U.S. files Chinese trade complaint

From the Associated Press

The Bush administration filed a complaint with the World Trade Organization on Friday accusing Beijing of providing Chinese companies with improper subsidies that hurt U.S. firms.

The action came as the administration faced increased pressure from the Democratic-controlled Congress to do something about the nation’s soaring trade deficits and lost manufacturing jobs, which critics blame in part on unfair trade practices by foreign countries.

The complaint alleges that China uses tax breaks that are illegal under WTO rules to encourage Chinese companies to export more to the United States while imposing tax and tariff penalties to limit purchases of U.S. products in China.

“We are seeking to level the playing field to allow U.S. manufacturers to compete fairly with Chinese firms,” U.S. Trade Representative Susan C. Schwab said in announcing the case.


“The United States believes that China uses its basic tax laws and other tools to encourage exports and to discriminate against imports of a variety of American manufactured goods,” Schwab said.

The decision to go to the WTO with a trade complaint will trigger a 60-day consultation during which trade negotiators will try to resolve the dispute. If that fails, a WTO hearing panel will be convened, and if the U.S. wins the case, it will be allowed to impose economic sanctions on Chinese products.

Schwab’s announcement came two days after Treasury Secretary Henry M. Paulson Jr. faced stiff questioning before a congressional panel, when both Democrats and Republicans accused the administration of doing too little to deal with America’s record trade deficits, including the deficit with China, which are at all-time highs.

An official with China’s delegation to the WTO in Geneva said the Chinese would have no immediate comment on the case.

Members of Congress and U.S. business groups praised the action.

“Forcing China to eliminate its illegal subsidies will keep world markets open to U.S. goods, keeping jobs at home,” said Senate Finance Committee Chairman Max Baucus (D-Mont.).

John Engler, a former Michigan governor who is now head of the National Assn. of Manufacturers, said he was disappointed that other major trading partners, including Japan and the European Union, refused administration requests to join in filing the case.

The case against China on subsidies is the second WTO case the administration has filed in the last year.


In March it filed a case accusing China of using an illegal tax system to block imports of U.S. and other foreign-made auto parts into China.

Two other potential WTO cases involving Chinese barriers to the sale of U.S.-made computer chips and liner board were resolved before dispute panels were convened.