While the top leaders of both countries have pledged to expand economic cooperation, the bureaucratic tussling has become frequent and intense. The Obama administration has steadily amped up its enforcement actions against China at the WTO, adding a new China unit in the Office of the U.S. Trade Representative and pulling in expertise from the State Department and other agencies to bolster its Mandarin language and other research capabilities.
The United State has typically fared well at the Geneva-based body, winning most of the cases it has brought against China. But the process can drag on, and the benefits to industry are sometimes disappointing. In some cases, dispute panels have produced settlements that allowed better market access. In others, the lag between the start of a particular Chinese policy and a WTO ruling against it has given China time to protect and build its national champions.
The auto industry has been at the center of trade troubles between the two nations before. The United States won an earlier case against import tariffs that China had imposed on American-made auto parts. But auto industry officials say the victory did little to stop the dispersion of auto parts manufacturing around the world. In July the administration challenged Chinese import duties on American-made cars; China was alleging that the government bailout of General Motors amounted to unfair underwriting of auto production.
That case also had political resonance even though its impact on American workers is expected to be minimal. The U.S. exports only 120,000 or so vehicles a year to China, and they are typically luxury models such as South Carolina-made BMWs, for which price is less of an issue for buyers.
A recent Commerce Department study said that with the auto industry still restructuring globally and with strong competition from Japan, Korea and elsewhere — as well as China — perhaps 10 percent of the country”s 5,000 auto parts makers “will fail in the next few years.”
The auto industry overall accounts for about 675,000 U.S. jobs. While it is unclear how much the elimination of the alleged Chinese subsidies might aid U.S. companies, a senior administration official said the aim is to continue mounting such challenges “as we’re able to peel away the intricacies” of China’s economic system. The policies targeted Monday include alleged tax breaks and preferential loan terms offered at a provincial level for firms located at “export bases.”
The United States runs a large and steady trade deficit with China — typically from $25 billion to $30 billion monthly. While the Obama administration has focused on the country’s potential as a large and growing market for U.S. exports, there has been concern that China’s membership in the WTO — which helped open U.S. markets to its goods — siphoned off middle-income manufacturing jobs as companies relocated to China to take advantage of the lower wages. China has tried to push its manufacturing expertise into increasingly sophisticated areas, seeking to challenge nations such as the United States, Japan, Korea and Germany as a manufacturer of high-tech equipment and industrial goods.
The timing of Monday’s action meshed with a campaign swing through Ohio, where Obama has heavily promoted the auto industry bailout he inherited from President George W. Bush and then ramped up in 2009. The industry directly employs 54,200 in Ohio, where unemployment lags the national average.
Major unions lauded the latest trade action.
“This isn’t just some political moment; this is part of a pattern of action,” said United Auto Workers President Bob King. The United Steel Workers union also released a statement praising the latest trade enforcement effort.
Gardner reported from Ohio.