China has reached understanding with the United States and
Mexico on their alleged trade subsidy measures, sparing a WTO panel
ruling on the case, the Chinese WTO mission said in
Geneva on Thursday.
Chinese Ambassador Sun Zhenyu signed respective memorandums of
understanding with his US and Mexican counterparts "regarding
certain measures granting refunds, reductions or exemptions from
taxes or other payments" at the WTO headquarters on Thursday, the
mission said in a statement.
In the MOUs, China made it clear to the US and Mexico that "the
policy of exemption for certain foreign-invested enterprises from
payments to the State for worker allowances is no longer
Besides, the policy of value-added tax (VAT) refund to
enterprises for the purchase of domestically produced equipment
does not constitute prohibited subsidies as provided by relevant
provisions of WTO agreements.
"Other preferential policies on income tax pertinent to the
disputes have been repealed or will be repealed along with the
implementation of the new Enterprise Income Tax Law of China," the
According to the Chinese mission, the MOUs will be notified to
the WTO as mutually acceptable solutions to the above-mentioned
dispute in accordance with the Dispute Settlement Understanding of
the world trade body.
The United States filed the case to the WTO in February and
later was joined by Mexico. The two countries alleged that China
was using tax breaks and other incentives to "subsidize" its
exports, which might violate WTO regulations.
A WTO panel was established in August to investigate the case,
following failed consultations between the three sides.
But the three sides finally reached understanding on the dispute
through continued discussions.
(Xinhua News Agency November 30, 2007)