US, China sign deal to end export subsidies program

The United States and China have signed an agreement that eliminates a significant subsidies program used by Beijing to bolster its exports across several sectors.

U.S. Trade Representative Michael Froman said the deal will not only help U.S. workers but highlights the Obama administration’s commitment to challenging violations of the World Trade Organization’s international trade rules.

{mosads}Froman called the deal 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,” Froman said.

The subsidy program affected seven sectors: textiles, apparel and footwear; advanced materials and metals (including specialty steel, titanium and aluminum products); light industry; specialty chemicals; medical products; hardware and building materials; and agriculture.

“Manufacturers welcome the U.S.-China agreement announced today that terminates a substantial Chinese export subsidy program, which has sought to advantage a wide range of Chinese manufacturing and other industries,” said Linda Dempsey, vice president of international economic affairs for the National Association of Manufacturers.

China has issued more than 130 directives to address U.S. concerns, and has agreed to transparency provisions that allow for close monitoring of the agreement’s terms, the USTR said.

The United States had challenged 175 Chinese government legal instruments in a WTO panel request in April 2015. Since then, China has terminated, amended, replaced or allowed them to expire. 

The move earned praise from several lawmakers.

House Ways and Means Committee ranking member Sandy Levin (D-Mich.) said that the “announcement is significant” and that “this 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.”

In a call with the media on Wednesday, Froman insisted that the Obama administration will continue aggressively enforcing global trade rules and its current trade agreements.

The Obama administration is trying to build support on Capitol Hill for the 12-nation Trans-Pacific Partnership, which faces a tough road to passage in a presidential election year that is overflowing with anti-trade rhetoric from most of the Republican and Democratic candidates.

“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,” said Rep. Rick Larsen (D-Wash.).

“If other countries want to trade with us, they must play by the rules or face the consequences,” Larsen said.  

Rep. David Price (D-N.C.) echoed Larsen, saying that the agreement with China “demonstrates that strong trade enforcement actions can effectively level the playing field for American businesses and workers.”

“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,” Price said.

On Feb. 11, 2015, the United States filed a challenge in the WTO against China’s “Demonstration Bases-Common Service Platform” program that provides prohibited export subsidies — cash grants and free or discounted services — to Chinese enterprises located in 179 industrial clusters throughout China known as “Demonstration Bases.” Each of those bases was made up of enterprises from one of seven sectors, the USTR said. 

A WTO panel was established in April 2015 as the United States and China continued to discuss how U.S. concerns could be addressed.