The United States has filed a ‘request for consultations’ with China at the World Trade Organization regarding “certain measures that allegedly provide export-contingent subsidies to enterprises in several industrial sectors.”
The WTO said these sectors include textiles, agriculture, medical products, light industry, special chemical engineering, new materials, and hardware and building materials.
“According to the US, China designates a cluster of enterprises in a particular industry as a Demonstration Base and then provides export-contingent subsidies to those enterprises,” WTO said, quoting the US plaint.
“In addition, the US argues that China provides certain other export-contingent subsidies to Chinese manufacturers, producers, and farmers.”
The US has already imposed anti-dumping duties on certain Chinese goods like solar equipment.
The request for consultations formally initiates a dispute in the WTO.
Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.
According to media reports from the US, the Obama administration accused China of providing about $1 billion in illegal subsidies over three years by offering common service platforms to help exporters. The complaint also alleges that China set up 179 “demonstration bases” for exporters, providing at least $635,000 apiece at some of the bases.
The beneficiary sectors are textile and clothing makers, advanced materials and metals companies, light industrial firms, specialty chemical manufacturers, medical product makers and agricultural firms.
“If you’re a Chinese textile firm designated as a demonstration base, you might get subsidized IT services, subsidized product design services and subsidized training services for their employees, showing them how to use yarn spinning techniques and weaving technologies,” U.S. Trade Rep. Michael Froman said. “All of these services, provided for free or at a discount, undermine fair competition.”