China Resolves WTO Case by Ending Subsidies of ‘Famous Brands’

Dec. 19 (Bloomberg) -- China resolved a trade dispute with the U.S. by agreeing to end dozens of subsidies that promote its exports, the Obama administration said.

The agreement settles a year-old U.S. complaint at the World Trade Organization accusing China of violating global trade rules by providing cash grants, loans and research funding to makers of so-called famous brands products including apparel, agriculture goods and electronics.

“We have signed an agreement with China confirming full elimination of the numerous subsidies we identified as prohibited under WTO rules,” U.S. Trade Representative Ron Kirk said yesterday in an e-mailed statement.

The WTO case was filed by the Bush administration, which said it uncovered 70 different subsidies that are prohibited by global trade rules because they are aimed at boosting exports. That total rose to 90 counting provincial subsidies, the U.S. trade office said yesterday.

The Obama administration also has challenged China’s trade policies, imposing tariffs of 35 percent on tire imports from China in September and filing a WTO complaint against China’s use of export curbs on raw materials used in steel production and manufacturing.

U.S. trade officials have said the amount of subsidies for famous brands is difficult to calculate because China’s system isn’t transparent. Aid to textile and apparel firms alone totaled hundreds of millions of dollars, according to the National Council of Textile Organizations.

The U.S. was joined by Mexico and Guatemala in its WTO complaint, which said the subsidies were improperly used to promote exports.

Wang Baodong, a spokesman for the Chinese Embassy in Washington, said that China “has been standing for settling disputes with the U.S. on the basis of mutual respect and mutual accommodation of each other’s concerns, and by following international trade rules.”