Famous Brands
Carrying "Famous Brands"
The world received something of a Christmas present December 18 when an agreement was announced between China, the United States, Mexico and Guatemala in which China agreed to end its “famous brands” export subsidies. This was a case that the United States and Mexico joined together to bring to the WTO on December 18, 2008 – and achieved a compromise just a day short of a year later, lightening speed in the world of trade policy. Guatemala joined in shortly after and the three countries worked together to convince China to change its ways on subsidies that encouraged Chinese exports of thousands of different household electronic appliances, textiles and apparel, light manufacturing industries, agricultural and food products, metal and chemical products, medicines, and health products. It’s surprising that resolution of the case hasn’t garnered more press interest, but I have only seen sketchy reports by Bloomberg and articles in specialist press for the affected industries. But mainstream media isn’t fond of good news.
The dispute centered on three initiatives by Beijing that made subsidies available to Chinese companies if they met prescribed criteria for export performance (a definite no-no under WTO rules). The initiatives were all couched in terms of promoting “famous brands” of Chinese products and were known, respectively as the “Famous Export Brand”, the “China World Top Brand”, and the “China Name Brand Products” initiatives. Subtle, the Chinese.
Companies that qualified as “famous brands” received a broad package of preferences from government agencies, including monetary assistance that was tied to exporting the products. The case also addressed a passel of other subsidies to Chinese exports.
To its credit, China worked cooperatively with the complaining countries, which is why the case was resolved so quickly. And probably why it received so little press. There was none of the usual rhetoric claiming the world was “unfair” or that others were infringing Chinese sovereignty. One suspects that Beijing realized they didn’t have a leg to stand on. In any event, the case turned out well and the WTO’s dispute settlement mechanism worked as it is supposed to. Good all around.
