China takes US trade spat to WTO

Beijing complains to world trade body after US imposes new tariffs on Chinese tyre imports.

Obama authorised the new tariffs after complaints by a key union [AFP]
Obama authorised the new tariffs after complaints by a key union [AFP]

Beijing has reacted strongly against the move, saying over the weekend that it would launch an “anti-dumping and anti-subsidy” investigation into imports of US vehicles and chicken products.

The Chinese commerce ministry’s website quoted Chen Deming, the commerce minister, as saying that the US move, announced on Friday, was a violation of global trade rules and a “grave act of trade protectionism”.

“This is an abuse of special safeguard provisions and sends the wrong signal to the world,” Chen said.

‘Teach them a lesson’

The Chinese authorities said that “in line with national laws and World Trade Organisation rules, the commerce ministry has started an anti-dumping and anti-subsidy examination of some imported US car products and chicken meat”.

What is dumping?

Dumping is an informal name for the practice of selling a product in a foreign country for less than either the price in the domestic market or the cost of making the product.

  To protect local industries, it is illegal in some countries to dump certain products into them.

The commerce ministry said on Monday that there were concerns that the US imports had “dealt a blow to domestic industries”.

Beijing added that the investigation “was simply a response to domestic concerns” and not carried out in retaliation for the US tariffs on Chinese tyre imports announced on Friday.

But the state-run China Daily newspaper reported strong support among Chinese firms and economists for retaliatory measures against the US.

“We could levy higher tariffs on tyres and automobiles imported from the US,” it quoted He Weiwen, of the China Society for American Economic Studies, as saying.

“China should not let the US car firms make easy money from its vast car market. We should teach them a lesson.”

The US trade deficit with China totalled $103bn in the first half of 2009, down 13 per cent from the same period last year.

special report

Obama’s decision to impose the 35 per cent tariff, which comes on top of an existing four per cent duty, was made after the United Steelworkers Union complained about the dumping of Chinese-made tyres.

The union is a key constituency for Obama and he has sought its support in fighting to overhaul the US healthcare system.

Obama said he authorised the additional duties, which run for three years beginning with 35 per cent then sliding progressively to 25 per cent, “in order to remedy a market disruption cause by a surge in tyre imports”.

US tyre manufacturers, many of whom also have plants in China, had not sought the tariffs. The imports amount to $1.8bn annually.

‘Dangerous signal’

Jiang Yu, a Chinese foreign ministry spokeswoman, said the move sent a dangerous protectionist signal.

“These disputes should be adequately addressed under the WTO and both sides should maintain a cool head”

Andrew Leung, analyst

“This is going to damage financial and trade co-operation between China and the United States, and does not help push the world economy towards an early recovery,” he said in a statement posted on the ministry website.

China and the US have vowed to co-operate in seeking to revive global economic growth.

But the tyre dispute has brought continued friction over trade into focus, which could spill over into the G20 summit this month and Obama’s scheduled visit to China in November.

Andrew Leung, an international analyst who specialises on China, told Al Jazeera: “We are not out of the woods of the current financial crisis. Jobs are still being lost in the West and politicians are fighting for their political survival with domestic problems … there are bound to be voices asking for job protection.

“Of course, China is the main beneficiary of the international trading regime. China wants to see that the rules are played out fairly on both sides. These disputes should be adequately addressed under the WTO and both sides should maintain a cool head.”

Source: Al Jazeera, News Agencies


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