After tyres, its cars now - U.S., China and the WTO

(Courtesy: Bloomberg Businessweek)

Reports are coming in of an impending auto trade dispute between China and the U.S. It has been widely reported in the BBC, Reuters, BloomBerg Businessweek and NYT. The U.S. has essentially complained against Chinese duties against imported American automobiles. China has imposed anti-dumping duties on U.S.imports of automobiles alleging that these automobiles have been "dumped" in China.

Whether the timing of the U.S. complaint coincides with the U.S.presidential campaign or the Chinese imposition is a tit for tat against U.S. action in another case involving Chinese tyres is debatable. China Hearsay has a brilliant analysis of the relationship between the U.S. and earlier Chinese measures here.

The USTR explained the rationale for the move here:

"The United States believes that China initiated the investigations without sufficient evidence; failed to objectively examine the evidence; and made unsupported findings of injury to China’s domestic industry. In addition, China failed to disclose “essential facts” underlying its conclusions; failed to provide an adequate explanation of its conclusions; improperly used investigative procedures; and failed to require non-confidential summaries of Chinese company submissions."

The U.S. submission to the WTO is found here which alleges violation of GATT, Anti-Dumping Agreement and the ASCM. The official Chinese response to the U.S. step was awaited. Would the Chinese retaliate with another WTO complaint? Would it prefer to take this the whole way to the DSM? With recent decisions going against it (export restraints) would it prefer to amicably settle it? Would it reconsider the duties and make way for a settlement? U.S. -China WTO disputes have become quite common now that it is no longer considered a trade war leading to disruption of trade relations. A good sign for the dispute settlement mechanism of the WTO?