Administration Seeks Elimination Of Trade Subsidies

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

June 12, 2007