WASHINGTON — The Bush administration announced Thursday it had settled a major trade dispute with an agreement in which the Chinese government has pledged to end several trade-distorting tax subsidies. The deal is a breakthrough in tense economic relations between the countries, ending one of four cases the United States has brought before the World Trade Organization attacking Chinese trade practices.
U.S. Trade Representative Susan Schwab said China had agreed to eliminate WTO-illegal tax breaks that supported Chinese exports to the United States and other countries. China also agreed to scrap tax breaks that had penalized U.S. and other foreign countries in trying to sell their goods in China.
Schwab said the economic boost for U.S. companies would be “very substantial” because the tax breaks have been so pervasive. Administration critics said President Bush will have to produce much bigger results to have an impact on America’s record trade deficit with China, which hit $233 billion last year and will be even larger this year.
