The World Trade Organisation on Tuesday set up a panel to examine the so-called “surrogate country” approach used by the European Union to calculate anti-dumping measures applied to Chinese exports, following a request from Beijing.
When China joined the WTO in 2001, it was agreed that other member states could treat it as a non-market economy for 15 years.
The deadline passed late last year, but the EU still wants to operate on rules that protect it from cheap Chinese products flooding its markets.
China last week asked the WTO to establish a panel of experts to rule on its demand that the EU stop using a “surrogate country” system - judging the price of Chinese goods against a third country’s - to determine whether China is selling its products below market prices.
The EU rejected that request, but when China submitted a second demand, WTO rules required the body to set up a panel.
China in December filed its initial disputes against both the EU and the United States over the issue, which are being handled separately.
When the sides were unable to reach a deal during WTO-led consultations, the door was left open for China to ask the WTO to create a panel of experts to study the case.
The EU has indicated it would like the US to be an ally against alleged unfair Chinese practices at the WTO, but US President Donald Trump’s administration has said it may ignore all rulings made at the Geneva-based body.
Experts have warned a US dismissal of the WTO could degrade the international trading system and trigger a rise in harmful tit-for-tat tariffs.
WTO’s panels of independent trade and legal experts usually take several months to render their decisions.
They can authorise retaliatory trade measures if they rule in favour of a plaintiff.
The WTO polices global trade accords in an effort to ensure a level playing field for its 164 member economies.