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Obama Charges China over Auto Parts Outsourcing

September 21, 2012

President Barack Obama has announced the U.S. has filed a complaint with the World Trade Organization against Chinese manufacturing companies that are unfairly subsidizing exports of automobile parts and automobiles, threatening the jobs of 800,000 American workers.

The Industrial Union Council of the AFL-CIO, the Alliance for American Manufacturing and the United Steelworkers had documented the potential damage to 800,000 workers in auto parts manufacturing if China maintains an advantage by violating trade laws.

The AAM says more than 400,000 jobs in the U.S. auto supply chain have been lost since 2000, mostly because of China’s “persistent violations of World Trade Organization rules.”

In March, 188 members of Congress sent a letter to the administration’s trade enforcement task force—announced by President Obama at his State of the Union message—asking for action on Chinese-built automobiles and parts.

AFL-CIO President Richard Trumka said the WTO action, commenced on Sept. 17, is:

Good news, not just for workers who rely on the auto industry, but for the entire American economy … President Obama understands that allowing America’s manufacturing sector to grow and thrive is essential to a healthy and sustainable economy, and that is why this administration has brought twice the number of trade cases against China as the previous administration.

The AAM said that $62 billion worth of Chinese auto parts have reached the U.S., contributing to an expansion of the trade deficit between the U.S. and China by more than 850 percent.

A release from the Office of the United States Trade Representative says that the U.S. requested China to engage in formal dispute settlement consultations over automotive exports in June, but the talks did not succeed. The WTO dispute settlement process is the next step. Trade Representative Ron Kirk says:

China expressly agreed to eliminate all export subsidies when it joined WTO in 2001. China benefits from international trade rules and must in turn live up to its international obligation.

The trade case is the eighth the administration has lodged against China, and the third this year.

In 2010, the U.S. won a trade complaint against Chinese tires imported to the U.S., protecting the jobs of members of the United Steelworkers. The same year, the U.S. challenged China’s subsidies in its wind power manufacturing sector. China backed down.

Between 2009 and 2011, the U.S. has challenged duties that China has imposed on U.S.-manufactured automobiles, steel and poultry products.

Earlier this year, the U.S. accused China of unfair trade in rare earth substances used in batteries and other high-tech and energy products.

Another investigation is taking place concerning unfair competition by China-based manufacturers in solar panel production. Members of Memphis, Tenn., Local 474 produce solar panels at Sharp.

Says International President Edwin D. Hill:

President Obama and his administration have demonstrated that to rebuild our nation’s manufacturing base, our leaders need to effectively deploy a wide array of tools, from tax policy favoring companies that return outsourced production to our shores, to strongly challenging other nations, like China, that refuse to play by the rules of global trade.

 

Photo used under a Creative Commons license from Flickr user Anthony Arrigo

Photo used under a Creative Commons license from Flickr user cliff1066