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US proposes tougher rules to WTO on subsidies

The United States submitted on Monday a paper to the World Trade Organization, proposing much tougher rules on trade-distorting subsidies.

„It’s time to take the next step in the development of stronger WTO rules that will rein in the use of industrial subsidies,” said United States Trade Representative Susan C. Schwab. „The subsidies we want to prohibit maintain inefficient production capacity in industries ranging from steel to semiconductors. Stronger rules for these types of subsidies would address significant trade-distorting practices of many of our trading partners that often lead to unfair trade,” she said.

These negotiations are occurring within the framework of the Doha Development Agenda, according to a statement released by the US Trade Representative Office. The US proposal would prohibit the following five types of subsidies if they are „specific,” which are only given to a particular company or industry and benefit a product that is exported or competes with imports: Coverage of operating losses; Forgiveness of government-held debt; Lending to „uncreditworthy” companies; Equity investments in „unequityworthy” companies; Other financing, such as „royalty-based” financing, that is not commercially available.

The US government also proposes additional WTO transparency procedures applicable to state-owned companies and government subsidies to such companies, said the statement. But the proposed new subsidy rules will not be intended to apply to the agriculture sector, while developing countries have urged the United States and EU to offer deeper farm subsidy cuts to resolve deadlock in global trade talks. (