GENEVA, July 24: China on Tuesday followed standard WTO practice by blocking a first US and Mexican request to set up a World Trade Organisation panel to examine allegedly illicit Chinese industrial subsidies.

Under the organisation’s rules, the request by the United States and Mexico is likely to be automatically accepted at the WTO Dispute Settlement Body’s (DSB) next meeting on August 21, unless they drop the move in the meantime.

The DSB meeting on Tuesday decided to merge separate complaints made by the United States and Mexico earlier this month, at the request of both countries, a trade source said.

In the documents lodged with the WTO, the two countries target tax breaks they claim China offers to companies if they buy Chinese supplies instead of imported goods or that appear to be based on a firm’s export performance.

The formal move by the US to step up the dispute comes amid growing pressure in Washington to respond to a burgeoning trade deficit with China and concerns that Beijing is flouting rules used by most trading partners.

“The United States is deeply concerned that China is providing numerous subsidies that appear to be prohibited under WTO rules,” the United States said in a statement to the meeting.

China said it regretted the US decision to drop negotiations with Beijing on a possible settlement and to turn to the WTO for a ruling.

“We are puzzled by the complainants’ decision to initiate the panel process,” China said in a statement.—AFP