The WTO on Monday rejected China's complaint against punitive US tariffs on Chinese tyres, a landmark ruling on safeguards invoked by Washington against disruptive imports from the Asian giant.
"We find that in imposing the transitional safeguards measure on 26 September 2009 in respect of imports of subject tyres from China, the United States did not fail to comply with its obligations," the ruling by the World Trade Organization dispute settlement panel said. US President Barack Obama invoked a safeguard clause in the Asian giant's WTO accession agreement to impose punitive duties on imports of Chinese tyres over three years.
That prompted China to lodge a complaint with the global trade watchdog about the move. The tyre dispute ignited the first trade spat of Obama's presidency with the Asian giant, with warnings that a rise in Chinese-made tyres had cost more than 5,000 US jobs. Beijing reacted strongly against the move, obliging the WTO to take up the case in January after negotiations between Beijing and Washington failed to resolve the spat.
China had urged the United States to withdraw the duties, amounting to 35 per cent in the first year, which it said breached global trade rules. But the WTO's panel of arbitrators rejected all of China's arguments in the 128-page ruling today. "This is a major victory for the United States and particularly for American workers and businesses," said US Trade Representative Ron Kirk in Washington.
In a rare comment about a trade dispute between member states, WTO Director General Pascal Lamy had expressed concern about the punitive US tariff last year, warning that it that could increase the risk of a protectionist "tit-for-tat spillover." China's official Xinhua news agency has quoted experts as saying that the tariffs would cost the country's tyre industry one billion dollars and wipe out 100,000 Chinese jobs. A US diplomat claimed that over four years, tyre imports into the United States tripled by volume, cutting domestic production by more than a quarter and leading to job losses for 14 per cent of workers in the industry.