China has turned to the World Trade Organization to help block U.S. tariffs on 22 types of Chinese products, including solar panels, pipes for oil wells, coated paper and steel wheel hubs.
The Chinese appeal to the WTO takes aim at the U.S. Commerce Department, which has recently imposed stiff duties on Chinese products. The department has cited Chinese subsidies, especially those funneled through state-owned enterprises, that it says give Chinese firms an edge over American competitors.
But U.S. experts said Beijing did not appear intent on triggering an all-out trade war. That would be an unappealing prospect at a time when China’s economy is showing signs of slowing down.Rather than resorting to retaliatory measures, China’s Ministry of Commerce on Friday asked for WTO consultations, the first stage of a formal dispute process. The products covered are worth a total of $7.29 billion, a substantial figure for the companies involved but only a small fraction of the trade between the two nations.
“From the broad strategic standpoint, it’s more of the tit-for-tatting that goes on with the U.S. and China in these trade barrier disputes,” said C. Fred Bergsten, head of the Peterson Institute. “I don’t think it’s anything like a trade war. At most, it is a skirmish over products that make up a tiny, tiny share of the trade between the two countries.”
Separately, the Treasury Department said China “is gradually allowing necessary external adjustments to take place” to increase the value of its currency, whose artificially depressed value has given China a competitive edge, many companies say. In its regular report on international exchange rates, the Treasury cited the decline in China’s current account surplus and the “real appreciation” of the Chinese currency since June 2010.
“Nevertheless,” the report added, “the underlying factors that distort China’s economy and constrain global demand growth remain.” It said that while China’s current account surplus had narrowed, it remained too high.
Sen. Sherrod Brown (D-Ohio) said Treasury’s failure to brand China a currency manipulator gave China “a free pass.” That designation would require a broad tariff on Chinese goods.
The Treasury Department said China needs to follow through on commitments it made at the strategic and economic dialogue with top U.S. officials in Beijing this month. At those talks, the Treasury report said, “China stated that it intends to cut import tariffs on certain consumer goods this year, and expand the coverage, to all regions and sectors, of its pilot program to reduce the tax burden on services in order to accelerate development of the services sector.”
Trade issues remain a source of friction. In a high-profile case involving solar panels, the Commerce Department imposed small duties, known as countervailing duties, to offset Chinese subsidies, and separately imposed 31 percent tariffs to counter what it called the dumping of cheap Chinese solar panels on the U.S. market.
“The U.S. behavior abused trade remedy practices and harmed the legal rights and interests of Chinese companies,” the Commerce Ministry said in a statement attributed to spokesman Shen Danyang. “The Chinese government opposes abuse of WTO rules and trade protectionism explicitly and consistently.” On Thursday, the ministry ruled that the U.S. government had provided improper subsidies for six renewable-energy projects.