US challenges sweeping Chinese export subsidies

The United States on Wednesday launched a legal challenge to Chinese export subsidies supporting billions of dollars of exports across a wide swathe of industries from steel to shrimp.

U.S. Trade Representative Michael Froman said Chinese companies in designated export hubs benefited from free or subsidized services, cash grants and other incentives which gave their products an unfair advantage.

The request for consultations, lodged on Wednesday, is the first step in a World Trade Organization dispute. The administration has also been trying to convince lawmakers, in particular Democrats, to support a new 12-nation Asia-Pacific trade deal and a bill to streamline Congressional passage of trade deals.

"We are equally committed to the decisive, effective enforcement of our trade rights," Froman told a news conference, flanked by seven members of Congress, six of them Democrats.

USTR estimates suppliers of subsidized services to Chinese export hub companies received more than $1 billion (£656.5 million) from the Chinese government over three years and said some companies received at least $635,000 in support annually.

STR | AFP | Getty Images

China had 179 such hubs called demonstration bases. Exports from just 16 of them, specializing in textiles, totaled more than $33 billion in 2012, a USTR official said. Other industries covered by the program include chemicals, medical products, metals and hardware.

Louisiana Representative Charles Boustany, a Republican, said unfairly subsidized shrimp imports threatened the livelihood of thousands of families in his state.

Read MoreUS-China trade war leave some solar firms reeling

Representative Jim Costa, a California Democrat who voted for three major trade deals in 2011, said Chinese export subsidies had a significant impact on his state's farm exports and enforcing trade rules was critical to winning support for trade deals under negotiation.

"If we are going to convince our constituents here in the United States, American workers, American businesses, that these negotiations will be good for our country, for the economy and for the world order of future trade, we have to ensure that our existing trade agreements are being followed," he said.

The United Steelworkers Union, which opposes the Trans-Pacific Partnership and planned legislation to fast track trade deals, said the move would help establish a level playing field for workers whose jobs were at risk due to Chinese subsidies.

Chinese officials were not immediately available for comment.