Mexico files trade grievance

Times Staff Writer

Mexico on Monday became the latest nation to file a complaint with the World Trade Organization over the Chinese government’s alleged payment of illegal subsidies to manufacturers.

The action signals Mexico’s growing frustration with a flood of Chinese imports, which has led to a soaring trade deficit with Beijing.

It follows Japan’s announcement last week that it would join the United States in formally protesting state subsidies that it claims make Chinese steel, paper and consumer products artificially cheap.

The actions represent an orchestrated effort to pressure China to live up to its WTO agreements more than five years after the Asian nation joined the world trade body. And it underscores growing impatience by trading partners who say they are losing jobs and market share as a result of China’s illegal trade practices.


In a statement, Mexico’s Economy Secretariat said its complaint was motivated by “the policy of Mexico to combat unfair trade that could affect the country’s competitiveness” as well as “the concern stated by diverse sectors” of Mexico’s manufacturing base.

The release did not specify the products or industries covered by the complaint or estimate the monetary damages that Mexican companies allegedly have sustained. Mexican trade officials could not be reached for comment.

Mexico’s action echoes a complaint filed by the U.S. government Feb. 2 with the Geneva-based WTO.

The office of the U.S. trade representative claims that the Chinese government offers hefty tax breaks to Chinese companies that gear most of their production for export. The agency said China also offered financial incentives for its factories to purchase Chinese-made machinery, putting foreign equipment makers at a disadvantage.

“We should not have to compete with the deep pockets of the Chinese government,” said Frank Vargo, vice president for international economic affairs with the National Assn. of Manufacturers, a Washington-based trade group.

Vargo said his organization and U.S. officials have been urging trading partners such as Mexico to join the U.S.-led effort.

The Democratic majority in Congress has been pushing the Bush administration to get tough with China, with which the U.S. ran a record trade deficit in 2006 of $232.5 billion.

Mexican officials have likewise been feeling the heat. The nation’s trade deficit with China has increased nearly tenfold since 2000, to $22 billion last year. Mexico has lost tens of thousands of factory jobs as production of textiles and electronics has migrated across the Pacific.


Times staff writer Carlos Martinez contributed to this report.