Commerce Secretary Carlos Gutierrez speaks during an interview with Reuters in New Delhi February 14, 2007. Worries that recent U.S. trade actions against China signal the two countries are on the verge of a trade war are 'way overblown,' Gutierrez said on Friday. [Reuters]

WASHINGTON - Worries that recent US trade actions against China signal an impending trade war between the two countries are "way overblown," US Commerce Secretary Carlos Gutierrez said on Friday.

The United States has filed a pair of cases against China at the World Trade Organization for movie, music and software piracy violations and market access barriers that it says keep legitimate US copyrighted products out.

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Those cases followed a Commerce Department policy change in late March that opened the door for US companies to seek new duties on subsidized imports from China.

Gutierrez said those steps were legitimate ways of handling frictions in the trade relationship.

"The speculation about a trade war -- those comments are way overblown. We have a massive trading relationship with China and you know we'll have some differences and we'll have some issues," he said in an interview.

"But the bulk of the relationship is very strong and continues to flow very smoothly," he said.

Gutierrez spoke a few hours after the Commerce Department released data showing the massive US trade deficit with the rest of the world narrowed unexpectedly in February to $58.4 billion from $59.1 billion in January.

But the gap with China for the first two months of the year was still 25.1 percent wider than in the same period of 2006.

Democrats blame the huge US trade deficit, which hit a record $765.3 billion in 2006, on what they say is lax enforcement of international trade rules and mismanagement of the economy by the Bush administration.

Gutierrez said he was encouraged that exports in the first two months of this year rose 10 percent, while imports grew only 3 percent.

"Our strategy continues to be to grow exports, not to reduce the deficit by limiting imports," Gutierrez said.

He stopped short of predicting the US trade deficit would fall in 2007 for the first time in several years.

"What we're staying focused on is our exports. We're well ahead of our trend line. Last year was a banner year and year-to-date we're growing up against that," he said.

US and EU officials will discuss options for increasing bilateral trade at an annual summit meeting on April 30 in Washington, as well as the importance of bringing world trade talks to a successful close, Gutierrez said.

German Chancellor Angela Merkel, whose country currently holds the presidency of the EU, has been pushing an initiative to expand transatlantic trade by reducing regulatory barriers.

"Clearly, we've been having discussions and that is a priority with the European Union -- to look for ways to make our commercial relationship more efficient and one way to do that is through regulatory efficiencies," Gutierrez said.

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