Mexico took the first step in an official dispute resolution process through the World Trade Organization (WTO), claiming that China illegally supports its textile and clothing industry under world trade law. The Mexican government claims that China’s textile and clothing policy breaks the WTO’s subsidies and countervailing measures agreement, the general agreement on tariffs and trade, the agriculture agreement and China’s own WTO accession commitments. The U.S. and European Union will join consultations between Mexico and China and are supporting Mexico’s case as third parties. The National Council of Textile Organizations describes the case as a landmark in textile trade. Among the subsidies that Mexico says China provides for its textile and clothing industry are income tax, import duty, VAT and municipal tax exemptions, reductions and refunds; low-cost loans, extended loan repayment and debt forgiveness by state-owned banks; preferential prices for land-use rights; government fee refunds; discounted electricity rates; cotton production, import and distribution subsidies; and government cash payments.

Source: World Trade Organization