* Panel rejects Chinese duties on specialty steel product
* Unclear when China will comply with WTO ruling
* Case seen as small, but politically significant
By Tom Miles and Rachelle Younglai
GENEVA/WASHINGTON Oct 18 The World Trade
Organization barred China on Thursday from imposing duties on
certain U.S. steel exports, siding with U.S. President Barack
Obama in a dispute with Beijing over a type of steel made in two
election battleground states.
The case involved duties imposed by China on "grain-oriented
electrical steel," which is used in the cores of high-efficiency
transformers, electric motors and generators. The steel is made
by AK Steel Corp of Ohio and ATI Allegheny Ludlum
Although the specialty steel case is tiny compared with
other trade disputes with Beijing, the WTO ruling gave Obama a
timely win as he defends himself against accusations by his
Republican opponent, Mitt Romney, that he is soft on China.
"Today we are again plainly stating that we will continue to
take every step necessary to ensure that China plays by the
rules and does not unfairly restrict exports of U.S. products,"
Obama administration trade representative Ron Kirk said in a
China's Ministry of Commerce had no immediate comment on the
ruling, which arrived late in the evening in Beijing.
When the Obama administration filed the case, the volume of
specialty steel trade with China was in the range of $250
million. That pales in comparison with the auto and auto-parts
trade at issue in the most recent case Washington filed against
China in September. The volume of auto parts trade alone
amounted to about $12 billion in 2011, according to the Alliance
for American Manufacturing.
Derek Scissors, a research fellow at the conservative
Heritage Foundation, said Thursday's ruling was "a small benefit
for the Obama campaign because it can advertise 'beating China'
in Ohio, but it's not a benchmark for anything."
Obama has won WTO victories against Beijing in areas ranging
from intellectual property rights to financial services to raw
materials trade and has launched several other challenges, such
as a case against Chinese export restrictions on rare earth
He has also created an interagency trade enforcement unit to
devote more resources to ensuring China and other countries
abide by global trade rules.
The Romney campaign repeated on Thursday that China was
stealing U.S. jobs and that Obama was not standing up to
LONG ROAD AHEAD
The United States brought the steel case in September 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 tariffs, which AK Steel said amounted to about 19.5
percent on its products, potentially affected hundreds of
millions of dollars' worth of the grain-oriented electrical
China imposed the duties after state-owned steel firms
Baosteel Group and Wuhan Iron and Steel Group complained about
imports from the United States and Russia, which was not a WTO
member at the time and was not involved in the case.
The Chinese steel companies were unhappy about the "Buy
America" provisions of the American Recovery and Reinvestment
Act of 2009 and state government procurement laws.
On Thursday, the WTO appeals judges upheld the original
ruling published in June and disagreed with China's claims that
the three-person panel of adjudicators who judged the case then
had misinterpreted the WTO rules.
"This is very good news for American producers of this
product," said David Hartquist, a partner with the law firm
Kelley Drye who represents ATI.
However, Hartquist said there was still a "long road ahead"
as the case had to go through the WTO's dispute settlement body
and China had to comply with the ruling.
Calls to AK Steel's lawyer were not immediately returned.
The decision of the original panel, which was chaired by New
Zealand WTO Ambassador John Adank, received one of the most
ringing endorsements by the appellate body in recent years.