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Remarks of U.S. Trade Representative Michael Froman United States Launches Challenge to Extensive Chinese Export Subsidy Program

Remarks of U.S. Trade Representative Michael Froman
United States Launches Challenge to Extensive Chinese Export Subsidy Program

February 11, 2015
Washington, D.C.

*As Prepared for Delivery*

As a pillar of “Middle Class Economics,” President Obama’s trade agenda is focused on supporting more goods jobs, strengthening the middle class, and spurring broad-based growth. At USTR, we’re working around the clock to make that agenda a reality and unlock economic opportunity for American workers, farmers, and businesses of all sizes.

We’re protecting American workers by opening markets in the Asia-Pacific region and in Europe to more Made-in-America exports.  We’re creating a more fair and level playing field by raising labor, environmental, and other standards so that we can compete and win in today’s global economy.  And we’re ensuring that it’s the United States that leads and defines the rules of the road and does so in a manner that reflects American interests and American values.

But negotiating these agreements is just the first step.  To make sure the American people gain the benefits of these and our past trade agreements, we are equally committed to the decisive, effective enforcement of our trade rights, and that’s what I’m here to talk about today.  Trade enforcement is how we protect our workers and businesses by holding other countries to account when they don’t honor the rules.

As President Obama said during his State of the Union address, “we've gone after countries that break the rules at our expense.” And we’ve built up a decisive record of wins on behalf of the American people.

Of the 18 complaints we previously filed since President Obama took office, the United States has won every single one that has been decided so far – with 4 of these victories in the last year alone.

What I’m here to announce today is our latest enforcement action.  Building on this track record, the United States is seeking dispute settlement consultations with the Chinese government at the World Trade Organization on China’s “Demonstration Bases-Common Service Platform” export subsidy program.

This program may not be well known here at home, but it has potential ramifications for important American industries from coast-to-coast that help support good jobs and grow our economy by selling American-made products all over the world.

Under this program, China appears to be giving prohibited export subsidies to companies spanning a diverse group of industries, including textiles, apparel and footwear; advanced materials and metals (including specialty steel, titanium and aluminum products); light industry; specialty chemicals; medical products; hardware and building materials; and agriculture. 

Let me tell you how this works:  China designates certain companies in these sectors as being “demonstration bases,” which is contingent on them exporting their product.  Once designated, they’re eligible for subsidized services provided by the “common service platform.”  So, if you’re a Chinese textile firm designated as a demonstration base, you might get subsidized IT services, subsidized product design services and subsidized training services for their employees, showing them how to use yarn spinning techniques and weaving technologies.  All of these services, provided for free or at a discount, undermine fair competition.

In our view, this program violates the commitment China made when it joined the WTO not to provide certain export subsidies.  In doing so, it injures American workers, farmers, ranchers, and businesses – really anyone who plays by the rules and wants to compete fairly, on the merits of their hard work and the quality of their products.

That’s why we’re challenging China’s Demonstration Bases-Common Service Platform program today – to hold China, one of our most important trading partners, to its word and do our utmost to guarantee that the rights of Americans are not subverted by unfair foreign giveaways that reduce fair competition and threaten jobs and wages here at home.

This enforcement action is the latest evidence that President Obama and his Administration will be unwavering in standing up for our trade rights. 

When the United States negotiates trade rules and trade deals, we’re adamant that our trading partners and competitors must stick to those rules.  For instance, last year we moved forward with the first-ever labor dispute under any free trade agreement, which involves standing up for labor rights in Guatemala. 

Three years ago, the President established the Interagency Trade Enforcement Center, which worked with USTR’s General Counsel’s office and China office to help put together today’s complex case.

The resolve that you have seen throughout President Obama’s time in office – the same resolve that you see today – is a testament to how vigorously USTR will fight to ensure that the groundbreaking labor, environmental, and other standards created through the Trans-Pacific Partnership are fully enforced.

This enforcement action, and everything we do at USTR, is guided by our commitment to supporting American jobs, strengthening the middle class, and giving Americans a fair shot to compete and win in today’s global economy.

Thank you.