U.S. wins WTO dispute with China over auto imports

U.S. Rep. Sandy Levin, left, and Sen. Debbie Stabenow celebrate the U.S. trade victory today as Trade Representative Ambassador Michael Froman looks on. Photo credit: Reuters

UPDATED: 5/23/14 2:12 pm ET -- new story, photo

WASHINGTON -- In a victory for automakers exporting vehicles from the United States to China, the World Trade Organization ruled that Chinese duties on U.S.-made cars and trucks violated international trade rules.

China imposed duties from 2 to 21.5 percent on U.S.-made vehicles in December 2011 to counter alleged government subsidies of U.S. automakers and “dumping” -- or selling vehicles for less than their fair value.

Anti-dumping duties of 2 to 8 percent were applied to General Motors, Chrysler, Mercedes-Benz, BMW and Honda exports from the United States to China.

Arguing that the government-sponsored bankruptcies of GM and Chrysler amounted to subsidies, additional duties of 12.9 percent were applied to GM and 6.2 percent to Chrysler vehicles, mostly Jeeps. The duties applied to U.S.-made cars and SUVs with engine displacements of 2.5 liters or higher.

The Obama administration filed a complaint against China with the WTO in Geneva in July 2012.

“We saw no basis for China’s action, so we made our case with the WTO that these duties were completely unjustified,” U.S. Trade Representative Ambassador Michael Froman said at a press conference today. “This is a significant victory.”

Automakers exported $8.5 billion worth of U.S.-made cars and SUVs to China last year, making it the second-largest market for American exports behind Canada. The duties affected some $5 billion worth of exports to China last year before they were eliminated by the Chinese government in December.

“We commend both countries for utilizing the WTO’s process to resolve a trade dispute,” a GM spokeswoman said in a statement.

The elimination of the duties came after a WTO panel had conducted hearings on the dispute but before issuing a final decision on the case today. Froman called China’s elimination of the duties “a direct result of the prosecution of this case.”

The decision marks the third time the U.S. government has prevailed in trade disputes with China brought before the WTO.

Another complaint filed in 2012 charges China unfairly subsidizes its automakers and parts manufacturers. That case is ongoing and unaffected by the WTO’s ruling today.

At the press conference, lawmakers from Michigan hailed the WTO ruling as a victory for American industry and workers and praised the Obama administration for going head-to-head with China on trade issues.

Sen. Debbie Stabenow, D-Mich., said the duties were part of a pattern of “illegal and improper activities” conducted by the Chinese.

“China has had 14 years to start playing by the rules, but instead we see illegal and improper activities over and over again,” Stabenow said. “As long as China keeps up this illegal behavior, we can and must respond with these kinds of strong enforcement actions.”

Rep. Sandy Levin, D-Mich., said the ruling was a step toward a more level playing field for global trade by ensuring that China abides by trade rules set by the WTO.

Said Levin: “This was an important event, when this administration, continuing its efforts, essentially said to China and the world that we are going to stand up for American industry and American workers -- auto and everyone.”

You can reach Ryan Beene at autonews@crain.com

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