USTR Welcomes Mexican Support Over Chinese Subsidies

by Glen Shapiro, LawAndTax-News.com, New York

02 March 2007

US Trade Representative Susan C. Schwab on Wednesday welcomed the announcement by the Government of Mexico earlier this week that it has requested WTO dispute settlement consultations with China on prohibited subsidies, and is thereby joining the United States in challenging China’s provision of certain subsidies that appear to be inconsistent with its WTO commitments.

“We are pleased that Mexico has decided to join the United States in challenging China’s use of what we believe are prohibited export and import-substitution subsidies,” announced Ambassador Schwab, continuing:

“We also welcome recent requests by Japan, Australia and the European Union to participate in the US consultations as third parties. It is important that the international community work cooperatively to encourage China to comply with its international obligations. We will continue to work with these and other trading partners to that end.”

On February 2, 2007, the United States requested World Trade Organization dispute settlement consultations with the People’s Republic of China regarding its provision of subsidies that appear to be prohibited by WTO rules.

China applies a series of measures that, by allowing for refunds, reductions, or exemptions from taxes and other payments owed to the government, appear designed to subsidize exports of manufactured goods or to support the purchase of domestic over imported equipment and certain other manufacturing inputs.

According to the USTR, these measures are contrary to a number of WTO rules, including the explicit prohibitions against export subsidies and import substitution subsidies set forth in the WTO Agreement on Subsidies and Countervailing Measures.

Earlier this month, the Office of the United States Trade Representative and the Department of Commerce submitted to Congress their 2007 Subsidies Enforcement Report.

The Report details efforts by the USTR and the Department of Commerce to strengthen the international trade rules against prohibited subsidies and to enforce compliance against the "unfair use" of foreign government subsidies across a broad range of industries, including aerospace, steel, paper, semiconductors and fertilizer.

"This report demonstrates our continued efforts to monitor the subsidy practices of our trading partners around the world and our willingness to exercise our rights under the international trade rules that prohibit unfair subsidies," stated Ambassador Schwab at the time, adding that:

"This year we have devoted particular attention to the subsidy practices of China, multilaterally at the WTO as well as in our bilateral relationship."

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