China Notifies WTO of Subsidies for 2019-2020

Simon Lester -

The WTO has just posted a July 13 communication from China entitled "New and Full Notification Pursuant To Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing Measures," notifying WTO Members of China's subsidies from 2019-2020. The communication explains that:

The following notification constitutes China's new and full notification of information on programmes granted or maintained at the central and sub-central government level during the period from 2019 to 2020. The information provided in this notification serves the purpose of transparency. Pursuant to Article 25.7 of the SCM Agreement, this notification does not prejudge the legal status of the notified programmes under GATT 1994 and the SCM Agreement, the effects under the SCM Agreement or the nature of the programmes themselves, China has included certain programmes in this notification which arguably are not (or are not always) subsidies or specific subsidies subject to the notification obligation within the meaning of the SCM Agreement.

The document covers 71 subsidies at the central government level and 36 at the sub-central government level. To take some examples, at the central government level there are:

  • Preferential tax treatment for energy-saving and new energy vehicles and vessels.
  • Preferential tax policies for integrated circuit industry.
  • Preferential VAT for large passenger aircraft and new regional aircraft.
  • Special fund for the development of renewable energy.

In the past, industry groups and governments have complained about China's lack of transparency in this area. For example, a recent report from the Information Technology and Innovation Foundation said:

Putting aside concerns regarding the propriety of China’s industrial subsidies under WTO rules is the separate issue that countries must notify their trading partners about their subsidies in a timely manner. China has failed to provide these notifications to the WTO in accordance with its WTO obligations. USTR describes China’s disregard of its WTO transparency obligations, which places its trading partners at a disadvantage, "as a cloak for China to conceal unfair trade policies and practices from scrutiny." According to USTR:

Since joining the WTO, China has not yet submitted to the WTO a complete notification of subsidies maintained by the central government, and it did not notify a single sub-central government subsidy until July 2016, when it provided information largely only on sub-central government subsidies that the United States had challenged as prohibited subsidies in a WTO case.

From 2011 to 2017 alone, the United States made formal requests (i.e., counter-notifications) for information from China regarding over 350 unreported Chinese subsidy measures. China has consistently failed to provide a complete and comprehensive response.

(footnotes omitted)

China's latest notification is likely to be the subject of questions from the United States and other WTO Members about its comprehensiveness.