China Still Won’t Cop to Hundreds of Steel Subsidies, U.S. Says

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By Bryce Baschuk

The Trump administration scoffed at China’s claim that it doesn’t offer any specific subsidies for steel companies, according to a document published by the World Trade Organization April 23.

Specifically, the U.S. asked China to explain how it’s possible for the government not to offer any subsidies to steel companies when the companies themselves said they receive “hundreds” of government subsidies in their annual reports.

The U.S. urged China to be more transparent about its subsidy reports—which each WTO member must submit on an annual basis, as required by the WTO Subsidies and Countervailing Measures agreement.

The U.S. previously alleged that Beijing offers more than 150 subsidy programs to Chinese steel companies such as the Wuhan Iron & Steel Corp., Hesteel Group Co. Ltd., and Angang Steel Co. Ltd.

Last year Trump administration officials said Beijing’s government subsidies bolstered Chinese steel production capacity by more than 160 percent since 2009 and have contributed to global overcapacity in the steel sector.

Trump has taken a hard-line approach to China’s overcapacity in steel production and launched 25 percent tariffs on steel products that the administration said China is exporting at unfairly low prices.

Show Us Your Data

Despite being a WTO member for more than 15 years, China has only submitted one complete report that includes its central and sub-central subsidy data, the U.S. said.

The U.S. also criticized China’s latest report for omitting complete information about the extent to which the country’s sub-central entities offer subsidies to Chinese farmers and manufacturers.

Washington noted that only 20 of China’s 32 sub-central entities are included in the country’s most recent report to the WTO Committee on Subsidies and Countervailing Measures.

“The United States considers this to be inadequate given the prevalence of subsidy programs administered by sub-central authorities, as well as a history of prohibited subsidies being provided by sub-central entities,” the filing said.

Fishing Subsidies

The U.S. also asked why China hasn’t submitted any information about its wild capture fishery subsidy programs, which are mostly allocated at the sub-central level, the U.S. filing said.

The question is relevant to the ongoing WTO negotiations to prohibit fishery subsidies that contribute to overcapacity and overfishing, as well as to ban subsidies that contribute to illegal, unreported, and unregulated fishing.

The U.S. also asked why China didn’t notify nearly 80 subsidy measures related to government funding for China’s Incentive Fund for “Famous-Brand Products,” which provides grants, loans, and other incentives for certain Chinese products.

In 2010, China ended dozens of subsides previously offered by its “Famous Export Brand and World Top Brand” programs after the U.S. filed a WTO dispute case that alleged its subsidies violated international trade rules.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bloomberglaw.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bloomberglaw.com

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