By  on October 16, 2007

GENEVA — China urged the U.S. last week to remove a set of preliminary duties imposed on imports of Chinese-made coated paper that it alleges breaches global trade rules. The case is being monitored by the textile industry and other U.S. manufacturing sectors because how the issue plays out could have an impact on billions of dollars of trade, experts said.

"It's a test case because many of the subsidies being offered to coated paper are also offered to China's textile industry," said Cass Johnson, president of the National Council of Textile Organizations.

China is adamant that the U.S. measures break international trade rules.

"We requested the U.S. to seriously consider China's concerns and correct the nonconforming measures," a senior Chinese official said after the first consultation on Beijing's complaint since it opened proceedings with the World Trade Organization's Dispute Settlement Body on Sept. 14.

If the two sides fail to resolve their differences, the next step is for China to file a request for the dispute panel to review the complaint.

"We engaged in consultations, they were cordial and we exchanged useful information," said a spokesman for the U.S. Trade Representative. "We are fully confident in our trade remedy laws and will vigorously defend the WTO consistency of these laws."

China's grievance, the first it has filed on its own against the U.S. since joining the WTO in December 2001, follows a decision this year by the U.S. Department of Commerce to impose preliminary countervailing duties and subsequently also preliminary antidumping duties.

The measures followed complaints from domestic producers after a 177 percent surge in imports of coated paper between 2005 and 2006. The countervailing duties are between 10.9 and 20.3 percent, and the antidumping range from 23.1 to 99.6 percent.

The U.S. action, which Chinese officials view as protectionist, altered a 23-year policy of not applying such trade remedies to nonmarket economy countries. However, commerce officials said the decision reflects China's economic development.

The resumption of the measures, Johnson said, "is a big and extremely powerful tool to use against predatory pricing by China," adding that it will be important for the industry when the quotas on Chinese textiles imports expire in 2009.Johnson said a textile case also has been filed under the new commerce department regime concerning imports of laminated bags. "We hear others are coming," he said. "It would be a setback" for industry if a WTO panel ruled in China's favor.

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