WTO to probe Chinese industrial subsidies

Geneva, August 31:

The World Trade Organisation (WTO) will certainly open a formal investigatio-n today into US and Mexic-an allegations that China is providing illegal subsidies for a range of industries.

The North American countries will make their second request for an investigative panel at a meeting of the WTO’s dispute settlement body. China bl-ocked a first request last month, but cannot under WTO rules delay a panel’s establishment.

Beijing, meanwhile, is expected to prevent the global commerce body from launching a separate probe of Chinese rules for protecting intellectual property rights. But the move might only push back creation of a panel until September, when Wa-shington can bring up the issue at the next meeting of the WTO’s dispute body.

The two disputes were brought to the global commerce body by the administration of US president George W Bush as the Democrat-controlled US Congress has stepped up pressure on it to do something about America’s soaring trade deficits and lost manufacturing jobs, which critics blame in part on unfair trade practices by foreign nations.

The US trade deficit set a record for the fifth consecutive year in 2006 at $765.3 billion. The imbalance with China grew to $232.5 billion, the highest ever with a single country.

In the subsidies dispute, the US accuses Beijing of using WTO-prohibited tax breaks to encourage Chinese companies to export more to the US while imposing tax and tariff penalties to limit purchases of US products in China. Mexico later made its own complaint.

“China is providing numerous subsidies that appear to be prohibited under WTO rules,” US trade lawyer Juan Millan told the WTO’s dispute body last month. “China offers tax refunds, reductions and exemptions that discriminate against imported pro-ducts.