US: Chinese subsidy victory claimed

By Keith Nuthall | 22 December 2009

The United States is claiming victory in a trade dispute with China, after Beijing announced it would scrap subsidies for products including automotive parts and vehicles.

Washington had launched formal disputes proceedings at the World Trade Organisation (WTO), where it argued these handouts were export subsidies banned under WTO rules.

Claiming there have been "dozens" such subsidies, US Trade Representative (USTR) Ron Kirk said: "I am very pleased we have signed an agreement with China confirming full elimination of the numerous subsidies we identified as prohibited..."

Chinese government documents showed automotive products sold with such financial help included: large and medium passenger cars; internal combustion engine pistons, packed bed filters, pump levers and fuel injectors; automotive vehicle-bridge, radiator, automotive drive shaft and muffler assemblies; catalytic converters; lithium ion batteries; automotive glass; aluminium alloy wheels; and full-steel radial tyres.

The documents did not however state the subsidies' value, and nor have US government statements.

Washington clearly regarded them as significant however, with the USTR office saying their abolition "will level the playing field for American workers"; they will also apply to other Chinese export markets.

The USTR regarded these handouts as export subsidies "because they are granted on the condition that the recipients meet certain export performance criteria."