Tags: us | wto | chinese | automobiles

US Files WTO Complaint Over Chinese Duties on Automobiles

Friday, 06 Jul 2012 09:34 AM

The U.S. filed a complaint against China for duties on more than $3 billion in American vehicle exports, mostly from General Motors Co. and Chrysler Group LLC, adding to tensions between the world’s two largest economies.

The Chinese duties cover more than 80 percent of U.S. auto shipments, including Jeep’s Wrangler and Grand Cherokee, both made by Chrysler, and GM’s Buick Enclave and Cadillac CTS, according to a White House fact sheet distributed Thursday.

“Americans aren’t afraid to compete; we believe in competition,” President Barack Obama said in Maumee, Ohio, near a Jeep factory at the start of a two-day campaign bus tour. “As long as we’re competing on a fair playing field, instead of an unfair playing field, we’ll do just fine.”

The U.S. complaint adds to an expanding list of trade grievances between the nations. Disputes over issues such as rare-earth minerals, solar panels and wind turbines by China and the U.S. in recent months have led some analysts to speculate the nations are headed for a trade war.

China, the world’s biggest car market, said on Dec. 14 it planned to impose anti-dumping duties as high as 12.9 percent on GM autos and 8.8 percent for Chrysler vehicles. China said U.S. taxpayer support of the two carmakers amounted to a government subsidy that was illegal under WTO rules, an allegation the Obama administration rejects.

U.S. Stakes

The U.S., which provided aid to the companies in 2008 in return for stock, holds a 32 percent stake in GM. It sold its Chrysler holdings to Italy’s Fiat Spa a year ago.

The Chinese levies, which cover about 92,000 vehicles, also were applied to vehicles produced by the U.S. units of Bayerische Motoren Werke AG and Daimler AG, which pay 2 percent and 2.7 percent respectively.

Kevin Frazier, a spokesman for Chrysler, declined to comment on the complaint. A GM spokesman didn’t immediately return calls seeking comment.

Obama is traveling by bus through northern Ohio and western Pennsylvania, areas heavily hit by declining U.S. manufacturing. He began in a suburb of Toledo, Ohio, home to a plant that makes the Jeep Wrangler.

Thursday’s complaint at the Geneva-based WTO is meant to remind voters of Obama’s steps after taking office in 2009 to rescue of GM and Chrysler and counteract criticism from presumptive Republican presidential candidate Mitt Romney that Obama has been too soft on China.

Stacked Deck

“The deck in China is stacked against American automakers and workers, and this case will help to level the playing field,” Scott Paul, executive director of the Washington-based Alliance for American Manufacturing, said in a statement. Of 18 million vehicles sold in China, less than 1 percent were made in the U.S. “despite the fact that the Detroit Three brands are growing more popular every day,” Paul said.

China is Ohio’s third-largest export market, with shipments to the Asian nation valued at $2.7 billion. Ohio’s exports to China have climbed more than eightfold since 2000 while exports from the state to the rest of the world only grew 68 percent.

When China imposed the duties, its car sales were rising at the slowest pace in 13 years, putting pressure on domestic producers to consolidate as GM and other foreign carmakers posted gains.

Undercut Progress

“The auto industry is helping turn our economy around by reviving manufacturing facilities across the nation,” Senator Sherrod Brown, an Ohio Democrat, said in a statement today. “We’re at risk of this progress being undercut if we allow China to continue to cheat and break trade laws.”

Senator Rob Portman, an Ohio Republican, joined Brown in December asking Kirk to investigate China’s duties on autos. Kirk was asked to use “all available tools” to insist China competes fairly, Portman and Brown wrote in a Dec. 19 letter.

On May 17, the Commerce Department announced tariffs of 31 to 250 percent on imports of Chinese solar cells. On May 30 the agency proposed duties as high as 26 percent on imports of wind- towers from China, and the U.S. International Trade Commission determined that imports of high-pressure steel cylinders from China harm American producers.

On June 17, the WTO determined that China unfairly imposed anti-dumping and anti-subsidy duties on more than $200 million worth of U.S. steel products. The U.S. has also complained over access for products including poultry, tires, and music.

Obama and Romney, a former Massachusetts governor, have positioned themselves to take a tough stance on China this election year.

“We’ve brought trade cases against China at nearly twice the rate of the previous administration,” Obama said at a May 30 event, referring to Republican George W. Bush.

Romney has said that on his first day in office, he will issue an executive order labeling China a currency manipulator.

Thursday’s request for consultations is the first step in WTO dispute proceedings and means the governments must now hold talks for at least two months in a bid to resolve the dispute. If the talks fail, the U.S. can ask WTO judges to rule.

© Copyright 2017 Bloomberg News. All rights reserved.

   
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