US President Barack Obama warned China on Tuesday that it would not be allowed to gain a competitive advantage in world trade by “skirting the rules.”
Making an election-year pitch to US workers and businesses, Obama announced that Washington had brought a new trade case against Beijing. The goal is to pressure China, a rising Asian economic power, to end its restrictions on exports of key materials used to manufacture hybrid car batteries, flat-screen televisions and other high tech-goods.
“If China would simply let the market work on its own, we’d have no objection,” Obama said during remarks at the White House. “But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow.”
The US, working in conjunction with the EU and Japan, on Tuesday asked the WTO to facilitate talks with China over its curtailment of exports of rare earth minerals. Obama cast the fresh action against China as part of a broader push to level the playing field for US companies.
“When it is necessary, I will take action if our workers and our businesses are being subjected to unfair practices,” Obama said.
With the US economy slowly recovering from recession, Obama has sought to bring a renewed focus on Chinese policies that could hinder US expansion. He used an executive order last month to create a new trade enforcement agency — the Interagency Trade Enforcement Center — to move aggressively against China and other nations.
However, Obama’s posture on China has already surfaced as an election-year issue, with Republican front-runner Mitt Romney criticizing him for refusing so far to cite China for manipulating its currency. Romney has said he would label China a currency manipulator on his first day in office, a move that could lead to trade sanctions against Beijing.
China has a stranglehold on the global supply of 17 rare earth minerals that are essential for making high-tech goods, including hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapor lights, smartphones and camera lenses. The materials also are used in the manufacture of tiny motors, such as those used to raise and lower car windows and in consumer electronics.
China has reduced its export quotas of these rare earth minerals over the past several years to cope with a growing demand during rapid business expansion at home, although Chinese officials also cite environmental concerns as the reason for the restrictions.
US industry officials suggest it is an unfair trade practice that violates rules established by the WTO, a group that includes China as a member.
Administration officials said Beijing’s export restrictions give Chinese companies a competitive advantage by providing them access to more of these rare materials at a cheaper price, while forcing US companies to manage with a smaller, more costly supply.
“America’s workers and manufacturers are being hurt in both established and budding industrial sectors by these policies,” US Trade Representative Ron Kirk said in a statement.
“China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace,” Kirk said.
Chinese foreign ministry spokesman Liu Weimin (劉為民) defended Beijing’s curbs on rare earth production as necessary to limit environmental damage and conserve scarce resources.
“We think the policy is in line with WTO rules,” Liu told a briefing on Tuesday.
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