Press Release

Secretary Gutierrez Statement on U.S. Proposal to Strengthen Subsidy Rules to World Trade Organization

WASHINGTON—Today, June 4, the United States 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.

“Developed and developing countries alike would benefit from stronger subsidy disciplines. Subsidies distort the free flow of goods and deny opportunity to the world’s most efficient producers. This is a positive step forward in strengthening fair trade with our global partners,” stated Commerce Secretary Carlos M. Gutierrez.

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.

These types of government supports are among the root causes of unfair foreign subsidization. Strengthening global trade on rules, such as unfair practices, will help to ensure a level playing field internationally on which U.S. workers, manufacturers and exporters can compete more effectively.

Under the WTO’s 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 If the panel finds that a prohibited subsidy is being provided, the subsidy must be withdrawn “without delay.”

The primary role of Import Administration is to enforce effectively the U.S. unfair trade laws (i.e., the anti-dumping and countervailing duty laws) and to develop and implement other policies and programs aimed at countering foreign unfair trade practices. The papers submitted by the United States will be available at www.ita.doc.gov and www.ustr.gov.