US Aims at China in Doha Round

♠ Posted by Emmanuel in , at 6/05/2007 12:28:00 AM
I don't know why my calling in life has become cataloging America's various trade measures against China, but that's how the cookie has crumbled--not that I'm complaining. Anyway, another facet of this endless, ongoing (melo)drama has been only lightly covered in the media as far as I can tell. The US Trade Representative has the following up on their website. Take note of the five proposed classifications for subsidies in the Doha round. After reading them, you cannot but help think of a certain (nominally) Communist country that begins with a C [give me an "C"!] and ends with an A [give me an "A"!] and I ain't exactly referring to a country with a cigar-chomping leader in bad health:

The United States today submitted a paper to the World Trade Organization (WTO) Negotiating Group on Rules proposing that certain particularly trade-distorting subsidies be prohibited. These negotiations are occurring within the framework of the Doha Development Agenda.

“It’s time to take the next step in the development of stronger WTO rules that will rein in the use of industrial subsidies. In an increasingly global economy, foreign government subsidies provide a distinctly unfair competitive advantage,” said United States Trade Representative Susan C. Schwab. “The subsidies we want to prohibit maintain inefficient production capacity in industries ranging from steel to semiconductors. Stronger rules for these types of subsidies would address significant trade-distorting practices of many of our trading partners that often lead to unfair trade.”

The U.S. proposal would prohibit the following five types of subsidies if they are “specific” (i.e., are only given to a particular company or industry) and benefit a product that is exported or competes with imports: (1) coverage of operating losses; (2) forgiveness of government-held debt; (3) lending to “uncreditworthy” companies; (4) equity investments in “unequityworthy” companies; and (5) other financing, such as “royalty-based” financing, that is not commercially available. Under the current rules on prohibited subsidies, a WTO Member can request a WTO dispute settlement panel to examine an alleged prohibited subsidy. If the panel finds that a prohibited subsidy is being provided, the subsidy must be withdrawn “without delay”.

Notice wha's missing--any reference to agricultural subsidies. Talk about rent-seeking behavior on the USTR's part: subsidies are what you do, not what I do. Is it any wonder why the Doha round is stuck in the mud with such one-sided demagoguery? Whatever happened to the WTO being a rule-based regime? Talk about the "golden rule": he who hath the gold makes the rules. I hope that's not what comes to pass this time around. Better no deal than a raw deal, IMHO. Caltrade noticed this not-so-inconsiderable deficiency:
The Bush Administration is "strongly urging" the World Trade Organization (WTO) to prohibit what it calls “certain particularly trade-distorting subsidies” in a variety of industries, except agriculture.

"It's time to take the next step in the development of stronger WTO rules that will rein in the use of industrial subsidies," said US Trade Representative Susan Schwab, adding that "the subsidies we want to prohibit maintain inefficient production capacity in industries ranging from steel to semiconductors."

Stronger rules for these types of subsidies, she said, ''would address significant trade-distorting practices of many of our trading partners that often lead to unfair trade. In an increasingly global economy, foreign government subsidies provide a distinctly unfair competitive advantage''

The official paper – submitted to the WTO Negotiating Group on Rules at the WTO headquarters in Geneva, Switzerland – also proposes additional WTO transparency procedures applicable to state-owned companies and government subsidies to them, but, however, does not apply to the global agricultural sector.