China Commerce Minister: U.S. CVD Measure Violates WTO Rules

March 7, 2012 01:28 AM
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via a special arrangement with Informa Economics, Inc.

Top Chinese official expresses concern about newly formed ITEC group; discusses trade imbalance, currency valuation

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

A U.S. measure that would allow the Commerce Department to impose anti-subsidy duties on imports from non-market economies like China and Vietnam has been labeled as violating WTO rules by Chinese Commerce Minister Chen Deming.

China will follow WTO rules or the rules of international organizations it has joined, Chen said in a news conference. However, Chen countered the country does not “have the obligation to abide by any domestic laws and regulations that are not in line with the rules of international organizations.”

Most members of the WTO use subsidies of different types, Chen noted, citing the U.S. bailout of automobile firms as an example of a subsidy. He countered China did not implement new subsidies in response to the financial crisis nor did China impose countervailing duty measures against those types of subsidies.

China is confused about U.S. action. According to a Xinhua recap of Chen’s remarks, the Commerce chief said he “can't understand” why the U.S. has imposed high tariffs on imports from China in the form of 31 anti-dumping and anti-subsidy measures and failed to correct its own mistakes after a court ruling. The court ruling referenced by Chen is what spawned the measure approved by the House and Senate this week. The measure was aimed at a 2011 court ruling which said US law prevents the US Commerce Department from applying countervailing duties to non-market economies because Congress never explicitly authorized such an action.

House Ways and Means Chairman Dave Camp (R-Mich.) authored the measure which would give the U.S. Commerce Department the authority to impose countervailing duties on imports from countries without market economies. The House and Senate have both approved the bill and sent it to President Obama for his signature.

China’s Chen said he wanted to discuss the issue with the U.S. and others who charge China uses prohibitive subsidies to help its own industries. “Let me be clear: there are no prohibitive subsidies handed down by the Chinese central government,” Chen said.

VP Biden comments. “By passing this law, Congress has taken a clear stand against the unfair trade practices that have put countless American jobs in jeopardy,” Vice President Joe Biden said.

“Our companies and workers should not be expected to compete against the deep pockets of the Chinese government,” Rep. Camp said.

Under the plan, the U.S. Commerce Department would be allowed to reduce anti-dumping duties in non-market economies where countervailing duties are simultaneously being imposed to prevent double remedies.

In his press conference, China’s Chen also address other trade-related issues:

Formation of the U.S. Interagency Trade Enforcement Center: Chen expressed a hope the new agency will operate with transparency and said China has continued to meet the commitment made at the G20 summit in Cannes to not introduce trade protection measures.

“We are paying close attention to its operation and watching whether it obeys the rules of international trade,” Chen added.

U.S.-China trade imbalance: Chen said the trade imbalance between the two is “questionable” and the matter should be “rethought.” He noted China has a trade surplus overall of $150 billion but holds a $200 billion advantage in its relationship with the United States.

“Anyone with a basic knowledge of economics can find a clear conclusion," Chen said.

Yuan exchange rate: Chen labeled the yuan exchange rate as being at a reasonable level and the country will keep making it more flexible. He noted that countries should maintain stable currency levels in the current global climate.

As for calls for China to devalue its currency, Chen countered that was “not desirable” and would undermine the economic recovery.

Comments: It’s not surprising that China and the US maintain different views on trade and other policies as that has historically been the case. It’s also clear that Chinese officials continue to resist pressure from the US on their currency which continues to be a source of friction between the two sides.


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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