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Chinese WTO suit strikes back at U.S. duties

05/25/2012 | 08:15pm US/Eastern

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 counterattacks in areas where the United States has hit Chinese products with punitive tariffs, known as anti-dumping duties or countervailing duties, in recent years.

In Washington, U.S. trade officials criticized Beijing for bringing the case because they said the U.S. Commerce Department was already working to address issues raised by China and which stem from an earlier WTO appellate panel ruling.

"China's resort to dispute settlement is premature and not an appropriate use of dispute settlement system resources," said Nkenge Harmon, a spokeswoman for the U.S. Trade Representative's office.

"This step by China suggests that China does not really care what the United States does; rather, China has determined without benefit of the facts that whatever the United States does will fall short of what China would like to see," Harmon said.

Beijing launched the action the same day that a WTO panel issued a confidential ruling in a high-stakes case aimed at prying open China's huge electronic payments market for U.S. firms like Visa, MasterCard and American Express.

The U.S. Trade Representative's office in Washington confirmed it had received the decision, but said it could not comment until it is made public in coming weeks.

Visa, MasterCard and American Express also declined comment on the case, which dates to late 2010 and challenges China UnionPay's domestic monopoly over electronic payment services.

The United States argues China failed to follow through on its commitment to allow foreign companies to offer electronic payments services by December 2006, five years after its entry into the World Trade Organization.

U.S. SAYS STUDYING COMPLAINT

China said its complaint covers exports worth $7.3 billion, encompassing diverse products like 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 Wednesday.

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. Later that year it launched a trade suit over Chinese government grants to wind power manufacturers, but it did not pursue the case.

Harmon said the Office of the U.S. Trade Representative 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" like 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 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 America 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.

The WTO is also expected to rule soon on another Chinese-U.S. trade dispute. The case involves Chinese duties on U.S. exports of a specialty steel product known as grain-oriented electrical steel that Washington says are unjustified.

(Additional reporting by Doug Palmer in Washington; Editing by Tim Pearce, Stacey Joyce and Andrew Hay)

By Tom Miles

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