The government has condemned a US attempt to apply countervailing duties on Chinese goods after the US alleged unfair trade practices by Chinese coated paper makers.

 

The US Commerce Department will rule on whether to alter trade rules to apply such duties to imports from "non-market economies" like China. The move follows a primary countervailing petition filed by US companies.

 

The Chinese commerce ministry retaliated to its US counterpart, responding that the proposal is illegal under US law and would violate global trading rules.

 

China's arguments against the policy change assert that the US Commerce Department "does not have the legal authority to initiate a countervailing duty investigation against China as long as China is designated a non-market economy."

 

At a minimum, the US government would be forced to issue new rules before it levies countervailing duties on Chinese products. Failure to first change the rules would violate the World Trade Organization's subsidy agreement, the Chinese commerce ministry's Bureau of Fair Trade for Imports and Exports stated.

 

The US government launched a probe last November into Chinese coated free sheet paper following claims by US paper maker New Page Corp that a dozen Chinese makers were being subsidized by central or local governments. It is the first such US anti-subsidy case against a Chinese industry.

 

Applying countervailing duties is a standard tool for US firms, used against alleged unfair foreign trade. However, under current US trade remedy rules, it is impossible to determine subsidy levels for countries not granted market economy status.

 

US reports said the decision is expected by early April. Experts said that the proposed change could lead to unfair double duties on Chinese goods if companies with complaints also sought protection under US anti-dumping laws.

 

(China Daily January 26, 2007)