UPDATE 1-U.S. challenges China over duties on high-tech steel

Mon Jan 13, 2014 5:06pm EST

WASHINGTON Jan 13 (Reuters) - The United States increased pressure on China on Monday in a dispute over U.S. high-tech steel exports, accusing Beijing of not complying with a World Trade Organization directive to drop duties.

U.S. Trade Representative Michael Froman said China continued to use tariffs to effectively block imports of U.S. grain oriented flat-rolled electrical steel, used in the cores of high-efficiency transformers, electric motors and generators, despite a WTO ruling in the United States' favor.

"The WTO found that China's duties are inconsistent with WTO rules. We were right, and China was wrong," Froman told a news conference.

"Unfortunately, it appears that China has not corrected those inconsistencies."

The United States brought the steel case in 2010 after China accused U.S. exporters of "dumping" - or selling at unfairly low prices - on the Chinese market and levied punitive duties on the steel imports. The WTO decided for the United States in 2012.

The office said the action to seek consultations with China over the steel duties marked the first time the United States had initiated a WTO proceeding to challenge a claim by China that it had complied with a WTO dispute ruling.

U.S. exports of the specialty steel product, made by AK Steel Corp of Ohio and ATI Allegheny Ludlum of Pennsylvania, had been worth $250 million a year before China imposed duties.

Attorneys for the USTR said they hoped China would bring its tariffs into line with WTO rules after the U.S. request and a review by a WTO compliance panel.

Countries can ultimately seek compensation or redress if trading partners do not comply with WTO rules.

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