SCIO press conference on WTO's eighth trade policy review of China

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Mr. Wang just mentioned the subsidy notification. We know that the subsidies are a hot issue in the WTO reforms. Many WTO members have proposed tightening the subsidy rules even further. Will China be supportive of negotiations on subsidy rules under the framework of WTO reform? Does China support tightening the subsidy discipline? At the same time, how does China plan to increase the transparency of its subsidy policies? Thank you.

Wang Shouwen:

Thank you for your question. Mr. Yan will answer this one.

Yan Dong:

Thank you for your question. Subsidies are a policy tool commonly used by governments around the world. They are mainly used to mitigate market failures and achieve various public policy objectives, such as promoting economic development, technology research and development, environmental protection and employment stabilization. More specifically, during the COVID-19 pandemic, WTO member governments have introduced numerous subsidy measures to help domestic enterprises overcome difficulties and guarantee employment and social stability.

The WTO has a special agreement for industrial products, called the Agreement on Subsidies and Countervailing Measures (SCM Agreement). The WTO also has a special agreement for agriculture subsidies, called the Agreement on Agriculture. These two agreements have established specific regulations for the WTO members, in terms of providing industrial and agricultural subsidies. Among them, the SCM Agreement prohibits a subsidy if it is contingent on export performance or on the use of domestic over imported goods. Moreover, it stipulates that, if subsidized imported products harm the domestic industry, the importers can enact countervailing measures.

These two agreements were both reached in the 1990s. Now, however, after operating for more than 20 years, the overall situation is fine, but problems do still exist. For instance, agricultural subsidy rules are critically unfair, imbalanced and unreasonable. The rules grant permissions for some developed members to have high agricultural subsidies. Some members are allowed to wrongly enact countervailing measures on industrial products to protect their domestic industries. Aside from that, the original subsidy rules do not reflect the economic and trade reality of today, and the rules are incapable of meeting WTO members' shared demands.

China supports necessary reforms to the WTO and is open to launching subsidy negotiations and discussions under the framework of WTO reform. Specifically, we have three detailed proposals: First, the agriculture subsidies must be discussed in concert with industrial subsidies to ensure equitable competition across these two important fields. Second, the discussions should address tightening trade remedy disciplines such as countervailing and anti-dumping, so as to solve the current problem of abusing trade remedy measures. Third, the issue of resuming non-actionable subsidies should also be discussed, so as to leave policy space for members in response to the pandemic and climate change.

You mentioned the issue of subsidy transparency. The WTO requires its members to submit notifications for subsidy policies and agricultural domestic support on a regular basis. Agricultural domestic support is the issue of agricultural subsidies. China is one of the members that adequately fulfilled these obligations. During the review, China submitted two subsidy policy notifications in accordance with WTO requirements, while some major developed members delayed their notifications for several months, and still, others are yet to submit their notifications at all. With regard to the notification for domestic support on agriculture, China plans to submit the latest notification soon. That's all for your question. Thank you.

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