. /.   WORLD TRADE  
ORGANIZATION  G/C/W/628 
27 October 2009 
 
 (09-5333) 
Council for Trade in Goods Original:   English 
  
 
TRANSITIONAL REVIEW MECHANISM PURSUANT TO PARAGRAPH 18  
OF THE PROTOCOL ON THE ACCESSION OF THE  
PEOPLE’S REPUBLIC OF CHINA (“CHINA”) 
 
Questions from the UNITED STATES to CHINA
 
  
 The United States wishes to pose the following  questions to China in  connection with the 
upcoming meeting of the Council for Trade in G oods for the purposes of the transitional review 
mandated by China’s Protocol of Accession.  These questions relate to matters that were raised by the 
United States during the transitional review held be fore one of the committees that reports to the 
Council for Trade in Goods, the Committee on Subsid ies and Countervailing Measures, but China did 
not respond to them.  The United States notes that  it may submit additional questions, depending on 
the outcomes of other upcoming transitional review s before committees that report to the Council for 
Trade in Goods.   
 
Subsidies to the Textiles Sector 
 
1. Publicly available information indicates that  numerous provincial and local authorities in 
China have developed textile-specific plans for the period 2009-2011, as directed by the central 
government's “ Plan for Adjustment and Revival of Textile Industry.”   Several of these provincial and 
local planning documents appear to contain pr ovisions contemplating significant support for the 
textile sector, and some raise concerns, given WTO subsidies rules.   
2. A July 2009 Wuxi City plan states that “foreign exchange from fibre per ton shall be 
increased by 20 per cent as compared with 2008” and “the ratio of domestic ( 国产 ) fabric in the 
clothing for export shall reach 90 per cent and above .”  (See Adjustment and Promotion Action Plan 
for the Textile and Clothing Industry (2009-2011), Wu Zheng Fa 2009  (No. 140) (“Wuxi Plan”)).  In 
addition, the Wuxi Plan states:  “For the major technologies, projects and enterprises which are 
included in the three-year adjustment & improveme nt plan, the lands and capital shall be firstly 
supplied.”  A list of projects specifying funds to individual companies includes, for example, over 
RMB 411 million earmarked for one co mpany specifically for “high-grade apparel for foreign trade.”   
(a) Could China please explain in what ways W uxi City is seeking to increase “foreign 
exchange from fibre” and promoting “domestic fabric in clothing for export”?  Please 
explain how these policies are consistent w ith China’s obligation under Article 3 of 
the Subsidies Agreement.   
(b) Please explain the criteria for providing support for the purpos e of “apparel for 
foreign trade.”  Is this suppor t contingent upon exportation?   
3. A 2009 Hunan Province plan states:  “We will offer certain subsidies and rewards for 
products exported by ramie processing companies.” 
  (See Implementation Plan for Reviving Hunan’s 
Textile Industry (2009-2011) , Xiang Zheng Fa 2009 (No. 19).) G/C/W/628 
Page 2  
 
  (a) What “subsidies and rewards” are availa ble to exporting companies in Hunan 
Province? 
(b) Please explain how this plan is consistent with China’s obligation under Article 3 of 
the Subsidies Agreement. 
4. In Jiangsu Province, the provincial author ities have outlined policy measures to be 
implemented with regard to the textile industry.  (See Notice of the People’s Government of Jiangsu 
Province About Releasing the Guidelines for Ad justing and Reviving Jiangsu’s Textile Industry , Su 
Zheng Fa 2009 (No. 84).)  The first of these polic y measures is entitled, “Inc reasing Credit Support.”  
It states:  “We will carry out the state credit po licy for the textile industry, encourage financial 
institutions to increase credit support for textile co mpanies, and provide current capital for companies 
with good fundamentals but temporary difficulties, and offer more fixed asset loans for major technological reform projects that are in line with industrial policies.”  Further, it states:  “We will 
encourage guaranteeing institutions to provide cr edit backing and financing service for textile 
companies.”   
(a) Please provide examples of how this policy is  being implemented at the provincial 
and local levels in Jiangsu Province. 
(b) Please explain what is meant by China’s “stat e credit policy for the textile industry.”  
Please also describe the manner in which guidance is provided to financial institutions to increase credit support for the textile industry. 
(c) What criteria are used to determine wh ich companies qualify as “companies with 
good fundamentals but temporary difficulti es”?  Which authorities determine what 
criteria are to be used in identifying these companies? 
(d) Please identify and describe the industrial po licies pursuant to which fixed asset loans 
for major technological reform projects can be offered under this policy. 
5. A Hangzhou City plan states that the city will “o ffer aid or awards in the form of special 
funds” to the textile sector, and states that the government will “optimize fi scal and financial credit 
support.”  (See Three-year Action Plan for Adjusting and Reviving Hangzhou’s Textile and Clothing 
Industry (2009-2011) , Hang Zheng Ban Han 2009 (No. 236)).  The plan also states:  “We will 
increase the input into special fiscal funds fo r textile companies and the ‘development fund for 
Hangzhou’s silk and women’s clothing industr y’, and increase fiscal support to companies.” 
(a) Please describe the fiscal and financial cred it support available specifically to textile 
and apparel sector companies in Hangzhou City. 
(b) What “aid or awards” are available to Hangz hou City textile sector companies?  What 
criteria must be met to qualify for “aid or awards?”  
 
 
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