China, U.S. face-off over export subsidies

Chinese commerce minister, Chen Deming, says the U.S. is violating free trade measures by imposing higher duties on products from China.

March 7, 2012   by The Canadian Press

BEIJING—China’s commerce minister criticized new trade enforcement measures approved by the U.S. Congress as a violation of free trade, but has acknowledged that some local Chinese authorities might be improperly subsidizing exporters.

Chen Deming said Beijing is committed to following World Trade Organization (WTO) free-trade principles but insisted it is not bound by the laws of individual countries.

“The recent move by the U.S. Congress is not consistent with U.S. laws and WTO rules,” Chen said.

The U.S. House of Representatives approved a measure Tuesday affirming the powers of the Commerce Department to impose higher duties on goods from China and other state-dominated economies that subsidize exports. The Senate approved the measure Monday.

The measure is a response to a U.S. court ruling in December that Commerce lacked the authority to impose such duties. The bill would ensure that 24 existing tariff orders —23 of them directed at Chinese subsidies—and six pending investigations remain valid. The other order is directed at Vietnam.

Chen appealed for a “heart-to-heart dialogue” with the U.S. over what constitutes a subsidy, noting that Washington provided aid to American automakers following the 2008 financial crisis.

“The Chinese central government has no prohibited subsidies provided to economic entities,” Chen said. “But China is a big country. At some regional or subnational level there might be some subsidies that might be problematic.”

The U.S. Commerce Department is investigating whether Chinese producers export solar panels and equipment to the U.S. at improperly low prices because they receive subsidies in the form of low-cost land and other support.

Chen said Beijing has tried to avoid protectionist measures in line with appeals by leaders of the Group of 20 major developed and emerging economies to help restore global growth. He accused Washington of raising trade barriers but gave no details.

In December, the U.S. ambassador to the WTO, Michael Punke, accused Beijing of increasing its intervention in the economy despite market-opening pledges. He said China “seems to be embracing state capitalism more strongly each year.”

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