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WTO will probe Chinese tariffs on U.S. cars

The U.S. complaint added to a growing list of trade grievances between the world’s two largest economies

Published October 23, 2012

The World Trade Organization said judges will decide whether Chinese duties on more than $3 billion of U.S. car exports violate global trade rules.

The anti-subsidy and anti-dumping levies cover more than 80 per cent of U.S. vehicle shipments, the Obama administration said when it lodged its complaint at the Geneva-based WTO on July 5. The vehicles include General Motors Co.’s Buick Enclave and Cadillac CTS and Jeep’s Wrangler and Grand Cherokee, both made by Chrysler Group LLC.

The U.S. complaint added to a growing list of trade grievances between the world’s two largest economies that include disputes over rare-earth minerals, solar panels and wind turbines. U.S. companies doing business in China are less optimistic than three years ago as Beijing favours domestic competitors in a market valued at $250 billion, according to an industry-group survey released on Oct. 10.

China, the world’s biggest car market, said on Dec. 14 it planned to impose anti-dumping duties as high as 12.9 per cent on GM autos and 8.8 per cent for Chrysler vehicles. China said U.S. taxpayer support of the two carmakers amounted to a government subsidy that was illegal under WTO rules, an allegation the Obama administration rejects.

The U.S., which provided aid to the companies in 2008 in return for stock, holds a 32 per cent stake in GM. It sold its Chrysler holdings to Italy’s Fiat SpA a year ago.

The Chinese levies, which cover 92,000 vehicles, also were applied to vehicles produced by the U.S. units of Bayerische Motoren Werke AG and Daimler AG, which pay 2 per cent and 2.7 per cent, respectively.

Boosting Obama

The U.S. complaint was designed to remind voters of U.S. President Barack Obama’s efforts after taking office in 2009 to rescue GM and Chrysler and to counteract criticism from Republican presidential candidate Mitt Romney that he’s been too soft on China.

When China imposed the duties, its car sales were rising at the slowest pace in 13 years, putting pressure on domestic producers to consolidate as Detroit-based GM and other foreign carmakers posted gains.

The WTO ruled on June 17 that China unfairly imposed anti- dumping and anti-subsidy duties on more than $200 million of U.S. steel products. The U.S. has also complained over access for products including poultry, tires and music, while China has filed WTO disputes against the U.S. over goods such as shrimp, wind towers, diamond sawblades and steel wire.

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