U.S. files WTO case over China brands
The United States has requested World Trade Organization dispute settlement consultations over China's 'Famous Brands' programs.
The programs appear designed to promote the development of global Chinese brand names and to increase sales of Chinese-branded merchandise around the world, said U.S. Trade Representative Susan Schwab.
Schwab's office said it's concerned not only because these programs appear to incorporate export subsidies (which are generally prohibited by applicable WTO rules), but also because of the protectionist industrial policy apparently underlying these programs.
'We were disturbed to find that China still appears to be using WTO-illegal measures to promote its exports, ranging from textiles and refrigerators to beer and peanuts,' Schwab said in a statement. 'We are going to the WTO today because we are determined to use all resources available to fight industrial policies that aim to unfairly promote Chinese branded products at the expense of American workers, farmers, ranchers, manufacturers and intellectual property owners.'
Mexico has also requested formal WTO consultations with China on the matter last week.
The USTR office worked closely with the U.S. Commerce Department to uncover and analyze dozens of Chinese programs at both the central and local government level.
'While dialogue is always our preferred option, we have always stated our willingness to use WTO rules and our own laws to ensure that our workers and businesses are not subject to unfair practices,' said Commerce Secretary Carlos Gutierrez said. 'This is one of these instances. We will continue to use all of the tools at our disposal to ensure that China plays by the rules.'
The United States has discovered that China, as part of its industrial policy aimed at promoting the sale of Chinese products abroad and encouraging worldwide recognition of Chinese brand names, apparently provides numerous subsidies at multiple levels of government. The subsidies appear to include cash grant rewards for exporting, preferential loans for exporters, research and development funding to develop new products for export, and payments to lower the cost of export credit insurance.
The designated Chinese brands represent a wide range of sectors, including household electronic appliances, textiles and apparel, a range of light manufacturing industries, agricultural and food products, metal and chemical products, medicines, and health products. The subsidies apply across the economy and therefore may unfairly alter the competitive landscape around the world for any industry competing with these Chinese products. The United States also has found other apparent export subsidies for Chinese products in particular sectors of the Chinese economy – available whether or not the products are famous brands – including textiles, agricultural products and products with high-technology content.
'Such industrial policies promoting Chinese exports to the United States and other countries unfairly disadvantage U.S. manufacturers, farmers, ranchers and workers,' the USTR said. 'China's policies favoring domestic brands also raise questions regarding China's commitment to providing a level playing field for foreign owners of important intellectual property rights, namely the trademark rights of U.S. brand owners.'