WASHINGTON — China has agreed to end a program of export subsidies for textiles, apparel and other products that the U.S. said gave Chinese brands an unfair competitive advantage.

This story first appeared in the December 21, 2009 issue of WWD. Subscribe Today.

The agreement, announced by the U.S. Trade Representative’s office on Friday, ended a World Trade Organization dispute the U.S. filed against China in December 2008 over dozens of subsidies, including textiles and apparel, home appliances, agricultural and food products, light manufacturing industries, metal and chemical products, medicines and health products.

The U.S. raised concerns over subsidies to brands from central, provincial and local governments to help promote sales and recognition of Chinese exports. The subsidies allegedly came in the form of government aid such as preferential loans and cash grants to brands.

The U.S. charged the policies violated WTO rules and gave the products an unfair advantage. More than 90 measures were identified by the U.S. as being inconsistent with WTO guidelines. Mexico and Guatemala joined the U.S. complaint.

“We have signed an agreement with China confirming full elimination of the numerous subsidies we identified as prohibited under WTO rules,” said U.S. Trade Representative Ron Kirk. “This outcome represents a victory for the full spectrum of U.S. manufacturers and their workers, given the reach of these Chinese industrial policy initiatives.”

The domestic textile industry lobbied the USTR to initiate action against China before the case was filed.

“We’re pleased that they have successfully negotiated an end to these subsidies,” said Cass Johnson, president of the National Council of Textile Organizations. “We’d also like more information about which subsidies they were able to put an end to.”

Importers initially expressed concern over the impact the case could have on Chinese apparel exports, but welcomed the resolution of the case.

“The fact that there’s a settlement is very positive, it sends a message that both the U.S. and China are taking their WTO commitments seriously,” said Julia Hughes, senior vice president international trade for the U.S. Association of Importers of Textiles and Apparel. “We hope as we learn more details about the agreement that it should have a positive impact.”

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