US President Barack Obama was to launch a new WTO enforcement action against Chinese auto subsidies yesterday, countering Republican rival Mitt Romney’s accusations that he is too timid towards Beijing.
Obama will leverage the political power of his office when he makes the announcement in swing state Ohio and argue that Chinese practices in the auto sector put US manufacturers at a disadvantage, a White House official said.
“The Obama administration is launching an enforcement action against China at the World Trade Organization for illegally subsidizing exports in their autos and auto-parts sectors,” a White House official said.
The official added, on condition of anonymity, that China’s actions were “putting US auto parts manufacturers at a competitive disadvantage and that is encouraging the outsourcing of auto parts production to China.”
The announcement will be seen as highly political as Ohio is a critical state in the Nov. 6 election, and the home for large numbers of workers in the auto industry and related auto parts sector.
Obama repeatedly touts his decision to offer the sickly US auto industry a government bailout in 2009 — which Romney opposed — as his campaign seeks to capture a state which is vital to the Republican’s White House hopes.
The announcement represents something of a political trump card, following days of sparring between the two campaigns over the challenge posed by China’s rise as an economic power, and the threat it has posed to the US economy.
An NBC/Marist College poll last week found Romney trailed Obama by 7 points in Ohio, following a blizzard of Democratic advertising touting the bailout and critical of Romney’s lucrative past life as a venture capitalist.
No Republican has lost Ohio and gone on to win the White House.
With less than eight weeks to go to election day, Romney’s performance in state polls, despite the slow economic recovery he blames on Obama, is a grave worry for his campaign.
More than 770,000 people work in the auto industry in the US. More than half of those jobs toil in the auto parts sector, which in turn supports millions of positions in linked industries including the steel and plastics sectors.
Ohio has more than 50,000 workers employed in the auto parts industry, the White House said.
The US case will argue that China is providing impermissible export subsidies to auto and auto parts firms and is violating WTO prohibitions on export contingent subsidies, an official said.
Washington argues that Beijing is also violating its own agreement to wipe out export subsidies when it joined the WTO in 2001.
The Obama administration claims that China’s “illegal subsidies” in the auto sector amounted to at least US$1 billion between 2009 and last year.
Obama is to argue such practices promote the outsourcing of auto and auto parts production to China, and then products are then exported into the US or other nations.
In new developments, China yesterday filed a complaint at the WTO seeking to challenge the new US law on “countervailing duties,” or tariffs intended to combat export-promoting subsidies.
The complaint, filed hours after the US announced plans to launch a wide-ranging trade complaint against China’s support for car exports, potentially affects close to 30 products that have previously been targeted by US duties, a trade official familiar with the case said.