US attacks ‘illegal’ subsidies

2012-02-01 11:43

A US industry and union coalition accused China on Tuesday of sweeping illegal subsidies to its auto-parts sector that threaten to destroy more than a million US jobs.

Launching a campaign to press for trade action against Beijing, the Alliance for American Manufacturing and senior politicians said the Chinese subsidies threaten to reverse the comeback of the US auto industry.

The AAM - which brings together the US steel industry and the United Steelworkers union - said alleged trade violations by China have already killed 400 000 jobs in the US auto supply chain, and threaten 1.6 million more.


AAM executive director Scott Paul said: "It's essential that federal action be taken to challenge these abuses before they completely undermine the job recovery under way in the US auto industry.”

He said the studies present "pretty compelling" evidence of China's breaking World Trade Organisation rules against subsidised exports.

The campaign was launched at the US Congress a week after US President Barack Obama said he would step up pressure on China and other countries that unfairly subsidise exports and launch a new government body to pursue such cases.

The AAM released three reports that paint China as targeting the US auto-parts sector by supporting its own manufacturers in ways that allegedly violate WTO fair trade rules.


They argued that Chinese auto-parts exports increased more than 900% in the decade to 2010 helped by $27.5 billion (R214.5bn)  in subsidies, many of them illegal, and that the government has committed nearly $11 billion (R85.8bn) more in such support over the next decade.

This effort is targeted at the US market, they said.

Usha Haley of the Economic Policy Institute, who contributed one of the studies, also blamed the practices of US carmakers themselves for buying more China-made parts.

"While other foreign auto companies operating in China have linked to auto-parts suppliers back home, US auto companies have cut ties with suppliers in the United States or encouraged them to manufacture in China," she said.