China to Appeal WTO Tire Ruling

China plans to appeal a World Trade Organization ruling that the U.S. was entitled to impose extra safeguard duties on Chinese tires, the Ministry of Commerce said on Tuesday.

China's Ministry of Commerce said in a statement on its Web site that it was "deeply concerned" about negative consequences from the Monday ruling and condemned the U.S. safeguard measures.

"The U.S. safeguard measures adopted toward Chinese tires are trade protectionism intended to shift domestic political pressure. They are not in line with WTO rules and have been widely criticized," the statement said.

President Barack Obama imposed the 35% duties on Chinese tires in September 2009 after the United Steelworkers union complained that surging imports of Chinese tires were hurting U.S. producers.

WTO rules allow members to impose temporary extra tariffs on goods to counter a destabilizing flood of imports.

"Facts have shown that safeguard measures do not fit with China's interests and will not bring benefits to the U.S.," the ministry statement said.

It noted that employment rates in the U.S. tire industry had slid and tire prices had risen since the measures were implemented, hurting American consumers.

The U.S. hailed the 219-page WTO dispute panel ruling when it was released, just a day before the U.S.-China Joint Commission on Commerce and Trade is to convene in Washington.

Those talks, chaired by U.S. Commerce Secretary Gary Locke and U.S. Trade Representative Ron Kirk for the U.S., with Chinese Vice Premier Wang Qishan leading the Chinese delegation, are likely to feature Washington's concerns about China's "indigenous innovation" policies which encourage government bodies to buy technology developed domestically.

Foreign companies are worried that in light of China's weak enforcement of intellectual property, those policies which require registering patents in, or shifting development operations to China, would open the door to theft and competition from lower-cost manufacturers.

China is likely to voice similar concerns over what is sees as protectionist U.S. policies and a closed investment environment.

In China's eyes, the U.S. may have ceded the moral high ground with the 'Buy American' provision attached to U.S. stimulus spending and the rejection of past Chinese investment, including a 2005 CNOOC bid for Unocal that was blocked by U.S. lawmakers.

China has also made repeated calls for the U.S. to ease high-tech export controls, arguing that it would help to balance the massive U.S. trade deficit with China.