The Chinese aren't messing around with this one. On Friday, Obama slapped a 35 percent punitive tariff on Chinese tires. On Monday, a soon as the WTO was open for business, China filed a formal complaint against the United States of America with the World Trade Association in Geneva, China Daily reports.
Under the WTO’s dispute settlement system, the two countries will have 60 days to try to resolve the dispute peacefully, and to pedal back to where they came from. If peace breaks out, China will export its tires, America will sell its cars and chickens. If consultations fail, China can and will request a WTO panel to investigate and rule on the case. If a ruling is reached, both can appeal. The next ruling is final.
China has experience with the proceedings. The United States, the European Union and Canada had taken China to task over spare parts tariffs. China imposed a 25 percent tariff rate on auto parts in 2005, if they accounted for 60 percent or more of the finished product’s value. Normally, spare parts carry a 10 percent import duty. The WTO ruled against China, China appealed, the WTO rejected the appeal. Two weeks ago, China backed down. It was seen as a peaceful signal. It was misread as weakness.
The Chinese mission to WTO said in a statement that the tire ruling “runs counter to relevant WTO rules, it is a wrong practice abusing trade remedies.”
China hopes that “all sides will understand its determination to firmly fight against trade protectionism so as to commonly safeguard the multilateral trading system by respecting WTO rules.”
They won’t roll over. And it won’t blow over unless Obama and Hu Jintao have a beer in the White House Rose Garden, or smoke the peace pipe in Pittsburgh, or do whatever needs to be done to make this thing go away. If it doesn’t, the whole car subsidy thing will come on the table, something the USA and some European countries will try to avoid. Just like Belgium is dragging Germany in front of the EU in Brussels over Opel, a whole globe would like to see the big guys being barbecued for their big wallet bailouts. In a way, this gives Obama a chance to save face. He can tell his United Steel Worker buddies: “Boys, I’ve tried.” Or not.
