G/SCM/Q2/CHN/74 23 April 2018 (18-2510) Page: 1/8 Committee on Subsidies and Countervailing Measures Original: English SUBSIDIES FOLLOW-UP QUESTIONS FROM THE UNITED STATES REGARDING THE SUB-CENTRAL NEW AND FULL NOTIFICATION OF CHINA1 The following communication, dated 20 April 2018, is being circulated at the request of the Delegation of the United States. _______________ 1. We appreciate the answers to the United States’ questions on China’s sub-central notification. We recognize that collecting subsidy information from sub-central entities can be a difficult task. We note, however, only 20 of the 32 sub-central entities are covered in China’s first and only sub-central subsidy notification since becoming a WTO Member seventeen years ago. The United States considers this to be inadequate given the prevalence of subsidy programs administered by sub-central authorities, as well as a history of prohibited subsidies being provided by sub-central entities, as is demonstrated in several dispute settlement consultation requests by the United States, and indeed, the sub-central notification itself. Will China commit to meeting its obligation under the Agreement on Subsidies and Countervailing Measures to include subsidies from all sub-central entities in its next subsidies notification (which was due June 2017)? 2. While China has notified the Strategic Emerging Industries (SEI) program at the central government level, there were no SEI measures included in the sub-central notification. Why were the sub-central SEI measures listed below not included in the sub-central notification? Beijing Municipality Opinion on the Implementation of Accelerating the Cultivation and Development of Strategic Emerging Industries, Beijing Municipal People's Government, Jing Zheng Fa [2011] No. 38 (21 July 2011). Fujian Province Plan on the Implementation of Accelerating the Development of Strategic Emerging Industries, Fujian Provincial People's Government, Min Zheng [2011] No. 104 (10 December 2011). Jiangxi Province Interim Measure on the Administration of the Strategic Emerging Industries Investment Guidance Fund, Jiangxi Provincial People's Government (27 March 2012). Shandong Province 12th Five-Year Plan on Strategic Emerging Industries Development, Shandong Provincial People's Government, Lu Zheng Fa [2012] No. 42 (2 November 2012). Shanghai Municipality Measure on the Administration of the Strategic Emerging Industries Development Special Fund, Shanghai Municipal Development and Reform Commission, Shanghai Municipal Department of Finance, Hu Fu Fa [2012] No. 72 (4 August 2012). 1 G/SCM/N/95/CHN/Suppl.1-G/SCM/N/123/CHN/Suppl.1-G/SCM/N/155/CHN/Suppl.1- G/SCM/N/186/CHN/Suppl.1-G/SCM/N/220/CHN/Suppl.1-G/SCM/N/253/CHN/Suppl.1- G/SCM/N/284/CHN/Suppl.1; 29 July 2016. G/SCM/Q2/CHN/74 - 2 - Opinion on the Implementation of State Council Deployment of Accelerating the Cultivation and Development of Strategic Emerging Industries, Guangdong Provincial People's Government, Yue Fu [2011] No. 87 (20 July 2011). Gansu Province Plan on the Implementation of the Strategic Emerging Industries Development Overall Campaign, Gansu Provincial People's Government, Gan Zheng Fa [2014] No. 87 (15 September 2014). Gansu Province Measure for the Administration of the Strategic Emerging Industries Development Provincial-Level Financial Funding Investment, Gansu Provincial People's Government, Gan Zheng Ban Fa [2014] No. 176 (3 November 2014). Zhejiang Province Interim Measure on the Administration of the Strategic Emerging Industries Finance Special Fund, Zhejiang Province Department of Finance, Zhe Cai Qi [2012] No. 152 (22 May 2012). Ningbo City Rule on the Strategic Emerging Industries Development Special Administration (Trial), Ningbo City Accelerating the Cultivation and Development of Strategic Emerging Industries Work Leading Small Group Office, Yong Xin Ling Ban [2013] No. 2 (9 April 2013). Ninghai County Opinion on the Implementation of Accelerating the Cultivation and Development of Strategic Emerging Industries, Ninghai County People's Government, Ning Dang Fa [2013] No. 27 (16 August 2013). Ninghai County Notice on Transmitting Down the 2015 Ningbo City Strategic Emerging Industries Development Special Financial Subsidies, Ninghai County Development and Reform Bureau, Ninghai County Finance Bureau, Ning Fa Gai [2015] No. 23 (22 May 2015). CPC Wenzhou City Ouhai District Commission and Wenzhou City Ouhai District People's Government Opinion on the Implementation of Accelerating the Cultivation and Development of Strategic Emerging Industries (Trial), CPC Wenzhou City Ouhai District Commission, Wenzhou City Ouhai District People's Government, Ou Wei Fa [2012] No. 91 (20 July 2012). Ouhai District Measure on the Administration of the Cultivation and Development of Strategic Emerging Industries Special Fund (Trial), Wenzhou City Ouhai District People's Government, Wen Ou Zheng Ban Fa [2013] No. 79 (9 May 2013). Sichuan Province Measure on the Use and Administration of the Strategic Emerging Industries Development Special Fund, Sichuan Provincial People's Government, Chuan Ban Fa [2012] No. 22 (11 April 2012). Sichuan Province Rule on the Implementation of the Measure on the Use and Administration of the Strategic Emerging Industries Development Special Fund, Sichuan Province Industrialization and Urbanization Work Leading Small Group, Chuan Gong Cheng [2012] No. 1 (4 June 2012). Jiangsu Province Interim Measure on the Administration of the Provincial-Level Strategic Emerging Industries Development Special Fund, Jiangsu Provincial People's Government, Su Zheng Ban Fa [2012] No. 172 (25 September 2012). Heilongjiang Province 12th Five-Year Plan on Strategic Emerging Industries Development, Heilongjiang Provincial Development and Reform Commission (19 August 2015). Xinjiang Uyghur Autonomous Region Interim Measure on the Administration of the Strategic Emerging Industries Special Fund, Xinjiang Uyghur Autonomous Region Department of Finance, Xinjiang Uyghur Autonomous Region Economic and Informatization Commission, Xin Cai Jian [2011] No. 728 (29 November 2011). G/SCM/Q2/CHN/74 - 3 - 3. China has stated that its steel companies do not receive any specific subsidies. Is it China’s position that none of the hundreds of line items listed in the annual reports of the steel companies in China under the heading of "Government Subsidies" or "Government Grants" should be notified?2 Is it not China’s position that these are all sub-central support measures? 4. China has stated that it is "considering" notification of its fisheries subsidies. Since becoming a WTO Member, China has not notified nearly all of its wild capture fishery subsidy programs. Based on China’s 2014 Trade Policy Review and the United States’ 2016 counter-notification of Chinese fisheries subsidies3, it appears that in recent years, subsidies for fishing boat construction/acquisition or renovation are primarily, if not exclusively, provided at the sub-central level. Based on estimates from China’s Ministry of Agriculture, as of 2015 2,700 distant water fishing vessels are in operation, and that compared to 2010 at the end of the "Eleventh Five-year Plan," the number of distant water fishing vessels has increased by 60 percent. Why were none of the provincial boat construction/acquisition or renovation programs included in China’s sub-central notification? 5. Why did China not include in its sub-central notification the subsidy measures listed below relating to the Internationally-Well Known Brand program? Notice on Organizing and Carrying Out the 2013-2015 "Anhui Famous Export Brands" Selection Work, Wan Shang Mao Fa Zi [2013] No. 248, Anhui Province Department of Commerce (20 May 2013). Notice Recommending the 2014-2015 Chongqing International Well-known Brand Enterprises, Chongqing Municipality Foreign Trade and Economic Commission (28 February 2014). Opinion on Support for Foreign Trade and Economic Development Several Policies, Rong Wei Fa [2011] No. 47, Rongchang County Economic and Trade Committee (2011). Notice on Organizing "2014-2016 Fujian Province Key Cultivation and Development International Well-Known Brands" Selection, Fujian Province Department of Commerce, Min Shang Wu Wai Mao [2014] No. 22 (15 September 2014). Fujian Province Foreign Trade and Economic Cooperation Bureau Passing on the Ministry of Commerce and Eight Agency [Issued] Guiding Opinion on Promoting International Well-Known Brands Cultivation Work, Min Wai Jing Mao Fa [2009] No. 16 (27 April 2009). Notice on Doing Well the 2014-2016 Fujian Province Key Cultivation and Development International Well-Known Brands Application Work, Fujian City Foreign Trade and Economic Cooperation Bureau (7 August 2014). Notice on Organizing Enterprises to Apply for the 2014-2016 "Fujian Province Key Cultivation and Development International Well-Known Brands", Quanzhou City Foreign Trade and Economic Cooperation Bureau (5 August 2014). Notice on Recommending the 2013-2014 "Fujian Province Key Cultivation and Development International Well-Known Brands" Enterprises, Fujian City Foreign Trade and Economic Cooperation Bureau (20 July 2011). Notice on Advancing Stone, Ceramic, and Kitchen and Bathroom Industry Steady Healthy Development Twenty Policies, Nan Wei Ban [2015] No. 16, CPC Nan'an City Committee Office, Nan'an City People's Government (3 February 2015). 2 See G/SCM/Q2/CHN/70. 3 See G/SCM/Q2/CHN/59. G/SCM/Q2/CHN/74 - 4 - Implementing Opinion on Accelerating Industrial Leapfrog Development, Zhang Wei Fa [2015]