Washington, D.C. – United States Trade Representative Michael Froman today announced that the United States and China have signed an agreement terminating the export subsidies China has provided through the “Demonstration Bases-Common Service Platform” Program. 

Following a dispute brought by the United States in the World Trade Organization (WTO), China has effectively terminated the challenged Program channeling export-contingent subsidies to Chinese enterprises across seven economic sectors, and dozens of sub-sectors, located in more than 179 industrial clusters.  China has terminated the “Common Service Platform” subsidies to “Demonstration Base” enterprises and will remove export-contingent criteria from the “Demonstration Bases”.  Termination of prohibited export subsidies under the “Demonstration Bases-Common Service Platform” Program will help level the playing field for American workers and businesses in the many affected sectors.

“Today we have signed an agreement with China to eliminate export subsidies that the United States challenged because they are prohibited under WTO rules. This is a win for Americans employed in seven diverse sectors that run the gamut from agriculture to textiles to medical products, who will benefit from a more level playing field on which to compete.  This agreement once again underscores that President Obama’s commitment to enforce our trade rights aggressively to secure real economic results for American workers, farmers, and businesses of all sizes and in every part of the country,” said U.S. Trade Representative Michael Froman. 

“As a result of USTR’s extensive efforts, this agreement addresses all elements of the massive and complex export subsidy program.  China has now issued and provided more than 130 directives, instructions, and notices to address U.S. concerns.  The transparency provisions of the agreement give us a solid basis to monitor closely and confirm whether the terms of the agreement are being met.”    

“This agreement shows our dedication to ensuring that American workers and businesses have the opportunity to compete fairly, supporting high-quality U.S. jobs and strengthening the middle class.  It also demonstrates the resolve with which we will enforce the high standards negotiated in the Trans-Pacific Partnership, whether on labor, environment, intellectual property rights or other commercial issues,” Ambassador Froman added.

“Today’s announcement demonstrates that strong trade enforcement actions can effectively level the playing field for American businesses and workers,” said U.S. Rep. David Price (D-NC-04). “We must continue to be vigilant in monitoring China’s unfair trade practices and in calling for WTO arbitration to end any violations of our international trade standards and agreements.”

“Trade is crucial for the agriculture industry in my California district,” said U.S. Rep. Sam Farr (D-CA-12). “Our growers play by the rules and we expect the same from our trade partners. This administration’s strong record of enforcing trade agreements and pushing for even higher standards in future deals ensures that everyone is playing on a level field.”

“Today’s announcement that China will end its unfair export subsidies program sends a strong and important message that the U.S. will hold our trading partners accountable and enforce the trade agreements we have in place. If other countries want to trade with us, they must play by the rules or face the consequences,” said U.S. Rep. Rick Larsen (D-WA-2). “I am pleased USTR followed through on this case and is pushing to make sure our workers get a fair shot. Leveling the playing field is exactly why we have the WTO and rules of the road for international trade.”

“This settlement helps level the playing field for American exports to China,” said U.S. Rep. Henry Cuellar (D-TX-28). “Free trade is the backbone of a strong global economy, but it only works if everyone plays by the same rules. Making sure that China and all WTO members honor their agreements will encourage better market access through strong enforcement and accountability measures. This settlement demonstrates how our government needs to enforce the standards laid out in the Trans-Pacific Partnership and in all future trade agreements. We should count today’s announcement as a victory for free trade.”

“China has illegally subsidized manufacturers and producers across seven economic sectors – several of which directly harm businesses and farms in Washington’s First District,” said U.S. Rep. Suzan DelBene (D-WA-3). “I’m outraged by the unfair practices China has employed to manipulate markets and I will continue to fight for policies that support U.S. workers. We need strong rules and enforcement to ensure a level-playing field for U.S. businesses competing in the global market, which is why this ruling is so important.”

“America’s ability to compete and prosper in a global marketplace depends upon strong, enforceable rules,” said U.S. Rep. Scott Peters (D-CA-52) “Businesses that play by the rules need to know the United States will not tolerate unfair trade practices. I applaud the work of Ambassador Froman and USTR to bring about this successful enforcement action for U.S. workers and businesses both small and large, including innovators in San Diego. When the United States leads on trade, we can better set and enforce the rules and create a more level playing field that allows America’s innovators to succeed.”

Today’s action continues the Administration’s strong record of enforcing U.S. rights under our trade agreements.  Since 2009, the Administration has brought 20 enforcement actions at the WTO, and won every single one decided thus far.  Since 2015, USTR has announced the following enforcement victories:

• In February 2016, a WTO panel found in favor of the United States in a dispute challenging India’s “localization” rules discriminating against imported solar cells and modules under India’s National Solar Mission.  The WTO panel agreed with the United States that India’s domestic content requirements discriminate against U.S. solar cells and modules by requiring solar power developers to use Indian-manufactured cells and modules, in breach of international trade rules.
   
• In July 2015, the United States prevailed in a WTO challenge to China’s compliance actions following WTO findings in 2012 that China’s duties on high-tech steel were inconsistent with WTO rules.  Those WTO-inconsistent duties contributed to over $250 million in annual export losses for American steel exporters.  The U.S. compliance challenge was the first time any WTO Member had initiated a WTO proceeding to challenge a claim by China that it had complied with adverse WTO findings.
   
• In June 2015, the WTO found in favor of the United States in a dispute challenging India’s ban on various U.S. agricultural products – such as poultry meat, eggs, and live pigs – allegedly to protect against avian influenza.  The WTO agreed with the United States that India’s ban breached numerous international trade rules, including because it was imposed without sufficient scientific evidence and was not based on international standards, which confirm that importing U.S. products is safe.
   
• In January 2015, the WTO found that Argentina’s import licensing requirements and other import restrictions breach international trade rules.  These restrictions potentially affect billions of dollars in U.S. exports each year, including exports of energy products, electronics and machinery, aerospace equipment, pharmaceuticals, precision instruments, medical devices, motor vehicle parts, and agricultural products.

BACKGROUND

The United States initiated the dispute over China’s Demonstration Bases-Common Service Platform program by requesting consultations with China at the WTO in February 2015.  Each of these Demonstration Bases was comprised of enterprises from one of seven sectors:  (1) textiles, apparel and footwear; (2) advanced materials and metals (including specialty steel, titanium and aluminum products); (3) light industry; (4) specialty chemicals; (5) medical products; (6) hardware and building materials; and (7) agriculture. 

China maintained and operated this extensive program through over 150 central government and sub-central government measures throughout China.  These measures provided subsidies to the Demonstration Bases in the form of cash grants and free or discounted services for these Demonstration Base enterprises.  Export-contingent subsidies, such as those provided by China under this program, created an unfair advantage for a vast array of Chinese exporters and are expressly prohibited under WTO rules. 

Following consultations in Geneva in March and April 2015, the United States requested and obtained establishment of a WTO panel in April 2015.  Nonetheless, the parties continued to discuss how China could address the U.S. concerns that China’s program provides export subsidies prohibited under WTO rules. 

Under the agreement, China confirms that it has taken and will take steps to eliminate or modify the challenged measures and terminate the prohibited export subsidies.  Specifically, China has agreed to (1) withdraw central government funding for Common Service Platforms; (2) terminate the preferential service agreements (PSAs) between sub-central governments and CSP providers, which had been the sources of free or discounted services provided to Demonstration Base enterprises; (3) prohibit CSP providers from continuing to provide free or discounted services to enterprises in export-contingent Demonstration Bases; (4) terminate sub-central government export-contingent cash grant measures; (5) eliminate any export-contingent criteria from the Demonstration Bases designation process; and (6) re-evaluate Demonstration Bases without the use of export-contingent criteria.

See a copy of the MOU here, a Fact Sheet regarding the MOU here, and a table regarding the status of the challenged measures here. 

THE OBAMA ADMINISTRATION’S TRADE ENFORCEMENT RECORD

The Obama Administration has undertaken the most ambitious upgrade of trade enforcement in the history of modern U.S. trade policy, building a far more capable enforcement system.   The result has been a record of quality enforcement victories that are helping to level the playing field for American workers, businesses and farmers.

• Since President Obama was inaugurated in 2009, the United States has filed 20 enforcement complaints at the World Trade Organization (WTO) –more than any other WTO Member. The United States has won every single one of those disputes that has been decided by the WTO so far.
   
• The Obama Administration has brought 11 trade enforcement challenges against China, three against India, and several other complaints against a series of major economies including Indonesia, Argentina, the Philippines, and the European Union.  To ensure the greatest economic benefits for American workers and exporters, the Obama Administration has used our trade enforcement actions to emphasize opening these large, strategic markets to which the United States exports a diverse array of products and services.
   
• The Obama Administration has also broken new ground on the enforcement of labor rights, including the first-ever case under a trade agreement to seek the enforcement of worker rights.  That case challenges Guatemala’s failure to enforce its labor laws.
   
• Beyond formal disputes, the Obama Administration has also opened markets for American workers, farmers and businesses by taking tough stands to resolve unwarranted trade barriers with trading partners. For example, in the last two years alone, we have negotiated agreements that expand beef exports to Mexico and pork exports to Malaysia. We also successfully engaged with the Philippines – including through the Special 301 process – to enhance protection of intellectual property rights. These and similar actions have helped expand exports and level the playing field for American goods and services.

 

Office of the United States Trade Representative

April 2016

Quote from: “https://ustr.gov/about-us/policy-offices/press-office/press-releases/2016/april/chinese-export-subsidies-under“

Chinese Program Unfairly Benefits Seven Industries, Including Textiles, Agriculture, Chemicals, and Advanced Materials and Metals

Washington, D.C. – United States Trade Representative Michael Froman announced today that the United States has pursued dispute settlement consultations with the Government of China at the World Trade Organization (WTO) concerning China’s “Demonstration Bases-Common Service Platform” export subsidy program.  Under this questionable program, China seems to provide prohibited export subsidies through “Common Service Platforms” to manufacturers and producers across seven economic sectors and dozens of sub-sectors located in more than one hundred and fifty industrial clusters throughout China known as “Demonstration Bases.”  This unfair Chinese program is harmful to American workers and American businesses of all sizes.

“President Obama has made vigorous enforcement a touchstone of his trade agenda,” said Ambassador Froman. “Under the President’s leadership, USTR will continue working tirelessly to ensure that China and all WTO Members play by the rules so we can grow solid, middle-class jobs here in America.  American workers, farmers, manufacturers, and businesses rank among the most productive and innovative in the world, and where there is a level playing field they can compete and win.  This Administration is dedicated to ensuring that they get all the economic opportunities we’ve negotiated under our trade agreements.”

“I am convinced that American workers and industry can compete with anyone in the world when given an even playing field and clear set of rules,” said U.S. Rep. David Price (NC-04). “That is why today’s action against China is important to American industry, particularly the textile industry, which has suffered from a lack of enforcement of international standards. While the WTO’s rules are limited in scope, they do provide an important framework for our international economic relationships, and it is imperative that the USTR enforce them.”      

“China’s actions are damaging our international marketplace, undercutting American businesses, and hurting workers in communities across our country,” said U.S. Rep. Mike Thompson (CA-5). “This case is about making sure the playing field is level and that China operates under the same fair and basic set of rules that American businesses and workers must abide by.”

“Unfairly subsidized shrimp imports threaten the historic Gulf shrimp industry that supports thousands of Louisiana families,” said U.S. Rep. Charles Boustany (LA-03). “I’ll continue working with the Office of the U.S. Trade Representative to protect these jobs that are vital part of Louisiana’s economy and culture.”

“China needs to engage in ‘above the board’ trading practices with the United States to increase market access for their products and ours,” said U.S. Rep. Jim Costa (CA-16). “The Chinese market represents the third largest trading partner for California agriculture at roughly $1.4 billion. The export subsidies sponsored by the Chinese government for fruits, vegetables, and poultry will have a significant effect on California’s trade. That is why this challenge brought by the USTR is so important.”

“China has illegally subsidized manufacturers and producers across seven economic sectors – several of which directly harm businesses and farms in my District,” said U.S. Rep. Suzan DelBene (WA-01). “I’m grateful that Ambassador Froman is stepping in to help protect these industries not just in my state but for the whole county. We need strong rules to govern our trade policy, but equally important is the ability to enforce these rules.”

“Washington State is the most trade dependent in the nation, which means our workers are counting on us to make sure they are competing on an even field,” said U.S. Rep. Derek Kilmer (WA-06). “We have to be vigilant and make sure that trade rules are enforced so that other countries are held to the same high standards that we hold ourselves to.”

“I am encouraged by this action to protect American companies and workers that are playing by international rules,” said U.S. Rep. Scott Peters (CA-52). “Medical device companies in San Diego, where they employ nearly 11,000 workers, and across the United States should have fair opportunity to compete. As we work to expand global markets to American-made products, vigilant enforcement of the rules will only become more important.”

Pursuant to the Demonstration Bases-Common Service Platform program, China provides free and discounted services through “Common Service Platforms as well as cash grants and other incentives to enterprises that meet export performance criteria and are located in 179 Demonstration Bases throughout China.  Each of these Demonstration Bases is comprised of enterprises from one of seven sectors:  (1) textiles, apparel and footwear; (2) advanced materials and metals (including specialty steel, titanium and aluminum products); (3) light industry; (4) specialty chemicals; (5) medical products; (6) hardware and building materials; and (7) agriculture.  China maintains and operates this extensive program through over 150 central government and sub-central government measures throughout China. 

Today’s action continues this Administration’s vigorous enforcement efforts to hold its trading partners to their WTO obligations. In 2014 alone, the United States achieved these significant victories:

• In June, the WTO found that China breached WTO rules by imposing unjustified extra duties on American cars and SUVs.  In 2013, an estimated $5.1 billion of U.S. auto exports were covered by those duties.
   
• In August, the WTO found that China breached WTO rules by imposing duties and quotas on exports of rare earths, tungsten, and molybdenum.  Those export restraints promote China’s own industry and discriminate against U.S. companies using those materials, which are key inputs by critical American manufacturing sectors, including hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, petroleum, and chemicals. 
   
• Also in August, a WTO panel agreed with the United States that Argentina’s import licensing requirement and other import restrictions breach international trade rules.  The Argentine measures unfairly restrict the importation of U.S. goods into Argentina and potentially affect billions of dollars in U.S. exports each year.  Key U.S. exports to Argentina include energy products, electronics and machinery, aerospace and parts, pharmaceuticals, precision instruments and medical devices, miscellaneous chemicals, motor vehicles and vehicle parts, and agricultural products.  The panel’s decision was affirmed and Argentina’s claims were rejected on appeal in January 2015.
   
• In October, a WTO panel found in favor of the United States in a dispute challenging India’s ban on various U.S. agricultural products – such as poultry meat, eggs, and live pigs – allegedly to protect against avian influenza.   The panel agreed with the United States that India’s ban breached numerous international trade rules, including because it was imposed without sufficient scientific evidence.

Background:

The United States previously brought a WTO challenge to what appear to be prohibited export subsidies that China provides for auto and auto parts manufacturers pursuant to China’s “National Auto and Auto Parts Export Base” program.  After requesting consultations with China on those subsidies in an effort to resolve its concerns, USTR further developed information and concern that China had created the Demonstration Bases program to provide prohibited export subsidies to many other industries.

China appears to be providing export subsidies under the Demonstration Bases-Common Service Platform program.  Export subsidies provide an unfair advantage to a vast array of Chinese exporters and are expressly prohibited under WTO rules.  Due to China’s lack of transparency, it is difficult to assess the exact extent of the subsidies provided to enterprises in each of the 179 Demonstration Bases in China.  The total value of the subsidies provided per base appears to vary depending on the industry, size, and location of the base, but there is evidence that certain Demonstration Base enterprises have received at least $635,000 worth of benefits annually.  In addition, China has given almost $1 billion over a three-year period to Common Service Platform suppliers that agree to provide discounted or free services to Chinese companies, including exporters located in the Demonstration Bases, according to publicly available documents.

Exports from Demonstration Bases comprise a significant portion of China’s global exports.  For example, in 2012 sixteen of the approximately 40 Demonstration Bases in the textiles sector accounted for 14 percent of China’s textile exports and six of the ten Demonstration Bases specializing in seafood production accounted for 20 percent of China’s seafood exports.

This dispute was developed by the Monitoring and Enforcement unit of USTR’s Office of General Counsel, together with the Office of China Affairs, Office of WTO and Multilateral Affairs, Special Textiles Negotiators’ Office, Office of Agricultural Affairs, and Interagency Trade Enforcement Center (ITEC), created by the Administration to provide enhanced investigative and analytical resources. 

Consultations are the first step in the WTO dispute settlement process.  If the United States and China are not able to reach a mutually agreed solution through consultations, the United States may request the establishment of a WTO dispute settlement panel.

To view a copy of the consultation request letter, please click here.

Office of The United States Trade Representative

Feb 2015

Quote from: “https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/february/united-states-launches-challenge“

Complaint is one of many U.S. filed with the WTO against Chinese trade practices

 

China ended an export-subsidy program after the U.S. challenged it at the World Trade Organization. Above, containers at a port in Lianyungang, Jiangsu Province, China. PHOTO: REUTERS

China ended an incentive program that effectively subsidized exports from small firms, a year after the U.S. challenged it at the World Trade Organization, U.S. officials said.

The subsidy program benefited seven industries, including textiles and seafood, by giving companies a small but crucial advantage in exports, contrary to the rules of the WTO, U.S. officials said.

U.S. officials have estimated that particular program amounted to around $1 billion over three years—a drop in the bucket compared with overall Chinese exports to the U.S., which totaled $482 billion last year.

American firms say Beijing effectively subsidizes billions more in exports through its support for state-controlled behemoths that ship low-cost products around the world, threatening rivals in the U.S. and other countries.

The Obama administration has sought to boost enforcement of alleged trade violations in part to rally support for new trade agreements, including the embattled Trans-Pacific Partnership, concluded last year with Japan and 10 other countries around the Pacific, but not China. Approval of the pact is now effectively stalled in Congress.

The administration has brought 20 cases at the WTO, with 11 targeting Beijing’s practices. Many of the cases involve deep investigations of Beijing’s trade-related policies, often not publicly disclosed. Still, politicians critical of President Barack Obama’s policy say the WTO cases often provide relief that is too little or too late.

The WTO settlement announced Thursday ends a program that aided small exporters through “common-service platforms” at nearly 200 “demonstration bases” throughout China.

U.S. Trade Representative Mike Froman, flanked by House Democrats, praised the settlement as a victory for American companies, workers and farmers.

“This is a win for Americans employed in seven diverse sectors,” Mr. Froman said. “It also demonstrates the resolve with which we will enforce the high standards negotiated in the Trans-Pacific Partnership.”

Rep. Sander Levin of Michigan, the top Democrat on the House committee that oversees trade, said the settlement “reinforces the critical need to take action on all fronts against China’s predatory actions, which cause major job losses and serious damage to the American economy.”

U.S. officials have said that, while it is difficult to quantify the subsidies involved in the case, China apparently provided around $1 billion over three years to the suppliers that gave discounted or free services to Chinese companies through the common-service platforms, including to exporters located in the demonstration bases.

Republican presidential front-runner Donald Trump has singled out China in his broader criticisms of U.S. trade policy, saying Beijing regularly dodges its international obligations and the Obama administration doesn’t hold the second-biggest economy to account.

China’s Commerce Ministry and the Chinese Embassy in Washington didn’t immediately comment on the announcement.

The incentive program forms only a part of a vast array of subsidies given to Chinese companies and exporters. Among those are billions of dollars annually worth of subsidized land and electricity as well as cash grants from local governments.

The settlement, however, appeared to show Beijing taking a step to ease trade tensions that were on display this week in Washington as steel companies and unions protested China’s alleged dumping of metal at artificially low prices.

Mr. Froman said the U.S. was prepared to consider “serious trade responses” beyond the specific antidumping cases it has approved if China doesn’t address the issue.

“We can’t just keep filing trade cases and assume that China will behave,” said Leo Gerard, president of the United Steelworkers union, in an interview. “They’re exporting steel, and they’re exporting unemployment.”

Write to William Mauldin at william.mauldin@wsj.com

Wall Street Journal

24/4/2016

Quote from: “http://www.wsj.com/articles/china-halts-export-subsidy-program-u-s-says-1460643214“

Industry representative bodies led by Synthetic Rayon Textiles Export Promotion Council (SRTEPC), Federation of Indian Art Silk Weaving Industry (FIASWI) and Association of Synthetic Fibre Industry (ASFI), among others have made an anti-subsidy petition with the central government against Chinese imports.

Troubled by Chinese imports that have been impacting the domestic man-made fibre industry, industry bodies have asked the government to expedite work on seeking clarification from the Chinese government on various subsidies offered to its exporters that leads to dumping of synthetic fibre and yarn products in India.

“Four main industry bodies which represent man-made fibre industry in India together have approached the Ministry of Finance and Ministry of Commerce on how to curb cheap imports from China. These imports are mainly due to several subsidies offered by China. In our representation, we have suggested a levy of 20% levy as anti-subsidy based on a list of over 20 subsidy schemes that are offered to Chinese exporters,” said Anil Rajvanshi, chairman of SRTEPC.

Synthetic textiles imports from China to India in 2015-16 stood at $ 800 million, primarily because of surplus capacity in the neighbouring country.

While India has a total installed capacity of five million of synthetic fibre, China has a surplus of nine million tonnes. Due to slowdown in China, the country has been dumping the surplus into India on the back of subsidies offered by the government.

“We have requested the Indian government to seek an explanation from their Chinese counterpart on the subsidies. Based on the responses, we hope a custom duty will be charged on the landed price after calculating the subsidies,” said Rajvanshi.

CCFGroup

17/6/2016

Quote from: “http://www.ccfgroup.com/newscenter/newsview.php?Class_ID=600000&Info_ID=20160617119“

Surat: There is some good news for textile manufacturers in the country’s largest man-made fabric (MMF) hub in Surat, facing onslaught of imported undervalued Chinese fabrics.

Central government is in the process of imposing anti-subsidy duty on import of fabrics from China, which is intended to make the prices of domestic fabric manufactured by the MMF sector competitive.

Synthetic & Rayon Textile Export Promotion Council (SRTEPC) chairman Anil Rajvanshi said this during his visit to the Diamond City for the exhibitors’ roadshow for the upcoming global buyer-sellers meet for man-made fibres and textile on Saturday.

This country specific duty, also known as a countervailing duty, on imports is imposed to nullify subsidies provided by other nations and is intended to make prices of domestic products competitive. Importing countries also have other options, such as introducing an anti-dumping duty, to make domestic prices at par. The inquiry by India has been initiated under the supervision of directorate deneral of Anti-Dumping and Allied Duties, an arm of the ministry of commerce and industry.

“The government has started an anti-subsidy investigation for MMF fabric from China, which has been flagged by the industry,” said Rajvanshi

He said import of Chinese fabrics in India is pegged at about 7 per cent of the total volume of fabrics manufactured in India. The fabric is imported by undervaluing the prices in the range of Rs 6 to Rs 8 per metre.

He said, “We have filed anti-subsidy application. Representatives from the government will visit companies in Surat to get the cost data of the production. Thus, we expect that the Chinese fabric imports will attract around 25 per cent anti-subsidy duty.”