U.S. files WTO complaint against China over auto duties
White House: GM, Chrysler hurt most
U.S. trade officials say duties cover more than 80 percent of U.S. auto exports to China and disproportionately fall on GM and Chrysler.
WASHINGTON -- The United States filed a complaint against China on Thursday with the World Trade Organization for imposing duties on more than $3 billion worth of U.S.-made autos.
The complaint came as President Barack Obama campaigned in Ohio, an important election battleground state where auto plants have been affected by the duties.
The president's re-election campaign has sought to tie his Republican opponent, Mitt Romney, to the outsourcing of American jobs to China, tapping into public worry over high U.S. unemployment that will be a key factor in the Nov. 6 ballot.
"Americans aren't afraid to compete," Obama told an enthusiastic crowd in Maumee, Ohio, near Toledo. "As long as we're competing on a fair playing field instead of an unfair playing field, we're going to do just fine. We're going to make sure that competition is fair."
Obama began a two-day campaign bus tour on Thursday that will end in Pennsylvania, where the threat to manufacturing jobs posed by competition from China also looms large among voter concerns.
"The key principle at stake is that China must play by the rules of the global trading system. When it does not, the Obama administration will take action to ensure that American businesses and workers are competing on a level playing field," a senior administration official said before the complaint was filed.
The trade duties cover more than 80 percent of U.S. auto exports to China, including cars manufactured in Toledo and Marysville, Ohio, and Detroit and Lansing, Mich.
"The duties disproportionately fall on General Motors and Chrysler products precisely because of the actions that President Obama took to support the U.S. auto industry during the financial crisis," the official said.
China, the world's biggest car market, announced plans on Dec. 14 to impose anti-dumping duties as high as 12.9 percent on GM vehicles and 8.8 percent for Chrysler vehicles.
Tough on China
The administration has sought to portray itself as tough on China, while taking care not to push too hard against a rival whose cooperation it needs on a number of important fronts, including against Iran over its nuclear program.
The WTO complaint is meant to reinforce that message and counteract criticism from Romney that Obama has not been strict enough when dealing with China.
The president's campaign has also hit Romney hard over reports that Bain Capital, the private equity firm he led, invested in companies that were early adopters of outsourcing business activities to cheap labor markets like China.
U.S. automakers typically are reluctant to comment on U.S.-China trade conflicts, wary of offending officials who represent the fast-growing Chinese market.
Scott Paul, executive director of the Alliance for American Manufacturing, a group that promotes U.S. manufacturing and products, praised Obama's move.
"American workers and manufacturers strongly support President Obama's decision to launch a trade enforcement action against China's unfair auto tariffs," Paul said.
"The deck in China is stacked against American automakers and workers, and this case will help to level the playing field. Less than 1 percent of the estimated 18 million vehicles sold in China last year were made in America, despite the fact that the Detroit Three brands are growing more popular every day."
Romney's campaign, as expected, took a more skeptical view, casting the president's move as one of political convenience.
"President Obama's election-year conversion on China is just the latest in a long string of disappointments and broken promises," said Lanhee Chen, Romney's campaign policy director.
"The American people are looking for a leader who will stand up to China and demand that they play by the rules, not one who will carefully time his actions to coincide with bus tours through swing states in the last months of his term," Chen said.
The anti-dumping and countervailing duties levied by China on U.S. auto exports cover roughly 92,000 autos and SUVs, worth $3.3 billion in annual U.S. exports.
At the time of the move, China said U.S. taxpayer support of the two automakers amounted to a government subsidy that was illegal under WTO rules, an allegation the Obama administration rejects.
The U.S. government, 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 S.p.A. a year ago.
The Chinese levies also were applied to vehicles produced by the U.S. units of BMW AG and Daimler AG, which pay 2 percent and 2.7 percent respectively.
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.
"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 and possible running mate of Romney's, 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.
The combined duties amounted to 15 percent on Chrysler's Jeep Wrangler produced in Toledo, Ohio and the Jeep Grand Cherokee produced in Detroit, Mich.
They were even an steeper 21.8 percent on GM's Buick Enclave and Cadillac CTS, produced in Lansing, Mich.
Foreign car makers who build autos in the United States were also hit, including Honda's Acura TL, produced in Marysville, Ohio, which was hit with a 4.1 percent duty.
Today'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.
Reuters and Bloomberg News contributed to this reportContact Automotive News