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UPDATE 1-China, U.S. try to take sting out of trade disputes

Published 10/29/2009, 07:17 AM
Updated 10/29/2009, 07:21 AM

(Adds details, background)

By Lucy Hornby

HANGZHOU, China, Oct 29 (Reuters) - China and the United States agreed to tackle a series of trade irritants from pork to wind power and reiterated pledges against protectionism at high-level talks that ended on Thursday.

But in a sign that the global financial crisis has fuelled a risk of more, not fewer, trade barriers, Chinese Commerce Minister Chen Deming confirmed that Beijing would conduct a preliminary dumping investigation of U.S. auto imports.

The probe is in response to the imposition last month by the United States of tariffs on Chinese tyres and some steel products.

Speaking to reporters after the bilateral meetings, though, officials from both countries tried to keep the focus on areas of agreement, not contention.

Chinese Agriculture Minister Sun Zhengcai said China would adjust restrictions on imports of U.S. pork, imposed earlier this year after an outbreak of a new strain of H1N1 flu virus, commonly referred to as swine flu.

"I hope pork imports can quickly resume, but I also hope the the U.S. will follow Chinese requirements to credibly ensure the quality, safety and health of pork exports to China," Sun said.

He said China had already allowed cooked pork products imports to resume.

China will also remove its requirement for national content in tenders for wind power equipment, Zhang Guobao, head of the National Energy Administration, said.

U.S. Trade Representative Ron Kirk said that China had agreed to submit a revised offer to join the World Trade Organisation's government procurement agreement by 2010.

The United States, for its part, agreed that imposing curbs on Chinese exports was not the way to tackle the country's politically contentious trade surplus, Chinese Commerce Minister Chen Deming said.

"The two have agreed that the solution to the trade gap between the United States and China is not to restrict imports from China but to promote balance," Chen told reporters through an interpreter.

OBAMA'S VISIT

Chen said the United States also agreed to establish a working group to examine Beijing's long-standing demand that Washington formally regard it as a market economy, a status that would make it harder to impose trade penalties on China.

He said progress on that front was unrelated to "micro-economic" issues such as U.S. concerns that China subsidises its state-owned enterprises with cheap loans, land and other resources.

The probe into U.S. auto imports would be "objective, just and fair", Chen said.

President Barack Obama, who will visit China in mid-November, angered Beijing last month by slapping a 35 percent duty on imports of Chinese-made tyres, which totaled about $1.8 billion last year.

China immediately challenged the action at the World Trade Organisation and said it would launch an anti-dumping and countervailing-duty investigation against U.S. autos to offset unfair pricing and government subsidies.

Beijing's probe could lead to new import duties on autos and sports utility vehicles made by Chrysler [CCMLPC.UL], Ford and General Motors [GM.UL], a U.S. industry official said on Wednesday. [ID:nN28258268] (Reporting by Lucy Hornby; Editing by Simon Rabinovitch)

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