WASHINGTON — U.S. Trade Representative Michael Froman said Friday the World Trade Organization will establish a dispute settlement panel on April 22, at the request of the U.S., after consultations with China failed to resolve its concerns in a case targeting a broad Chinese export subsidy program encompassing seven sectors, including apparel, textiles and footwear.
Froman said the U.S. held consultations with China on March 13 and April 1 and 2, but failed to reach a resolution in a broad WTO case the U.S. filed in February. The U.S. is challenging China’s “Demonstration Bases-Common Service Platform” export subsidy program which American officials claimed provided $1 billion over a three-year period to suppliers. These suppliers in turn gave discounted or free services to Chinese manufacturers that export in the sectors identified. The value of subsidies provided varied, but officials said there is evidence that certain “base enterprises” have received at least $635,000 worth of annual benefits.
“This program appears to grant unfair, prohibited export subsidies to a large range of Chinese manufacturers and producers, from sectors like textiles to agriculture to chemicals to advanced materials and metals,” USTR said.
Exports from the Demonstration Bases program comprise a “significant portion of China’s global exports,” U.S. trade officials have claimed.
In 2012, 16 of the estimated 40 “demonstration bases,” or clusters of companies, in the textile sector allegedly receiving subsidies accounted for 14 percent, or $33.25 billion, of China’s textile exports to the world, according to the U.S. The other six sectors identified by the U.S. as being subsidized by China’s program include advanced materials and metals, light industry, specialty chemicals, medical products, hardware and building materials, and agriculture.
Froman said the U.S. will continue to hold countries like China “to account at the WTO so we can unlock all the economic opportunities we’ve negotiated in our agreements and help trade deliver for Main Street.” He said, “Growing Made-in-America exports to support more well-paying jobs here in America is a key component of the President’s Middle-Class Economics agenda and upholding the high trade standards that the U.S. stands for is vital to that effort.”