China agrees to scrap export subsidies

By Bill Tomson

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WASHINGTON, April 14, 2016 - China is eliminating a complex web of subsidies the country has been using to boost its exports of agricultural, medical, textile and other goods, U.S. Trade Representative Michael Froman announced Thursday.

“Today we have signed an agreement with China to eliminate export subsidies that the United States challenged because they are prohibited under WTO rules,” Froman said in a press conference, flanked by four House members.

USTR officials said they calculated that China has spent about $1 billion over the past three years, providing free or discounted services to industrial centers that specialize in exporting and that put U.S. producers and exporters at a disadvantage in the global market.

Lets Talk Food

China's elimination of the subsidies is particularly good for U.S. farmers and agricultural exporters, Rep. Sam Farr, D-Calif., said.

“Trade is crucial for the agriculture industry in my California district,” Farr said. “Our growers play by the rules and we expect the same from our trade partners. This administration's strong record of enforcing trade agreements and pushing for even higher standards in future deals ensures that everyone is playing on a level field.”

USTR officials highlighted seafood as a sector that has been highly subsidized by the Chinese government in order to boost exports, but Farr pointed to damage in his own central California district.

Chinese shipments of commodities like garlic are especially damaging to U.S. producers, he said. He noted that his constituents have complained often that you can buy imported Chinese garlic in Gilroy, California -- home to the annual Gilroy Garlic Festival and the Miss Gilroy Garlic Beauty Pageant - at lower prices than the domestic product.

Democratic Reps. Henry Cuellar of Texas, Scott Peters of California and Kurt Schrader of Oregan also attended the press conference to praise the USTR victory. Rep. Suzan DelBene, D-Wash., who was not at the event, said in a statement, “China has illegally subsidized manufacturers and producers across seven economic sectors - several of which directly harm businesses and farms in Washington's First District.”

But the U.S. win went further than just stopping Chinese export subsidies, Froman said. It shows that the U.S. is capable of enforcing trade rules and provides an example of how the U.S. will make sure that foreign trade partners live up to promises in the 12-country Trans-Pacific Partnership, he explained.

“This agreement shows our dedication to ensuring that American workers and businesses have the opportunity to compete fairly, supporting high-quality U.S. jobs and strengthening the middle class,” Froman said. “It also demonstrates the resolve with which we will enforce the high standards negotiated in the Trans-Pacific Partnership, whether on labor, environment, intellectual property rights or other commercial issues.”

Froman and other Obama administration officials are lobbying lawmakers to approve the TPP this year, a deal the American Farm Bureau Federation says will increase net farm income by $4.4 billion annually.

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It was on Feb. 11, 2015, that the U.S. first filed a challenge with the World Trade Organization against China's export subsidy scheme with the awkward name Demonstration Bases-Common Service Platform Program, and the WTO established a dispute panel about two months later.

In the end China chose not to fight the U.S. complaint and on Thursday signed an agreement in Switzerland to dismantle the export subsidies that supported 179 industrial complexes throughout the country.

When asked if the U.S. was looking into other subsidy schemes being employed by China, one U.S. trade officials responded: “We're constantly prowling … looking for other things. We're going to continue to that. We're pretty good at finding these things out.”

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