By and  on June 5, 2007

WASHINGTON — The Bush administration on Monday asked the World Trade Organization to prohibit five types of government subsidies, including lending to non-credit-worthy companies.

Domestic textile companies long have charged that the supports give foreign producers, particularly those in China and Vietnam, an unfair advantage in the global market.

U.S. negotiators offered the proposal as part of the Doha Round of trade talks. The negotiations are an attempt to overhaul the world trading system by slashing tariffs and removing other barriers to trade, but the talks have suffered a series of setbacks.

"It's time to take the next step in the development of stronger WTO rules that will rein in the use of industrial subsidies," U.S. Trade Representative Susan Schwab said in a statement. "The subsidies we want to prohibit maintain inefficient production capacity in industries ranging from steel to semiconductors."

The U.S. proposal also addresses subsidies that compensate for operating losses, equity investments in non-credit-worthy companies and other types of financing.

WTO member countries can only bring trade cases to address export subsidies and import substitution subsidies. In February, the U.S. initiated a WTO subsidies case against China, starting a process that could take years to be resolved.

In Geneva, trade diplomats said the viability of the U.S. largely hinges on the reaction of major emerging economies.

"This could be a deal maker or a deal breaker," said a WTO ambassador, who spoke on the condition of anonymity. "We still have to see. The crucial question will be how China reacts to this and, to an extent, India and also Brazil."

A senior Chinese official said, "There's no official position" on the proposal.

China and other WTO members are expected to react to the U.S. text during a session of the Doha rules talks, to be held next week. Diplomats said the Bush administration has indicated that the proposal commands "broad" bipartisan support in the U.S. Congress and across the industry.

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