GENEVA - The World Trade Organization opened a formal investigation Friday into allegations by the United States and Mexico that China is providing illegal subsidies for a range of industries.
The two countries accuse Beijing of using WTO-prohibited tax breaks to encourage companies in China to boost exports, while imposing tax and tariff penalties to limit purchases of foreign products in China.
"We are concerned about a series of measures maintained by China that appear to constitute subsidies prohibited under WTO rules," U.S. trade lawyer Juan Millan told the WTO's dispute body. "China offers tax refunds, reductions, and exemptions that appear to be contingent on a firm's use of domestic over imported products or on a firm's export performance."
Beijing, meanwhile, blocked a separate probe of its rules for protecting intellectual property rights. But the move will probably only delay the creation of a panel until the next meeting of the WTO's dispute body in September, when Washington, D.C., can bring up the issue again.
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Under WTO rules, a second request for an investigative panel automatically is granted.
The U.S. government brought the two complaints to the global commerce body earlier this year amid pressure from Congress to do something about the United States' soaring trade deficits and lost manufacturing jobs, which critics blame in part on unfair trade practices by foreign nations.