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Listing
these 12 subsidies, sources said, could be an effort by
China to make it more difficult for WTO members to negotiate
against China’s subsidies, since fighting against these
subsidies would hurt many non-Chinese companies.
The ministry of commerce has now sought detailed comments
from Planning Commission, department of economic affairs,
department of revenue, and industry associations Assocham,
CII, Ficci and Fieo on China’s “New and Full Subsidy”
notification as submitted to WTO.
As one example, sources pointed out, “China is building its
pulp, paper and wood processing industries through finance
and investment, tax and trade measures. However, China’s
88-page submission does not indicate that any of these
activities are being undertaken for the purpose of helping
these industries”.
Instead, sources said, the submission notified that several
billions of dollars worth of subsidies to protect natural
forestry resources. “The listed subsidies appear to be aimed
at maintaining or building up forest lands not at harvesting
logs or producing paper products,” they said.
Besides, China’s paper specified that the subsidies listed
are those that existed between 2001 and 2004 and do not
include information on all current subsidies, including any
that were introduced last year.
Sources also pointed out that many of 78 subsidies notified
by China to the WTO might not meet the WTO definition of
prohibited or actionable subsidies.
Under WTO’s agreement on subsidies and countervailing
measures (ASCM), subsidies are deemed to exist if a
government makes a payment either in cash or by providing
goods or services, or foregoes the collection of revenues,
such as taxes. In addition, subsidies must be specific to a
certain industry and must bestow a benefit to recipients.
The ASCM prohibits subsidies that are granted when goods are
exported or that are contingent on the use of domestic goods
over imported goods.
Sources said that apart from two specific subsidies, none of
the others are so clearly aimed at stimulating exports,
which means it could be much more difficult to claim that
those remaining subsidies are prohibited.
China listed about 20 agricultural subsidies, but none
target a specific crop and most are aimed at encouraging
technological upgrades or providing a safety net after small
harvests or natural disasters. Another 10 subsidies are
meant to help protect the environment.
“Most of the remaining subsidies listed by China are aimed
at poverty reduction, animal management, research and
development, and education and health, and none of these
appear to target a specific industry”, sources said.
Chinese checkers ? Beijing gives incentives to foreign
companies to invest in certain regions ? WTO members
fighting China’s subsidies to its domestic companies ? By
highlighting incentives to foreign companies, China has made
things difficult for WTO ? Diluting the subsidies would end
up hurting nonChinese companies too. |
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