China, US tension: trade case against Washington

By Victoria Samatova

On Monday Beijing filed a World Trade Organization case challenging the United States duties on 24 products.

Based on the information provided by WTO representative those products include steel, tires, magnets, chemicals, kitchen appliances, wood flooring and wind towers.

Beijing’s case came after the US filed a WTO case accusing China of improperly subsidizing exports of automobiles and auto parts.

The US and China clashed over the complaints about market barriers and subsidies for goods including autos, solar panels, tires, steel and chicken. The conflict is sharpened due to  the political pressure related to the decreasing demand on their goods, and thus raising the threat of job losses in export areas.

The Chinese Ministry of Commerce explained that the reason for the current complaint was due to the US giving its Commerce Department of Congress power to impose anti-dumping duties on Chinese goods. Also prior to that a US court identified countries like China and Vietnam to be “non-market economies”.

“This practice puts Chinese enterprises in an uncertain legal environment, in violation of the relevant rules of the WTO transparency and due process,” ministry spokesman Shen Danyang said in a statement.

The Chinese filed the complaint requesting the consultations from WTO to settle the dispute, which is the first stage in a WTO complaint. Then if there is no resolution found in 60 days China has the right to ask for the case to be handed over to a WTO panel for judgement. And depending on the outcome of that, China might be allowed to request sanctions.

It is clear that Chinese complaint is the result of the case filed by Washington in July 2012 challenging anti-subsidy tariffs imposed by Beijing on import of American automobiles. Chinese authorities imposed the charges after concluding the financial rescue of General Motors Co and Chrysler LLC violated rules against subsidies.

Among other complaints, the United States, European Union, and Japan are challenging China’s control on exports of rare earths which are necessary for the manufacturing of cell phones and other hi-tech products. Also Washington is investigating complaints regarding Beijing’s improper subsidies for its solar panels producers which leads to wiping out American jobs.

Observing the growing tension between two leading powers in modern world, US and China, one has to admit a lack of trust and strong competition between them. It would be profitable for both countries to learn to accept and trust one another, which might not be easy to reach if filing trade cases to WTO against each other. It might be that a better way to do it is by “making baby steps” toward one another and having some readiness to compromise even when realizing the risks and the endeavor for economic development. Would these countries be willing to compromise? – that is the hard question but giving an answer to which one can forecast the future development of the world economy.

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