USTR Files WTO Challenge Against Chinese Famous Brand Programs

December 19, 2008

On December 19, 2008, US Trade Representative Susan C. Schwab announced that the United States has requested World Trade Organization (WTO) dispute settlement consultations with the People’s Republic of China regarding China’s “Famous Brands” programs. These programs are alleged to be used by the Chinese government to promote the production and export of prominent Chinese brands. The US alleges that these subsidies are "prohibited export subsidies" under the WTO.

In the consultation request, the US government identified more than 70 governmental programs many of which are available to Chinese manufacturers of textile and apparel. The USTR identified two central governmental subsidy programs "China World Top Brand Program" and the "Chinese Famous Export Brand Program" as well as many local and regional government programs. The US government argues that these subsidies are used to encourage exports because to participate in the program, the companies must meet the specified export requirements. The alleged subsidies included R&D funding, special loans, cash grant rewards for exporting, and loan guarantees. The US alleged that many provinces, including China's five largest, have similar subsidy programs.

The USTR also pointed out that this request for consultations is different from its previous request for consultations in 2007 because the 2007 complaint primarily involved Chinese tax subsidies. That case ended when China agreed to amend those subsidy programs.

According to the WTO regulations, the US and China should hold a consultation within 30 days after the request is made. If a resolution cannot be reached within 60 days, the parties have the right to request a dispute settlement panel.

The press release issued by the USTR is available online at: http://www.ustr.gov/Document_Library/Press_Releases/2008/December/
United_States_Files_WTO_Case_Against_China_Over_Illegal_Support_for_Chinese_Famous_Brs.html.

A fact sheet about the request is available at: http://www.ustr.gov/assets/Document_Library/Fact_Sheets/2008/asset_upload_file457_15251.pdf. A copy of the US request for consultations is available at: http://www.steptoe.com/publications/wto2008_7377c.pdf.