China challenges trade protectionism

Updated: 2012-05-26 10:37

By Li Jiabao (China Daily)

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China filed World Trade Organization cases on Friday challenging US countervailing measures against Chinese exports worth nearly $7.3 billion, widening a conflict between the world's two largest economies.

The cases, covering US anti-subsidy tariffs on 22 Chinese goods including steel, paper and solar cells, come as a weakening global economy is fueling trade frictions, experts said.

China began its challenge by requesting consultations with the United States through the WTO to resolve the dispute. If that fails, China can request a ruling by a WTO panel, which can order the US to scrap measures found to violate free-trade commitments, or to pay compensation.

China's mission to the WTO accused Washington of improperly using anti-dumping measures to shield US companies.

"The relevant practices constitute the abuse of trade remedy measures which undermines the legitimate interests of China's enterprises," said a statement by the mission.

It complained that Washington was repeating its "wrongful practice" from a dispute over Chinese solar power equipment.

Ministry of Commerce spokesman Shen Danyang said the US acted inconsistently with WTO rules in the countervailing investigations, and continued wrongdoings that had been refuted by the WTO Dispute Settlement Body rulings.

"We reviewed 22 countervailing cases that the US has launched against China since 2006 and found common wrongdoings in these cases and so complained to the Dispute Settlement Body for consultation," said Li Chenggang, head of the ministry's department of treaty and law.

Shen added that US misuse of trade remedy measures infringed the interests of Chinese enterprises and aroused intense discontent.

The US Department of Commerce announced on May 17 that it will impose preliminary anti-dumping duties on Chinese solar power equipment - ranging from 31 percent to 250 percent - after it ruled in March that Chinese manufacturers sold products below cost. The case was included in the 22 cases in which China challenged the US countervailing measures, according to Li.

"China's challenge to the US countervailing measures is timely and reasonable. It is justified because the US is currently misusing the trade protection measures, which hurt Chinese enterprises," said Zhou Shijian, a senior expert in the center for US-China Relations at Tsinghua University.

The US has 10 days to respond to China's consultation request and 30 days to start negotiations. If it accepts the request, it has 60 days to conclude the negotiations. Failure with these procedures will entitle China to ask for a Dispute Settlement Body panel to investigate the complaint.

"The US will probably accept the request but I don't see a big chance to resolve the dispute through consultation," Zhou said.

After the first countervailing investigation against Chinese exports in November 2006, the US launched about 30 countervailing cases. China complained to the WTO regarding four of the countervailing cases in 2008 and won support from the Dispute Settlement Body in 2011.

"But we regret that the US did not carry out the rulings and repeated its wrongful practices in the following cases," Li said.

US President Barack Obama signed a bill in March allowing countervailing investigations on products from countries that the US doesn't grant economy market status to, but the bill was recently reviewed for inconsistency with the US constitution.

"This showed that the US misuse of trade protection measures is not even accepted at home," Zhou said.

"But despite frequent trade frictions, we do not see a trade war between the top two economies because China's challenge to the US countervailing measures goes within the WTO framework and will not affect normal trade. It is normal to see trade frictions as bilateral trade expand, especially when the US economy is slowly recovering," Li said.

"In the long run, China's move to correct the US misuse of trade remedy measures helps maintain a healthy trade relationship," he said.

AP contributed to this story.