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Economy Jul 5, 2012

US to file WTO complaint against China for automobile duties

Washington: The United States will file a complaint against China on Thursday with the World Trade Organization for imposing duties on more than $3 billion worth of US-made autos, a senior US official said.

The complaint comes as President Barack Obama campaigns in Ohio, an important election battleground state where auto plants have been affected by the duties.

The president's re-election campaign has sought to tie his Republican opponent, Mitt Romney, to the outsourcing of American jobs to China, tapping into public worry over high US unemployment that will be a key factor in the 6 November ballot.

Obama will discuss the trade action during his visit to Ohio, where he begins a tw0-day campaign bus tour that will end in Pennsylvania, where the threat to manufacturing jobs posed by competition from China also looms large among voter concerns.

Dust-covered Buick cars, made by US carmaker General Motors, are seen lined up on the Binhai docks area in the Chinese coastal city of Tianjin.Reuters

"The key principle at stake is that China must play by the rules of the global trading system. When it does not, the Obama administration will take action to ensure that American businesses and workers are competing on a level playing field," a senior administration official said in an e-mail.

The administration has sought to portray itself as tough on China, while taking care not to push too hard against a rival whose cooperation it needs on a number of important fronts, including against Iran over its nuclear program.

The trade duties cover more than 80 percent of US auto exports to China, including cars manufactured in Toledo and Marysville, Ohio, and Detroit and Lansing, Michigan.

"The duties disproportionately fall on General Motors and Chrysler products precisely because of the actions that President Obama took to support the US auto industry during the financial crisis," the official said.

The WTO complaint is meant to reinforce that message and counteract criticism from Romney that Obama has not been strict enough when dealing with China.

The president's campaign has also hit Romney hard over reports that Bain Capital, the private equity firm he led, invested in companies that were early adopters of outsourcing business activities to cheap labor markets like China.

Beijing slapped anti-dumping and countervailing duties on US auto exports in December 2011 on roughly 92,000 autos and SUVs, worth $3.3 billion in annual US exports.

The combined duties amounted to 15 percent on Chrysler's Jeep Wrangler produced in Toledo, Ohio and the Jeep Grand Cherokee produced in Detroit, Michigan.

They were even an steeper 21.8 percent on GM's Buick Enclave and Cadillac CTS, produced in Lansing, Michigan. Foreign car makers who build autos in the United States were also hit, including Honda's Acura TL, produced in Marysville, Ohio, which was hit with a 4.1 percent duty.

Reuters

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