U.S. files WTO case against China over export subsidies
Marketwatch - February 02, 2007 12:28 PM ET
WASHINGTON (MarketWatch) -- The Bush administration is filing a case
with the World Trade Organization against what are illegal Chinese
export subsidies, U.S. Trade Representative Susan Schwab announced
Friday.
"We are committed to challenging
China's
WTO-inconsistent practices that harm American workers and businesses,"
said U.S. Trade Representative Susan Schwab in a prepared statement.
"China's
use of market-distorting subsidies creates an uneven playing field and
subverts China's own efforts to foster consumption-led growth," Schwab
said.
The
U.S. is
seeking WTO-sponsored talks with China to end the subsidies, including
basic tax laws and other tools, which the U.S. says are illegal and
provide incentives for foreign investors in China and their Chinese
partners to export to the United States.
Chinese law contains a series of measures that
reduce taxes and other payments owed to the government by exporters.
They violate a number of WTO rules, including the explicit prohibition
of export subsidies.
The companies who qualify for using these subsidies
account for nearly 60% of
China's
exports of factory goods in 2005, including steel, wood, and paper, the
USTR said.
Pressure has been mounting on the White House from
Congress and
U.S.
manufacturers to take action to counter the growing bilateral trade gap,
which some experts say may hit a record $240 billion in 2006. In the
past, the Bush administration had argued that its strategy of quiet
negotiations was the best way to bring economic reform to China.
"Our decision to bring this case to the WTO comes
after our efforts at dialogue failed," Schwab said.
Other subsidy programs targeted by the
U.S.
provide incentives for Chinese companies to purchase domestic equipment,
instead of buying from U.S. exporters.
"The case is important because we are seeking to
level the playing field to allow
U.S.
manufacturers to compete fairly with Chinese firms," Schwab said.
China
entered the WTO five years ago and has steadily increased its share of
global trade.
The
U.S. has
only brought two other cases to the WTO against China. The only pending
case is a joint U.S., European and Canadian complaint against China's
tariffs on auto parts.
The
U.S.
action is the first step in a WTO dispute. After 60 days, if no
settlement is reached, the U.S. may ask the WTO to set up a dispute
settlement panel.