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TWN
Info Service on WTO and Trade Issues (May25/02) Yerevan, 5 May (D. Ravi Kanth) — China inveighed against the alleged repeated violation by the United States of the World Trade Organization’s core principle of “non-discrimination” at a meeting of the WTO’s Committee on Subsidies and Countervailing Measures (SCM) on 29 April. “The United States, as a former leader in multilateral rule-making, has repeatedly violated the rules and principle of non-discrimination on the issue of subsidies and has become a “market distorter”, “double standard manipulator” and “rule breaker”,” China said at the WTO’s SCM Committee meeting on 29 April. It offered three reasons as to how the US is single-handedly destroying the multilateral trading system and the global market. To start with, China said the “US often bills itself as a model of a “market economy”, but we’re not sure if that’s really the case,” adding that “the “guardrail clause” in the CHIPS and Science Act distorts the market with “non-market-based conditions”, requiring subsidy recipients not to build or expand cutting-edge and advanced technology factories and facilities in some countries for 10 years from receiving subsidies, and not to engage in major transactions with the countries concerned.” China said, “the relevant standards are not only discriminatory but also hinder the subsidized enterprises from making investment decisions freely based on market signals, hinder the opening and utilization of global innovative technologies, and undermine the normal operation of the global semiconductor industry chain and international trade.” According to China, the US always “manipulates double standard” by “disciplining others with the strictest standards and self-discipline with the loosest standards, and inconsistency between words and deeds has become the norm.” In January 2020, China said, “the United States and 2 other members declared that “excessively large subsidies” are classified as subsidies that “have such a harmful effect”, and the burden of proof is therefore reversed, requiring the member who would like to give subsidy to prove there are no serious negative trade or capacity effects, and also requiring those who could not prove to immediately withdraw the subsidies.” But, “in the case of the semiconductor industry, where the US has long been a global leader, in disregard of its own definition of the so-called “harmful subsidies” standard, to give domestic enterprises a huge amount of subsidies; in November 2024, only for one American chip company, the US Department of Commerce awarded direct funding as high as 7.86 billion US dollars,” China said. Finally, China said that “the so-called “reciprocal tariff” of the United States has seriously impacted the multilateral trading system, which not only violates the basic rules of MFN treatment and bound tariff, but also creates a bad precedent suspected of constituting prohibited subsidies.” China said that the “Section 3 paragraph of the US reciprocal tariff executive order provides that “the ad valorem rates of duty set forth in this order shall apply only to the non-US content of a subject article, provided that at least 20 percent of the value of the subject article is US originating”. According to China, “the US, by excluding the value of the “US content” of the imported products from the application of the additional tariffs, provides subsidies contingent in law or in fact, upon export performance and the use of domestic over imported goods.” In response to China’s strongest criticisms yet against Washington, the US defended the CHIPS Act and its tariffs, stating that it would not apologize for protecting its supply chains and responding to what it called “a problem of China’s making” – namely, China’s subsidization and dominance in key industries such as semiconductors. The US argued that China holds more than 50% of the global market share in 600 products, warning of economic security risks and supply chain vulnerabilities. The US went on to justify its reciprocal tariffs under national emergency laws, saying that it faces a “lack of reciprocal trading relationships” and that actions were taken under the WTO’s national security exception. China dismissed the justifications offered by the US, calling them “discriminatory and unilateral” on grounds that they are driven by the “America First” ideology. It urged the US to embrace multilateralism, saying that “there is no way out for unilateralism and protectionism.” On a different issue, China challenged the US countervailing duty (CVD) investigations on crystalline photovoltaic cells. Beijing severely criticized the US Department of Commerce’s final determination in its transnational subsidy investigations involving Cambodia, Malaysia, Thailand, and Vietnam. Washington, however, rejected China’s claims that it was a victim in the investigation, asserting that China was causing harm to US industries with unfair subsidies. +
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