DS: China — Measures Relating to the Production and Exportation of Apparel and Textile Products

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Summary of the dispute to date

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Consultations

Complaint by Mexico.

On 15 October 2012, Mexico requested consultations with China concerning measures that allegedly support producers and exporters of apparel and textile products.

Mexico claims that China maintains a wide variety of measures that support producers and exporters of apparel and textile products, as well as suppliers in the cotton and chemical fibres industries. Measures cited include tax exemptions for certain enterprises, reduction of import duties and VAT for purchase of equipment by certain groups of enterprises and those located in certain regions, measures contingent on use of Chinese goods and contingent on export performance, low cost loans by state-owned banks to certain industries, preferential land use rights, discounted electricity rates, support for production, sale and transportation provided to cotton farmers and the Chinese petrochemical industry, and cash payments from government agencies. According to Mexico, these measures appear to involve both prohibited and actionable subsidies that are causing or threatening to cause serious prejudice through displacement and impedance of Mexican exports to the United States as well as through significant price undercutting, price suppression, price depression, and lost sales in the United States.

Mexico claims that these measures are inconsistent with:

• Articles 3.1(a) and (b), 5(c), 6.3(b) and (c), 6.4, and 6.5 of the SCM Agreement;
   
• Article III:4 of the GATT 1994;
   
• Articles 3, 9 and 10 of the Agreement on Agriculture; and
   
• Paragraph 1.2 of Part I of China's Accession Protocol.

On 25 October 2012, the European Union requested to join the consultations.  On 26 October 2012, Australia and Guatemala requested to join the consultations.  On 29 October 2012, Brazil, Peru and the United States requested to join the consultations.  On 30 October 2012, Honduras requested to join the consultations. On 15 November 2012, Colombia requested to join the consultations.