Mexico takes Chinese textile subsidy issue to WTO

16 Oct '12

2 min read

Mexico has filed a complaint with the World Trade Organization (WTO) over the subsidies provided by China to its textiles and garment sector, according to a statement released by the WTO.

The complaint by Mexico says the Chinese Government provides various subsidies to the Chinese companies in the form of exemption in income tax, value-added taxes and municipal taxes, according to the statement.

The complaint cites cash payments from government agencies, discounts on loans, land rights and electricity tariffs as other subsidies provided by the Chinese Government to textile and apparel companies.

Under a series of trade agreements between Mexico and China, all tariffs on Chinese products, including textiles, were gradually reduced to zero by December 2011.

The official complaint by Mexico has been termed as ‘a highly important move’ by CANAINTEX and CANAIVE, the country’s textile and clothing industry associations, respectively.

In a joint statement, the associations said, the subsidies provided by the Chinese Government violate WTO regulations and give Chinese entrepreneurs an unfair advantage and seriously hurt Mexican textile and garment industry.

As per WTO norms, China will get a 60-day period to give a satisfactory explanation and resolve the dispute. Subsequently, Mexico could urge the WTO to adjudicate on the case and force China to amend its laws.

In response to the WTO complaint by Mexico, China’s Ministry of Commerce has said that it will abide by the dispute settlement process of the WTO.

Fibre2fashion News Desk - India

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