The United States Trade Representative (USTR) has decided to pursue dispute settlement consultations with the Government of China at the World Trade Organisation (WTO) concerning China’s “Demonstration Bases-Common Service Platform” export subsidy programme.
Under the programme, China seems to provide prohibited export subsidies through “Common Service Platforms” to manufacturers and producers across seven economic sectors—including the textiles, apparel and footwear sector—and dozens of sub-sectors located in more than one hundred and fifty industrial clusters throughout China known as “Demonstration Bases”.
According to the National Council of Textile Organisations (NCTO), China provides WTO prohibited export subsidies to manufacturers which meet export performance criteria. These subsidies have bolstered China’s meteoritic export surge of textiles and apparel into the US market, from around $7 billion in 2001 to over $40 billion in 2013.
Exports from Demonstration Bases comprise a significant portion of China’s global exports. For example, in 2012 sixteen of the approximately 40 Demonstration Bases in the textiles sector accounted for 14 percent of China’s textile exports. The unfair Chinese export subsidies programme is harmful to American workers and American businesses of all sizes, said Congresswoman Suzan Delbene on her website.
China’s massive export growth over 2001-2013 resulted in billions of dollars in lost sales and tens of thousands of lost jobs in the US and the Western Hemisphere, according to NCTO.
“It has been NCTO’s long standing position that China’s rise in the global textile and apparel market has been substantially aided by illegal and unfair trading practices. These illegal practices distort the global market place and put the entire US manufacturing base at a considerable disadvantage,” stated NCTO president Augustine Tantillo while applauding the Obama Administration for its decision to hold US’ international trading competitors to their WTO obligations.
NCTO urged the US government to strenuously pursue the matter of Chinese export subsidy programme at the WTO in order to begin the eradication of such trading practices, leading to more fair and open competition in the global market.
In 2013, the US textile and apparel industry was the third largest exporter of textile and apparel products in the world, exporting nearly $24 billion in goods. The industry is also a significant contributor to the overall US economy, producing over $70 billion in annual output. Most importantly, the industry remains a major employer in the United States, providing jobs for nearly 500,000 workers from fibre production to finished product in 2013. Hence, when afforded a level playing field, the US textile and apparel industry can compete with any country in the world, NCTO said.