U.S. consults WTO over China’s export subsidy program

The United States questioned the validity of China’s so-called “demonstration bases-common service platform” export subsidy program.

   The United States will pursue dispute settlement consultations with China at the World Trade Organization over the country’s so-called “demonstration bases-common service platform” export subsidy program.  
   Under this program, the U.S. government says China appears to provide prohibited export subsidies to the country’s manufacturers and producers across seven economic sectors and dozens of sub-sectors located in more than 150 industrial clusters throughout China known as “demonstration bases.”  
   “This unfair Chinese program is harmful to American workers and American businesses of all sizes,” the White House’s Office of the U.S. Trade Representative said in a statement on Wednesday.
   “China’s actions are damaging our international marketplace, undercutting American businesses, and hurting workers in communities across our country,” said U.S. Rep. Mike Thompson, D-Calif, who is among a number of House lawmakers to voice support for USTR taking action in the WTO. “This case is about making sure the playing field is level and that China operates under the same fair and basic set of rules that American businesses and workers must abide by.”
   Through the demonstration bases-common service platform program, China provides free and discounted services, as well as cash grants and other incentives, to firms that meet export performance criteria and are located within 179 demonstration bases throughout the country. These demonstration bases comprise key manufacturing sectors, including 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 maintains and operates this extensive program through over 150 central government and sub-central government measures throughout China, USTR said.
   According to USTR, exports from demonstration bases comprise a significant portion of China’s global exports. In 2012, for example, 16 of about 40 demonstration bases in China’s textiles sector accounted for 14 percent of the country’s textile exports and six of the 10 demonstration bases specializing in seafood production accounted for 20 percent of China’s seafood exports.
   Consultations are the first step in the WTO dispute settlement process. If the United States and China are not able to reach a mutually agreed-upon solution through consultations, the United States may request the establishment of a WTO dispute settlement panel.