WTO to investigate Chinese industrial subsidies

FE Team | Published: September 02, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

GENEVA, Sept 1 (AFP): The World Trade Organisation (WTO) said yesterday it will investigate whether Chinese industrial subsidies breach international trade rules following a complaint by the United States and Mexico.
The US and Mexico's complaint targets tax breaks they claim China offers to its companies if they buy Chinese supplies instead of imported goods and other tax benefits that appear to be based on the export performance of companies.
The WTO's Dispute Settlement Body (DSB) accepted the complaint after China blocked an initial request in July, as the Asian giant was allowed to do under the global trade body's rules.
US officials have argued that state subsidies for steel, paper, information technology and other industries allow China to export its goods cheaply and prevent US companies from competing fairly.
For its part, China said it was "deeply regrettable" that the US and Mexico have persisted in their complaint, and stressed its confidence that the relevant measures were consistent with its WTO obligations.
"China has showed good faith to find a positive solution to this dispute throughout such consultations and is still ready to do so in a reciprocal way with the complainants," it said.
The complaint comes amid growing pressure in Washington to respond to a burgeoning trade deficit with China and concerns that Beijing is flouting rules used by most trading partners.
The US, together with Canada and the European Union, also requested a WTO panel in September 2006 to help settle a dispute over automobile parts. The complainants accuse China of imposing charges that unfairly discriminate against imported parts.
The complaint is ongoing and a judgement is expected in January 2008.
The US lodged its complaint at the Geneva-based global trade body on August 13. The DSB will be obliged to adopt the complaint at its next meeting on September 14, unless the US withdraws it in the meantime.
China said Friday that it believes its measures are consistent with WTO rules, and that it takes its intellectual property commitments very seriously.
Reuters from Washington says: The Bush administration returns to world trade talks next week with renewed optimism, but even the most ardent supporters of the Doha round see formidable hurdles to clinching a deal.
Negotiators will gather in Geneva to press ahead in the WTO's Doha round.
In interviews Friday, Agriculture Secretary Mike Johanns and a senior US trade official painted a picture of renewed optimism, mixed with caution after six years of deep divisions on farm subsidies, tariffs and a host of other issues.
"I believe it's still doable ... my hope is that other countries will share that optimism," Johanns said.
The trade official, speaking on condition of anonymity, said the climate had improved since an unhappy end to talks in Potsdam, Germany in June between the round's major players.