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WTO to probe US-China tire rift
Published on: 2010-01-13
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BRUSSELS -- The World Trade Organization will investigate import tariffs levied by the U.S. on Chinese tires in September, according to documents published Monday by the Geneva-based trade arbiter.


The probe follows a Chinese appeal filed almost immediately after the tariffs were announced in September. It's part of a trade battle that has emerged since President Obama took the high-profile decision to approve extra tariffs of 35%, 25% and 20% over the next three years, in addition to the regular 4% levy on tires.


Since then, China has slapped import tariffs or restrictions on imports of U.S. nylon, industrial acid, chicken and other products. It's also begun an investigation into whether U.S. automakers are selling below cost, or "dumping", cars in China.


The U.S. has retaliated, looking into allegations of dumping in other products and last month slapping tariffs on imports of Chinese steel pipes, a $2.8-billion market.


The growing tensions in global trade's richest bi-national trade relationship have exacerbated protectionist fears on both sides of the Pacific. It's one reason global trade talks once against collapsed in Geneva last month.


In the tires case, the WTO will formalize the panel at a meeting on Jan. 19. The three-judge body will look into whether the U.S. respected WTO rules in levying the so-called safeguard tariffs on Chinese tires.


When the China joined the WTO in 2001, it agreed to give trade partners "safeguards", the right to increase tariffs if a flood of Chinese imports began to disrupt domestic factories and put people out of work.


That's what the U.S. tire industry says happened.


Between 2008 and 2004, imports of tires from China, which at $50 or less can easily undercut those made in the U.S.A., rose to $9.3 billion from $5.1 billion, giving the Middle Kingdom a 17-percent market share, according to trade data.


That put a stress on the U.S. tiremakers, people in the industry say. Seven U.S. tire plants have closed since 2006. There were 5,168 fewer workers in the industry in 2008 than there were in 2004.


The WTO's decision will hinge "on how much Chinese tire imports increased, whether U.S. tiremaker were hurt by these imports, and whether the tariffs exceeded what was necessary," says Simon Lester of worldtradelaw.net, a Washington-based consultancy. "It's more straightforward than most trade remedy case."


China has denied the link. Its tires cater to a different, low-cost market than U.S. tires, its officials say.


The panel will publish a decision after nine months of investigation. If it finds that the U.S. unfairly imposed the tariffs, it could authorize China to put tariffs on key U.S. imports, up to the amount lost by Chinese exporters because of the duties. The U.S. can appeal, meaning the case could last several years.

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