|
||
|
TWN
Info Service on WTO and Trade Issues (Apr24/21) Geneva, 25 Apr (D. Ravi Kanth) — The World Trade Organization’s Committee on Subsidies and Countervailing Measures (SCM) on 23 April witnessed rising tensions and “finger-pointing” among major industrialized countries over their controversial industrial policies that are undergirded by subsidies worth hundreds of billions of dollars, as well as the failure to notify their subsidy programs, said people familiar with the discussions. Besides, the United States along with the European Union, Canada, Japan, Australia, and the United Kingdom seemingly targeted China over the issue of subsidies and capacity, particularly subsidies that allegedly contribute to overcapacity. At a meeting of the SCM Committee, which oversees the obligations of members as enshrined in the Agreement on Subsidies and Countervailing Measures (ASCM), major industrialized countries such as the US and the EU, as well as several other members including China seemingly engaged in questioning each other over the rising levels of subsidies provided by their respective governments as well as the controversial industrial policies being pursued allegedly in contravention of the WTO rules, said people familiar with the discussions. Significantly, the non-adherence to the notification requirements under the ASCM, akin to the non-compliance with the WTO Dispute Settlement Body’s rulings and recommendations, figured during the deliberations. The chair of the SCM Committee, Mr James Lester of New Zealand, expressed concern over the low level of compliance with the requirement to timely notify subsidies. He is understood to have said that the chronic low level of compliance with this fundamental transparency obligation constitutes a fundamental problem in the proper functioning of the ASCM. According to the figures provided by the Committee, around 90 members are yet to submit their new and full subsidy notifications for 2023. Although the deadline expired on 30 June 2023, non-compliant members have not yet indicated as to when they will file their notifications. According to the figures provided by the Committee, the 90 countries that are yet to notify their subsidies for 2023 are: Afghanistan, Albania, Angola, Antigua and Barbuda, Armenia, Bahrain, Bangladesh, Barbados, Belize, Benin, Bolivia, Botswana, Brunei Darussalam, Burundi, Cambodia, Cameroon, Central African Republic, Chad, Colombia, Congo, Cote d’Ivoire, Croatia, Djibouti, Dominica, Ecuador, Egypt, El Salvador, Fiji, Gabon, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea Bissau, Guyana, India, Indonesia, Jamaica, Jordan, Kazakhstan, Kuwait, Lao PDR, Liberia, Malawi, Maldives, Mali, Mauritania, Mexico, Moldova, Mongolia, Morocco, Mozambique, Namibia, Nicaragua, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Peru, Qatar, Russian Federation, Rwanda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Saudi Arabia, Senegal, Seychelles, Sierra Leone, Solomon Islands, South Africa, Sri Lanka, Tajikistan, North Macedonia, Togo, Tonga, Trinidad and Tobago, Tunisia, Uganda, the United Arab Emirates, Venezuela, Viet Nam, Yemen, Zambia and Zimbabwe. Around 83 countries have not submitted their 2021 subsidy notifications, despite the deadline having expired three years ago. Further, 72 members are yet to submit their 2019 notifications despite the deadline passing almost five years ago, the chair said. He expressed concern over the growing trend of non-compliance as per the ASCM rules. Major industrialized countries such as the US, the United Kingdom, Japan, Canada, Australia, and the EU seemingly concurred with the concerns expressed by the chair over the issue of non-compliance. The US, which itself has a poor record of complying with several Dispute Settlement Body (DSB) rulings and recommendations, made it known that it is sharply concerned over the increasing number of countries that have not complied with the requirement of timely notifications. Without naming China, Washington said certain members who have taken additional transparency obligations in their protocols of accession to the WTO have failed to meet their obligations. In response, China reminded members, including the US, that it takes its transparency obligations seriously by ensuring timely notifications, said people familiar with the discussions. SUBSIDIES & CAPACITY At the SCM Committee meeting, one of the controversial issues that resulted in some sharp exchanges centred on subsidies and capacity. Over the last several months, the G7 countries have highlighted the issue of subsidies allegedly resulting in overcapacity. In an alleged move to “name and shame” China, the US, Canada, Japan, the EU, and Australia tried to bring the issue of overcapacity to the center stage, but China apparently warned that it would block the agenda if the term “overcapacity” is used in the discussions. Washington along with the EU and Japan had already targeted China on the issue of overcapacity. The US, which spoke first at the meeting, stuck to its oft-repeated view that overcapacity is caused by subsidies. The US claimed that overcapacity is currently rising in certain industries in China, suggesting that the idea of the wording of “overcapacity” in the title changes the underlying facts is “patently absurd.” The US said China’s unwillingness to engage with a title that says “overcapacity” reveals two fundamental facts. According to the US, they indicate that (1) China is not interested in having a comprehensive debate and discussion in this Committee or at the WTO as a whole on issues important to members and to the functioning of the multilateral trading system; (2) China’s procedural objections attempt to hide a fundamental truth that China’s non-market policies and practices lead to overcapacity, create unfair competition and inhibit the industrial development of WTO members at all levels of development. The US cited a report by the Rhodium Group which it said highlights mounting evidence that overcapacity is accelerating in China. It alleged that China’s cheap exports are flooding global markets, saying that massive government subsidization is creating excess capacity, leading to under-priced exports that harm businesses and workers. Australia, Canada, the EU, Japan, and the UK, in their separate interventions, conveyed the same message with varying levels of emphasis on overcapacity. CHINA DEBUNKS US Commenting on the issue of overcapacity, China said that it had objected in 2017, when the item was first introduced on the agenda. China argued that the issue of overcapacity did not fall within the mandate of the SCM Committee, indicating that it always maintained this position. China elaborated on its position, saying that there is no clear definition of “overcapacity.” China said that the so-called “overcapacity” is not clearly defined either economically or legally, but the US and the EU continue to use the term repeatedly. Beijing maintained that “market” and “competition” will not emphasize these concepts only when they could prevail or maintain a dominant position in the market. China said that when these countries are unable to compete, they use the term “overcapacity.” It argued that “either in traditional or emerging industries in China, the capacity utilization rate is within the normal range; there is no “surplus” or “excess”.” China pointedly asked the US and the EU that “if the global market for new energy products is already saturated or oversupplied, will the current massive subsidies provided by the United States and the European Union contribute and exacerbate the “overcapacity”?” Lastly, China said, “in 2023, China’s new energy vehicle sales reached over 9 million units.” “If China follow(s) the US approach which is to subsidize 7,500 USD for one electric vehicle, it is impossible for China to afford at all,” China said. EV ACTIONS At the meeting, China apparently took issue with Brussels’ decision to initiate countervailing (duty) investigation last October on China’s exports of electric vehicles (EVs). China pointed out that the EU failed to provide China with an opportunity for prior consultations before European Commission President Ursula von der Leyen announced on 13 September 2023, the EU’s intention to launch the investigation, depriving China of its rights under the ASCM. According to China, the EU even failed to provide the document on the initiation of the investigation as well as the supporting evidence, despite repeated requests. China criticized the EU for launching an investigation without any petition from its domestic car companies producing EVs, like Mercedes Benz, BMW, and Renault, which have clearly expressed opposition to this investigation, said people familiar with the discussions. In response to the Chinese complaint, the EU said the statement by China includes and refers to confidential information which are part of the investigation proceedings, suggesting that it could not go into the details of China’s claims. The EU also claimed that several aspects raised by China are factually and/or legally incorrect and that it strongly disagrees with China’s legal characterization and its comments on the EV investigation. On a separate issue concerning the EU’s introduction of the novel concept of “cross-border subsidies” in its countervailing (CV) investigations and measures, China complained that the EU has departed from the ASCM in several CV investigations by invoking “cross-border subsidies”, a concept that was not derived from the agreement but rather created by the EU, said people familiar with the discussions. Morocco supported China in its criticism of the EU’s use of “cross-border subsidies”, maintaining that the EU’s action was related to Morocco’s participation in China’s Belt and Road initiative. The EU disagreed with Morocco’s characterization, saying that the subsidies alleged in the complaint are Moroccan subsidies in the form of a financial contribution. The ASCM does not preclude the possibility that a financial contribution provided by one WTO member can be attributed to another WTO member in light of the specific evidence available, it added. China sharply criticized the US for launching a CV investigation against firms that allegedly took part in China’s export buyer’s credit programme, and the US Commerce Department’s use of “adverse facts available” (AFA) in determining that subsidization was taking place. In response to the Chinese complaint, the US maintained that the government of China has never fully provided all the requested information to analyse the export buyer’s credit programme, thus justifying the use of AFA. The US also said that the US International Trade Commission decisions on the issue have been mixed to date. Nevertheless, the Commerce Department has developed additional questionnaires to request other information on financing from Chinese company respondents, said people familiar with the discussions.
|
||
