US Says China Agrees to End Some Subsidies
US Says China Agrees to End Some Subsidies
New York Times -
By STEVEN R. WEISMAN WASHINGTON, Nov. 29 - Bowing to American pressure on the eve of high-level talks to reduce economic tensions, China agreed today to end a dozen subsidies that promote exports and discourage imports of steel, wood products, …
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The Chinese actions affect exports by companies that have foreign investment or are joint ventures with foreign companies. Nearly 60 percent of Chinese exports are produced by these companies.
While the intent is to help American companies compete against China, some of the loss of subsidies would be borne by companies that export goods to the United States and owned at least in part by Americans.
Susan C. Schwab, the United States trade representative, announced the agreement by China, signed earlier in the day at the World Trade Organization in Geneva. She hailed the action as “a victory for U.S. manufacturers, producers and workers” and a vindication of using negotiations to resolve trade disputes.
Ms. Schwab said she could not identify any names of American or other companies affected by the new agreement without their permission.
The agreement came only two weeks before Ms. Schwab is to join Treasury Secretary Henry M. Paulson Jr. and other Cabinet members for a high-level meeting of the “strategic economic dialogue” with China that Mr. Paulson launched last year to reduce tensions with China.
The dialogue is aimed at resolving tensions that have mounted along with the trade deficit, which soared to $232 billion last year and is likely to go significantly higher this year.
Ms. Schwab said there was no immediate information on how many exports would be affected, in part because China was eliminating a set of 12 different subsidy and loan laws on its books, and it was not clear how many companies had actually taken advantage of them.
The agreement by China left intact other subsidies of exports that the United States is still challenging in certain kinds of steel products, heavy-duty tires, paper and chemicals. These challenges are to subsidies and government assistance that American laws deem unfair and subject to duties imposed on imports.
Also unresolved are American complaints that China is using regulations and other practices to favor exports and discourage imports on a broad array of manufactured goods, as well as separate complaints that China has done little to crack down on piracy and counterfeit goods of software, videos and consumer products.
Nor does it affect the principal complaint that the Chinese are keeping the value of their currency, the yuan, artificially low to promote exports.
The Chinese have been irate over American actions challenging their economic practices at the World Trade Organization, and this has aggravated efforts to resolve the disputes through negotiations.
But Ms. Schwab said the agreement on subsidies today vindicated the administration’s approach of using negotiation to resolve disputes, and to oppose punitive legislation that is pending in Congress.
http://www.nytimes.com/2007/11/29/business/
worldbusiness/29cnd-trade.html?ref=worldbusiness