US-China tensions fuelled by steel tariff

Tensions between China and the US have escalated over Washington's controversial decision to place tariffs of up to 30 per cent on a wide range of imported steel products to boost its ailing steel industry.

China yesterday demanded that the United States give it preferred treatment as a developing country and exempt it from the hefty tariffs. China also is seeking compensation from Washington for the imposition of the protective taxes effective from March 20th last.

The state-controlled International Business Daily newspaper said yesterday that the demand was made by the Vice-Foreign Trade Minister, Mr Ma Xiuhong, during a meeting with the US Trade Representative, Mr Robert Zoellick, who is on a visit to Beijing. Mr Ma warned that Beijing could resort to "other means" to resolve the issue to protect its own interests in line with World Trade Organisation (WTO) rules if both sides failed to reach an agreement.

China's steel exports to the United States accounted for less than 3 per cent of total US steel imports between 1996 and 2000.

On Tuesday, Mr Zoellick pledged that Washington would consult with Beijing over widely contested steel tariffs but insisted its actions were in line with world trade rules.

China, which analysts say exported more than $300 million (€341 million) worth of steel to the United States last year, filed its first formal complaint to the WTO since becoming a member on the steel row.

Mr Zoellick said on Tuesday that WTO rules permitted temporary safeguard actions like those taken by Washington to help the ailing US steel industry and noted around two-thirds of China's steel exports to the United States would be unaffected by the tariffs.

"If there's any market in the world that needs negotiations on dealing with unfair practices, it's the steel market," he told students at the Central University of Finance and Economics in Beijing. Washington also had issues with China over its performance under WTO rules but Mr Zoellick said it was his inclination "to try and work with China and give it time".