Wednesday, September 05, 2007

U.S. Brings WTO Case Against China for Export Subsidies

Sources: WTO Probes China Export Subsidy Claims, U.S. Files WTO Case Against China, WTO Investigates Allegations of Illegal China Subsidies

On Friday the World Trade Organization (WTO) launched an investigation into China's exporting practices. This investigation was largely in response to the claim filed by the United States and Mexico accusing China of illegal subsidizing of exports. China allegedly provides subsidies, in part, in the form of tax breaks. For example, China has tax laws that discriminate against imported products or results in a tax break for domestic exports. The U.S. and Mexico claim that such practices violate the rules set by the WTO, which explicitly prohibit export subsidies.

Analysts observe that providing these types of subsidies may distort the market and create an unfair advantage for China. In bringing a case against unfair trade activities in China will, the U.S. government seeks to protect the rights and interests of American companies doing business in China. The U.S. had brought a case against China before the WTO earlier in the year regarding product piracy.

Would sanctions against China by the WTO be fair in light of the developmental differences between China and the U.S.? Are these disputes really about fairness or about putting the U.S.'s economic interests before China's developmental interests?

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