Non-market Economy Status

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About Non-market Economy Status:

The United States of America designates a country as non-market economy based on several factors namely
- If the country’s currency is convertible;
- If wage rates are determined by free bargaining between labour and management;
- If joint ventures or other foreign investment are allowed; whether the means of production are owned by the state; and
- If the state controls the allocation of resources and price and output decisions. Other factors like human rights are also considered.
The non-market economy label allows the US to impose “anti-dumping” duties on goods imported from designated countries.

What is market Economy?

It is a system in which production decisions and the prices of goods and services are guided primarily by the interactions of consumers and businesses.
That is, the law of supply and demand, not a central government’s policy, is allowed to determine what is available and at what price.
A market economy gives entrepreneurs the freedom to pursue profits by creating new products, and the freedom to fail if they misread the market.

Key facts about anti-dumping duty

It is a tariff imposed on imports manufactured in foreign countries that are priced below the fair market value of similar goods in the domestic market.
The government imposes anti-dumping duty on foreign imports when it believes that the goods are being “dumped” – through low pricing – in the domestic market.
Anti-dumping duty is imposed to protect local businesses and markets from unfair competition by foreign imports.

Q1: What is Inverted duty structure?

It is a situation where import duty on finished goods is low compared to the import duty on raw materials that are used in the production of such finished goods.

Source: Why Vietnam wants US to change its ‘non-market economy’ status