Mexico follows US with WTO case against China

GENEVA, Feb 26 (Reuters) Mexico took the first step today towards a trade dispute with China over industrial subsidies, echoing a move already made by the United States.

In a statement to the World Trade Organisation (WTO), Mexico said it was seeking consultations with China on subsidies granted to a range of industries, which would include steel, computers and clothing.

The US administration, under pressure from Congress to get tough with China over trade, said on February. 2 that it was seeking consultations over industrial subsidies in a bid to ensure that American manufacturers could compete more effectively.

It is likely that the two cases will be combined into one single WTO dispute if after 60 days the consultations yield no agreements, trade sources said.

The next phase would be a dispute panel, which would have some 9 months to rule on whether the Chinese measures are legal.

Complex cases often take far longer.

A number of China's other trading partners, including the European Union, Australia, Japan and Mexico, have asked to take part in the US-brought dispute as third parties, but Mexico is so far the only one to go further and become a complainant.

Nearly one third of the huge US trade deficit, which reached 760 billion dollars in 2006, is with China, and many US lawmakers and manufacturers say Chinese subsidies are a factor.

The subsidies row is the second WTO fight involving China to break out in recent weeks. The United States and the European Union have also taken issue with China's supposed restrictions on imports of auto parts.

REUTERS SAM RK2048