Textiles under scrutiny in US-China trade dispute
12/02/2015
The dispute concerns what he called an extensive export subsidy programme under which, he claimed, China “seems to provide prohibited export subsidies” to manufacturers across seven economic sectors in 179 industrial clusters throughout China. Textiles, apparel and footwear are among the sectors concerned.
Allegations from the US centre on manufacturing clusters called ‘Demonstration Bases’. Michael Froman’s department insists it has evidence of Chinese manufacturers receiving “an unfair advantage” in the arena of global trade through direct subsidies to exporters from the Chinese government and also through a programme of subsidies to suppliers. The suggestion is that suppliers have received government subsidies, to the tune of $1 billion in the last three years, the US alleges, in return for supplying free or discounted services to Chinese exporters.
Exports from ‘Demonstration Bases’ comprise a significant portion of China’s global exports, Mr Froman’s department said. For example, in 2012, 16 of the approximately 40 Demonstration Bases in the textiles sector accounted for 14% of China’s total textile exports that year.
Consultations are the first step in the WTO dispute settlement process. If the US and China are not able to reach a mutually agreed solution through these consultations, the US may request the establishment of a WTO dispute settlement panel.
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