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Analyzing "Challenging The RMB Exchange Rate As A Subsidy" By The Rules Of WTO

Posted on:2012-08-15Degree:MasterType:Thesis
Country:ChinaCandidate:M WangFull Text:PDF
GTID:2189330332497101Subject:Law
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Since 2002, the RMB exchange rate issue has become a hot point of Sino-US economic and trade relations and even of the international community. In recent years, some American scholars and politicians have accused the Chinese government artificially undervalued the exchange rate remained at the standard level, which has brought an unfair trade advantage for Chinese exports, thus it can be identified that the RMB exchange rate mechanism has formed prohibited subsidies under the WTO legal system. This thesis is directed against the view of Americans, combining with Agreement on Subsidies and Countervailing Measures (SCM Agreement). It analyzes the RMB exchange rate mechanism and then comes to the conclusion that it does not constitute subsidies.This thesis is divided into three chapters:The first part gives a brief overview of the relevant argument "challenging the RMB exchange rate as a subsidy".The author first introduces the origin of the argument and its recent trends, and reveals the reasons for its prevalence in the United States:they want to exert pressure on RMB appreciation with the help of the argument "challenging the RMB exchange rate as a subsidy", in order to strike Chinese economic, initiatively depreciate dollar and decrease foreign loans. Furthermore, if the RMB exchange rate dispute can be solved within the framework of WTO, it will be much easier to achieve the purpose of the United States, meanwhile the countervailing duty investigation can also made a great passive impact on China's industries and Macro-regulation.The implied premise of "challenging the RMB exchange rate as a subsidy" is that Chinese government maintained RMB on the undervalued level, however, after analysis, it can be concluded that the RMB exchange rate has not been underestimated.In the second part, the author discusses the two issues WTO jurisdiction and "non-market-economy country" of "challenging the RMB exchange rate as a subsidy". That people accused the RMB exchange rate of constitutes subsidies is the RMB exchange rate mechanism is actually violating the WTO rules, which also derivates the problem whether WTO has a jurisdiction on this issue. View from the GATT Article 15, WTO has a jurisdiction on the exchange rate arrangements which can lead to trade disputes; from WTO's own perspective, "challenging the RMB exchange rate as a subsidy" criticizes the RMB exchange rate mechanism has disobeyed the trade obligation of WTO covered agreements'SCM Convention, therefore, WTO dispute settlement institutions have no substantial obstacles to exercise its jurisdiction on this issue.The argument of "subsidy" has also brought the debate of the non-market-economy countries apply to the countervailing measures. Because America has refused to recognize China's completely market-economy status and Western countries are not have the tradition of countervailing investigation on "non-market-economy country", as a result, many Chinese enterprises mistakenly believe that the non-market-economy status is still a umbrella eluding themselves from countervailing measures. From the perspective of U.S. domestic law, the statute law has no clear prescription, but there exists evidences on the basis of case law. From the perspective of WTO, it does not prohibit its members take countervailing measures on the non-market-economy countries.The third part is based on the SCM Convention, which analyzes whether RMB exchange rate constitute prohibited subsidies or not.Since SCM Convention is the "basic law" in the countervailing area, it should be the standard of judgment on the RMB exchange rate. SCM Convention regulates the conditions constituting the prohibited subsidies:a subsidy is provided by government or public institutions; the nature of subsidy is financial assistance or any forms of income or price support; subsidy should benefit relevant enterprises or industries; subsidy is specific. On the basis of contradicting American part's reasons, the author combines the following conditions to deploy a discussion:the commercial banks conducting foreign exchange operations do not meet the requirements of subsidy providers; RMB exchange rate mechanism is not equivalent to the financial assistance provided by government departments.; there are not sufficient legal evidences to recognize Chinese export enterprises are awarded benefits on the basis of the only global RMB currency; the RMB exchange rate mechanism is applicable to all the Chinese economic sectors and micro economies, and it does not in law or in fact to the conditions of export performance as the sole or on of the conditions, thus it do not have specificity. It is known that RMB exchange rate mechanism does not accord with SCM Convention. It is untenable in WTO legal system that use subsidy as a tool attack RMB exchange rate.
Keywords/Search Tags:RMB Exchange Rate, Prohibited Subsidy, SCM Convention
PDF Full Text Request
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