29 October 2012
On 16 October, the Government of Mexico announced that it filed a WTO case against China asserting that Chinese subsidies to its fiber, textile and apparel industry had damaged its apparel exports, in particular those to the United States. The wide-ranging complaint cites exemptions from income tax, value-added tax and municipal taxes; discounts on loans, land rights and electricity prices; support for the cotton sector; and cash payments from government agencies (totally 30 different subsidies) .
China has 60 days to resolve the issue with Mexico or the case will go to a WTO dispute panel. A WTO dispute panel could potentially order China to remove its subsidies to its textile and apparel sector, though such a result could take several years to implement.
This case was partially the result of a joint effort by NCTO, Canaintex and the ABIT, the Brazilian textile industry, to uncover in depth the layers of subsidies used by China to promote its textile and apparel exports.
By asserting that its apparel exports had been damaged, the Mexican government is taking a step that would have been impossible in the United States. Under WTO rules, only a maker of “like” product can file a claim at the WTO and remaining U.S. apparel producers have been unwilling to support such a step. Mexico, because it is major apparel exporter, has the right to file under WTO if it feels that its export performance has been harmed by another country’s subsidies.
Source: NCTO, Reuters