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China – US Challenges ‘Illegal’ Subsidies.

17 February, 2015

 


The US has requested formal talks with China at the World Trade Organisation (WTO), over what it describes as “illegal” subsidies for Chinese exports, the Financial Times has reported.

Washington is taking issue with the use of 179 ‘demonstration bases’, or government-funded industrial clusters, in sectors including agriculture, footwear, seafood, speciality metals, textiles and medical products. These are given discount services and cash bonuses for export performance, the Financial Times said.

 

These discounts and bonuses were discovered by the US during a previous WTO case on auto parts subsidies, according to the Financial Times.

 

US trade representative Mike Froman said the demonstration bases appear to “break the rules that China committed to uphold when they joined the WTO, and it’s a policy that injures … anyone who plays by the rules and wants to compete fairly,” the Financial Times reported.

 

The requested formal talks are the first step in bringing a case at the WTO. If the issue is not settled within 60 days, the US can ask the WTO to set up a dispute settlement panel, on the basis that China is not acting in accordance with WTO rules, the report said.

 

US president Barack Obama is currently asking the US Congress for fast-track powers to push through the Trans-Pacific Partnership (TPP), a 12-country treaty covering the Asia-Pacific region and some observers have said that the tough approach on existing trade rules is designed to convince Congress to back the TPP.

 

The WTO announcement came the day after Obama and Chinese president Xi Jinping agreed that Mr. Xi would visit Washington in September.

 
Pinsent Masons

 

For further information, please contact:

 

Andrew Masraf, Partner, Pinsent Masons

andrew.masraf@pinsentmasons.com

 

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