Chinese WTO suit hits back at U.S. duties

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 and steel products.

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

China's complaint counter-attacks in areas where the United States has hit Chinese products with punitive tariffs, known as anti-dumping duties or countervailing duties, in recent years.

China said the complaint covers exports worth $7.3 billion, encompassing such diverse products as citric acid, kitchen shelving and lawn groomers. It also includes wind towers, even though the U.S. Commerce Department's preliminary decision on those wind tower imports is not due until next Wednesday.

Just 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 hit Chinese steel pipe imports with hefty anti-dumping duties in 2010, and later in the same year it launched a trade suit over Chinese government grants to wind power manufacturers, although it did not pursue the case.

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.

COMPLAINT WON

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.

Many of China's grievances might have been dealt with by a U.S. court decision last year, which struck down the Commerce Department's ability to impose countervailing duties on "non-market economies" such as China.

But the U.S. Congress voted to restore it in March, ensuring U.S. duties on about two dozen Chinese goods stayed in place.

China's new complaint, the seventh it has filed against the United States since it joined the WTO in 2001, comes just as WTO chief Pascal Lamy flies to China for a four-day visit, during which he will meet Vice Premier Wang Qishan.

The legal process begins with China holding talks with the United States to seek an amicable settlement.

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, even though the United States has seen signs of China "making progress" towards easing restrictions on its currency, one of the biggest causes of friction.

The U.S. Treasury again shied away from calling China a currency manipulator in its semi-annual report on Friday.

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.

Lamy has repeatedly warned that the world needs to be on guard against any rise of protectionism in the wake of the financial crisis, although the threat of a global trade war has not yet become reality.

U.S. and Chinese politicians also deny they are in a trade war, but global trade tensions are rising, with Latin American becoming an increasing focus of trade disputes. On Friday, one of the most heated disputes flared into a European Union suit over Argentina's import restrictions.

India, which launched a trade complaint over U.S. duties on steel last month, is also threatening to take the United States to the WTO over U.S. visa fees for high-skilled foreign workers.

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, Mastercard and American Express, while China UnionPay enjoys a monopoly.

(Reporting by Tom Miles, additional reporting by Doug Palmer in Washington; Editing by Tim Pearce)

By Tom Miles

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