Washington:The United States announced in an unprecedented decision to impose penalty tariffs on China to offset government subsidies, as Washington grapples with its massive trade deficit with the world’s most populous nation.
Commerce Secretary Carlos Gutierrez told a news conference that a “preliminary decision had been made to apply US anti-subsidy law to imports from China. China’s economy has developed to the point that we can add another trade remedy tool, such as the countervailing duty law.”
Beijing expressed dissatisfaction, saying it “goes against consensus reached by leaders of both countries to resolve differences through dialogue.”
“China strongly requires the US side to reconsider the decision and make prompt changes,” Chinese commerce ministry spokesman Wang Xinpei said.
The US move dampened sentiment on Wall Street as shares see-sawed to a mixed finish with a stronger-than-expected economic data offset by worries that trade sanctions slapped on China might spark growing protectionism.
This landmark decision was based on a case brought by US firm NewPage Corp., which contended that Chinese high-gloss paper imports were fuelled by subsidies like tax breaks, debt forgiveness and low-cost loans that posed unfair competition to US-made paper.
Commerce Department determined that Chinese producers and exporters of coated free sheet paper received “countervailable subsidies” of upto 20.35%.
By acting on NewPage’s petition filed last October, US was “leveling the playing field for American manufacturers, workers and farmers,” Gutierrez said.
The US National Association of Manufacturers said the Commerce Department’s move was “an important step” to balance trade with China.
“We can compete against Chinese wages but competing against the deep pockets of the Chinese government is entirely different. US companies should not have to battle with that,” said the association’s president John Engler.
In February, the United States hauled China to the WTO over its “illegal” industrial subsidies in steel, paper, information technology and other sectors.
It was the third time that US took China to Geneva-based arbiter of global trade since Beijing joined the WTO in 2001. Officials said US government next could sue China at WTO over rampant piracy of US goods, while exerting continued pressure for reform to its tightly managed exchange rate.
Gutierrez stressed that the decision against China did not signal any retreat from economic engagement with the rising Asian power. “Rather it speaks of the growing strength of our commercial relationship and the fact that as economic partners, we must be above all fair,” he said while adding that the US would like to apply this principle to all their trading partners.