U.S. Challenges China Trade Subsidies on Cars, Auto Parts

Sept. 17 (Bloomberg) -- 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. Hans Nichols reports on Bloomberg Television's "Market Makers." (Source: Bloomberg)

President Barack Obama told an Ohio audience that a new trade complaint against China shows his commitment to protecting U.S. jobs, and he accused Republican Mitt Romney of profiting from outsourcing to China.

Addressing 4,500 supporters in a crucial swing state where one in eight jobs is tied to the auto industry, Obama said Romney has claimed he’ll “take the fight to China,” even though as a private-equity executive he “made money investing in companies that uprooted from here and went to China.”

“Ohio, you can’t stand up to China when all you’ve done is sent them our jobs,” Obama told the crowd in Cincinnati.

Romney, campaigning in Los Angeles, said Obama was using the trade action to “distract from his record” on the jobs.

The economy returned to the forefront of the presidential campaign as the U.S. today filed a challenge at the World Trade Organization accusing China of illegally subsidizing exports of automobiles and auto parts. It was the administration’s second complaint related to the auto industry since Obama began his re- election campaign.

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.

Photographer: Nelson Ching/Bloomberg

Employees of Zhengzhou Nissan Automobile Co. Ltd. work on the assembly line of the X-Trail sport utility vehicle (SUV). Close

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Photographer: Nelson Ching/Bloomberg

Employees of Zhengzhou Nissan Automobile Co. Ltd. work on the assembly line of the X-Trail sport utility vehicle (SUV).

The U.S. announced the complaint 50 days before the Nov. 6 presidential election and 15 days before early voting starts in Ohio. The state has 54,200 residents employed by the car-parts industry and 12.4 percent of the state’s total employment related to the auto sector.

Romney’s Criticism

It also comes as Romney, who opposed the 2009 government rescue of General Motors Co. (GM) and Chrysler Group LLC, has stepped up attacks on Obama on trade, saying the president has been too timid in confronting Chinese leaders. He said today the WTO complaint is inadequate.

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

“President Obama may think that announcing new trade lawsuits less than two months from Election Day will distract from his record, but the American businesses and workers struggling on an uneven playing field know better,” Romney said in Los Angeles, where he addressed the U.S. Hispanic Chamber of Commerce. “If I’d known all it took to get him to take action was to run an ad citing his inaction on China’s cheating, I would have run one long ago.”

Outsourcing Debate

In Cincinnati and later in Columbus, Obama accused Romney of taking part in the shift of jobs from the U.S. to China when the private-equity firm the former Massachusetts governor headed, Bain Capital LLC, took over companies.

Romney spokesman Ryan Williams said in a statement that Obama is “recycling false and debunked attacks because he can’t tell the people of Ohio about his record of fewer jobs, more debt, and lower incomes.”

An NBC/Wall Street Journal poll released last week showed Obama leading Romney 50 percent to 43 percent among likely voters in Ohio. The survey of 979 people had a margin of error of plus or minus 3.1 percentage points.

No Republican has ever won the White House without carrying Ohio, which has 18 of the 270 Electoral College votes needed to win the White House.

WTO Complaint

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.

Josh Earnest, a White House spokesman, denied the administration tied the timing of the challenge to Obama’s appearance in the swing state.

“These cases are months in the making,” Earnest told reporters on Air Force One. “We’re not going to delay until next year an action” that would protect workers because of the presidential campaign.

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 GM and Chrysler. That filing came on the same day Obama began a bus tour of Ohio and Pennsylvania.

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