The Obama administration on Monday filed a case with the World Trade Organization against China accusing the country of using unfair subsidies to boost exports of motor vehicles and auto parts.
The decision to file a case against China, the administration’s second WTO action in three months, follows fierce criticism from Republican presidential nominee Mitt Romney that Obama has been too soft on its major trade partner. The administration accuses China of giving at least $1 billion in subsidies to auto and auto parts exporters from 2009 through 2011.
Auto part imports have consistently driven volume through major U.S. ports, with inbound containerized shipments up 25 percent year-over-year in July, according to PIERS data. Containerized auto parts exports grew 10 percent in 2011, lagging 2010’s 26 percent year-over-year growth.
“The Obama administration is committed to protecting the rights of nearly 800,000 American workers in our $350 billion auto and auto parts manufacturing sector,” said Ambassador Ron Kirk. “We insist upon having a level playing field on which our world-class manufacturers can compete.”
China has accused the U.S. of unfairly calculating the penalty in anti-subsidy cases in its own WTO case. But the move isn’t likely a reaction to the Obama administration’s trade case, because Chinese trade officials are often slow to react to U.S. trade action challenges, according to The New York Times.
“China expressly agreed to eliminate all export subsidies when it joined the WTO in 2001,” Kirk said. "China benefits from international trade rules and must in turn live up to its international obligations.”
Kirk said the newly created Interagency Trade Enforcement Center was key in spotting “dozens of Chinese legal instruments” used to create the country’s export subsidy program. He also highlighted the administration’s series of WTO enforcement actions, including challenges of Chinese duties on automobiles, steel products and poultry products.
He also pointed to the successful challenge of China’s export restraints on key industrial raw materials in July, and a dispute on export restraints of “rare earths,” key components in the high-tech and clean-energy industries. His comments reflect Obama’s effort to show voters a tough approach to Chinese trade violations, as Romney pledges to be more aggressive in forging free trade pacts and vows to label China a currency manipulator in his first day of office if elected.
The United States in early July filed a trade complaint with the WTO challenging Chinese duties placed on more than $3 billion in U.S.-made vehicles. The Obama administration on Monday said dispute settlement consultations have failed, forcing the U.S. to request a dispute settlement panel.