January 20, 2009 / 3:28 PM / 10 years ago

WTO to rule in China trade dispute with U.S.

GENEVA, Jan 20 (Reuters) - The World Trade Organisation (WTO) agreed on Tuesday to rule on a dispute launched by China over U.S. measures against imports of certain steel pipes, tyres and woven sacks.

The WTO’s dispute settlement body decided to set up a panel to judge the complaint, highlighting trade tension between Washington and Beijing on the day the new U.S. administration of Barack Obama takes office.

The United States used its one-time right to block the formation of a panel last month, but under global trade rules was not able to do so twice.

“China is greatly concerned by the various substantive and procedural problems found in the U.S. anti-dumping and countervailing duty investigations and measures against Chinese products at issue,” China said in a statement to the WTO formally requesting a panel for a second time.

A U.S. statement expressed disappointment at China’s move and said its measures were in line with WTO rules.

“China’s complaint appears to be an effort to hinder the effectiveness of these two remedies permitted under the WTO agreements for these two injurious practices,” it said.

SECOND CASE

The case is only the second launched by China at the WTO since it joined in 2001. In September last year it challenged U.S. measures against imports of coated paper.

But that dispute was resolved without going to a panel after the U.S. International Trade Commission (ITC) decided that Chinese imports of paper had not harmed U.S. producers, and the measures never took effect.

China, the world’s second biggest exporter behind Germany, has itself now been the target of 7 disputes at the WTO, in all of which the United States, either alone or with other countries, has been a plaintiff.

The WTO adopted its first ruling against China, in a case involving imports of auto parts, on Jan. 12.

Some people argue that China’s embrace of the WTO dispute process is a sign of the health of the global trading system.

Similarly, recourse to WTO dispute settlement by the United States and other countries is seen showing that states are willing to play by the rules and settle problems peacefully.

But others fear that growing protectionism as countries try to protect jobs from cheap imports in the recession will lead to increased litigation that could poison trade ties.

Three months after China launched the current case on Sept. 19, the United States began legal action over subsidies for Chinese branded goods.

And Obama is facing calls to start a case at the WTO to force China to revalue its yuan currency.

In the current case China is challenging duties imposed by Washington to counter what it sees as unfairly priced imports. According to the U.S. authorities, the Chinese goods were sold in the U.S. market for less than they cost at home or benefited from subsidies.

Despite the challenge the ITC gave the green light on Dec. 22 to the Commerce Department to impose countervailing duties of up to 40.05 percent to counter subsidies on steel pipes used to ship oil and natural gas.

Several countries joined the case as third parties, flagging an interest in the dispute. Besides Argentina, Australia, Canada, the European Union and Turkey, they were Gulf states Bahrain, Kuwait and Saudi Arabia, who trade lawyers said had rarely if ever participated in WTO disputes. (Editing by Richard Balmforth)

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