China blasts U.S. tyre duties as protectionist blow

The vehement denunciation from Beijing came after Washington announced the move, which a White House spokesman said was to remedy the clear disruption to the U.S. tyre industry from cheap Chinese imports.

China's minister of commerce, Chen Deming, indicated he took this latest trade dispute with Washington especially seriously.

This is a grave act of trade protectionism, Chen said in a statement issued on his ministry's website (www.mofcom.gov.cn) on Saturday.

Not only does it violate WTO rules, it contravenes commitments the United States government made at the G20 financial summit, and is an abuse of special safeguard provisions that sends the wrong signal to the world.

The tyre duty was the first time Washington has applied special safeguard provisions Beijing agreed to before joining the World Trade Organisation in 2001.

Washington and Beijing have vowed to cooperate in seeking to revive global economic growth. But this dispute brings into sharp focus their continued friction over trade, which could spill into the next G20 summit later this month and U.S. President Barack Obama's scheduled visit to China in November.

Since the financial crisis broke, the G20 gatherings of major rich and developing nations have repeatedly renounced trade protectionism.

China's official Xinhua news agency said the Obama administration has set a damaging precedent through this step.

The Chinese Ministry of Commerce spokesman, Yao Jian, said the U.S. move could spark a chain reaction of trade protectionist measures that could slow the current pace of revival in the world economy, according to the ministry website.

The new duty of 35 percent will take effect on Sept. 26 and adds to an existing 4 percent duty. The extra duty would fall to 30 percent in the second year and 25 percent in the third year.

Those levels are lower than the United States' International Trade Commission recommended earlier this year, but probably still high enough to deter tyre imports from China, if not shut them out completely.

The United Steelworkers union, which represents workers at many U.S. tyre production plants, filed a petition earlier this year seeking the protection. It said a tripling of tyre imports from China to about 46 million in 2008 from about 15 million in 2004 had cost more than 5,000 U.S. tyre worker jobs.

For far too long, workers across this country have been victimised by bad trade policies and government inaction, United Steelworkers President Leo Gerard said when welcoming the decision.

PITTSBURGH SUMMIT LOOMS

But the Chinese spokesman Yao accused the Obama administration of taking the special measure without sufficient proof and bowing before domestic protectionist forces, spurning Chinese efforts at compromise.

This step has harmed China, as well as harming U.S. interests, and even more it sends the wrong trade protectionist signal to the world before the Pittsburgh summit, said Yao.

President Barack Obama, Chinese President Hu Jintao and other international leaders will meet for the next G20 summit in Pittsburgh, Pennsylvania, on Sept 24-25. The new tariff kicks in the following day.

China has increasingly turned to domestic demand to shore up its growth during the global economic slump.

But for now exports remain a key part of China's economic engine, and its relatively cheap exports to the United States have long faced complaints from U.S. manufacturing groups and unions who say Beijing is unfairly overwhelming competitors.

China warned of protectionist ripples across the global economy.

Although the world economy has shown some positive developments, the outlook for economic revival remains tortuous, and rampant trade protectionism can only delay the course of recovery, said Yao, the Chinese spokesman.

The U.S. trade deficit with China totalled $103 billion in the first half of 2009, down 13 percent from last year but still a source of much ire in Washington.

Yao said there was no evidence to justify the U.S. duties on his country's tyre exports, and he said Beijing could complain to the World Trade Organisation.

In 2008, China's tyre exports to the U.S. grew 2.2 percent compared to the previous year's exports, and in the first half of 2009 they fell 16 percent compared to the same period in 2008, said Yao.

China retains the right to further respond and adopt corresponding measures, said Chen, the minister. (Reporting by Chris Buckley; Editing by Jerry Norton)