China has ended an incentive program that effectively subsidized exports from small firms, a year after the US challenged it at the World Trade Organization (WTO), the Wall Street Journal reported.
The subsidy program is said to have benefited seven industries, including textiles and seafood, by giving companies a small but crucial advantage in exports, contrary to the rules of the WTO.
The WTO settlement announced Thursday ends a program that aided small exporters through “common-service platforms” at nearly 200 “demonstration bases” throughout China, the report said.
US Trade Representative Mike Froman, flanked by House Democrats, praised the settlement as a victory for American companies, workers and farmers.
“This is a win for Americans employed in seven diverse sectors,” Froman said. “It also demonstrates the resolve with which we will enforce the high standards negotiated in the Trans-Pacific Partnership.”
Rep. Sander Levin of Michigan, the top Democrat on the House committee that oversees trade, said the settlement “reinforces the critical need to take action on all fronts against China’s predatory actions, which cause major job losses and serious damage to the American economy.”
While it is difficult to quantify the subsidies involved in the case, American officials have said that China may have provided around US$1 billion over three years to the suppliers that gave discounted or free services to Chinese firms through the common-service platforms.
The incentive program, however, forms only a part of a vast array of subsidies given to Chinese companies and exporters.
Firms get huge benefits through subsidized land and electricity as well as cash grants from local governments, the Journal noted.
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