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| W.T.O. Is Said to Side With U.S. in Dispute Over Chinese Car Tariffs | W.T.O. Is Said to Side With U.S. in Dispute Over Chinese Car Tariffs |
| (about 2 hours later) | |
| HONG KONG — The Obama administration is preparing to declare victory on Friday in a dispute with China over punitive Chinese tariffs on American exports of large cars and sport utility vehicles. | HONG KONG — The Obama administration is preparing to declare victory on Friday in a dispute with China over punitive Chinese tariffs on American exports of large cars and sport utility vehicles. |
| The fight was the latest in a series of World Trade Organization disputes between Beijing and Washington. A W.T.O. panel in Geneva has spent more than a year reviewing legal briefs from the two sides over the Chinese commerce ministry’s abrupt imposition in late 2011 of antidumping and anti-subsidy tariffs on the large-engine family vehicles, and has distributed the report to both governments in the case, said a person briefed on the dispute who spoke only on the condition of anonymity because of the legal and diplomatic issues involved. | The fight was the latest in a series of World Trade Organization disputes between Beijing and Washington. A W.T.O. panel in Geneva has spent more than a year reviewing legal briefs from the two sides over the Chinese commerce ministry’s abrupt imposition in late 2011 of antidumping and anti-subsidy tariffs on the large-engine family vehicles, and has distributed the report to both governments in the case, said a person briefed on the dispute who spoke only on the condition of anonymity because of the legal and diplomatic issues involved. |
| China imposed antidumping tariffs of 2 to 8.9 percent on American cars and S.U.V.s with an engine displacement of more than 2.5 liters in December 2011, alleging that these vehicles were being sold to dealers in China for less than the full cost of manufacturing them. China also imposed additional anti-subsidy tariffs of 12.9 percent on large-engine passenger vehicles from General Motors and 6.2 percent on these vehicles, mainly Jeeps, from Chrysler. | China imposed antidumping tariffs of 2 to 8.9 percent on American cars and S.U.V.s with an engine displacement of more than 2.5 liters in December 2011, alleging that these vehicles were being sold to dealers in China for less than the full cost of manufacturing them. China also imposed additional anti-subsidy tariffs of 12.9 percent on large-engine passenger vehicles from General Motors and 6.2 percent on these vehicles, mainly Jeeps, from Chrysler. |
| China contended that the government-managed bankruptcies of G.M. and Chrysler had the effect of providing subsidies for these manufacturers’ exports. | China contended that the government-managed bankruptcies of G.M. and Chrysler had the effect of providing subsidies for these manufacturers’ exports. |
| The W.T.O. panel found that in imposing penalties on imported large-engine vehicles, China had failed to prove first that the imports were causing any injury to its domestic vehicles, said a government official who also spoke only on the condition of anonymity because of the delicacy of the case. International free-trade rules require a so-called injury determination to prevent countries from imposing tariffs to forestall imports from entering at all, instead of waiting to see if they actually cause a problem. | |
| The panel also found fault with the Chinese government’s methodology in calculating that automakers with factories in the United States — including Daimler, which makes Mercedes-Benz, and BMW of Germany — had underpriced their sales in China. Large cars and S.U.V.s in China often cost as much as three times as the same models cost in the United States, although this is mostly because of heavy taxes that China has imposed in large-engine market segments where its domestic manufacturers have virtually no sales. | |
| The importance of the ruling is less for the auto industry than for the limitation it imposes on China’s ability to suddenly place antidumping or anti-subsidy tariffs in response to foreign trade actions that it dislikes. But China could still amend its procedures and impose such tariffs if it follows a considerably longer, more transparent procedure and acts against companies that are more clearly dumping their products or exporting them with government subsidies. | |
| Officials at the commerce ministry in Beijing and at the Chinese mission to the W.T.O. in Geneva did not respond to early requests for comment, while American trade officials in Washington declined to comment pending the announcement. | |
| Michael B. Froman, the United States trade representative, is to be joined for an announcement of the decision by two Michigan Democrats, Senator Debbie Stabenow and Representative Sandy Levin, in one of many moves by the Obama administration to portray itself as being willing to confront China on trade issues. International trade has been a particularly delicate issue in Michigan, home to G.M., Ford and Chrysler, and Republicans have periodically contended that they are better able to handle trade relations with Beijing. | Michael B. Froman, the United States trade representative, is to be joined for an announcement of the decision by two Michigan Democrats, Senator Debbie Stabenow and Representative Sandy Levin, in one of many moves by the Obama administration to portray itself as being willing to confront China on trade issues. International trade has been a particularly delicate issue in Michigan, home to G.M., Ford and Chrysler, and Republicans have periodically contended that they are better able to handle trade relations with Beijing. |
| The W.T.O. decision coincidentally comes out in the same week in which the Justice Department indicted five Chinese soldiers, saying they had broken into the computers of five companies and a union in the United States. Three of the companies and the union had been engaged in trade disputes with China when they were the victims of the alleged break-ins. | The W.T.O. decision coincidentally comes out in the same week in which the Justice Department indicted five Chinese soldiers, saying they had broken into the computers of five companies and a union in the United States. Three of the companies and the union had been engaged in trade disputes with China when they were the victims of the alleged break-ins. |
| China imposed the antidumping and anti-subsidy tariffs a week after the Obama administration had upset Beijing by saying that it would file a W.T.O. case against Chinese restrictions on imports of American broiler chickens. But the big irritant in bilateral trade relations at the time was the Commerce Department’s decision that autumn to begin a broad antidumping and anti-subsidy investigation of solar panels from China, which would lead to steep tariffs the next year. | China imposed the antidumping and anti-subsidy tariffs a week after the Obama administration had upset Beijing by saying that it would file a W.T.O. case against Chinese restrictions on imports of American broiler chickens. But the big irritant in bilateral trade relations at the time was the Commerce Department’s decision that autumn to begin a broad antidumping and anti-subsidy investigation of solar panels from China, which would lead to steep tariffs the next year. |
| In bringing a W.T.O. case against China’s antidumping and anti-subsidy tariffs on large-engine passenger vehicles, the United States has run the risk that a W.T.O. panel might issue a broadly worded opinion that could later be used against American antidumping and anti-subsidy rules. These rules have also been challenged periodically at the W.T.O. by other countries, with partial success. | In bringing a W.T.O. case against China’s antidumping and anti-subsidy tariffs on large-engine passenger vehicles, the United States has run the risk that a W.T.O. panel might issue a broadly worded opinion that could later be used against American antidumping and anti-subsidy rules. These rules have also been challenged periodically at the W.T.O. by other countries, with partial success. |
| But the American rules are the product of decades of fine-tuning in response to previous trade disputes. China has abruptly drafted and begun imposing its own rules in the last few years, and these rules have drawn international criticism for lacking clarity or transparency. | But the American rules are the product of decades of fine-tuning in response to previous trade disputes. China has abruptly drafted and begun imposing its own rules in the last few years, and these rules have drawn international criticism for lacking clarity or transparency. |
| The Chinese tariffs were partly symbolic. Automakers have been rushing to shift production of practically every model to China, as it has emerged as the world’s largest market in terms of the number of vehicles sold, although the American market remains somewhat larger in dollar terms. | The Chinese tariffs were partly symbolic. Automakers have been rushing to shift production of practically every model to China, as it has emerged as the world’s largest market in terms of the number of vehicles sold, although the American market remains somewhat larger in dollar terms. |
| From the start, China’s commerce ministry imposed the tariffs for a term of only two years, and they expired in December. An American analysis of the tariffs found that China has not been collecting them since then. | |
| The United States nonetheless pressed for the W.T.O. to declare that China had misapplied antidumping and anti-subsidy rules in imposing the tariffs at all. The goal was to set a legal precedent limiting China’s ability to slap antidumping and anti-subsidy tariffs on other products without following internationally approved procedures. | |
| The government official said that the ruling was narrowly enough applied to China that it was unlikely to create problems for American enforcement of antidumping and anti-subsidy rules. | |
| The losing party in W.T.O. cases almost always appeals the decision, and sometimes both sides do so, with the winner seeking a clearer endorsement of its position. China has a track record of consistently appealing when it loses on the panel report. | The losing party in W.T.O. cases almost always appeals the decision, and sometimes both sides do so, with the winner seeking a clearer endorsement of its position. China has a track record of consistently appealing when it loses on the panel report. |
| An appeal by either side then sets off a review by the appeals tribunal of the W.T.O., a process that is supposed to last 60 to 90 days, although it may take longer for complex cases like this one. The panel of international trade experts issuing the report that is now being distributed ran two months past the deadline for their stage in the process. | An appeal by either side then sets off a review by the appeals tribunal of the W.T.O., a process that is supposed to last 60 to 90 days, although it may take longer for complex cases like this one. The panel of international trade experts issuing the report that is now being distributed ran two months past the deadline for their stage in the process. |
| Appeals tribunals seldom completely reverse a panel report, but they frequently rewrite the report, which can turn a clear victory for one side into a murky outcome with each side prevailing on some of the issues and not others. | Appeals tribunals seldom completely reverse a panel report, but they frequently rewrite the report, which can turn a clear victory for one side into a murky outcome with each side prevailing on some of the issues and not others. |
| Once the appeals tribunal has issued the W.T.O.'s final recommendation for what should be done to comply with international free trade rules, the countries involved in the dispute hold negotiations that may last many months to work out the details. In a few cases, the sides have been unable to reach a deal even after a panel report, in which case the winning side may ask the W.T.O.'s permission to start imposing retaliatory trade measures, like placing its own punitive tariffs on goods from the losing country. | Once the appeals tribunal has issued the W.T.O.'s final recommendation for what should be done to comply with international free trade rules, the countries involved in the dispute hold negotiations that may last many months to work out the details. In a few cases, the sides have been unable to reach a deal even after a panel report, in which case the winning side may ask the W.T.O.'s permission to start imposing retaliatory trade measures, like placing its own punitive tariffs on goods from the losing country. |
| The large-engine passenger vehicle issue is one of two pending W.T.O. automotive disputes between the United States and China. A separate panel is considering an American complaint that China has subsidized exports of cars and particularly car parts to the United States. | The large-engine passenger vehicle issue is one of two pending W.T.O. automotive disputes between the United States and China. A separate panel is considering an American complaint that China has subsidized exports of cars and particularly car parts to the United States. |