Obama steps up trade fight with China over autos

Updated: 2012-09-18 11:14

By Zhang Yuwei in New York (China Daily)

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US President Barack Obama filed a complaint over Chinese automotive and auto-parts subsidies with the World Trade Organization on Monday, a move seen as a final push before the November elections.

"These are subsidies that directly harm working men and women on the assembly lines in Ohio and Michigan and across the Midwest," Obama told supporters while campaigning in Ohio.

"We are going to stop it. It is not right, it is against the rules and we will not let it stand," he said.

It was the second time Obama disclosed an anti-China trade action in Ohio, which is a pivotal "swing" state for electoral votes and among the top manufacturers of vehicles and auto parts in the United States. The industries directly or indirectly employ 850,000 people in the state, according to the White House.

On an early-July bus tour in Ohio, the president announced plans to ask a WTO panel to hear a separate case in which the US accused China of imposing unfair duties on more than $3 billion in exported US-made vehicles.

Zhiqun Zhu, a professor of political science and international relations at Bucknell University in Pennsylvania, said the announcement's timing was intentional. He called the move "one of Obama's final pushes to maintain his lead over [Republican nominee Mitt] Romney" in the remaining weeks of the campaign.

"Ohio, together with Michigan and Wisconsin, is one of the key battlegrounds in this election since one out of eight jobs there is tied to auto manufacturing. So this explains the timing and location of Obama's announcement," Zhu said.

"The Obama announcement is well calculated. In other words, it's more about the US elections and jobs than about China," he added.

The announcement was met with the kind of criticism from Romney that he has been leveling at Obama over his administration's handling of China in trade and currency matters.

"President Obama's credibility on this issue has long since vanished," the Republican said in a statement. Obama, according to Romney, "has spent 43 months failing to confront China's unfair trade practices. Campaign-season trade cases may sound good on the stump, but it is too little, too late for American businesses and middle-class families."

William Perry, a partner with law firm Dorsey & Whitney LLP and head of its international trade practice, said the president's announcement had been expected.

"The timing may have been pushed a little by the election, but really that is not the reason. The auto-parts problem has been around since the report issued by (Washington-based law firm) Stewart and Stewart in January of 2012," Perry told China Daily.

The latest round of campaign-trail battles over China came last week when both Romney and Obama issued ads related to the world's No 2 economy.

The Republican blamed the Democratic incumbent for "failing American workers" and being weak on China on trade. Obama countered by accusing Romney, the founder of a private-equity firm, of outsourcing jobs to China as a business executive.

"I will not wait until the last months of my presidency to stand up to China, or do so only when votes are at stake," Romney said in his statement Monday.

Also Monday, China filed a case against the US to the WTO's Dispute Settlement Body on an amendment to the Tariff Act of 1930 that Obama signed in March. Beijing claims the revised law is inconsistent with WTO rules on transparency and procedural justice, and requested consultations with Washington.

In July, the world's two biggest economies had a formal consultation but couldn't reach a conclusion, according to China's Ministry of Commerce.

Zhu said proceedings after the filing of a WTO case can drag on for as long as two years.

"Obviously both sides prefer to settle the disputes through the WTO now," the scholar said. "This may not be bad for China, since it can file complaints about America's protectionism such as restricting investments from China in certain sectors of the US economy."

This year, the US also ordered anti-dumping and countervailing duties against Chinese-made solar panels and wind turbine towers, adding to tensions between the two economic powers.

In July, the US Commerce Department announced plans to charge duties of up to 73 percent on wind-turbine towers imported from China. In May, it set preliminary anti-dumping duties of 31 percent to 250 percent on Chinese solar-panel makers to protect US producers and countervailing duties of 14 percent to 26 percent on Chinese-made towers.

"The solar-cells case is going to have a very negative impact on trade relations between the US and China," said Perry.

He pointed out that a hearing in that case is set for Oct 3 before the US International Trade Commission. "The chances are very high that the ITC will reach an affirmative injury determination and orders will be issued" for imposing the duties," Perry added.

Also Monday, the US Trade Representative's Office said it had brought the case to the Geneva-based WTO, arguing that the Chinese government's "illegal subsidies" on automobile and auto-parts exports put US companies at a disadvantage.

The actions stem from an initiative called the Interagency Trade Enforcement Center, which Obama set up in February to target unfair practices of countries around the world.

Perry said he believes pressure in Congress from Republicans and Obama's own Democratic Party is forcing the president to get tough on China.

"Obama therefore created a new trade-enforcement office in the USTR," the lawyer said. "This is the first big project that (that office) is taking to the WTO."