Legal Issues Research On RMB Exchange Rate Subsidies

When the U.S. House of Representatives passed the "exchange rate reform and the promotion of fair trade bill" with highest number of votes on September 29,2010, The United States accuse China of currency constitutes a subsidy, in violation of "SCM Agreement", threatened to sued China to WTO dispute settlement body to carry out anti-subsidy investigations. Firstly, from the perspective of procedural law, this article discussed the jurisdiction of WTO Dispute Settlement Body on RMB exchange rate subsidies and countervailing issues. And then, from the perspective of substantive law, the RMB exchange rate does not constitute subsidies according to the "SCM Agreement".There are five chapters in this article:The first chapter, I introduced general theory of Exchange Rate and Subsidies and some basic issues. The main content are the concept of subsidies, classification of subsidies, and I also give a brief introduction on content of China's exchange rate system and background of the reform in China. In addition, the China's RMB exchange rate system is consistent with the provisions of Jamaica.In the second Chapter, from the perspective of procedural law, I discussed the jurisdiction on the RMB exchange rate of subsidy and countervailing issues. And this point is combined with some relevant international legal norms and the division of labor and the relationship between IMF and WTO.For the third chapter, from the constituent elements of subsidies of the "SCM Agreement", I focus on the issue that RMB exchange rate does not match the SCM Agreement according to "financial assistance" and "conferring a benefit" of subsidies requirement. I focused on "specificity", which is the core issue of actionable subsidies. I have discussed the definition and the recognized standard of "specificity", which combined with "SCM Agreement" and the relevant provisions of the practice of the Appellate Body and the Expert Group, as well as the practice of the U.S. Finally, I settled on an analysis on the issue that RMB does not have specificity.In the fourth chapter, I studied and analyzed the "prohibited subsidies". There are two parts in this chapter; the first part is about the basic theory of "prohibited subsidies", including the definition and the identification of the "prohibited subsidies". The second part is for the analysis of the RMB exchange rate which is not in accordance with the "prohibited subsidies" requirement.