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Published: Thursday, 7/5/2012 - Updated: 2 years ago

China to face accusation of unfair trade

Complaint to world body affects Toledo-made SUVs

BY TOM TROY
BLADE POLITICS WRITER
In Maumee today, President Obama is expected to discuss the planned complaint to the WTO. In Maumee today, President Obama is expected to discuss the planned complaint to the WTO.
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Demonstrating a tough line on trade with China, the Obama Administration will file an unfair trade complaint today against China's new duties on some American-made cars and sport utility vehicles, including the Toledo-made Jeep Wrangler.

A senior administration official told The Blade Wednesday the United States will file the case with the World Trade Organization in Geneva, accusing China of putting illegal duties on $3.3 billion worth of U.S.-made auto imports.

President Obama is expected to refer to the WTO trade action in his speech today in suburban Toledo as he begins his two-day "Betting On America Bus Tour" through northern Ohio and western Pennsylvania.

The enforcement action aims to force China to rescind the duties it placed disproportionately on General Motors Co. and Chrysler Group LLC imports because of the 2009 taxpayer rescue of the auto industry.

The enforcement action ties in with the President's campaign message that his administration went to bat for workers in the auto industry in early 2009 to save as many as 1 million auto and auto-parts jobs that could have been lost in bankruptcy liquidation of the two companies.

Since Chrysler and GM emerged from bankruptcy in June, 2009, the American auto industry has added 233,700 jobs, the Obama administration said.

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Republican challenger Mitt Romney, a native of Michigan and the former governor of Massachusetts, said the free market, aided by government guarantees for postbankruptcy financing, should have determined the future of GM and Chrysler, an argument he made in a 2008 New York Times essay headlined "Let Detroit Go Bankrupt."

China in December imposed anti-dumping and countervailing duties on certain SUVs, claiming that U.S. taxpayer support of the two automakers amounted to a government subsidy that was illegal under WTO rules. The Obama Administration disputes that claim.

The duties cover more than 80 percent of U.S. auto exports to China, or about 92,000 vehicles. They add 15 percent to the price of an imported Jeep Wrangler or Detroit-made Jeep Grand Cherokee, 21.8 percent to a Buick Enclave and Cadillac CTS produced in Lansing, and 4.1 percent to an Acura TL sedan made by Honda of America Manufacturing Co. at Marysville, Ohio.

The complaint argues that China is abusing its rights under the WTO to impose anti-dumping and countervailing duties.

Under WTO rules, consultations are the first step in a dispute. If parties do not resolve the dispute within 60 days, the complainant may request a WTO dispute settlement panel. United States Trade Representative Ron Kirk said the "unfair duties" represent yet another abuse of trade remedies by China.

"As we have made clear, the Obama Administration will continue to fight to ensure that China does not misuse its trade laws and violate its international trade commitments to block exports of American-made products," Mr. Kirk said. "American auto workers and manufacturers deserve a level playing field, and we are taking every step necessary to stand up for them. This is the third time that the Obama Administration has challenged China's misuse of trade remedies."

The Obama Administration has previously brought allegations of illegal duties against China on behalf of U.S. steel and chicken products.

It has brought trade actions against imports of Chinese passenger-vehicle and light-truck tires. And the United States has brought actions against China's export restraints on rare earth minerals used in manufacturing, restrictions on electronic payment services, and subsidies to China's wind power equipment sector.

In May, the administration moved to place a 31 percent tariff on solar panels made in China, saying Chinese producers had dumped solar cells and panels in the United States for less than it cost to manufacture and ship them. The Toledo area is a center for research into, and manufacturing of, solar panels.

The administration says it is trying to make sure China complies with the rules it agreed to when it joined the World Trade Organization in 2001. Those commitments include maintaining open markets on a nondiscriminatory basis, and following internationally agreed procedures in a transparent way.

China announced its duties on U.S.-made SUVs after President Obama decided in September, 2009, to impose a "safeguard" against imported Chinese tires.

In May, 2011, China's Ministry of Commerce determined that American-made automobiles had been sold at less than fair value, or "dumped," into the Chinese market and that they were subsidized by the government. China began imposing the anti-dumping and countervailing duties on imports of American-produced automobiles and SUVs with an engine capacity of 2.5 liters or larger in December.

China also named Mercedes-Benz U.S. International Inc. and BMW's factory in Spartanburg, S.C., as affected by its new duties.

The United States contends that China imposed the duties without sufficient evidence of wrongdoing and made unsupported findings of injury to China's domestic industry.

The President says his administration has filed trade enforcement complaints against China at about twice the rate of his predecessor, Republican George W. Bush.

The fact-checking organization PolitiFact agreed that the Obama Administration had brought six cases against China before the WTO in less than one term -- seven cases -- while the Bush administration brought seven cases over two full terms.

PolitiFact rated the claim "half-true" because it found that the first two years of the Bush administration were a honeymoon for China, which was newly admitted to the WTO; that trade complaints are more likely to be brought during tough economic times, and that the Obama Administration's first complaint was in the pipeline when he took office.

The Obama and Romney campaigns have traded China-related attacks in their recent TV ads.

The Obama campaign charged that "Romney's never stood up to China. All he's ever done is send them our jobs," building on allegations that Mr. Romney's former business, Bain Capital, invested in companies that outsourced jobs.

The Romney campaign claims that the President has failed to keep up with Europe and China in reaching trade agreements with other countries. Mr. Romney also contends that the President has allowed China to build up its own economy by "misappropriating western technology, blocking access to its market, and manipulating its currency."

Ohio U.S. Sens. Sherrod Brown, a Democrat, and Rob Portman, a Republican, in December jointly wrote a letter urging the administration to oppose the new Chinese duties. They said the tariffs unfairly impose burdens on Ohio-made vehicles. The letter noted that more than $2.2 billion of Ohio goods were exported to China in 2010.

The President is to arrive at Toledo Express Airport and travel by bus to the Wolcott House Museum complex on River Road in Maumee for an 11:15 a.m. program.

That will be the first stop on a trip that will also take him to Sandusky at 3:40 p.m. and to suburban Cleveland in the evening. The bus trip resumes Friday with a morning stop in Poland, Ohio, near Youngstown, and ends at Carnegie Mellon University in Pittsburgh.

The Obama campaign said it has distributed all the tickets it had available for the Maumee event.

Contact Tom Troy at tomtroy@theblade.com or 419-724-6058.



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