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USTR Files WTO Case Against Chinese Imports

James A. Morrissey, Washington Correspondent

US Trade Representative (USTR) Susan C. Schwab has filed a formal request with the World Trade Organization (WTO) to initiate a dispute settlement case involving what the USTR contends are illegal subsidies for a variety of exports including textiles and apparel.

The cases involves so-called “Famous Brands,” which are designed to promote the development of global Chinese brand names and to increase sales of Chinese branded goods throughout the world. Schwab said the United States is “concerned not only because these programs appear to incorporate export subsidies which are generally prohibited by WTO rules, but also because of the protectionist industrial policy apparently underlying these programs.”

In endorsing the action, US Department of Commerce Secretary Carlos Gutierrez said that while dialogue is the preferred method for dealing with such issues, “we have always stated our willingness to use WTO rules and our own laws to ensure that our workers and businesses are not subject to unfair practices. We will continue to use all of the tools at our disposal to ensure that China plays by the rules.”

Saying that eliminating China’s illegal exports subsidies are of “paramount importance to US manufacturers,” Auggie Tantillo, executive director of the American Trade Action Coalition (AMTAC), said his organization looks forward to working with the present administration and the incoming Obama administration and Congress to eliminate China’s WTO-illegal subsidies. He said the genesis of the case was a study conducted by textile trade associations that uncovered a number of subsidies that they, and now the government, allege are illegal subsidies.

A USTR statement said the United States has discovered that China, as part of its industrial policy aimed at promoting the sale of Chinese products abroad, apparently provides numerous subsidies at multiple levels of government, adding that the subsidies appear to include cash grant rewards for exporting, preferential loans to exporters, research and development funding to develop new products for export, and payments to lower the cost of export credit insurance. The “Famous Brands” cover a wide range of manufacturing sectors including household electronic appliances, textiles and apparel, metal and chemical products, medicines and health products, and agriculture and food products.

Schwab said such industrial policies promoting exports to the United States and other countries “unfairly” disadvantage US manufacturers, farmers, ranchers and workers and they raise questions regarding China’s commitment to provide a level playing for other products.

The government of Mexico also requested WTO consultations on this matter.

January 6, 2009