China Trade Disputes

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[authors: Bonnie B. Byers , William C. Talmadge]

The United States and China have filed dueling complaints at the World Trade Organization (WTO) in recent weeks. The United States complaint charged the Chinese with providing its auto parts makers with hundreds of millions of dollars annually in improper export subsidies. China countered with a WTO complaint alleging that the U.S. Commerce Department is deliberately and inappropriately targeting Chinese goods as the subject of anti-dumping complaints.

Trade disputes with China have escalated to the top rung of acrimonious campaign rhetoric. The spotlight has thus been thrown on a politically charged controversy which will be played out against a complicated economic backdrop. In the most recent development, eight Democratic lawmakers have asked the Commerce Department to crack down harder on Chinese solar manufacturers. They accuse Commerce of providing the Chinese with a loophole in their preliminary decision which was rendered in May. The final decision from Commerce is expected on October 10th. Senator Ron Wyden (D-OR) and Congressman Sander Levin (D-MI) led the effort.

President Obama and Governor Romney are engaged in a vigorous contest of one-upsmanship to see who most deserves being described as “tough on China.” Governor Romney derides the auto parts complaint as nothing more than a campaign gimmick. President Obama refers back to earlier allegations that Governor Romney was actively engaged in exporting jobs to China during his days at Bain Capitol. The Obama Administration has also added a new enforcement unit in the Office of the U.S. Trade Representative and, to support it, is acquiring expertise from the State Department and other agencies to bolster its Mandarin language and other research capabilities.

Developments on the trade front should be contrasted to the situation in China which is likely to push the country away from any inclination to compromise. A new leadership is poised to take over in what promises to be less than a seamless transition. Furthermore, rapid economic expansion is tailing off and the ruling Communist Party must face the possibility of missing some of its economic targets.

 

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