US wrong to slap punitive tariffs on Chinese imports, says WTO

The U.S. was wrong to slap punitive import fees on a range of Chinese products, the World Trade Organization (WTO) ruled Monday in a decision that handed Beijing a key victory in a long-running tariff dispute.

In response to a Chinese complaint, the international trade body said the U.S. improperly raised duties on goods including steel products and solar panels that Washington says benefits from unfair Chinese government subsidies.

But the three-member panel also rejected some of the Chinese arguments against the U.S.-imposed duties in the $7.2 billion complaint filed in May 2012, which has echoes in America's trade relations with other countries.

A summary of the report issued on the WTO’s website said the judges upheld the Chinese claim that the underpinning for the U.S. action was inconsistent with its agreement on subsidies and countervailing duties.

The panel therefore "recommended that the United States bring its measures into conformity with its obligations" under the pact, a basic element of the global 1994 Marrakech accord that also set up the WTO.

Members of the international trade body have the right to impose extra duties when they suspect imported goods are being "dumped" on them or sold at below market prices to corner a share of business unfairly.

But in order to do so, they must prove that their domestic producers are suffering as a result of dumping, and that the duties are not simply being deployed to protect them against foreign competitors.

Wrangling over dumping is common at the WTO, whose panels can authorize retaliatory trade measures against a guilty party.

The WTO’s findings were immediately welcomed by China in a statement from its foreign trade ministry that was distributed by Beijing's trade mission in Geneva.

"China urges the United States to respect the WTO rulings and correct its wrongdoings of abusively using trade remedy measures, and to ensure an environment of fair competition for Chinese enterprises," the English-language statement said.

Washington has the right to appeal against the ruling, which was the first in the case.

Wire services