Obama Takes Action On China Trade

What did you think the word "trade" meant? You probably thought it meant we buy from them, and they buy from us, and we both get richer. I'll bet you never thought "trade" means we buy from them, and they don't buy from us, and they get richer and we get poorer, did you? I'll bet you never thought "trade" meant we close factories here, move them over there and bring the same goods back here to sell in the same stores (except the people who worked in those factories don't have jobs anymore, and the rest of us get pay and benefit cuts) did you? Well, guess what, suckers.

Chinese Goods Swamp American Markets, American Goods Not Allowed In Chinese Markets

Look around you at all the Chinese-made goods in our stores. Now, think about this: China just doesn't let a whole range of American-made goods into their country. Automobiles are an example. In 2011, around 18 million vehicles were sold in China. But China allowed only 106,000 American-made vehicles into their market. China's deal is, if you want to sell in China you have to build a factory in China.

Trade Enforcement Action Today

So today the United States is initiating a World Trade Organization (WTO) suit against China. China has imposed tariffs on American-made cars , which severely limits how many can be sold in China. Toldeo Blade: China to face accusation of unfair trade [1],

Demonstrating a tough line on trade with China, the Obama Administration will file an unfair trade complaint today against China's new duties on some American-made cars and sport utility vehicles, including the Toledo-made Jeep Wrangler.

A senior administration official told The Blade Wednesday the United States will file the case with the World Trade Organization in Geneva, accusing China of putting illegal duties on $3.3 billion worth of U.S.-made auto imports.

... Republican challenger Mitt Romney, a native of Michigan and the former governor of Massachusetts, said the free market, aided by government guarantees for postbankruptcy financing, should have determined the future of GM and Chrysler, an argument he made in a 2008 New York Times essay headlined "Let Detroit Go Bankrupt."

The Presidential Campaign

While there have been a series of trade enforcement actions by the Obama administration, and actions like today's take months to prepare, today's campaign-trail announcement was clearly intended to draw contrasts between the President's enforcement and Repubican Presidential candidate Mitt Romney's past statements on trade.

SF Chronicle: Obama Hammers Romney Bain Record With China on Ohio Bus Trip [2].

The WTO complaint came as Obama began a two-day bus trip in Ohio and Pennsylvania. The “Betting on America” tour, as his campaign has dubbed it, runs through areas reliant on the auto industry. The label is designed to draw a contrast with presumed Republican presidential nominee Mitt Romney, a former private- equity executive whose business made investments overseas.

Romney’s experience “has been in owning companies that were called ‘pioneers of outsourcing,’” Obama said. “My experience has been in saving the American auto industry, and as long as I’m president, that’s what I’m gonna be doing.”

Time, Swampland: Obama Welcomes Campaign Season with China Trade Complaint [3]

“It’s campaign season, again,” Barack Obama announced Thursday, after emerging in the sweltering summer heat behind hay bales and before a giant American flag draped across the roof of a nearby building. Then he pivoted to a policy decision his advisers say has nothing to do with the season.

“This morning, my Administration took new action to hold China accountable for unfair trading practices that harm American automakers,” Obama said. “Let me tell you something, Americans are not afraid to compete. We believe in competition. I believe in trade. I know this, Americans and American workers build better products than anybody else, so as long as we are competing on a fair playing field we will do just fine, but we are going to make sure competition is fair. That is part of what I believe.”

The Time story points out that Romney has opposed trade enforcement:

In 2009, Romney criticized Obama for taking too hard a line against China, after Obama imposed tariffs on Chinese tires, after claiming that China was dumping them on U.S. markets. “President Obama’s action to defend American tire companies from foreign competition may make good politics by repaying unions for their support of his campaign, but it is decidedly bad for the nation and our workers. Protectionism stifles productivity,” Romney wrote in No Apology: The Case For American Greatness, which he has since referred to as blueprint for his 2012 campaign.

The World Trade Organization later ruled that Obama was legally justified in bringing the sanctions against Chinese tires.

Auto Parts, Too

This action attempts to enforce trade rules on automobiles, but China is also using trade violations in an attempt to take over the strategically important auto-parts industry. In February I wrote about the problem of China's cheating and how even while out auto-manufacturing jobs are returning, auto-parts jobs are not.

China Cheating Costs 400K Auto Parts Jobs [4],

This week three new reports [5] described even more continuing damage to our economy caused by China's trade cheating -- and our own lack of response. Even as the auto industry recovers and auto-assembly jobs are returning, the auto-parts industry and jobs are not.

... The reports describe Chinese trade violations and calculate the damage done to our economy:

• Growing Threats to the U.S. Auto-Parts Industry from Heavily Subsidized Chinese Tires and Parts [6], from EPI. The report concludes that “every one of these [1.6 million U.S.] auto-parts jobs is individually at-risk from this unfair trade competition.” ...
• Putting the Pedal to the Metal: Subsidies to China’s Auto-Parts Industry from 2001 to 2011 [7], ... says there are $27.5 billion of Chinese government subsidies to their auto-parts industry with an additional $10.9 billion in subsidies for industrial restructuring and technological development of the industry coming.
• China’s Support Program for Automobiles and Auto Parts Under the 12th Five Year Plan [8], ... says China's subsidies to their auto-parts companies are in violation of China’s WTO commitments, but will continue unless we enforce trade rules.

See Also

Conservatives Demand Surrender To China [9]

Romney, Jobs And China -- Let's Connect Dots [10]

Romney Etch-A-Sketching On China Currency [11]

Trade Deficit - One Root Of Many Problems [12]

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