In a press release issued today, the Office of the United States Trade Representative (USTR) announced that the U.S. government is pursuing dispute settlement consultations with the Chinese government at the World Trade Organization (WTO) to address China’s “Demonstration Bases-Common Service Platform.”
The USTR’s investigation into the “Demonstration Bases-Common Service Platform” program indicates that certain companies participating as Demonstration Base enterprises receive at least $635,000 in benefits from the Chinese government annually. Further, based on its analysis of public documents, the USTR believes that over a three year period the Chinese government has given almost $1 billion to Common Service platform suppliers that, in turn, agree to provide free or discounted services to Chinese companies, including those exporters located in the Demonstration Bases.
There are 179 Demonstration Bases located throughout China, each composed of a business from one of seven sectors: (1) textiles, apparel and footwear; (2) advanced materials and metals; (3) light industry; (4) specialty chemicals; (5) medical products; (6) hardware and building materials; and (7) agriculture. Although a wide variety of export-oriented businesses are involved in the Demonstration Bases, the program is particularly important to China’s seafood industry. According to the USTR, six of the ten Demonstration Bases specializing in seafood production accounted for twenty percent of China’s seafood exports.
Imports of frozen, non-breaded warmwater shrimp claimed to be of Chinese-origin are substantially below the levels that played a significant role in the Southern Shrimp Alliance spearheading the filing of antidumping duty petitions in 2003. In 2014, the total volume of Chinese frozen, non-breaded warmwater shrimp imports was the lowest amount imported into the United States since 1999.
However, China remains far and away the single largest producer of farmed shrimp in the world. Significant quantities of dumped, contaminated Chinese shrimp continue to enter the U.S. market through fraudulent country-of-origin claims. These shrimp imports undermine the price structure of the U.S. shrimp market and consumer confidence in the shrimp Americans are consuming.
Further development of shrimp aquaculture capacity and production in China by the Chinese government threaten the viability of the U.S. shrimp industry. The USTR’s announcement today provides some hope that the Chinese government’s efforts to create even greater overcapacity in farmed shrimp production will be stopped.
“The U.S. shrimp industry applauds the USTR’s aggressive efforts to address export subsidies in China,” said John Williams, Executive Director of the Southern Shrimp Alliance. “The leadership of our Congressional allies, particularly Louisiana’s Charles Boustany, in tackling tough trade issues, as well as U.S. Trade Representative Michael Froman’s commitment to fair trade, has been essential in safeguarding the livelihoods of thousands of working families in our industry.”
Read the U.S. Trade Representative’s press release United States Launches Challenge to Extensive Chinese Export Subsidy Program (Feb. 11, 2015) here: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/february/united-states-launches-challenge