On the Practice and Dispute of the Rules for Determining the Specificity of Exchange Rate Subsidies in the United States

Abstract

The U.S. Modification of Regulations Regarding Benefit and Specificity in Countervailing Duty Proceedings proposed in 2020 incorporated currency exchange rate undervaluation to the subsidy program and clarify the concept of a "group" of enterprises in the subsidy specificity. The exchange rate undervaluation, if needed to be regulated or prohibited, must be subsidy-specific. The Modification of Regulations Regarding Benefit and Specificity in Countervailing Duty Proceedings generalizes the concept of a "group" of enterprises to facilitate a de facto specificity determination for exchange rate subsidies. The application of this rule has been found in the exchange rate subsidy investigations initiated by the U.S. in the past two years, making it more difficult for the investigated country to defend itself. However, the rules of specifying the U.S. exchange rate subsidies are not compatible with the SCM Agreement under the WTO framework. In this regard, China can actively defend against the inconsistency between the rules of the U.S. exchange rate subsidies and the SCM Agreement, enhance the transparency of the relevant exchange rate policies and exchange rate operations, pay attention to procedural participation, and improve the skills of responding to the lawsuit.