U.S. Joins Mexico on China Textile-Subsidy Case
The United States is backing Mexico in its efforts to challenge alleged subsidies the Chinese government provides its apparel and textile factories.
On Oct. 15, Mexico went to the World Trade Organization to challenge what it believes are various measures and economic incentives by China to financially support apparel and textile manufacturers.
On Oct. 30, the United States decided to join Mexico in that challenge.
Under WTO auspices, Mexico requested consultations with China over nearly 100 alleged illegal subsidies that include tax exemptions, reduction of import duties and value-added taxes for equipment purchases, low-cost loans from state-owned banks, preferential land-use rights, and cash payments from government agencies.
Mexico believes these alleged subsidies, prohibited under WTO rules, have hurt its apparel exports to the United States. Mexico used to be the No. 2 provider of apparel and textiles to the United States. It is now No. 4, with $4.7 billion in apparel and textiles sent to the United States in 2011. China is No. 1, providing about 40 percent of all apparel and textiles sold in this country. Last year, that totaled $40.6 billion.Under WTO rules, the two sides have 60 days to discuss Mexico’s claims. If a settlement is not reached, Mexico can ask a WTO panel to make a ruling.Cass Johnson, the president of the National Council of Textile Organizations in Washington, D.C., praised the decision by the United States to join the consultations between Mexico and China.
“For decades, large and comprehensive subsidies by the Chinese government have prevented free and fair markets from operating in world trade in textiles and apparel. These subsidies have directly contributed to the loss of hundreds of thousands of U.S. textile workers,” Johnson said in a statement, noting that 379,000 U.S. textile jobs have been lost over the last 11 years as manufacturing shifted outside the United States.
“The landmark case by the government of Mexico exposes the Chinese government intervention for exactly what it is—a mercantilist state-guided effort to control one of the world’s largest manufacturing sectors.”
—D.B.
