U.S. Files Trade Case Against China Over Cars

The following is an excerpt from an article in:


The New York Times
Tuesday, September 18, 2012

News Analysis: U.S. Files Trade Case Against China Over Cars

By KEITH BRADSHER BEIJING — President Obama’s trade case against China on cars and auto parts will have little immediate impact on jobs and companies in the United States, but it is one of the few legal options available to the United States as China’s auto industry faces overcapacity problems and looks overseas to increase sales.

In filing the case on Monday with the World Trade Organization, Mr. Obama is making a political gesture to Midwestern states coping with the pressure that Chinese exports are placing on the American auto industry. But actual effects are likely to be delayed and limited.

World Trade Organization cases typically take a year and a half to resolve. And unlike antidumping and antisubsidy cases, which can result in steep tariffs on imports that stay in place for years, the trade organization cases often end with the losing country simply abandoning the offending policy.

There can be a requirement that companies repay previous subsidies, but that is often difficult to enforce and can require further years of legal wrangling.

The subsidies at issue are also small relative to the scale of Chinese exports, which may mean that China’s low wages, high investment rate and other advantages may have played a bigger role in the spectacular expansion of Chinese auto exports than government subsidies.

American trade officials respond that while China may have many strengths underlying its export prowess, they are doing what they can to address those policies that may violate international trade rules — particularly China’s emerging policy of setting up so-called export bases in which automakers receive incentives to make cars and car parts for overseas markets.

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