The European Union has hit out against China for failing to provide information to the World Trade Organization on the extent of government subsidies for Chinese industry.

In a communication circulated to WTO members Oct. 5, the EU said China has not only failed to provide requested statistical data on its subsidy programs, but has also failed to provide any information on subsidies provided by local and regional authorities.

"Already on previous occasions the European Union has expressed its concern over the apparent unwillingness of China to abide by its WTO obligations, including the fundamental principles of transparency and accountability," the EU declared, warning that the continued failure by China to meet its notification obligations "could lead to the initiation of WTO dispute settlement."

Under WTO rules, China and other WTO members must file annual notifications to the WTO of all subsidies paid out by the government. The notifications are to include the form of the subsidy, the total amount budgeted, the purpose and duration of the subsidy, and statistical data permitting an assessment of the trade effects of the subsidy.  China filed a subsidy notification in April 2006, covering the years 2001-2004. It was the first notification submitted by China since it joined the WTO in December 2001.

The notification was widely criticized by the EU, the United States, and others for containing substantial gaps in information. For example, the notification identified 78 subsidy programs at the central government level that benefited China's industrial and agricultural sectors, but spending details were only provided for 29 programs, most of them concerning agriculture and rural development (81 DER A-2, 04/27/06 ).

The EU said while the Chinese notification was welcome, it "falls well short" of WTO requirements as well as obligations under China's WTO accession agreement.

The EU also said that replies to follow-up questions posed by Brussels "reveal that not in any single reply China has provided the statistical data" requested by the EU. While China cited the lack of available statistics, China has a "clear obligation" to provide the data, the EU said, adding that lack of statistics "is not a valid excuse."

Source: NCTO materials, BNA, October 11, 2007

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