United States V. China's Prohibited Subsidies Case Assessment,

As an important legal means of maintaining the fair trade and protecting the domestic industry, countries all over the world identify the importance of the subsidies and countervailing measures in the international economy and trade. Facing to the fierce competition in the international economy, each government pays more and more attention to the subsidies to gain the advantages in the competition, microscopically stimulating the export and increasing the foreign exchange and their own countries' economy, macroscopically promoting the escalation of the structure of their own countries' industry, improving the competitive strength. How to try their best to strengthen the subsidies under the tolerable limitation, and how to set out the subsidy measures to restrict other countries have been the main task which every government is facing.Countervailing measure is one of the three main trade remedy measures of WTO, which can be taken by WTO members under certain conditions. Compared with anti-dumping measures and safeguard measures, countervailing measures relate to a government's activities, so it is more sensitive in political term. Moreover, WTO members cautiously take countervailing measures because the methodology of calculation on investigating the subsidy is not perfect. At the present time, the study and the innovation have become the focus which every country is concerned with.When joining WTO, China promised that it would accept the treatment as a non-market economy country on the subsidy. So in the past, most western countries thought that in the non-market economy countries like China, the price of capital goods is controlled by the government, thus it's difficult to differentiate the governmental subsidy from the actual cost of production. So they thought the non-market economy countries were not applicable to the countervailing measures. Therefore we Chinese haven't paid more close attention to the subsidies and the countervailing measures.However, there are a lot of trade frictions during the period, along with the rapid development of China's external trade and the persistent propelling of the market opening. Moreover, we are transforming our economy into the market economy and other countries don't consider China as a non-market economy country. Then gradually WTO ASCM will regulate China, so will other WTO members' countervailing measures. For the past few years, the number of the cases on the countervailing is still small, but obviously it is going up. In 2004 Canada Border Service Agency(CBSA) put on record and investigated the grill, carbon steel, stainless steel fastening piece and compound floor slab, which were made in China. And this undrew the prologue of overseas countries' investigating China on the subsidy. Practices tell us that we should take reasonable measures, take advantage of the rules and use the reasonable subsidies to develop our economy while improving the unreasonable ones.There are three main parts in my paper, besides the introduction, the summary and the conclusion. Part I summarizes the fact that U.S.A requires a consultation with China in WTO on China's trade subsidies, including the process of the case, America's main viewpoints, China's attitudes towards the case and the actions it takes; Juridical analysis in part II is the center and the stress of the article. Using positive analysis, comparative approach and juridical analysis, firstly I find the focus of the dispute that China's trade subsidies are the export subsidies and the import substitution or not. Secondly I find six favorable and possible justifications on the accusation from two angles that China's trade subsidies are the subsidies and prohibitive subsidies in ASCM or not according to the WTO rules and previous cases in DSB. Part III is the conclusion and suggestion. Through showing the realistic meaning and the theoretical enlightenment, at the end of the paper I form my opinion on dealing with the countervailing. Firstly we should have proper mind-set; secondly we must improve our laws and pay particular attention to the skills and methods on legislation; thirdly we ought to make use of the supervision of all the enterprises and prepare for the respondent well; fourthly we should consider the lawsuit on countervailing systematically and strategically.