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USTR files case in WTO against illegal Chinese textile subsidies
Dec '08
Based on an NCTO request (attached) last year, the United States Trade Representative's Office announced today that it was filing a WTO dispute settlement case against China regarding two large export subsidy programs (“Famous Brands”) and a number of smaller programs which are WTO illegal. The subsidy programs are cross sector and impact not only textiles but medical equipment, appliances, advanced technological products, chemicals and agricultural products.

Cass Johnson, President of NCTO, stated, “We want to thank Ambassador Schwab for moving forcefully against these prohibited export subsidies. Export subsidies are de facto illegal under WTO rules and what is astonishing is that the USTR case makes clear that Chinese Central Government implemented these large programs after China joined the WTO and committed to following its rules. We also want to thank Secretary Gutierrez and the Commerce Department for their hard work in uncovering the facts about these programs.”

Johnson continued: “The USTR action confirms yet again that China's export machine is built in large part on unfair government subsidies, many of which are illegal. At the recent G-20 Summit, China pledged not to introduce new protectionist measures and then turned around two weeks later and announced it would hike subsidies for textile exports under its VAT program by $10 billion. We also note that China has failed six years in a row to notify the WTO of any of its provincial and municipal subsidies, as required under WTO rules.”

“The U.S. textile industry is extremely concerned that China will use these as well as many other subsidies to surge into the U.S. market once quotas on Chinese textile and apparel products are removed on January 1st. The industry is already tracking a late year surge in many of the safeguard categories. We look forward to working with the Obama Administration to monitor China's imports once quotas are removed and to take quick action if Chinese exports surge.”

Johnson noted that the USTR complaint only covers certain export subsidies and that most of China's subsidies to its textile sector remain untouched. “NCTO has uncovered 63 subsidies that the Chinese government gives to its textile sector. These include covering currency manipulation, land, rent, privatization, financing, energy costs and research and investment remain untouched. These subsidies have contributed greatly to the loss of 66,000 textile and apparel jobs so far this year.”

National Council of Textile Organisations

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