Asia Times: Beijing talks tough in US steel war


	March 21, 2002	atimes.com

China

Beijing talks tough in US steel war
By Antoaneta Bezlova

BEIJING - Often cast in the role of a diehard protectionist state, China has been glad to see protagonists swapping parts in the current performance of "steel wars" between the United States and other major steel producers.

Joining the chorus of angry global opposition against Washington's decision this month to impose safeguard tariffs on steel imports, Beijing expressed "deep regret" and threatened to file a formal complaint with the World Trade Organization (WTO) should talks with the United States fail to resolve the trade dispute.

Just three months after joining the WTO, China is already projecting itself as a firm supporter of free trade and flexing its economic muscles in the ongoing steel bickering. The stakes are not only the profits of Chinese or US steel producers, but also the scope of influence and measure of authority within the global trade club.

"We think this is an action of trade protectionism which violates WTO rules," Shi Guangsheng, minister of foreign trade and economic cooperation, said last week. He indicated that China would aggressively defend itself against various charges that it sold goods on foreign markets below cost or below domestic market prices.

Shi said China would also push for new trade rules that provided more benefits to developing countries such as his own. "China has to learn how to protect its own interests," Shi said at a news conference on the sidelines of the National People's Congress (NPC), which concluded its annual session last Friday.

Premier Zhu Rongji went even further by threatening a tit-for-tat war if the United States did not reconsider its safeguard measures. "I'm worried about our steel industry just as the United States leaders are worried about their farmers. Would it be acceptable to the United States if I wanted to impose a 30 percent tariff on imports of soybeans from the United States?"

China, which joined the WTO in December, is the biggest market for US soybeans. Last year it imported US$1 billion worth of the crop, or some 15 million tonnes - an amount that equals China's annual domestic production and is projected to continue to increase rapidly now that the country has entered the global trade club.

By comparison, China's steel exports to the United States are relatively small, only about $360 million last year. That represents a tiny share of China's trade with the United States. China had an $80 billion trade surplus with the United States, according to US figures.

But China's sales of steel products to the United States have been growing steadily. Washington said this month that beginning on Wednesday, it would impose tariffs of up to 30 percent on a range of steel imports to help its struggling domestic industry.

President George W Bush invoked a WTO rule known as a safeguard that allows a country to impose tariffs on imports deemed to threaten a local industry's survival. US steelmakers say a surge of cheap steel imports since 1998 has driven prices down, sending a score of steelmakers into bankruptcy. But Chinese steel producers contest the allegation, saying China's steel products have been unfairly targeted.

The tariffs exempt countries that have signed free-trade agreements with the United States such as Canada and Mexico, and developing countries such as Argentina, Thailand and Turkey whose steel exports to the United States are limited within 3 percent of the market share.

"By my understanding, China's steel exports to America last year were 790,000 tonnes, or less than 3 percent of all US steel imports," said Liu Jie, general manager of Angang Corp, one of China's leading steel producers. "Such an amount does not represent a threat for the US steel industry and it is not reasonable to impose tariffs on Chinese steel products."

Speaking on the sidelines of the NPC session last week, Liu Jie criticized Washington for violating WTO rules, saying that China as a new member has been careful not to trespass against those rules.

China, which produced 143 million tonnes of steel in 2001, already has the world's largest and fastest-growing steel industry. Nevertheless, its steel sector is plagued with pervasive troubles, from backward management practices to poor-quality product and government interference. News about the US tariffs touched a sore nerve with the government, which is trying to overhaul the sector and minimize the shocks of the WTO entry. In the state-run press however, the trade dispute between China and the United States has been projected as a turf war between the two economies - the United States, large but troubled and China's - fast-growing and robust.

"The Steel Cold War", read the headline of an editorial in the China Economic Times on March 8. The author accused the United States of "deviation of principles", saying Bush's decision to prop up the US steel industry has harmed the new spirit of free trade induced by the WTO negotiations in Doha last November.

"Inside the United States, the US government subscribes to the principle of trade protectionism. In international trade, the US government preaches liberalism. Isn't it clear that the ultimate goal of such strategy is to ensure America's leading role in world trade?" the editorial said.

(Inter Press Service)