China warns US over trade row

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Alan Beattie, FT Syndication Service
LONDON: China on Friday threatened the US with litigation at the World Trade Organisation for imposing anti-subsidy duties on its paper exports, in only the second dispute Beijing has brought since joining the WTO in 2001.
The move marks a further escalation of trade friction between the two nations and follows an abrupt change of policy by the US, which broke a 23-year precedent by imposing so-called "countervailing duties" on exports from what it designates as a non-market economy.
The US said tax breaks and low-cost loans from Beijing were unfairly helping China's exports of coated paper.
It also said China was dumping - selling at a lower price in the US than at home.
Some lawyers have warned that imposing countervailing import duties against China could open the floodgates to a new wave of protection and litigation.
China said the US had failed to show how much its government subsidy programme helped exports, a requirement before imposing duties under WTO rules.
Sean Spicer, a spokesman for the US trade representative, said: "We are fully confident in our trade remedy laws and will vigorously defend the WTO consistency of these laws."
The US must now enter into consultation with China and either withdraw the duties or prepare for a case at the WTO's dispute settlement panel, which has the power to order retaliatory sanctions.
John Weekes, policy adviser at the law firm Sidley Austin in Geneva, said: "Clearly this is a bilateral relationship that is highly charged at the moment. But in some sense it is positive that China is using the tools available within the WTO and remaining within an agreed system of rules."
The case is the first brought by China on its own at the WTO.
Previously it joined a case brought by the European Union against the US for restricting steel imports.
Separately, the WTO yesterday announced that the US had requested a dispute panel in its claim that China was failing to protect intellectual property rights.
However, in another report, Andrew Bounds from Brussels adds: The European Union is poised to extend anti-dumping duties on energy-efficient Chinese light bulbs for a year although no member states positively support the plan. In a meeting on Friday, 15 nations abstained, 10 voted against and two were undecided, a diplomat said. Abstention counts as approval of the European Commission's proposal to retain the tariffs on energy-efficient bulbs at the request of Osram, the German producer.
States have one more chance to vote before the proposal becomes law.