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China's WTO suit hits back at U.S. duties

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05/25/2012 | 03:27pm CEST

China launched a complaint at the World Trade Organization on Friday against U.S. import duties on 22 Chinese products that the United States says are unfairly priced or subsidized, including solar panels, wind towers and steel products.

"China firmly opposes the abuse of trade remedy measures and trade protectionism," China's Ministry of Commerce said in a statement.

The complaint, which also encompasses such diverse products as citric acid, kitchen shelving and lawn groomers, covers exports to the United States worth $7.3 billion, the Ministry said.

A spokeswoman for the Office of the U.S. Trade Representative, Nkenge Harmon, said it was studying the complaint and would respond in accordance with WTO rules.

"The Obama Administration strongly supports the trade remedy laws, and was the first Administration ever to apply a 421 safeguard to imports from China," she said. A 421 safeguard is a U.S. measure that allows manufacturers to request emergency restrictions on Chinese imports in response to a surge.

China's complaint counter-attacks in areas where the United States has been critical of China in the past few years.

Eight days ago the U.S. Commerce Department set punitive tariffs on Chinese solar panels, which it said Chinese exporters had dumped on the U.S. market at unfairly low prices.

The United States also launched a trade suit over Chinese government grants to wind power manufacturers in December 2010, although it did not pursue the case to the arbitration stage at the time, and hit Chinese steel pipe imports with hefty anti-dumping duties earlier in the same year.

COMPLAINT WON

But last year China won a WTO complaint similar to Friday's against U.S. duties on imports of Chinese steel pipes, off-road tires and woven sacks. U.S. Trade Representative Ron Kirk called that decision "a clear case of overreaching" by the judges.

The latest case, China's seventh against the United States since it joined the WTO in 2001, begins with China "requesting consultations" with the United States to seek an amicable settlement.

But it may move to arbitration if the two cannot agree, and the United States could be forced to scrap its duties and even compensate China if it is found to have broken the rules.

The dispute adds more heat to a trade relationship that has barely stopped simmering despite the United States seeing signs of China "making progress" towards easing restrictions on its currency, one of the biggest causes of friction.

Although the overall pace of China's export growth has slumped to single digits this year, its trade surplus with the United States set a record of more than $295 billion in 2011, putting extra pressure on U.S. manufacturers whose markets are still recovering from the financial crisis.

WTO dispute panels are due to rule on two more Chinese-U.S. trade disputes within days or weeks.

One concerns China's exports of grain-oriented electrical steel.

The other is a U.S. complaint that China's electronic payments market is closed to foreign firms such as VISA (>> Visa Inc.), Mastercard (>> Mastercard Inc) and American Express (>> American Express Company), while China UnionPay enjoys a monopoly.

(Reporting by Tom Miles; Editing by Kevin Liffey)

By Tom Miles

Stocks treated in this article : American Express Company, Mastercard Inc, Visa Inc.
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