VZCZCXRO0473
OO RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2441/01 2371130
ZNR UUUUU ZZH
O 251130Z AUG 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5779
INFO RUEHOO/CHINA POSTS COLLECTIVE IMMEDIATE
RUEHGV/USMISSION GENEVA IMMEDIATE 2532
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RHMFIUU/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE

UNCLAS SECTION 01 OF 02 BEIJING 002441 
 
SENSITIVE 
SIPDIS 
 
STATE FOR E, EAP, EAP/CM 
STATE FOR H/BETSY FITZGERALD, EAP/CM SHAWN FLATT, EEB/TPP 
CLAYTON HAYS, SCA/RA JOHN SIPLSBURY 
STATE PASS USTR FOR TIM STRATFORD, ANN MAIN, JEAN GRIER 
DOC FOR IRA KASOFF, NICOLE MELCHER (5130), MAC (4420) 
TREASURY FOR OASIA/DOHNER/WINSHIP 
GENEVA PASS USTR 
NSC FOR LOI 
 
E.O. 12958: N/A 
TAGS: ETRD EFIN ECON PREL WTRO CH
SUBJECT: AMBASSADOR MEETS MOFCOM CHEN TO DISCUSS TIRES 
 
REF: A. BEIJING 2299 
     ¶B. STATE 85673 
     ¶C. BEIJING 2439 
 
¶1. (SBU): SUMMARY: During his August 22 meeting with 
Ambassador Huntsman, Minister of Commerce Chen Deming 
expressed concern about the possible use by the United States 
of the special safeguard protection measures against imports 
of Chinese-produced passenger car tires. Chen said that if 
the USG "employed" the safeguard, it would open the door to 
the rest of the world doing the same.  Many other countries, 
Chen continued, had previously thought to use special 
safeguards against China, but had not.  This case was not 
really about bilateral trade or the protection of domestic 
Chinese workers or companies.  Rather it was about the 
devastating effect it could have on global trade.  Although 
leaders of both nations were facing numerous political 
pressures, they must, Chen emphasized, honor promises made at 
the G20 summit in London to avoid implementing any 
protectionist measures before the end of 2010.  Ambassador 
Huntsman said that President Obama had given him specific 
instructions to maintain a "positive, collaborative and 
comprehensive" relationship with China.  He promised to pass 
Chen's concerns on to Washington, and noted that both 
countries needed to avoid protectionist measures that could 
thwart economic recovery.  Further, the Ambassador noted that 
the U.S. and China must anticipate problems and work hard to 
resolve them together.  Economic recovery and growth in Asia 
and the world depended on our ability to avoid trade wars and 
friction. END SUMMARY. 
 
PREVIOUSLY RAISED CONCERNS REPEATED 
----------------------------------- 
 
¶2. (SBU) In addition to the central worry of inciting an 
avalanche of discriminatory measures against China, Chen 
restated several points that we have heard in recent days: 
- No U.S. administration has ever used a special safeguard 
protection measure against China; 
- The special safeguard protection itself is an ambiguous 
tool followed closely by Chinese media and "netizens" who 
might react with considerable displeasure to being hit by the 
"trade atomic bomb"; 
- Losses to the United States resulting from such a measure 
would far exceed the gains to the U.S. tire workers; 
- U.S. tire producers did not necessarily support the measure; 
- U.S. soybean exports were vulnerable to Chinese 
anti-dumping measures as measured by rapid increases in 
volume and price; 
- China had honored the consensus reached by the G20 in 
London not to employ trade protectionist measures before the 
end of 2010, and; 
- the U.S. is not ready to negotiate further due to the lack 
of the deputies at both the Department of Commerce and USTR, 
as well as the lack of a U.S. ambassador to the WTO in Geneva. 
 
A LITTLE CONTEXT PLEASE 
----------------------- 
 
¶3. (SBU) Chen went on to claim  that he understood the 
political pressures U.S. leaders faced at home.  Just the day 
before, Chairman of the House Foreign Relations Committee 
Howard Berman had warned Chen that protectionist sentiment 
there is stronger than ever because of the economic slowdown 
and unemployment.  Moreover, as he addresses health care 
reform, President Obama "depends on the contentment of the 
Congress," that, in turn, faced mid-term elections later next 
year.  Given this context, Chen said that his government 
would refrain from making any unreasonable requests, but 
would ask the Administration to consider the strategic 
relationship between the U.S. and China in order to avoid a 
bilateral trade war. 
 
¶4. (SBU) Chen claimed that MOFCOM had received numerous 
petitions from various Chinese industries seeking 
protectionist measures against U.S. imports. The auto 
industry was asking for protection because of U.S. subsidies 
 
BEIJING 00002441  002 OF 002 
 
 
to exporters of cars to China.  The Chinese chicken industry 
was discontented because the United States not only banned 
imports of Chinese chicken, but then went ahead and exported 
chicken to China. Finally, Chinese industry was complaining 
about U.S. imports of integrated circuits and aircraft. 
 
END ON A POSITIVE NOTE? 
----------------------- 
 
¶5. (SBU) Chen concluded the meeting with a discussion of 
U.S.-Chinese cooperation to advance trade talks at the Doha 
Round.  He pointed out that many countries are trying to 
force the United States to clarify its positions.  Although 
he was confident the U.S. economy will see significant 
recovery by the end of this year, China believed the U.S. 
needed more time for economic recovery. 
 
¶6. (SBU) Separately, the Ambassador noted that President 
Obama would be in China soon and would discuss the importance 
of bilateral relationship and the need to avoid harmful 
confrontation. 
HUNTSMAN