US says China agrees to end brand subsidies

WASHINGTON, Dec 18, 2009 - The United States announced Friday that China agreed to end a series of “famous brand” subsidies for a range of goods that Washington challenged as illegal at the World Trade Organization.

The office of the US Trade Representative said Washington and Beijing had signed an agreement to settle a complaint filed last December with the WTO challenging an array of programs viewed as improper export subsidies.

“Export subsidies are illegal under WTO rules,” the USTR said in a statement.

“The termination of the subsidies will level the playing field for American workers in a wide range of manufacturing and export sectors, including household electronic appliances, textiles and apparel, light manufacturing industries, agricultural and food products, metal and chemical products, medicines, and health products.”

The case centres on China’s “Famous Export Brand” program and the “China World Top Brand” program under which the government set out criteria for export aid.

Enterprises involved in the programs had been entitled to various government aid, including what Washington said appeared to be financial support tied to exports.

US officials identified more than 90 separate programs of “what appeared to be WTO-inconsistent financial support” for exports, according to the USTR.

Washington’s initial complaint was joined by Mexico and later by Guatemala, resulting in consultations starting in February and continuing until the agreement was reached.

Senior US trade officials said the case is important because China had been moving toward export policy inconsistent with free markets and WTO rules.

“We have been concerned that China has been moving toward industrial policies that were very problematic and not consistent with open markets,” said one official, who spoke to journalists on condition of anonymity.

“This was a very widespread set of initiatives that started at the central government and went down to all the major exporting provinces.” China has confirmed that it has taken steps to eliminate the measures or modify them to remove any provisions related to export-contingent brand designations, officials said.US Trade Representative Ron Kirk said the agreement “represents a victory for the full spectrum of US manufacturers and their workers, given the reach of these Chinese industrial policy initiatives.

“We are pleased that the WTO dispute settlement mechanism has worked as intended, enabling the parties to reach an appropriate resolution,” Kirk added.

The case is one of several involving Washington and Beijing at the WTO.

US officials said China has agreed to settle four of the eight cases Washington filed at the WTO before they went to a dispute resolution panel.

“We think it shows there is a pragmatism (in China) about fixing cases at least in certain circumstances,” a senior official said.

But several cases remain active.Last month, China exercised its right to block a US-led request for the WTO to set up a panel to rule on Chinese export curbs on certain raw materials. The United States has been joined by the European Union and Mexico in the complaint.

- AFP