China unveiled data on Tuesday that showed tire exports to the United States actually fell in the first half of 2009, rebutting Washington's accusations it had breached its WTO agreements by flooding the U.S. market.
Both countries moved to allay concerns of a trade war, but the row over Washington's decision to impose added duties on Chinese-made tires showed no signs of abating as Beijing said the U.S. move was sending the wrong message to the rest of the world.
We mainly think that it's an abuse of safeguard measures, China's commerce ministry spokesman Yao Jian told a news conference.
The tire duty was the first time Washington has applied special safeguard provisions Beijing agreed to before joining the World Trade Organization (WTO) in 2001. The safeguard can be invoked if a surge in imports hurts U.S. manufacturers.
China promptly said it would seek consultations with the United States over the duties, a preliminary step toward seeking a World Trade Organization ruling on the measures.
It is sending a wrong message to the world under the current situation that the global financial crisis is still spreading, Yao added.
Yao objected to U.S. claims that a surge in imports were harming American industry and jobs, saying that Chinese shipments had fallen off and that globalization means barriers to Chinese imports would not guarantee U.S. jobs.
Chinese statistics show that tire exports to the United States rose by 2 percent in 2008, and fell by more than 15 percent in the first half of 2009, Yao said.
Under these circumstances, the conclusion that China's exports are distorting the U.S. market does not stand, Yao said, pointing out that U.S. tire manufacturers had not joined the complaint, which was brought by a union.
If the U.S. only cares about the jobs of 5,000 workers while harming a large number of innocent others, and if the U.S. only cares about its own jobs regardless of jobs in China, a developing country, I really think that's not fair.
The United Steelworkers union, which represents workers at many U.S. tire-making plants, has said a tripling of tire imports from China to about 46 million in 2008 from about 15 million in 2004 had cost more than 5,000 U.S. tire worker jobs.
Yao said of the tires exported from China, 68 percent were from foreign-invested plants, including by American firms. Manufacturers have largely shifted production of cheaper tires offshore, producing higher-end tires in the United States.
TRADE WAR CAN BE AVOIDED
U.S. President Barack Obama said that if the United States didn't enforce the rules that were contained in its trade agreements, then it's very hard to have credibility. But he added he was sure a trade war could be averted.
Here's a situation where China entered into the WTO. It had rules contained in that accession that said that, in fact, if there is a big surge like this, there is a surge breaker, Obama told CNBC television.
We have exercised it. I'm not surprised that China's upset about it. But keep in mind we have a huge economic relationship with China. But I just want to make sure that if we actually have rules written down, they mean something.
Asked whether he was confident a trade war can be avoided, Obama said, Absolutely. I think it's in China's interest and our interest and the world's interest to avoid protectionism, particularly just as world trade is starting to bounce back from the huge decline that we have seen in the last year.
Larry Summers, director of Obama's National Economic Council, said Washington had tried to negotiate a solution with Beijing but those talks had failed.
China's Yao also said Beijing did not want to see the case negatively impact Sino-U.S. ties. We don't want to see a negative impact on our bilateral trade relations due to the frictions, especially those stemming from the U.S. abuse of safeguard measures, he said.
Yao added that China would reiterate its opposition to protectionism at the upcoming G20 summit of world leaders in the steelmaking city of Pittsburgh, Pennsylvania.
The Ministry of Commerce said on Sunday it would launch its own investigation into chicken parts and automotive imports from the United States.
Some Chinese media have emphasized counter-measures to be taken against the tire duties, while others have sought to downplay the impact on the overall trade relationship between the world's largest and third-largest economies.
The possibility of triggering a trade war is not big, the 21st Century Business Herald cited commerce ministry sources as saying.
(Additional reporting by Huang Yan; Editing by Jeremy Laurence)