The World Trade Organisation (WTO) has agreed to set up a panel at China's request to rule whether recently imposed US safeguard duties on Chinese tyres are legal.

The tyre case is one of a growing number of disputes between the two nations, ranging from climate change to currency levels, but Washington and Beijing are resolving it within the WTO's rules-based system, Reuters reported.

China insists the 35% additional duty imposed last September by president Barack Obama is unjustified protectionism.

"Since the US decision itself runs short of a factual basis and breached US obligations under the WTO, China once again urges the US to promptly withdraw its measures," China told the WTO's dispute settlement body.

The US administration argues that the tariff is permitted under the terms of China's agreement to join the WTO in 2001, which allows other members to counter a potentially destabilising flood of imports from China with temporary restraints.

US tyre imports from China more than tripled in volume over four years, while U.S. production shrunk more than 25% and 14% of US workers in the industry lost their jobs, the US told the meeting.

"This special safeguard mechanism was a key part of the deal that permitted China to become a WTO member," the US said. "The United States rejects the notion that having recourse to this bargain through the proper application of the safeguard mechanism is unfair, unreasonable or protectionist."

Reuters noted that the WTO decision to set up the panel was a foregone conclusion after the US had blocked the creation of a panel at the last meeting of the dispute body on 21 December. Under WTO rules it was not able to stop it going ahead at the second request.

The time taken to fight the case, and then unwind the safeguard if China wins, means it may be in place for much of its three-year life, during which the duty is set to fall to 30% after one year and to 25% in the third year, the report added.