China defends export policies against WTO complaint

US files WTO case against China
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By Chris Buckley
BEIJING (Reuters) - China on Wednesday rejected charges from the United States and Europe that its restrictions on raw materials exports violated international trade rules, saying that its policies were in keeping with WTO regulations.
The European Union and the United States said on Tuesday they were taking a complaint to the World Trade Organization over China's export curbs on some industrial raw materials used in steel, cars, microchips, planes and other products.
In the first official Chinese response, the Ministry of Commerce rejected the complaint but said it would go along with the consultation procedures required under WTO rules.
"The main objective of China's relevant export policies is to protect the environment and natural resources. China believes the policies in question are in keeping with WTO rules," the press office of the ministry said in a faxed statement.
"Following the WTO procedures for dispute resolution, China will appropriately handle the request for consultations."
Washington and Brussels have launched the WTO case while they are also looking for China's cooperation in pulling the world economy out of a slump. The complaint may become another irritant in ties alongside recent friction over military modernization, Internet controls and the United States' own economic policies.
But China's initial response was relatively mild compared with its vehement reaction to earlier WTO complaints. And traders said the move would have little immediate impact on trade flows.
"I don't think it will impact exports as steel wire rod has already carried a 15 percent export tax, therefore no one can ship any anyway," said a senior executive at Sinosteel Corp, the country's largest state-owned steel trader. He spoke on condition of anonymity.
Brussels and Washington say Beijing continues to restrict exports of raw materials used in steel, semiconductors, aircraft and other products despite China's pledge to eliminate taxes and charges on exports when it joined the WTO in 2001.
This hurts foreign "downstream producers" of goods, such as aluminum producers and steelworkers, since the export restraints limit their access to raw materials and raise world market prices for the materials while lowering the prices that domestic Chinese producers have to pay, U.S. officials said.
Included in the materials covered by the case is a range of strategic minor metals used in applications such as alloys, ceramics, mobile phones and light bulbs.
Zhou Shijian, a former Chinese trade official, said the U.S. and EU were guilty of hypocrisy.
"Protecting natural resources is perfectly reasonable, and all countries in the world, including the United States, protect their national resources," Zhou told the Global Times, a Chinese-language paper.
"The WTO stresses one cannot restrict imports and should open markets, but it doesn't have specific rules on what should be done about exports," said Zhou.
(Additional reporting by Alfred Cang in Shanghai; Editing by Ken Wills and Dean Yates)

Source: Reuters

Obama urges passage of "historic" climate change bill

By Richard Cowan
WASHINGTON (Reuters) - Democrats in the U.S. House of Representatives, urged on by President Barack Obama, announced progress on Tuesday toward quick passage of legislation to fight global warming by reducing industrial emissions of carbon dioxide.
At a midday White House press conference, Obama said the "historic" climate change bill moving through the House would "transform the way we produce and use energy in America."
With incentives to encourage utilities, manufacturers and other companies to switch from higher-polluting oil and coal to cleaner energy alternatives, Obama said the legislation would spark a "transformation that will reduce our dependence on foreign oil and confront the carbon pollution that threatens our planet."
Hours after Obama's remarks, House Democrats announced they had reached a deal on difficult agriculture issues in the legislation, clearing the way for a vote and probable passage in the chamber this week.
Representative Henry Waxman, a main proponent of the climate change bill in the House, told reporters that farmers won several of the demands they had been holding out for in exchange for supporting the climate bill.
House Majority Leader Steny Hoyer was cautiously optimistic, telling reporters, it is "quite possible and maybe even probable" the bill will be debated on Friday and pass.
With House passage, the climate change debate would shift to the Senate, which has not yet crafted its own bill and where passage is more complicated than in the House because Republicans could use delaying tactics.
As Obama was leading the charge for climate change legislation cutting carbon dioxide emissions by 17 percent by 2020 and 83 percent by 2050 (from 2005 levels), his administration acted on another clean energy front.
HELP FOR AUTOMAKERS
Nearly $8 billion in Energy Department loans were announced to help automakers retool plants so they can build more fuel efficient vehicles, including electric cars and autos with improved gasoline engines.
In pushing companies to reduce their carbon emissions, the climate change bill would encourage the use of alternative energy such as solar and wind, while promoting technologies to capture and store emissions from coal-burning plants.
Supporting that effort, Interior Secretary Ken Salazar announced that the government had awarded its first leases for offshore wind development off the Atlantic Ocean coasts of New Jersey and Delaware.
While large U.S. companies such as Duke Energy, Dow and Alcoa, have embraced the broad goals of the House climate bill, other industries criticized it.
The American Petroleum Institute, representing major U.S. oil companies, called the House legislation "fundamentally flawed" and said it would "cost Americans billions of dollars in higher costs, kill jobs and will not deliver the environmental benefits promised."
This week, the nonpartisan Congressional Budget Office estimated the House Democrats' climate bill could cost households an average $175 a year in added costs, while the poor would enjoy a $40 annual benefit from rebates and other breaks. Republicans had warned of $3,100 in price increases yearly and severe job losses. Continued...
Source: Reuters

Obama harshly condemns Iran crackdown on protesters

Demo detainees aired on Iran TV
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By John Whitesides and Jeff Mason
WASHINGTON (Reuters) - President Barack Obama toughened his criticism of Iran on Tuesday for its crackdown on anti-government protesters, harshly condemning the violence and declaring scenes of death in Tehran "heartbreaking."
At his fourth White House news conference, Obama also said he was still optimistic about the prospects in Congress for an overhaul of the costly U.S. healthcare system and urged lawmakers to pass a comprehensive climate change bill.
The Democratic president, facing heavy criticism from Republicans that he was being too timid in backing street protests over Iran's contested election, said the United States was "appalled and outraged" by the violence.
"I strongly condemn these unjust actions, and I join with the American people in mourning each and every innocent life that is lost," Obama said.
He called the video of an Iranian women killed in the streets, which has become a staple of news coverage of the protests, "heartbreaking" and said it made clear the violence against the protesters was "fundamentally unjust."
"In 2009, no iron fist is strong enough to shut off the world from bearing witness to the peaceful pursuit of justice," he said.
Asked why it took him so long to express his outrage, Obama said the U.S. approach had been consistent and he did not want to hurt the protesters by aligning them with the United States.
"Ultimately, the most important thing for the Iranian government to consider is legitimacy in the eyes of its own people," he said.
But Obama declined to spell out any potential consequences for Tehran of the crackdown, and said there was still "a path available" to Iran in which it could operate within the international community.
SETBACKS AND POLL DECLINES
Obama has faced setbacks on central legislative goals and a bout of bad news in public opinion polls in the last week, and he became testy at times when pressed by reporters. He rejected suggestions he was responding to attacks by Republicans such as former presidential rival Senator John McCain.
Obama said he still believed Congress would pass an overhaul of the healthcare system, and a government-run health insurance plan "made sense" as part of the package, he said.
Obama is battling growing concerns over the price tag -- at least $1 trillion and possibly far more -- on his reform plan and proposals for a government-run insurance plan that would compete with private insurers.
"This is legislation that will be paid for. It will not add to our deficits over the next decade. We will find the money through savings and efficiencies within the health care system," he said.
A wave of new public opinion polls show declining satisfaction with Obama's policies and concerns about growing federal debt, although the president remains personally popular. Continued...
Source: Reuters

Obama: Health reform needs public insurer option

By David Alexander and Donna Smith
WASHINGTON (Reuters) - President Barack Obama said on Tuesday his healthcare overhaul needed a public insurance option to enforce market "discipline", but stopped short of saying he would veto legislation without one.
Obama, who has made healthcare reform a top legislative priority, said he would insist Congress pass a plan to control skyrocketing costs and cut the number of uninsured. But he added "we have not drawn lines in the sand" on other issues.
"The public plan, I think, is an important tool to discipline insurance companies," Obama told a White House news conference. "I think there is going to be some healthy debate about the shape that this takes."
The United States spends some $2.5 trillion annually on healthcare, about 16 percent of gross domestic product, but trails many developed countries on important measures of health. Some 47 million Americans are uninsured and have little access to the healthcare system.
Obama, who promised reform during his presidential campaign, has stepped up his efforts to sell the public on his proposals, holding a series of speeches and town hall meetings, including one at the White House set for Wednesday night.
He has proposed allowing those who do not have insurance through their employers and who cannot afford to buy it privately to purchase it from a marketplace where private insurers and a public insurance plan would compete.
Shortly after Obama's news conference, an organization representing private health insurance companies made public its blunt rejection of any state-run health plan, posting a June 19 letter to Democratic Senator Edward Kennedy on its website.
"A government plan option -- in any form -- is unnecessary to achieve comprehensive reform and would have devastating consequences on the health insurance coverage," said the letter from the heads of America's Health Insurance Plans and the Blue Cross and Blue Shield Association.
Republicans and private insurance companies have raised concerns over a public plan, arguing it would lead to a government takeover of the entire U.S. healthcare system and drive private insurance companies out of business.
Obama rejected that notion at his news conference.
"If private insurers say that the marketplace provides the best quality health care; if they tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical," he said, adding, "They should be able to compete."
NEGOTIATIONS AND COSTS
Democrats in Congress who are developing healthcare reform legislation hope to keep a public option, but have also suggested that non-profit medical cooperatives could be formed to compete with insurers.
Obama said a government-run plan could help drive efficiencies throughout the system.
"If it turns out that the public plan, for example, is able to reduce administrative costs significantly, then I'd like the insurance companies to take note," he said. "That's good for everybody in the system." Continued...
Source: Reuters

House Democrats reach deal on climate change bill

By Richard Cowan
WASHINGTON (Reuters) - Democrats in the House of Representatives on Tuesday said they had reached a deal on difficult agriculture issues in a climate change bill, clearing the way for a vote and probable passage in the chamber this week.
"We have an agreement finally," said House Agriculture Committee Chairman Collin Peterson, whose support had been widely sought by House Democratic leaders. Peterson declared he is now prepared to vote for the controversial bill.
Representative Henry Waxman, a main proponent for legislation to reduce industrial emissions of carbon dioxide associated with global warming, told reporters: "I think we will have the majority to pass the bill."
Waxman also predicted environmental groups will remain supportive, despite new provisions to help farm states that some feared would weaken the bill.
The breakthrough came just hours after President Barack Obama, at a White House press conference, embraced the Democrats' bill and urged the House to move quickly on it.
"It is legislation that will finally spark a clean energy transformation that will reduce our dependence on foreign oil and confront the carbon pollution that threatens our planet," Obama said.
Earlier in the day, House Majority Leader Steny Hoyer said he hoped the bill would be debated by the full House, and passed, on Friday.
Last month, Waxman's Energy and Commerce Committee easily passed a climate change bill to reduce industrial emissions of carbon dioxide and other greenhouse gases by 17 percent by 2020 and 83 percent by 2050, as well as provide new incentives for producing alternative fuels.
But since then, Waxman has been in difficult negotiations with farm state Democrats and other House Democrats to gain their needed support since few Republicans are expected to vote for the bill.
AGRICULTURE DEPT OVERSIGHT ROLE
In announcing the deal after briefing a group of moderate Democrats, Waxman said that the U.S. Department of Agriculture, not the Environmental Protection Agency, would be put in charge of overseeing certain steps to be taken by farmers to reduce carbon emissions.
Known as "offsets," the program would allow farmers to claim achievements in reducing carbon pollution by planting trees or taking other environmental actions. But the agriculture community objected to EPA overseeing the program and insisted that the more sympathetic USDA do the job.
"We agreed that we would have the USDA run the program and we will seek guidance from the administration to figure out the appropriate role for EPA," Waxman said.
Waxman announced another break for agriculture as part of the deal: The climate change bill would halt an EPA proposal that farmers feared could hold U.S. ethanol makers responsible for greenhouse gases from crops overseas.
Waxman said a "five-year moratorium" on a proposed EPA rule would be included in the legislation and USDA and Congress would have additional powers to stop the plan after the five years. Continued...
Source: Reuters

Pentagon approves creation of cyber command

By Andrew Gray
WASHINGTON (Reuters) - The Pentagon will create a Cyber Command to oversee the U.S. military's efforts to protect its computer networks and operate in cyberspace, under an order signed by Defense Secretary Robert Gates on Tuesday.
The new headquarters, likely to be based at Fort Meade, Maryland, outside Washington, D.C., will be responsible for defending U.S. military systems but not other U.S. government or private networks, Pentagon spokesman Bryan Whitman said.
Asked if the command would be capable of offensive operations as well as protecting the Department of Defense, Whitman declined to answer directly.
"This command is going to focus on the protection and operation of DoD's networks," he said. "This command is going to do what is necessary to be able to do that."
U.S. officials have voiced growing concern in recent years about being vulnerable to attacks on the country's civilian or military networks as technology takes on an ever-increasing role, including in military operations.
President Barack Obama said last month he would name a White House-level czar to coordinate government efforts to fight cybercrime.
The United States has said many attempts to penetrate its networks appear to come from China but it has stopped short of accusing Chinese authorities of being responsible.
Whitman said the new command will consolidate existing Pentagon efforts to protect its networks and operate in cyberspace.
Those efforts currently come under the auspices of U.S. Strategic Command in Nebraska, which will also oversee the new headquarters.
The U.S. Department of Defense runs some 15,000 electronic networks and runs some 7 million computers and other information technology devices, Whitman said.
"Our defense networks are constantly probed. There are millions of scans every day," he said.
"The power to disrupt and destroy, once the sole province of nations, now also rests with small groups and individuals, from terrorist groups to organized crime to industrial spies to hacker activists, to teenage hackers," he said.
"We also know that foreign governments are trying to develop offensive cyber capabilities," he added, saying more than 100 foreign intelligence services were trying to hack into U.S. networks.
The new command should begin initial operations by this October and be fully up and running a year later.
The head of the Cyber Command would also be the director of the U.S. National Security Agency, which conducts electronic surveillance and communications interception and is also based at Fort Meade.
(Editing by Eric Walsh)

Source: Reuters

U.S., EU act against China on raw material exports

US files WTO case against China
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By Susan Cornwell and Darren Ennis
WASHINGTON/BRUSSELS (Reuters) - The United States and European Union took action against China on Tuesday for restricting exports of industrial raw materials, intensifying a trade struggle at a delicate time for the global economy.
In the United States the decision to bring the dispute before the World Trade Organization was seen as part of a more muscular trade policy promised by the Obama administration, but it added to tensions at a time when Washington counts on Beijing to keep buying its debt.
Europe and the United States had earlier failed to persuade resource-hungry China to reduce its export tariffs and raise quotas on materials like bauxite, coke and manganese that are used in steel, microchips, planes and other products.
Billions of dollars in trade flows are affected, and China gives its industries an unfair edge, U.S. officials said.
"After more than two years of urging China to lift these unfair restrictions, with no result, we are filing at the WTO today," U.S. Trade Representative Ron Kirk told a news conference in Washington.
"We are most troubled that this appears to be a conscious policy to create unfair preferences for Chinese industries" that use the materials, he said.
As a first step, the United States and the European Commission -- which oversees trade for the 27-nation EU bloc -- formally sought consultations with Beijing at the global trade watchdog. If these talks fail, after 60 days the next step would be to request a WTO panel to hear the complaint.
"It is very much hoped that we will not have to proceed to the next stage," Kirk said.
In Brussels, EU Trade Commissioner Catherine Ashton said: "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn."
"I hope that we can find an amicable solution to this issue through the consultation process," she said in a statement.
CHINA LIMITING EXPORTS
The EU and the United States say China restricts exports of raw materials despite a pledge to eliminate export taxes and charges made when it joined the WTO in 2001.
This hurts foreign "downstream producers" of goods, such as aluminum producers and steelworkers, since the export restraints limit their access to raw materials and raise world market prices for the materials while lowering the prices that domestic Chinese producers have to pay, U.S. officials said.
U.S. officials said the nine materials covered by their case were bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc.
In Ottawa, Canadian officials indicated they had not ruled out joining the case. "For the moment, we are closely monitoring developments in this file," said Melisa Leclerc, spokeswoman for Canadian Trade Minister Stockwell Day. Continued...
Source: Reuters

Obama praises Bernanke, hedges on a second term

By Jeff Mason
WASHINGTON (Reuters) - President Barack Obama said on Tuesday Federal Reserve Chairman Ben Bernanke had done a good job handling the financial crisis but offered no hints on whether he wanted the central bank chief to stay in his job.
Bernanke, who was appointed by former President George W. Bush, a Republican, became Fed chair in February 2006. His term expires at the end of January 2010 and financial markets are eager to know whether he will stay.
"He has done a fine job under very difficult circumstances," Obama, a Democrat, said at a news conference.
"I'm not going to make news about Ben Bernanke," Obama said to laughter when asked if he wanted the Fed chair to stay in his post after January.
There has been some press speculation that top White House economic adviser Lawrence Summers wants to succeed Bernanke, who has presided over the Fed during the worst financial crisis since the Great Depression.
Obama implied that he didn't consider the Fed blameless in allowing reckless behavior by the financial sector to create conditions for the financial market meltdown that began in 2007, but he said it had done better than other regulators.
"I would say all financial regulators didn't do everything that needed to be done to keep the crisis from happening," Obama told reporters shortly before the Fed began a two-day policy meeting.
"The Fed probably performed better than most other regulators prior to the crisis taking place, but I think they'd be the first to acknowledge that in dealing with systemic risk and anticipating systemic risk they didn't do everything that needed to be done," he said.
Obama added: "I think since the crisis has occurred Ben Bernanke has performed very well."
KEEPING HIS OPTIONS OPEN
Experts gave a mixed interpretation of Obama's statements on Bernanke, saying the president had left his options open.
"I take it as a positive that he's willing to comment positively on Ben," said Randall Kroszner, a former Federal Reserve Governor and now a professor at the University of Chicago's Booth School of Business.
Jeffrey Frankel, a professor at Harvard University and former economic adviser to President Bill Clinton, said Obama had been deliberately vague.
"It is pretty clear that President Obama's intention was to transmit no information whatsoever regarding whether Bernanke would be reappointed," Frankel said.
Even as Obama mulls whether to keep Bernanke, his administration has proposed giving the Fed authority to monitor large, interconnected financial firms and play a lead role in designating which ones pose "systemic risk" to the economy. Continued...
Source: Reuters

Israel PM meeting with Obama envoy postponed

By Allyn Fisher-Ilan
ROME (Reuters) - Israeli Prime Minister Benjamin Netanyahu and U.S. President Barack Obama's peace envoy delayed talks planned in Europe as the allies negotiated differences on Jewish settlement building, officials said Tuesday.
Netanyahu, in Rome on the first leg of a European visit, told reporters traveling with him his government was also pushing for a deal to free a soldier held captive by Palestinian Islamist militants of Hamas who control the Gaza Strip.
The meeting between Netanyahu and Obama's envoy, George Mitchell, had been set to take place in Paris Thursday and to focus on bridging differences over Israel's expansion of Jewish settlements in the occupied West Bank, Israeli officials said.
Defense Minister Ehud Barak will instead visit Washington next Monday to meet Mitchell, a delay that will give both sides more time to "clarify some of the issues," Netanyahu spokesman Nir Hefetz said.
A U.S. State Department spokesman confirmed the talks were postponed and the plan for Mitchell to meet with Barak. The spokesman, Ian Kelly, had no comment on why it was important for Mitchell to see Barak first.
A senior U.S. official, who asked not to be named, said: "Mitchell and the prime minister jointly decided to postpone their meeting" and that Barak and Mitchell would meet in Washington Monday to discuss "a range of issues."
An Israeli official told Reuters the U.S. and Israel were seeking to achieve "understandings" on settlement building in occupied land, an issue that has delayed the resumption of stalled Middle East peace talks.
"The goal we have is to try to reach understandings with the (Obama) administration on settlements, and move on," the Israeli official said, speaking on condition of anonymity.
SETTLEMENT FREEZE?
Obama has called for a settlement freeze.
Netanyahu has said he would not build additional enclaves in the territory Israel captured in a 1967 war that Palestinians seek for a state, but wants to build in existing settlements to accommodate what he calls "natural growth."
Netanyahu told reporters "if there is a desire, then it is possible to achieve an understanding" on the issue.
Italy's Prime Minister Silvio Berlusconi pressed the Israeli leader in their two-hour meeting to offer a "signal" he was ready for compromise on the settlement issue, an aide to the Italian leader said.
Reports in the Arab press said an agreement was imminent for the release of soldier Gilad Shalit who captured in a cross-border raid from Gaza in 2006 in exchange for hundreds of Palestinian prisoners held by Israel.
Netanyahu said: "To this moment, I haven't received any such information ... We are making efforts on various levels. We are now examining various possibilities." Continued...
Source: Reuters

U.S. patent office shortfall worsens: official

By Diane Bartz
WASHINGTON (Reuters) - The U.S. Patent and Trademark Office is facing a growing shortfall that has forced it to ask Congress for rule changes to help it weather economic hard times, a Commerce Department official told Reuters on Tuesday.
The patent office, which supports itself by collecting fees to grant and maintain patents, has seen its collections drop from $6.9 million a day in January and February of this year to $6.2 million per day in April and May, said Jay Reich, deputy chief of staff of the Commerce Department.
Last week, collections totaled just $5.9 million a day, Reich told Reuters.
Even before the financial crisis prompted companies to pare their patent portfolios, which reduced the patent office's revenue, the department was criticized for its large and growing backlog, which Reich estimated at 770,000 applications.
The 6,285 patent examiners approve or reject about 450,000 applications each year, according to patent office figures.
The patent office had already cut $120 million from its budget this year and identified another $20 million in potential savings from reductions such as eliminating overtime pay, said Reich.
"Everything we can control, we have tried to reduce," said Reich. "The Draconian move we want to avoid is furloughs."
President Barack Obama said last week he had chosen David Kappos to run the patent office. Kappos is currently IBM's vice president and assistant general counsel for intellectual property.
The patent office is contacting the congressional committees with authorizing and appropriating power over it to solicit ideas for a fix and ask for the right to temporarily tap at least part of a $60 million projected surplus held by the trademark side of the office and to put about $10 million earmarked for special projects into the general operating fund.
The U.S. Patent and Trademark has an annual budget of about $1.9 billion.
But Reich said the agency's surveys of patent attorneys and industries found that the budget woes could worsen.
"They're not very bullish in terms of turning the situation around in the near term," he added.
(Reporting by Diane Bartz; editing by Matthew Lewis)

Source: Reuters