Not So Fast, China: Non-Market Economy Status is Not Necessary for the “Surrogate Country” Method

The expiration of Article 15(a)(ii) of the Accession Protocol of the People’s Republic of China to the World Trade Organization (WTO) calls into question the legal basis for employing the “surrogate country” method in antidumping investigations. China believes that it is entitled to Market Economy status, which it believes would preclude the use of the “surrogate country” method. The U.S. takes a different approach. Ignoring the protocol, the U.S. takes the position that an obligation to determine “comparable prices” in antidumping investigations affirmatively permits the “surrogate country” method if that method becomes necessary to finding a comparable price. This Comment argues that neither country is completely correct. Market Economy status is inconsequential to antidumping investigations, and the obligation to find a “comparable price” grants the authority to do just that, and nothing more. The legal basis for employing alternative pricing methodologies against China comes from the “particular market situation” principle in Article 2 of the Antidumping Agreement. This principle is based on the situation surrounding the individual sales of the product in the domestic market rather than the overall market situation. That situation becomes “particular” when it is distorted by factors other than supply and demand. The expiration of Article 15(a)(ii) leaves China in the same position as every other WTO Member—susceptible to a case-by-case analysis of the transactions that for