Front Page	E-mail PagePrint Version

New rules would expand the existing category of subsidies by five

WASHINGTON, DC – 06/04/07 – The Bush Administration is "strongly urging" the World Trade Organization (WTO) to prohibit what it calls “certain particularly trade-distorting subsidies” in a variety of industries, except agriculture.

"It's time to take the next step in the development of stronger WTO rules that will rein in the use of industrial subsidies," said US Trade Representative Susan Schwab, adding that "the subsidies we want to prohibit maintain inefficient production capacity in industries ranging from steel to semiconductors."

Stronger rules for these types of subsidies, she said, ''would address significant trade-distorting practices of many of our trading partners that often lead to unfair trade. In an increasingly global economy, foreign government subsidies provide a distinctly unfair competitive advantage''

The official paper – submitted to the WTO Negotiating Group on Rules at the WTO headquarters in Geneva, Switzerland – also proposes additional WTO transparency procedures applicable to state-owned companies and government subsidies to them, but, however, does not apply to the global agricultural sector.

The US paper urges the WTO to adopt rules prohibiting five types of subsidies if they are ''specific'' (or, only given to a particular company or industry) and benefit a product that is exported or competes with imports – the coverage of operating losses; the forgiveness of government-held debt; the lending to ''uncreditworthy'' companies; equity investments in ''unequityworthy'' companies; and other financing, such as “royalty-based” financing, that is not commercially available.

Currently, the WTO Agreement on Subsidies and Countervailing Measures only prohibits two types of subsidies, namely export and import substitution subsidies.

The US proposal would also expand the existing category by adding five additional types of particularly trade-distorting subsidies.

Under the current rules on prohibited subsidies, a WTO member country can request a WTO dispute settlement panel to examine an alleged prohibited subsidy. If the panel finds that a prohibited subsidy is being provided, the subsidy must be withdrawn ''without delay.''

Last month, the US had filed a complaint at WTO against India saying its duties on beer, wine, and selected other imports are in violation of global trade rules.

Go back, or read the latest Front Page stories:

California Exports Take a Nosedive

SACRAMENTO � 03/17/09 � A virtual mirror of the global economic slowdown, California saw its merchandise export trade crash-dive by more than 20% in January, according to the University of California Center; the state�s overseas sales of non-manufactured goods dropped by almost 29% during the same period.