China loses WTO appeal in U.S. specialty steel case

Source：| Reuters Release Date：2012-10-19 348

Metalworking

* Panel rejects Chinese duties on specialty steel product * Unclear when China will comply with WTO ruling * Case seen as small, but politically significant

By Tom Miles and Rachelle Younglai

GENEVA/WASHINGTON -- The World Trade Organization barred China on Thursday from imposing duties on certain U.S. steel exports, siding with U.S. President Barack Obama in a dispute with Beijing over a type of steel made in two election battleground states.

The case involved duties imposed by China on "grain-oriented electrical steel," which is used in the cores of high-efficiency transformers, electric motors and generators. The steel is made by AK Steel Corp of Ohio and ATI Allegheny Ludlum of Pennsylvania.

Although the specialty steel case is tiny compared with other trade disputes with Beijing, the WTO ruling gave Obama a timely win as he defends himself against accusations by his Republican opponent, Mitt Romney, that he is soft on China.

"Today we are again plainly stating that we will continue to take every step necessary to ensure that China plays by the rules and does not unfairly restrict exports of U.S. products," Obama administration trade representative Ron Kirk said in a statement.

China's Ministry of Commerce had no immediate comment on the ruling, which arrived late in the evening in Beijing.

When the Obama administration filed the case, the volume of specialty steel trade with China was in the range of $250 million. That pales in comparison with the auto and auto-parts trade at issue in the most recent case Washington filed against China in September. The volume of auto parts trade alone amounted to about $12 billion in 2011, according to the Alliance for American Manufacturing.

Derek Scissors, a research fellow at the conservative Heritage Foundation, said Thursday's ruling was "a small benefit for the Obama campaign because it can advertise 'beating China' in Ohio, but it's not a benchmark for anything."

Obama has won WTO victories against Beijing in areas ranging from intellectual property rights to financial services to raw materials trade and has launched several other challenges, such as a case against Chinese export restrictions on rare earth materials.

He has also created an interagency trade enforcement unit to devote more resources to ensuring China and other countries abide by global trade rules.

Junior