Obama starts first trade case against China

President Obama's administration on Tuesday announced it will bring its first trade case against China in the World Trade Organization (WTO) unless consultations solve the dispute.

The fight centers on restrictions China imposes on exports of raw materials used to make steel, aluminum and chemicals. By restricting exports, China gives its producers a price advantage, according to the U.S.

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During the presidential campaign, Obama promised to be tougher on China trade policies than President Bush. He ran campaign ads that said China's trade practices had been protected by the "Bush-McCain economic policies," a reference to GOP presidential candidate Sen. John McCain (R-Ariz.).

Since taking office, however, Obama has disappointed some supporters. His Treasury Department released a report earlier this year that did not label China a currency manipulator.

Critics argue China keeps its currency artificially low in order to reduce the cost of its exports. The U.S. trade deficit with China has grown this year, though at a slower pace than last year.

A request for consultations in the WTO is the first step in a trade dispute. If consultations do not stem the dispute within 60 days, the U.S. may request that a panel be set up to hear the fight.

The Bush administration launched several WTO cases against China.

The request for consultations comes at a sensitive time for U.S.-China relations. Administration officials and House Speaker Nancy Pelosi (D-Calif.) have sought to assure Chinese leaders in recent months that they are committed to bringing down U.S. budget deficits seen as threatening the value of the U.S. dollar. China has hundreds of billions of dollars in U.S. currency reserves.