since 2002, but it is important here that the Russian Federation and the United States are members of the World Trade Organization. Before Russia's membership in the WTO, the US could pursue any trade policy, and now there is Chapter 6 of the WTO rules, which regulates anti-dumping measures, defines dumping and when countries can impose these restrictions. And there is also an arbitration process: that is, if the United States has introduced measures against Germany, then Germany can complain, there will be an analysis, the WTO will issue a verdict in which it can decide that these were unfair measures. In the list of these rules there are just countries with non-market economies, which say that these countries have a lot of scope for making such decisions, and the WTO can consider this, but in general leaves everything to these countries.
There have been no conflicts between the WTO and the US on the list of countries yet. The WTO does not yet argue with the US decision. When the US imposes anti-dumping measures against China, the WTO agrees, but these are enforcement details.”
The United States has another trump card in the trade war with Russia
“It is worth adding that Russia lost its most-favoured-nation trade status in March with the EU and in April with the US. Within the framework of the WTO, this means that countries cannot set tariffs for one country more than for another, that is, they cannot be arbitrarily raised, with exceptions that are prescribed in WTO rules, as well as by decision of the president in states of emergency. When Trump imposed tariffs on China, he claimed that it was a state of emergency, and thus used American laws and the WTO. Now in March-April, Russia has completely lost its trade-friendly status, which means that if the US decides to set tariffs on Russian goods at 20-30-40%, the WTO will not object. This is a more significant change, this is a rare event, and now the US has another way to wage a trade war with Russia. They expanded their arsenal, although before that it was expanded.
Consequences for Russia
“Usually, anti-dumping rules are not so much used from country to country as they arise as a response to complaints from American firms. This will provide an additional opportunity for US firms that compete, for example, with Russian exporters of resources and minerals, to additionally complain about them and get another advantage over them. I do not think that there will be any large-scale effect, but, for example, in November, anti-dumping rules were introduced against the export of potassium nitrate from Russia to the United States. This will not be a full-fledged ban on the export of specific items, but rather an increase in uncertainty for Russian companies, making competition more difficult. But still there is a formal complaint procedure, anyway the company that complains must explain its position, it must go through the International Trade Commission, and it can be challenged by the WTO. This could have happened before, but with the transfer of Russia to the list of countries with non-market economies, it became easier. It sounds as if the procedure for determining the normal price has changed and has become less beneficial for Russia, because it is now easier to admit that goods are dumped.”
