China calls U.S. duties on paper, salts unfair

The U.S. Commerce Department on Tuesday hit Chinese coated paper companies with countervailing duties ranging from 3.92 to 12.83 percent to offset government subsidies, and in a separate action, levied Chinese companies that produce or export potassium phosphate salts with a preliminary duty of 109.11 percent.

"Frequent" countervailing probes by the United States into Chinese products have "unfairly restricted normal exports," Chinese Commerce Ministry spokesman Yao Jian said in a statement seen on the ministry website.

"The fundamental reason for American coated paper producers and other industries' difficulties is the drop in demand due to the financial crisis. The United States wants to transfer those difficulties to Chinese producers which China cannot accept," Yao said.

"China believes that if the United States wants to expand its exports, it should open its markets and fight protectionism together with the rest of the world."

The final duties on China could be higher if the U.S. Commerce Department accepts the industry's argument that Beijing subsidizes coated paper exports by maintaining an undervalued currency against the dollar, a plaintiffs' lawyer said.

If the department agrees to that, it would be the first time that U.S. countervailing duty laws have been used against China's exchange rate regime. That makes the paper case potentially more politically explosive than other trade spats.

The United States on Tuesday also levied a 17.48 percent duty on Indonesian coated paper in the same case.

Asia Pulp & Paper (APP), a major exporter of coated paper from both China and Indonesia, said it was disappointed with the ruling and would continue to fight the duties.

In a similar case brought by U.S. producers a few years ago, the U.S. International Trade Commission blocked final duties from going into effect.

(Reporting by Lucy Hornby; Editing by Benjamin Kang Lim and Bill Tarrant)