Wednesday, 19 September 2007

Wall Street Journal interview on China's first WTO case against the US in 5 years

Recently China brought a case against the US on the measures taken by the US on imports of coated paper. I was interviewed by the WSJ on the case (see below). For those who are interested in knowing more technical details about the case, you can find my posting at the International Economic Law and Policy Blog here.

China, in assertive move, challenges U.S. at WTO
Andrew Batson. The Wall Street Journal Asia. Hong Kong: Sep 17, 2007. pg. 8

BEIJING -- China is showing a new willingness to aggressively defend its interests as the world's largest exporter, filing a case at the World Trade Organization challenging U.S. trade policies.

The dispute concerns trade penalties the U.S. imposed in March in a fairly narrow market for a kind of glossy, high-quality paper, which is used in magazines and art books.

But it has the potential to broadly affect Chinese exporters, because the U.S. broke with 23 years of its practice and allowed U.S. firms much broader leeway to seek protection against Chinese imports.

Underscoring the importance of the case, this is only the second time China has formally used the WTO's dispute-settlement process since it joined the trade group in 2001. The first time was in March 2002, when China followed several other nations in challenging duties U.S. President George W. Bush imposed on steel imports.

In Washington, where anti-China sentiments are fueling a broader political backlash against globalization, the Bush administration brushed aside the complaint.

"We are fully confident in our trade-remedy laws," said Sean Spicer, a spokesman for U.S. Trade Representative Susan Schwab. Mr. Spicer said the administration intends to "vigorously defend" U.S . trade laws before the WTO.

Chinese officials have long preferred private dialogue to public confrontation and have criticized the U.S. for bringing several cases this year against China at the WTO. Political pressure to block Chinese imports has been rising in the U.S., and the trend has been compounded by recent scares over unsafe Chinese toy imports and pet food tainted with illegal chemicals from China.

With Chinese exporters increasingly worried about access to the U.S. market, China's government is under pressure to challenge any barriers, analysts said.

"Instead of trying to work out the solutions through secret political negotiations, China now becomes more and more willing to use the dispute-settlement system," said Henry Gao, a former WTO official.

China's representative at the WTO, Sun Zhenyu, wrote a letter Friday to his U.S. counterpart, Peter Allgeier, requesting the WTO consultations. The Ministry of Commerce in Beijing declined to comment beyond its initial statement announcing the request.

The U.S. decision at issue concerns a kind of trade measure known as countervailing duties. Such duties can be imposed if complaining companies can demonstrate that their overseas competitors are being subsidized by the government. The measures are distinct from a more common type of trade-protection measure known as antidumping duties, which are intended to stop overseas companies from selling products below cost.

The U.S. designates China as a "nonmarket" economy, a condition that makes it easier for domestic companies to win antidumping actions against Chinese goods. But it hadn't previously permitted companies to also seek countervailing duties against goods from China and other nonmarket economies.

In March, the U.S. Commerce Department reversed that position and imposed preliminary countervailing duties of 10.9% to 20.4% on Chinese producers of the coated paper.


Greg Hitt in Washington contributed to this article.

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