Heated Exchange Over China Subsidy Notifications; US, EU CV Determinations at WTO Committee Meeting
The U.S. accused China of failing to inform World Trade Organization members of subsidy programs for steel, fisheries and “other key industries,” drawing criticism from China about WTO members’ investigations finding Chinese bank loans constituted grants subject to CV duties, according to a Geneva trade official. The exchange occurred during an Oct. 24 meeting of the WTO Committee on Subsidies and Countervailing Measures. The U.S., Japan, the EU and Australia reiterated concerns about a statement by China at the last committee meeting that it wasn’t obliged to answer questions about subsidy programs not included in its notifications to the WTO, the Geneva source said.
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An examination of yearly reports from six Chinese steel producers showed headings listing “government subsidies or grants,” with 160 programs listed in total, despite claims by China that it doesn’t have subsidy programs specific to steel producers, the U.S. said. The EU, Japan, Canada and Australia all emphasized the need for “transparency in this sector,” the Geneva source said. China said that “on steel … its notification included some policies relevant to the steel industry but those that were not specific to the steel industry were not included,” the source said. “In any case, China [said it] will study the matter and try to respond to the US concerns in its new subsidy notification.”
China also countered by criticizing EU and U.S. CV duty determinations that treated Chinese state-owned bank loans as grants. An EU determination involving hot-rolled steel from China didn’t provide any explanations or reasons it concluded that China was providing grants, and similar U.S. practices resulted in the calculation of high CV duty rates, China complained. The U.S. said Chinese law requires banks to lend in accordance with Chinese industrial policy, “so it seems the banks might be lacking independence,” the Geneva source said.
The U.S. also noted more than 40 mainly provincial subsidy programs for China’s fisheries sector, which still haven’t been notified despite WTO’s 2014 trade policy review of China identifying the programs. The U.S. also asked how it was possible for WTO members to negotiate new disciplines on fisheries subsidies -- on which members hope to reach an agreement during the December Ministerial Conference in Buenos Aires -- when they lack “even basic information on the subsidy programs of the world’s largest fishing nation,” according to the source. China responded that it had already clarified some of the programs, and also gave details on other programs during the meeting. Officials are working hard to collect information on other subsidy programs, China said, adding that “Rome was not built in a day,” and that all subsidy programs can’t be accounted for overnight.
Further, the U.S. criticized China for notifying the WTO about its “Famous Brands” program of export subsidies for Chinese-branded goods seven years after the program formally ended, and for not providing any information on the program’s replacement, the “Internationally Well-Known Brand” program. The U.S. noted that China’s lack of transparency about the replacement program raises questions about its consistency with WTO rules. But China said many of those program activities were established at the “sub-central level,” and that they have been “cancelled or abolished,” as far as China was aware. The U.S. then responded that it was “curious” there were “so many measures” that China said weren’t subsidies, and added that it had text of the measures that China said did not exist, translated from Chinese, showing that they “did indeed exist.”