Industry News

The United States Challenges China's Subsidy Programs and Currency Valuation

February 17, 2015


    On February 11, 2015, the Office of the United States Trade Representative (USTR) filed a complaint with the World Trade Organization to dispute China’s export subsidy program, which allegedly distributes funds to producers within China.  According to the USTR, the subsidy program provides ““Common Service Platforms” to manufacturers and producers across seven economic sectors and dozens of sub-sectors located in more than one hundred and fifty industrial clusters throughout China known as “Demonstration Bases.””  The Demonstration Bases include seven different areas of the Chinese market: “(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.”  The USTR stated that over three years, China has supported the Common Service Platform with $1 billion.  

    The House and the Senate also both presented legislation on February 10, 2015 to include undervalued currencies as a type of subsidy during the U.S. Department of Commerce’s countervailing duty investigations.  The U.S. House of Representatives Ways and Means Committee introduced The Currency Reform for Fair Trade Act, which uses the International Monetary Fund's procedures for determining undervalued currencies.  Senators introduced a similar bill, which outlines its own guidelines for determining undervalued currencies.