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Japan Launches WTO Dispute Versus China Over Stainless Steel

Steel bars at a market in Shenyang, northeastern China's Liaoning province.
AP
Steel bars at a market in Shenyang, northeastern China's Liaoning province.

Japan launched its second-ever trade complaint against China at the World Trade Organization on Thursday, challenging Beijing's claim that Japanese steel firms are competing unfairly in the world's biggest steel market.

Japan's case was filed the day after it won a WTO ruling against Canada and four days after a landslide election win for the Liberal Democratic Party, whose leader Shinzo Abe has talked tough in a territorial dispute with China.

The complaint seeks to overturn China's decision to levy anti-dumping duties on Japanese exports of high performance stainless steel seamless tubes, which are used in coal-fired power plants.

(Watch Now: Is China Abiding By Its WTO Commitments?)

China can legitimately apply such duties if it suspects imports are being sold at unfairly cheap prices on its market. But Japan is challenging the duties and the way China applied them, alleging it did not have enough evidence and kept what it did have secret, shielding the companies who had complained.

The result was a 14.4 percent duty on imports from Kobe Steel and 9.2 percent on supplies from Nippon Steel & Sumitomo Metal, affecting Japanese stainless steel tube exports to China that were worth 5.8 billion yen ($69 million) in 2011.

The Chinese duties also targeted the European Union, with a 9.7 percent tariff on imports from Tubacex and 11.1 percent on products from Salzgitter, but the EU did not join Japan's WTO challenge of China's decision.

The complaint is the third brought to the global trade body by Japan this year and brings to 27 the total number of complaints launched in 2012, the most in almost a decade. The WTO has begun shifting staff to its disputes team to cope with the increase in work.

(Read More: No Imbalance in Trade Finance Market: WTO's Lamy)

Trigger

Previously Japan had challenged China jointly with the United States and the European Union over export restrictions on rare earth metals, tungsten and molybdenum. That case is still under adjudication.

By launching the complaint, Japan has triggered a 60-day period for China to try to settle the dispute, after which Japan can ask the WTO to appoint a panel of adjudicators to rule on its complaint.

China's Ministry of Commerce said in a statement China would "appropriately handle" Japan's latest complaint in accordance with the WTO dispute settlement mechanism.

Japan's confidence in its case may have been strengthened by a U.S. victory in a similar dispute over Chinese restrictions on steel imports two months ago.

In October, the WTO's appeals judges upheld a U.S. complaint against Chinese anti-dumping duties on a type of specialty steel used in electric motors, generators and transformers. Japan was a third-party observer in that case.

Details of Japan's latest complaint were not immediately available. The WTO statement said they would be published within the next few days.