US warns Chinese over ‘cheating’ auto subsidy
By Rubber & Plastics News
Posted 19 September 2012
The Obama administration has requested dispute settlement consultations with China at the World Trade Organisation (WTO) over China’s subsidies for its auto and auto parts exporters.
In addition, the administration asked WTO to establish a dispute settlement panel to address China’s imposition of anti-dumping and countervailing duties against $3bn (£1.85bn) worth of US-produced cars exported to China.
The Alliance for American Manufacturing (AAM), a coalition of various US manufacturers and the United Steelworkers union, praised the administration’s actions.
“President Obama is delivering a major boost to our nation’s automotive sector workers and businesses today by holding China accountable for its cheating,” said AAM executive director Scott Paul.
Under its “export base” subsidy programme, China provides massive subsidies to auto and auto parts producers in designated regions that meet export performance requirements, according to a statement from the Office of the US Trade Representative (USTR).
Based on public documents, the USTR said China paid at least $1bn (£616m) to auto and auto parts makers in export bases between 2009 and 2011.
US trade representative Ron Kirk credited the Obama administration’s newly-created Interagency Trade Enforcement Center for providing crucial investigative and analytical resources to help uncover the facts about export base subsidies.
Export subsidies, according to Kirk, are strictly forbidden under WTO rules because they severely distort international trade.
“The Obama administration is committed to protecting the rights of nearly 800,000 American workers in our $350bn (£216bn) auto and auto parts manufacturing sector,” Kirk said. “We insist upon having a level playing field on which our world-class manufacturers can compete.”
As for the Chinese duties on US cars, the Obama administration first requested formal dispute settlement consultations with China in June, the USTR said. Those talks failed, so the US is taking the further step of requesting a WTO dispute settlement panel.
“The facts in the case are indisputable,” the AAM’s Paul said. “China is subsidising its auto parts sector, blocking our exports, and causing significant harm to workers and businesses in our nation.”
Later this month, three years’ worth of high tariffs against Chinese passenger and light truck tyres imported to the US are scheduled to end.
The Obama administration imposed the tariffs in September 2009 under Section 421 of the Trade Act, after a petition filed in April 2009.
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