Page 8 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.76, # 1, 2019, pp. 4-19

environmental consequences i n the EU […]. China is not a market economy and the
five criteria established by the EU to define market economies have not yet been
fulfilled”.

There are different attitudes of European countries on this issue in 2016. Germany
parliamentarians were more in favour of MES for China, but German firms have been
among the first in claiming anti-dumping measures against China. On positive attitude,
we record the will of the European Commission to cancel the “non-market economy
status” to China, as well some Eastern European countries and various experts –
according with the expired date of price determination method for China. The Chinese
perspective on MES issue has a key focus: many of Chinese officials and scholars
believe that after the 15 years’ Non-Market Economic Status as stipulated in Article 15
of The Protocol on China's Accession to the WTO, China will automatically gain MES
(Li, 2016). China has been expecting Europe to interact in a positive way on this certain
issue for a long time. Hence, China’s reaction against EU Resolution (China complaint has
been formalized within WTO dispute settlement body) could be viewed as a reasonable answer.

Generally, MES has been used by European countries as a political instrument to
pressure China to open further its market and reduce barriers to European investments
in specific sectors. At the same time, this contradictory approach reflects the political
weaknesses in the EU space. The symptoms are evident in the following cases: the EU
position on Ukraine, the Brexit events, but also the decline of traditional political
parties and the concurrent evolution of populist parties (Zheng, 2017). On MES, both
the US and EU have not respected the WTO rules. Moreover, what Europe asks on
rule of law and market economy mechanism are often full of contradictions. Direct
and indirect forms of subsidizes persist in the US and in the EU. Thus, state
intervention is not China’s prerogative. On this matters Europe does not consider
many forms of European protectionist measures (e.g. on agricultural, steel and
chemical products), neither the state interventions in the financial sectors since the
2008 crises. Also recently, for example, the European acceptance of huge state
intervention of Italian government to rescue two Italian banks from bankruptcy is in
contradiction with substantial rules. Billions of taxpayer money have been used to save
two banks (Banca Popolare di Vicenza e Veneto Banca), allowing the free absorption
of the latter by Intesa San Paolo and without rigid conditions to give part of the money
back. The results, in a critical historical period, is a public intervention without a clear
plan for restructuring, allowing higher degree of oligopolistic position for few banks.
All against antitrust regulations and said “market economy” principles. Hence, it is
even reasonable that there are other factors than market principles, such as the political
influence, also considering the strong ties between Europe and the US that someone

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