China says it will end subsidies
U.S. Trade Representative Susan C. Schwab said Thursday that China has agreed to terminate subsidies to several industries that the United States alleged were illegal under World Trade Organization rules.
“I am very pleased that today we have been able to sign an agreement with China that should lead to full elimination of these prohibited subsidies,” said Schwab in a statement. “This outcome represents a victory for U.S. manufacturers and their workers.
“Earlier this year, when China had not removed these market-distorting subsidies after we repeatedly voiced our concerns about them, the United States took action,” she added. “While many challenges still remain, today’s news is concrete and welcome.”
A memorandum of understanding between the two countries is designed to settle a WTO case the United States and Mexico initiated in February. The United States had alleged that China was maintaining several subsidy programs that were benefiting industrial sectors in China, including steel, wood products, and information technology. Mexico filed as a co-complainant.
Most of the challenged subsidies were tied to exports, giving an unfair competitive advantage to Chinese products and denying U.S. manufacturers the chance to compete fairly with them in the United States and in third country markets.
The remaining subsidies, known as “import substitution” subsidies, encouraged companies in China to purchase Chinese-made goods instead of imports. These subsidies were designed to give Chinese-made goods a significant edge in the China market over high-quality, fairly priced goods from the United States and other countries.
Under the agreement, Schwab’s office said China has committed to complete a series of steps by the end of the year to ensure that the WTO-prohibited subsidies cited in the U.S. complaint have been permanently eliminated, and that they will not be re-introduced in the future.