The Bush administration said Thursday that it is filing a trade case against China before the World Trade Organization in a dispute involving auto parts from the U.S. and other nations.
The 25-nation European Union joined in the complaint, which alleges that China is imposing high taxes on imported auto parts in violation of pledges it made when China joined the WTO in late 2001.
“As a mature trading partner, China should be held accountable for its actions and be required to live up to its responsibilities,” U.S. Trade Representative Rob Portman said.
Filing a complaint with the WTO triggers a 60-day consultation period in which both sides try to work out their differences.
If these negotiations do not succeed, then the United States and the EU will have the right to pursue a trade case that could result in penalty tariffs being levied against Chinese products.
Portman told reporters that America’s concerns over the higher taxes on U.S. auto parts had been raised a number of times with China before the decision to file the WTO case was made. He said the administration had “given China every opportunity to respond.”
The action was praised by members of Congress, who have been pushing the administration to take a harder line with China.
“I have long urged USTR to take strong enforcement action. Today’s action ... is a welcome step in that direction,” said Sen. Max Baucus, D-Mont.
Before the new case joined by the EU, the United States was the only country ever to file a WTO complaint against China. That earlier case, involving a Chinese tax rebate for semiconductor chips, was resolved during the consultation phase.
The filing comes at a time of rising trade tensions over what critics in the U.S. see as numerous unfair trade practices that have contributed to America’s soaring trade deficit with China.
The trade deficit with China hit $202 billion last year, the highest U.S. imbalance ever recorded with a single country.
“We expect that country to treat us fairly,” President Bush said Wednesday while taking questions from reporters. Bush is scheduled to meet in mid-April with Chinese President Hu Jintao in Washington.
Before those discussions, top administration and Chinese economic officials will meet on April 11 to discuss a wide range of trade issues between the two nations.
American manufacturers are lobbying the administration to brand China a “currency manipulator” in a report that the Treasury Department must submit to Congress in April.
U.S. companies contend that China is unfairly keeping its currency undervalued by as much as 40 percent to give Chinese producers a competitive advantage over American firms.
China last July took a small step toward a more flexible currency system but in testimony before Congress on Wednesday, Treasury Undersecretary Timothy Adams made it clear that the moves so far have been insufficient and China must move more quickly to revalue its currency.
A bill sponsored by Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., would impose penalty tariffs of 27.5 percent on all Chinese goods coming into the country.
The two senators said earlier this week that they would delay a vote on that measure for up to six months after discussions they held last week with Chinese officials that gave them the hope that China is prepared to do more on the currency issue.
The U.S. also is looking at filing another trade case with the WTO against China over what the trade representative’s office says is rampant piracy of intellectual property rights such as movies, music and computer programs.
The administration signaled its new get-tough approach with China earlier this year when it released a top-to-bottom review of America’s trade relationship with the Asian giant.
“We will not hesitate to pursue our legal options when negotiations are not productive,” Portman said Thursday.