- The Washington Times - Friday, February 2, 2007

1:39 p.m.

The U.S. filed a trade case against China at the World Trade Organization charging that China unfairly subsidizes the steel, information technology, wood and other industries, U.S. Trade Representative Susan C. Schwab said today.

The complaint says China is using government support and tax policies to bolster Chinese firms in competition against U.S. and other foreign firms.

“We are seeking to level the playing field to allow U.S. manufacturers to compete fairly with Chinese firms,” Mrs. Schwab said in announcing the case.

The action will trigger a consultation during which trade negotiators will try to resolve the dispute. If that fails, a WTO hearing panel will be convened to handle the dispute.

A win by the Bush administration would clear the way for the United States to impose economic sanctions against China if Beijing refuses to change its subsidy program.

Mrs. Schwab’s announcement that a case was being filed came just two days after Treasury Secretary Henry M. Paulson Jr. faced stiff questioning before a congressional panel, where both Democrats and Republicans accused the administration of doing too little to deal with a swelling trade deficit with China.

The subsidies case is the second WTO case the administration has filed in the past year. In March, it filed a case accusing China of using a WTO illegal tax system to block imports of U.S. and other foreign-made auto parts into China.

Mr. Paulson told the Senate Banking Committee on Wednesday that he thought a high-level dialogue that was begun in December with top Chinese officials offered the best approach to dealing with America’s trade problems with China.

The administration has been trying to get China to allow its currency to rise in value against the dollar.

U.S. manufacturers contend that the Chinese currency, the yuan, is undervalued by as much as 40 percent, giving Chinese products a huge competitive advantage against American goods.

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