HONG KONG -- China's Commerce Ministry issued a cautiously worded statement Thursday evening that "expressed regret" that the Obama administration had started a trade case at the World Trade Organization challenging Chinese subsidies.
The ministry defended Chinese policies aimed at providing assistance to exporters' administrators without directly covering part of the actual cost of producing and shipping goods. In announcing the trade case Wednesday, the Obama administration said the programs violated the trade organization's prohibition on export subsidies.
China's policies are "part of the transformation and upgrade of our foreign trade," the Chinese ministry said. "We hope that the WTO will appropriately handle this based on the dispute resolution process."
China has long tended to respond more mildly to challenges at multilateral forums, such as World Trade Organization cases, than to unilateral trade measures, such as anti-dumping tariffs, imposed when an exporter is suspected of selling a product at a price below the cost of manufacturing it.
The administration accused China of providing almost $1 billion in illegal subsidies over three years by offering so-called common service platforms to help exporters, and that China set up 179 "demonstration bases" for exporters, providing at least $635,000 apiece at some of the bases.
The Obama administration's action appeared to be aimed as much at placating Congress as at confronting China. The administration is trying to convince lawmakers that it can be trusted to defend U.S. trade interests. In exchange, the administration is asking Congress to approve authority for it to negotiate trade pacts and submit them to Congress for approval on a yes-or-no vote, with no amendments allowed.
The administration contends that other governments will not reveal their bottom-line negotiating position in talks for the creation of a trade agreement called the Trans-Pacific Partnership if they think they might then be asked for another round of concessions before any deal can be approved by Congress.
If negotiated and approved, the partnership would lower trade barriers among a dozen Pacific Rim nations -- China is not currently among them, but the United States and Japan are -- while providing better protection for patents and other intellectual property.
Business on 02/13/2015