(Reuters) Tariffs against Chinese exports in a falling market might not fit a safeguard mechanism China agreed to when it joined the World Trade Organisation, Chinese trade sources said on Wednesday.
Experts suggest that position may signal a new strategy to counter potential U.S. tariffs on Chinese-made tyres.
The Obama administration is expected to soon decide whether to impose steep duties on imports of Chinese tyres, under provisions China agreed to when it joined the WTO to prevent a flood of Chinese exports.
"Given the global financial crisis, Chinese exports are also falling. So it’s unclear that this case would fit the criteria" for the safeguard measures, which are allowed if a surge in Chinese products disrupts the domestic market, said Fu Donghui, a trade lawyer with the Allbright Law Firm.
"We would need to look into whether (applying the measures in the tyre case) is indeed against WTO rules. If it is, then other countries have the right to take action."
The tyre case is important because it would signal the Obama administration’s position on industry requests for relief from cheaper Chinese imports. The Bush administration turned down similar requests for relief.
A delegation from the Chinese Ministry of Commerce visited Washington this month to lobby against the tyre tariffs. The results were not positive, a ministry official said.
Making an appeal against the legality of the U.S. tariffs would be more in China’s interests than a damaging, tit-for-tat trade war, since China’s economy is so export-dependent.
Other U.S. industries are lined up to file complaints, should the Obama administration approve the tyre tariffs.
On Aug. 19, the U.S. International Trade Commission began an investigation of magnesia carbon bricks, a raw material used in steelmaking, from China and Mexico, on the request of U.S. producer Resco Products Inc.
A Chinese industry association countered that Chinese exports of the material dropped by about half so far this year, echoing the 52% drop in U.S. steel production in the first half of the year, and proving that Chinese exports of the bricks are demand-driven.
"This is not only unfair and hurts the Chinese industry’s interest, it hurts the U.S. steel industry’s interests as well," Xu Dianli, secretary general of the Association of China Refactories Industry, told reporters on Wednesday.
"The sharp drop shows that this is not at all dumping."
Chinese media and industry groups have floated ideas for a variety of ways in which China might retaliate if the U.S. imposed tariffs on tyres, including banning or limiting the import of certain products like U.S.-made cars or soy beans. (Tire Review/Akron)
