U.S. Challenges China's Export Subsidies to Auto Manufacturers in China

On September 17, 2012, the U.S. requested dispute settlement consultations with the Government of China at the World Trade Organization (WTO) concerning China's auto and auto parts "export base" subsidies.  China provides extensive subsidies to auto and auto parts producers located in designated regions, known as "export bases," that meet export performance requirements. China's program appears to provide export subsidies that are prohibited under WTO rules because they severely distort trade by providing an unfair advantage to auto and auto parts manufacturers located in China, which are in competition with producers located in the United States and other countries. China expressly agreed to eliminate all export subsidies when it joined the WTO in 2001, however, documentation shows that "export bases" made at least $1 billion in subsidies available to auto and auto-parts exporters in China during the years 2009 through 2011.

This challenge is the latest in a series of enforcement actions that U.S. has taken to ensure that China complies with its WTO commitments, including challenging China's local-content subsidies to its wind power equipment manufacturers; unfairly imposed duties China places on U.S. automobiles, U.S. steel products, and U.S. poultry products; China's export restraints on key industrial raw materials; and market access restrictions on U.S. providers of electronic payment (e.g., credit and debit card) services. 

In a separate case filed on the same day, the U.S. has requested that the WTO establish a dispute settlement panel to address China's imposition of antidumping and countervailing duties on more than $3 billion in exports of American-produced automobiles.