Washington and Beijing have lodged a new round of complaints at the World Trade Organisation (WTO) surrounding subsidies and duties for automobile manufacturers, even as the long-standing policy tiff between the U.S. and China over trade competition appeared to be coloured by election-campaign fervour here.
Recent weeks have witnessed the battle between President Barack Obama and his Republican rival Mitt Romney intensify over the issue of “taking China to the mat,” as candidate Obama promised to do in 2008, Mr. Romney alleged in his weekly podcast. “But since then, he’s let China run all over us,” he added. Yet, on Monday, the White House announced that it would be demanding dispute settlement consultations with the Chinese government at the WTO concerning China’s auto and auto parts “export base” subsidy programme. Under the programme, said U.S. Trade Representative (USTR) Ron Kirk, “China provides extensive subsidies to auto and auto parts producers located in designated regions, known as export bases, [which] meet export performance requirements.”
In a statement Mr. Kirk said, “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... China expressly agreed to eliminate all export subsidies when it joined the WTO in 2001... The export subsidy programme that we are challenging today is implemented through dozens of Chinese legal instruments.”
Noting that publicly available documents suggested that these export bases made at least $1 billion in subsidies available to auto and auto-parts exporters in China during the years 2009 through 2011, the USTR’s office argued that the subsidies were “prohibited under WTO rules because they severely distort trade.”
They also provided an “unfair advantage to auto and auto parts manufacturers located in China, which are in competition with producers located in the U.S. and other countries,” the complaint said.
CHINA FILES COMPLAINT
Meanwhile, China was said to have similarly filed a trade complaint challenging a new U.S. law that permitted “countervailing duties” on subsidised goods from China. According to Beijing’s complaint, the tariffs, which are theoretically intended to offset export-promoting subsidies, would potentially affect nearly 30 products that have previously been targeted by U.S. duties, according to trade officials.
The WTO added that the products hit might include steel, tires, magnets, chemicals, kitchen appliances, wood flooring and wind towers.
“China hopes that the U.S. can correct its mistaken policy and appropriately resolve China’s concerns through WTO dispute resolution mechanisms and consultations,” Commerce Ministry spokesman Shen Danyang was quoted as saying.
Earlier this year, the U.S. House of Representatives passed and President Obama authorised a bill approving the imposition of duties on subsidised goods from China and Vietnam, “a move the White House said was needed to protect.
