Obama launches WTO suit against China over auto export subsidies

The Obama administration filed a trade case Monday against China, which it says has provided auto and auto parts companies with at least $1 billion in illegal export subsidies.

The suit at the World Trade Organization comes as Obama faces attacks from Republican presidential nominee Mitt Romney, who argues the president has been too weak with China on trade.

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It also dovetails with the Obama campaign’s message that the president’s support for the auto industry has saved hundreds of thousands of jobs, a pitch Obama is expected to make at two stops Monday in the swing state of Ohio. The president’s campaign believes the auto messaging has helped Obama build a solid lead in Ohio, which is crucial to Romney’s hopes of winning the presidency.

The trade case argues Beijing provided at least $1 billion in subsidies from 2009 through 2011, giving its manufacturers an advantage over U.S. competitors.

China’s industry has steadily grown, with the value of its auto and auto parts exports rising from $7.4 billion in 2002 to $69.1 billion last year. China is the world’s fifth largest exporter of autos and auto parts, while the U.S. is the biggest market.

“The Obama administration is committed to protecting the rights of nearly 800,000 American workers in our $350 billion auto and auto parts manufacturing sector,” U.S. Trade Representative Ron Kirk said in a statement announcing the case.

“Today we are continuing to make it clear to our trading partners that we will fight to support each job here at home that this sector supports,” Kirk said.

Romney dismissed the Obama action as electioneering. 

“Campaign-season trade cases may sound good on the stump, but it is too little, too late for American businesses and middle-class families," Romney said in a statement. "President Obama’s credibility on this issue has long since vanished." 

In his statement, Romney vowed to pursue a "comprehensive strategy to confront China's unfair trade practices" from the start of his presidency.

Export subsidies are prohibited under WTO rules because they severely distort international trade. China expressly agreed to eliminate all export subsidies when it joined the WTO in 2001.

The U.S. requested dispute settlement talks with China, the first step in seeking an international panel to resolve the fight.

The auto case is one of several tit-for-tat fights between the two countries on trade. The administration has also challenged China on policies surrounding rare-earth minerals used in cell phones and other high-tech gadgets, as well as steel, poultry and wind power components.

In a possible response to the auto parts case, China on Monday filed its own suit against U.S. countervailing duties that are placed on imports found to be benefitting from export subsidies.

The U.S. trade deficit with China expanded in July to $29.4 billion.

Romney has criticized Obama for not finding that China manipulates its currency to lower the value and secure a trade advantage.

Lawmakers in both parties have pressed for the designation, and presidents in both parties have avoided stamping China with the designation.

This story was posted at 7 a.m. and was updated at 10:22 a.m.