MercoPress. South Atlantic News Agency

US asks WTO for panel to decide on alleged Chinese subsidies

United States formally requested Thursday the World Trade Organization to establish a dispute settlement panel to judge whether Chinese subsidies to industry violate WTO rules as US experts claim.

The request came after two rounds of consultations which begun last February failed to convince China to eliminate several subsidies, although China earlier this year did eliminate one subsidy subject to the US challenge. 'China has taken a positive step by repealing one of the subsidy programs we challenged, but much more needs to be done,' spokesman for the US Trade Representative Sean Spicer said. 'We continue to prefer a negotiated settlement to this dispute, but without assurance of complete corrective action by China, we must continue to pursue the WTO process to enforce our rights.' The US challenge targets several Chinese subsidies, including subsidies granted to companies that use domestic rather than imported components, and those given to promote exports, which the WTO says are prohibited. Dispute panels can take two years or more to litigate, as they can be appealed. Findings by the panel against certain policies often lead to agreements on a set amount of time by which the member in violation must comply with the ruling. However, members can also decide to keep the offending policy in place, and offer compensation to trading partners. China has warned in recent months that the subsidies case in the WTO, as well as another US case against high Chinese auto parts tariffs and two potential cases involving intellectual property rights, are harming bilateral relations. The US request comes when Beijing authorities announced that reviewed growth estimates for 2006 indicate the economy expanded 11.1% in 2006 (up from 10.7%) which means China is about to become the world's third largest economy overtaking Germany, and only behind the United States and Japan. The Chinese Statistics Bureau according to China Daily estimates the country's GDP reached 2.79 trillion US dollars, compared to Germany's 3 trillion. However the 2006 data also shows that Beijing has failed so far in its attempts to cool the overheated economy with such measures as credit and investment restrictions in the automobile, real estate and steel industries. China's Central Bank and the World Bank estimate the economy will expand this year in the range of 10.8%. Beijing authorities are also increasingly concerned about the growing gap between the urban and rural populations and the proliferation of wealthy extravagant life styles next to subsistence economy for hundreds of millions of peasants.