Subsidies
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China has agreed to eliminate, upon accession, all subsidies on industrial
goods that are prohibited under WTO rules, i.e., subsidies contingent upon
export performance (“export subsidies”) and subsidies contingent upon the
use of domestic over imported goods (“import substitution subsidies”).
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China has agreed that, in identifying and measuring the amount of certain
subsidies provided to Chinese enterprises, such as preferential government
equity investments and loans, WTO Members may turn to foreign or other
market-based criteria when internal Chinese benchmarks are inappropriate.
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Special rules also govern the actionability/countervailability of subsidies
provided to state-owned enterprises, in both WTO enforcement proceedings
and national countervailing duty proceedings.
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Under standard WTO rules, a subsidy is actionable/countervailable only
when it is provided to a “specific” enterprise or industry or group of
enterprises or industries within the jurisdiction of the subsidizing authority.
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Under the terms of China’s accession, subsidies that are provided predominately
or in disproportionately large amounts to state-owned enterprises will
be considered “specific,” even if such enterprises represent a broad and
diverse cross-section of Chinese industries.
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The United States will now be able to use WTO enforcement proceedings,
to ensure that China’s subsidies are consistent with WTO disciplines.
Antidumping
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China has agreed that the United States (and other WTO members) may continue
to apply its non-market economy methodology for measuring dumping in antidumping
investigations of imports from China for the first 15 years following accession.
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China continues to have the opportunity to demonstrate that market conditions
prevail in its economy as a whole or in a particular industry, but any
such demonstration must be made to the satisfaction of the investigating
authority.
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With regard to its own antidumping regime, China has agreed to bring it
into conformity with WTO rules, including in any review or refund proceedings
involving antidumping measures imposed prior to China’s accession.
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Furthermore, China has agreed to initiate sunset reviews for all outstanding
antidumping measures no later than five years after the date of their imposition.
Under standard WTO rules, China would only have been obligated to initiate
such sunset reviews within five years of its accession to the WTO.
Transitional China-Specific Safeguard Mechanism
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China's accession agreement includes a unique, China-specific safeguard
mechanism allowing a WTO Member to restrain increasing imports from China
that disrupt its market.
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This mechanism can be applied to any type of product, i.e., industrial
goods, including textiles and apparel, and agricultural goods, and will
be available for 12 years after accession.
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China can agree bilaterally to restrain its exports (an action that is
not permitted under the WTO Agreement on Safeguards), or a WTO Member can
act unilaterally to limit imports to the extent necessary to prevent or
address the market disruption.
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China can retaliate in response to the use of this safeguard mechanism
under special circumstances.
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If a safeguard measure based on a relative increase in imports has been
in effect for more than two years, China may impose similar restrictions
on the WTO Member applying the measure.
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If a safeguard measure based on an absolute increase in imports has been
in effect for more than three years, China may impose similar restrictions
on the WTO Member applying the measure.
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In critical circumstances where delay would cause damage that would be
difficult to repair, provisional relief can be taken immediately based
on a preliminary determination of market disruption or threat. Such
action may precede bilateral consultations and last for up to 200 days.
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The China-specific safeguard restricts imports from China only, rather
than requiring restrictions of imports from all WTO Members as provided
in the Safeguards Agreement.
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If a WTO Member considers that an action, taken by another WTO Member under
the China-specific safeguard provision, causes or threatens to cause significant
diversions of trade into its market, it may take action to the extent necessary
to prevent or remedy such diversions.
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