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The United States has filed a complaint with the World Trade Organization, or W-T-O, over China's use of subsidies that appear to be prohibited by W-T-O rules. The U.S. believes the subsidies give an unfair competitive advantage to Chinese products both when exported and when they compete against imports in China.

U.S. Trade Representative Susan Schwab said that the consultations seek to end a practice that unfairly impairs the ability of U.S. companies to compete in China. She said the action demonstrates the U.S. intention to hold China to the commitments it made when it joined the W-T-O. The U.S. action is also intended to encourage China's continued economic reforms, including its efforts to move away from export-centric industrial policies and toward more balanced, consumption-led growth.

China has taken significant steps to open its market and reform its trade practices since becoming a member of the W-T-O in 2001. Both China and the United States have benefited from a stronger trade relationship.

Thomas Christensen is U.S. Deputy Assistant Secretary of State for East Asian and Pacific Affairs. In a written statement presented to the U.S.-China Economic and Security Review Commission, he said that "China's engagement with the global economy has raised tens of millions of its citizens out of abject poverty, has opened China's economy to quality U.S. products and services, has helped educate and inspire a generation of Chinese entrepreneurs, engineers, and officials, and has contributed to keeping inflation low in the U.S. by lowering prices on a wide range of consumer goods and inputs to U.S. production."

As mature trade partners, China and the United States confer with each other on their differences. The U.S. will continue to seek cooperative and pragmatic resolutions of its concerns through dialogue with China. But when differences cannot be resolved through dialogue, the United States will turn to dispute-settlement mechanisms.

This period of consultations at the W-T-O gives China the opportunity to eliminate its subsidies without having the issue move to the next stage of dispute settlement. Ending the subsidies would benefit not only Chinese consumers and U.S. companies and workers, but also the global trading system.

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