“State Aid” Issue not Only EU Driven Anymore? New Panel on Alleged Subsidies at the WTO

From the WTO website:

“The United States was concerned that China appeared to be providing export subsidies through a programme establishing the Foreign Trade Transformation and Upgrading Demonstration Bases and the Common Service Platforms. China identified enterprises based on, among other things, export performance and provides export-contingent subsidies to these enterprises in the Demonstration Bases through free or discounted services or through grants. The US noted that the Subsidies and Countervailing Measures (SCM) Agreement prohibits subsidies contingent upon export performance. Given that the consultations with China did not resolve the dispute, the US requested the DSB to establish a panel immediately, in accordance with Article 4.4 of the SCM Agreement, to examine its complaint.

China expressed its disappointment with the US decision to request the establishment of a panel in this dispute. It was surprised that the US had chosen to file a request for panel establishment just seven days after the consultations. China noted that finding a mutually agreed solution was the preferred approach to dispute settlement, in particular at a time when the system was resource-constrained. China stood ready to safeguard its rights under the Dispute Settlement Understanding (DSU).”

What is also of interest is the fact that the  “European Union said it had an interest in this dispute which raised important systemic issues.”

We also learn that Australia, Brazil, Canada, the EU, India, Japan, Korea and Russia have “reserved their third-party rights to participate in the panel’s proceedings” put together by the Dispute Settlement Body (DSB).

Where the BEPS could this lead?

Robert Robillard, Ph.D., CPA, CGA, MBA, M.Sc. Econ.
Senior Partner, DRTP Consulting Inc.
514-742-8086; robertrobillard “at” drtp.ca

DRTP Consulting Inc. solutions go beyond transfer pricing and international tax solutions. The information in this blog post is general information only. Data and information come from sources believed to be reliable but complete accuracy cannot be guaranteed. DRTP Consulting Inc. or the author are not responsible or liable for any error, omission or inaccuracy in such information. The opinions expressed in this blogpost are those of the author. Readers should seek advice and counsel from DRTP Consulting Inc. as required.

Posted by drtp On 27 April 2015