The World Trade Organization rejected China’s appeal of a ruling that backed U.S. duties on Chinese tire imports, saying the Obama administration hadn’t violated global trade rules in imposing the three-year levies.

WTO judges found last December that the tariffs on $1.8 billion of car and light-truck tires from China were legal. President Barack Obama imposed the duties of as much as 35 percent in September 2009 under a so-called safeguard provision designed to protect U.S. producers from a surge in imports.

The Chinese government said the tariffs broke WTO rules and were a “serious case of trade protectionism.” China lodged its complaint at the Geneva-based WTO against the levies just three days after Obama announced them.

Appellate judges upheld the initial panel’s finding that the U.S. “did not fail properly to establish that rapidly increasing imports from China were a significant cause of material injury to the domestic industry,” according to their decision, posted Monday on the trade arbiter’s website.

U.S. Trade Representative Ron Kirk called the appellate ruling a “tremendous victory” for the U.S. “as well as for American workers and manufacturers. The Obama administration will continue to fight for U.S. jobs and businesses,” he said in a statement from Washington.

The ruling may sour relations that are strained by disagreements over Chinese controls on exports of raw materials and rare earths, exchange rates and U.S. antidumping measures on Chinese diamond sawblades and shrimp even as the two governments cooperate on the global economic crisis and North Korea.

“The safeguard measure does not help reducing U.S. tire imports, but injures China’s legitimate trading interests,” the Chinese mission to the WTO said in a statement. “The U.S. measure only serves to chill its trading partners and distort international trade.”

Chinese tire exports fell almost 24 percent last year from 2009 and 6 percent in the first half of 2011 while overall U.S. tire imports increased 20 percent last year and 9 percent in the first half, according to the statement.

China’s trade surplus surged to $31.5 billion in July, the most since January 2009, as exports climbed to a record, the country’s customs bureau said on Aug. 10. The surplus, a cause of friction with trading partners including the U.S., is boosting China’s record $3.2 trillion foreign-exchange reserves and pushing more cash into the nation’s financial system.

The appellate judges’ decision bolsters Obama’s effort to show he’s tough on enforcement. By going after China ― the U.S.’s second-biggest trading partner with $457 billion in annual two-way trade last year ― the president sought to signal to unions and trade skeptics in Congress that he won’t be lax in preventing breaches of a free-trade agreement with South Korea, the administration’s first such Asian deal.

Congress and the government have been in a stalemate over passing the South Korea accord because Obama wants a guarantee Republicans also will approve an extension of U.S. aid to workers who lose their jobs to global competition.

The complaints filed to Obama by the United Steelworkers union, which represents 15,000 employees at 13 tire plants in the U.S., were the largest safeguard petition to protect U.S. producers from growing imports from China. The union said Chinese tire exports to the U.S. tripled from 2001 to 2004 to 41 million tires and called for an annual import cap of 21 million. 

(Bloomberg)