WTO Dispute Settlement Proceeding Regarding China-Certain Measures Granting Refunds, Reductions or Exemptions From Taxes and Other Payments

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice; request for comments.

SUMMARY:

The Office of the United States Trade Representative (USTR) is providing notice that on July 12, 2007, in accordance with the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement), the United States requested the establishment of a dispute settlement panel regarding certain Chinese measures granting refunds, reductions or exemptions to enterprises from taxes otherwise due the government. That request may be found at www.wto.org contained in a document designated as WT/DS358/13. USTR invites written comments from the public concerning the issues raised in this dispute.

DATES:

Although USTR will accept any comments received during the course of the consultations, comments should be submitted on or before October 5, 2007 to be assured of timely consideration by USTR.

ADDRESSES:

Comments should be submitted (i) electronically, to FR0507@ustr.eop.gov, with “China Prohibited Subsidies (DS358)” in the subject line, or (ii) by fax, to Sandy McKinzy at (202) 395-3640, with a confirmation copy sent electronically to the electronic mail address above, in accordance with the requirements for submission set out below.

FOR FURTHER INFORMATION CONTACT:

Arun Venkataraman, Associate General Counsel, Office of the United States Trade Representative, 600 17th Street, NW., Washington, DC., (202) 395-5694.

SUPPLEMENTARY INFORMATION:

Pursuant to section 127(b) of the Uruguay Round Agreements Act (URAA) (19 U.S.C. 3537(b)(1)), USTR is providing notice that the United States has requested the establishment of a WTO dispute settlement panel pursuant to the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”). Such panel, which would hold its meetings in Geneva, Switzerland, would be expected to issue a report on its findings and recommendations within nine months after it is established, which is requested to be on August 31, 2007.

Major Issues Raised by the United States

China maintains measures that provide refunds, reductions, or exemptions to enterprises in China from taxes otherwise due the government on the condition that those enterprises purchase domestic over imported goods. The United States believes that, as such, these measures are inconsistent with China's obligations under Article 3.1(b) and 3.2 of the A greement on Subsidies and Countervailing Measures (“SCM Agreement”). Furthermore, because they condition advantages on an enterprise's purchase of domestic over imported equipment, these measures appear to accord imported products treatment less favorable than that accorded “like” domestic products, inconsistent with Article III:4 of the General Agreement on Tariffs and Trade 1994 and Article 2.1 and Annex 1, paragraph 1(a), of the Agreement on Trade-Related Investment Measures For the same reasons, these measures appear not to comply with China's obligations under paragraphs 7.2-7.3 and 10.3 of Part I of its Protocol of Accession and paragraph 1.2 of Part I of its Protocol of Accession (to the extent that it incorporates paragraph 203 of the Report of the Working Party on the Accession of China).

China also maintains measures that grant refunds, reductions, or exemptions from taxes otherwise due to the government on the condition that the beneficiary enterprises meet certain export performance criteria. The United States believes that, as such, these measures are inconsistent with China's obligations under Article 3.1(a) and 3.2 of the SCM Agreement and, consequently, paragraph 10.3 of Part I of China's Protocol of Accession, and paragraph 1.2 of Part I of its Protocol of Accession (to the extent that it incorporates paragraph 167 of the Report of the Working Party on the Accession of China).

Public Comment: Requirements for Submissions

Interested persons are invited to submit written comments concerning the issues raised in the dispute. Comments should be submitted (i) electronically, to FR0507@ustr.eop.gov, with “China Prohibited Subsidies (DS358)” in the subject line, or (ii) by fax, to Sandy McKinzy at (202) 395-3640, with a confirmation copy sent electronically to the electronic mail address above.

USTR encourages the submission of documents in Adobe PDF format as attachments to an electronic mail. Interested persons who make submissions by electronic mail should not provide separate cover letters; information that might appear in a cover letter should be included in the submission itself. Similarly, to the extent possible, any attachments to the submission should be included in the same file as the submission itself, and not as separate files.

Comments must be in English. A person requesting that information contained in a comment submitted by that person be treated as confidential business information must certify that such information is business confidential and would not customarily be released to the public by the commenter. Confidential business information must be clearly designated as such and “BUSINESS CONFIDENTIAL” must be marked at the top and bottom of the cover page and each succeeding page. Persons who submit confidential business information are encouraged also to provide a non-confidential summary of the information.

Information or advice contained in a comment submitted, other than business confidential information, may be determined by USTR to be confidential in accordance with section 135(g)(2) of the Trade Act of 1974 (19 U.S.C. 2155(g)(2)). If the submitter believes that information or advice may qualify as such, the submitter—

(1) Must clearly so designate the information or advice;

(2) Must clearly mark the material as “SUBMITTED IN CONFIDENCE” at the top and bottom of the cover page and each succeeding page; and

(3) Is encouraged to provide a non-confidential summary of the information or advice.

Pursuant to section 127(e) of the URAA (19 U.S.C. 3537(e)), USTR will maintain a file on this dispute settlement proceeding, accessible to the public, in the USTR Reading Room, which is located at 1724 F Street, NW., Washington, DC 20508. The public file will include non-confidential comments received by USTR from the public with respect to the dispute; if a dispute settlement panel is convened or in the event of an appeal from such a panel, the U.S. submissions, the submissions, or non-confidential summaries of submissions, received from other participants in the dispute; the report of the panel and, if applicable, the report of the Appellate Body. The USTR Reading Room is open to the public, by appointment only, from 10 a.m. to noon and 1 p.m. to 4 p.m., Monday through Friday. An appointment to review the public file (Docket WTO/DS-358, China Prohibited Subsidies Dispute) may be made by calling the USTR Reading Room at (202) 395-6186.