The U.S. filed a complaint with the World Trade Organization that accuses China of providing government aid to promote global demand for Chinese-branded merchandise.
The U.S. Trade Representative’s office announced the complaint today, arguing that China is providing cash grants, cheap loans and research funding to makers of products including apparel and high-tech electronics.
“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,” U.S. Trade Representative Susan Schwab said in a statement.
The Bush administration said it uncovered 70 different subsidies that are prohibited by global trade rules because they are aimed at boosting exports. Aid to textile and apparel firms alone could total hundreds of millions of dollars, according to the National Council of Textile Organizations.
“Eliminating this program isn’t going to make China a fair place to do business, but it’s indicative of the mindset there where they try to subsidize their way to success,” Cass Johnson, the council’s president, said in an interview.
The case comes in the waning days of the Bush administration and of U.S. quotas on Chinese apparel imports, which expire at the end of this year. Various textile companies are gearing up to petition the incoming Obama administration for new tariffs or quotas on Chinese imports.
Largest Exporter
Last year, China surpassed Canada to become the largest exporter to the U.S., selling $322 billion in goods. Even as its overall exports fall, China is on track to run up a record trade surplus with the U.S. again this year.
One-third of the U.S.’s almost $100 billion in textile and apparel imports were from China last year.
Wang Baodong, a spokesman for the Chinese embassy in Washington, said he wasn’t aware of the case.
In general, “China has been honoring the commitments it made upon joining the WTO” in 2001, Wang said.
The petition by the U.S. today begins a period of 60 days in which the U.S. and China must try to negotiate a settlement. If that doesn’t happen, the Obama administration would then have to decide if it will ask WTO judges in Geneva to decide the complaint.
If the U.S. prevails, China would have to drop or amend its programs. If China failed to do that, the U.S. could raise import duties on Chinese products in retaliation.
