End to Chinese brand export subsidies

The Chinese government has agreed to end a range of subsidies that help boost sales of Chinese-branded merchandise around the world -- including apparel and textiles -- rather than face a fight with the United States at the World Trade Organisation (WTO).

The office of US Trade Representative said the deal marks the end of "numerous subsidies we identified as prohibited under WTO rules." The agreement between Washington and Beijing brings to a close legal action begun by the United States at the WTO last December.

In its case, the United States said it had identified more than 90 official measures "providing what appeared to be WTO-inconsistent financial support." These included cash grant rewards for exporting, preferential loans for exporters, research and development funding to develop new products for export, and payments to lower the cost of export credit insurance.

The subsidies, the United States said, were tied to exports, "giving an unfair competitive advantage to Chinese products and denying US manufacturers the chance to compete fairly with them."

Key to the case were three central government initiatives promoting famous Chinese brand merchandise -- the Famous Export Brand initiative, the China World Top Brand initiative and the China Name Brand Products initiative.

But the United States also identified several other subsidy programmes that appeared to benefit Chinese exports -- including textiles -- regardless of whether they were famous brands. US Trade Representative Ron Kirk said: "The termination of the subsidies will level the playing field for American workers in a wide range of manufacturing and export sectors."

News Source: AEPC India