China Agrees to Drop Export Subsidies on Aluminium

China Agrees to Drop Export Subsidies on Aluminium
Forbidden City Imperial Guardian Lions. Source: Wikimedia

The People’s Republic of China has agreed to end export subsidies that have helped to drown the aluminium market (among others) in an oversupply of the metal. United States Trade Representative Michael Froman made the announcement regarding an agreement ending the subsidies in question earlier today.

“Today we have signed an agreement with China to eliminate export subsidies that the United States challenged because they are prohibited under WTO rules,” said U.S. Trade Representative Michael Froman. “This is a win for Americans employed in seven diverse sectors that run the gamut from agriculture to textiles to medical products, who will benefit from a more level playing field on which to compete.  This agreement once again underscores that President Obama’s commitment to enforce our trade rights aggressively to secure real economic results for American workers, farmers, and businesses of all sizes and in every part of the country.”

The export subsidies, which are part of the “Demonstration Bases-Common Service Platform” Program, are the subject of a complaint brought to the World Trade Organization (WTO) by the United States government. According to the agreement, the Chinese government will end “Common Service Platform” subsidies to “Demonstration Base” enterprises and will remove export-contingent criteria from the “Demonstration Bases.” There are 179 demonstration bases divided up into seven industrial sectors. Aluminium is classified as an “advanced material or metal” under the regulatory regime. The Chinese government supported these demonstration bases via cash grants and/or free or discounted services.

The United States first challenged these subsidies by requesting consultations with China at the WTO in February 2015. After consultations in March and April of last year, the United States requested and obtained establishment of a WTO panel in April. The two countries continued negotiations outside of the WTO, however, and this agreement is the result of such talks.

In addition to aluminium, goods that will lose subsidies under this agreement include exported apples, beef, mushrooms, pork, tea, tomatoes, beans, ginseng, poultry, seaweed, and garlic.