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Obama wants action on Chinese auto parts subsidies

September 18, 2012

WASHINGTON (Sept. 18, 8:30 a.m. ET) — The Obama administration has requested dispute settlement consultations with China at the World Trade Organization over China’s subsidies for its auto and auto parts exporters.

In addition, the administration asked WTO to establish a dispute settlement panel to address China’s imposition of antidumping and countervailing duties against $3 billion worth of U.S.-produced autos exported to China.

The Alliance for American Manufacturing, a coalition of various U.S. manufacturers and the United Steelworkers union, praised the administration’s actions.

“President Obama is delivering a major boost to our nation’s automotive sector workers and businesses today by holding China accountable for its cheating,” said AAM Executive Director Scott Paul.

Under its “export base” subsidy program, China provides massive subsidies to auto and auto parts producers in designated regions that meet export performance requirements, according to a press release from the Office of the U.S. Trade Representative.

Based on public documents, USTR said, China paid at least $1 billion to auto and auto parts makers in export bases between 2009 and 2011.

Ron Kirk, U.S. trade representative, credited the Obama administration’s newly created Interagency Trade Enforcement Center for providing crucial investigative and analytical resources to help uncover the facts about export base subsidies.

Export subsidies, according to Kirk, are strictly forbidden under WTO rules because they severely distort international trade.

“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,” Kirk said. “We insist upon having a level playing field on which our world-class manufacturers can compete.”

As for the Chinese duties on U.S. cars, the Obama administration first requested formal dispute settlement consultations with China in June, USTR said. Those talks failed, so the U.S. is taking the further step of requesting a WTO dispute settlement panel.

“The facts in the case are indisputable,” the AAM’s Paul said. “China is subsidizing its auto parts sector, blocking our exports, and causing significant harm to workers and businesses in our nation.”

Later this month, three years’ worth of high tariffs against Chinese passenger and light truck tires imported to the U.S. are scheduled to end. The Obama administration imposed the tariffs in September 2009 under Section 421 of the Trade Act, after a petition filed in April 2009 by the USW.