US goes to World Trade Organization over China's 'unfair' auto duties

U.S. President Barack Obama's administration has asked the WTO for “dispute settlement consultations” in the case, the first step in a trade grievance, U.S. Trade Representative Ron Kirk said.

The action seeks to halt China's imposition of antidumping and countervailing duties on more than US$3 billion in exports of American-produced automobiles, announced last December amid a rising number of tit-for-tat bilateral trade actions.

“The key principle at stake is that China must play by the rules of the global trading system,” the White House said in a statement.

“When it does not, the Obama administration will take action to ensure that American businesses and workers are competing on a level playing field.”

“As we have made clear, the Obama Administration will continue to fight to ensure that China does not misuse its trade laws and violate its international trade commitments to block exports of American-made products,” said Kirk in a statement.

China set the duties for imports of passenger cars and sports utility vehicles with engine capacities of 2.5 liters or more, applying anti-dumping penalties from 2.0 percent to 21.5 percent and anti-subsidy tariffs at a maximum 12.9 percent.

Beijing specifically targeted U.S.-made vehicles from Chrysler, BMW, Mercedes-Benz U.S. International, American Honda Motor and Ford Motor.

China said its investigation found domestic vehicle manufacturers had “suffered substantial damages” due to dumping of U.S.-made luxury cars and subsidies provided the manufacturers.

But at the time Chinese state media said it would affect no more than 50,000 units a year — a small fraction of the total number of vehicles sold in China — and U.S. manufacturers said China had kept the action in reserve as it waited to see how Washington dealt with other trade problems.

But the move came amid a series of trade actions between the world's two largest economies, as the U.S. seeks to cut its huge trade deficit with export power China.

China's announcement of the penalties followed closely after Washington launched an investigation into China's alleged dumping and subsidies for its solar cell industry, which led to the U.S. applying earlier this year substantial import penalties on Chinese-made solar panels and cells.

President Barack Obama has stepped up the U.S. attack on China's alleged unfair trade actions in an effort to get the U.S. economy back up to a health speed of growth and generate jobs.

But the U.S. actions also have a political dimension: with Obama facing a tough re-election challenge in November, he is seeking to show that he is a tough defender of U.S. manufacturers and the auto industry in particular.

China's duties include cars manufactured in Ohio and Michigan — two key battleground states in the Nov. 6 vote.

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