US Files WTO Case Against China. Tell Us Something We Don't Know.
The United States has hit China with a WTO case, contending China has been subsidizing its exporters, particularly its largest and best known companies. The US government is alleging that China's central government, provinces and cities have all been paying subsidizing many Chinese companies that export.
As my kids would say, well duh!.
Since this has been going on since forever and since everyone knows it, the real question is why has the US brought this lawsuit now? I do not know. In fact, if anything, the timing seems very strange. First off, it would have been good politics to have brought it before the recent elections, but that was not done. Second, if the US wins and China has to stop subsidizing its exporters (or push those subsidies a bit further underground), this will mean higher prices for buyers in the US and elsewhere. Of course, these higher prices will also been US companies will be better able to compete with Chinese companies on the world market and that, no doubt is why this case has been brought.
Click here for the Office of the United States Trade Representatives "Fact Sheet" on this lawsuit [h/t to Laurel Delany of The Global Small Business Blog, who alerted me by email to this filing]
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Comments
ad hominem tu quoque? both sides seem to be planning protectionist measures. forgive my ignorance, but i wonder what WTO obligations hundreds of billions of dollars in loans and bailouts falls under...
Posted by: bocaj | December 20, 2008 1:31 AM
Looking at the complaint, there seems to be a lot less than meets the eye. The USTR is complaining about one specific program sponsored by the Ministry of Commerce designed to promote Chinese brands overseas. This also isn't the first complaint that the US has filed, and looking at what the Chinese government is accused up, it also seems marginal whether the program actually is against WTO rules.
It's also questionable whether the program actually has done anything useful. The "Famous Brands" program has existed since 2000. Have you heard of it? If not, then it is ironic that no one has heard about a program to develop Chinese brands in the global market.
Also I think it's hardly "obvious" that the central and local government has been subsidizing exports or that that they are doing anything that violates WTO rules.
Central and local governments generally want to make money from companies they manage and there's no real point in pumping money into them to increase exports. Usually any subsidy is designed to prevent employment, at which case you can just pump money into the company to manufacture more domestic products or do nothing at all.
Posted by: Twofish | December 20, 2008 10:30 AM
How does the military grandstanding from last week play into the [possible] trade war?
Posted by: robert | December 21, 2008 3:46 AM
It's extraordinarily difficult to gather the type of evidence needed to bring one of these cases in the WTO so it is no surprise that it has taken a long time to put this case together. China is very good at hiding evidence and it doesn't exactly cooperate in these investigations. China doesn't advertize their subsidies to their general public either. These are mostly unpublicized arrangements directly between Chinese gov't agencies and State Owned Enterprises. This is exactly the opposite of the transparency that Western govts function under.
It's about time that China was called out on for their multitude of illegal and unfair trade practices. I'm glad the US is doing so. The Europeans will, as usual, lay back and let the US take the criticism but will not hesitate to take advantage of the WTO rulings against China's policies.
Posted by: Jay | December 21, 2008 4:52 PM