Tuesday, April 03, 2007
CHINESE PAPER MAKERS HIT OUT AT US RULING
By Richard McGregor in Beijing
Tuesday, April 03, 2007, FT
Chinese coated-paper manufacturers hit by US import duties yesterday condemned the measures as unfair and unwarranted, amid concerns that large swaths of local industry would be vulnerable to Washington's new trade strategy.
Xu Lizhi, head of the export department of Taiyang Paper, one of China's three largest paper manufacturers, said support from the government in the form of export rebates and other measures for the company had been ended last year.
“We are currently charging a similar price to our US counterparts – their accusations are unfounded,” Mr Xu said.
Many trade lawyers and analysts expect the US Department of Commerce's favourable response to a petition on coated paper imports from a manufacturer will also encourage other industrial sectors to seek similar relief.
The department, under pressure from Congress to tackle China's swelling trade surplus, announced on Friday that it was overturning more than two decades of policy to impose so-called “countervailing duties” on Chinese imports.
The US imposed duties of between 10 and 20 per cent on products of companies such as Taiyang, after ruling Chinese manufacturers were receiving subsidies in the form of tax breaks, low-cost loans and debt forgiveness.
Stephen Green, an economist with Standard Chartered bank in Shanghai, said the department had decided bank loans could be judged as subsidies, depending on the interest rate, as could a range of tax breaks China uses to encourage exports and foreign investment.
“Vast swaths of China's export industry, both domestic and foreign-owned, are in theory now vulnerable given the DoC's broad definition of subsidy,” Mr Green said in a note to investors.
In the short term, the US action will quell the rapid rise in Chinese exports of coated paper into America, which had risen from $21m in 2004 to $224m in 2006 but are a minute part of China's overall trade. China's global trade surplus for the first two months of this year alone was $40bn.
But the impact of the policy switch will be more significant if other, larger industries, such as textiles and steel, also file petitions charging that their Chinese competitors are subsidised.
The Chinese government has greeted the measure frostily, with the official English-language China Daily saying that Washington's “combative mood” would not help solve bilateral trade tensions.
“Washington has gone against the consensus reached by both countries, which advocates resolving differences through dialogue,” the editorial said.
The US has so far managed to take a tougher line with Beijing on trade, through both the Commerce department's latest measures and complaints to the World Trade Organisation, without derailing the larger dialogue between the two countries.
Tuesday, April 03, 2007, FT
Chinese coated-paper manufacturers hit by US import duties yesterday condemned the measures as unfair and unwarranted, amid concerns that large swaths of local industry would be vulnerable to Washington's new trade strategy.
Xu Lizhi, head of the export department of Taiyang Paper, one of China's three largest paper manufacturers, said support from the government in the form of export rebates and other measures for the company had been ended last year.
“We are currently charging a similar price to our US counterparts – their accusations are unfounded,” Mr Xu said.
Many trade lawyers and analysts expect the US Department of Commerce's favourable response to a petition on coated paper imports from a manufacturer will also encourage other industrial sectors to seek similar relief.
The department, under pressure from Congress to tackle China's swelling trade surplus, announced on Friday that it was overturning more than two decades of policy to impose so-called “countervailing duties” on Chinese imports.
The US imposed duties of between 10 and 20 per cent on products of companies such as Taiyang, after ruling Chinese manufacturers were receiving subsidies in the form of tax breaks, low-cost loans and debt forgiveness.
Stephen Green, an economist with Standard Chartered bank in Shanghai, said the department had decided bank loans could be judged as subsidies, depending on the interest rate, as could a range of tax breaks China uses to encourage exports and foreign investment.
“Vast swaths of China's export industry, both domestic and foreign-owned, are in theory now vulnerable given the DoC's broad definition of subsidy,” Mr Green said in a note to investors.
In the short term, the US action will quell the rapid rise in Chinese exports of coated paper into America, which had risen from $21m in 2004 to $224m in 2006 but are a minute part of China's overall trade. China's global trade surplus for the first two months of this year alone was $40bn.
But the impact of the policy switch will be more significant if other, larger industries, such as textiles and steel, also file petitions charging that their Chinese competitors are subsidised.
The Chinese government has greeted the measure frostily, with the official English-language China Daily saying that Washington's “combative mood” would not help solve bilateral trade tensions.
“Washington has gone against the consensus reached by both countries, which advocates resolving differences through dialogue,” the editorial said.
The US has so far managed to take a tougher line with Beijing on trade, through both the Commerce department's latest measures and complaints to the World Trade Organisation, without derailing the larger dialogue between the two countries.
Labels: commerce raiding
¶ 11:17 AM
