WTO sides with China on US trade tariff case

China won support from the World Trade Organization in challenging United States trade measures against Chinese products, while experts warned about underlying trade friction between the world's two biggest economies.

The WTO on Monday issued a panel report on the US' imposition of countervailing duties on 22 products from China. The WTO backed China "on many aspects ... and found the US measures breach the WTO rules, which is welcomed by China", said the Ministry of Commerce in an online statement.

Li Chenggang, director-general of the ministry's Department of Treaty and Law, told reporters in Beijing that the result was "within expectations" in view of the WTO's favorable ruling in a similar case in March 2011.

"The ruling marks one more victory for China in challenging discriminatory US countervailing duties on Chinese products. This will further constrain the US misuse of trade remedy measures and benefit Chinese enterprises," Li said.

He added that the ruling will "directly shake the legal basis of imposing countervailing duties" while the US classifies China as a nonmarket economy. US countervailing measures on Chinese exports endanger goods of $7.2 billion a year, the ministry said.

Countervailing duties are tariffs on imported goods intended to offset subsidies in the exporting country.

In May 2012, China requested consultations with the US on the imposition of the countervailing duties. The WTO set up a panel in September 2012 to look into the dispute.

The US can appeal the ruling within 60 days.

Gary Hufbauer, a senior fellow at the Washington-based Peterson Institute of International Economics, said that the panel decision could be a "big win" for China if the US loses its appeal, which he said it definitely will.

"At this stage, it's a win for China, pending all the legal details," he said. "China has been both a petitioner and a respondent. They bring a lot of cases, and they get hit with a lot of cases. But this (case) is special in terms of the dollar value. This $7 billion is a lot."

Chen Weidong, a professor at the Law School of the University of International Business and Economics in Beijing, said: "The favorable parts of the panel report surely constitute good news for China. But there is still a long way to go for China in its fight against US countervailing measures on Chinese products."

Bilateral economic ties have been affected by friction. On July 8, the Commerce Ministry said it would re-investigate chicken products from the US, just one day before the expiration of the WTO ruling on the product.

On July 7, the world's top trade body issued a report on the appeal regarding US anti-dumping and countervailing measures on 24 products from China. The WTO ruled the US moves "to be inconsistent with" WTO rules.

But the WTO was unable to rule on whether a US trade remedy law - commonly known as GPX Legislation, which was signed by US President Barack Obama in March 2012 - was consistent with WTO rules.

The US enacted the legislation to allow its Commerce Department to apply countervailing duties to imports from nonmarket economies, including China.

"On the whole, trade disputes between China and the US are set to increase and become more complex in view of the huge trade flows. What's more, there will more fights over the rules and standards affecting trade flows," Li Hui, a deputy director of the Trade Remedy and Investigation Bureau at the Ministry of Commerce, told a recent news briefing.

"China's challenge to the US' domestic laws aims to bring the wrong measures of the US, a global trade leader, into conformity with the WTO rules, which means a lot to us," she added.