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USTR Seeks Input on WTO Case Against China Export Subsidies

Friday, March 27, 2015
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative is accepting comments through April 15 on the issues raised in a World Trade Organization complaint the U.S. has filed against certain measures providing export-contingent subsidies to enterprises in several industrial sectors in China. The U.S. requested consultations on these measures in February, and if these consultations fail to resolve the matter the U.S. will likely request the establishment of a dispute settlement panel.

According to USTR, it appears that China provides export-contingent subsidies through a program establishing “Foreign Trade Transformation and Upgrading Demonstration Bases” and “Common Service Platforms.” Demonstration bases are industrial clusters of enterprises in several Chinese industries, including the textiles, agriculture, medical products, light industry, special chemical engineering, new materials, and hardware and building materials industries. Common service platforms are service suppliers designated by China to provide services to enterprises in demonstration bases. China designates an industrial cluster of enterprises in a particular industry as a demonstration base and then provides export-contingent subsidies to the enterprises located in that demonstration base. These subsidies include the provision of discounted or free services through common service platforms or the provision of cash grants. In addition, it appears that China provides certain other export-contingent subsidies to Chinese manufacturers, producers and farmers. The U.S. believes this program violates the express prohibition on export subsidies in WTO rules.

This case grew out of a previous WTO challenge to what appeared to be prohibited export subsidies provided to domestic auto and auto parts manufacturers pursuant to China’s “National Auto and Auto Parts Export Base” program. USTR notes that after requesting consultations with China on those subsidies it further developed information and concern that China had created the demonstration bases program to provide export subsidies to many other industries.

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