US files WTO dispute against China over 'famous brands'

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Tom Barkley | December 20, 2008

Article from: Dow Jones Newswires

THE US filed a claim against China with the World Trade Organisation today to end measures to promote the country's "famous brands," arguing that the policy is protectionist.

The promotion of Chinese-branded merchandise appear to use export subsidies, which would violate WTO trade rules, and to form part of a "protectionist industrial policy," the US Trade Representative's office said in a release. 

"We were disturbed to find that China still appears to be using WTO-illegal measures to promote its exports, ranging from textiles and refrigerators to beer and peanuts," said US Trade Representative Susan Schwab in the statement. 

"We are going to the WTO today because we are determined to use all resources available to fight industrial policies that aim to unfairly promote Chinese branded products at the expense of American workers, farmers, ranchers, manufacturers and intellectual property owners.” 

USTR, working with the Commerce Department, discovered more than 70 separate government measures promoting "famous brands" at both the federal and local level. 

US trade officials have been working intensely over the past nine months to put together the broadest WTO case the Government has brought against China, in terms of the multiple levels of government and the wide number of provinces involved, a trade official said. 

"As we kept following the thread and continuing to see where those threads were going, we were quite amazed by the extent and penetration of this program," the trade official said. 

Mexico joined the US in requesting dispute settlement consultations with China through the WTO. If the consultations don't lead to a resolution in 60 days, the countries can request a WTO dispute settlement panel. 

Under pressure from Congress, the Bush administration has stepped up its efforts to pressure China on trade issues, not only through the WTO but also by imposing antidumping and countervailing duties on imports. 

Commerce Secretary Carlos Gutierrez said the US prefers dialogue, but is always willing to use WTO rules and "all of the tools at our disposal to ensure that China plays by the rules." 

The case brings the number of outstanding WTO disputes with China to three, including complaints on intellectual property rights protections and market access for publications, videos, music and movies. Both are being considered before dispute panels. 

The US has now filed seven WTO cases against China since 2004, with most of them coming in the last two years. 

Meanwhile, China responded to the US enforcement measures by requesting WTO consultations in September to end the use of antidumping and countervailing duties. 

The latest case comes just weeks before president-elect Barack Obama takes over the reins of government, but the trade official said the timing had nothing to do with the change in administration. 

Mr Obama, who has promised to take a tougher stance against China, nominated former Dallas mayor Ron Kirk to replace Schwab as trade chief. 

In a media conference announcing his nomination, Mr Kirk said he would "promote a progressive, pro-trade agenda" that protects workers and the environment.