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Trade Dispute
July 25, 2007

China blocks US, Mexican requests on subsidies
China on July 24 blocked requests made by the United States and Mexico for a World Trade Organization (WTO) experts panel to investigate allegedly illegal Chinese industrial subsidies, trade sources said.

"We are puzzled by the complainants' decision to initiate the panel process," the Chinese trade delegation told a meeting of the WTO's Dispute Settlement Body (DSB).

China stressed that it had already taken active measures to reform its company taxation regime and "measures identified by the complainants are fully consistent with WTO subsidy rules."

It also noted that "several non-existent measures" were included in the U.S. and Mexican complaints, which could only prove their "misunderstanding and misallegation."

"For the reasons mentioned, China is not able to accept the establishment of a panel at this meeting," it said.

The United States has accused China of using taxation measures to "subsidize" exports and limit imports, which might violate WTO rules. It first brought the complaints to the WTO in February and was later joined by Mexico.

The United States and Mexico had already held two rounds of consultations with China on the so-called subsidies, which Washington said were "constructive."

But they insisted that the WTO panel process would continue because their concerns had not been resolved.

Under WTO rules, a WTO panel request could be only blocked once, so if the United States and Mexico make the request again at the WTO's next DSB meeting, possibly in September, a panel would be automatically be established.

But it could take years before a final ruling could be made by the WTO panel. Xinhua


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