President Barack Obama will launch a new WTO enforcement action against Chinese auto subsidies Monday, countering his Republican foe Mitt Romney’s accusations that he is too timid towards Beijing.
Obama will leverage the political power of his office when he makes the announcement in swing state Ohio and argue that Chinese practices in the auto sector put US manufacturers at a disadvantage, a White House official said.
“The Obama administration is launching an enforcement action against China at the World Trade Organization for illegally subsidizing exports in their autos and auto-parts sectors,” a White House official said.
The official added, on condition of anonymity, that China’s actions were “putting US auto parts manufacturers at a competitive disadvantage and that is encouraging the outsourcing of auto-parts production to China.”
The announcement will be seen as highly political as Ohio is a critical state in the November 6 election, and the home for large numbers of workers in the auto industry and related auto parts sector.
Obama repeatedly touts his decision to offer the sickly US auto industry a government bailout in 2009 — which Romney opposed — as his campaign seeks to capture a state which is vital to the Republican’s White House hopes.
The announcement represents something of a political trump card, following days of sparring between the two campaigns over the challenge posed by China’s rise as an economic power, and the threat it has posed to the US economy.
An NBC/Marist College poll last week found Romney trailed Obama by seven points in Ohio, following a blizzard of Democratic advertizing touting the bailout and critical of Romney’s lucrative past life as a venture capitalist.
No Republican has lost Ohio and gone on to win the White House.
“With less than eight weeks to go to election day, Romney’s performance in state polls, despite the slow economic recovery he blames on Obama, is a grave worry for his campaign.
More than 770,000 people work in the auto industry in the United States. More than half of those jobs toil in the auto parts sector, which in turn supports millions of positions in linked industries including the steel and plastics sectors.
Ohio has more than 50,000 workers employed in the auto parts industry, the White House said.
The US case will argue that China is providing impermissible export subsidies to auto and auto-parts firms and is violating WTO prohibitions on export-contingent subsidies, an official said.
Washington argues that Beijing is also violating its own agreement to wipe out export subsidies when it joined the WTO in 2001.
The Obama administration claims that China’s “illegal subsidies” in the auto sector amounted to at least $1 billion between 2009 and 2011.
Obama will argue such practices promote outsourcing of auto and auto parts production to China, and then products are then exported into the United States or other nations.
The US president has repeatedly demanded that China play by fair “rules of the road” in global trade, sometimes in the presence of senior Beijing leaders, and has initiated a number of recent trade enforcement actions, including in the auto tire and textile sectors.
But Romney has been hammering Obama’s record on China, and last week renewed his promise to brand it a currency manipulator on his first day in office in remarks which drew a stern rebuke from Beijing.
“The cheating takes on a lot of different dimensions,” Romney said on Thursday.
The Obama campaign responded by accusing Romney of blatant hypocrisy, claiming his tough talk was undermined by his business record of helping client firms outsource US jobs to China.
“He claims that he’ll crack down on China but he’s never done that and I don’t think he ever will,” Obama supporter and former Ohio Governor Ted Strickland said last week.
Obama will make appearances in Cincinnati and Columbus, Ohio on Monday, as he seeks to boost his support among working class white voters leaning towards Romney.
China bashing is a regular feature of US election campaigns, but once in office, presidents have a habit of following decades-long US foreign policy orthodoxy of seeking cooperation with Beijing.
Top Chinese leaders have told Obama that they expect a measure of anti-Beijing rhetoric in the US election, US officials have said.
But Romney’s remarks were met with a stinging response in a commentary carried by China’s official Xinhua news agency.
“It is advisable that politicians, including Romney, should abandon … short-sighted China-bashing tricks and adopt at least a little bit of statesmanship on China-US ties,” the commentary said.