US files complaint to WTO on Chinese subsidies

On February 2, 2007, the US government filed a complaint to the World Trade Organization (WTO) concerning China's subsidies in many industries, including steel, clothing and computers. In its complaint, the US government accused China of violating the WTO rules by subsidizing some of its industries. Speaking in relation to the issue, US Trade Representative Susan Schwab said, “China uses its basic tax laws and other tools to encourage exports and to discriminate against imports of a variety of American-manufactured goods.” The American Iron and Steel Institute (AISI) welcomed the US government's move. Commenting on the complaint, the AISI president and CEO Andrew G. Sharkey called the move “an important first step, but just a first step.” Sharkey continued, “This filing, while significant, only touches the tip of the iceberg of the full range of subsidies being provided to steel and other manufacturing industries in China. An essential and urgently needed next step is to ensure that US countervailing duty law will be applied in an effective manner to counter the trade and market-distorting impacts of subsidies provided by China and other non-market economies." China has been given 60 days to respond to the complaint, which is said to be the largest trade complaint ever lodged against China at the WTO. In line with the Chinese response, the US government may request a WTO panel. If the WTO rules for the US, China will have to remove the subsidies or face US import penalties. If China wins, the subsidies may remain.