China is to join the European Union in protecting domestic steel companies against surging imports in a retaliatory move against United States tariffs on steel imports.

Starting from Friday, China is to levy tariffs of 7 per cent to 26 per cent on imports of nine steel products that exceed certain quotas, said sources close to the government.

The quota tariffs were adopted in response to appeals by domestic steel firms, which said US steel tariffs have incurred losses of an estimated US$1.2 billion.

The temporary safeguard measure comes shortly after China submitted to the World Trade Organization (WTO) a list of US products on which it intends to suspend promised tariff reductions in line with its WTO commitments.

China submitted the list to the WTO on Friday, according to the Ministry of Foreign Trade and Economic Co-operation (MOFTEC).

Some imports of waste paper, bean oil and electric compressors from the United States will be subject to 24 per cent tariffs, said the list.

The added tariffs will begin after the WTO dispute settlement body gives its final jurisdiction against the US tariffs and will be valid until March, 2005.

The tariffs could total US$94 million, said MOFTEC in a statement.

It said the tariffs were proposed after the United States failed to give clear replies to China's demand for compensation or exemption from the US tariffs of 8 per cent to 30 per cent on steel imports.

The US tariffs, which took effect on March 20, have drawn angry reactions from major trading partners and are likely to trigger a new round of trade protectionism for the steel industry.

The EU, Japan, South Korea, Russia, China and Brazil are among the hardest hit.

The EU, Japan and Switzerland have filed with the WTO lists of US products to be subject to punitive tariffs in response to the US steel tariffs earlier this month.

The EU and Canada have also initiated temporary safeguard measures to protect their steel markets.

The WTO dispute settlement body is meeting to discuss the case Wednesday and is expected to set up a panel of three experts as requested by the EU and Japan.

MOFTEC officials denounced the revival of US trade protectionism but said China will strictly abide by WTO rules before taking any countermeasures.

They said China is also paying close attention to the new farm bill signed by US President George W. Bush last week which will allow subsidies of up to US$190 billion to the country's farming sector in the coming decade.

The EU, Australia, Canada, New Zealand and many other WTO members had all expressed discontent and protests over the US bill.

The bill distorts international farm trade, goes against the US Government's commitment to liberalizing farm trade and damages the ongoing WTO new round of talks on farm trade, said a joint statement from MOFTEC and the Ministry of Agriculture.

China closely watches the issue and reserves the right to take further actions within the WTO framework, said the statement.

In another development, China will Wednesday start an anti-dumping investigation into imports of toluene diisocyanate from the United States, Japan and the Republic of Korea.

(China Daily May 22,2002)