China ministry "regrets" U.S. tyre trade finding

BEIJING, June 19 (Reuters) - China's Ministry of Commerce expressed "deep regret" at a U.S. trade panel ruling that Chinese tyres had flooded the U.S. market, the first step in what could be the Obama administration's first trade dispute with Beijing.

The International Trade Commission found that a surge of low-cost tyres from China had disrupted U.S. markets, following a complaint by the United Steelworkers union which hopes to cap Chinese tyre imports at their 2005 level.

"China has repeatedly expressed its opposition to foreign governments' using safeguard clauses to launch investigations of Chinese products," Commerce Ministry spokesman Yao Jian said in a statement posted on the ministry's website on Friday.

"The decision does not conform to objective facts, and also violates relevant World Trade Organisation rules in addition to U.S. law."

Lawyers representing Chinese tyre producers argue that U.S. companies largely abandoned the low-range tyre market before Chinese manufacturers moved in. They also noted that no U.S. tyre producers had joined the steelworkers' complaint.

"We hope the U.S. will fully consider the actual situation of this case and proceed from the overall interests of the two countries' industries," Yao said.

U.S.-based steel makers have long complained that Chinese incentives to its steel industry have resulted in a flood of steel exports to countries like the United States. Tyres are often reinforced with steel wire.

The union's complaint says that closings of U.S. plants by Goodyear (GT.N), Continental Tire (CONG.DE), and Bridgestone/Firestone (5108.T) have cost thousands of jobs.

This is not the first time that imported Chinese tyres have ruffled relations between the two countries. Two years ago, Chinese-made radial tyres imported by an American dealer were recalled after the manufacturer stopped including a safety feature that prevented the tyres from separating.

(Reporting by Lucy Hornby, Editing by Dean Yates)