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China lodges WTO complaint over US tyre tariffs
2009-09-14
GENEVA (AFP) - China lodged a complaint against US tariffs on Chinese tyres at the World Trade Organisation on Monday, deepening a trade row as US President Barack Obama denied that the move amounted to protectionism. "The United States has adopted protective measures against Chinese tyres shipped to the United States. This is a violation of WTO rules," said Chinese commerce ministry spokesman Yao Jian. Amid warnings that a jump in Chinese-made tyres had cost more than 5,000 jobs, Obama on Friday imposed punitive duties of 35 percent on the Chinese imports, igniting the first trade spat of his presidency just weeks before hosting his Chinese counterpart Hu Jintao. The government-run US International Trade Commission (USITC) had urged duties of up to 55 percent after union leaders claimed imports of cheap Chinese tyres had tripled over the last five years. However, to minimise Chinese anger, Obama opted for a lower figure, whereby tariffs, already at four percent, will rise by an additional 35 percent in the first year, 30 percent in the second and 25 percent in the third. Obama defended the move on Monday as he warned that the United States would not shirk from invoking rules in trade pacts. "When, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism, we do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system," he said. Beijing reacted strongly against the move, saying over the weekend that it would in turn investigate possible unfair practices in US exports of car parts and chicken meat to China. Chinese Deputy Commerce Minister Zhong Shan said in a statement issued on the commerce ministry's website that both parties had held consultations since the United States in April began investigating Chinese-made tyres. But "due to domestic political pressure, the US government made overly high demands ... (which were) unacceptable to the Chinese," he noted. While Obama had finally taken a lower figure, Zhong said that it was "nevertheless serious protectionism". "The Chinese government is closely watching the possible negative impact that this case could have on our relevant export industry and will listen to suggestions from the industry, take pro-active steps ... to do all it can to help enterprises overcome difficulties." China's official Xinhua news agency quoted experts as saying that 100,000 Chinese jobs could be lost as a result of US tariffs and that China's tyre industry would be worse off to the tune of one billion dollars. "The United States, by making the decision, failed to honour its commitments made at the G20 financial summit and abused trade remedy measures, which is grave protectionism and will undermine China-US economic and trade ties as well as the early recovery of the world economy," Chinese foreign ministry spokeswoman Jiang Yu said over the weekend. In Monday's statement, Chinese officials also reminded the United States of Beijing's "determination to firmly fight against trade protectionism", adding that its move to go to the WTO was a "correct action ... aimed at safeguarding our interests". Beijing and Washington now have 60 days to hold bilateral consultations on the issue. If it is not resolved at the end of the period, the WTO will rule on the issue. Meanwhile, financial market analysts said the spat prompted nervous investors to take profits, dragging global stock markets lower on Monday. "The prospects of a trade war with China has made traders considerably nervous," said Joseph Hargett at Schaeffer's Investment Research.
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