US, China in subsidies' row
February 12, 2015
The Commerce Ministry in Beijing on Thursday expressed "regret" at Washington's decision to challenge Chinese subsidies supporting billions of dollars of exports across industries from steel to shrimp.
China consistently followed World Trade Organization (WTO) rules and its policies were important measures to promote the healthy development of its foreign trade, the ministry said in a statement on its website.
The statement came after Washington on Wednesday lodged a request for consultations over the subsidies, claiming Beijing unfairly subsidized exports in seven industries. They would include textiles and clothing, advanced materials and metalworking, as well as light industry, specialty chemicals, medical products and agriculture.
The Office of the US Trade Representative (USTR) said China designated certain export companies as "demonstration bases" that were receiving free or discounted services from suppliers. China paid the suppliers almost $1 billion (881 million euros) over three years to provide those services, USTR claimed.
"If you're a Chinese textile firm designated as a demonstration base, you might get subsidized IT services, subsidized product design services and subsidized training services for their employees, showing them how to use yarn spinning techniques and weaving technologies," US Trade Representative Michael Froman said in a statement. "All of these services provided for free or at a discount, undermine fair competition."
The move is the first step toward bringing a formal case against China. USTR said it would try to reach a settlement with China, but if that were to fail the US could ask the WTO to rule on the dispute.
The subsidies case is one of a number of trade disputes the United States has with China, underscoring the economic tensions between the world's two largest economies. The US Commerce Department reported last week that the country's trade deficit with China set another record last year, rising 23.9 percent to $342.6 billion. The trade gap with China has been America's biggest deficit since China surpassed Japan in that category in 2000.
uhe/nz (Reuters, AP)