The Obama Administration has requested that the World Trade Organization (WTO) resolve a trade dispute with China over at least $1 billion in alleged subsidies made available to Chinese auto and auto-parts exporters between 2009 and 2011. The U.S. government contends that the subsidies are unfair under WTO rules and threaten jobs in America’s $350 billion auto sector. China is accused of providing cash grants, tax preferences and interest-rate subsidies for both original equipment and aftermarket motor vehicle parts.
The WTO action is the latest in a series of disputes by both countries over trade rules for autos, tires and several other commodities. Exports of Chinese-made auto parts have risen nearly tenfold in the last decade, from $7.4 billion in 2002 to nearly $70 billion in 2011. Although the trade dispute could result in the imposition of tariffs, a more likely result is that China would abandon the subsidies if its policy is found to be unfair.
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