US-China Subsidy Row: Is Pot Calling The Kettle Black

New Delhi, Nov 2: | Updated: Nov 3 2003, 05:30am hrs
After the European Commission, it is now the US which has objected to the lack of transparency in subsidies being provided by China to its industry. In a recent submission to the World Trade Organisation (WTO) committee on subsidies and countervailing measures, the US has questioned the compatibility of the subsidies provided to the Chinese textile industry with WTO regulations.

In its list of questions posed to China as part of the countrys transitional review mechanism, the US pointed out that reports indicated that subsidies were available in the textile industry for manufacturing, financing mill establishments and purchasing raw materials.

It asked China to provide details on such programmes in accordance with the required subsidy notification format, including the type of subsidy, timeline of the programme and recipients.

The US also asked China to explain what role the China National Textile Industry Council played to support subsidy programmes for the textile industry.

It was pointed out by the US that China had not yet submitted its subsidy notifications although it had informed exactly a year ago that it was collecting information to the effect and would notify when the information was complete, accurate and sufficient.

Is China actively working to collect the information to be submitted, the US asked in its report. It asked China to describe the problems that are preventing it from making its notification and what type of information was the Government of China relying on to assemble its notification.

A month back, the EC, too, had pointed out snags in Chinas subsidy regime and had questioned the sops being provided by China to its export-oriented units.

The EC said it had noticed that the Shanghai Foreign Investment Center provided information regarding a number of incentives given to export-oriented enterprises in its official website. The units are promised priority in supplying water, electricity, transport and telecommunication charges at par with the state-owned companies, priority for short-term funds or other necessary loans, exemption from local income tax after expiration of normal income tax exemption based on the percentage of products exported and preferential charges for land use.

The EC asked China to provide detailed information on these and other similar provisions in the agreed subsidy notification format and explain how such measures were compatible with the obligations resulting from the ASCM.

With pressure mounting on China to become more transparent, it remains to be seen when the country comes up with its subsidy notifications.