TPT November 2012

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Global Marketplace
80 November 2012
automotive suspensions. The same Japanese partners have
a US operation: Kobe Aluminum Automotive Products LLC
(Bowling Green, Kentucky).
As reported by the Tokyo-based daily Asahi Shimbun , first-
phase construction at KAAP China required an investment of
$31.5mn. The second, $57.5mn, phase is set for completion
in March.
According to forgingmagazine.com (23 August), KAAP China
aims to supply anticipated greater demand for automotive parts
in China, including parts for lighter-weight vehicles that meet
stricter fuel consumption regulations. Aluminium suspensions
are seen as a critical element of this market developing among
Japanese, US and European auto makers.
Of related interest . . .
› On 31 August, the US blocked a request by China for
World Trade Organization judges to probe American anti-
subsidy measures targeting 22 products including steel pipes.
The Chinese case, which involves exports worth $7.3bn,
follows a 2009 complaint against US duties on imports
of circular welded carbon quality steel pipe, light-walled
rectangular pipe and tube, and other products.
In that case, the WTO’s Appellate Body concluded in March
2011 that the US Commerce Department violated global trade
rules with its determination that state-owned suppliers of goods
to Chinese producers targeted by the anti-subsidy duties were
“public bodies” and therefore provided government financial
contributions to manufacturers.
Other issues between China and the US at the WTO include a
US complaint against China over access for products including
grain-oriented flat-rolled electrical steel and cars.
Together with the European Union and Japan, the US filed a
WTO complaint in March challenging Chinese export limits on
rare-earth minerals.
Automotive
A US case at the World Trade
Organization may signal a
growing Western combativeness
toward China
In another notable WTO complaint, the US on 17 September
filed a broad case against China alleging unfair subsidies for
car and auto parts exports. The American action came just
11 days after the European Union agreed to start the world’s
largest anti-dumping action ever, against imports of solar
panels from China. Writing from Beijing in the New York Times,
Keith Bradsher characterised the US trade case as “the latest
sign of a greater willingness by Western governments to
confront China”.
In its WTO filing on the automotive exports, the US accused
China of providing at least $1bn worth of subsidies from 2009
to 2011. Mr Bradsher cited Chinese customs data that put
Chinese exports of automobiles and auto parts at a total of
$56bn over this period.
He wrote, “Even if China were forced by the WTO to reverse
the subsidies, the effect on Chinese exporters’ total costs
might not be significant.”
But the Times’s Hong Kong bureau chief also pointed out
that, while China exports virtually no fully assembled cars
to the US, it has rapidly expanded its exports to developing
countries. Those exports compete to some extent with cars
exported from the US. (“US Files Trade Case Against China
Over Cars,” 17 September)
Hours after news of the American trade case began to
circulate, but before its actual filing, China’s commerce
ministry announced on its website that it was filing a WTO
case of its own, alleging unfairness in the American method
of calculating penalty tariffs in anti-subsidy cases. The timing
of the action, apparently coincidental, was even so typical of
the tit-for-tat pattern that has come to define China and the
US at the WTO.
The US complaint against China came at a critical point in
the recent presidential campaign, as auto manufacturing
states in the upper Midwest turned into battlegrounds. But its
real importance may lie in what it signifies for a global trading
system that rests, at least in part, on the assumption that
companies will defend operations in their home countries by
filing anti-dumping and anti-subsidy cases against importers.
“That logic has eroded in recent years in the case of China,”
wrote Mr Bradsher, “as practically every Western multinational
company – and a growing number of smaller companies as
well – has moved factories and other operations to China and
become reluctant to risk retaliation by filing trade cases.”
› He cited the example of labour unions, which have the
legal standing to bring many kinds of trade cases in
the US, but seldom do so. With the exception of the United
Steel Workers, which filed a legal petition in 2010 for the
administration to review imports of energy-efficient technology,
unions have shown a reluctance to file trade cases because of
the six-figure and even seven-figure legal fees involved.
But nations can file WTO complaints; and Michael Wessel, a
longtime trade adviser to the United Steel Workers, told the
Times that American unions were eager for the government to
file cases. This, Mr Wessel said – in reference to the case filed
17 September against China – “may be the start of a major
shift in the US approach to trade enforcement.”
› The somewhat more confrontational US stance towards
China in trade matters happens to come as Chinese trade
surpluses erode and capital flight from China increases. But
China’s ownership of $1.2tn of US debt is also a factor worthy
of consideration, and Mr Bradsher concluded on what sounds
like a cautionary note.
“China,” he wrote, “remains the largest foreign holder of [US]
treasuries.”