U.S. sends 70 questions to WTO about China's subsidies

[January 30, 2019]   By Tom Miles

GENEVA (Reuters) - The United States has accused China of hiding some trade-distorting subsidy programs from international scrutiny while disclosing others it does not need to, according to a document circulated on Wednesday at the World Trade Organization.

The U.S. document lists 70 questions about Beijing's subsidy programs that highlight Washington's misgivings about the role the state plays in China's huge and growing market.

China is fighting a major trade dispute at the WTO against U.S. and EU claims that China is not a "market economy" and therefore that its export prices should not be taken at face value when evaluating whether it is trading fairly.

Topics covered by the U.S. questions include subsidies for China's fishing industry and the activity of so-called government guidance funds, which seek to foster domestic innovation in different industries from advanced engineering and robotics to biotechnology and clean energy.

There were also questions about whether imported cars were eligible for tax breaks and scrappage schemes and whether imported goods were eligible for a Chinese fund for promoting energy saving products.

The U.S. document was sent to the WTO's subsidies committee in response to a notification by China about subsidies programs it is obliged to disclose for transparency purposes.

China did not immediately respond to the U.S. document. It would normally be expected to file its responses with the WTO committee in a similar document, which is likely to take months to appear.

President Donald Trump, U.S. Secretary of State Mike Pompeo, U.S. President Donald Trump's national security adviser John Bolton and Chinese President Xi Jinping attend a working dinner after the G20 leaders summit in Buenos Aires, Argentina December 1, 2018. REUTERS/Kevin Lamarque/File Photo

The United States said in the document it appreciated that for the first time China had notified both central and sub-central subsidies in one document, adding:

"Unfortunately, as was true for China's previous notifications, China's most recent notification suffers from both severe under-reporting of important programs and significant over-reporting of irrelevant or minor programs."

Providing transparency about trade policies is a key job of the WTO, and the United States has been vocal about wanting China, India, Vietnam and other WTO members to improve the standard and their timeliness of their notifications.

U.S. President Donald Trump has threatened to withdraw from the global trade body if it doesn't "shape up".

The United States has teamed up with Japan and the European Union to pursue improvements in international trade. After meeting earlier this month, they said they planned to finalize "text-based work" on industrial subsidies early this year and then engage other key WTO members.

(Reporting by Tom Miles; Editing by Gareth Jones)

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