US Tariffs – Compatible with WTO Rules?

As Reuters notes, the decision as to whether or not the US will impose tariffs on Chinese made consumer tyres is not a straightforward one. As the news service pointed out on August 26, Chinese trade sources indicate that these tariffs may not line up with a safeguard mechanism China agreed to when it joined the World Trade Organisation.

“Given the global financial crisis, Chinese exports are also falling. So it’s unclear that this case would fit the criteria” for the safeguard measures, which are allowed if a surge in Chinese products disrupts the domestic market, said Fu Donghui, a trade lawyer with the Allbright Law Firm. “We would need to look into whether (the imposition of tariffs on Chinese consumer tyres) is indeed against WTO rules. If it is, then other countries have the right to take action.”

A delegation from the Chinese Ministry of Commerce visited the US in August to lobby against the tyre tariffs. According to a ministry official, the results of this visit were not positive. Whatever the outcome, the tyre case is important as it will shed more light on the Obama administration’s position regarding requests from US industry for relief from Chinese imports. Other US industries are ready to file complaints, should the Obama administration approve the tyre tariffs.

Chinese media and industry groups have suggested ways in which China could potentially retaliate if the US does impose tariffs on tyres. On August 26 the China Daily cited He Weiwen, a council member at the China Society for America Economy Studies, as saying that China could limit imports of US made automobiles.