March 22, 2007	Thursday	Rabi-ul-Awwal 2, 1428

GENEVA, March 21: China said talks with the US aimed at preventing a full-blown row at the World Trade Organisation (WTO) over its alleged subsidies to industry showed that Washington misunderstood Beijing's policies.

In a rare public statement after a meeting at the WTO's Geneva headquarters, China said some contested programmes were no longer in place, while others had already been reformed.

“It is evident from the consultations that the complaining parties have misunderstandings towards Chinese foreign investment and taxation regimes,” China's delegation to the World Trade Organisation said in a statement late on Tuesday.

Washington sought consultations at the World Trade Organisation last month about what it says are illegal subsidies for steel, computers, clothing and other industries.

The US government is under pressure from Congress to act against a gaping trade deficit which is expected to have reached a record of about $760 billion in 2006. About $230 billion of the gap is with China alone.

It is targeting Chinese export subsidy programmes, which potentially cover up to 60 per cent of China's exports, and three other programmes that it says discriminate against imports by subsidising purchases of domestic goods.

But China said that preferential loans for certain exporters did not exist anymore, while other subsidies programmes had been on the agenda of reform of China's enterprises income taxation regime which had been put into law in the meantime.

The United States has been joined by Mexico in the complaint, while the European Union, Japan and Australia have been given third party rights which allows them to be informed about developments.

If the consultations yield no agreement, the US and Mexico can ask for a formal investigation of their complaint by a World Trade Organisation panel.

The subsidies row is the second World Trade Organisation fight involving China to break out in recent weeks. The US and the EU have also taken issue with China's supposed restrictions on imports of auto parts.

—Reuters