Monday on the American and European trade tensions.Few if any trade issues between the West and China have been as acrimonious in the last several years as rare earth metals, which are crucial to a wide range of sophisticated technologies, from iPhones and energy-efficient lighting to electric cars and smart bombs. China has shown a willingness to use its near monopoly on rare earth production as a trade weapon, sharply reducing shipments to the West through export taxes and quotas that have forced many companies to move factories to China.

The United States and European Union now plan to challenge those export taxes and quotas. Their legal filing at the W.T.O. in Geneva on Tuesday is also expected to include tungsten, a metal used to harden steel and other materials. China is the world's leading producer of tungsten and has restricted tungsten exports as well.

Japan will join the United States and European request for W.T.O. consultations on rare earths, people involved in the discussions said. Japan has avoided W.T.O. cases against China until now, wary of antagonizing its much larger neighbor or of reawakening Chinese hostility over Japanese atrocities during World War II. But the rare earth embargo in 2010 was a deeply emotional issue in Japan, reminding many there of how dependent their island nation is on imported natural resources.

A W.T.O. appeals panel ruled in late January that China must eliminate its export taxes on nine widely used industrial materials, not including rare earths or tungsten. The panel strongly criticized China's export quota system, saying the policies favored Chinese domestic manufacturers over their global competitors that also need the same raw supplies.

The panel did leave open the possibility that the separate system of quotas could be reformed instead of being scrapped entirely. Chinese trade officials are to join the W.T.O.'s monthly dispute-settlement meeting for all member nations in Geneva on March 23 to discuss the matter.

But Chinese commerce ministry officials have already told Chinese state-controlled media that they do not plan to change their rare earth policies in light of the W.T.O. appeals panel decision.

In the United States and Europe, lawmakers, unions and businesses have been chafing at what has seemed to them like Western delay in addressing the rare earth issue. The other four trade issues now also likely to move to center stage are these:

AUTO PARTS:

About 150 members of the House and Senate are preparing to send a letter to President Obama this week asking him to investigate whether China has violated American trade laws by helping its auto parts manufacturers become big suppliers to the United States market. The president is expected to refer the letter to the new interagency trade enforcement task force he announced in January during his State of the Union address.

CARS :

After promising late last year not to discriminate against foreign products in government procurement, China unexpectedly released this month a draft list of automobiles that government officials may buy. All of the more than 140 models are Chinese brands, with no foreign nameplates -- even though most foreign brands are now made in China, including the Audis and Buicks popular with Chinese officials.

Federal procurement practices in the United States allow the purchase of foreign brands, including imports as well as foreign brands produced in the United States, although critics contend that American government agencies tend to show an informal preference for Detroit brands anyway.

SOLAR PANELS The United States Commerce Department is scheduled to release on March 20 an initial decision on whether China has illegally subsidized solar panel shipments to the United States. The department is widely expected to impose retroactive tariffs on the Chinese products.

ANTI-SUBSIDY CASES Congress has just passed, and the administration has indicated that President Obama will soon sign, a law that would retroactively revise some American trade laws to 2006. The move would help American companies and labor unions bring anti-subsidy cases against companies in non-market economies like China.

Quick action on trade, though, can sometimes create new problems. In mid-December, a federal appeals court in Washington ruled that off-road tires from China could not be subjected to the anti-subsidy taxes the Commerce Department had tried to impose. The court said Congress had never explicitly stated that non-market economies like China's could be accused of giving preferential subsidies to local manufacturers.

Congress has quickly responded by passing a law that awaits President Obama's signature, making such cases retroactive to 2006 -- the year that the Commerce Department began letting anti-subsidy cases be filed against China.

But Andrew Schroth, a trade lawyer in the Hong Kong office of Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt who sometimes represents the Chinese commerce ministry in trade cases, said that the United States could be violating its W.T.O commitments by making such a legislative change without first consulting China.

''The U.S. is trying to change the rules on them,'' he said.

The Obama administration is already seeking a rehearing of the December appeals court decision. The administration wants to argue that Congress has always implicitly allowed anti-subsidy cases against nonmarket economies -- a stance that would be harder for China to challenge at the W.T.O.

Source Citation:

Bradsher, Keith. "Trade Issues With China Flare Anew."New York Times13 Mar. 2012: B1(L).Business Insights: Essentials. Web. 1 Sept. 2021.

Discussion:

• How are consumers affected by the Chinese tire dumping and the subsequent US tariffs?

• How would you describe the competitive dynamics between China and the United States?

• How much China and the United States signaled their intention to cooperate in order to reduce competitive intensity?

• Are anti-dumping laws effective?