China Agrees to End Subsidies Challenged by the U.S. in the WTO
China agreed to sign a Memorandum of Understanding (MOU) that is designed to settle a WTO case that the United States and Mexico initiated in February 2007. In the WTO case, the U.S. had alleged that China was maintaining several subsidy programs that are prohibited under WTO rules. The USTR states that most of the challenged subsidies were tied to exports, giving an unfair advantage to Chinese products and denying U.S. manufacturers the chance to compete fairly with them in the U.S. and in third countries.
Under the MOU, China has committed to complete a series of steps by January 1, 2008 to ensure that the WTO-prohibited subsidies cited in the U.S. complaint have been permanently eliminated, and that they will not be re-introduced in the future.
The agreement was made only two weeks before the USTR is to join Treasury Secretary Henry M. Paulson Jr. and other Cabinet members for a high-level meeting of the "strategic economic dialogue" with China that Paulson launched last year to reduce tensions with China.
The USTR's remarks on this issue can be found here.