China not playing fair: US

The US is set to file a case against China at the World Trade Organization (WTO) challenging export restrictions on raw materials used in steelmaking and other industries, The Financial Times reported today.

Sources close to the case told the paper that US trade officials have been working on the case for months and could move ahead with a request for consultations in the next few weeks. Consultations are the first step in the WTO dispute settlement process.

The US case rests on allegations that Chinese export quotas and taxes on raw materials such as metallurgial coke, molybdenum, silicon carbide and flourspar used in steel production have given Chinese manufacturers an unfair advantage over US producers by artificially deflating domestic prices and inflating global prices.

A person familiar with the case said that US officials have focused on a handful of products where the US is confident that China has breached WTO rules, The Financial Times said.

The paper also said that a report released last year by the American Iron and Steel Institute, the main trade body representing US steelmakers, claimed that the Chinese steel industry has benefited from 52 billion USD (35.8 billion euros) of government subsidies over the past ten years.

The US has also expressed dissatisfaction over China's pork subsidies, China Daily said.

In a letter which appeared on the world body's website last week, the US argues that pork and some of China's other agricultural products are unfairly exempted from taxes and enjoy government subsidies.

The US cited loopholes in China's corporate income tax law that could exempt pork processors from paying tax and has asked the government to provide data about how much revenue the pork industry is generating annually.

It also asked about a subsidy of 100 yuan (10 euros) paid for every sow, twice what it said was the previous rate, the paper said.

Zhou Shijian, a standing member of the China Association of International Trade, said China's agricultural subsidy is in line with WTO rules. The WTO allows certain agricultural subsidies as long as they comply with specific requirements for each country.

The WTO will review China's trade policies on September 17 and 18.

1 USD = 0.687 euros
1 yuan = 0.10 euros per XE.com rates