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U.S. launches trade fight with China

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Reposted from the Dayton Daily News


U.S. launches trade fight with China

Steve Bennish | September 18, 2012 | Dayton Daily News

MORAINE — Trade tensions between the United States and China escalated Monday with both nations complaining of unfair policies in what has become a dominant issue in swing state Ohio and the presidential election campaigns.

President Barack Obama announced his administration will file a trade complaint with the World Trade Organization against China over its government subsidies of automobiles and auto parts – a crucial industrial sector in Ohio.

China on Monday filed a WTO complaint challenging U.S. anti-dumping measures that could hit billions of dollars in its exports including appliances, paper, steel, tires, magnets, chemicals, wood flooring and wind towers. Those items are also made in Ohio, some in the Dayton area.

Also Monday, Obama said he’s taking the next formal step in a WTO case launched in July against China’s imposition of duties on more than $3 billion on exports of U.S.-made autos. He said the Chinese duties cover more than 80 percent U.S. auto exports to China and disproportionately fall on General Motors and Chrysler products because of actions he took to support the U.S. auto industry.

Obama on Monday reiterated his efforts to fight unfair trade during a campaign stop in Cincinnati. Republican challenger Mitt Romney said Obama isn’t fighting hard enough to combat unfair trade.

The issue resonates in Ohio because of its impact on the manufacturing-intensive state, which both campaigns view as a must-win in the election.

In more than a decade, the state lost 3,500 factories, a loss that both Ohio senators and others connect to China’s record of currency manipulation, product dumping and trade cheating. The state’s industrial electric demand has plunged nearly 30 percent and the state’s total annual payroll has dropped by $22 billion in the period, analysis by the Dayton Daily News shows.

The auto and auto parts industry employs more than 770,000 in the U.S., with 475,000 of these in auto parts manufacturing. In Ohio, the auto parts industry directly employs 54,200. But the industry supply chain– including steel, aluminum, plastics, and electronics – supports almost 850,000 jobs or 12.4 percent of Ohio employment, the Obama administration said.

The auto and auto parts industry employs 16,612 in the 14-county Dayton area, according to analysis of federal data by the Dayton Development Coalition. Average earnings of $70,546 were reported. Estimates are that auto and auto parts industries account for $6 billion in annual sales here – a high concentration compared to the U.S. overall.

In Cincinnati, Obama stressed U.S. manufacturing and the nation’s trade relationship to China.

“My experience has been waking up every single day and doing everything I can to make sure American workers get a fair shot in the global economy,” he said.

“When other countries don’t play by the rules, we’ve done something about it,” Obama said. “We’ve brought more trade cases against China in one term than previous administrations did in two. And every case we’ve brought that’s been decided, we’ve won.”

Hydraulic brake hose assembly manufacturer Harco Manufacturing Group LLC, of Moraine, has for years pushed elected officials for stronger federal trade enforcement action, General Manager Rick Garver said.

The company employs 150 and in the past few weeks won new contracts from General Motors, but still operates at only 12 percent of capacity. He estimates China’s trade cheating alone is costing upwards of 100 more jobs at the factory. Garver said he supports trade agreements – provided terms are enforced.

“There needs to be bipartisan aggressiveness on this issue – on both sides of the aisle,” he said. “It’s next to impossible for companies in the U.S to compete.”

U.S. Trade Representative Ron Kirk said the U.S. requested dispute settlement consultations with China at the World Trade Organization. He said China gave at least $1 billion in subsidies during 2009-11 to auto and auto parts producers in designated regions, subsidies prohibited under WTO rules because they severely distort trade. The subsidies provide an unfair advantage to auto and auto parts manufacturers in China, he said, which compete with producers located in the United States and other countries.

Consultations are the first step in the WTO dispute settlement process. If the matter is not resolved through consultations within 60 days, the U.S. may request the establishment of a WTO dispute settlement panel.

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

Romney said Obama isn’t fighting hard enough to combat unfair trade as the economy struggles and unemployment stays high. Romney said he will formally declare China a currency manipulator on his first day in office, a move that would allow sanctions to counter China’s undervaluation of its currency by up to 40 percent. The Obama administration has avoided labeling China a manipulator in seven semi-annual Treasury Department reports amid bipartisan criticism.

“President Obama 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,” Romney said. “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. From Day One, 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.”

Ohio senators Rob Portman, a Republican, and Sherrod Brown, a Democrat, each issued statements on the latest flurry of trade action.

“When it comes to aggressively pursuing countries like China who have used unfair subsidies and trade barriers to disadvantage American workers, words are not enough; we must have consistent policies and actions that hold China accountable,” Portman said. “I continue to be disappointed that President Obama has refused to take on China’s manipulation of their currency, which he has failed to do seven times.”

Brown said Monday’s action follows efforts by himself and 188 members of Congress urging the Obama administration to confront China. China’s cheating in auto parts puts 1.6 million jobs at risk, Brown said. Since the U.S. established permanent normal trade relations with China and China joined the WTO in 2001, the U.S. auto parts deficit with China rose from $1.03 billion in 2001 to $9.95 billion in 2011.

“We can’t allow the gains made by American automakers—who depend on Ohio parts suppliers and workers—to be undercut by Chinese cheating,” Brown said.

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