Tyre Tariff May Slow Recovery: WTO

Tire Review/Reuters – Trade measures of the type imposed by the United States on Chinese tires run the risk of spilling over and slowing economic recovery, a senior World Trade Organization (WTO) official said on Thursday. The tyre trade dispute blew up between the United States and China after Washington imposed additional duties on Chinese-made tyres last Friday, accusing Beijing of flooding the US market.

Valentine Rugwabiza, a WTO deputy director-general, said “safeguard” measures of the type applied by Washington were not protectionist but were still damaging to free trade. “People reverting increasingly to those remedies is a source of concern to us … They all result in restricting trade and there is a serious risk of spillover and tit-for-tat reaction which will undoubtedly slow down any recovery,” she said in an interview with Reuters Television.

Beijing wants consultations with the United States over the duties, a step toward seeking a WTO ruling. Rugwabiza said emerging economies had been hard hit by the contraction in world trade brought on by the financial crisis and that stalling trade could lead to political instability. Speaking on the sidelines of The Economist’s emerging markets summit, Rugwabiza said she hoped G20 leaders meeting in Pittsburgh next week would commit to wrapping up negotiations on the long-running Doha round of world trade talks by next year and agree to resist protectionist pressures.

Indian Commerce Minister Anand Sharma said there was a growing tendency to raise new barriers to trade, but he told the meeting there was “definitely a realistic possibility for us to ensure a successful conclusion for the WTO talks in Geneva. Countries have closed the gap. Positions have to be harmonized and convergence reached,” he told Reuters. European Union Trade Commissioner Catherine Ashton told the meeting that while US President Barack Obama was committed to trade, she felt there was “little, if any, domestic support in the United States for the completion of the Doha round.”

“All of my conversations with Congress, with manufacturing, with the Farm Bureau and with the trade unions say to me that they have a serious domestic issue,” she said. British Business Secretary Peter Mandelson, who was EU trade commissioner until being called back to domestic politics a year ago, said a Doha deal was “absolutely vital” and would be a “global insurance policy against future protectionism.” Among the key players, he said that India’s new administration had a fresh commitment to negotiating a deal, “but we’ve got to discover that in the American administration as well.” Mandelson said that during a visit to China this month, he had been struck by the country’s leaders recognition that they had to “rebalance” the Chinese economy away from an emphasis on exports by promoting domestic demand. “But it’s not going to happen quickly,” he said.