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Friday, October 24, 2014
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Published: Saturday, 5/24/2014 - Updated: 5 months ago

U.S. wins dispute over auto exports to China

WTO sides with officials who say tariffs punitive

NEW YORK TIMES
U.S. Trade Representative Mike Froman, Rep. Sander Levin, D-Mich., and Sen. Debbie Stabenow, D-Mich., speak to reporters. U.S. Trade Representative Mike Froman, Rep. Sander Levin, D-Mich., and Sen. Debbie Stabenow, D-Mich., speak to reporters.
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WASHINGTON — The World Trade Organization sided with the United States on Friday in a dispute over punitive Chinese tariffs on U.S. exports of cars and SUVs.

China had already lifted the tariffs in question but U.S. officials declared it a victory, citing the decision as the latest in a series of rulings that it has won against Beijing.

“China has had 14 years — 14 years — to start playing by the rules,” said Sen. Debbie Stabenow (D., Mich.), at a news conference in Washington. “But instead we see illegal and improper activities over and over again. As long as China keeps up this illegal behavior, we can and must respond with these kinds of strong enforcement actions.”

The decision comes against a backdrop of increasing acrimony between Beijing and Washington as the Obama Administration is pushing Chinese leaders on commercial spying and hacking while China has become more aggressive in asserting its claims against U.S. allies in the South China Sea.

A WTO panel in Geneva spent more than a year reviewing legal briefs from the two sides over the Chinese commerce ministry’s abrupt imposition in late 2011 of anti-dumping and anti-subsidy tariffs on the large-engine family vehicles.

China imposed anti-dumping tariffs of 2 percent to 8.9 percent on U.S. cars and SUVs with an engine displacement of more than 2.5 liters in December, 2011, alleging that these vehicles were being sold to dealers in China for less than the full cost of manufacturing them. China also imposed additional anti-subsidy tariffs of 12.9 percent on large-engine passenger vehicles from General Motors and 6.2 percent on vehicles, mainly Jeeps, from Chrysler.

China’s “unjustified duties” affected about $5 billion in automobile exports, said Michael B. Froman, the U.S. trade representative. “This is also an important victory that impacts our nation’s workers and their families.”

U.S. trade officials said they did not know the actual dollar value of any lost sales because of China’s tariffs.

Beijing contended that the government-managed bankruptcies of GM and Chrysler had the effect of providing subsidies for these manufacturers’ exports.

The WTO panel found that in imposing penalties on imported large-engine vehicles, China had failed to prove first that the imports were causing any injury to its domestic industry. International free-trade rules require a so-called injury determination to prevent countries from imposing tariffs to forestall imports from entering at all, instead of waiting to see if they actually cause a problem.

The panel also found fault with the Chinese government’s methodology in calculating that automakers with factories in the United States — including Daimler, which makes Mercedes-Benz, and BMW of Germany — had underpriced their sales in China. Large cars and SUVs in China often cost as much as three times the amount the same models cost in the United States, although this is mostly because of heavy taxes that China has imposed in large-engine market segments where its domestic manufacturers have virtually no sales.

Officials at the commerce ministry in Beijing and at the Chinese mission to the WTO in Geneva did not respond to early requests for comment.

The Chinese tariffs were partly symbolic. Automakers have been rushing to shift production of practically every model to China, as it has emerged as the world’s largest market in terms of the number of vehicles sold, although the U.S. market remains somewhat larger in dollar terms.

The losing party in WTO cases almost always appeals the decision, and sometimes both sides do so, with the winner seeking a clearer endorsement of its position. China has a track record of consistently appealing when it loses on the panel report.



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