TOKYO: Despite fighting for market-economy status for four years, China lost its battle last week.

Beijing allowed a landmark World Trade Organization (WTO) dispute which was aimed to force the European Union (EU) to recognize China as a market economy in trade investigations, lapsed on June 15.

The case was first brought in 2016. However, China lost an interim ruling on the matter in 2019.

China currently provides the EU with more legal certainty to fight the low-price Chinese exports with artificially high tariffs.

The resolution, however, has been a setback for Beijing as the EU steps up efforts to limit China’s ‘expansionist practices’ into Europe.

The EU also announced an unprecedented effort to block China’s subsidies to exporters the same day China allowed the dispute to lapse.

The EU is also likely to unveil a proposal to protect European companies from Chinese takeovers.

China has decided to drop the matter after the WTO rejected the claim that Beijing’s 2001 agreement to join WTO automatically granted it the right to be treated as market economy.

This means that the EU can even continue to impose higher duties on underpriced Chinese imports on a case-by-case basis.

In fact, the United States and the EU do not consider Chinese prices reliable.

China had filed a dispute in 2016 arguing that the legal basis that permits the EU to deviate from standard WTO anti-dumping practices expired in 2016.

China, meanwhile, temporarily suspended the dispute after WTO issued its interim report in 2019 preventing the ruling from going public.

(With inputs from Agencies)