US Challenge to China Export Subsidy Program

Dear Friends,

We wanted to make sure you are aware of a recent development in the US-China trade relationship that could affect imports in a number of industries.

On February 11, 2015, the U.S. Trade Representative announced that the United States was initiating an action at the World Trade Organization challenging China’s “Demonstration Bases-Common Service Platform” export subsidy program.  In short, the United States is alleging that China provided ~$1 billion in prohibited export subsidies to manufacturers and producers in 7 industries through 179 Demonstration Bases located throughout China.  The 7 industries are:  (1) textiles, apparel and footwear; (2) advanced materials and metals (including specialty steel, titanium and aluminum products); (3) light industry; (4) specialty chemicals; (5) medical products; (6) hardware and building materials; and (7) agriculture.  A copy of the USTR press release is available here for your reference.

Every company that imports articles in one of these sectors should be mindful of this development.  If the United States challenge is successful (directly or indirectly), importers could see increased prices (as the subsidies go away) or increased duties.  Accordingly, we recommend that companies confirm whether their Chinese suppliers participate in the ‘common service platforms’ or are located in Demonstration Bases.

If you have any questions about the United States’ challenge, how the action may impact you, or how to confirm whether your suppliers participate in the target program, please let us know.

Best regards,

Ted

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