Research Reports
The meaning of granting Market Economy Status to China and its impacts on Korea’s Agriculture
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AuthorChung, Chunggil
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Publication Date2005.05.01
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Original
The purpose of this study is to analyze the validity of granting Market Economy Status(MES) to China and to measure its effects on domestic agriculture, and furthermore, to find out how to utilize the existing Industrial Damage Relief Systems allowed by the WTO such as Anti-Dumping and Safeguard measures.
Granting MES to China means that Chinese domestic prices should be regarded as normal prices when Anti-Dumping margins are calculated. In this study, we calculated dumping margins of major agricultural products imported from China based on the price data of third countries. We considered the protection effects of Anti-Dumping measures based on the third country data as the costs of granting MES to China because Korea will lose the opportunities to utilize Anti-dumping measures regarding China as non-market economy.
The protection effects of the Anti-Dumping measures invoked in this way is estimated about 2.2 billion Korean won. This amount is not enormous compared with the total value of agricultural production and trade. In other words, this means that the impacts of granting MES to China on the Korean agricultural industry is expected to be small.
There are four types of Industrial Damage Relief System such as Safeguard, Special safeguard(SSG), Transitional safeguard, Anti-Dumping Duties, and Countervailing Duties. Even though Korea grant the MES to China, there is only difference in normal price to be quoted for the calculation of dumping margins. Korea still can take Anti-Dumping measures against Chinese agricultural products if it exports under the domestic prices.
To prevent negative effects caused by the rise in imports of cheap Chinese agricultural products and to minimize trade dispute between two countries, the legal and systematic problems of existing industrial damage relief system should be improved. Korea should operate safeguard system considering the characteristics of agricultural products and take advantage of expected injury rather than resulted injury as the condition of invoking the safeguard measures. Besides, the function of research and survey in the trade committee should be reinforced for the efficient application of industrial damage relief system. In particular, agricultural experts are needed in the trade committee for the exact evaluation of the situations related to safeguard measures.
Researchers: Chung-Gil Chung, Jae-Ok Lee, Hyun-Ju Lee
E-mail Address: cgchung@krei.re.kr
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