China escalates subsidies spat with U.S., asks for WTO ruling

GENEVA Tue Nov 20, 2012 7:40am EST

GENEVA Nov 20 (Reuters) - China is to ask the World Trade Organization to rule on its latest commercial spat with the United States, the WTO said on Tuesday, hoping it will back Beijing's complaint that punitive U.S. tariffs imposed on a raft of Chinese goods are illegal.

In a move that deepened the dispute, China will ask the WTO to set up a three-person dispute panel at a meeting on Nov. 30. If China wins the case and any subsequent appeal Washington could be forced to drop the tariffs it levied on 31 Chinese products which it said were being traded unfairly.

The U.S. tariffs affected photovoltaic cells and modules used in solar power, various steel products, off-road tyres, aluminium goods as well as towers for windfarms.

Such capital-intensive and cyclical commodity products have frequently been at the centre of trade disputes as national industries have asked governments to step in and stop foreign competition from destroying profits and jobs.

Steel products have frequently been involved, as more recently have solar power components, with the oversupplied global solar industry struggling to maintain its profit margins.

The United States has been a fierce critic of what it says are clandestine Chinese subsidy programmes, but Beijing says Washington's efforts to tackle suspected wrongdoing have gone beyond the rules.

China's complaint targets Public Law 112-99, which was signed by President Barack Obama in March, as well as U.S. steps taken against suspected export-distorting subsidies between Nov. 20 2006 and the passage of the contested law.

In a WTO filing, China said the U.S. law had broken the rules because it applied retroactively to suspected Chinese subsidies as far back as 2006.

The United States was also at fault, China said, because it used "double remedies" against China between 2006 and March this year.

Double remedies means targeting the same Chinese exports twice over - once for being subsidised and once for being "dumped", or sold at unfairly cheap prices.

China launched the complaint in September, just hours after the United States lodged a similar complaint against China's support for car exports.

Under WTO rules a country accused of breaking the rules has 60 days to try to resolve the complaint, after which the complainant can ask the WTO to set up a panel of adjudicators to judge the merits of the dispute. The WTO's ruling is likely to be made public in mid-2013.