Bloomberg News

U.S. Challenges China Car Subsidies as Obama, Romney Spar

September 17, 2012

The U.S. filed its second car- related complaint against China at the World Trade Organization since President Barack Obama began his re-election campaign, accusing the Asian nation of illegally subsidizing exports of automobiles and auto parts.

The aid amounted to at least $1 billion between 2009 and 2011 and benefited as much as 60 percent of Chinese car-parts exports, according to the U.S. The subsidies put U.S. component manufacturers at a competitive disadvantage, which encourages the outsourcing of car-parts production to China, the U.S. said.

The administration “is committed to protecting the rights of nearly 800,000 American workers in our $350 billion auto and auto-parts manufacturing sector,” Trade Representative Ron Kirk said in an e-mailed statement. “Today we are continuing to make it clear to our trading partners that we will fight to support each job here at home that this sector supports.”

The U.S. announced the complaint as Obama campaigns in Ohio, a key battleground state in the Nov. 6 election, with 54,200 residents employed by the car-parts industry and 12.4 percent of the state’s total employment related to the auto sector. Republican candidate Mitt Romney, who opposed the 2009 government bailout of the auto industry, has stepped up accusations that Obama is timid on China as the campaign enters its final weeks and said today’s complaint is inadequate.

‘Too Late’

“It is too little, too late for American businesses and middle-class families,” Romney said in an e-mailed statement. “I will pursue a comprehensive strategy to confront China’s unfair trade practices and ensure a level playing field where our businesses can compete and win.”

His campaign began airing an ad, “Failing American Workers,” last week that blames Obama for the loss of U.S. manufacturing jobs, notes China has surpassed the U.S. in such employment and criticizes the president for not declaring China a currency manipulator.

Today’s WTO challenge is the 15th lodged by the U.S. against China, which joined the Geneva-based trade arbiter in December 2001, and means the two governments must hold talks for at least two months in a bid to resolve the matter. If the discussions fail, the U.S. can ask WTO judges to rule.

Complaints

Before Obama’s announcement, China challenged U.S. anti- subsidy duties in its eighth WTO complaint against the nation. The challenge comes after the U.S. passed a law in March allowing the Commerce Department to apply duties on $4.7 billion of imports such as tires, steel, aluminum, paper and chemicals to offset government subsidies by nations with non-market economies such as China.

The U.S. also said it will ask WTO judges to rule on the legality of Chinese duties on American auto exports. The request, to be made at the WTO’s next Dispute Settlement Body meeting on Sept. 28, stems from the Obama administration’s July 5 complaint accusing China of imposing unfair levies on $3.3 billion of U.S. vehicle exports, mostly by General Motors Co. (GM:US) and Chrysler Group LLC. That filing came on the same day Obama began a bus tour of Ohio and Pennsylvania.

To contact the reporters on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net; Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net


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