February 11, 2011 / 4:47 PM / in 6 years

UPDATE 2-US takes disputes to WTO, China trade gap up

4 Min Read

* US says China duties on steel violate world trade rules

* Wants promised access to electronic payments market

* US trade gap with China hit record $273.1 bln in 2010 (Adds background, quotes)

By Doug Palmer

WASHINGTON, Feb 11 (Reuters) - The United States said on Friday it had asked the World Trade Organization to rule on two disputes with China -- one on restrictions Beijing has imposed on U.S. specialty steel exports and the other on access to its vast credit and debit card payments market.

The announcement came just after a Commerce Department report showing the U.S. trade deficit with China grew 20.4 percent in 2010 to a record $273.1 billion.

"We are troubled by the procedures and decision-making employed by China in its trade remedy investigations, which have now led to serious restrictions on exports of American steel," U.S. Trade Representative Ron Kirk said.

"We also remain deeply concerned about China's continuing efforts to reserve its domestic payment card market for one state-owned enterprise, to the exclusion of American credit and debit card companies."

The steel case involves Chinese duties imposed on potentially hundreds of millions of dollars of "grain-oriented flat-rolled electrical steel" (GOES) made by AK Steel Corp of Ohio and Allegheny Ludlum of Pennsylvania.

The United States charges that China, without sufficient evidence of unfair U.S. pricing practices or government subsidies, began an investigation that led to anti-dumping and countervailing duties of more than 100 percent on the American-made steel, the trade office said.

It also alleges other WTO violations in the course of China's investigation and said on Friday the case appeared to be part of a larger pattern.

"We have watched with growing concern China's resort to additional duties on U.S. exports," Kirk said.

Chinese Monopoly

In the electronic payments case, the United States accuses China of failing to meet a commitment to open its market to foreign firms by December 2006. Most of the world's top providers of electronic payment services for credit and debit cards are headquartered in the United States, the trade office said.

Several hundred billion dollars worth of electronic payment transactions were processed in China in 2010.

Over the past decade, the People's Bank of China has issued regulations that give China UnionPay a monopoly over the handling of transactions done in China's domestic currency while excluding other potential suppliers, the U.S. trade representative said.

"Opening up China's market, as China committed to do over four years ago, would create American jobs for the U.S. suppliers of electronic payment services and a more efficient payment card system in China would be beneficial for both merchants and consumers," Kirk said.

Once a WTO dispute settlement panel is formed, it typically takes 12 to 18 months for a final public decision.

U.S. Commerce Undersecretary Francisco Sanchez, at a separate briefing on the trade data, defended the Obama administration's overall handling of U.S.-China trade.

"I don't believe (the new record deficit) is evidence of a failed trade policy," Sanchez said. "On the contrary, you have to look at our numbers overall and our numbers overall are goods. Our exports to China grew by 34 percent."

U.S. goods exported to China totaled $91.9 billion in 2010 while imports from China rose 24 percent to $364.9 billion. (Reporting by Doug Palmer; editing by Eric Beech and Bill Trott)

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