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Published: Monday, 9/24/2012 - Updated: 2 years ago

Rivals for presidency talk tough on trade with China

BY TOM TROY
BLADE POLITICS WRITER
President Barack Obama, left, and GOP candidate Mitt Romney. President Barack Obama, left, and GOP candidate Mitt Romney.
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Look out, China, no matter who gets elected: Both Mitt Romney and President Obama are vowing to get tough with you.

That’s the word from the campaign trail.

President Obama, during campaign stops in two Ohio cities last week, boasted of the actions he’s taken to rein in unfair Chinese competition with American tire, car parts, and auto manufacturers.

“When other countries don’t play by the rules, we’ve done something about it” Mr. Obama told crowds in Cincinnati and Columbus. “It’s not right; it’s against the rules; and we will not let it stand.”

Mr. Romney, the Republican presidential nominee, wasn’t in the state last week, but he sounded off on the same subject by way of television ads that portray China as a “cheater” and that say that he would stand up to that nation.

“President Obama has spent 43 months failing to confront China’s unfair trade practices. 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,” Mr. Romney said.

Meanwhile, the trade gap with China continues to widen.

U.S. exports to China were $57.7 billion in the first seven months of 2011 and rose to $61.4 billion during the first seven months of 2012 — an increase of 6.4 percent. In that same period, China imports into the United States were $218.1 billion in 2011 and $235.8 billion in 2012, an increase of 8.1 percent, according to the U.S. Department of Commerce.

For the year so far, China has sold $174 billion more products in the U.S. than the U.S. has sold in China — up from $160.4 billion for the same period in 2011. That’s what’s officially known as the trade deficit.

Right now, the biggest China-related trade going on is the trading of accusations over America’s China economic policy.

Mr. Obama's efforts on China are strongly related to blue-collar concerns.

Responding to demands from industry, unions, and fellow Democrats in Congress, such as Ohio Sen. Sherrod Brown, President Obama has ratcheted up the pressure on Chinese manufacturers in three separate cases:

● In 2009, his administration imposed a tariff on Chinese-made tires to address what it said was a flood of underpriced tires that were hurting the American tire industry. Mr. Obama said that action saved 1,000 jobs.

● In Maumee in July, Mr. Obama announced a case against China for imposing duties on imported American cars sold in China, especially General Motors Co. and Chrysler Group LLC products. The Chinese imposed the higher duties because they said the United States was illegally subsidizing American manufacturers through its $80 billion 2009 auto industry bailout — a charge the Obama Administration has denied.

(While the taxpayers have been repaid about $47 billion of their investment made during the credit crisis, the industry has rebounded and has become the President's signature achievement in Ohio.)

● And on Sept. 17, speaking in Cincinnati and Columbus, President Obama announced his administration was launching a trade enforcement action against China's alleged subsidizing of the car parts industry.

In addition, the administration this year created the Interagency Trade Enforcement Center to help challenge unfair trade practices around the world.

Mr. Romney is promoting what he thinks is a more comprehensive vision of trade policy with China that would label China a “cheater” on currency manipulation and intellectual property theft. And more broadly he is calling for a ramp-up of international trade deals to keep up with China's creation of trade deals.

“Many businesses are investing heavily in China, even recognizing that China is stealing their intellectual property. That is a position they are placed in by the nature of the trading policy. The right answer is to have government policies that actually address the policies so they reward China for playing by the rules,” said Oren Cass, Romney domestic policy director.

Currency manipulation occurs when a government sets the value of its money artificially low compared to the dollar, making that nation’s products cheaper than similar U.S. products.

“Viewing currency manipulation as one example of the broader subsidies and unfair trade practices, what Governor Romney is proposing is to take a different approach to the economic relationship with China and say you either have to play by the rules or face some very serious consequences. So when we talk about designating China a currency manipulator that’s actually a diplomatic action," Mr. Cass said.

“The act of listing them is a very important first step to show that America is turning away from the approach it took under the Obama Administration of trying to placate the Chinese at all costs and instead call the Chinese cheating what it is and respond to it,” Mr. Cass said.

Mr. Obama is particularly interested in the auto industry, where the U.S. government is an investor, "but he hasn’t done anything more broadly about China’s systematic policy of trying to subsidize its manufacturers to give them an advantage over the U.S.,” Mr. Cass told The Blade.

According to the Obama campaign, Mr. Romney is too invested in the Chinese economy to credibly become an adversary on trade.

“Romney wants to talk tough on China because it’s what he thinks will help him in places like Ohio, but really he’s talking out of both sides of his mouth,” said Jessica Kershaw, an Obama for Ohio spokesman.

She said if he were serious about the interests of middle-class Americans, “he wouldn’t continue to support policies like tax breaks for the wealthiest Americans paid for by the middle class, he wouldn’t continue to hold investments in China, and he wouldn’t have been dubbed a pioneer of outsourcing when he was CEO of Bain.” She was referring to a Washington Post story about Mr. Romney's oversight of the investment firm Bain Capital.

FactCheck.org has cast doubt on claims that Mr. Romney was personally an outsourcer. It said in June there was no evidence that Mr. Romney, while he was running Bain Capital, shipped American jobs overseas. The same analysis agreed that Bain “invested in some companies that helped other companies outsource work and that some of that work went overseas.”

The China trade issue is a mere echo of one that practically dominated the early presidential campaign in 2008 — the North American Free Trade Agreement and other international trade agreements.

International trade is a growing share of Ohio's portfolio, as is Ohio trade with China. Ohio exports to China have risen in the last decade from just more than $500 million in 2003 to nearly $3 billion in 2011.

Also on the rise is China's share of Ohio exports, though it's still a one-digit fraction of Ohio's overall export business — about 6 percent in 2011, up from about 2 percent in 2003, according to the Ohio Development Services Agency.

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



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