China has signed an agreement with the United States to end export subsidies provided through its so-called “Demonstration Bases-Common Service Platform” program.
China has signed an agreement with the United States to end export subsidies provided through its so-called “Demonstration Bases-Common Service Platform” program.
The move follows a recent dispute brought before the World Trade Organization by the United States.
Through the agreement China will end a program which channeled export-contingent subsidies to Chinese companies among seven economic sectors and dozens of sub-sectors, located in more than 179 industrial clusters throughout the country.
“This agreement addresses all elements of the massive and complex export subsidy program,” said U.S. Trade Representative Michael Froman in a statement. “China has now issued and provided more than 130 directives, instructions, and notices to address U.S. 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.”
The United States initiated the dispute over China’s Demonstration Bases-Common Service Platform program by requesting consultations with China at the WTO in February 2015. Each of these demonstration bases was comprised of businesses from one of seven sectors: textiles, apparel and footwear; advanced materials and metals (including specialty steel, titanium and aluminum products); light industry; specialty chemicals; medical products; hardware and building materials; and agriculture.
“China maintained and operated this extensive program through over 150 central government and sub-central government measures throughout China. These measures provided subsidies to the demonstration bases in the form of cash grants and free or discounted services for these demonstration base enterprises. Export-contingent subsidies, such as those provided by China under this program, created an unfair advantage for a vast array of Chinese exporters and are expressly prohibited under WTO rules,” the Office of the U.S. Trade Representative explained.
Consultations were held at the WTO’s Geneva headquarters in March and April 2015, during which the United States requested and secured the establishment of a WTO panel in April 2015.
Under the agreement, China will take steps to end these export subsidies. Specifically, China has agreed to withdraw central government funding for common service platforms (CSPs); end preferential service agreements (PSAs) between sub-central governments and CSP providers, which had been the sources of free or discounted services provided to demonstration base enterprises; prohibit CSP providers from continuing to provide free or discounted services to enterprises in export-contingent demonstration bases; end sub-central government export-contingent cash grant measures; remove any export-contingent criteria from the demonstration bases designation process; and reevaluate demonstration bases without the use of export-contingent criteria, USTR said.
China agrees to end export-contingent subsidies
