VZCZCXRO0224
PP RUEHCN RUEHVC
DE RUEHGH #0399/01 2640824
ZNR UUUUU ZZH
P 210824Z SEP 09
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC PRIORITY 8287
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHAAA/NSC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHXX/GENEVA IO MISSIONS COLLECTIVE
RUEHGH/AMCONSUL SHANGHAI 8939

UNCLAS SECTION 01 OF 02 SHANGHAI 000399 
 
SENSITIVE 
SIPDIS 
 
NSC FOR JLOI, DBELL 
STATE PASS USTR FOR DMARANTIS, TREIF, TSTRATEFORD, AMAIN, JGRIER 
DOC FOR IKASOFF, NMELCHER 
TREASURY FOR OASIA/DOHNER/WINSHIP 
GENEVA PASS USTR 
 
E.O. 12958: N/A 
TAGS: ECON EIND ETRD EFIN PREL CH
SUBJECT: SHANGHAI WTO CENTER CALLS U.S. "IRRESPONSIBLE" FOR IMPOSING 
TIRE IMPORT SAFEGUARDS 
 
REF: A. SHANGHAI 397 
     ¶B. BEIJING 2671 
 
SHANGHAI 00000399  001.2 OF 002 
 
 
(U) This message is sensitive but unclassified.  Not for 
distribution outside USG channels. 
 
¶1.  (SBU) Summary: Meeting with the Consul General September 18, 
the head of Shanghai's WTO Center labeled the U.S. decision to 
impose safeguard tariffs on tire imports from China politically 
motivated and "irresponsible" in the current global economic 
climate but at the same time expressed understanding for the 
action. He indicated China would be less willing to accept 
informal U.S. assurances in any future negotiations and raised 
concerns that other countries might follow the U.S. example and 
apply their own protectionist measures. As a result, China, the 
world's greatest beneficiary of globalization to date, could 
become its biggest loser. End Summary. 
 
---------------------------------------- 
Window into Central Government Thinking? 
---------------------------------------- 
 
¶2.  (SBU) Consul General Beatrice Camp met September 18 with 
Shanghai WTO Affairs Consultation Center (SCC/WTO) President Mr. 
Wang Xinkui to discuss Chinese reaction to the USG decision to 
impose safeguard tariffs on tire imports from China.  The 
SCC/WTO Center, established in 2000 on the eve of China's 
accession to the WTO, is a quasi-governmental think tank funded 
by the Shanghai Municipal Government. The Center routinely 
provides economic analysis related to trade policy to municipal 
and central government agencies. Wang also serves as a member of 
the Financial and Economic Committee of the Shanghai Municipal 
People's Congress. 
 
¶3. (U) Wang Xinkui visited the United States as a State 
Department-sponsored Voluntary Visitor in 2001 and again in 2008 
as part of a delegation that met with the U.S. Departments of 
Commerce, Agriculture, and Treasury, as well as the 
International Trade Commission. During the course of the 
meeting, upon highlighting the utility of his previous visits to 
the United States, Wang introduced another colleague set to lead 
a delegation to New York and Washington, DC in October. 
 
---------------------- 
"A Political Decision" 
---------------------- 
 
¶4. (SBU) Wang observed that, given the backdrop of the global 
financial crisis, China was bracing itself for rising levels of 
global protectionism, particularly involving the United States. 
Wang claimed that he understood the political climate in the 
U.S. giving rise to the safeguards decision, and expressed 
sympathy for President Obama, stating that the President had 
little room to maneuver politically and had to be seen as doing 
something on the case. Nevertheless, Wang argued that the U.S. 
International Trade Commission (ITC) lacked fixed standards for 
calculating industrial injury in safeguards cases and the "421" 
decision ultimately had not been based on economic analysis but 
rather on a political calculus. 
 
----------------------- 
Playing the Victim Card 
----------------------- 
 
¶5. (SBU) Wang provided historical context for his views by 
noting that the political climate in Washington during China's 
WTO accession negotiations had forced China into accepting 
concessions that it now regrets, including the safeguard 
provisions outlined in Sections 222 and 421 of the Trade Act. 
Wang claimed former United States Trade Representative Charlene 
Barshefsky had "promised that the U.S. would be very cautious in 
its use of these provisions." China now feels "naove for having 
taken her words seriously" and would no longer value "informal 
promises" during future negotiations, Wang observed. 
 
¶6. (SBU) Wang also emphasized, given the current global economic 
crisis, that other countries needed "to understand the 
sacrifices that China has made." He cited a 20-percent drop in 
Chinese exports from January to August 2009 which has caused the 
loss of one million export-related jobs. (Note: China's Ministry 
of Commerce reported China's cumulative exports for the 
January-August period were down 22 percent year-on-year, 
 
SHANGHAI 00000399  002.2 OF 002 
 
 
although seasonally-adjusted monthly data has shown steady 
improvement over the past few months. End Note.) In spite of the 
economic downturn, Wang argued, China had not devalued its 
currency or resorted to protectionist measures. Moreover, China 
had spent RMB 4 trillion in stimulus funds to spur growth and 
contribute to the global economy, he added. For the United 
States to impose a safeguards measure amidst the current 
economic climate was, in Wang's words, "irresponsible." 
 
--------------------------------------------- --------- 
"China Showing Restraint" in Reaction to U.S. Decision 
--------------------------------------------- --------- 
 
¶7. (SBU) Since the announcement of the 421 decision September 
11, Wang said that China has exhibited tremendous restraint. He 
claimed that domestic media reporting on the decision had not 
been sensationalistic and that the Chinese Government had 
stressed repeatedly that the matter should be resolved through 
"the WTO framework." (Note: The case was featured heavily on the 
front pages of all major Chinese and English language 
newspapers. China has also signaled that it will file a case on 
U.S. chicken exports. For additional detail, see reftel B. End 
Note.) 
 
--------------------------------------- 
Globalized World, Globalized Challenges 
--------------------------------------- 
 
¶8. (SBU) Wang noted that the global financial crisis had forced 
China to reassess globalization, and that the current global 
economic framework needed to be "re-adjusted." Wang stated China 
has been among the world's largest beneficiaries from 
globalization but stands to be one of the biggest losers, as 
does the United States, should trade protectionism increase. 
Citing the example of U.S. synthetic rubber manufacturers, who 
export to Chinese tire makers, as being likely unintended 
victims of the safeguards decision, Wang noted that a trade war 
between China and the United States would also have a 
significant impact on the global economy. He ironically 
expressed hope that the decision may lead to one positive 
outcome -- politicians may come to realize that "domestic 
politics can't be their first priority" and that they must also 
consider our "increasing global interdependence." 
 
----------------- 
Follow the Leader 
----------------- 
 
¶9. (SBU) Wang expressed concern that the difficult economic 
climate may compel other countries to follow the U.S.'s lead and 
implement their own safeguard measures, adding that the value of 
Chinese tire exports to the United States comprise merely 0.06 
percent of total Chinese exports. 
 
¶10. (SBU) The Consul General noted that the USG shares China's 
concerns over growing protectionism but that the USG views the 
421 remedy as enforcement of trade laws rather than 
protectionism. She also agreed that this matter should be 
resolved within the WTO framework and expressed optimism that 
the core of the bilateral relationship remains solid despite 
occasional trade frictions. 
 
------- 
Comment 
------- 
 
¶11. (SBU) During his discussion with the Consul General, Wang 
held closely to the popular victimization narrative 
characterizing public discourse in China concerning the U.S. 
safeguards decision. Nevertheless Wang's comments were delivered 
with an air of regret, not of anger, and he clearly hoped to 
maintain the Center's substantial interaction with the USG. 
CAMP