Administration Seeks Elimination Of Trade Subsidies

By James A. Morrissey, Washington Correspondent

The Bush administration has submitted a petition to the World Trade Organization (WTO) asking it to prohibit what it calls “particularly trade-distorting subsidies,” some of which have been sharply criticized by US textile manufacturers

In a paper presented to the WTO’s Development Agenda Negotiation Group on Rules, US Trade Representative Susan C. Schwab said, “It is time for the WTO to develop rules that will rein in the use of industrial subsidies.”

The types of subsidies the United States would like to prohibit include coverage of operating losses, forgiveness of government held debt, lending to uncredit-worthy companies, equity investments in unequity worthy companies, and offering government financing that is not commercially available. The petition also proposed additional WTO transparency procedures applicable to state-owned companies and government subsidies to those companies.

US textile industry representatives in Washington have long been critical of trade-distorting subsidies offered to manufacturers in countries with state-owned companies such as China and Vietnam. While currency manipulation has received the most attention, they also have strongly objected to various forms of financial assistance given to state-owned exporting companies.