China to end export subsidies after US challenge in WTO

15 Apr '16

3 min read

China is dismantling a rash of subsidies it has been using to boost its exports of agricultural, medical, textile and other goods, US Trade Representative Michael Froman announced on Thursday.

Froman said the US and China have signed an agreement terminating the export subsidies China has provided through the “Demonstration Bases-Common Service Platform” Programme.

Following a dispute brought by the US in the World Trade Organization (WTO), China has effectively terminated the challenged Programme channeling export-contingent subsidies to Chinese enterprises across seven economic sectors, and dozens of sub-sectors, located in more than 179 industrial clusters, the Office of the US Trade Representative said in a press release.

China has terminated the “Common Service Platform” subsidies to “Demonstration Base” enterprises and will remove export-contingent criteria from the “Demonstration Bases”. Termination of prohibited export subsidies under the “Demonstration Bases-Common Service Platform” Programme will help level the playing field for American workers and businesses in the many affected sectors.

“Today we have signed an agreement with China to eliminate export subsidies that the United States challenged because they are prohibited under WTO rules. This is a win for Americans employed in seven diverse sectors that run the gamut from agriculture to textiles to medical products, who will benefit from a more level playing field on which to compete. This agreement once again underscores that President Obama's commitment to enforce our trade rights aggressively to secure real economic results for American workers, farmers, and businesses of all sizes and in every part of the country,” Froman said.

“As a result of USTR's extensive efforts, this agreement addresses all elements of the massive and complex export subsidy programme. China has now issued and provided more than 130 directives, instructions, and notices to address US concerns. The transparency provisions of the agreement give us a solid basis to monitor closely and confirm whether the terms of the agreement are being met.”

Froman said the US win went beyond just stopping Chinese export subsidies. It shows that the US is capable of enforcing trade rules and underlines how the US will make sure that foreign trade partners live up to promises in the 12-country Trans-Pacific Partnership, he explained.

“This agreement shows our dedication to ensuring that American workers and businesses have the opportunity to compete fairly, supporting high-quality US jobs and strengthening the middle class,” Froman said. “It also demonstrates the resolve with which we will enforce the high standards negotiated in the Trans-Pacific Partnership, whether on labour, environment, intellectual property rights or other commercial issues.”

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