Glamor Economics

Chapter 195

Chapter 24 Section 6 The International Controversy on Subsidies of Agricultural Products——Trade Subsidies and Countervailing

On August 2008, 8, the World Trade Organization website published a letter from the US government.In the letter, the United States raised a series of questions to the WTO on tariffs, subsidies and export rules of Chinese agricultural products (such as pork and wheat).The US government's main point of attack in the letter is China's pig breeding policy.

The letter stated that China's corporate income tax rate is 25%, but meat companies such as pig raising in China do not seem to have to pay such income tax.The U.S. asked China to explain whether pork producers and processors are "enterprises engaged in agriculture, forestry, animal husbandry, and fishery projects," and asked China to publish the total income of pork producers and processors in 2007 and 2008.

In 2007, the number of live pigs in China fell sharply due to diseases and other problems, which led to a sharp rise in pork prices in the market.To this end, the Chinese government has adopted a series of measures to encourage and promote pig breeding and meat processing.In a letter to the WTO, the U.S. government accused China of subsidizing 100 yuan per sow raised, double the previous subsidy, which had previously been as high as 8.86 million U.S. dollars for hog breeding.The U.S. asked China to provide details of the new subsidy program and the total amount of subsidies.

The United States is one of the countries with the most agricultural subsidies in the world. It is really gangster logic to accuse China of agricultural subsidies.Trade subsidy refers to a country's government or public institutions that directly or indirectly provide cash subsidies or financial preferences to domestic export companies.This move is conducive to improving the competitiveness of export enterprises in international trade.But from another perspective, trade subsidies will adversely affect similar foreign companies and easily lead to unfair competition.For this reason, the controversy over trade subsidies has never ceased.

Trade subsidies can be direct or indirect.A direct trade subsidy is simply a negative tax, with the opposite consequences of a tax.Indirect trade subsidies generally take the form of loosening credit, cheap energy use or free use of infrastructure.The subsidy amount can maintain a certain proportional relationship with the trade volume, which is called a specific subsidy; it can also maintain a certain fixed proportional relationship with the trade value, which is called an ad valorem subsidy.

For example, export subsidy in trade subsidies, also known as export subsidy, is a cash subsidy or financial subsidy given to exporters by a government to reduce the price of export commodities and strengthen its competitiveness in foreign markets when exporting certain commodities. preferential treatment.There are direct and indirect ways: direct subsidy, cash subsidy paid directly to the exporter when exporting a certain commodity; indirect subsidy, the government gives financial preference to certain export commodities.

To a large extent, trade subsidies can be used as a tool of trade protectionism and become non-tariff barriers in international trade.For a long time, it has become a common phenomenon for governments of various countries to subsidize different industries or products at different times in order to meet the needs of domestic economic development or other policies, or to promote exports.A country's government has the right to adopt whatever policies it deems appropriate to promote domestic economic development and improve people's living standards. This is a country's sovereignty and is in line with the spirit of the UN Charter.What kind of economic policies a government adopts, what specific methods it implements, and which industries it subsidizes are all internal affairs of a country, and other countries have no right to interfere.

However, a country's subsidies to domestic industries can directly or indirectly affect its foreign trade, and once these domestic measures affect the subsidizing country's economic exchanges with other countries, the problem is not so simple.In international trade, the issue of subsidies and countervailing measures has always been a complicated, thorny and controversial issue.From the figures listed below, it can be seen that the government of a country adopts subsidy measures, the countries affected by the subsidy measures adopt countervailing measures, and the countries affected by the countervailing measures adopt other methods to deal with them. This kind of struggle between subsidies and countervailing measures It has become an important aspect of international trade.

At present, subsidies and countervailing have become prominent problems in international trade.China should seriously pay attention to the disputes caused by trade subsidies, and carry out the legislation and practice of subsidies and countervailing.

[links to related words]

Countervailing refers to the behavior and process of a country's anti-dumping investigation agency implementing and enforcing countervailing laws and regulations.

(End of this chapter)