China insists US tire duties counter-productive, will appeal WTO ruling

China on Tuesday criticized a World Trade Organization (WTO) ruling yesterday that upheld the U.S. decision last year to slap duties on Chinese-made tires and said it will appeal to the global trade body.

The Chinese commerce ministry repeated that the safeguard measures adopted by the U.S. on Chinese tire imports were protectionist and counter-productive.

The U.S. safeguard measures adopted toward Chinese tires are trade protectionism intended to shift domestic political pressure. They are not in line with WTO rules and have been widely criticized, the Commerce Ministry said in a statement.

The U.S. had imposed a 35 percent duty on Chinese tires last year after trade unions complained that domestic producers were negatively affected by the import of Chinese tires. The United Steelworkers union had filed the so-called safeguard petition to President Obama, citing that tire exports from China grew three-fold between 2001 and 2004.

According to WTO guidelines, member countries can impose temporary extra tariffs on goods as a precautionary measure to face down a flood of imports.

However, the three-year duties on Chinese tires worth $1.8 billion was challenged at the WTO, ratcheting up tensions between the world's largest and second largest economies.

A China Daily article on Tuesday quoted an unnamed Chinese Commerce Department official who accused the U.S. of resorting to trade protectionism following domestic political pressure.

The protectionist move was designed to transfer domestic political pressures and was not in line with global trade rules, the official said, adding that the tariff has hurt the interests of both China and the United States.

The official also said the U.S measure resulted in loss of manufacturing and sales jobs in the U.S. and a spike in the prices of tires which affected low-income consumers.

According to the daily, the Chinese official also pointed out that the U.S. safeguard measure was counter-productive. The official said while the duties depressed tire exports from China to the U.S., the value and volume of tire imports to the U.S. from other countries rose.

He said while the value of tires the US imported from all countries in the first half of 2010 rose 30 percent the rise in volume during the same period was 21 percent.

The commerce ministry statement echoed the argument. Facts have shown that safeguard measures do not fit with China's interests and will not bring benefits to the U.S., the statement said.

However, the U.S. on Monday hailed the WTO decision upholding the duties, saying it is a major victory for the country, particularly for American workers and businesses.

We have said all along that our imposition of duties on Chinese tires was fully consistent with our WTO obligations. It is significant that the WTO panel has agreed with us, on all grounds, the U.S. Trade Representative Ron Kirk said in a statement.

The ruling, and China's response to it, will foment the trade rivalry the two countries are engaged in. Monday's ruling came as Chinese officials were gathering in Washington for high-level trade talks under an annual forum called the U.S.-China Joint Commission on Commerce and Trade.

In the U.S. the focus is very much on China's huge trade surplus, which amounted to $201 billion in the first nine months of the year, and there is increasing pressure on the Obama administration to slow down Chinese imports to the country and thereby reduce the soaring trade deficit.

The U.S. manufacturers have long complained that China keeps it yuan exchange rates artificially low to make their products cheaper and more competitive.