BEIJING — The United States on Monday filed a broad trade case against China at the World Trade Organization, alleging unfair subsidies for exports of cars and auto parts.
The case comes at a critical time in the U.S. presidential campaign, as auto manufacturing states in the upper Midwest like Michigan, Wisconsin and particularly Ohio have turned into crucial battlegrounds. But the case may not make any difference in terms of jobs for many months, as WTO cases typically take a year and a half before a final decision is reached, and sometimes longer.
Hours after news of the American move began to circulate, but before the trade case was actually filed in Beijing, China’s commerce ministry announced in a statement on its website that it was filing its own WTO case against the United States, alleging unfairness in how the United States calculates the penalty tariffs in anti-subsidy cases.
The Chinese action appeared to be coincidental, as the Chinese government seldom responds quickly to trade actions — indeed, the Chinese commerce ministry statement made no mention of the American action. The ministry had no response all day to questions relayed by phone and fax in the morning about the American action.
The case brought by the United States on Monday is the latest sign of a greater willingness by Western governments to confront China. The American action on trade comes just 11 days after the European Union agreed to start the world’s largest anti-dumping action ever, against imports of solar panels from China.
President Barack Obama planned to talk about the move Monday during a visit to Ohio, a place where the president is trying to capitalize on his bailout of the auto industry in 2009. A poll by NBC News, The Wall Street Journal and Marist College last week showed Obama building a significant lead over the Republican challenger, Mitt Romney, in Ohio.
In its WTO filing, the United States accuses China of providing at least $1 billion worth of subsidies from 2009 to 2011 for worldwide exports of cars and auto parts.
While $1 billion may sound like a large number, Chinese exports of automobiles and auto parts totaled $56 billion during this period, according to Chinese customs data. So even if China were forced by the WTO to reverse the subsidies, the effect on Chinese exporters’ total costs might not be significant.
While China exports virtually no fully assembled cars to the United States, it has rapidly expanded exports to developing countries, and those exports compete to some extent with cars exported from or designed in the United States.
Ohio has suffered heavily from job losses that have coincided with surging imports of auto parts from China. Auto parts employment in the United States has dropped by about one-half from 2001 to 2010, as imports from China grew nearly sevenfold over the same period, according to data provided by the senior administration official.