U.S. to File Trade Complaint against China

Complaint charges China with illegally subsidizing auto and auto-part exports.

The Obama administration will announce a trade complaint against China today as President Barack Obama campaigns in Ohio, alleging impermissible subsidies of auto and auto-parts exports that encourage outsourcing to China from the U.S., an administration official said.

Obama and Republican Mitt Romney have been trading accusations over China in the closing weeks of the presidential campaign. Obama is expected to defend his record on U.S. jobs and China policy during stops in Cincinnati and Columbus today.

This latest case to go before the World Trade Organization in Geneva is being announced as Obama returns to a battleground state with 54,200 residents employed by the auto-parts industry and 12.4 percent of the state’s total employment related to the auto industry.

The U.S. is accusing China of $1 billion in illegal subsidies between 2009-11 that benefit as much as 60 percent of Chinese auto-part exports, according to the official, who asked to speak on condition of anonymity in advance of the public announcement.

The Romney campaign last week began airing an ad, “Failing American Workers,” that blames Obama for the U.S. loss of manufacturing jobs, notes China surpassing the U.S. in manufacturing jobs and criticizes Obama for not declaring China a currency manipulator.

Obama’s campaign responded with an ad saying Bain Capital LLC, the private equity firm Romney co-founded, invested in companies that specialize in sending jobs to other countries, including China, and that Romney has invested in China. “Romney’s never stood up to China,” the ad’s narrator says. “All he’s done is send them our jobs.”

“The China trade issue is likely to get more limelight as the election heats up,” Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd., said in a telephone interview today. “Both camps need to raise the protectionism tone to cater to voter sentiment as unemployment is still stuck above 8 percent.”

Such rhetoric will likely be toned down following the polls, as the competitiveness of the U.S. auto industry will suffer should they impose sanctions on imports of relatively cheap Chinese parts, said Liu, who previously worked at the World Bank.

In July, the Obama administration filed a WTO complaint accusing China of imposing unfair duties on $3.3 billion in U.S. auto exports. That filing came on the same day the president began a bus tour of Ohio and Pennsylvania.


Auto Bailout

Obama also has said on the campaign trail that his taxpayer rescue of the auto industry in 2009 helped save jobs in states including Ohio, while Romney opposed the U.S. taxpayer bailout.

In Columbus, Obama will also attend a fundraiser with 25 guests paying $10,000 per ticket, according to a campaign official who requested anonymity because she was not authorized to make a public statement. Proceeds go to the Obama Victory Fund, a joint committee for the Obama campaign, Democratic National Committee and several state Democratic parties.

Ohio, with 18 electoral votes, has voted for the winner in every presidential election since 1964. Obama is leading Republican Mitt Romney by 4.2 percentage points, 48.5 percent to 44.3 percent, in an average of four polls conducted Sept. 7-12 and compiled by the website Real Clear Politics.

The state’s unemployment rate was 7.2 percent in July, lower than the national rate of 8.1 percent in August and down from a state high of 10.6 percent in January 2010, according to the U.S. Bureau of Labor Statistics.

Ohio ranked sixth among the 50 states in its rate of improving economic health, according to the Bloomberg Economic Evaluation of States from the first quarter of 2011 through the first quarter of this year.


Bloomberg News


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