The American administration, facing heavy pressure to deal with soaring trade deficits, decided to impose economic sanctions against China to protect American paper producers from unfair Chinese government subsidies.
The action reverses 23 years of U.S. trade policy by treating China, which is classified as a nonmarket economy, in the same way that other U.S. trading partners are treated in disputes involving government subsidies. “China’s economy has developed to the point that we can add another trade remedy tool,” said Commerce Secretary Carlos Gutierrez. ” For two decades, the U.S. government has held that American companies did not have a right to challenge government subsidies granted to their foreign competitors if those companies were in “nonmarket economies” such as China.
U.S. companies have always had the right to file dumping cases against China, which can result in penalty duties if Chinese companies are found to be selling products in the United States below cost.
But the ability to file subsidy cases could significantly expand the level of penalties that Chinese imports could face, giving American producers more protection.
Source: American Press