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UPDATE 1-China blasts U.S. tire duties as protectionist

Published 09/12/2009, 12:24 AM
Updated 09/12/2009, 12:27 AM

(Adds details throughout)

By Chris Buckley

BEIJING, Sept 12 (Reuters) - China lashed a U.S. decision to impose duties on Chinese-made tyres, calling them flagrant protectionism that sent the wrong signal before the next G20 summit and risked a "chain reaction" that could slow global recovery.

"China strongly condemns this grave act of trade protectionism by the U.S.," the spokesman for China's Ministry of Commerce, Yao Jian, said in a statement issued on the Ministry website (www.mofcom.gov.cn) on Saturday, hours after the Obama administration announced the move.

The new duty 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, the White House said.

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

Beijing's reaction was unusually detailed and vehement.

"This step not only violates the rules of the World Trade Organisation, it is also contrary to the relevant commitments that the United States government made at the G20 financial summit," said Yao.

He accused the Obama administration of trade protection measures without sufficient proof and of bowing before domestic protectionist forces.

"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."

President Barack Obama, Chinese President Hu Jintao and other international leaders will meet for the next G20 summit of major rich and developing economies in Pittsburgh, Pennsylvania, later this month.

Yao said the duties could spark a "chain reaction of trade protectionist measures that could slow the current pace of revival in the world economy."

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 trade unions who say Beijing is unfairly overwhelming other competitors.

Yao, the Chinese spokesman, said there was no evidence of that in the tyre case, and he said Beijing could take its complaint to the World Trade Organisation.

"The Chinese government will continue taking the necessary measures to support the tyre industry," he said.

"At the same time ... China will retain all its legitimate rights, including recourse to the World Trade Organisation." (Reporting by Chris Buckley; Editing by Jerry Norton)

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