DS: China — Certain Measures Granting Refunds, Reductions or Exemptions from Taxes and Other Payments

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Current status

 

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Key facts

 

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by the United States. (See also dispute DS359)

On 2 February 2007, the United States requested consultations with China concerning measures granting refunds, reductions or exemptions from taxes and other payments owed to the Government by enterprises in China.

The request for consultations identifies various measures, including any amendments and any related or implementing measures. The United States considers the measures in question to be inconsistent with Article 3 of the SCM Agreement in that they provide refunds, reductions or exemptions to enterprises in China on the condition that those enterprises purchase domestic over imported goods, or on the condition that those enterprises meet certain export performance criteria. Further, the United States claims that, to the extent the measures accord imported products treatment less favourable than that accorded “like” domestic products, they are inconsistent with Article III:4 of the GATT 1994 and Article 2 of the TRIMs Agreement. The United States also claims that the measures do not comply with China's obligations under paras. 7.2-7.3 and 10.3 of Part I of its Accession Protocol, as well as para. 1.2 (to the extent that it incorporates paras. 167 and 203 of the Report of the Working Party on the Accession of China), which forms part of the terms of accession agreed between China and the WTO and is an integral part of the WTO Agreement.

On 15 February 2007, the European Communities requested to join the consultations. On 16 February 2007, Australia and Japan requested to join the consultations. On 19 February 2007, Mexico requested to join the consultations. Subsequently, China informed the DSB that it had accepted the requests of Australia, the European Communities, Japan and Mexico to join the consultations.

On 27 April 2007, the United States requested supplemental consultations to take into account China's recently adopted new income tax law. On 4 May 2007, Mexico requested to join the supplemental consultations. On 7 May 2007, the European Communities requested to join the supplemental consultations. On 11 May 2007, Australia and Japan requested to join the supplemental consultations. On 14 May 2007, Canada requested to join the supplemental consultations. Subsequently, China informed the DSB that it had accepted the requests of Australia, the European Communities, Japan and Mexico to join the supplemental consultations.

On 12 July 2007, the United States requested the establishment of a panel. At its meeting on 24 July 2007, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

At its meeting on 31 August 2007, the DSB established a single panel with dispute WT/DS359. Australia, Canada, Chile, the European Communities, Japan, Chinese Taipei and Turkey reserved their third-party rights. Subsequently, Argentina, Colombia and Egypt reserved their third-party rights.

 

Withdrawal/termination

On 19 December 2007, China and the United States informed the DSB that they had reached an agreement in relation to this dispute, in the form of a memorandum of understanding.