BEIJING/WASHINGTON Jan 19 Chinese negotiators
are likely to try and stave off future safeguard duties against
Chinese products when they argue against U.S. tariffs on tyres
at a World Trade Organisation panel to be set up on Tuesday.
The duties on Chinese tyres, announced by the Obama
administration in September, marked the first time the United
States imposed the safeguard barriers that China reluctantly
agreed to when it joined the WTO in 2001 [ID:nSP515339].
The WTO panel into the tyre duties coincides with a new
dispute between China and U.S. Internet search engine giant
Google Inc (GOOG.O). China and the United States are already at
odds over the value of the yuan currency, U.S. arms sales to
Taiwan and climate change policy. [ID:nTOE60C07A]
A victory for China in the tyre case makes it much less
likely such duties will be used against other exports, which
keep the Chinese economy humming and its workers employed.
"If the panel rules against the U.S., that will definitely
discourage the use of China-specific safeguards," said Brendan
McGivern, a partner with White & Case in Geneva.
The special safeguards clause that China agreed to when it
joined the WTO had a 12-year limit, leaving it only with
After 2013, countries would have to enact safeguards
against all exporters if they feel imports are hurting domestic
industry -- a tariff measure the Bush administration tried with
steel in 2002 but was forced to remove in 2003.
The time it will take to fight the case, and then revoke
the tariff if Washington loses, means the tyre tariffs will
have been in place for most of their original three-year
"I don't think China has realistic expectations that this
will result in any meaningful relief," said David Spooner, a
lawyer with Squire, Sanders and Dempsey in Washington.
"I think China took this WTO case as a prophylactic to keep
the U.S. and other countries from using the safeguard again and
to stand up for their rights so they can have a talking point
if they win," he said.
China may argue that the United States has weakened the
idea that a rise in imports must be the main cause of damage to
a domestic industry. Its negotiators could cite a 1974 U.S. law
allowing imports to be only one of a number of damaging
factors, Spooner said.
NO RAPID INCREASE
Documents submitted by Chinese negotiators in their first
request for a panel do not question the legitimacy of the
special safeguards, as some commentators at home had argued
"The safeguard clause has always been a source of intense
irritation for the Chinese," McGivern said.
"The Chinese say, 'OK, we're stuck with these safeguard
rules, we don't like them but if we're stuck with them, you
have to meet the minimal standards that are set out'," he said.
Chinese negotiators have argued that U.S. tyre imports were
not "increasing rapidly", the condition set out in clause 16.4
of China's WTO agreement.
"First, there's no rapid increase of imports from China
from 2007. According to China's customs data, the increase from
2007 to 2008 was 2.2 percent, and the data of the first half of
2009 decreased 16 percent from 2008," they said.
They may also argue the fact that tyre manufacturers, many
of whom have plants in China, did not support the tariffs means
the imports are not hurting the U.S. industry but are simply a
consequence of its restructuring.
The United States did not outline its counter-argument when
it blocked China's first panel request. China's second request
will be granted automatically, according to WTO procedures.
The defence that shipments are falling will be easier for
China to argue because global trade in general declined in
The producers of carbon magnesia brick, who are preparing
to fight a separate safeguard tariff request by U.S.
competitors, are also readying their defence based on a fall in
(Additional reporting by Jonathan Lynn in GENEVA; Editing
by Paul Tait)